SECURITIES PURCHASE AND EXCHANGE AGREEMENT
THIS SECURITIES PURCHASE AND EXCHANGE AGREEMENT
("Agreement") is made as of the 31st day of January, 1996
by and among Xxxxxx, Inc., a Delaware corporation (the
"Company"), Wand/Xxxxxx Investments L.P., a Delaware
limited partnership ("Wand I"), Wand/Xxxxxx Investments
II L.P., a Delaware limited partnership, and Wand/Xxxxxx
Investments III L.P., a Delaware limited partnership
("Wand III"). Wand I, Wand II and Wand III are referred
to herein collectively as the "Purchasers."
RECITALS
A. Wand I and Wand II are each currently
owners of the following securities of the Company: (1)
common stock, par value $.01 per share ("Company Common
Stock"); (2) Series C Convertible Preferred Stock, par
value $1.00 per shares ("Series C Preferred Stock"); (3)
Series D Convertible Preferred Stock, par value $1.00 per
share ("Series D Preferred Stock"); (4) certain common
stock purchase warrants to purchase shares of Company
Common Stock at various exercise prices (the "Old
Warrants").
B. Certain of the Company securities
currently held by Wand I will be transferred to Wand III,
as follows:
(1) 74,151 shares of Company Common Stock (the
"Wand III Company Common Stock");
(2) 1,444 shares of Series C Preferred Stock
(the "Wand III Series C Preferred Stock");
(3) 8,322 shares of Series D Preferred Stock
(the "Wand III Series D Preferred Stock");
(4) Warrants to acquire 4,161 shares of
Company Common Stock at an exercise price
of $2.00 per share (the "$2.00 Warrants");
(5) Warrants to acquire 416,115 shares of
Company Common Stock at an exercise price
of $.65 per share (the "$.65 Warrants");
and
(6) Warrants to acquire 291,281 shares of
Company Common Stock at $1.00 per share
(the "$1.00 Warrant").
C. the Company desires to sell to Wand I and
Wand II, and Wand I and Wand II desires to purchase from
the Company, in the aggregate, (1) 599 shares of a new
class of convertible preferred stock of the Company, par
value $1.00 per share (the "Series F Preferred Stock")
having the terms set forth in the Company's Certificate
of Designation of the Terms of the Series F Preferred
Stock in the form set forth as Exhibit I, and (2)
Warrants to purchase up to an aggregate of 173,710 shares
of Company Common Stock in the form set forth as Exhibit
II (the "Regular Warrants");
D. The Company desires to sell to Wand III,
and Wand III desires to purchase from the Company, (1)
401 shares of a new class of convertible preferred stock
of the Company, par value $1.00 per share (the "Series G
Preferred Stock") having the terms set forth in the
Company's Designation of the Terms of the Series G
Preferred Stock set forth as Exhibit III and (2) warrants
to purchase up to an aggregate of 116,290 shares of
Company Common Stock in the form set forth as Exhibit IV
(the "Restricted Warrants").
E. In order to facilitate this purchase and
sale of the Company securities to the Purchasers, the
Company and the Purchasers have agreed that (1) the 1,776
Series C Preferred Stock owned by Wand I (excluding the
1,444 shares of such stock to be transferred to Wand III)
and the 250 shares of Series C Preferred Stock owned by
Wand II shall be exchanged for an aggregate of 2,026
shares of a new class of convertible preferred stock of
the Company, par value $1.00 per share (the "Series H
Preferred Stock") having the terms set forth in the
Company's Certificate of Designation of Terms of the
Series H Preferred Stock set forth as Exhibit V, (2) the
1,444 shares of Series C Preferred Stock transferred to
Wand III shall be exchanged for an aggregate of 1,444
shares of a new class of convertible preferred stock of
the Company, par value $1.00 per share (the "Series E
Preferred Stock") having the terms set forth in the
Company's Certificate of Designation of terms of the
Series E Preferred Stock set forth as Exhibit VI, and (3)
the $1.00 Warrants and the $.65 Warrants shall be
exchanged for revised Warrants having the terms set forth
in Exhibits VII (the "Revised $1.00 Warrants") and VIII
(the "Revised $.65 Warrants"), respectively. The Revised
$1.00 Warrants and the Revised $.65 Warrants are herein
referred to in the aggregate as the "Revised Warrants."
F. Concurrently herewith the parties are
entering into the Amended and Restated Registration
Agreement, dated as of January 31, 1996, in the form set
forth as Exhibit IX (the "Registration Rights
Agreement").
NOW, THEREFORE, in consideration of the mutual
covenants contained herein, and of other good and
valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, each
intending to be legally bound, do hereby agree as
follows:
1. SALE AND PURCHASE OF COMPANY SECURITIES; OTHER
TRANSACTIONS.
(a) The Company has authorized the issuance
and sale to Wand I and Wand II, in the respective amounts
set forth on Schedule I, (i) 599 shares (the "Series F
Preferred Shares") of the Series F Preferred Stock and
(ii) the Regular Warrants. Subject to the terms and
conditions herein set forth, the Company will issue and
sell to Wand I and Wand II, and Wand I and Wand II will
purchase from the Company, at the Closing ( as defined
below) the Series F Preferred Shares and the Regular
Warrants in the respective amounts set forth on Schedule
I. The aggregate purchase price for the Series F
Preferred Shares and Regular Warrant shall be $599,000 in
cash (the "Series F Purchase Price").
(b) The Company has authorized the issuance
and sale to Wand III as set forth on Schedule I (i) 401
shares (the "Series G Preferred Shares") of the Series G
Preferred Stock and (ii) the Restricted Warrants.
Subject to the terms and conditions herein set forth,
including the receipt of all requisite regulatory
approvals, the Company will issue and sell to Wand III,
and Wand III will purchase from the Company, at the
Closing (as defined below) the Series G Preferred Shares
and the Restricted Warrants in the amount set forth on
Schedule I. The purchase price for the Series G
Preferred Shares and the Restricted Warrants shall be
$401,000 in cash (the "Series G Purchase Price").
(c) The Company has authorized the issuance to
Wand III of 1,444 shares (the "Series E Preferred
Shares") in exchange for 1,444 shares of Series C
Preferred Stock (the "Wand III Series C Preferred
Shares"). The Wand III Series C Preferred Shares shall
be cancelled and retired.
(d) The Company has authorized the issuance to
Wand III of the Revised $1.00 Warrant in exchange for the
$1.00 Warrant and the Revised $.65 Warrant in exchange
for the $.65 Warrant. The $1.00 Warrant and the $.65
Warrant shall be cancelled and retired.
(e) The Company has authorized the issuance to
Wand I and Wand II in the respective amounts set forth on
Schedule I, of an aggregate of 2,026 shares (the "Series
H Preferred Shares") in exchange for an aggregate of
2,026 shares of Series C Preferred Stock (the "Wand I and
Wand II Series C Preferred Shares"). The Wand I and Wand
II Series C Preferred Shares shall be cancelled and
retired.
(f) The Series E Preferred Shares, the Series
F Preferred Shares, the Series G Preferred Shares, and
the Series H Preferred Shares are referred to herein in
the aggregate as the "Preferred Shares" and the Regular
Warrants and the Restricted Warrants are referred to
herein in the aggregate as the "New Warrants."
2. CLOSING.
(a) Subject to the applicable provisions of
Sections 7, 8, and 9 hereof, the closing of (i) the sale
of the Series F Preferred Shares, the Series G Preferred
Shares, the Regular Warrants and the Restricted Warrants,
(ii) the exchange of the Series C Preferred Stock for the
Series E Preferred Shares and the Series H Preferred
Shares, and (iii) the exchange of the $.65 Warrants and
the $1.00 Warrants for the Revised Warrants (the
"Closing") shall take place at the offices of Skadden,
Arps, Slate, Xxxxxxx & Xxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, as soon as practicable following the
satisfaction or waiver of the applicable conditions set
forth in Sections 7, 8 and 9 hereof.
(b) At the Closing, (i) the Company shall
deliver to the Purchasers certificates evidencing the
respective number of Series F Preferred Shares, Series G
Preferred Shares, Regular Warrants and Restricted
Warrants to be purchased by the Purchasers, (ii) the
Purchasers shall deliver to the Company the Series F
Purchase Price and the Series G Purchase Price by wire
transfer of immediately available funds to an account
designated by the Company, and (iii) the parties shall
make such other deliveries as are contemplated hereby.
(c) In addition, at the Closing (i) the
Company shall deliver to the Purchaser certificates
evidencing the respective number of Series E Preferred
Shares, Series H Preferred Shares and Revised Warrants to
be acquired by the Purchasers, (ii) the Purchasers shall
deliver to the Company for cancellation the Wand I and
Wand II Series C Preferred Shares, the Wand III Series C
Preferred Shares, the $1.00 Warrants and the $.65
Warrants, and (iii) the parties shall make such other
deliveries as are contemplated hereby.
(d) The Closing of the purchase and sale of
the Company securities contemplated by this Agreement and
the Closing of the exchange of Company securities
contemplated by this Agreement may take place at
different times if the parties mutually agree.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to
the Purchasers as follows:
(a) Organization, Standing and Power of the
Company. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of
the State of Delaware. The Company has all requisite
power and authority to own, lease and operate its
properties, assets and business and to conduct its
business as now being conducted and is duly qualified to
do business as a foreign corporation in good standing in
those jurisdictions, other than the state of its
incorporation, in which the nature of the business
conducted or property owned by it makes such
qualification necessary, except for any failures so to
qualify which would not have, individually or in the
aggregate, a material adverse effect on the business,
condition or results of operations of the Company (a
"Company Material Adverse Effect").
(b) Authority; Enforceability; No Conflict.
The Company has all requisite corporate power and
authority to enter into this Agreement, the Registration
Rights Agreement, the New Warrants and the Revised
Warrants (such agreements other than this Agreement are
collectively referred to hereafter as the "Related
Agreements") to issue and sell the Preferred Shares, the
New Warrants and the Revised Warrants and to carry out
its obligations hereunder and under the Related
Agreements. The execution, delivery and performance of
this Agreement and the Related Agreements by the Company
and the issuance and sale of the Preferred Shares, the
New Warrants and the Revised Warrants by the Company have
been duly and validly authorized by all requisite
corporate proceedings on the part of the Company. This
Agreement is, and the Related Agreements when executed
and delivered by the Company will be, and when issued and
sold each of the New Warrants and the Revised Warrants
will be, a valid and binding obligation of the Company,
enforceable against it in accordance with its terms,
except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium,
rehabilitation, liquidation, conservatorship,
receivership or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii)
the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
Subject to the receipt of the consents or approvals set
forth in Section 3(b) of the disclosure schedule
delivered by the Company to the Purchasers concurrently
with the execution and delivery of this Agreement (the
"Disclosure Schedule"), the execution and delivery of
this Agreement and each Related Agreement by the Company
do not, and the consummation by the Company of the
transactions contemplated hereby and thereby will not,
the issuance and sale of the Preferred Shares, the New
Warrants and the Revised Warrants will not, and the
performance by the Company of its obligations under the
terms of the Preferred Shares, the New Warrants and the
Revised Warrants will not, result in or constitute: (i)
a default, breach or violation of or under the
Certificate of Incorporation or the By-laws of the
Company, or (ii) a default, breach or violation of or
under any mortgage, deed of trust, indenture, note, bond,
license, lease agreement or other instrument or
obligation to which the Company is a party or by which
any of their properties or assets are bound, except for
any defaults, breaches or violations which would not
have, individually or in the aggregate, a Company
Material Adverse Effect, or (iii) a violation of any
statute, rule, regulation, order, judgment or decree of
any court, public body or authority by which the Company
or any of its properties or assets are bound, except for
any violations which would not have, individually or in
the aggregate, a Company Material Adverse Effect, or (iv)
an event which (with notice or lapse of time or both)
would permit any person to terminate, accelerate the
performance required by, or accelerate the maturity of,
any indebtedness or obligation of the Company under any
agreement or commitment to which the Company is a party
or by which the Company is bound or by which any of its
properties or assets are bound, except for any
accelerations or terminations which would not have,
individually or in the aggregate, a Company Material
Adverse Effect, or (v) the creation or imposition of any
lien, charge or encumbrance on any property of the
Company under any agreement or commitment to which the
Company is a party or by which the Company is bound or by
which any of its respective properties or assets are
bound, except for any liens, charges or encumbrances
which would not have, individually or in the aggregate, a
Company Material Adverse Effect, or (vi) an event which
would require any consent under any agreement to which
the Company is a party or by which the Company is bound
or by which any of its respective properties or assets
are bound, except for any consents which, if not
received, would not have, individually or in the
aggregate, a Company Material Adverse Effect.
(c) Capitalization. The authorized capital
stock of the Company consists of (i) 30,000,000 shares of
Common Stock, par value $.01 per share, of which
7,844,908 shares (excluding shares held in treasury) are
outstanding and 10,000,000 shares of preferred stock, par
value $1.00 per share (the "Preferred Stock"), of which
(i) 452,064 shares of Series A Preferred Stock, par value
$1.00 per share (the "Series A Preferred Stock"), of
which 452,064 shares are outstanding; (ii) 2,380,000
shares of Series B Preferred Stock, par value $1.00 per
share, of which 2,380,000 shares are outstanding; (iii)
3,500 shares of Series C Preferred Stock, par value $1.00
per share, of which 3,470 shares are outstanding; (iv)
210,549 shares of Series D Preferred Stock, par value
$1.00 per share, (the "Series D Preferred Stock"), of
which 210,549 shares are outstanding; (v) 1,444 shares of
Series E Preferred Stock, of which no shares are
outstanding; (vi) 599 shares of Series F Preferred Stock,
of which no shares are outstanding; (vii) 401 shares of
Series G Preferred Stock, of which no shares are
outstanding; and (viii) 2,026 shares of Series H
Preferred Stock, of which no shares are outstanding. All
of the outstanding shares of Common Stock, Series A
Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock have been
duly authorized and validly issued, and are fully paid
and non-assessable. Immediately following the Closing,
(i) 7,844,908 shares of Common Stock will be outstanding;
(ii) 452,064 shares of Series A Preferred Stock will be
outstanding; (iii) 2,380,000 shares of Series B Preferred
Stock will be outstanding; (iv) no shares of Series C
Preferred Stock will be outstanding; (v) 210,549 shares
of Series D Preferred Stock will be outstanding; (vi)
1,444 shares of Series E Preferred Stock will be
outstanding; (vii) 599 shares of Series F Preferred Stock
will be outstanding; (viii) 401 shares of Series G
Preferred Stock will be outstanding, and (ix) 2,026
shares of Series H Stock will be outstanding. Except for
the outstanding shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and
Series D Preferred Stock, and except as set forth in
Section 3(c) of the Disclosure Schedule, there are no
outstanding preemptive, conversion or other rights,
options, warrants or agreements granted or issued by or
binding upon the Company for the purchase or acquisition
of any shares of capital stock of the Company or any
other securities convertible into, exchangeable for or
evidencing the right to subscribe for any shares of such
capital stock. The Company is not subject to any
obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any shares of the capital
stock of the Company or any convertible securities,
rights or options of the type described in the preceding
sentence. The Company is not a party to, and does not
have knowledge of, any agreement expressly restricting
the transfer of any shares of the capital stock of the
Company.
(d) No Subsidiaries or Other Ventures. The
Company has no subsidiaries. Except as set forth in
Section 3(d)(i) of the Disclosure Schedule, the Company
does not own, directly or indirectly, any interest in any
corporation, partnership, joint venture, association or
other entity.
(e) Status of Shares. The Preferred Shares to
be issued at the Closing have been duly authorized by all
necessary corporate action on the part of the Company.
When issued and paid for as provided in this Agreement,
the Preferred Shares will be validly issued and
outstanding, fully paid and nonassessable, and the
issuance of such Preferred Shares is not and will not be
subject to preemptive rights of any other stockholder of
the Company. The shares of Common Stock to be issued
upon conversion of the Preferred Shares and upon exercise
of the New Warrants and the Revised Warrants have been
duly authorized by all necessary corporate action on the
part of the Company and, as of the Closing, will be duly
reserved for issuance. When the shares of Common Stock
are issued upon conversion of the Preferred Shares and
upon exercise of the New Warrants and the Revised
Warrants, such shares will be validly issued and
outstanding, fully paid and nonassessable and the
issuance of such shares will not be subject to preemptive
rights of any other stockholder of the Company.
(f) Financial Statements. (1) The Company has
heretofore delivered or made available to the Purchaser
the audited consolidated balance sheets at June 30, 1995,
1994 and 1993 of the Company and the related consolidated
statements of income, stockholders' equity and cash flows
for the years then ended, including the related notes and
auditor's report thereon (the "Financial Statements").
The Financial Statements (i) present fairly the
consolidated financial condition of the Company at the
dates thereof and present fairly its consolidated results
of operations and cash flows for the years then ended and
(ii) have been prepared in conformity with generally
accepted accounting principles ("GAAP") applied
consistently with respect to the immediately preceding
fiscal year period except as set forth in the notes to
the Financial Statements or in the auditor's report
thereon.
(2) The Company has heretofore delivered or
made available to the Purchaser the unaudited
consolidated balance sheet at September 30, 1995 of the
Company (the "September Balance Sheet") and the related
consolidated statements of income and cash flows for the
three months then ended (such September Balance Sheet and
related consolidated statements, collectively, the
"September Financial Statements"), each of which (i)
presents fairly, in all material respects, the
consolidated financial condition of the Company at
September 30, 1995, and presents fairly its consolidated
results of operations and cash flows for the nine months
then ended and (ii) has been prepared in compliance with
all of the requirements of Section 15(d) of the
Securities Exchange Act of 1934, as amended, (the
"Exchange Act") and the applicable rules and regulations
thereunder.
(g) SEC Reports. The Company has filed all
reports, statements, forms and documents with the
Securities Exchange Commission ("SEC") that it was
required to file since December 31, 1990 (the "SEC
Reports"), all of which have complied in all material
respects with all applicable requirements of the
Securities Act of 1933, as amended (the "Securities
Act"), and the Exchange Act. As of their respective
dates, each such report, statement, form or document,
including without limitation any financial statements or
schedules included therein, did not contain any untrue
statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances
under which they were made, not misleading.
(h) Liabilities. As of the date hereof,
except (i) as set forth on the September Balance Sheet,
(ii) as set forth in Section 3(h) of the Disclosure
Schedule or (iii) for liabilities or obligations which
were incurred after September 30, 1995 in the ordinary
course of business and consistent with past practices,
the Company has no liabilities, obligations, claims or
losses (whether liquidated or unliquidated, secured or
unsecured, absolute, accrued, contingent or otherwise)
that would be required to be disclosed on a consolidated
balance sheet of the Company (including the notes
thereto) in conformity with GAAP.
(i) Indebtedness of the Company. Section 3(i)
of the Disclosure Schedule sets forth all outstanding
secured and unsecured Indebtedness (as defined
hereinafter) of the Company in excess of $50,000 in any
individual case, or for which the Company has
commitments, on the date of this Agreement. The Company
is not in default with respect to any such Indebtedness.
"Indebtedness" means at any time, (i) all indebtedness
for borrowed money, (ii) all obligations evidenced by
bonds, debentures, notes or other similar instruments,
(iii) all reimbursement obligations and other liabilities
under letters of credit, (iv) all obligations to pay the
deferred purchase price of property or services, other
than normal trade creditors in the ordinary course, (v)
all obligations in respect of capitalized leases, (vi)
all guarantees and contractual obligations of the
Company, contingent or otherwise, with respect to any
indebtedness or obligation of another, and (vii) all
obligations of the Company secured by any mortgage,
pledge, lien, security interest or other encumbrance on
any asset or property of the Company, whether or not such
obligation has been assumed.
(j) Title to Properties; Liens. The Company
does not own any real property. Section 3(j) of the
Disclosure Schedule correctly describes all real property
leased by the Company, together with a description of the
lease payment obligations and lease termination
provisions relating thereto. The Company enjoys peaceful
and undisturbed possession under all leases necessary in
any material respect for the operation of its properties
and assets, and all such leases are valid and subsisting
and are in full force and effect.
(k) Actions Pending. There is no action, suit,
claim, investigation or proceeding pending or, to the
knowledge of the Company, threatened, against the Company
which questions the validity of this Agreement or the
Related Agreements or any action taken or to be taken
pursuant hereto or thereto. There is no action, suit,
claim, investigation or proceeding pending or, to the
knowledge of the Company, threatened, against or
involving the Company or any of its properties or assets.
There are no outstanding orders, judgments, injunctions,
awards or decrees of any court, arbitrator or
governmental or regulatory body against the Company.
(l) Compliance with Law. The business of the
Company has been and is presently being conducted so as
to comply with all applicable federal, state, and local
governmental laws, rules, regulations and ordinances.
The Company has all material franchises, permits,
licenses, consents and other governmental or regulatory
authorizations and approvals necessary for the conduct of
its business as now being conducted by it, and the
Company is in compliance therewith except for any non-
compliances which would not, individually or in the
aggregate, have a Company Material Adverse Effect.
(m) No Violations. The Company is not in
violation of or default under (i) any term of its
Certificate of Incorporation or By-Laws, (ii) any of its
contracts or agreements or under any instrument by which
the Company is bound, or (iii) any outstanding indenture
or other debt instrument or with respect to the payment
of principal of or interest on any outstanding
obligations for borrowed money.
(n) Taxes.
(i) The Company has duly and timely
filed, or caused to be filed, and will duly and
timely file, or cause to file, with the appropriate
taxing authority all Tax Returns (as defined below)
required to be filed on or before the date hereof by
or with respect to the Company and such Tax Returns
were or will be true, correct and complete in all
material respects when filed.
(ii) The Company has paid or caused to be
paid in full or has made adequate provision for on
its balance sheet all material Taxes (as defined
below) shown to be due on such Tax Returns. There
are no liens for Taxes upon the assets of either the
Company except for statutory Liens for current Taxes
not yet due.
(iii) None of the Tax Returns filed by or
on behalf of the Company has been examined by the
appropriate taxing authorities.
(iv) Except as set forth in Schedule
3(n)(iv) hereto, the Company has not received any
notice of deficiency or assessment from any taxing
authority with respect to liabilities or obligations
for Taxes with respect to the Company which has not
been fully paid or finally settled, and any such
deficiency or assessment shown in Schedule 3(n)(iv)
hereto is being contested in good faith through
appropriate proceedings. The Company has not given
any outstanding waivers or comparable consents
extending the application of the statute of
limitations with respect to any Taxes or Tax Returns
with respect to the Company.
(v) The Company has complied in all
material respects with all applicable laws, rules
and regulations relating to the payment and
withholding of payroll and employment taxes and
have, within the time and in the manner prescribed
by law, withheld from employee wages and paid over
to the proper governmental authorities all material
payroll and employment taxes required to be so
withheld and paid over.
(vi) No audit or other administrative
proceeding or court proceeding which is material to
the financial condition of Company is presently
pending with regard to any Taxes or Tax Returns.
(vii) The amount and character of the tax
loss carryforwards as set forth in the Company's
financial statements for the year ending June 30,
1995 are materially accurate and, to the Company's
best knowledge, are not subject to any "Section 382
limitation" under Section 382 of the Code, and any
regulations promulgated thereunder. To the
Company's best knowledge, at the Closing Date, the
issuance of the Preferred Shares, the Warrants and
the Fee Warrants in accordance with the terms of
this Agreement and the Related Agreements will not
result in an "ownership change" under Section 382 of
the Code, and any regulations promulgated
thereunder. As of the Closing Date, the Company
shall not have any plan or intention to take any
action after the Closing Date, which to its best
knowledge would result in an "ownership change"
under Section 382 of the Code and any regulations
promulgated thereunder.
(viii) For purposes of this Agreement,
"Taxes" shall mean any and all taxes, charges, fees,
levies or other like assessments (and all related
interest, additions to tax and penalties),
including, but not limited to, income, transfer,
gains, gross receipts, excise, inventory, property
(real, personal or intangible), custom, duty, sales,
use, license, withholding, payroll, employment,
capital stock and franchise taxes, imposed by the
United States, or any state, local or foreign taxing
authority, whether computed on a unitary, combined
or any other basis and "Tax Return" shall mean any
report, return or other information filed with any
taxing authority with respect to Taxes imposed upon
or attributable to the operations of the Company.
(o) ERISA. Section 3(o) of the Disclosure
Schedule contains a true and complete list of each
employee benefit plan, as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and any other bonus, severance or
termination pay, stock option or stock purchase,
incentive pay or other plan, program or arrangement
covering present or former employees of the Company which
is maintained or contributed to by the Company or any of
its subsidiaries (the "Plans"). None of the Plans is
subject to the provisions of Title IV of ERISA, and none
of the Plans is a multiemployer Plan as defined in
Section 3(37) of ERISA (a "Multiemployer Plan"). The
Company has not incurred (directly or indirectly) any
liability to the Pension Benefit Guaranty Corporation or
with respect to a Multiemployer Plan. None of the Plans
is subject to the minimum funding standards set forth in
Section 302 of ERISA or Section 412 of the Internal
Revenue Code of 1986, as amended (the "Code"). None of
the Company or any of its officers or employees has
engaged in a "prohibited transaction" as defined in
Section 406 of ERISA or Section 4975 of the Code with
respect to any Plan which would subject any of such
parties to a civil penalty under Section 502(i) of ERISA
or an excise tax under Section 4975 of the Code. Each of
the Plans has been operated in all material respects in
accordance with applicable law, including ERISA and the
Code. None of the Plans is an employee welfare plan, as
defined in Section 3(1) of ERISA, which provides health
or life insurance benefits to employees of the Company
following their retirement (other than coverage mandated
by applicable law). Each Plan that is intended to be
qualified under Section 401(a) of the Code is so
qualified.
(p) Absence of Specified Changes. Except as
set forth in Section 3(p) of the Disclosure Schedule,
during the period from June 30, 1995 to the date hereof,
there has not been any:
(1) material adverse change in the
business, condition or results of operations of the
Company;
(2) transactions involving the Company
except in the ordinary course of business;
(3) change in accounting principles,
methods or practices of the Company;
(4) amendment to the Certificate of
Incorporation or By-Laws of the Company; or
(5) agreement or understanding to take
any of the actions described above in this paragraph.
(q) Certain Fees. No broker's, finder's or
financial advisory fees or commissions will be payable by
the Company with respect to the transactions contemplated
by this Agreement and the Related Agreements.
(r) Use of Proceeds. The Company will apply
the proceeds from the sale of the Series F Preferred
Shares, the Series G Preferred Shares and the New
Warrants to general working capital purposes.
(s) Intellectual Property Rights.
(i) The Company is the owner of or has
rights to use (including the right to xxx for past
infringement) the intellectual and similar property
of every kind and nature used at any time in or
necessary for the conduct of its business, including
without limitation, (A) Patents (meaning all United
States and foreign patents and patent applications,
patent disclosures and inventions, and all patents
issued upon said patent applications or based upon
said disclosures and inventions, including all
reissues, divisions, continuations, continuations-
in-part, substitutions, extensions or renewals of
any of the foregoing), (B) Trademarks (meaning all
United States, any political subdivision thereof,
and foreign trademarks, service marks, trade names,
corporate names, company names, business names,
fictitious business names, trade styles, logos,
designs and general intangibles of like nature, all
registrations and recordings thereof, and all
applications in connection therewith, including
registrations, recordings and applications in the
United States Patent and Trademark Office (the
"PTO"), any State of the United States or any other
country or jurisdiction or any political subdivision
thereof, and all goodwill symbolized thereby and/or
associated therewith and all extensions or renewals
thereof,), (C) Copyrights (meaning all copyrights,
United States and foreign copyright registrations,
and applications to register copyrights), (D)
inventions, formulae, processes, designs, know-how,
show-how or other data or information, (E)
confidential or proprietary technical and business
information, processes and trade secrets, (F)
computer software and databases (including all
embodiments or fixations thereof and related
documentation, registrations and franchises, and all
additions, improvements, enhancements, updated and
accessions thereto), (G) all technical manuals and
documentation made or used in connection with any of
the foregoing, and (H) all licenses and rights with
respect to the foregoing or property of like nature,
in each case as any of the foregoing have been at
any time used in or necessary for the conduct of the
business of the Company (collectively, the
"Intellectual Property Rights").
(ii) Section 3(s)(ii) of the Disclosure
Schedule sets forth a complete and accurate list of
all Copyrights, Patents, and Trademarks owned by or
under obligation of assignment to the Company. Each
owner identified thereon is listed in the records of
the appropriate United States, State or foreign
agency as the sole owner of record.
(iii) Section 3(s)(iii) of the Disclosure
Schedule sets forth a complete and accurate list of
(a) all material agreements and (b) all other
agreements entered into since January 1, 1990, in
each case between the Company and any third party
granting any right to use or practice any rights
under any Intellectual Property Right (collectively,
the "Intellectual Property Licenses"), except for
single-user licenses granting the right to use on a
single personal computer a single copy of
application software incorporating any of the
Company's Intellectual Property Rights.
(iv) There is no restriction or limitation
on the right of the Company to transfer any of the
Intellectual Property Rights.
(v) No trade secret, formula, process,
invention, design, know-how, show-how or any other
confidential information relating to the Company's
business has been disclosed or authorized to be
disclosed to any third party unless any such third
party has entered into, or is bound by, a
confidentiality agreement that is sufficient to
protect fully the Company's proprietary interest and
right in and to such Intellectual Property Right.
(vi) The use of the Intellectual Property
Rights by the Company is not in conflict with the
rights of others. There are no pending legal or
governmental proceedings, including oppositions,
interferences, proceedings or suits, relating to the
Intellectual Property Rights, and, to the best
knowledge of the Company, no such proceedings are
threatened. To the best knowledge of the Company,
the conduct of the business of the Company and the
exercise of the Intellectual Property Rights does
not infringe upon or otherwise violate, and the
exercise of any rights granted to the Company under
any Intellectual Property License would not infringe
upon or violate any intellectual property rights of
any third party. To the best knowledge of the
Company, except as set forth in Section 3(s)(vi), no
person is infringing upon or otherwise violating any
of the Intellectual Property Rights. None of the
Company or its affiliates has received notice of any
claims, and there are no pending claims, of any
persons relating to the scope, ownership or use of
any of the Intellectual Property Rights.
(vii) Each copyright registration,
patent, and registered trademark and application
therefor listed in Section 3(s)(ii) of the
Disclosure Schedule is valid, subsisting and in
proper form, and has been duly maintained, including
the submission of all necessary filings in
accordance with the legal and administrative
requirements of the appropriate jurisdictions.
There have been no failures in complying with such
requirements. No such Copyright, Patent or
Trademark has lapsed and there has been no
cancellation or abandonment thereof.
(viii) With respect to each patent and
patent application listed in Section 3(s) of the
Disclosure Schedule, there are no defects of form in
the preparation or filing of the applications
thereof. Each pending application is being
diligently prosecuted. During the prosecution of
each Patent, (A) all pertinent prior art references
known to the Company or its counsel was properly
disclosed to the PTO, and (B) neither such counsel
nor the Company made any misrepresentation to, or
concealed any material fact from, the PTO.
(ix) The execution and delivery of this
Agreement and the Related Agreements and the taking
of the actions contemplated hereby and thereby will
not alter any of the rights of the Company in or to
the Intellectual Property Rights.
(t) Environmental Matters. The Company is in
compliance with the provisions of all federal, state and
local laws relating to pollution or protection of the
environment applicable to it or to real property leased
by it or to the use, operation or occupancy thereof,
except for violations or liabilities which individually
or in the aggregate could not reasonably be expected to
have a Company Material Adverse Effect. The Company has
not engaged in any activity in violation of any provision
of any federal, state or local law relating to pollution
or protection of the environment, which violation could
reasonably be expected to have a Company Material Adverse
Effect. The Company has no liability, absolute or
contingent, under any federal, state or local law
relating to pollution or protection of the environment,
except for liabilities which individually or in the
aggregate could not reasonably be expected to have a
Company Material Adverse Effect.
(u) Registration Rights. Except as set forth
in Section 3(u) of the Disclosure Schedule, the Company
is not a party to any agreement granting registration
rights to any person with respect to any of its equity or
debt securities.
(v) Agreements. Section 3(v) of the
Disclosure Schedule contains a list of each agreement or
instrument (including any and all amendments thereto) to
which the Company is a party as of the date hereof and
which is or, immediately following the consummation of
the transactions contemplated by this Agreement, will be,
material to the business, condition or results of
operations of the Company. Each such agreement or
instrument (including any and all amendments thereto) is
in full force and effect and constitutes a legal, valid
and binding obligation of (i) the Company and (ii) to the
best knowledge of the Company, the other respective
parties thereto, and, to the best knowledge of the
Company, no person is in default or breach of (with or
without the giving of notice or the passage of time) any
such agreement or instrument.
(w) Availability of Documents. Section 3(w)
of the Disclosure Schedule contains a true, correct and
complete copy of the Company's Certificate of
Incorporation, together with all amendments thereto. The
Company has also heretofore provided or made available to
the Purchaser an accurate copy of its by-laws and has
heretofore made available for inspection by the Purchaser
all written agreements, arrangements, commitments and
documents referred to herein or in the Disclosure
Schedule, in each case, together with all amendments and
supplements thereto. The Company has heretofore made
available for inspection by the Purchaser its corporate
minute books. Such corporate minute books contain the
minutes of all the meetings of stockholders, board of
directors and any committees thereof which have been held
since the Company's date of incorporation and all written
consents to action executed in lieu thereof.
(x) Business Relations. To the knowledge of
the Company, no client, customer or supplier will cease
to do business with the Company due to the consummation
of the transactions contemplated by this Agreement or the
Related Agreements.
(y) Interest in Competitors, Suppliers,
Customers, etc. Except as set forth on Section 3(y) of
the Disclosure Schedule or with respect to the ownership
of less than 1% of the outstanding publicly traded
securities of an entity, neither the Company nor its
officers, directors, or affiliates have any ownership
interest in any competitor, supplier, customer or
franchisee of the Company.
(z) Private Offering. Assuming the accuracy
of the Purchaser's representations set forth in Section
4(c) herein, the offer and sale of the Shares hereunder
is exempt from the registration and prospectus delivery
requirements of the Securities Act. Neither the Company
nor any person acting on behalf of it has taken or will
take any action which would subject the offering and
issuance of any of such securities to the provisions of
Section 5 of the Securities Act or to the provisions of
any securities law, rule or regulation of any applicable
jurisdiction.
(aa) Disclosure. No representation or
warranty to Purchaser contained in this Agreement and no
statement contained in the Disclosure Schedule or any
Officer's Certificate of the Company furnished pursuant
to the provisions hereof, contains any untrue statement
of a material fact or omits to state a material fact
necessary in order to make the statements contained
therein not misleading.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
Each Purchaser represents and warrants,
severally and not jointly, to the Company as follows:
(a) Organization and Standing of the
Purchasers. The Purchaser is a partnership duly
organized, validly existing and in good standing (to the
extent such concept exists) under the laws of the
jurisdiction of its organization.
(b) Authority; Enforceability; No Conflict.
The Purchaser has all requisite power and authority
(corporate or otherwise) to enter into this Agreement and
to carry out its obligations hereunder. The execution,
delivery and performance of this Agreement by the
Purchaser have been duly and validly authorized by all
requisite partnership proceedings on the part of the
Purchaser. This Agreement is a valid and binding
obligation of the Purchaser, enforceable against it in
accordance with its terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium, rehabilitation, liquidation,
conservatorship, receivership or other similar laws now
or hereafter in effect relating to creditors' rights
generally and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be
brought. The execution and delivery of this Agreement by
the Purchaser do not, and consummation by the Purchaser
of the transactions contemplated hereby will not, result
in or constitute (i) a default, breach or violation of or
under the organizational documents of the Purchaser, or
(ii) a default, breach or violation of or under any
mortgage, deed of trust, indenture, note, bond, license,
lease agreement or other instrument or obligation to
which the Purchaser is a party or by which any of its
properties or assets are bound, except for any defaults,
breaches or violations which would not, individually or
in the aggregate, have a material adverse effect on the
Purchaser or prevent or materially delay the consummation
by the Purchaser of the transactions contemplated hereby,
or (iii) a violation of any statute, rule, regulation,
order, judgment or decree of any court, public body or
authority, except for any violations which would not,
individually or in the aggregate, have a material adverse
effect on the Purchaser or prevent or materially delay
the consummation by the Purchaser of the transactions
contemplated hereby.
(c) Acquisition for Investment. The Purchaser
is either an "accredited investor," as that term is
defined in SECTION230.501(a) of the rules and regulations
promulgated by the SEC under the 1933 Act or a person
described in SECTION230.506(b)(ii) of such rules and
regulations. The Purchaser is acquiring the Preferred
Shares, the New Warrants and, in the case of Wand III,
the Revised Warrants solely for its own account for the
purpose of investment and not with a view to or for sale
in connection with any distribution thereof, and has no
present intention or plan to effect any distribution of
such Preferred Shares, the New Warrants or Revised
Warrants. The Purchaser acknowledges that it is able to
bear the financial risks associated with an investment in
the Preferred Shares and Warrants. The Preferred Shares
and Warrants may bear a legend to the following effect:
"THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE IN
RELIANCE ON CERTAIN EXEMPTIONS FROM
REGISTRATION THEREUNDER. THE SALE,
PLEDGE, HYPOTHECATION OR OTHER
TRANSFER OF SUCH SECURITIES IS
SUBJECT TO COMPLIANCE WITH APPLICABLE
SECURITIES LAWS AND REGULATIONS AND
CERTAIN RESTRICTIONS AND CONDITIONS
CONTAINED IN A CERTAIN SECURITIES
PURCHASE AND EXCHANGE AGREEMENT AND
RELATED AGREEMENTS DATED AS OF
JANUARY 31, 1996. THE HOLDER OF THIS
CERTIFICATE BY ACCEPTANCE HEREOF
AGREES TO BE BOUND BY SUCH
RESTRICTIONS AND CONDITIONS. A COPY
OF THE SECURITIES PURCHASE AND
EXCHANGE AGREEMENT IS ON FILE WITH
THE SECRETARY OF THE COMPANY."
5. CONDUCT OF BUSINESS OF THE COMPANY.
Except as expressly contemplated by this
Agreement or the Related Agreements, during the period
from the date hereof through the Closing, the Company
will conduct its operations according to its ordinary
course of business and consistent with past practice, and
the Company will use its best efforts to preserve intact
its business organization, to keep available the services
of its officers and employees and to maintain existing
relationships with customers and others having business
relationships with it. Without limiting the generality
of the foregoing, and except as otherwise expressly
contemplated by this Agreement or the Related Agreements
or as set forth in Section 5 of the Disclosure Schedule,
prior to the Closing, the Company will not, without the
prior written consent of the Purchaser:
(a) amend its Certificate of Incorporation or
By-Laws;
(b) (i) except in accordance with the existing
terms of the convertible securities, warrants, options
and other agreements disclosed on Section 3(c) of the
Disclosure Schedule, authorize for issuance, issue, sell,
deliver or agree or commit to issue, sell or deliver
(whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase
or otherwise) any securities of any class, or (ii) amend
in any respect any of the terms of any such securities
outstanding as of the date hereof, except to the extent
required by the express terms on the date hereof of such
securities;
(c) split, combine or reclassify any shares of
its capital stock, declare, set aside or pay any dividend
or other distribution (whether in cash, stock, or
property or any combination thereof) in respect of its
capital stock (except for dividends on the existing
preferred stock in accordance with its terms), or redeem,
retire, repurchase or otherwise acquire, directly or
indirectly, any of its securities or adopt a plan of
complete or partial liquidation or resolutions providing
for or authorizing any such liquidation;
(d) incur any additional Indebtedness, except
for short-term borrowings or other Indebtedness incurred
in the ordinary course of business, or mortgage or pledge
any of its assets, tangible or intangible;
(e) acquire, sell, lease or dispose of any
assets outside the ordinary course of business;
(f) make any change in any of the accounting
principles or practices, methods or practices or business
policies used by it;
(g) acquire (by merger, consolidation, or
acquisition of stock or assets) any corporation,
partnership or other business organization or division
thereof;
(h) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, contingent
or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business
consistent with past practice or, in accordance with
their terms, of liabilities reflected or reserved against
in the September Balance Sheet (or the notes thereto) or
incurred in the ordinary course of business consistent
with past practice;
(i) increase the compensation payable to the
officers and employees of the Company, except for
increases in salary or wages (a) in accordance with past
practice or (b) in conjunction with promotions or other
changes in job status in the ordinary course of business;
(j) pay, loan or advance any amounts to,
transfer or lease any properties or assets to or enter
into any contract or agreement with any officers,
directors, employees or shareholders of the Company,
except with respect to directors' fees and compensation
to officers and employees at rates in accordance with
past practice, and except with respect to reimbursable
business expenses of a nature and in amounts reasonably
related to the requirements of the business of the
Company;
(k) waive or release any rights of material
value or terminate or fail to renew any material
contract; or
(l) take, or agree in writing or otherwise to
take, directly or indirectly, any of the actions
described in Sections 5(a) through 5(k).
6. ADDITIONAL AGREEMENTS.
(a) Access to Information; Confidentiality.
From the date hereof to the Closing, the Company shall
afford the officers, employees and agents of the
Purchasers access during normal business hours to the
Company's officers, employees, agents, properties,
offices and all books and records of the Company, and
shall furnish the Purchasers with all financial,
operating and other data and information concerning the
Company as the Purchaser, through its officers, employees
or agents, may request and shall cooperate fully with the
Purchasers and their representatives in their examination
of the Company.
Each Purchaser will, and will cause its
respective affiliates, partners, directors, officers,
employees, agents, representatives and financial advisors
(collectively, "Representatives") to, hold in strict
confidence all Confidential Information (as hereinafter
defined), and not disclose the same to any person without
the prior consent of the Company, unless compelled to
disclose any such Confidential Information by judicial or
administrative process or, in the written opinion of
their counsel, by other requirements of law. Prior to
disclosing any Confidential Information to any such
person, the Purchasers will inform such person and its
representatives of the confidential nature thereof and
will obtain from such person its agreement to be bound by
the provisions of this paragraph as if references herein
to the Purchaser were references to such person. If
this Agreement is terminated, each Purchaser will
promptly return to the Company or destroy all documents
(including all copies thereof) furnished by the Company
and received by such Purchaser or any of its
Representatives containing such Confidential Information.
For purposes hereof, "Confidential Information" shall
mean all confidential nonpublic information concerning
the Company that the Purchaser obtains from the Company,
or its representatives, excluding any such information
that subsequently becomes publicly available (other than
directly or indirectly through acts of the Purchaser.)
(b) Best Efforts. Subject to the terms and
conditions herein provided, each of the parties hereto
agrees to use its best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all
things reasonably necessary, proper or advisable under
applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement
and the Related Agreements as promptly as practicable. In
case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this
Agreement and the Related Agreements, the proper officers
and directors of each party hereto shall take all such
necessary action.
(c) Public Announcements. The Purchasers and
the Company will consult with each other before issuing
any press release or otherwise making any public
statements with respect to the transactions contemplated
by this Agreement and the Related Agreements, and shall
not issue any such press release or make any such public
statement prior to such consultation, except as may be
required by applicable law. Except as may be required by
applicable law, the Company shall not disclose the
identify of any Purchaser in any such press release or
other public statement without the prior written consent
of such Purchaser.
(d) Supplements to Disclosure Schedule. Prior
to the Closing, the Company will supplement or amend the
Disclosure Schedule with respect to any matter hereafter
arising which, if existing or occurring at the date of
this Agreement, would have been required to be set forth
or described in the Disclosure Schedule. No supplement
or amendment of the Disclosure Schedule made pursuant to
this section shall be deemed to cure any breach of any
representation or warranty made in this Agreement unless
the Purchasers specifically agrees thereto in writing.
(e) Directors. For so long as the Purchasers
shall own, in the aggregate, Common Stock (or Preferred
Shares convertible into Common Stock) equal to or
exceeding five percent of the then outstanding Common
Stock of the Company, the Purchaser shall be entitled to
propose two candidates (the "Purchaser Designees") for
election to the Board of Directors of the Company.
Subject to its fiduciary duties to shareholders, the
Company will recommend to its shareholders that the
Purchaser Designees be elected to the Company's Board of
Directors.
7. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE
COMPANY TO SELL THE PREFERRED SHARES AND WARRANTS
AND OF THE PURCHASERS TO PURCHASE THE PREFERRED
SHARES AND WARRANTS.
The respective obligations hereunder of the
Company to issue and sell the Preferred Shares and
Warrants and of the Purchasers to purchase the Preferred
Shares and Warrants are subject to the satisfaction, at
or before the Closing, of each of the following
conditions set forth in paragraphs (a) through (c) below.
(a) Consents. The consents and approvals set
forth in Section 3(b) of the Disclosure Schedule shall
have been obtained.
(b) No Injunction. No statute, rule,
regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or enforced
by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of
the transactions contemplated by this Agreement.
(c) Related Agreements. The Related
Agreements shall have been executed and delivered by the
parties thereto.
8. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE
COMPANY TO SELL THE PREFERRED SHARES AND WARRANTS.
The obligation hereunder of the Company to sell
the Preferred Shares and Warrants to the Purchasers is
further subject to the satisfaction, at or before the
Closing, of each of the following conditions set forth in
paragraphs (a) and (b) below. These conditions are for
the Company's sole benefit and may be waived by the
Company at any time in its sole discretion.
(a) Accuracy of the Purchasers' Representations
and Warranties. The representations and warranties of each
Purchaser shall be true and correct in all material respects
as of the date when made and as of the Closing as though made
at that time (except for representations and warranties that
speak as of a particular date).
(b) Performance by the Purchasers. The
Purchasers shall have performed, satisfied and complied
in all material respects with all covenants, agreements
and conditions required by this Agreement to be
performed, satisfied or complied with by the Purchasers
at or prior to the Closing.
9. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE
PURCHASERS TO PURCHASE THE PREFERRED SHARES AND
WARRANTS.
The obligation of the Purchasers hereunder to
acquire and pay for the Preferred Shares and Warrants is
subject to the satisfaction, at or before the Closing, of
each of the following conditions set forth in paragraphs
(a) through (e) below. These conditions are for the
Purchaser's sole benefit and may be waived by the
Purchasers at any time in its sole discretion.
(a) Accuracy of the Company's Representations
and Warranties. The representations and warranties of
the Company shall be true and correct in all material
respects as of the date when made and as of the Closing
as though made at that time (except for representations
and warranties that speak as of a particular date).
(b) Performance by the Company. The Company
shall have performed, satisfied and complied in all
material respects with all covenants, agreements and
conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to
the Closing.
(c) Legal Opinions. The Purchasers shall have
received the opinion of Xxxx Marks & Xxxxx, substantially
in the form set forth in Exhibit IX hereto.
(d) Compliance with Securities Laws. The
offering and sale by the Company, at or prior to the
Closing, of the Preferred Shares and Warrants shall have
been made in compliance with all applicable requirements
of federal and state securities laws and each Purchaser
shall have received evidence thereof in form and
substance reasonably satisfactory to it.
(e) No Offerings. Neither the Company nor any
of its subsidiaries shall have offered, placed or sold,
or caused or agreed to be offered, placed or sold, any
securities or other obligations other than as part of the
contemplated sale of the Preferred Shares and Warrants
and the capital structure as reflected herein.
(f) Regulatory Approvals. All regulatory
approvals shall have been obtained by the Purchasers.
10. TERMINATION.
(a) Right To Terminate. Notwithstanding
anything to the contrary set forth in this Agreement,
this Agreement may be terminated and the transactions
contemplated herein abandoned at any time prior to the
Closing:
(i) at any time by mutual written consent
of the Company and the Purchasers;
(ii) by either the Company or the
Purchaser if the Closing shall not have occurred by March
1, 1996; provided, however, that the right to terminate
this Agreement under this Section 10(a)(ii) 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; or
(iii) by either the Company or the
Purchasers if a court of competent jurisdiction shall
have issued an order, decree or ruling permanently
restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such
order, decree, ruling or other action shall have become
final and nonappealable.
(b) Obligations to Cease. In the event that
this Agreement shall be terminated pursuant to Section
10(a) hereof, all obligations of the parties hereto under
this Agreement shall terminate and there shall be no
liability of any party hereto to any other party except
that (i) the provisions of the second paragraph of
Section 6(a), Section 11, and Section 12(g) shall
survive, and shall be and remain in full force and effect
and (ii) nothing herein will relieve any party from
liability for any willful breach of this Agreement.
11. INDEMNIFICATION.
(a) General Indemnity. The Company agrees to
indemnify and save harmless the Purchasers (and their
respective directors, officers, partners, affiliates,
representatives, advisors, successors and assigns) from
and against any and all losses, liabilities,
deficiencies, costs, damages and expenses (including,
without limitation, interest, penalties, reasonable
attorneys' fees, charges and disbursements) incurred by
the Purchasers as a result of (i) any breach of the
representations, warranties or covenants made by the
Company herein or in the Related Agreements or (ii) any
action, proceeding or claim commenced or threatened by a
third party in connection with this Agreement, the
Related Agreements and the transactions contemplated
hereby and thereby. Each Purchaser agrees to indemnify
and save harmless the Company (and its directors,
officers, partners, affiliates, representatives,
advisors, successors and assigns) from and against any
and all losses, liabilities, deficiencies, costs, damages
and expenses (including, without limitation, interest,
penalties, reasonable attorneys' fees, charges and
disbursements) incurred by the Company as a result of any
breach of the representations, warranties or covenants
made by such Purchaser herein or in the Related
Agreements. No party shall be entitled to
indemnification hereunder unless and until the aggregate
amount of such party's indemnification claims exceeds
$15,000 and then to the full extent of such claims.
(b) Indemnification Procedure. Any party
entitled to indemnification under this Section 11 (an
"indemnified party") will give prompt written notice to
the indemnifying party of any claim with respect to which
it seeks indemnification promptly after the discovery by
such party of any matters giving rise to a claim for
indemnification; provided that the failure of any party
entitled to indemnification hereunder to give notice as
provided herein shall not relieve the indemnifying party
of its obligations under this Section 11 except to the
extent that the indemnifying party is actually prejudiced
by such failure to give notice. In case any action,
proceeding or claim is brought against an indemnified
party in respect of which indemnification is sought
hereunder, the indemnifying party shall be entitled to
participate in and, unless in the reasonable judgment of
the indemnified party a conflict of interest between it
and the indemnifying party may exist in respect of such
action, proceeding or claim, to assume the defense
thereof, with counsel reasonably satisfactory to the
indemnified party. In the event that the indemnifying
party advises an indemnified party that it will contest
such a claim for indemnification hereunder, or fails,
within thirty (30) days of receipt of any indemnification
notice to notify, in writing, such person of its election
to defend, settle or compromise, at its sole cost and
expense, any action, proceeding or claim (or discontinues
its defense at any time after it commences such defense),
then the indemnified party may, at its option, defend,
settle or otherwise compromise or pay such action or
claim. In any event, unless and until the indemnifying
party elects in writing to assume and does so assume the
defense of any such claim, proceeding or action, the
indemnified party's costs and expenses arising out of the
defense, settlement or compromise of any such action,
claim or proceeding shall be losses subject to
indemnification hereunder. The indemnified party shall
cooperate fully with the indemnifying party in connection
with any negotiation or defense of any such action or
claim by the indemnifying party and shall furnish to the
indemnifying party all information reasonably available
to the indemnified party which relates to such action or
claim. The indemnifying party shall keep the indemnified
party fully apprised at all times as to the status of the
defense or any settlement negotiations with respect
thereto. If the indemnifying party elects to defend any
such action or claim, then the indemnified party shall be
entitled to participate in such defense with counsel of
its choice at its sole cost and expense. The
indemnifying party shall not be liable for any settlement
of any action, claim or proceeding effected without its
written consent, provided, however, that the indemnifying
party shall not unreasonably withhold, delay or condition
its consent. Anything in this Section 11 to the contrary
notwithstanding, the indemnifying party shall not,
without the indemnified party's prior written consent,
settle or compromise any claim or consent to entry of any
judgment in respect thereof which imposes any future
obligation on the indemnified party or which does not
include, as an unconditional term thereof, the giving by
the claimant or the plaintiff to the indemnified party of
a release from all liability in respect of such claim.
The indemnification required by this Section 11 shall be
made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when
bills are received or expense, loss, damage or liability
is incurred. The indemnity agreements contained herein
shall be in addition to (i) any cause of action or
similar right of the indemnified party against the
indemnifying party or others, and (ii) any liabilities
the indemnifying party may be subject to pursuant to the
law.
12. MISCELLANEOUS.
(a) Brokers. The Company and the Purchasers
represent and warrant to each other that they have not
taken any action which will result in any liability of
the other to pay any broker's or finder's fee with
respect to this Agreement or the transactions
contemplated hereby.
(b) Expenses. Each party hereto shall pay its
own fees and expenses incurred in connection with this
Agreement except that, if the closing of the purchase of
the Series G Preferred Stock by the Wand III Partnership,
as set forth on Schedule 1 attached hereto, is
consummated, the Company shall, immediately thereafter,
pay the reasonable out-of-pocket fees and expenses, up to
a maximum amount of $10,000, incurred by the Purchasers
in connection with this Agreement, the Related Agreements
and the transactions contemplated hereby and thereby,
including the reasonable fees and expenses of Skadden,
Arps, Slate, Xxxxxxx & Xxxx in its capacity as
Purchasers' legal counsel.
(c) Survival of Representations, Warranties
and Covenants. The representations and warranties set
forth herein shall survive the Closing until sixty days
after the Company shall have delivered to the Purchaser
the audited financial statements of the Company and its
consolidated subsidiaries (if any) for the fiscal year
ended June 30, 1997, certified by the Company's
independent public accountants; provided that the
representations and warranties shall survive such date to
the extent written notice of any breach thereof is given
on or prior to such date and representations and
warranties relating to Taxes shall survive until a date
which is six months after the expiration of the
applicable statute of limitations. The covenants of the
Company set forth herein shall endure for so long as the
Purchaser shall continue as a stockholder of the Company
or for such shorter period as may be specified herein.
(d) Assignment and Binding Effect. Neither
the Company nor the Purchaser shall assign all or any
part of this Agreement without the prior written consent
of the other; provided, however, that the Purchaser,
without such prior written consent, may assign its rights
hereunder to any entity or entities directly or
indirectly controlled by, or under common control with,
it; provided, further, that no such assignment shall
relieve the Purchaser of its obligations under this
Agreement. This Agreement shall be binding upon and
inure to the benefit of the permitted successors and
assigns of the parties pursuant to this paragraph.
(e) Headings. Subject headings are included
for convenience only and shall not affect the
interpretation of any provisions of this Agreement.
(f) Notices. Any notice, demand, request,
waiver, or other communication under this Agreement shall
be in writing and shall be deemed to have been duly given
on the date of service if personally served or on the
third day after mailing if mailed to the party to whom
notice is to be given, by first class mail, registered,
return receipt requested, postage prepaid and addressed
as follows:
To the Company: Xxxxxx, Inc.
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Chief Executive Officer
With copies to: Xxxx Marks & Xxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
To the Wand (Xxxxxx) Inc.
Purchasers: c/o Wand Partners Inc.
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
With a copy to: Skadden, Arps, Slate,
Xxxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxx, Esq.
(g) Governing Law. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS
OF THE STATE OF DELAWARE AS APPLIED TO CONTRACTS MADE AND
TO BE PERFORMED ENTIRELY IN THE STATE OF DELAWARE.
(h) Entire Agreement. This Agreement,
including the Exhibits and Schedules hereto, sets forth
the entire understanding and agreement of the parties
hereto relating to the matters set forth herein and
supersedes any and all other understandings, negotiations
or agreements between the parties hereto relating to the
matters set forth herein.
(i) Counterparts. This Agreement may be
executed in counterparts, each of which shall be deemed
an original, and all of which together shall constitute a
single agreement.
(j) Severability. In the event that any one
or more of the provisions contained in this Agreement
shall for any reason be held to be invalid, illegal or
unenforceable, the same shall not affect any other
provision of this Agreement, but this Agreement shall be
construed in a manner which, as nearly as possible,
reflects the original intent of the parties.
(k) Words in Singular and Plural Form. Words
used in the singular form in this Agreement shall be
deemed to import the plural, and vice versa, as the sense
may require.
(l) Amendment and Modification. This
Agreement may be amended or modified only by written
agreement executed by all parties hereto.
(m) Waiver. At any time prior to the Closing,
any party hereto may (i) extend the time for the
performance of any of the obligations or other acts of
any other party hereto, (ii) waive any inaccuracies in
the representations and warranties contained herein or in
any document delivered pursuant hereto, and (iii) waive
compliance with any of the agreements or conditions
contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by
the party granting such waiver but such waiver or failure
to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or
future failure.
(n) Specific Enforcement. The Purchaser and
the Company acknowledge and agree that irreparable damage
would occur in the event that any of the provisions of
this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to
an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the
United States or any state thereof having jurisdiction,
this being in addition to any other remedy to which they
may be entitled at law or equity.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first set forth
above.
XXXXXX, INC.
By: /s/ Xxxxx Xxxxxxx
__________________________
Name: Xxxxx Xxxxxxx
Title: Vice Chairman
WAND/XXXXXX INVESTMENTS L.P.
WAND/XXXXXX INVESTMENTS II L.P.
WAND/XXXXXX INVESTMENTS III L.P.
By: WAND (XXXXXX) INC.
as General Partner
By: /s/ Xxxxxxx X. Xxxxxxxxx
______________________________
Name: Xxxxxxx X. Xxxxxxxxx
Title: Vice President
[150339/2a]
SCHEDULE I
SECURITIES TO BE PURCHASED BY WAND/XXXXXX INVESTMENTS
L.P.
Security Purchase Price
527 Shares of Series F $527,000
Preferred Stock (together
with detachable Warrants to
purchase 152,830 shares of
Common Stock)
SECURITIES TO BE PURCHASED BY WAND/XXXXXX INVESTMENTS II
L.P.
Security Purchase Price
72 Shares of Series F $72,000
Preferred Stock (together
with detachable Warrants to
purchase 20,880 shares of
Common Stock)
SECURITIES TO BE PURCHASED BY WAND/XXXXXX INVESTMENTS III
L.P.
Security Purchase Price
401 Shares of Series G $401,000
Preferred Stock (together
with detachable Warrants to
purchase 116,290 shares of
Common Stock)
[The purchase of Series G Preferred Stock is subject to
Wand III's receipt of all regulatory approvals that it
deems necessary or advisable, in its sole discretion.]
Securities To Be Transferred By
Wand/Xxxxxx Investments L.P. to Wand/Xxxxxx Investments
III L.P.
74,151 Shares of Company Common Stock
1,444 Shares of Series C Preferred Stock
8,322 Shares of Series D Preferred Stock
416,115 $.65 Warrants
291,281 $1.00 Warrants
4,161 $2.00 Warrants
Securities To Be Exchanged By
Wand/Xxxxxx Investments L.P.
1,776 Shares of Series C Preferred Stock for
1,776 Shares of Series H Preferred Stock
Securities To Be Exchanged By Wand/Xxxxxx Investments II
L.P.
250 Shares of Series C Preferred Stock for
250 shares of Series H Preferred Stock
Securities To Be Exchanged By Wand/Xxxxxx Investments III
L.P.
1,444 Shares of Series C Preferred Stock for
1,444 Shares of Series E Preferred Stock
416,115 $.65 Warrants for 416,115 Revised $.65
Warrants
291,281 $1.00 Warrants for 291,281 Revised $1.00
Warrants
