EXHIBIT 10.20
COMMON STOCK PURCHASE AGREEMENT
between
BOCA RESEARCH, INC.
and
INFOMATEC INTEGRATED INFORMATION SYSTEMS AG
____________________
April 28, 1999
____________________
TABLE OF CONTENTS
ARTICLE I AUTHORIZATION OF ISSUANCE OF THE COMMON STOCK
ARTICLE II PURCHASE AND SALE OF COMMON STOCK, CLOSING
Section 2.01. Purchase and Sale
Section 2.02. Closing
Section 2.03 Deliveries
Section 2.04 Use of Proceeds
Section 2.05 Definitions
Section 2.06 Set aside of Shares for Retention of Management
Section 2.07 Right to Maintain Percentage
Section 2.08 Registration Rights
(a) Demand Registration
(b) Incidental Registration
(c) Certain Obligations of the Company
(d) Expenses
(e) Indemnification by the Company
(f) Indemnification by Purchaser and Underwriters
(g) Indemnification Procedure
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.01. Organization and Good Standing
Section 3.02. Capitalization
Section 3.03. Due Authorization; Execution and Delivery
Section 3.04. Absence of Breach; No Conflict
Section 3.05. Validity
Section 3.06. Securities Law Compliance
Section 3.07. Commission Documents; Financial Information
Section 3.08. Approvals; Compliance with Laws; Licenses and Authorities
Section 3.09. Litigation
Section 3.10. Tax Matters
Section 3.11. Material Contracts
Section 3.12. Title to Properties, Encumbrances
Section 3.13. Plant and Equipment; Sufficiency Of Assets
Section 3.14. Labor Matters
Section 3.15. Environmental Matters
Section 3.16. No Existing Violation, Default, Etc.
Section 3.17. Affiliate Transactions
Section 3.18. Insurance
Section 3.19. Unlawful Payments and Contributions
Section 3.20. Year 2000
Section 3.21. Absence of Certain Events; No Material Adverse Change
Section 3.22. Full Disclosure
Section 3.22. ERISA
Section 3.23 Intellectual Property
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Section 4.01. Organization and Standing
Section 4.02. Investment Representation
Section 4.03. Due Authorization; Execution and Delivery
Section 4.04. Absence of Breach; No Conflict
Section 4.05. No Consents
Section 4.06. Investment Company
Section 4.07. Ownership of Stock of the Company
Section 4.08. Certain Regulatory Matters
Section 4.09. Due Diligence
Section 4.10 Availability of Funds
ARTICLE V COVENANTS
Section 5.01. Covenants of the Company
(a) Access and Confidentiality
(b) Announcements
(c) Shares
(i) Replacement of Certificates
(ii) Government and Other Approvals
Section 5.02 Proxy Matters; Standstill
Section 5.03. [Intentionally Omitted]
Section 5.04 Board Nominations
Section 5.05 International Investment
ARTICLE VI FINANCIAL STATEMENTS; ACCESS TO INFORMATION
Section 6.01. Financial Statements
Section 6.02. Access to Information
ARTICLE VII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF EACH PARTY TO CONSUMMATE
THE TRANSACTIONS CONTEMPLATED HEREBY
Section 7.01. No Adverse Action or Decision
Section 7.02. No Injunction
Section 7.03 Consents of Third Parties, Modification of Agreements
Section 7.04. Xxxx-Xxxxx-Xxxxxx Filing
Section 7.05 Board of Directors' Approval
ARTICLE VIII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY TO ISSUE,
SELL AND DELIVER THE COMMON STOCK
Section 8.01. Accuracy of the Purchaser's Representations and Warranties
Section 8.02. Performance by the Purchaser
Section 8.03. Approval of Finova Capital Corporation
Section 8.04 Opinion of Xxxxxxxx Xxxxxxxx Company LLC
ARTICLE IX CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASER TO
PURCHASE AND ACCEPT DELIVERY OF THE COMMON STOCK
Section 9.01. Accuracy of the Company's Representations and Warranties
Section 9.02. Performance by the Company
Section 9.03. No Material Adverse Effect
Section 9.04. Governmental Approvals and Consents
Section 9.05. Secretary's Certificate
Section 9.06. Proceedings
Section 9.07. Shares
ARTICLE X TERMINATION
Section 10.01. Termination by Mutual Written Consent
Section 10.02. Termination by the Company or the Purchaser
Section 10.03. Termination by the Purchaser
Section 10.04. Termination by the Company
Section 10.05. Effect of Termination
Section 10.06. Negotiations with Third Parties
ARTICLE XI DEFINITIONS
ARTICLE XII MISCELLANEOUS
Section 12.01. Notices
Section 12.02. Fees and Expenses
Section 12.03. Survival of Representations and Warranties
Section 12.04. Entire Agreement
Section 12.05. Successors and Assigns
Section 12.06. Paragraph Headings
Section 12.07. Applicable Law.
Section 12.08. Severability
Section 12.09. Equitable Remedies
Section 12.10. No Waiver
Section 12.11. Counterparts
Section 12.12. Brokers
Section 12.13. Certain Assignment of Rights
TABLE OF SCHEDULES
(to be completed and delivered to
Purchaser by May 7, 1999)
Schedule 2.01 Wire Transfer Account
Schedule 3.01(a) Subsidiaries
Schedule 3.01(b) Outstanding Capital Stock of Subsidiaries
Schedule 3.02 Options, Warrants, Rights, Puts, Calls, Commitments, etc.
Schedule 3.04 Breaches, Conflicts
Schedule 3.09 Litigation
Schedule 3.21 Material Adverse Change
Schedule 3.23 Intellectual Property
COMMON STOCK PURCHASE AGREEMENT
AGREEMENT made and entered into on this ______ day of April, 1999, among
BOCA RESEARCH, INC., a Florida corporation (the "Company"), and INFOMATEC
INTEGRATED INFORMATION SYSTEMS AG, who shall agree to purchase common stock
pursuant to this Agreement in accordance with the terms hereof, the
("Purchaser").
WITNESSETH
WHEREAS, the Company desires to sell to the Purchaser, and the Purchaser
desire to purchase from the Company, 1,747,965 shares of the Company's Stock,
par value $0.01 per share ("Shares"), of the Company, such total Shares
purchased not to exceed 19.9% of the Company's theretofore issued common stock;
and
WHEREAS, the Company and the Purchaser are entering into this Agreement to
provide for said purchase and sale of Shares and to establish various rights and
obligations in connection therewith, upon the terms and subject to the
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual premises and covenants
contained herein, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
ARTICLE I
AUTHORIZATION OF ISSUANCE OF THE COMMON STOCK
Prior to the Closing, the Company shall have duly authorized and taken all
such corporate and other action which is necessary in accordance with the terms
of this Agreement to effect the valid issuance, sale and delivery to the
Purchaser of the Shares to be purchased by each Purchaser hereunder.
ARTICLE II
PURCHASE AND SALE OF COMMON STOCK; CLOSING
Section 2.01. Purchase and Sale. Upon the terms and subject to the
conditions hereinafter set forth, on the Closing Date, the Company shall issue,
sell and deliver to the Purchaser, and the Purchaser shall purchase from the
Company, the Shares for the purchase price equal to $4.58 USD per share. Payment
for the Shares shall be made by wire transfer of immediately available funds to
the account of the Company designated on Schedule 2.01 hereto (or in such other
manner as may be agreed by the Purchaser and the Company), and shall be wired
against the issuance and delivery by the Company on the Closing Date to the
Purchaser of certificates in definitive and fully registered form representing
the aggregate number of Shares being purchased by the Purchaser.
Section 2.02. Closing. Subject to the terms and conditions of this
Agreement, the closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices
of Spinner, Dittman, Xxxxxxxxxx & Xxxxxxx at 10:00 a.m., Eastern time, on May
28, 1999, or at such other later date or such other place as the parties shall
mutually agree. The date of the Closing is referred to in this Agreement as the
"Closing Date."
Section 2.03 Deliveries. At or prior to the Closing, the parties shall
deliver all documents, instruments, certificates and writings required to be
executed and delivered by them at or prior to the Closing pursuant to this
Agreement.
Section 2.04 Use of Proceeds. The proceeds from the purchase and sale of
the Shares hereunder will be used for general corporate purposes.
Section 2.05 Definitions. Terms used as defined terms herein and not
otherwise defined shall have the meanings set forth in Article XI.
Section 2.06 Set aside of Shares for Retention of Management. In order to
motivate the existing management to remain in the employment of the Company, the
Purchaser hereby agrees, and the Company hereby consents, subject to the
approval of the shareholders of the Company, to the Purchaser granting to those
members of management hereinafter set forth ("Management") the option to
purchase and acquire from the Purchaser out of the Shares being acquired by
Purchaser pursuant to this Agreement, 270,000 shares thereof (the "Management
Retention Options") at an option strike price equal to $4.58 USD per share in
the manner and number of shares allocated as hereafter set forth:
Name Number of Shares
Xxxxxxx Xxxxxxxx 95,000
Xxxxxxx Xxxxx 45,000
Xxxxx Xxxxx 45,000
Xxxx Xxxxxxx 45,000
Xxxxx Xxxxxxxxx 20,000
Xxxxxx Xxxxxxxx 10,000
Xxxxxx Xxxxxx 5,000
Xxxxxx Xxxxxxxx 5,000
The options shall vest at the rate of 50% of the Management Retention Options
immediately upon shareholder approval and the remaining 50% of the Management
Retention Options one (1) year thereafter.
The subject Management Retention Options shall immediately vest upon a Change of
Control in the Company as defined in this Agreement.
The Management Retention Options shall remain exercisable for a period of five
(5) years from the date of Closing.
The Management Retention Options shall be granted in an Option Agreement
prepared by Company counsel and in form and substance reasonably acceptable to
Purchaser and delivered to Management five (5) days following the required
shareholder approval.
Section 2.07 Right to Maintain Percentage.
(a) If hereafter at any time, or from time to time, the Company shall
intend to issue (i) shares of common stock, or other securities which are
directly or indirectly convertible into or exchangeable for shares of common
stock, or (ii) warrants or options (other than options currently issuable
pursuant to existing employee stock option and employee benefit plans and
options or rights to purchase not more than 100,000 shares of common stock which
options or rights may become issuable pursuant to future employee stock option
and employee benefit plans) or other rights to acquire shares of its common
stock or (iii) shares of common stock in connection with the acquisition of all
or substantially all of the assets, business, or voting stock of another entity,
other than, in each case, pro rata to existing shareholders on the date thereof,
or (iv) upon the exercise of outstanding warrants, options or rights,
outstanding options currently issuable pursuant to existing employee stock
option and employee benefit plans and options or rights to purchase not more
than 100,000 shares of common stock which may become issuable pursuant to future
employee stock and employee benefit plans (collectively, the "Subject Shares"),
then in each such instance the Company shall, at least 15 days prior to each
such intended issuance, via the Company Notice (as defined below), offer to
Purchaser the right to purchase such number, amount or units of additional
securities of the same type as the Subject Shares as may be necessary to permit
Purchaser to maintain its relative percentage of the Total Voting Power of the
Company following issuance of such securities (the "Preferential Purchase
Right"). The Preferential Purchase Right may be exercised in whole or in part
with respect to any and every event deemed a Preferential Purchase Right.
(b) The "Company Notice" shall set forth the terms and conditions of the
proposed issuance, including the price or other consideration to be received by
the Company for such issuance. Purchaser shall then, for a period of fourteen
days, have the right to elect, via Purchaser's Notice (as defined below), to
exercise the Preferential Purchase Right to purchase additional shares or units
of the same type as the Subject Shares on the same terms that such Subject
Shares are issued.
(c) Within fourteen days after receipt of the Company Notice, Purchaser
shall advise the Company in writing ("Purchaser's Notice") of its intention with
respect to the purchase of the additional shares or units of securities of the
same type of the Subject Shares covered by the Company Notice. Upon the delivery
of Purchaser's Notice, Purchaser shall become obligated to purchase the number,
amount of units of additional securities as specified in the Purchaser's Notice,
provided, however, that if for any reason the actual issuance of the Subject
Shares shall result in a greater or lesser number of Subject Shares being issued
than were set forth in the Company Notice, then Purchaser shall have two
business days from the receipt of notice from the Company to such effect, which
notice (the "Revised Notice") shall set forth such new number of Subject Shares
actually issued, to elect to purchase in accordance with the terms hereof and
thereof such additional or lesser shares or units of the same type as the
Subject Shares were
actually issued on the same terms that such Subject Shares were actually issued,
which purchase shall become a binding obligation of Purchaser upon such
election. Such purchase shall be consummated on the later of (x) the business
day following the consummation of the transaction which gave rise to the
Preferential Right (or immediately following the third business day following
the receipt of the Revised Notice) or (y) the business day following the early
termination or expiration of the applicable waiting period under the
Xxxx-Xxxxx-Xxxxxx Act with respect to the purchase of such securities, or such
later date as shall be mutually agreed to in writing by Purchaser and the
Company, provided, however, that if for any reason the intended sale of Subject
Shares shall not occur, the Company shall have no obligation whatsoever to issue
and Purchaser shall have no obligation to purchase any share or units of the
same type as the Subject Shares as to which Purchaser has notified the Company
of its election to purchase hereunder. At the closing of such purchase, which
shall take place at the principal office of the Company in Boca Raton, Florida,
the Company shall deliver to Purchaser certificates evidencing the number,
amount or units of additional securities of the same type as the Subject Shares
or, where appropriate, other instruments reflecting the ownership of the
additional securities of the same type as the Subject Shares purchased by
Purchaser, and Purchaser shall, in accordance with paragraph (d) below, deliver
to the Company the same type and amount of consideration per share or unit of
the additional securities of the same type as the Subject Shares purchased as
was paid by the purchasers of the Subject Shares in the transaction which gave
rise to the Preferential Purchase Right less any underwriting or placement
discounts or commissions payable by the Company with respect to the Subject
Shares.
(d) If the consideration paid per share or unit of the Subject Shares in
the transaction giving rise to the Preferential Purchase Right described in the
Company Notice is not solely made up of cash or marketable securities then the
Company Notice shall, if determinable, include the fixed price or other value of
such non-cash consideration as of the day such fixed price is to be determined
for the transaction giving rise to the Preferential Purchase Right, and the
consideration then payable by Purchaser for additional securities of the same
type and amount as the Subject Shares shall be in cash, payable in the same day
funds, equal to the amount of such fixed price or other value. In all other such
events, the price to be paid by Purchaser per share or unit shall be the value
of such securities as jointly determined by Purchaser and the Company and if
they cannot agree as determined by Xxxxxxxx Xxxxxxxx Company LLC.
(e) If the purchase price set forth in the Company Notice shall include
marketable securities, the purchase price payable by Purchaser shall include, to
the extent marketable securities were included as a portion of the consideration
provided for in the Company Notice, an amount in cash determined by reference to
the "Current Market Price" of such securities on the date of the announcement of
the transaction giving rise to the Preferential Purchase Right. The term
"Current Market Price" shall mean, as applied to any class of stock on any date,
the average of the daily "Closing Prices" (as defined below) for the 30
consecutive "Trading Days" (as defined below) immediately prior to the date in
question. The term "Closing Price" on any day shall mean the last sales price,
regular way, per share of such stock on such day, or if no such sale takes
places on such day, the average of the closing bid and asked prices, regular
way, as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the shares of such stock are listed of
admitted to trading, or, if the shares of such stock are not listed or admitted
to trading on any national securities exchange, the average of the high bid and
low asked prices in the over-the-counter manner as reported by the National
Association of Securities Dealers Inc.'s Automated Quotation System. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which such shares of such stock are listed or admitted to trading is
open for the transaction of business or if the shares of such stock are not
listed or admitted to trading on any national securities exchange, a day on
which banking institutions in the Borough of Manhattan, City and State of New
York are not authorized or obligated by law or executive order to close.
Section 2.08 Registration Rights.
(a) Demand Registration. At any time (i) after Closing Date or (ii) before
the receipt by Purchaser and the Company of an opinion of counsel reasonably
satisfactory to both Purchaser and the Company that registration of the Shares
under the Securities Act is not then required in order for Purchaser to effect a
public offering, Purchaser shall have the right to make two requests of the
Company in writing to register under the Securities Act at least 15% of the
outstanding shares of common stock beneficially owned by Purchaser (shares
subject to such request hereunder being referred to as the "Subject Stock"), and
the Company shall use best efforts to cause such Subject Stock to be registered
under the Securities Act as soon as reasonably practicable so as to permit
promptly the sale thereof, and in connection therewith, the Company shall
prepare and file, on such appropriate form as the Company in its discretion
shall determine, a registration statement under the Securities Act to effect
such registration. Purchaser undertakes to provide all such information and
materials and take all such action as may be required in order to permit the
Company to comply with all applicable requirements of the Commission and to
obtain any desired acceleration of the effective date of such registration
statement. Notwithstanding the foregoing, the Company (i) shall not be obligated
to cause any special audit to be undertaken in connection with any such
registration (ii) shall be entitled to postpone for a reasonable period of time,
but not in excess of 60 days, the filing of any registration statement otherwise
required to be prepared and filed by the Company if the Company is, at such
time, conducting or about to conduct an underwritten public offering of equity
securities (or securities convertible into equity securities) and is advised in
writing by its managing underwriter or underwriters (with a copy to Purchaser)
that such offering would in its or their opinion be adversely affected by the
registration so requested and (iii) shall be entitled to postpone for a
reasonable period of time the filing of any registration statement otherwise
required to be prepared and filed by the Company if the Company determines, in
its reasonable judgment, that such registration and offering would interfere
with any financing, acquisition, corporate reorganization or other material
transaction involving the Company or that it would require the Company to
disclose material non-public information that it deems advisable not to disclose
and promptly gives Purchaser written notice of such determination. If the
Company shall so postpone the filing of a registration statement, Purchaser
shall have the right to withdraw the request for registration by giving written
notice to the Company within 30 days after receipt of the notice of postponement
and, in the event of such withdrawal, such request shall not be counted for
purposes of the requests for registration to which Purchaser is entitled to in
this paragraph (a).
(b) Incidental Registration. If, at any time after Closing Date, the
Company proposes to register any of its securities under the Securities Act
(otherwise than pursuant to paragraph (a), and other than securities to be
issued pursuant to a stock option or other employee benefit or similar plan),
the Company shall, as promptly as practicable, give written notice to Purchaser
of the Company's intention to effect such registration. If, within 15 days after
receipt of such notice, Purchaser submits a written request to the Company
specifying the number of shares of common stock that it proposes to sell or
otherwise dispose of, the Company shall include the shares specified in
Purchaser's request in such registration statement and the Company shall keep
each such registration statement in effect and maintain compliance with each
Federal and state law and regulation as set forth in subsection 2.08 (c) below.
Notwithstanding the foregoing, if the offering of the Company's securities
pursuant to such registration statement is to be made by or through
underwriters, the Company shall not be required to include any Shares of
Purchaser therein if and to the extent that the underwriter managing the
offering reasonably believes in good faith that such inclusion would materially
adversely affect such offering; provided, however, that in such event, Purchaser
shall delay any offering by it for such period, not to exceed 60 days, as the
managing underwriter shall request and the Company shall file such supplements
and post-effective amendments and take such other steps as may be necessary to
permit Purchaser to make its proposed offering following the end of such period
of delay.
(c) Certain Obligations of the Company. In connection with any offering of
shares of Subject Stock registered pursuant to this Section 2.08, the Company
(i) shall furnish to Purchaser such number of copies of any prospectus
(including any preliminary prospectus) as it may reasonably request in order to
effect the offering and sale of the Subject Stock to be offered and sold, but
only while the Company shall be required under the provisions hereof to cause
the registration statement to remain current and (ii) take such action as shall
be necessary to qualify the shares covered by such registration statement under
such Blue Sky or other state securities laws for offer and sale as Purchaser
shall request; provided, however, that the Company shall not be obligated to
qualify as a foreign corporation to do business under the laws of any
jurisdiction in which it shall not then be qualified or to file any general
consent to service of process in any jurisdiction in which such a consent has
not been previously filed. The Company shall enter into an underwriting
agreement with a managing underwriter or underwriters selected by it (reasonably
satisfactory to Purchaser) containing representations, warranties, indemnities
and agreements then customarily included by an issuer in underwriting agreements
with respect to secondary distributions; provided, however, that such
underwriter or underwriters shall agree to use their best efforts to ensure that
the offering results in a distribution of the Subject Stock sold in accordance
with the terms of the agreement. In connection with any offering of Subject
Stock registered pursuant to this Section 2.08. The Company shall (x) furnish to
the underwriter, at the Company's expense, unlegended certificates representing
ownership of the Subject Stock being sold in such denominations as requested and
(y) instruct any transfer agent and registrar of the Subject Stock to release
any stop transfer orders with respect to such Subject Stock. Upon any
registration becoming effective pursuant to this Section 2.08, the Company shall
use its best efforts to keep such registration statements current for a period
of nine months.
(d) Expenses. All out-of-pocket expenses (other than the fees and
disbursements of the Company's and Purchaser's respective legal counsel, which
shall be paid by each party) incurred in connection with any registration
statements referred to in this Section 2.08, including, without limitation, the
fees and disbursements of the Company's accountants, all underwriting discounts,
commissions and expenses, the fees and disbursements of the Purchaser's
accountants, all Commission and Blue Sky registration and filing fees, printing
expenses and transfer agent's and registrar's fees, to the extent such fees and
expenses are attributable to the registration of the Subject Stock or, if the
Subject Stock is registered together with other securities of the Company, pro
rata according to the dollar amount received by Purchaser compared to the total
dollar amount received by all sellers of such registered securities (including
the Company) shall be borne equally by the Company and the Purchaser.
(e) Indemnification by the Company. In the case of any offering registered
pursuant to this Section 2.08, the Company agrees to indemnify and hold
Purchaser, each underwriter of Shares under such registration and all of their
directors and officers, and each person who controls any of the foregoing within
the meaning of Section 15 of the Securities Act and of Purchaser, harmless
against any and all losses, claims, damages or liabilities to which they or any
of them may become subject under the Securities Act or any other statute or
common law or otherwise, and to reimburse them, from time to time upon request,
for any legal or other expenses reasonably incurred by them in connection with
investigating any claims and defending any actions, insofar as any such losses,
claims, damages, liabilities or actions shall arise out of or shall be based
upon (i) any untrue statement or alleged untrue statement of a material fact
contained in the registration statement relating to the sale of such Subject
Stock, or the omission or alleged omission to state therein 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 or (ii)
any untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus (as amended or supplemented if the Company shall have
filed with the Commission any amendment thereof or supplement thereto), or the
omission or alleged omission to state therein a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that the indemnification agreement
contained in this paragraph (e) shall not apply to such losses, claims, damages,
liabilities or actions arising out of or based upon and in conformity with
information furnished in writing to the Company by Purchaser or any such
underwriter specifically for use in connection with the preparation of the
registration statement or any preliminary prospectus or prospectus contained in
the registration statement or any such amendment thereof or supplement thereto
or made in any preliminary prospectus, and the prospectus contained in the
registration statement in the form filed by the Company with the Commission
pursuant to Rule 424 under the Securities Act shall have corrected such
statement or omission and a copy of such prospectus shall not have been sent or
given to such person at or prior to the confirmation of such sale to him. (f)
Indemnification by Purchaser and Underwriters. In the case of each offering
registered pursuant to this Section 2.08, the Purchaser and each underwriter
participating therein shall agree, in the same manner and to the same extent as
set forth in paragraph (e) of this Section 2.08 severally to indemnify and hold
harmless the Company and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act, and the
6
directors and officers of Company, and in the case of each such underwriter,
Purchaser, each person, if any, who controls Purchaser within the meaning of the
Securities Act and the directors and officers of the Purchaser, with respect to
any statement in or omission from such registration statement or any preliminary
prospectus (as amended or as supplemented, if amended or supplemented as
aforesaid) or prospectus contained in such registration statement (as amended or
supplemented, if amended or supplemented as aforesaid), if such statement or
omission shall have been made in reliance upon and in conformity with
information furnished in writing to the Company by such indemnifying party
specifically for use in connection with the preparation of such registration
statement or any preliminary prospectus or prospectus contained in such
registration statement or any such amendment thereof or supplement thereto.
(g) Indemnification Procedure. Each party indemnified under paragraph (e)
or (f) of this Section 2.08 shall, promptly after receipt of notice of the
commencement of any action against such indemnified party in respect of which
indemnity may be sought hereunder, notify the indemnifying party in writing of
the commencement thereof. The omission of any indemnified party to so notify an
indemnifying party of any such action shall not relieve the indemnifying party
from any liability in respect of such action which it may have to such
indemnified party on account of the indemnity agreement contained in paragraph
(e) or (f) of this Section 2.08, except to the extent the indemnifying party was
prejudiced by such omission, and in no event shall relieve the indemnifying
party from any other liability which it may have to such indemnified party. In
case any such action shall be brought against any indemnified party and it shall
notify an indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it may desire,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under paragraph
(e) or (f) of this Section 2.08 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof, other
than reasonable costs of investigation (unless such indemnified party reasonably
objects to such assumption on the grounds that there may be defenses to it which
are different from or in addition to such indemnifying party, in which event the
indemnified party shall be reimbursed by the indemnifying party for the expenses
incurred in connection with retaining separate legal counsel).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As of the Closing, the Company will represent and warrant to the
Purchaser as follows:
Section 3.01. Organization and Good Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida, and is duly qualified to transact business as a foreign
corporation and is in good standing in each jurisdiction in which the nature of
the business transacted by it or the character or location of the properties
owned or leased by it requires such qualification, except where the failure to
be so qualified or in good standing would not have a Material Adverse Effect.
The Company has full corporate power and authority to own and manage its
properties and to carry on its business as it
7
is now being (and as it is currently proposed to be) conducted. The copies of
the Company's certificate of incorporation, by-laws and other organizational
documents and instruments (in each case, as amended and/or restated through the
date hereof), heretofore made available to the Purchaser, are true, complete and
correct copies thereof. The Company, directly or indirectly, owns all of the
outstanding capital stock of each Subsidiary. The Company does not own any
interest in any other company or entity other than the Subsidiaries set forth on
Schedule 3.01(a), and other than interests in trusts established by the Company
or its Subsidiaries in connection with the Company's securitization program.
Each Subsidiary is duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization and has the power
and authority to own or lease its properties and to conduct its business as now
conducted. All outstanding shares of the capital stock of each Subsidiary have
been validly issued and are fully paid and non-assessable. Except as set forth
on Schedule 3.01(b), there are no outstanding options, warrants, rights,
agreements or commitments of any nature whatsoever of any third party to
subscribe for or purchase any equity security of any Subsidiary or to cause any
Subsidiary to issue any such equity security.
Section 3.02. Capitalization. The authorized capitalization of the Company
consists of: (a) 25,000,000 shares of common stock, par value $0.01 per share,
and (b) 5,000,000 shares of Preferred Stock, par value $0.01 per share
("Preferred Stock"). As of March 31, 1999, there were 8,783,746 shares of common
stock outstanding, and there are currently no shares of Preferred Stock
outstanding. No other class or series of capital stock of the Company is, or at
the Closing will be, authorized or issued. All such shares outstanding on the
date hereof are, and the Shares, when issued, will be, duly authorized, validly
issued and fully paid and non-assessable. Except as set forth on Schedule 3.02,
there are no outstanding options, warrants, rights, puts, calls, commitments, or
other contracts, arrangements, or understandings issued by or binding upon the
Company requiring or providing for, and there are no outstanding debt or equity
securities of the Company which upon the conversion, exchange or exercise
thereof would require or provide for, the issuance by the Company of any shares
of capital stock (or any other securities of the Company which, with notice,
lapse of time and/or payment of monies, are or would be convertible into or
exercisable or exchangeable for shares of capital stock). Except as set forth in
Schedule 3.02, there are no preemptive or other similar rights available to the
existing holders of Shares or other securities of the Company.
Section 3.03. Due Authorization; Execution and Delivery. The Company has
all requisite corporate right, power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby and thereby, including
without limitation the issuance of the Shares. As of the Closing, the execution,
delivery and performance of this Agreement and the Related Agreements and the
consummation of the transactions contemplated hereby and thereby, will have been
duly authorized and approved by the Board of Directors of the Company and no
further corporate action on the part of the Company is necessary to authorize
the execution, delivery and performance by the Company of such agreements or the
consummation by the Company of the transactions contemplated hereby or thereby.
This Agreement constitutes, and the Related Agreements will constitute as of the
Closing Date, the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with their respective terms,
except that such enforcement may be subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights, and the remedies of specific performance and
injunctive relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought. Section 3.04.
Absence of Breach; No Conflict. Except as set forth on Schedule 3.04 hereto, the
execution, delivery, and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby will not (a)
give rise to a right to (or otherwise) terminate, accelerate the maturity of or
accelerate or increase any payment due under, trigger a right of redemption of,
conflict with, result in a breach or violation of any of the terms, conditions
or provisions of, constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, require any approval,
waiver or consent under, or result in the creation or imposition of any
obligations on behalf of the Company or any Lien upon any property or assets of
the Company or any Subsidiary pursuant to the terms of, any note, bond,
mortgage, pledge, indenture, deed of trust, lease, agreement, indemnity,
obligation, commitment, instrument, franchise, license, certificate or permit to
which the Company or any of the Subsidiaries is a party or by which any of their
respective properties or assets may be bound; (b) violate or conflict with any
term or provision of the certificate of incorporation, by-laws or equivalent
organizational instruments and documents (in each case, as amended and/or
restated through the date hereof) of the Company or any Subsidiary; or (c)
assuming the accuracy of the representations and warranties of the Purchaser
contained in Article IV hereof, violate any judgment, decree, order, writ,
statute, rule or regulation of any judicial, arbitral, public, or governmental
authority having jurisdiction over the Company, any of the Subsidiaries or any
of their respective properties or assets. The issuance of the Shares will not
violate the rules, regulations or bylaws of the Nasdaq Stock Market or any other
securities exchange on which the securities of the Company are traded or listed.
Section 3.05. Validity. The Shares to be issued, sold and delivered to the
Purchaser hereunder shall, upon such issuance, sale, exercise and delivery in
accordance with this Agreement, be duly authorized, validly issued, fully paid
and non-assessable, and free and clear of any and all Liens and preemptive and
other similar rights.
Section 3.06. Securities Law Compliance. Assuming the representations and
warranties of the Purchaser set forth in Section 4.02 hereof are true and
correct in all material respects, the offer and sale of the shares of common
stock (collectively, the "Issuable Shares") pursuant to this Agreement will be
exempt from the registration requirements of the Securities Act. Neither the
Company nor any Person acting on its behalf has, in connection with the offering
of the Issuable Shares, engaged in (i) any form of general solicitation or
general advertising (as those terms are used within the meaning of Rule 502(c)
under the Securities Act), (ii) any action involving a public offering within
the meaning of Section 4(2) of the Securities Act, or (iii) any action that
would require the registration under the Securities Act of the offering and sale
of the Issuable Shares pursuant to this Agreement or that would violate
applicable state securities or "blue sky" laws. The Company has not made and
will not prior to the Closing make, directly or indirectly, any offer or sale of
the Issuable Shares of the same or similar class as the Issuable Shares if, as a
result, the offer and sale contemplated hereby could fail to be entitled to
exemption from the
registration requirements of the Securities Act. As used herein, the terms
"offer" and "sale" have the meanings specified in Section 2(3) of the Securities
Act.
Section 3.07. Commission Documents; Financial Information.
(a) The Company has made available to the Purchaser true and complete
copies of all SEC Documents filed with the Commission prior to the date hereof
and will furnish the Purchaser a true and correct copy of each amendment thereto
and any SEC Documents filed by the Company with the Commission on or before the
Closing Date. As of their respective filing dates, the SEC Documents complied
(or will comply) in all material respects with the requirements of the
Securities Act, Exchange Act and the rules and regulations of the Commission
thereunder applicable to such SEC Documents, and as of their respective dates
none of the SEC Documents contained (or will contain) any untrue statement of a
material fact or omitted (or will omit) to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company and its Subsidiaries included in the SEC Documents
comply (or will comply) as of their respective dates as to form in all material
respects with applicable accounting requirements and the rules and regulations
of the Commission with respect thereto (except as may be indicated in the notes
thereto or, in the case of the unaudited statements, as permitted by Form 10-Q
promulgated by the Commission), and present fairly (or will present fairly) as
of their respective dates the consolidated financial position of the Company and
the Subsidiaries as at the dates thereof and the consolidated results of their
operations and their consolidated cash flows for each of the respective periods,
in conformity with GAAP. As used in this Agreement, the consolidated balance
sheet of the Company and its Subsidiaries at December 31, 1998 previously
provided to the Purchaser is hereinafter referred to as the "Balance Sheet", and
December 31, 1998 is hereinafter referred to as the "Balance Sheet Date."
(b) Except as and to the extent expressly set forth in the Balance Sheet,
or the notes, schedules or exhibits thereto, or as disclosed in the SEC
Documents, (i) as of the Balance Sheet Date, neither the Company nor the
Subsidiaries had any material liabilities or obligations (whether absolute,
contingent, accrued or otherwise) that would be required to be included on a
balance sheet or in the notes, schedules or exhibits thereto prepared in
accordance with GAAP and (ii) since the Balance Sheet Date, the Company and its
Subsidiaries have not incurred any such material liabilities or obligations
other than in the ordinary course of business.
Section 3.08. Approvals; Compliance with Laws; Licenses and Authorities.
(a) Except as provided for in this Agreement and assuming the accuracy of
the representations and warranties of the Purchaser contained in Article IV
hereof, no notices, reports or other filings are required to be made by the
Company or any Subsidiary with, nor are any consents, registrations,
applications, approvals, permits, licenses or authorizations required to be
obtained by the Company or any Subsidiary from, any public or governmental
authority or other third party in connection with the execution and delivery of
this Agreement the consummation by the Company of the transactions contemplated
hereby, or the exercise by the Purchaser of
their rights hereunder, except for any of the foregoing, the failure of which to
make or obtain would not have a Material Adverse Effect or adversely affect the
Purchaser' rights hereunder.
(b) The business of the Company and each of the Subsidiaries has been and
is presently being conducted in compliance with all applicable federal, state,
county and local ordinances, statutes, rules, regulations and laws (collectively
"Laws").
(c) Except as would not have a Material Adverse Effect, (i) the Company and
its Subsidiaries have all permits or licenses of all Authorities that are
necessary to carry on the business of the Company and its Subsidiaries as now
conducted; (ii) each such permit or license is in full force and effect and has
not been revoked, canceled or encumbered and the Company or relevant Subsidiary
is in compliance therewith in all respects; and (iii) no such permit or license
will be terminated or adversely affected by virtue of the execution of the
Agreement or the performance by the parties of their obligations or the exercise
by the parties of their rights hereunder.
Section 3.09. Litigation. Except as set forth in SEC Documents filed with
the Commission prior to the date of this Agreement or as set forth on Schedule
3.09, there are no pending actions, suits, proceedings, arbitrations or
investigations against or affecting the Company or any of its Subsidiaries or
any of their respective properties, assets or operations, or with respect to
which the Company or any such Subsidiary is responsible by way of indemnity or
otherwise (a "Material Claim"), that are required under the Securities Act or
Exchange Act to be described in such SEC Documents or which, if there is an
adverse decision, could singly, or in the aggregate, with all such other
actions, suits, investigations or proceedings, have a Material Adverse Effect
and, to the knowledge of the Company, no such actions, suits, proceedings or
investigations are threatened. No adverse development has occurred with respect
to any Material Claim except as disclosed in the SEC Documents filed with the
Commission prior to the date of this Agreement.
Section 3.10. Tax Matters.
(a) Each of the Company and its Subsidiaries has filed or caused to be
filed, or has properly filed extensions for, all material Tax Returns that are
required to be filed by or respect to the Company, any of its Subsidiaries or
the business of the Company and its Subsidiaries; and each of the Company and
its Subsidiaries has timely paid or caused to be paid all material Taxes with
respect thereto whether or not shown on said Tax Returns (and on all material
assessments received by it) to the extent that such Taxes and assessments have
become due, except for any failure to so file or cause to be filed, any failure
to so file an extension, or any failure to so pay or cause to be paid, in each
case that would not, individually or in the aggregate, have a Material Adverse
Effect, and, except for any failure to pay or cause to be paid Taxes the
validity or amount of which is being contested in good faith by appropriate
proceedings and with respect to which adequate reserves, in accordance with
generally accepted accounting principles, have been set aside. All said Tax
Returns are complete and accurate in all respects and have been prepared in
compliance with all applicable laws and regulations, except for any such failure
to be complete and accurate or to be so prepared that would not, individually or
in the aggregate,
have a Material Adverse Effect. The Company and its Subsidiaries reasonably
believe (i) the reserves on the Balance Sheet of the Company and its
Subsidiaries for Taxes due or owing by the Company and its Subsidiaries to be
adequate in all material respects for all unpaid Taxes, whether or not disputed,
of the Company and its Subsidiaries for all fiscal years that, as of the Balance
Sheet Date, had not been examined and reported on by any taxing authorities (or
closed by applicable statutes), and (ii) that as of the Closing Date, such
reserves as adjusted on the books in accordance with past practice, will be
sufficient for the then-unpaid taxes of the Company and its Subsidiaries
attributable to periods prior to and ending on the Closing Date, except in
either case where any failure to establish any such reserve would not
individually or in the aggregate constitute a Material Adverse Effect.
(b) There are no actions or proceedings currently pending or, to the best
knowledge of the Company or any of its Subsidiaries, threatened in writing
against the Company, any of its Subsidiaries or any affiliated group with
respect to the Company, any of its Subsidiaries or the business of the Company
and its Subsidiaries by any governmental authority for the assessment or
collection of material Taxes, and no claim for the assessment or collection of
material Taxes has been asserted in writing against the Company or any of its
Subsidiaries or any affiliate group with respect to the Company, any of its
Subsidiaries or the business of the Company and its Subsidiaries, in either case
which singly or in the aggregate are likely to have a Material Adverse Effect.
Section 3.11. Material Contracts. All of the material contracts of the
Company or any of its Subsidiaries that are required to be described in the SEC
Documents or to be filed as exhibits thereto prior to the date hereof are
described in the SEC Documents filed prior to the date hereof or filed as
exhibits thereto and are in full force and effect. True and complete copies of
all such material contracts as of Closing have been made available to the
Purchaser. All material contracts to which the Company or its Subsidiaries are
parties on or prior to the date hereof which will be required to be described or
filed as an Exhibit in the SEC Documents required to be filed following the date
hereof have been provided to the Purchaser and are in full force and effect.
Neither the Company nor any of its Subsidiaries nor, to the knowledge of the
Company, any other party is in material breach of or in default under any such
contract. The Purchaser acknowledges its obligation under the Confidentiality
Agreement heretofore entered into with the Company as it specifically relates to
contracts with the Company's customers.
Section 3.12. Title to Properties, Encumbrances. Each of the Company and
its Subsidiaries has good and valid title to its respective assets, free and
clear of all defects and Liens except (a) materialmen's, mechanics', carriers',
workmen's, warehousemen's, repairmen's, or other like Liens arising in the
ordinary course of business; (b) Liens for current Taxes not yet due and
payable; (c) Liens or minor imperfections of title that do not materially
interfere with the use or materially detract from the value of such property,
and (d) Liens permitted by the Finova loan agreement.
Section 3.13. Plant and Equipment; Sufficiency Of Assets.
(a) The plant and equipment used by the Company and its Subsidiaries has
been maintained to the standards of operating condition and repair typical of
companies engaged in the same or similar businesses except as would not have a
Material Adverse Effect.
(b) Each of the Company and its Subsidiaries own or have the lawful right
to use all assets, properties, operating rights, easements, contracts, leases,
licenses, and other instruments necessary to operate their businesses lawfully
and to maintain the same as presently conducted except as would not have a
Material Adverse Effect.
Section 3.14. Labor Matters.
(a) Neither the Company nor any of its Subsidiaries is party to any labor
or collective bargaining agreement and there are no labor or collective
bargaining agreements which pertain to employees of the Company or any of its
Subsidiaries.
(b) No employees of the Company or any Subsidiary are represented by any
labor organization. No labor organization or group of employees of the Company
or any of its Subsidiaries has made a pending demand for recognition or
certification, and there are no representation or certification proceedings or
petitions seeking a representation proceeding presently pending or, to the
knowledge of the Company, threatened to be brought or filed, with the NLRB or
any other labor relations tribunal or authority. To the knowledge of the
Company, there are no organizing activities involving the Company or any of its
Subsidiaries pending with, or threatened by, any labor organization.
(c) There are no strikes, work stoppages, slowdowns, lockouts, material
arbitrations or material grievances or other material labor disputes pending or,
to the knowledge of the Company, threatened against or involving the Company or
any of its Subsidiaries. Except as would not result in any Material Adverse
Effect, there are no unfair labor practice charges, grievances or complaints
pending or, to the knowledge of the Company, threatened by or on behalf of any
employee or group of employees of the Company or any of its Subsidiaries.
Section 3.15. Environmental Matters.
(a) Each of the Company and its Subsidiaries is in material compliance with
all Environmental Laws and neither the Company nor any of its Subsidiaries has
received any written communication from a governmental authority with respect to
such compliance or the failure thereof.
(b) There is no civil, criminal or administrative action, claim, demand,
investigation or notice relating to a violation of an Environmental Law (an
"Environmental Claim") pending or, to the knowledge of the Company, threatened
and to the knowledge of the Company, there are no past or present actions,
activities, circumstances, conditions, events or incidents, including, without
limitation, the release, emission, discharge or disposal of any chemical,
pollutant, contaminant, waste, toxic substance, petroleum or petroleum product,
that would form the basis of any Environmental Claim, in either case (A) against
the Company or any
of its Subsidiaries, (B) against any person or entity whose liability for any
Environmental Claim the Company or any of its Subsidiaries has or may have
retained or assumed either contractually or by operation of law, or (C)
involving any real or personal property which the Company or any of its
Subsidiaries owns, leases or manages except, in each case, as would not have a
Material Adverse Effect.
Section 3.16. No Existing Violation, Default, Etc. Neither the Company nor
any of its Subsidiaries is (a) in violation of any provision of its certificate
of incorporation, by-laws or other organizational documents or (b) in violation
of any applicable Law, stock exchange rule or regulation, which violation has or
would reasonably be expected to have a Material Adverse Effect. No breach, event
of default or event that, but for the giving of notice or the lapse of time or
both, would constitute an event of default exists under any indenture, mortgage,
loan agreement, note or other agreement or instrument for borrowed money, any
guarantee of any agreement or instrument for borrowed money or any lease,
permit, license or other agreement to which the Company or any of its
Subsidiaries is a party or by which the Company or any such Subsidiary is bound
or to which any of the properties, assets or operations of the Company or any
such Subsidiary is subject, which breach, event of default, or event that, but
for the giving of notice or the lapse of time or both, would constitute an event
of default, has or would reasonably be expected to have a Material Adverse
Effect.
Section 3.17. Affiliate Transactions. Except as disclosed in the SEC
Documents, the Company and its Subsidiaries have not entered into any material
transaction or material series of transactions with any current or former
director, officer, employee or Affiliate of the Company.
Section 3.18. Insurance. The Company and its Subsidiaries, in the
reasonable determination of the Company's management, maintain with financially
sound and reputable insurers insurance against loss or damage of the kinds
customarily insured against by corporations of established reputation engaged in
the same or a similar business and similarly situated, and of such types and in
such amounts as is customarily carried under similar circumstances by such other
corporations.
Section 3.19. Unlawful Payments and Contributions. Neither the Company nor
any of its directors, officers or, to the Company's knowledge, any of its other
employees or agents has (a) used any Company funds for any unlawful
contribution, endorsement, gift, entertainment or other unlawful expense
relating to political activity; (b) made any direct or indirect unlawful payment
to any government official or employee from Company funds; (c) violated or is in
violation of any provision of the Foreign Corrupt Practices Act of 1977, as
amended in connection with the Company's and its Subsidiaries' business; or (d)
made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any person or entity with respect to matters pertaining to the
Company.
Section 3.20. Year 2000. The Company and its Subsidiaries have undertaken
those steps and efforts to assume Year 2000 compliance internally and with
regard to its products as described in its most recent 10K filed with the SEC.
Section 3.21. Absence of Certain Events; No Material Adverse Change. Except
as disclosed in the SEC Documents filed with the Commission prior to the date
hereof, since the Balance Sheet Date, the Company and its Subsidiaries each has
conducted its business operations in the ordinary course and there has not
occurred any event or condition having or, that is reasonably likely to have, a
Material Adverse Effect. Without limiting the generality of the foregoing, other
than as is disclosed in the SEC Documents filed with the Commission prior to the
date hereof or on Schedule 3.21 hereto, since the Balance Sheet Date there has
not occurred:
(a) any change or agreement to change the character or nature of the
business of the Company or any of its Subsidiaries;
(b) any purchase, sale, transfer, assignment, conveyance or pledge of the
assets or properties of the Company or any of its Subsidiaries, except in the
ordinary course of business;
(c) any waiver or modification by the Company or any of its Subsidiaries of
any right or rights of substantial value, or any payment, direct or indirect, in
satisfaction of any liability, in each case, having a Material Adverse Effect;
(d) any liability, contract, agreement, license or other commitment entered
into or assumed by or on behalf of the Company or any of its Subsidiaries
relating to the business, assets or properties of the Company or any of its
Subsidiaries, whether oral or written, except in the ordinary course of
business;
(e) any loan, advance or capital expenditure by the Company or any of its
Subsidiaries, except for loans, advances and capital expenditures made in the
ordinary course of business;
(f) any change in the accounting principles, methods, practices or
procedures followed by the Company in connection with the business of the
Company or any change in the depreciation or amortization policies or rates
theretofore adopted by the Company in connection with the business of the
Company and its Subsidiaries;
(g) any declaration or payment of any dividends, or other distributions in
respect of the outstanding shares of capital stock of the Company or any of its
Subsidiaries (other than dividends declared or paid by wholly-owned
Subsidiaries);
(h) any issuance of any shares of capital stock of the Company or any of
its Subsidiaries or any other change in the authorized capitalization of the
Company or any of its Subsidiaries, except as contemplated by this Agreement;
(i) any grant or award of any options, warrants, conversion rights or other
rights to acquire any shares of capital stock of the Company or any of its
Subsidiaries, except as contemplated by this Agreement or except pursuant to
employee benefit plans, programs or
arrangements in existence on the date hereof, in the ordinary course of business
consistent with past practice;
(j) (a) any granting by the Company or any of its Subsidiaries to any
employee earning in excess of $100,000 USD per year any increase in
compensation, except in the ordinary course of business consistent with prior
practice or as was required under employment agreements in effect as of the date
of the most recent audited financial statements included in the SEC Documents,
(b)any granting by the Company or any of its Subsidiaries to any
employee earning in excess of $100,000 USD per year of any increase in severance
or termination pay, except as was required under any employment, severance, or
termination agreements in effect as of the date of the most recent audited
financial statements included in the SEC documents, or (c) any entry by the
Company or any of its Subsidiaries into any employment, severance, or
termination agreement with any employee earning in excess of $100,000 USD per
year; or
(k) any adoption, or amendment in any material respect, by the Company or
any of its Subsidiaries of any collective bargaining agreement or any bonus,
pension, profit sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, retirement, vacation,
severance, change of control, retention, disability, death benefit,
hospitalization, medical, or other plan, arrangement, or understanding (whether
or not legally binding) providing benefits to any current or former employee,
officer, or director of the Company or any of its Subsidiaries (collectively,
"Benefit Plans").
Section 3.22. Full Disclosure. None of the statements made by the Company
in this Agreement (including, without limitation, the representations and
warranties made by the Company herein and in the schedules and exhibits hereto
which are incorporated by reference herein and which constitute an integral part
of this Agreement) contains (or will contain on the Closing Date) any untrue
statement of a material fact, or omits (or will omit on the Closing Date) to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
Section 3.22. ERISA. Neither the Company nor any of its subsidiaries
sponsors or maintains (or has ever sponsored or maintained) an "employee pension
benefit plan" (within the meaning of Section 3(2) of ERISA) that is subject to
Title IV of ERISA or to the minim funding requirements of Section 412 of the
Code or Part 3 of Title I of ERISA. Neither the Company nor any of its
subsidiaries contributes or is obligated to contribute (or has ever been
obligated to contribute) to a "multiemployer plan" (within the meaning of
Section 4001(a)(3) of ERISA).
Section 3.23 Intellectual Property. Except as set forth on Schedule 3.23,
to the best of the Company's knowledge, it owns, free and clear of all liens,
encumbrances, licenses, claims and other restrictions or burdens, all patents,
trade names, internet domain names, trademarks, copyrights, inventions,
processes, designs, computer software, works of authorship, franchises,
formulas, trade secrets, know-how and other intangible property and proprietary
rights (collectively, "Intellectual Property") necessary for or used in the
conduct of its business, and may use all such Intellectual Property in the
conduct of its business with no conflict with or
infringement of the rights of others which would have a material adverse impact
on the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby severally as to itself (but not jointly) represents
and warrants and covenants to the Company as follows:
Section 4.01. Organization and Standing. The Purchaser, which is an entity,
represents and warrants that it is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its formation.
Section 4.02. Investment Representation. The Purchaser represents and
warrants that it is an "Accredited Investor" within the meaning of Rule 501(a)
of Regulation D under the Securities Act, and it is or will be acquiring the
Issuable Shares for its own account and not with a view to, or for sale in
connection with, any distribution thereof in violation of the Securities Act. It
understands that the Issuable Shares have not been registered under the
Securities Act by reason of a specific exemption from the registration
provisions thereof which depends upon, among other things, the bona fide nature
of their investment intent as expressed herein. The Purchaser hereby
acknowledges and agrees that upon the original issuance thereof, and until such
time as the same is no longer required under the applicable requirements of the
Securities Act and the rules and regulations thereunder, the Issuable Shares may
bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE LAWS REGULATING THE SALE OF
SECURITIES AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED UNLESS REGISTERED OR AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION IS OBTAINED TO THE EFFECT
THAT SUCH REGISTRATION IS NOT REQUIRED."
Section 4.03. Due Authorization; Execution and Delivery. As of Closing, the
Purchaser represents and warrants that it has the requisite right, power and
authority to enter into this Agreement, and to consummate the transactions
contemplated hereby and thereby, and that the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary
action on its behalf, and this Agreement constitutes, and will constitute, the
legal, valid and binding obligation of it, enforceable against it in accordance
with the terms hereof and thereof, except that such enforcement may be subject
to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights, and the remedy of
specific
performance and injunctive relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.
Section 4.04. Absence of Breach; No Conflict. The Purchaser represents and
warrants that the execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby and thereby, will not (a)
conflict with, or constitute a default under, any agreement to which such
Purchaser is a party or by which any of the properties or assets of such
Purchaser may be bound; (b) violate or conflict with the governing
organizational instruments and documents (in each case, as amended and/or
restated through the date hereof) of such Purchaser or (c) assuming that the
Company is an "operating company" as such term is defined in Department of Labor
Regulation 2510.3-101, violate any statute, rule, regulation, order, judgment,
writ or decree of any judicial public or governmental authority having
jurisdiction over such Purchaser, or any of the properties or assets of such
Purchaser, which violation would prevent, impair, hinder or delay the
consummation of the transactions contemplated by this Agreement.
Section 4.05. No Consents. Other than as is required in this Agreement, the
Purchaser represents and warrants that no consent, authorization or approval of,
or filing with, any person or any federal, state or local government department,
commission, board, agency or instrumentality is required to be made or obtained
by such Purchaser in connection with its execution and performance of this
Agreement as may be required under the HSR Act or pursuant to the laws, rules
and regulations of the Department of Commerce notifications and except for such
consents, authorizations, approvals and filings the absence of which would not
prevent, impair, hinder or delay the consummation of the transactions
contemplated by this Agreement.
Section 4.06. Investment Company. The Purchaser represents and warrants
that it is not (and immediately after consummation of the transactions
contemplated by this Agreement will not be) an investment company, a company
controlled by an investment company, or otherwise subject to any provisions of
the Investment Company Act of 1940, as amended, and/or the rules and regulations
of the Commission promulgated thereunder.
Section 4.07. Ownership of Stock of the Company. The Purchaser represents
and warrants that it does not own beneficially or of record any shares of
capital stock or other securities of the Company and does not have any present
intention or plan to acquire shares of capital stock or other securities of the
Company except pursuant to this Agreement and the transactions contemplated
hereby.
Section 4.08. Certain Regulatory Matters. The Purchaser represents and
warrants that it is not aware of any facts or circumstances regarding such
Purchaser, including the record or beneficial ownership of any securities by
such Purchaser, which can reasonably be expected to cause the Department of
Justice or the Federal Trade Commission to prohibit such Purchaser's acquisition
of Shares contemplated hereunder or the exercise by such Purchaser of its rights
contained herein pursuant to their regulatory authority over such matters.
Section 4.09. Due Diligence. Without in any way affecting or mitigating the
representations and warranties of the Company contained in Article III of this
Agreement or affecting any rights resulting from a breach thereof, the Purchaser
will, if it participates in Closing, acknowledge that as of Closing, it has had
an opportunity to engage in due diligence on the Company and has had an
opportunity to discuss the Company and its business and prospects with
management of the Company.
Section 4.10 Availability of Funds. The Purchaser represents that it has
immediately available to it adequate funds, without borrowing same, necessary to
perform its obligations under this Agreement.
ARTICLE V
COVENANTS
Section 5.01. Covenants of the Company
(a) Access and Confidentiality. Upon reasonable notice prior to the
Closing, the Company shall (and shall cause each of its Subsidiaries to) afford
the Purchaser and its representatives reasonable access during normal business
hours to its properties, books, contracts and records and personnel and advisors
and the Company shall (and shall cause each of the Subsidiaries to) furnish
promptly to the Purchaser all information concerning its business, properties
and personnel as the Purchaser or its representatives may reasonably request,
provided that any review will be conducted in a way that will not interfere
unreasonably with the conduct of the Company's business.
(b) Announcements. Except as required by law or as advised by outside
counsel, no party or any Affiliate, officer or agent of the parties hereto shall
make any announcement concerning the transactions contemplated hereby without
the other parties' written consent, which consent shall not unreasonably be
withheld; provided, however, that any party or such Affiliate, officer or agent
may make any announcements required by applicable law so long as the text of
such announcement shall have been provided to the parties hereto prior to the
making of such announcement. The parties agree to consult with each other with
respect to announcements concerning the transactions contemplated hereby.
(c) Shares. From the date hereof until the Closing, the Company will not
issue any shares of its capital stock or securities convertible or exchangeable
for shares of capital stock, except for the issuances set forth on Schedule
3.02. The Company hereby covenants to the Purchaser, that from and after the
date hereof and so long as the Purchaser owns any Issuable Shares, the Company
shall:
(i) Replacement of Certificates. Upon receipt by the Company of evidence
reasonably satisfactory to it of loss, theft, destruction or mutilation of any
certificate evidencing any of the Shares (or securities issued upon exchange,
conversion or exercise thereof), and (in case of loss, theft or destruction) of
indemnity reasonably satisfactory to the Company, and upon the surrender and
cancellation of such certificate, if mutilated, the Company shall make and
deliver in lieu of such certificate a new certificate for the number of Shares
(or securities issued upon exchange, conversion or exercise thereof), as the
case may be, evidenced by such lost, stolen, destroyed or mutilated certificate
which remains outstanding. A Purchaser's (which term does not include any
successors or assigns of the initial Purchaser) agreement of indemnity shall
constitute indemnity satisfactory to the Company for the purposes of this
Section 5.01(c) without the need of any further surety or bond.
(ii) Government and Other Approvals. Promptly prepare, submit and file with
all public and governmental authorities, all applications, notices,
registrations, certificates, statements and such other information, documents
and instruments as may be required pursuant to any federal, state, local or
foreign Law or rule or regulation of the NASD or any securities exchange, in
connection with the consummation of the transactions contemplated by this
Agreement, including the effect of any dividends, exchange or conversion rights,
anti-dilution provisions or Board control contemplated by the terms of the
Shares or other securities of the Company which may be acquired by the Purchaser
pursuant to this Agreement.
Section 5.02 Proxy Matters; Standstill
(a) The Purchaser hereby agrees that during the Standstill Period
(hereinafter defined) it will not, nor will it permit any of its Affiliates (any
such Purchaser together with its Affiliates being hereinafter referred to as a
"Purchaser Group") to, directly or indirectly, unless in any such case
specifically authorized in advance to do so by the Board of Directors of the
Company:
(i) acquire, offer to acquire, or agree to acquire by purchase, by joining
a partnership, limited partnership, syndicate or other "group" (as such term is
used in Section 13(d)(3) of the Exchange Act, hereinafter referred to as "13D
Group"), any securities of the Company entitled to vote
generally in the election of directors, or securities convertible into or
exercisable or exchangeable for such securities (collectively, "Restricted
Shares") or any material portion of the assets or businesses of the Company and
its Subsidiaries if and to the extent that (a) such action would trigger a
Change of Control or (b) such action has not received any requisite approval
from governmental authorities; provided, however, that nothing contained herein
shall prohibit any member of a Purchaser Group from acquiring any Restricted
Shares acquired pursuant to this Agreement or otherwise contemplated hereby,
including Section 2.07 hereof, (x) as a result of a stock split, stock dividend
or similar recapitalization by the Company or (y) upon the execution of
unsolicited buy orders by any member of a Purchaser Group which is a registered
broker-dealer for the bona fide accounts of its brokerage customers unaffiliated
and not acting in concert with any member of such Purchaser. Prior to acquiring
any shares of capital stock of the Company, other than upon exercise of its
rights under the Agreement, the Related Agreements and the Shares, the Purchaser
will give written notice of their intent to do so to the Company. If within ten
(10) days after receipt of such notice, the Company advises the Purchaser in
writing that, based on the advice of its advisors, it believes that the proposed
acquisition would be prohibited by this paragraph, the parties shall thereafter
discuss in good faith whether such acquisition would in fact be so prohibited;
(ii) participate in, or encourage, the formation of any 13D Group which
owns or seeks to acquire beneficial ownership of, or otherwise acts in respect
of, Restricted Shares, other than any 13D Group which is comprised exclusively
of the Purchaser or a Purchaser Group and any other permitted transferee or
transferees of securities from a Purchaser in accordance with Section 5.03;
(iii) make, or in any way participate in, directly or indirectly, any
"solicitation" of "Proxies" (as such terms are defined or used in Regulation 14A
under the Exchange Act) or become a "participant" in any "election contest" (as
such terms are defined or used in Rule 14a-11 under the Exchange Act) with
respect to the Company, or initiate, propose or otherwise solicit stockholders
for the approval of one or more stockholder proposals with respect to the
Company or induce or attempt to induce any other person to initiate any
stockholder proposal, provided, however, that the limitation contained in this
clause (iii) shall not apply to (y) the election of any directors to be elected
by the holders of Shares or (z) any matter to be voted on by the Company's
stockholders that is not initiated or proposed by any member of a Purchaser
Group or any Affiliate thereof; or
(iv) call or seek to have called any meeting of the stockholders of the
Company, provided, however, that the limitation contained in this clause (iv)
shall not apply to any meeting of the stockholders of the
Company called for the purpose of voting on any matter described in the proviso
of clause (iii) above.
(b) Nothing in this Section 5.02 shall preclude members of a Purchaser
Group from exercising the voting and other rights, (i) granted to the Purchaser
pursuant to this Agreement or (ii) in connection with any proposed merger, sale
of assets or similar transaction, or tender or exchange offer proposed by any
person who is not part of a Purchaser Group or any of its Affiliates.
(c) As used herein, the term "Standstill Period" shall mean the period from
the date of this Agreement until the earlier to occur of:
(i) the date which is the second anniversary of the Closing Date; or
(ii) the designation of any date as the termination date of the Standstill
Period by a majority of the directors of the Company at a duly convened meeting
thereof or by all of the directors of the Company by written consent; or
(iii) the Company's material breach of any of its obligations contained in
this Agreement; or
(iv) the Company or any of its Subsidiaries shall commence a voluntary case
concerning itself under Title 11 of the United States Code entitled "Bankruptcy"
as now or hereafter in effect, or any successor thereto (the "Bankruptcy Code"),
which, in the case of a Subsidiary of the Company, has had or would have a
Material Adverse Effect; or an involuntary case is commenced against the Company
or any of its Subsidiaries and the petition not controverted within 10 days, or
is not dismissed within 60 days after commencement of the case, which, in the
case of a Subsidiary of the Company, has had or would have a Material Adverse
Effect; or a custodian (as defined in the Bankruptcy Code) is appointed for, or
takes charge of, all or any substantial part of the property of the Company or
any of its Subsidiaries, which, in the case of a Subsidiary of the Company, has
had or would have a Material Adverse Effect; or the Company or any of its
Subsidiaries commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, rehabilitation, dissolution,
insolvency or liquidation or similar law of any jurisdiction, whether now or
hereafter in effect, relating to the Company or such Subsidiary, or there is
commenced against the Company or any of its Subsidiaries any such proceeding
which remains undismissed for a period of 60 days, which, in the case of a
Subsidiary of the Company, has had or would have a Material Adverse Effect; or
the Company or any of its Subsidiaries is adjudicated insolvent or bankrupt,
which, in the case of a Subsidiary of the Company, has had or would have a
Material Adverse Effect; or any order of relief or other order approving any
such case or proceeding is entered, which, in the case of a Subsidiary of the
Company, has had or would have a Material Adverse Effect; or the Company or any
of the Subsidiaries suffers any appointment of any custodian or the like for it
or any substantial part of its property to continue undischarged or unstayed for
a period of 60 days, which, in the case of a Subsidiary of the Company, has had
or would have a Material Adverse Effect; or the Company or any of its
Subsidiaries makes a general assignment for the benefit of creditors, which, in
the case of a Subsidiary of the Company, has had or would have a Material
Adverse Effect; or the Company shall fail to pay, or shall state that it is
unable to pay, or shall be unable to pay, its debts, generally as they become
due, which, in the case of a Subsidiary of the Company, has had or would have a
Material Adverse Effect; or the Company or any of its Subsidiaries shall call a
meeting of its creditors with a view to arranging a composition or adjustment of
its debts, which, in the case of a Subsidiary of the Company, has had or would
have a Material Adverse Effect; or the Company or any of its Subsidiaries shall
by any act or failure to act indicate its consent to, approval of or
acquiescence in any of the foregoing, which, in the case of a Subsidiary of the
Company, has had or would have a Material Adverse Effect; or any corporate
action is taken by the Company or any of its Subsidiaries for the purpose of
effecting any of the foregoing, which, in the case of a Subsidiary of the
Company, has had or would have a Material Adverse Effect; or
(v) without encouragement by or the participation of a Purchaser or any of
its Affiliates, the acquisition by any person or 13D Group (other than members
of a Purchaser Group or Affiliates thereof) of, the commencement of a tender
offer by such person or 13D Group for, or the public announcement of an
intention to acquire, Restricted Shares which, if added to the Restricted Shares
(if any), including the Management Retention Options, already owned by such
person or 13D Group, would represent nineteen and nine-tenths percent (19.9%) or
more of the total voting power (including rights to acquire voting power) of the
Company's Restricted Shares, or the receipt by such person or 13D Group of the
Company's agreement or consent to make such acquisition; or
(vi) the date this Agreement is terminated in accordance with its terms.
Section 5.03. [Intentionally Omitted].
Section 5.04 Board Nominations.Upon Closing, and for so long as the
Purchaser shall continue to own at least 1,400,000 shares of common stock
purchased by it on the Closing Date, the Board of Directors of the Company shall
consist of nine (9) members and the Purchaser shall have the right to nominate
four (4) out of nine (9) members to the Board of Directors of the Company, and
to effect such nominations, the parties hereby agree to the following procedure:
In the event the Closing shall have taken place prior to the 1999 Annual
Shareholder Meeting of the Company, the Company shall amend its proxy to
include, in addition to the current eight Directors being nominated for
re-election, the addition of four individuals designated by the Purchaser, with
the effect of creating a 12-member Board. Within one month following the later
of (i) the Closing, or (ii) the said 1999 Annual Shareholder Meeting of the
Company, the Company shall require the resignation of Xxxxxxx X. Xxxxxxxx and
the two outside Board members who have served the shortest terms in such
capacity, with the effect that the Board will be reduced to a 9-member Board,
with 4 members to annually be designated by the Purchaser and 5 members to
annually be designated by recommendation to the shareholders of the Company by
the Board members other than the designees of the Purchaser. The Company agrees
to recommend to the shareholders the election of such entire slate of
nominations and the Purchaser agrees to vote their shares, in person or by
proxy, for the election of such entire slate of nominations.
At such time as Purchaser shall beneficially own less than 75% of the
Shares or shall have a decrease in ownership requiring Purchaser to modify its
Form 13D with the SEC, Purchaser shall use its best efforts to cause such
remaining director or directors, who has or have been elected hereunder at
Purchaser's designation, to promptly resign from the Company's Board of
Directors. The Company agrees that so long as Purchaser is entitled pursuant to
the terms of this Section 5.04 to representation on the Board of Directors of
the Company, the Company shall not increase or decrease the number of Directors
constituting the entire Board of Directors, except as contemplated by this
Agreement.
Section 5.05 International Investment. The Company shall prepare and file
(or, to the extent necessary, furnish) all required reporting documentation
under the International Investment and Trade in Surveys Act, 22 U.S.C. (3101 et
seq, to the extent applicable.
ARTICLE VI
FINANCIAL STATEMENTS; ACCESS TO INFORMATION
Section 6.01. Financial Statements. The Company covenants that it will
deliver to each Purchaser who owns any Issuable Shares those items set forth in
paragraphs (a), (b) and (d) and that, upon request, it will deliver to each
original Purchaser (but not their transferees) those items set forth in
paragraphs (c), (e) and (f):
(a) As soon as practicable and in any event within 45 days after the end of
each quarterly period (other than the last quarterly period) in each fiscal
year, a consolidated statement of income and consolidated statements of changes
in financial position and cash flows of the Company and its Subsidiaries for
such quarterly period and for the period from the beginning of the current
fiscal year to the end of such quarterly
period, and a consolidated balance sheet of the Company and its Subsidiaries as
at the end of such quarterly period, setting forth in each case in comparative
form figures for the corresponding periods in the preceding fiscal year, all in
reasonable detail and certified by an authorized financial officer of the
Company, subject to changes resulting from year-end adjustments; provided,
however, that delivery pursuant to clause (d) below of a copy of the Quarterly
Report on Form 10-Q of the Company for such quarterly period filed with the
Commission shall be deemed to satisfy the requirements of this clause (a);
(b) As soon as practicable and in any event within 90 days after the end of
each fiscal year, a consolidated statement of income and consolidated statements
of changes in financial position and cash flows of the Company and its
Subsidiaries for such year, and a consolidated balance sheet of the Company and
its Subsidiaries as of the end of such year, setting forth in each case in
comparative form corresponding consolidated figures from the preceding annual
audit, all in reasonable detail together with an opinion directed to the Company
of independent public accountants of recognized standing selected by the
Company; provided, however, that delivery pursuant to clause (d) below of a copy
of the Annual Report on Form 10-K of the Company for such fiscal year filed with
the Commission shall be deemed to satisfy the requirements of this clause (b);
(c) Promptly upon transmission thereof, copies of all such financial
statements, proxy statements, notices and reports as it shall send to its public
stockholders and copies of all registration statements (without exhibits), other
than on Form S-8 or any similar successor form, and all reports which it files
with the Commission (or any governmental body or agency succeeding to the
functions of the Commission);
(d) Promptly upon receipt thereof, a copy of each other report submitted to
the Company or any of its Subsidiaries by independent accountants in connection
with any annual, interim or special audit made by them of the books of the
Company or any of its Subsidiaries; and (e) With reasonable promptness, such
other financial data as any Purchaser may reasonably request.
Section 6.02. Access to Information. The Company shall permit the Purchaser
(and its designated representatives) to visit and inspect any of the properties
of the Company and its Subsidiaries, including the books and records of the
Company and its Subsidiaries (and to make extracts and copies therefrom), and to
consult with respect to and discuss the affairs, businesses, finances,
operations and accounts of the Company and its Subsidiaries with the officers,
directors and employees of such entities, all at such reasonable times and as
often as such Purchaser may reasonably request. The Purchaser agrees, except as
otherwise required by law, to keep any confidential information obtained
pursuant to this Article VI confidential.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF EACH PARTY
TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY
The respective obligation of each party hereto to consummate the
transactions contemplated hereby is subject to the satisfaction, at or before
the Closing, of each of the following conditions set forth in Section 7.01
through Section 7.03 below. These conditions may be waived by each party (in
whole or in part) at any time in its sole discretion.
Section 7.01. No Adverse Action or Decision. There shall be no action,
suit, investigation or proceeding pending with, or to the knowledge of the
Company threatened against or affecting the Company, any of its Subsidiaries or
any of their respective properties or rights, before any court, arbitrator or
administrative or governmental body which (a) seeks to restrain, enjoin or
prevent the consummation of the issuance, sale and delivery of the Shares to the
Purchaser or (b) challenges the validity or legality of the issuance, sale and
delivery of the Shares to the Purchaser or seeks to recover damages or to obtain
other relief in connection therewith, which in any single case or in the
aggregate (i) the Company or the Purchaser shall reasonably determine is
reasonably likely to result in a Material Adverse Effect, or (ii) the Purchaser
shall reasonably determine is reasonably likely to result in a material
impairment to the Purchaser' rights hereunder.
Section 7.02. No Injunction. No temporary, preliminary or permanent
injunction or any order by any federal or state court of competent jurisdiction
shall have been issued which prohibits or otherwise seeks to prohibit, restrain,
enjoin or delay the consummation of the issuance, sale and delivery of the
Issuable Shares to the Purchaser.
Section 7.03. Consents of Third Parties; Modification of Agreements. The
Company shall have duly obtained modifications of or waivers under the
agreements described in Section 5.01(c)(ii) amending or waiving any right to
acceleration, redemption or increase of any payment or obligation of the Company
or its Subsidiaries which could arise as a result of the transactions
contemplated hereby, which modifications or waivers shall be in a form
reasonably satisfactory to the Purchaser.
Section 7.04. Xxxx-Xxxxx-Xxxxxx Filing. The Company and the Purchaser
hereby represent and warrant to the other that neither party is a
$100,000,000.00 USD party as defined in the Xxxx-Xxxxx-Xxxxxx Act.
Section 7.05 Board of Directors' Approval. This Agreement is contingent
upon the approval of this Agreement by the Board of Directors of the Company and
the Supervisory Board of the Purchaser by May 21, 1999. In the event the above
required approvals of the Company's Board of Directors and the Purchaser's
Supervisory Board shall not have been obtained by May 21, 1999, and the parties
shall not have entered into a mutually acceptable extension agreement, this
Agreement shall automatically terminate
and neither party shall have further liability thereunder to the other party,
including but not limited to any liability under Section 10.05.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY
TO ISSUE, SELL AND DELIVER THE COMMON STOCK
The obligations of the Company to issue, sell and deliver the Shares are
subject to the satisfaction, at or before the Closing, of each of the following
additional conditions set forth in Sections 8.01, 8.02, 8.03, and 8.04 below.
These conditions are for the Company's sole benefit and may be waived by the
Company (in whole or in part) at any time in its sole discretion.
Section 8.01. Accuracy of the Purchaser's Representations and Warranties.
The representations and warranties of the Purchaser contained in Article IV
hereof shall be true and correct as of the date when made and as of the Closing
Date, as though made on such date, and the Company shall have received a
certificate attesting thereto signed by a duly authorized officer or agent of
the Purchaser.
Section 8.02. Performance by the Purchaser. The Purchaser shall have
performed, satisfied and complied with, in all material respects, all covenants,
agreements, and conditions required by this Agreement to be performed, satisfied
or complied with by them on or prior to the Closing Date, and the Company shall
have received a certificate attesting thereto signed by a duly authorized
officer or agent of the Purchaser.
Section 8.03. Approval of Finova Capital Corporation. The Company shall
have obtained the written approval of Finova Capital Corporation consenting to
the subject sale and issuance of the Shares.
Section 8.04 Opinion of Xxxxxxxx Xxxxxxxx Company LLC. The Company shall
have obtained the opinion of the Xxxxxxxx Xxxxxxxx Company LLC to the effect
that the consideration to be paid by the Purchaser to the Company is fair to the
holders of the Company's Shares from a financial point of view.
ARTICLE IX
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
PURCHASER TO PURCHASE AND ACCEPT DELIVERY
OF THE COMMON STOCK
The obligations of the Purchaser hereunder to acquire and pay for, and
accept delivery of, the Shares are subject to the satisfaction, at or before the
Closing, of each of the following additional conditions set forth in Section
9.01 through Section 9.07
below. These conditions are for the Purchaser's sole benefit and may be waived
(in whole or in part) by the Purchaser.
Section 9.01. Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company contained in Article III hereof
which are not subject to a qualification regarding materiality shall be true and
correct in all material respects as of the date when made and as of the Closing
Date, as though made on such date, the representations and warranties of the
Company contained in Article III hereof, which are subject to a qualification
regarding materiality shall be true and correct in all respects as of the date
when made and as of the Closing Date, as though made on such date, and each
Purchaser shall have received a certificate attesting thereto signed by the
Chief Executive Officer of the Company, on behalf of the Company.
Section 9.02. Performance by the Company. The Company shall have performed,
satisfied and complied with, in all material respects, all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with on or prior to the Closing Date, and the Purchaser shall have received a
certificate attesting thereto signed by the Chief Executive Officer of the
Company.
Section 9.03. No Material Adverse Effect. There shall not have occurred and
there shall not otherwise exist any condition, event or development having, or
likely to have (in the reasonable judgment of the Purchaser), a Material Adverse
Effect.
Section 9.04. Governmental Approvals and Consents. The Company shall have
duly obtained, received or effected (and all applicable waiting and termination
periods, if any, including any extensions thereof, under any applicable law,
statute, regulation or rule, shall have expired or terminated) all
authorizations, consents, approvals, licenses, franchises, permits and
certificates by or of, and shall have made all filings and effected all
notifications, registrations and qualifications with, all federal, state and
local governmental and regulatory Authorities necessary for the issuance, sale
and delivery of the Shares being issued and sold at the Closing and, to the
extent required at Closing, the consummation of the other transactions
contemplated hereby.
Section 9.05. Secretary's Certificate. The Secretary or an Assistant
Secretary of the Company shall have delivered to the Purchaser at the Closing
Date a Certificate dated as of the Closing certifying: (a) that attached thereto
is a true and complete copy of the By-Laws of the Company as in effect on the
date of such certification; (b) that attached thereto is a true and complete
copy of all resolutions adopted by the Board of Directors of the Company
authorizing the execution, delivery and performance of the Agreement, the
issuance, sale and delivery of the Issuable Shares, and that all such
resolutions are in full force in effect and are all the resolutions adopted in
connection with the transactions contemplated by this Agreement; (c) that
attached thereto is a true and complete copy of the Certificate of Incorporation
as in effect on the
date of such certification; and (d) to the incumbency and specimen signature of
certain officers of the Company.
Section 9.06. Proceedings. All corporate and other proceedings to be taken
by the Company in connection with the transactions contemplated by this
Agreement and all documents reflecting or evidencing such proceedings shall be
reasonably satisfactory in scope, form and substance to the Purchaser and its
legal counsel, and the Purchaser and its legal counsel shall have received all
such duly executed counterpart originals or certified or other copies of such
documents and instruments as they may reasonably request.
Section 9.07. Shares. The sale of the Shares to the Purchaser hereunder
shall have been exempted from the provisions of the Blue Sky Law of the Florida
Statutes.
ARTICLE X
TERMINATION
Section 10.01. Termination by Mutual Written Consent. This Agreement may be
terminated and the transactions contemplated hereby may be abandoned, for any
reason, at any time prior to the Closing Date, by the mutual written consent of
the Company and the Purchaser.
Section 10.02. Termination by the Company or the Purchaser. Subsequent to
the approval of the Board of Directors of the Company and the Supervisory Board
of the Purchaser, this Agreement may be terminated and the transactions
contemplated hereby may be abandoned by action of Company or the Required
Purchaser if and to the extent that (a) the Closing shall not have occurred at
or prior to 5:00 p.m., Eastern time, on May 28, 1999, or such date as shall be
mutually agreed upon by the parties; provided, however, that the right to
terminate this Agreement under this Section 10.02 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 Date to occur on or before
such date; or (b) any court or governmental authority of competent jurisdiction
shall have issued an order, decree, writing or ruling or taken any other action,
or there shall be in effect any statute, rule or regulation, permanently
restraining, enjoining or otherwise prohibiting the purchase of the Shares
hereunder, or the consummation of the transactions contemplated by this
Agreement.
Section 10.03. Termination by the Purchaser. Subsequent to the approval of
the Board of Directors of the Company and the Supervisory Board of the
Purchaser, this Agreement may be terminated and the transactions contemplated
hereby may be abandoned by action of Purchaser, at any time prior to the Closing
Date, if (a) the Company shall have failed to comply in any material respect
with any of the covenants or agreements contained in this Agreement to be
complied with or performed by the
Company at or prior to such date of termination, and the Company shall not,
within a reasonable period of time after notice of such failure, have cured or
commenced prompt and diligent measures which would promptly cure such failure,
(b) there shall have been a material misrepresentation or material breach by the
Company with respect to any representation or warranty made by it in this
Agreement and such misrepresentation or breach cannot be cured prior to the
Closing Date, or (c) there shall have occurred and be continuing any condition,
event or development having, or reasonably likely to have, a Material Adverse
Effect.
Section 10.04. Termination by the Company. Subsequent to the approval of
the Board of Directors of the Company and the Supervisory Board of the
Purchaser, this Agreement may be terminated and the transactions contemplated
hereby may be abandoned by action of the Company, at any time prior to the
Closing Date, if (a) the Purchaser shall have failed to comply in any material
respect with any of the covenants or agreements contained in this Agreement to
be complied with or performed by the Purchaser at or prior to such date of
termination and such Purchaser shall not, within a reasonable period of time
after notice of such failure, have cured or commenced prompt and diligent
measures which would promptly cure such failure, (b) there shall have been a
material misrepresentation or material breach by any of the Purchaser with
respect to any representation or warranty made by such Purchaser in this
Agreement and such misrepresentation or breach cannot be cured prior to the
Closing Date, or (c) pursuant to Section 10.06 below.
Section 10.05. Effect of Termination. If this Agreement is terminated
pursuant to this Article X, this Agreement shall become void and of no effect
with no liability on the part of any party hereto, except (a) to the extent such
termination results from the breach by a party hereto of any of its
representations, warranties, covenants or agreements set forth in this
Agreement, and (b) that the covenants and agreements contained in that certain
Confidentiality Agreement between the parties dated April 13, 1999, shall
survive termination hereof.
Section 10.06. Negotiations with Third Parties. The Company shall be
entitled to entertain, discuss and negotiate with any third party that provides
an unsolicited offer for the sale of the Issued Shares that is potentially
superior to the terms of this Agreement in satisfaction of its fiduciary
obligations to the Company's Stockholders, as advised by its independent legal
counsel. In the event the Company shall determine that an unsolicited offer is
superior, the Company reserves the right to terminate this Agreement by
providing written notice to the Purchaser.
ARTICLE XI
DEFINITIONS
"Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated by
the Commission under the Exchange Act.
"Approval Date" shall mean the date (i) on which the Purchaser shall have
obtained all necessary approvals from the FTC and other regulatory authorities
with jurisdiction over the acquisition of the Shares and (ii) on which all
applicable notice and comment periods shall have expired without disapproval by
the other authorities. Such approval of the authorities shall mean approvals
with respect to the Purchaser' acquisition of the Shares.
"Authorities" shall mean approvals, consents, rights, certificates, orders,
franchises, determinations, permissions, licenses, authorities or grants issued,
declared, designated or adopted by any nation or government, any federal, state,
municipal or other political subdivision thereof or any department, commission,
board, bureau, agency or instrumentality exercising executive, legislative,
judicial, regulatory or administrative functions pertaining to government.
"Balance Sheet" shall have the meaning set forth in Section 3.07 of this
Agreement.
"Balance Sheet Date" shall have the meaning set forth in Section 3.07 of
this Agreement.
"Benefit Plans" shall have the meaning set forth in Section 3.21 of this
Agreement.
"Business Day" shall mean any day except a Saturday, Sunday or other day on
which commercial banks in the City of New York are not open for the transaction
of business.
"CERCLA" shall mean Comprehensive Environmental Response, Compensation, and
Liability Act. "Change of Control" shall mean:
(i) An acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the
"Exchange Act") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more of the combined voting power
of the then outstanding securities entitled to vote generally in the election of
directors of the Company; excluding, however, the following (1) any acquisition
by the Company, (2) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company, or (3) any acquisition by any entity pursuant to a transaction
which is excluded from subsection (ii) below; or
(ii) The approval by the shareholders of the Company of a reorganization,
merger or consolidation or sale or other disposition of all or substantially all
of the assets of the Company ("Corporate Transaction"); excluding, however, any
Corporate Transaction which would result in the voting securities of the Company
immediately prior to such Corporate Transaction continuing to represent (either
by remaining outstanding or being converted into voting securities of another
entity) 50% or more of the combined voting power of the securities entitled to
vote generally in the election of directors of the Company or such other entity
existing immediately after such Corporate Transaction.
"Closing" shall have the meaning set forth in section 2.02 of this
Agreement.
"Closing Date" shall have the meaning set forth in Section 2.02 of this
Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission.
"Company" shall mean Boca Research, Inc., a Florida corporation.
"Environmental Claim" shall have the meaning set forth in Section 3.16.
"Environmental Laws" shall mean any applicable Law concerning releases into
any part of the natural environment, or protection of natural resources, the
environment and public and employee health and safety including, without
limitation, CERCLA, the Hazardous Materials Transportation Act (49 U.S.C.
Section 1801 et seq .), the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.), the Clean Water Act (33 U.S.C. Section 1251 et seq.), the
Clean Air Act (33 U.S.C.Section 7401 et seq.), the Toxic Substances Control Act
(15 U.S.C.Section 7401 et seq.), the Federal Insecticide, Fungicide, and
Rodenticide Act 17 U.S.C. Section 136 et seq.), and OSHA, as such laws have been
and may be amended or supplemented through the Closing Date, and the regulations
promulgated pursuant thereto, and any applicable state or local statutes, and
the regulations promulgated pursuant thereto.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"GAAP" shall mean United States generally accepted accounting principles.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976.
"IRS" shall mean the United States Internal Revenue Service.
"Liens" shall mean any lien, claim, charge, pledge, mortgage, security
interest or other encumbrance.
"Material Adverse Effect" shall mean a material adverse effect on the
business, prospects, condition (financial or otherwise), assets or results of
operations of the Company and the Subsidiaries taken as a whole.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NLRB" shall mean the National Labor Relations board.
"OSHA" shall mean Occupational Safety and Health Act.
"Permits" shall mean, collectively, each permit, license, order or
authorization from any public or governmental authority which is material to or
necessary for the conduct of the business of the Company or any of the
Subsidiaries.
"Person" shall mean any individual, firm, corporation, partnership, limited
liability company or partnership, trust, incorporated or unincorporated
association, joint venture, government (or any agency or political subdivision
thereof) or other entity of any kind.
"Purchaser" shall mean Infomatec Integrated Information Systems AG and its
Affiliates for so long as it shall own in the aggregate at least 15 percent of
the Shares purchased by them hereunder.
"SEC Documents" means all reports, schedules, registration statements and
other documents (including all exhibits and schedules thereto) filed by the
Company with the Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Subsidiary" shall mean each corporation or other entity of which a
majority of the voting power of the voting equity securities or equity interest
is owned, directly or indirectly by the Company.
"Taxes" shall mean all taxes, charges, fees, levies or other assessments,
including, without limitation, all net income, gross receipts, capital, sales,
use, ad valorem, value added, transfer, franchise, profits, inventory, capital
stock, license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation, property and estimated taxes, customs,
duties, fees, assessments and charges of any kind whatsoever, together with any
interest and any penalties, fines, additions to tax or additional amounts
imposed by any public or governmental taxing
authority (domestic or foreign) and shall include any transferee liability in
respect of Taxes.
"Tax Return" shall mean all returns, declarations, reports, estimates,
information returns and statements required to be filed in respect of any Taxes.
ARTICLE XII
MISCELLANEOUS
Section 12.01. Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other party, or whenever any of the parties desires to give or
serve upon any other communication with respect to this Agreement, each such
notice, demand, request, consent, approval, declaration or other communication
shall be in writing and either shall be delivered in person with receipt
acknowledged or sent by registered or certified-mail, return receipt requested,
postage prepaid, or by overnight mail or courier, or delivery service or by
telecopy and confirmed by telecopy answer back, addressed as follows:
(a) If to the Company to:
Boca Research, Inc.
0000 Xxxxx Xxxx Xxxx
Xxxx Xxxxx, XX 00000
Attention: Chief Executive Officer
With a copy to:
Xxxxxx X. Xxxxxxxxxx, Esq.
Spinner, Dittman, Xxxxxxxxxx & Xxxxxxx
000 X. Xxxxxxxx Xxxxxx
Xxxxxx Xxxxx, XX 00000
If to the Purchaser to:
Infomatec Integrated Information Systems XX
Xxxxxxxxx Xxxx 00
00000 Xxxxxxxx, Xxxxxxx
Attention: Xxxx Xxxxx, Chief Financial
Officer
With a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Winthrop, Stimson, Xxxxxx & Xxxxxxx
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, XX 000000-0000
or at such other address as may be substituted by notice given as herein
provided. The furnishing of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Every notice, demand,
request, consent, approval, declaration or other communication hereunder shall
be deemed to have been duly given or served on (A) the date on which personally
delivered, with receipt acknowledged, (B) the date on which telecopied and
confirmed by telecopy answer back, or (C) the next Business Day if delivered by
overnight or express mail, courier or delivery service, as the case may be.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other communication.
Section 12.02. Fees and Expenses. Each party shall be responsible for its
own legal fees and costs with respect to negotiating and entering into this
Agreement. The Company agrees to indemnify and save harmless the Purchaser and
its respective officers, trustees, directors, partners, employees and agents
from and against any and all actions, causes of action, suits, losses,
liabilities and damages, and expenses (including, without limitation, reasonable
attorneys' fees and disbursements) in connection therewith (herein called the
"indemnified liabilities") incurred by Purchaser or any of its officers,
trustees, directors, partners, employees or agents as a result of, or arising
out of, or relating to any of the transactions contemplated hereby, except for
any indemnified liabilities arising (i) on account of the gross negligence or
willful misconduct of such Purchaser or any of its officers, directors,
partners, employees or agents, (ii) on account of any breach of a material term
or provision of this Agreement by the Purchaser hereunder or (iii) on account of
Taxes based on income in respect of securities of the Company, except as
otherwise expressly provided herein; provided that, if and to the extent such
agreement to indemnify may be unenforceable for any reason, the Company shall
make the maximum contribution to the payment and satisfaction of each of the
indemnified liabilities which shall be permissible under applicable law. The
obligations of the Company under this Section 12.02 shall survive the transfer,
redemption or conversion of any Shares.
Section 12.03. Survival of Representations and Warranties. All
representations and warranties contained herein or made in writing by the
Company in connection herewith shall survive the execution and delivery of this
Agreement, the sale and purchase of the Shares and any disposition thereof for a
period ending sixty days following the filing with the Commission of the
Company's Annual Report on Form 10-K covering the fiscal year ending December
31, 1999, except that the representations and warranties contained in Section
3.10 and Section 4.07 shall survive until the expiration of the applicable
statute of limitations for Taxes and three (3) years, respectively.
Section 12.04. Entire Agreement. This Agreement, together with the
schedules and exhibits hereto which are incorporated by reference herein,
represent the entire agreement and understanding among the parties hereto with
respect to the subject matter hereof and supersedes any and all prior oral and
written agreements, arrangements and understandings among the parties hereto
with respect to such subject matter, and can be amended, supplemented or
changed, and any provision hereof can be waived, only by a written instrument
making specific reference to this Agreement signed by the party against whom
enforcement of any such amendment, supplement, modification or waiver is sought.
Notwithstanding the foregoing, any document which is contemplated to be executed
or delivered at Closing or the Exchange Date in the form attached as an Exhibit
hereto may be delivered in substantially the form attached, together with any
changes thereto reasonably acceptable to the parties hereto.
Section 12.05. Successors and Assigns. This Agreement shall be binding upon
the parties hereto and their respective successors and assigns, including any
person to whom the Purchaser may assign its right and obligations to purchase
Shares and shall inure to the benefit of the parties hereto and, their
respective successors and assigns.
Section 12.06. Paragraph Headings. The paragraph headings contained in this
Agreement are for general reference purposes only and shall not affect in any
manner the meaning or interpretation of the terms or other provisions of this
Agreement.
Section 12.07. Applicable Law. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of Florida,
applicable to contracts to be made, executed, delivered and performed wholly
within such state, and in any case, without regard to the conflicts of law
principles of such state.
Section 12.08. Severability. If at any time subsequent to the date hereof,
any provision of this Agreement shall be held by any court of competent
jurisdiction to be illegal, void or unenforceable, such provision shall be of no
force and effect, but the illegality or unenforceability of such provision shall
have no effect upon and shall not impair the enforceability of any other
provision of this Agreement.
Section 12.09. Equitable Remedies. The parties hereto agree that
irreparable harm would occur in the event that any of the covenants contained in
this Agreement were not performed in all material respects by the parties hereto
in accordance with their specific terms or conditions or were otherwise
breached, and that money damages are an inadequate remedy for breach thereof
because of the difficulty of ascertaining and quantifying the amount of damage
that will be suffered by the parties hereto in the event that such covenants are
not performed in accordance with their terms or are otherwise breached. It is
accordingly hereby agreed that the parties hereto shall be entitled to seek an
injunction or injunctions to restrain, enjoin and prevent breaches and
violations of any of the covenants, contained in this Agreement by the other
parties and to enforce specifically the terms and provisions hereof in any court
of the United States or any state having competent jurisdiction, such remedy
being in addition to and not in lieu
of, any other rights and remedies to which the other parties are entitled to at
law or in equity.
Section 12.10. No Waiver. The failure of any party at any time or times to
require performance of any provision hereof shall not affect the right at a
later time to enforce the same. No waiver by any party of any condition, and no
breach of any provision, term, covenant, representation or warranty contained in
this Agreement, whether by conduct or otherwise, in any one or more instances,
shall be deemed to be construed as a further or continuing waiver of any such
condition or of the breach of any other provision, term, covenant,
representation or warranty of this Agreement.
Section 12.11. 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 but one and the same original instrument.
Section 12.12. Brokers. The Company, on the one hand, and each Purchaser as
to itself, on the other hand, represents and warrants to the other parties
hereto that neither it nor any of its officers, directors, general partners,
agents, employees, Affiliates or associates, has engaged or authorized any
broker or finder to act, directly or indirectly, on its behalf, in connection
with the transactions contemplated by this Agreement, or has consented to or
acquiesced in anyone so acting, and it knows of no claim by any person for
compensation from it for so acting or of any basis for such a claim except, (i)
in the case of the Company, for Xxxxxxxx Xxxxxxxx Company LLC pursuant to the
terms of the Engagement Letter previously provided to the Purchaser, and (ii) in
the case of the Purchaser, for Xxxx Xx Will
Section 12.13. Certain Assignment of Rights. Prior to Closing, the
Purchaser shall not be entitled to assign any of its rights hereunder other than
as is provided in Section 2.06 with regard to the Management Retention Options.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement, as of the day and year first above written.
SELLER PURCHASER
BOCA RESEARCH, INC. INFOMATEC INTEGRATED
INFORMATION
SYSTEMS AG
By: /s/ Xxxxxxx X. Xxxxxxxx
--- -----------------------
Name: Xxxxxxx X. Xxxxxxxx By: /s/ Xxxx Xxxxx
----- ------------------- --- --------------
Title: President/Chief Executive Name: Xxxx Xxxxx
Officer Title: CPA/Chief Financial
Officer
