SECURITIES PURCHASE AGREEMENT
Dated as of November 14, 2000
by and among
HEALTHEXTRAS, INC.
as the Purchaser
and
TD JAVELIN CAPITAL FUND, L.P.,
MERIKEN NOMINEES, LTD,
et al.
as the Sellers
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS....................................................1
Section 1.01. Defined Terms....................................1
Section 1.02. Other Defined Terms..............................3
ARTICLE II. SALE AND PURCHASE OF PREFERRED STOCK AND
PREFERRED WARRANTS................................................3
Section 2.01. Sale and Purchase..................................3
Section 2.02. The Closing......................................3
Section 2.03 Board of Directors...............................4
ARTICLE III. REPRESENTATIONS AND WARRANTIES WITH RESPECT
TO IPM .......................................................4
Section 3.01. Organization and Good Standing.....................4
Section 3.02. Subsidiaries and Other Interests...................4
Section 3.03. Capitalization.....................................4
Section 3.04. Shareholders Lists and Agreements................5
Section 3.05. No Violation.......................................5
Section 3.06. Financial Statement and Other Information..........5
Section 3.07. Litgation..........................................6
Section 3.08. Title to Assets..................................6
Section 3.09. Contracts........................................6
Section 3.10. Insurance Policies...............................7
Section 3.11. Suppliers and Customers..........................7
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF SELLERS......................7
Section 4.01. Ownership..........................................7
Section 4.02. Organization and Good Standing.....................7
Section 4.03. Authorization, Execution and Delivery..............7
Section 4.04. Litigation.........................................8
Section 4.05. No Broker or Finder..............................8
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PURCHASER....................8
Section 5.01. Organization and Good Standing.....................8
Section 5.02. Authorization, Execution and Delivery..............8
Section 5.03. No Violation.......................................8
Section 5.04. Litigation.........................................9
Section 5.05. Purchase of Preferred Stock and Preferred
Warrants...........................................9
Section 5.06. No Broker or Finder................................9
ARTICLE VI. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION...................................................9
Section 6.01. Survival of Representations and Warranties.........9
Section 6.02. Indemnification by Purchaser.......................10
Section 6.03. Indemnification by Sellers.........................10
Section 6.04. Undisputed Claims................................10
Section 6.05. Disputed Claims..................................11
Section 6.06. Third Party Suits................................11
Section 6.07. Settlement or Compromise.........................11
Section 6.08. Failure to Act by Indemnified Party..............12
Section 6.09. Insured Claims...................................12
ARTICLE VII. GENERAL PROVISIONS...........................................12
Section 7.01. Taking of Necessary Action.......................12
Section 7.02. Effect of Due Diligence..........................12
Section 7.03. Successors and Assigns...........................12
Section 7.04. Entire Agreement.................................12
Section 7.05. Notices..........................................13
Section 7.06. Specific Performance.............................13
Section 7.07. Applicable Law...................................13
Section 7.08. No Third Party Beneficiaries.....................13
Section 7.09. Amendments and Waivers...........................13
Section 7.10. Severability.....................................13
Section 7.11. Construction.....................................14
Section 7.12. Counterparts.....................................14
Section 7.13. Headings.........................................14
Section 7.14. Consent to Jurisdiction; Receipt of Process......14
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of the 14th day of November, 2000, by and among HealthExtras, Inc. (the
"Purchaser"), a Delaware corporation, and TD Javelin Capital Fund, L.P., a
Delaware limited partnership ("Javelin"), Meriken Nominees, Ltd., an entity
organized under the laws of the Cayman Islands ("Meriken"), Xxxxxx X. Xxxxx Xx.
("Xxxxx"), Xxxxxx X. and Xxxxx Xxxxx, Xxxxxxx and Xxxxx Xxx and Xxxxxx and Xxxxx
Xxxxxxxxxx (collectively the "Preferred Stockholders" or the "Sellers," and each
a "Preferred Stockholder" or a "Seller")).
RECITALS
WHEREAS, the Preferred Stockholders desire to sell to Purchaser and
Purchaser desires to purchase (i) an aggregate of 333,879 shares of Series A
Convertible Preferred Stock, par value $0.001 per share, of IPM (the "Preferred
Stock") and (ii) warrants (the "Preferred Warrants") issued in connection with
the issuance of the Preferred Stock to purchase shares of common stock, par
value $0.001 per share, of IPM (the "Common Stock") under certain circumstances;
NOW THEREFORE, in consideration of the premises, the mutual covenants and
agreements of the parties contained herein, and of other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
each of the parties, the parties do hereby represent, warrant, covenant and
agree as follows:
ARTICLE I. DEFINITIONS
SECTION 1.01. DEFINED TERMS.
"CLAIM" means a claim pursuant to Article VII that a party is entitled, or
may become entitled, to indemnification under this Agreement.
"CLOSING" shall have the meaning provided in Section 2.02(a) of this
Agreement.
"CLOSING DATE" shall have the meaning provided in Section 2.02(a) of this
Agreement.
"COMMON STOCK" shall have the meaning set forth in the Recitals to this
Agreement.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the SEC thereunder.
"GOVERNMENTAL ENTITY" shall mean any court, administrative agency or
commission or other federal, provincial, state, local, municipal or foreign
government or governmental authority or instrumentality.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section 7.04.
Page 1 of 16
"INDEMNIFYING PARTY" shall have the meaning set forth in Section 7.04.
"IPM" shall mean International Pharmacy Management, Inc., a Delaware
corporation.
"LAWS" shall mean any foreign, Federal, state or local governmental law,
rule, regulation or requirement, including any rules, regulations or orders
promulgated thereunder and any orders, decrees, consents or judgments of any
governmental regulatory agencies and courts having the force of law.
"LIEN" shall mean all liens, charges, security interests, pledges, rights
or claims of others, restraints on transfer or other encumbrances.
"LOSS" means any loss, damage or expense including attorneys' fees and
costs of investigation and litigation, but excluding any consequential damages
(including, but not limited to, loss of revenue or income, cost of capital, or
loss of business reputation or opportunity) or punitive damages..
"MATERIAL ADVERSE EFFECT" shall mean, with respect to any Person, a
material adverse effect on the business, results of operations, financial
condition or assets of such Person and its subsidiaries, if any, taken as a
whole. In determining whether any individual event would result in a Material
Adverse Effect, notwithstanding that such event does not of itself have such
effect, a Material Adverse Effect shall be deemed to have occurred if the
cumulative effect of such event and all other then existing events would result
in a Material Adverse Effect.
"OBJECTION PERIOD" shall have the meaning set forth in Section 7.04.
"PERSON" or "PERSON" means any individual, corporation, partnership
(limited or general), limited liability company, joint venture, association,
joint-stock company, trust, any other unincorporated organization or entity, or
government or other agency or any other entity thereof.
"PREFERRED STOCK" shall have the meaning set forth in the Recitals to this
Agreement.
"PREFERRED STOCKHOLDERS" shall have the meaning set forth in the Recitals
to this Agreement.
"PREFERRED WARRANTS" shall have the meaning set forth in the Recitals to
this Agreement.
"PROPORTIONATE SHARE" shall mean, with respect to any Seller, the amount,
expressed as a percentage, that the purchase price received by Seller pursuant
to Section 2.01 bears to the aggregate purchase price paid to all Sellers
hereunder.
"PURCHASE" means the purchase of the Preferred Stock and the Preferred
Warrants contemplated by this Agreement.
Page 2 of 16
"PURCHASER" shall have the meaning set forth in the Recitals to this
Agreement.
"REGULATORY AUTHORITY" shall mean any foreign, federal, provincial, state,
local or municipal government or governmental authority the approval of which,
or filing with, is legally required for consummation of the transactions
contemplated by this Agreement.
"RESOLUTION PERIOD" shall have the meaning set forth in Section 7.05.
"SEC" means the United States Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.
"SELLERS" shall have the meaning set forth in the Recitals to this
Agreement.
"THIRD PARTY SUIT" means a suit or proceeding by a third party with respect
to which a Claim is made.
SECTION 1.02. OTHER DEFINED TERMS. Other terms defined through this
Agreement shall have the meanings defined in this Agreement.
ARTICLE II. SALE AND PURCHASE OF PREFERRED STOCK AND
PREFERRED WARRANTS
SECTION 2.01. SALE AND PURCHASE. Subject to the terms and conditions of
this Agreement, each Preferred Stockholder agrees to sell to Purchaser and
Purchaser agrees to purchase from each such Preferred Stockholder the number of
shares of Preferred Stock and the Preferred Warrants indicated as owned by each
such Preferred Stockholder on Exhibit A hereto for the amount of consideration
set forth on Exhibit A hereto.
SECTION 2.02. THE CLOSING.
(a) Subject to the terms and conditions contained in this Agreement, the
closing ("xxx Xxxxxxx") of the sale to, and purchase by, Purchaser of the
Preferred Stock and Preferred Warrants described in Section 2.01 shall occur at
10:00 a.m. on the date hereof at the offices of Purchaser at 0000 Xxxxxxxx
Xxxxxxxxx, 0xx Xxxxx, Xxxxxxxxx, Xxxxxxxx. The day on which the Closing occurs
shall be the "Closing Date".
(b) At the Closing, each of the Preferred Stockholders shall deliver to the
Purchaser certificates, endorsed for transfer to the Purchaser, for the shares
of Preferred Stock and the Preferred Warrants being sold to Purchaser by each
such Preferred Stockholder as set forth on Exhibit A hereto, together with stock
power issued in blank, against payment of the purchase price set forth on
Exhibit A hereto. The payment of the purchase price will be by wire transfer,
check, or other method acceptable to the Preferred Stockholder.
Page 3 of 16
SECTION 2.03. BOARD OF DIRECTORS. Javelin, Meriken and Xxxxx agree to
cause, at Closing, Directors Xxxxxxx Xxxxx and Xxxxx Xxxxxxx to resign from the
Board.
ARTICLE III. REPRESENTATIONS AND WARRANTIES WITH RESPECT TO IPM
Each Seller hereby represents and warrants to Purchaser as of the date
hereof and as of the Closing Date as follows:
SECTION 3.01. ORGANIZATION AND GOOD STANDING. IPM is a corporation validly
existing and in good standing under the laws of the State of Delaware and has
full corporate power and authority to conduct its business as it is now being
conducted and to own, operate or lease the properties and assets it currently
owns, operates or holds under lease. IPM is duly qualified or licensed to do
business and is in good standing as a foreign corporation in the State of
Alabama. Sellers have heretofore delivered to Purchaser true and correct copies
of IPM's Certificate of Incorporation and Bylaws as in effect on the date
hereof.
SECTION 3.02. SUBSIDIARIES AND OTHER INTERESTS. Except as described in
Section 3.02 of the IPM Disclosure Schedule, IPM does not have any subsidiaries
or, directly or indirectly, any legal or beneficial interest in any partnership,
joint venture or other entity.
SECTION 3.03. CAPITALIZATION.
(a) The authorized capital stock of IPM consists of (i) 1,750,000 shares of
Common Stock, par value $0.001 per share, 153,604 shares of which are issued and
outstanding and (ii) 750,000 shares of Preferred Stock, 333,879 shares of which
are issued and outstanding. In addition, 333,879 shares of Common Stock have
been reserved for issuance upon the conversion of the shares of Preferred Stock
into Common Stock. All of the issued and outstanding shares of Preferred Stock
of IPM are owned, of record and beneficially, by the Preferred Stockholders in
the amounts set forth on Exhibit A hereto. The designations, powers,
preferences, rights, qualifications, limitations and restrictions in respect of
each class and series of authorized capital stock of IPM are as set forth in its
Certificate of Incorporation, and all such designations, powers, preferences,
rights, qualifications, limitations and restrictions are valid, binding and
enforceable and in accordance with all applicable corporate laws. All
outstanding shares of capital stock of IPM have been duly authorized and validly
issued and are fully paid and non-assessable. None of the outstanding securities
have been issued in violation of any preemptive rights, rights of first refusal
or similar rights which have not been waived. Except as set forth in Schedule
3.03 of the IPM Disclosure Schedule, there are no outstanding options, warrants,
convertible securities, calls, rights, commitments, preemptive rights or
agreements or instruments or understandings of any character to which IPM is a
party or by which IPM is bound, obligating IPM to issue, deliver or sell, or
cause to be issued, delivered or sold, contingently or otherwise, additional
shares of its capital stock or any securities or obligations convertible into or
exchangeable for such shares or to grant, extend or enter into any such option,
warrant, convertible security, call, right, commitment, preemptive right or
agreement.
Page 4 of 16
(b) Except as set forth in Section 3.03 of the IPM Disclosure Schedule,
there are no outstanding obligations, contingent or other, of IPM to purchase,
redeem or otherwise acquire any shares of its capital stock and there are no
voting trust agreements or other contracts, agreements, arrangements,
commitments, plans or understandings restricting or otherwise relating to voting
(i) between or among IPM and any of its stockholders or (ii) between or among
any of IPM's stockholders.
SECTION 3.04. SHAREHOLDERS LISTS AND AGREEMENTS. Section 3.04 of the IPM
Disclosure Schedule sets forth a true and complete list of all stockholders and
other security holders of IPM showing the number of shares of Common Stock and
Preferred Stock and other securities held by each stockholder or security holder
of IPM.
SECTION 3.05. NO VIOLATION. The execution and delivery of this Agreement by
Sellers does not, and the consummation by Sellers of the transactions
contemplated by this Agreement, and compliance with the terms hereof will not,
(a) conflict with, or result in any violation of or default under, any provision
of its Certificates of Incorporation or Bylaws; (b) conflict with, or result in
any breach or violation of or default or loss of any benefit under, any license,
or any statute, law, rule or regulation, or any judgment, decree or order of any
court or other governmental agency or instrumentality to which IPM is a party or
to which any of its property is subject, which conflict, breach or violation
would have a Material Adverse Effect. IPM is in compliance with all applicable
laws, rules or regulations relating to or affecting the operation, conduct or
ownership of its property or business, other than violations that individually
or in the aggregate do not and will not have a Material Adverse Effect on IPM.
SECTION 3.06. FINANCIAL STATEMENTS AND OTHER INFORMATION.
(a) Sellers have delivered to Purchaser (i) true, correct and complete
copies of the audited balance sheets of IPM as of December 31, 1999
and December 31, 1998 and the related audited statements of
operations, statements of shareholders equity (deficit), and
statements of cash flows (the "Audited Financial Statements") and (ii
true, correct and complete copies of the unaudited balance sheet of
IPM as of September 30, 2000 and the related unaudited statements of
operations, statements of shareholders equity (deficit), and
statements of cash flows for the nine month period then ended (the
"Interim Financial Statements"). The Audited Financial Statements and
Interim Financial Statements are herein collectively referred to as
the "Financial Statements."
(b) To the Sellers' actual knowledge, the Financial Statements are in
accordance with the books and records of IPM, have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods covered thereby (except, in the case of
the Interim Financial Statements, for the absence of footnotes and
normal year-end adjustments) and the balance sheets included therein
present fairly as of their respective dates the financial condition of
IPM. All material liabilities and obligations, whether absolute,
accrued, contingent or otherwise, whether direct or indirect, and
whether due or to become due, which existed at the date of such
Page 5 of 16
Financial Statements have been disclosed in the balance sheets
included in the Financial Statements or, in the case of the Audited
Financial Statements, in notes to the Financial Statements, to the
extent such liabilities were required, under generally accepted
accounting principles, to be so disclosed.
(c) Since September 30, 2000, there has been no material adverse change in
the business, results of operations, financial conditions or assets of
IPM, including whether as a result of any revocation of any license or
right to do business, fire, explosion, accident, casualty, labor
trouble, riot, condemnation, or act of God.
SECTION 3.07. LITIGATION. Except as described in Section 3.07 of the IPM
Disclosure Schedule, there is no action, suit, investigation, arbitration or
proceeding pending or threatened in writing against IPM or any of its properties
or rights (including without limitation no charge of patent and/or trademark
infringement), by or before any Governmental Entity, or to Sellers' actual
knowledge, any basis in fact therefor, against or involving IPM or any of its
officers, directors, employees or consultants (in all instances, in their
capacity as such), assets, business or products, whether at law or in equity. To
Sellers' actual knowledge, the IPM Disclosure Schedule accurately describes each
action, suit, investigation, arbitration or proceeding brought against IPM or
any of its properties or assets (including any of its patents, trademarks or
other intellectual property) or to which IPM was a party.
SECTION 3.08. TITLE TO ASSETS. Section 3.08 of IPM's Disclosure
Schedule contains a complete and accurate list of all real property owned or
leased by IPM. IPM has good and (to the extent such property may be insured)
insurable title to the properties and assets owned by it, whether real or
personal, tangible or intangible, in each case free and clear of any Liens,
except (i) liens for taxes not yet due and payable, (ii) pledges to secure
deposits and other Liens incurred in the ordinary course of business, and (iii)
such easements, restrictions and encumbrances, if any, as are not material in
character, amount or extent, and do not materially detract from the value, or
materially interfere with the present use of the properties subject thereto or
affected thereby.
SECTION 3.09. CONTRACTS. There are no material liabilities of IPM
arising directly from any breach of or default in any provision of any
material contracts, nor has there occurred any breach or default thereof by
IPM which would permit the acceleration of any material obligation of any party
thereto or the creation of a material Lien upon any asset(s) of IPM. The
consummation of the Purchase or the other transactions contemplated hereby
will not result in any violation or termination of, default or loss of benefit
under, or give rise to a right of termination under, the terms of any
contract to which IPM is a party.
SECTION 3.10. INSURANCE POLICIES. There are no material pending claims
against any insurance policies covering IPM, its businesses, employees, agents
and assets, by or on behalf of IPM as to which the insurers have denied coverage
or otherwise reserved rights.
Page 6 of 16
SECTION 3.11. SUPPLIERS AND CUSTOMERS. Except as set forth in Section
3.11 of IPM's Disclosure Schedule, to the knowledge of Javelin or Meriken,
none of IPM's material customers or suppliers intend to cease purchasing from,
selling to or dealing with IPM.
ARTICLE IV. REPRESENTATIONS AND
WARRANTIES OF SELLERS
Each of the Sellers individually represents and warrants, severally and not
jointly, to Purchaser as follows:
SECTION 4.01. OWNERSHIP. Such Seller holds of record and owns beneficially
the number of shares of Preferred Stock and the Preferred Warrants set forth
next to his, her or its name in Exhibit A hereto, free and clear of any Liens.
Except as provided in Section 4.01 of a Seller Disclosure Schedule hereto, there
are no outstanding options, warrants, convertible securities, calls, rights,
commitments, court orders, proceedings, preemptive rights or agreements or
instruments or understandings of any character to which such Seller is a party
or by which he, she or it is bound, obligating him, her or it to deliver or
sell, or cause to be issued, delivered or sold, contingently or otherwise, any
shares of Preferred Stock or the Preferred Warrants owned by him, her or it or
to grant, extend or enter into any such option, warrant, convertible security,
call, right, commitment, preemptive right or agreement. Such Seller is not a
party to any voting trust, proxy, or other agreement, commitment or
understanding, or any court order or proceeding, with respect to the voting,
dividend rights or disposition of any capital stock of IPM, except as disclosed
in Section 4.01 of a Seller Disclosure Schedule hereto. At the Closing, good and
marketable title to the shares of Preferred Stock and the Preferred Warrants
being sold by each Seller, as applicable, will pass to Purchaser free and clear
of all Liens.
SECTION 4.02. ORGANIZATION AND GOOD STANDING. To the extent it is not an
individual, such Seller is validly existing and in good standing under the laws
of its state of organization.
SECTION 4.03. AUTHORIZATION, EXECUTION AND DELIVERY. Such Seller has full
power and authority or legal capacity, as applicable, to enter into this
Agreement, and to carry out his, her or its obligations under this Agreement.
The execution and delivery by such Seller of this Agreement, the consummation of
the transactions contemplated hereby and the performance by such Seller of his,
her or its obligations hereunder have been duly authorized by all necessary
corporate, partnership, trust or analogous action on the part of such party, if
applicable. This Agreement has been duly executed and delivered by such Seller
and constitutes the legal, valid and binding obligation of such Seller,
enforceable against such Seller in accordance with its terms (except the
enforceability thereof as may be limited by bankruptcy, insolvency,
receivership, conservatorship, liquidation, reorganization, moratorium or
similar Laws relating to or affecting creditors' rights generally (including,
without limitation, fraudulent conveyance Laws) and by general principles of
equity, regardless of whether such enforceability is considered in equity or at
law).
Page 7 or 16
SECTION 4.04. LITIGATION. There are no judicial or administrative actions,
proceedings or investigations pending or, to such Seller's actual knowledge,
threatened that question the validity or enforceability of this Agreement or any
action taken or to be taken by such Seller in connection herewith or therewith.
There are no lawsuits, claims, administrative or other proceedings or
investigations pending or, to Seller's actual knowledge, threatened by, against
or affecting such Seller in connection with this Agreement.
SECTION 4.05. NO BROKER OR FINDER. Neither such Seller nor any affiliate of
such Seller has retained any financial advisor, broker, agent or finder or paid
or agreed to pay any financial advisor, broker, agent or finder on account of
this Agreement or the transaction contemplated hereby.
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser hereby represents and warrants to the Sellers as follows:
SECTION 5.01. OGANIZATION AND GOOD STANDING. Purchaser is a corporation
validly existing and in good standing under the laws of the State of Delaware
and has full corporate power and authority to conduct its business as it is now
being conducted and to own, operate or lease the properties and assets it
currently owns, operates or holds under lease and is duly qualified to do
business and is in good standing in the State of Maryland.
SECTION 5.02. AUTHORIZATION, EXECUTION AND DELIVERY. Purchaser has all full
corporate power and authority to execute and deliver this Agreement and to
perform its obligations under this Agreement. The execution and delivery of this
Agreement, and the performance by Purchaser of its obligations hereunder have
been duly authorized by all necessary corporate action. This Agreement has been
duly executed and delivered by Purchaser and constitutes the legal, valid and
binding obligation of Purchaser, enforceable against Purchaser in accordance
with its terms (except as the enforceability thereof may be limited by
bankruptcy, insolvency, receivership, conservatorship, liquidation,
reorganization, moratorium or similar laws relating to or affecting creditors'
rights generally (including, without limitation, fraudulent conveyance laws) and
by general principles of equity).
SECTION 5.03. NO VIOLATION. The execution and delivery of this Agreement by
Purchaser does not, and the consummation by Purchaser of the transactions
contemplated by this Agreement, and compliance with the terms hereof will not,
(a) conflict with, or result in any violation of or default under, any provision
of its Certificate of Incorporation or Bylaws; (b) conflict with, or result in
any breach or violation of or default or loss of any benefit under, or
accelerate the performance required by, the terms of any agreement, contract,
indenture or other instrument to which Purchaser is a party or to which any of
its properties are subject, or constitute a default or loss of any right
thereunder or an event which, with the lapse of time or notice or both, might
result in a default or loss of any right thereunder or the creation of any Lien
upon any of the assets or properties of Purchaser.
Page 8 of 16
SECTION 5.04. LITIGATION. There are no judicial or administrative actions,
proceedings or investigations pending or, to the Purchaser's actual knowledge,
threatened that question the validity or enforceability of this Agreement or any
action taken or to be taken by Purchaser in connection herewith or therewith.
There are no lawsuits, claims, administrative or other proceedings or
investigations pending or, to the Purchaser's actual knowledge, threatened by,
against or affecting the Purchaser in connection with this Agreement.
SECTION 5.05. PURCHASE OF PREFERRED STOCK AND PREFERRED WARRANTS.
(a) The Preferred Stock and the Preferred Warrants are being acquired for
the Purchaser's own account, not as a nominee or agent for any other
Person, and without a view to the distribution of such securities or
any interest therein in violation of the Securities Act.
(b) The Purchaser (i) is an "accredited investor" within the meaning of
Rule 501(a) under Regulation D promulgated under the Securities Act,
(ii) has such knowledge and experience in financial and business
matters so as to be capable of evaluating the merits and risks of its
investment in the Preferred Stock and the Preferred Warrants, and
(iii) is capable of bearing the economic risks of such investment
(including the risk of complete loss of its investment in the
Preferred Stock and the Preferred Warrants); and
(c) The Purchaser acknowledges that the Preferred Stock and the Preferred
Warrants have not been registered under the Securities Act and
understands that the Preferred Stock and the Preferred Warrants must
be held indefinitely unless they are subsequently registered under the
Securities Act or such sale is permitted pursuant to an available
exemption from such registration.
SECTION 5.06. NO BROKER OR FINDER. Neither Purchaser nor any affiliate
of Purchaser has retained any financial advisor, broker, agent or finder or paid
or agreed to pay any financial advisor, broker, agent or finder on account of
this Agreement or the transaction contemplated hereby.
ARTICLE VI. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION
SECTION 6.01. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations, warranties and agreements contained in this Agreement shall
survive the Closing and shall remain in full force and effect until the
expiration of one year from the Closing Date and, thereafter, to the extent a
Claim is made is good faith in writing prior to such expiration with respect to
any breach of such representation, warranty or agreement, until such Claim is
finally determined or settled. Notwithstanding the foregoing, the
representations and warranties contained in Sections 3.01, 3.03, 3.04, 4.01,
4.02, 4.03 and 5.02 shall remain in full force and effect until the expiration
of the applicable statute of limitations.
Page 9 of 16
SECTION 6.02. INDEMNIFICATION BY PURCHASER. Purchaser covenants and agrees
that it will indemnify and hold each Seller, its successors and assigns and its
officers, directors, employees, stockholders and agents at all times harmless
from and against any Loss caused by or arising out of (a) any misrepresentation
or breach of warranty under Article V of this Agreement, or (b) any
nonfulfillment of any agreement on the part of Purchaser under this Agreement or
(c) any activity of Purchaser, IPM or any subsidiary or affiliate of IPM on or
after the Closing Date, other than those arising with respect to or relating to
the purchase of the Preferred Stock hereunder.
SECTION 6.03. INDEMNIFICATION BY SELLERS.
(a) Each Seller, severally and not jointly, covenants and agrees that it
will indemnify and hold Purchaser and its successors and assigns and
its officers, directors, employees, stockholders and agents at all
times harmless from and against any Loss caused by or arising out of
or in connection with (i) any misrepresentation or breach of warranty
under Article III of this Agreement or (ii) any misrepresentation or
breach of warranty on the part of such Seller under Article IV of this
Agreement or (iii) any nonfulfillment of any agreement on the part of
such Seller under this Agreement.
(b) Notwithstanding the foregoing, the liability of each Seller under this
Article VI for any breach of any representation or warranty (x) made
in Article IV of this Agreement shall be limited to the amount
received by such Seller under Section 2.01 hereof and (y) made in
Article III of this Agreement shall be limited to the lesser of (i)
such Seller's Proportionate Share of such Loss and (ii) the amount
received by such Seller under Section 2.01 hereof.
(c) No Claim for indemnification against any Seller with respect to any
breach of any representation or warranty set forth in Article III may
be asserted against any Seller hereunder unless the aggregate of all
Losses incurred by Purchaser under Article III exceeds $150,000 and
only to the extent any such Losses exceed $150,000.
SECTION 6.04. UNDISPUTED CLAIMS. A party (the "Indemnified Party") may
assert a Claim by giving notice of its Claim to the party or parties that are,
or may become, required to indemnify the Indemnified Party (the "Indemnifying
Party," whether one or more), providing reasonable details of the facts giving
rise to the Claim and a statement of the Indemnified Party's Loss in connection
with the Claim, to the extent such Loss is then known to the Indemnified Party
and, otherwise, an estimate of the amount of the Loss that it reasonably
anticipates that it will incur or suffer. If an Indemnifying Party does not
object to the Claim during the 30 day period following the date of delivery of
the Indemnified Party's notice of its Claim (the "Objection Period"), the Claim
shall be considered undisputed and the Indemnified Party shall be entitled to
recover the amount of its Loss. The fact that a Claim is not disputed by any
Indemnifying Party shall not constitute an admission or create any inference
that the asserted Claim is valid for any purpose other than the indemnity
obligation of the Indemnifying Party as to such Claim pursuant to this Article
VII.
Page 10 of 16
SECTION 6.05. DISPUTED CLAIMS. If any Indemnifying Party gives notice to
the Indemnified Party within the Objection Period that such Indemnifying Party
objects to the Claim, then (a) the parties shall attempt in good faith to
resolve their differences during the 30 day period following the date of
delivery of the Indemnifying Party's notice of its objection (the "Resolution
Period") and (b) if the parties fail to resolve their disagreement during the
Resolution Period, the disputed Claim shall be submitted for binding arbitration
in Wilmington, Delaware in accordance with the American Arbitration
Association's rules for commercial arbitration in effect at the time. The award
of the arbitrator or panel of arbitrators shall be final and binding and shall
include such provision for the payment of reasonable attorneys' fees to the
prevailing party as may be determined by such arbitrator(s) to be fair and
equitable.
SECTION 6.06. THIRD PARTY SUITS. In the case of any claim relating to a
Claim by a third party (a "Third Party Suit"), the Indemnified Party shall
control the defense of the Third Party Suit and the Indemnifying Party may, at
its own expense, participate in (but not control) the defense and employ counsel
separate from the counsel employed by the Indemnified Party; provided, however,
that the Indemnifying Party may assume control of the defense of the Third Party
Suit at any time during the course of the suit if the Indemnifying Party
confirms in writing to the Indemnified Party that the Indemnified Party is
entitled to indemnification under this Agreement with respect to the Claim and
for the full amount of any Losses arising out of the Third Party Suit. If the
Indemnifying Party assumes control of the defense of a Third Party Suit, (a) the
Indemnifying Party shall consult with the Indemnified Party with respect to the
Third Party Suit upon the Indemnified Party's reasonable request for
consultation and (b) the Indemnified Party may, at its expense, participate in
(but not control) the defense and employ counsel separate from the counsel
employed by the Indemnifying Party. Regardless of whether the Indemnifying Party
assumes the defense of the Third Party Suit, all parties shall cooperate in its
defense.
SECTION 6.07. SETTLEMENT OR COMPROMISE. If the Indemnified Party is
conducting the defense of a Third Party Suit, the Indemnified Party shall give
the Indemnifying Party at least 15 days prior written notice of any proposed
settlement or compromise, during which time the Indemnifying Party may assume
the defense of the Third Party Suit in compliance with the requirements of
Section 6.06 and, if it does so (or if the Indemnifying Party has already
assumed control of such Third Party Suit), the proposed settlement or compromise
may not be made without the Indemnified Party's consent, which shall not be
unreasonably withheld. If the Indemnifying Party does not so assume the defense
of the Third Party Suit, the Indemnified Party may enter into the proposed
settlement. Any settlement or compromise of any Third Party Suit by either the
Indemnifying Party or the Indemnified Party entered into in compliance with this
Section 7.07 shall also be binding on the other party in the same manner as if a
final judgment or decree had been entered by a court of competent jurisdiction
in the amount of the settlement or compromise.
SECTION 6.08. FAILURE TO ACT BY INDEMNIFIED PARTY. Any failure by the
Indemnified Party to defend a Third Party Suit shall not relieve the
Indemnifying Party of its indemnification obligations if the Indemnified Party
gives the Indemnifying Party at least 30 days prior written notice of the
Indemnified Party's intention not to defend and affords the Indemnifying Party
the opportunity to assume the defense.
Page 11 of 16
SECTION 6.09. INSURED CLAIMS. In case any event shall occur which would
otherwise entitle either party to assert a Claim for indemnification hereunder,
no Loss shall be deemed to have been sustained by the Indemnified Party to the
extent of any proceeds received by the Indemnified Party from any insurance
policies with respect thereto.
ARTICLE VII. GENERAL PROVISIONS
SECTION 7.01. TAKING OF NECESSARY ACTION. In case at any time after the
Closing any further action is necessary or desirable to carry out the purposes
of this Agreement, each of the parties hereto agrees, subject to applicable
laws, to use all reasonable efforts promptly to take or cause to be taken all
further action and promptly to do or cause to be done all further things
(including the execution and delivery of such further instruments and documents)
as any party reasonably may request.
SECTION 7.02. EFFECT OF DUE DILIGENCE. No investigation by or on behalf of
Purchaser into the business, operations, prospects, assets or condition
(financial or otherwise) of IPM shall diminish in any way the effect of any
representations or warranties made with respect to IPM or any of the other
parties to this Agreement or shall relieve any parties to this Agreement of any
of their obligations under this Agreement.
SECTION 7.03. SUCCESSORS AND ASSIGNS. This Agreement will inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns, heirs, executors, administrators and legal
representatives. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto without the
prior written consent of the other parties hereto.
SECTION 7.04. ENTIRE AGREEMENT. This Agreement and the other documents
referred to herein contain the entire agreement among the parties hereto with
respect to the transactions contemplated hereby, and controls and supersedes any
prior understandings, agreements or representations by or between the parties,
written or oral, which conflicts with, or may have related to, the subject
matter hereof in any way.
SECTION 7.05. NOTICES. All notices or other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered
personally or sent by telefax communication, by recognized overnight courier
marked for overnight delivery, or by registered or certified mail, postage
prepaid, addressed as follows:
(a) If to Purchaser, 0000 Xxxxxxxx Xxxxxxxxx, 0xx Xxxxx, Xxxxxxxxx, XX
00000, with a copy to: Xxxxxxx, Xxxxxx & Xxxxxxxx LLP, 0000 Xxxxxxxxx
Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, Attention: Xxxxxx X. Xxxxxxxx,
Esq.
(b) If to a Seller, to the address specified in Exhibit A hereto.
Page 12 of 16
Or such other addresses as shall be furnished by like notice by such party.
All such notices and communications shall, when telefaxed (immediately
thereafter confirmed by telephone), be effective when telefaxed, or if sent by
nationally recognized overnight courier service, be effective one business day
after the same has been delivered to such courier service marked for overnight
delivery, or, if mailed, be effective when received.
SECTION 7.06. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement were
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
SECTION 7.07. APPLICABLE LAW. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Delaware,
without reference to or application of any conflicts of laws principles.
SECTION 7.08. NO THIRD PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any Person other than the parties
and their respective successors and permitted assigns.
SECTION 7.09. AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by each
of the parties hereto; provided, however, that the holders of a majority of the
outstanding Preferred Stock shall have the right to amend any provision of this
Agreement on behalf of the Sellers unless any nonconsenting Seller is adversely
affected by such amendment in a manner different from other Sellers. No waiver
by any party of any default, misrepresentation or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
SECTION 7.10. SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
SECTION 7.11. CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement.
SECTION 7.12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Page 13 of 16
SECTION 7.13. HEADINGS. The headings used in this Agreement are for
convenience only and are not to be considered in construing or interpreting any
term or provision of this Agreement.
SECTION 7.14. CONSENT TO JURISDICTION; RECEIPT OF PROCESS. Except as
contemplated by Section 7.05, each party hereby consents to the jurisdiction of,
and confers non-exclusive jurisdiction upon, any federal or state court located
in the State of Delaware, and appropriate appellate courts there from, over any
action, suit or proceeding arising out of or relating to this Agreement, or any
of the transactions contemplated hereby. Except as contemplated by Section 7.05,
each party hereby irrevocably waives, and agrees not to assert as a defense in
any such action, suit or proceeding, any objection which it may now or hereafter
have to venue of any such action, suit or proceeding brought in any such federal
or state court and hereby irrevocably waives any claim that any such action,
suit or proceeding brought in any such court or tribunal has been brought in an
inconvenient forum. Process in any such action, suit or proceeding may be served
on any party anywhere in the world, whether within or without the State of
Delaware provided that notice thereof is provided pursuant to provisions for
notice under this Agreement.
Page 14 of 16
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties hereto as of the date first written
above.
HEALTHEXTRAS, INC.
By:/s/ Xxxxx X. Xxxxx
-----------------------------------
Xxxxx X. Xxxxx
President and Chief Executive Officer
TD JAVELIN CAPITAL FUND, L.P.
By: JVP, L.P., its general partner
By: JVP, Inc., its general partner
By: /s/Xxxxxxx X. Xxxxx
-------------------
Name: Xxxxxxx X.Xxxxx
Title:Vice President
MERIKEN NOMINEES, LTD. For and on behalf of
ATCO NOMINEES LTD.
By: /s/ Xxxx Xxxxxxxxx By: /s/ Xxxx Xxxxxxxx
------------------ -----------------
Name: Xxxx Xxxxxxxxx Name: Xxxx Xxxxxxxx
Title: Managing Director Title: Asst. Manager
Mutual Funds & Securities
Page 15 of 16
/s/ Xxxxxx X. Xxxxx Xx.
------------------------------------------------------------------
XXXXXX X. XXXXX, XX.
/s/ Xxxxxx X. Xxxxx, Xx. attorney in fact for Xxxxxx X. Xxxxx, Xx.
------------------------------------------------------------------
XXXXXX X. XXXXX, XX.
/s/ Xxxxx Xxxxx
------------------------------------------------------------------
XXXXX XXXXX
/s/ Xxxxxx X. Xxxxx, Xx. attorney in fact for Xxxxxxx Xxx
------------------------------------------------------------------
XXXXXXX XXX
/s/ Xxxxxx X. Xxxxx, Xx. attorney in fact for Xxxxx Xxx
------------------------------------------------------------------
XXXXX XXX
/s/ Xxxxxx X. Xxxxx, Xx. attorney in fact for Xxxxxx Xxxxxxxxxx
------------------------------------------------------------------
XXXXXX XXXXXXXXXX
/s/ Xxxxxx X. Xxxxx, Xx. attorney in fact for Xxxxx Xxxxxxxxxx
------------------------------------------------------------------
XXXXX XXXXXXXXXX
(SIGNATURE PAGE 2 OF 2 TO THE SECURITIES PURCHASE AGREEMENT)
Page 16 of 16
