EXHIBIT 10.20
JOINT VENTURE AGREEMENT
JOINT VENTURE AGREEMENT dated as of October 15, 1999 (this
"AGREEMENT"), among WAVEXPRESS, INC., a Delaware corporation (the
"COMPANY"), XXXXXXX CORPORATION, a New Jersey corporation ("XXXXXXX"),
and WAVE SYSTEMS CORP., a Delaware corporation ("WAVE").
The parties hereby agree as follows:
ARTICLE I
DEFINITIONS AND CONSTRUCTION
SECTION 1.01. CERTAIN DEFINITIONS, As used in this Agreement, the following
terms shall have the meanings specified below:
"AFFILIATE" shall mean, when used with respect to a specified Person,
another Person that directly, or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the Person
specified.
"APPROVAL" shall mean any consent, approval, license, permit or
authorization.
"BURDENSOME CONDITION" shall mean any action taken, or credibly
threatened, by any Governmental Authority or other Person to investigate or
challenge the legality of the Transactions under any Federal or state Law or
that would otherwise deprive any party of any material benefit of any Operative
Agreement, which action may include (i) any governmental investigation (formal
or informal), (ii) the institution of Litigation or the threat thereof, (iii) an
order by a Governmental Authority of competent jurisdiction preventing
consummation of the Transactions or placing any material conditions or
limitations upon such consummation or (iv) the issuance of any subpoena, civil
investigative demand or other request for documents or information that is
unreasonably burdensome.
"BUSINESS PLAN" shall mean the Business Plan of the Company from time
to time in effect.
"BUSINESS DAY" shall mean any day other than a day which is (i) a
Saturday or Sunday or (ii) any other day on which commercial banks in New York,
New York are authorized or required to remain closed.
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"CERTIFICATE OF DESIGNATIONS" shall mean the certificate of
designations with respect to the Series A Preferred Stock of the Company in the
form of EXHIBIT A hereto.
"CLOSING" shall mean the closing of the purchase and sale of the
Xxxxxxx Shares.
"CLOSING DATE" shall mean the date on which the Closing shall occur.
"COMMON STOCK" shall mean the Common Stock, par value $0.0001 per
share, of the Company.
"CONTRACT" shall mean any contract, indenture, mortgage, lease, deed,
commitment, agreement, arrangement or legally binding understanding.
As used in this Agreement, "CONTROL" (including, with its correlative
meanings, "CONTROLLED BY" and "UNDER COMMON CONTROL WITH") shall mean
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise).
"CONVERTIBLE NOTE" shall mean the Unsecured Convertible Term Note to be
dated the Closing Date made by the Company payable to the order of Wave
substantially in the form of EXHIBIT G hereto.
"DEMANDING PARTY" shall mean a Person who is exercising a right under
Section 7.01(a) to demand registration of all or any portion of such Person's
Registration Shares.
"DOLLARS" or "$" shall mean lawful money of the United States of
America.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934.
"GAAP" shall mean United States generally accepted accounting
principles.
"GOVERNMENTAL APPROVAL" shall mean any Approval of, or declaration or
filing with, any Governmental Authority.
"GOVERNMENTAL AUTHORITY" shall mean any court, administrative agency or
commission or other governmental agency or instrumentality, domestic or foreign,
or any arbitrator, of competent jurisdiction.
"HOLDER" shall mean (i) any Xxxxxxx Securityholder SO LONG AS such
Xxxxxxx Securityholder is the registered holder of at least 100,000 shares of
Xxxxxxx Securities and (ii) any Wave Securityholder SO LONG AS such Wave
Securityholder is the registered holder of at least 100,000 shares of Wave
Securities. The number of shares referred to in this definition shall be
adjusted proportionately in order to give effect to any stock dividends, splits,
reverse splits, combinations or recapitalizations after the Closing Date.
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"INITIAL PUBLIC OFFERING" shall mean the initial underwritten public
offering by the Company of Common Stock pursuant to an effective registration
statement under the Securities Act.
"INITIAL SHARES" shall mean the Xxxxxxx Shares and the Wave Shares.
"INJUNCTION" shall mean any preliminary, temporary, interim or final
injunction, temporary restraining order or other legal prohibition.
"INTELLECTUAL PROPERTY" shall mean patents, patent applications, patent
rights, trademarks, trademark registrations, trademark applications, service
marks, business marks, trade names, brand names, all other names and slogans
embodying business or product goodwill (or both), copyright registrations,
copyrights (including those in computer programs, software, including all source
code and object code, development documentation, programming tools, drawings,
specifications and data), trade secrets, know-how, mask works, industrial
designs, formulas, processes and technical information, including confidential
and proprietary information, and any rights under licenses to any of the
foregoing, whether or not subject to statutory registration or protection.
"ISSUE" shall mean issue and sell.
"JUDGMENT" shall mean any judgment, order, decree or arbitral award.
"LAW" shall mean any statute, law, ordinance, rule or regulation.
"LICENSED INTELLECTUAL PROPERTY" shall mean all Intellectual Property
licensed to the Company pursuant to the Xxxxxxx License or the Wave Licenses, as
the case may be.
"LIEN" shall mean, with respect to any asset, (i) any mortgage, deed of
trust, lien, pledge, charge, security interest, easement, covenant, right of
way, restriction, equity or encumbrance of any nature whatsoever in or on such
asset, (ii) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement relating to such asset and
(iii) in the case of securities, any purchase option, call or similar right of a
third party with respect to such securities.
"LITIGATION" shall mean any written claim, action, lawsuit, arbitration
or proceeding.
Any reference to any fact, event, change or effect being "MATERIAL"
with respect to any party shall mean an event, change or effect that is or,
insofar an can reasonably be foreseen, will be material to the business,
properties, assets, liabilities, financial condition or results of operations of
such party and its Subsidiaries taken as a whole.
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"METERED SERVICE" shall mean a service which provides for identifying
and quantifying the usage of specific content by an end user, after the content
has been transmitted and stored on a user device, and the billing for such
usage.
"OPERATIVE AGREEMENTS" shall mean this Agreement, the Stockholder
Agreement, the Xxxxxxx License, the Xxxxxxx Development Agreement, the Wave
Licenses, the Wave Development Agreement, the Convertible Note and the Wave
Warrant and all other documents, instruments and agreements now or hereafter
entered into and designated by Xxxxxxx and Wave as an "Operative Agreement".
"NASDAQ" shall mean the National Association of Securities Dealers
automated quotation system.
"PARTICIPATING HOLDER" shall mean any Holder whose Registration Shares
have been included in a registration pursuant to Section 7.01 or 7.02.
"PARTY" shall mean any party hereto.
"PERMIT" shall mean any permit, license, franchise or authorization.
"PERSON" shall mean any individual, firm, corporation, partnership,
trust, joint venture, Governmental Authority or other entity, and shall include
any successor (by merger or otherwise) of such entity.
"PUBLIC SALE" shall mean any sale of Common Stock to the public
pursuant to a public offering registered under the Securities Act or to the
public through a broker or market-maker pursuant to the provisions of Rule 144
(or any successor rule) adopted under the Securities Act of 1933.
"REGISTRATION SHARES" shall mean (i) all Shares issued to or
subsequently acquired by a Xxxxxxx Securityholder, a Wave Securityholder or
Xxxxxxx Common Stock Purchaser and (ii) all securities issued or issuable in
respect thereof by way of stock dividend, stock split or reclassification or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise.
"XXXXXXX DEVELOPMENT AGREEMENT" shall mean the Development Agreement to
be dated as of the Closing Date between the Company and Xxxxxxx substantially in
the form of EXHIBIT D hereto.
"XXXXXXX LICENSE" shall mean the Technology and Patent License
Agreement to be dated as of the Closing Date between the Company and Xxxxxxx
substantially in the form of EXHIBIT C hereto.
"XXXXXXX SHARES" shall mean the 1,160,000 shares of Common Stock and
the 2,840,000 shares of Series A Preferred Stock, Issued by the Company to
Xxxxxxx on the Closing Date.
"XXXXXXX SECURITIES" shall mean (a) the Xxxxxxx Shares, (b) all shares
of Common Stock issued or issuable upon conversion of such shares, (c) all
shares of
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Common Stock purchased or otherwise acquired from time to time by Xxxxxxx, (d)
the shares of Common Stock acquired by the Xxxxxxx Common Stock Purchasers as
contemplated by Section 2.03(c), and (e) all shares of the Company's capital
stock issued with respect to such shares by way of stock dividend or stock split
or in connection with any merger, consolidation, recapitalization or other
reorganization affecting the Company's capital stock. Xxxxxxx Securities will
continue to be Xxxxxxx Securities in the hands of any holder and each transferee
thereof will succeed to the rights and obligations of a holder of Xxxxxxx
Securities hereunder, PROVIDED that Xxxxxxx Securities will cease to be Xxxxxxx
Securities when transferred (i) to the Company or its Subsidiaries, (ii) to any
Wave Securityholder, or (iii) pursuant to a Public Sale.
"XXXXXXX SECURITYHOLDER" shall mean (a) Xxxxxxx for so long as Xxxxxxx
holds Shares and any other Person to whom Xxxxxxx transfers Xxxxxxx Securities
for so long as such Person holds such Shares, and (b) and any Xxxxxxx Common
Stock Purchaser for so long as such Xxxxxxx Common Stock Purchaser holds Common
Stock and any Person to whom such Xxxxxxx Common Stock Purchaser transfers
Xxxxxxx Securities for as long as such Person holds such shares.
"SEC" shall mean the Securities and Exchange Commission or any
successor commission or agency having similar powers.
"SERIES A PREFERRED STOCK" shall mean the Series A Preferred Stock, par
value $0.0001 per share, of the Company.
"SECURITIES ACT" shall mean the Securities Act of 1933.
"SHARES" shall mean the Common Stock and the Series A Preferred Stock.
"SIGNIFICANT XXXXXXX SECURITYHOLDER" shall mean any Xxxxxxx
Securityholder SO LONG AS (i) with respect to registrations on Form S-1, such
Xxxxxxx Securityholder is the registered holder of at least 1,200,000 shares of
Xxxxxxx Securities and (ii) with respect to registrations on Form S-3, such
Xxxxxxx Securityholder is the registered holder of at least 1,200,000 Xxxxxxx
Securities. The number of shares referred to in this definition shall be
adjusted proportionately in order to give effect to any stock dividends, splits,
reverse splits, combinations or recapitalizations after the Closing Date.
"SIGNIFICANT WAVE SECURITYHOLDER" shall mean any Wave Securityholder SO
LONG AS (i) with respect to registrations on Form S-1, such Wave Securityholder
is the registered holder of at least 1,800,000 shares of Wave Securities and
(ii) with respect to registrations on Form S-3, such Wave Securityholder is the
registered holder of at least 1,800,000 shares of Wave Securities. The number of
shares referred to in this definition shall be adjusted proportionately in order
to give effect to any stock dividends, splits, reverse splits, combinations or
recapitalizations after the Closing Date.
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"STOCKHOLDER AGREEMENT" shall mean the Stockholder Agreement to be
dated as of the Closing Date among the Company, Xxxxxxx, Wave and the other
stockholders of the Company from time to time party thereto, substantially in
the form of EXHIBIT B hereto.
"SUBSIDIARY" of any Person shall mean a corporation, company or other
entity (i) more than 50% of whose outstanding shares or securities (representing
the right to vote for the election of directors or other managing authority)
are, or (ii) which does not have outstanding shares or securities (as may be the
case in a partnership, joint venture or unincorporated association), but more
than 50% of whose ownership interest representing the right to make decisions
for such other entity is, now or hereafter, owned or controlled, directly or
indirectly, by such Person, but such corporation, company or other entity shall
be deemed to be a Subsidiary only so long as such ownership or control exists.
"TRANSACTIONS" shall mean the transactions contemplated by the
Operative Agreements.
"TRANSFER" shall mean to sell, transfer or assign.
"WAVE COMMON STOCK PURCHASERS" means each officer, employee or director
of Wave that purchased Common Stock prior to the Closing Date.
"WAVE DEVELOPMENT AGREEMENT" shall mean the Development Agreement to be
dated as of the Closing Date between the Company and Wave substantially in the
form of EXHIBIT F hereto.
"WAVE LICENSES" shall mean, collectively, (a) the Patent License
Agreement to be dated as of the Closing Date between the Company and Wave and
(b) the Service Agreement to be dated as of the Closing Date between the Company
and Wave, substantially in the forms of EXHIBIT E-1 and EXHIBIT E-2 hereto,
respectively.
"WAVE SECURITIES" shall mean (a) the Wave Shares, (b) all shares of
Common Stock purchased by or issued from time to time to Wave (including upon
exercise of the Wave Warrant and conversion of the Convertible Note), (c) the
shares of Common Stock issued to the Wave Designees and the Wave Designee
Relatives as contemplated by Section 2.03(b) and (d) all shares of the Company's
capital stock issued with respect to such shares by way of stock dividend or
stock split or in connection with any merger, consolidation, recapitalization or
other reorganization affecting the Company's capital stock. Wave Securities will
continue to be Wave Securities in the hands of any holder and each transferee
thereof will succeed to the rights and obligations of a holder of Wave
Securities hereunder, PROVIDED that Wave Securities will cease to be Wave
Securities when transferred (i) to the Company or its Subsidiaries, (ii) to a
Xxxxxxx Securityholder, or (iii) pursuant to a Public Sale.
"WAVE SECURITYHOLDER" shall mean Wave for so long as Wave holds Shares
and any other Person who holds Wave Securities for so long as such Person holds
such Shares.
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"WAVE SHARES" shall mean 5,300,000 shares of Common Stock (adjusted for
1000-for-1 stock split) Issued by the Company to Wave as of June 1, 1999.
"WAVE WARRANT" shall mean the Warrant to Purchase Common Stock of the
Company to be dated the Closing Date and issued by the Company to Wave
substantially in the form of EXHIBIT A attached to the Convertible Note.
SECTION 1.02. ADDITIONAL DEFINITIONS.
DEFINED TERM SECTION DEFINED IN
Demand Registration 7.01(a)
Piggy Back Registration 7.02(a)
Registration Statement 7.09(i)
Xxxxxxx Common Stock Purchaser 2.03(c)
Wave Designees 2.03(b)
Wave Designee Relatives 2.03(b)
SECTION 1.03. TERMS GENERALLY. The definitions in Sections 1.01 and
1.02 shall apply equally to both the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". All references herein to Articles, Sections, Exhibits and Schedules
shall be deemed references to Articles and Sections of, and Exhibits and
Schedules to, this Agreement unless the context shall otherwise require. The
headings of the Articles and Sections are inserted for convenience of reference
only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement. Unless the context shall otherwise require,
any reference to any agreement or other instrument or statute or regulation are
to it as amended and supplemented from time to time (and, in the case of a
statute or regulation, to any successor provision). Any reference in this
Agreement to a "day" or a number of "days" (without the explicit qualification
of "Business") shall be interpreted as a reference to a calendar day or number
of calendar days. If any action or notice is to be taken or given on or by a
particular calendar day, and such calendar day is not a Business Day, then such
action or notice shall be deferred until, or may be taken or given, on the next
Business Day.
ARTICLE II
PURCHASE AND SALE OF XXXXXXX SHARES
SECTION 2.01. PURCHASE OF XXXXXXX SHARES. At the Closing, in reliance
upon the representations and warranties set forth in each Operative Agreement,
and upon the terms and subject to the conditions set forth herein, the Company
shall Issue to Xxxxxxx, and Xxxxxxx shall purchase, the Xxxxxxx Shares. In full
consideration for the Xxxxxxx Shares, Xxxxxxx shall enter into the Xxxxxxx
License. The parties acknowledge and agree that, as of the Closing Date, the
shares of Common Stock constituting Xxxxxxx Shares have a fair market value
equal to $0.0001 per share and the shares of Series A Preferred Stock have a
fair market value equal to $1.4084506 per share.
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SECTION 2.02. CLOSING. (a) Subject to the satisfaction of the
conditions set forth in Article III, the Closing will take place at 10:00 a.m.
on October 15, 1999. The Closing shall occur at a place to be agreed by the
parties.
(b) At the Closing, (i) each party shall execute and deliver each
Operative Agreement to which it is a party that has not previously been executed
and (ii) the Company shall deliver to Xxxxxxx a certificate representing the
Xxxxxxx Shares, registered in the name of Xxxxxxx.
SECTION 2.03. OTHER PURCHASES OF SHARES. (a) On and as of June 1, 1999,
the Company Issued to Wave, and Wave purchased, the Wave Shares for a purchase
price per share equal to the fair market value per share.
(b) On and as of June 1, 1999, the Company Issued 700,000 shares of
Common Stock (adjusted for 1000-for-1 stock split) to certain employees,
officers or directors or consultants of Wave (the "WAVE DESIGNEES"), for a
purchase price per share equal to the fair market value per share. Certain of
the Wave Designees subsequently transferred their shares of Common Stock to
their spouses, siblings, parents, issue or to a trust the beneficiaries of which
include such Wave Designee or any of the foregoing relatives (collectively, the
"WAVE DESIGNEE RELATIVES"). Upon the execution and delivery by the Wave
Designees and the Wave Designee Relatives of the Stockholder Agreement, the Wave
Designees and the Wave Designee Relatives shall be entitled to the benefits and
subject to the obligations of Wave Securityholders set forth in Article VII,
and, for such purpose, such shares of Common Stock shall constitute Wave
Securities, and the Wave Designees and the Wave Designee Relatives shall be
deemed to be Wave Securityholders.
(c) Xxxxxxx may sell and transfer up to 1,160,000 shares of the Common
Stock constituting Xxxxxxx Shares to certain employees, officers or directors or
consultants of Xxxxxxx (the "XXXXXXX COMMON STOCK PURCHASERS"). Upon the
execution and delivery by the Xxxxxxx Common Stock Purchasers of purchase
agreements for such shares of Common Stock satisfactory to the Company, and the
purchase and sale to the Xxxxxxx Common Stock Purchasers of such shares of
Common Stock, the Xxxxxxx Common Stock Purchasers shall be entitled to the
benefits and subject to the obligations of Xxxxxxx Securityholders set forth in
Article VII, and, for such purpose, such shares of Common Stock shall constitute
Xxxxxxx Securities, and the Xxxxxxx Common Stock Purchasers shall be deemed to
be Xxxxxxx Securityholders.
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SECTION 2.04. LEGENDS. Each certificate evidencing the Initial Shares
shall bear the legends set forth on SCHEDULE 2.04 hereto
ARTICLE III
CONDITIONS TO CLOSING
SECTION 3.01. CONDITIONS TO EACH PARTY'S OBLIGATIONS. The obligations
of Xxxxxxx to purchase the Xxxxxxx Shares and the obligations of Xxxxxxx and
Wave to enter into the other Operative Agreements to which they are parties, and
the obligations of the Company to Issue the Xxxxxxx Shares to Xxxxxxx and to
enter into the other Operative Agreements to which it is a party, are subject to
the satisfaction or waiver, as of the Closing Date, of the following conditions:
(a) GOVERNMENTAL APPROVALS. All Governmental Approvals necessary for
the consummation of the Transactions shall have been obtained or made and all
waiting periods imposed by any Governmental Authority or Law shall have expired.
(b) NO INJUNCTIONS OR LITIGATION. No Injunction restraining or
preventing the consummation of the Transactions shall be in effect, and no
Litigation shall be pending or threatened by or before any Governmental
Authority that would restrain or prevent the consummation of the Transactions or
impose any Burdensome Condition.
(c) OTHER OPERATIVE AGREEMENTS. The parties to each other Operative
Agreement shall have entered into all such other Operative Agreements, each of
which shall be in full force and effect (except each such other Operative
Agreement may be similarly conditioned on the entering into of all other
Operative Agreements).
(d) APPROVALS. All Approvals necessary for the consummation of the
Transactions shall have been obtained.
(e) BURDENSOME CONDITION. No Burdensome Condition shall exist in
connection with the consummation of any of the Transactions.
(f) EMPLOYMENT MATTERS. Each party shall be reasonably satisfied with
the officers and employees of the Company as of the Closing Date.
(g) BUSINESS PLAN. Xxxxxxx and Wave shall have approved the initial
Business Plan.
(h) INSURANCE. The Company shall have obtained such insurance, and
shall have adopted a plan for the purchase of such additional insurance, as
Xxxxxxx and Wave shall reasonably require.
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SECTION 3.02. CONDITIONS TO XXXXXXX'X OBLIGATIONS. The obligations of
Xxxxxxx to purchase the Xxxxxxx Shares and enter into any of the other Operative
Agreements to which it is a party are subject to the satisfaction (or waiver by
Xxxxxxx), as of the applicable Closing Date, of the following additional
conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and Wave made in each Operative Agreement shall be
true and correct in all material respects as of the Closing Date, as if made on
and as of the Closing Date.
(b) PERFORMANCE OF OBLIGATIONS. The Company and Wave shall have
performed or complied with in all material respects their respective covenants
and agreements contained in the Operative Agreements required to be performed or
complied with by the Company or Wave on or prior to the Closing Date.
(c) DELIVERY OF COMPANY CERTIFICATES. The Company shall have delivered
to Xxxxxxx the following (in each case dated the Closing Date, unless otherwise
indicated):
(i) a certificate of the Chief Executive Officer and the Secretary of
the Company to the effect that the conditions specified in Sections 3.02(a)
and 3.02(b) have been satisfied with respect to the Company;
(ii) a certificate of the Secretary of the Company certifying as to (A)
the attached copy of the Certificate of Incorporation of the Company, and
all amendments thereto (including the Certificate of Resignation), being
true and complete, (B) the attached copy of the By-laws of the Company
being true and complete, (C) the attached resolutions of the Company's
Board of Directors authorizing (I) the execution and delivery by the
Company of the Operative Agreements to which the Company is a party, (II)
the consummation by the Company of the Transactions and (III) the issuance
of the Xxxxxxx Shares and (D) the incumbency and signatures of certain
officers of the Company;
(iii) such other certificates or documents as Xxxxxxx or its counsel
may reasonably request relating to the satisfaction of the conditions to
the Closing; and
(iv) the documents referred to Section 3.03(c)(ii).
(d) DELIVERY OF WAVE CERTIFICATES. Wave shall have delivered to Xxxxxxx
the following (in each case dated the Closing Date, unless otherwise indicated):
(i) a certificate of an authorized signatory of Wave to the effect that
the conditions specified in Sections 3.02(a) and 3.02(b) have been
satisfied with respect to Wave; and
(ii) such other certificates or documents as Xxxxxxx or its counsel may
reasonably request relating to the satisfaction of the conditions to the
Closing.
(e) PROCEEDINGS SATISFACTORY. All corporate and legal proceedings
required to be taken by the Company and Wave in connection with the Transactions
and all documents and papers relating to such transaction shall be reasonably
satisfactory in form and substance to Xxxxxxx and its counsel, and Xxxxxxx shall
have received all such certified or other copies of all such documents as
Xxxxxxx or its counsel shall reasonably require.
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SECTION 3.03. CONDITIONS TO WAVE'S OBLIGATIONS. The obligations of Wave
to enter into the Operative Agreements to which it is a party are subject to the
satisfaction (or waiver by Wave), as of the applicable Closing Date, of the
following additional conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and Xxxxxxx made in each Operative Agreement shall be
true and correct in all material respects as of the Closing Date, as if made on
and as of the Closing Date.
(b) PERFORMANCE OF OBLIGATIONS, The Company and Xxxxxxx shall have
performed or complied in all material respects with their respective covenants
and agreements contained in the Operative Agreements required to be performed or
complied with by the Company or Xxxxxxx on or prior to the Closing Date.
(c) DELIVERY OF COMPANY CERTIFICATES. The Company shall have delivered
to Wave the following:
(i) the documents referred to in Sections 3.02(c)(i)-(iii); and
(ii) such other certificates or documents as Wave or its counsel may
reasonably request relating to the satisfaction of the conditions to the
applicable closing.
(d) DELIVERY OF XXXXXXX CERTIFICATES. Xxxxxxx shall have delivered to
Wave the following (in each case dated the Closing Date, unless otherwise
indicated):
(i) a certificate of an authorized signatory of Xxxxxxx to the effect
that the conditions specified in Sections 3.03(a) and 3.03(b) have been
satisfied with respect to Xxxxxxx;
(ii) such other certificates or documents as Wave or its counsel may
reasonably request relating to the satisfaction of the conditions to the
Closing.
(e) PROCEEDINGS SATISFACTORY. All corporate and legal proceedings
required to be taken by the Company and Xxxxxxx in connection with the
Transactions and all documents and papers relating to such transactions shall be
reasonably satisfactory in form and substance to Wave and its counsel, and Wave
shall have received all such certified or other copies of all such documents as
Wave or its counsel shall reasonably require.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company hereby represents and warrants to Xxxxxxx and Wave, on the date hereof
(except with respect to Section 4.01 (b)) and on and as of the Closing Date, as
follows:
(a) ORGANIZATION AND STANDING OF THE COMPANY. The Company:
(i) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware;
(ii) has all requisite corporate power and authority and possesses all
Permits and Approvals from Governmental Authorities necessary to enable it
to use its corporate name and to own, lease or otherwise hold its
properties and assets and to carry on its business as contemplated by the
Business Plan; and
(iii) is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where it is required by the nature
of its business as contemplated by the Business Plan to be so qualified.
(b) AUTHORITY. The Company has all requisite corporate power and
authority to enter into this Agreement and the other Operative Agreements and to
consummate the Transactions. The execution and delivery by the Company of this
Agreement and the other Operative Agreements and the consummation by the Company
of the Transactions have been duly authorized by all necessary corporate action
on the part of the Company. This Agreement and the other Operative Agreements
have been, or will at the Closing have been, duly executed
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and delivered by the Company and constitute, or will at the Closing constitute,
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms. The execution and delivery by
the Company of this Agreement and the other Operative Documents do not and did
not, and the consummation by the Company of the Transactions and compliance by
the Company with the terms of the Operative Agreements will not, conflict with,
result in any violation of or default (with or without notice or lapse of time
or both) under, give rise to a right of termination, cancellation or
acceleration of any material obligation or to the loss of any material benefit
under or result in or require the creation, imposition or extension of any Lien
upon any of the properties or assets of the Company under (i) any Contract, (ii)
any provision of the Certificate of Incorporation or By-laws of the Company or
(iii) any Judgment or Law. No Governmental Approval or Approval of any other
Person is required to be obtained or made by the Company in connection with the
execution and delivery of this Agreement or the other Operative Agreements or
the consummation of the Transactions.
(c) CAPITALIZATION OF THE COMPANY. Except as set forth on SCHEDULE
4.01(C), no Shares are issued or outstanding. Except for this Agreement, there
are no outstanding Contracts pursuant to which the Company is or may become
obligated to issue, deliver or sell any Shares. There are no outstanding
Contracts pursuant to which the Company is or may become obligated to redeem,
repurchase or otherwise acquire or retire any Shares. The issuance of the
Initial Shares has been duly authorized, and the Initial Shares, when issued and
delivered pursuant to this Agreement, will be validly issued, fully paid and
nonassessable and will not have been issued in violation of, and will not be
subject to, any preemptive or subscription rights.
(d) NO SUBSIDIARIES, JOINT VENTURES, ETC. The Company does not have any
Subsidiaries or, directly or indirectly, own any capital stock or other equity
interests in any corporation, partnership or other entity, and the Company is
not a member of or participant in any partnership, joint venture (except by
virtue of this Agreement) or similar entity.
(e) BROKERS OR FINDERS, No Person is or will be entitled to any
broker's or finder's fee or any other commission or similar fee from the Company
in connection with any of the Transactions.
(f) ABSENCE OF DEFAULT, No default (however defined) on the part of the
Company under any Operative Agreement exists or will exist at the time of, or as
a result of or immediately following, the Closing.
SECTION 4.02. REPRESENTATIONS AND WARRANTIES OF XXXXXXX AND WAVE. Each
of Xxxxxxx and Wave represents and warrants to the other party that, as of the
date of this Agreement and as of the Closing Date, with respect to itself:
(a) ORGANIZATION AND STANDING. Such party:
(i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation; and
(ii) has all requisite corporate power and authority necessary to
enable it to use its corporate name and to own, lease or otherwise hold its
properties and assets and to carry on its business as presently conducted.
(b) AUTHORITY. (i) Such party has all requisite corporate power and
authority to enter into this Agreement and the other Operative Agreements to
which it is a party and to consummate the Transactions. The execution and
delivery by such party of this Agreement and the other Operative Agreements to
which it is a party and the consummation by such party of the
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Transactions have been duly authorized by all necessary corporate action on the
part of such party. This Agreement and the other Operative Agreements to which
it is a party have been, or will at the Closing have been, duly executed and
delivered by such party and constitute, or will at the Closing constitute, its
legal, valid and binding obligations, enforceable against such party in
accordance with their respective terms. The execution and delivery by such party
of this Agreement and the other Operative Documents to which it is a party do
not and did not, and the consummation of the Transactions and compliance with
the terms of the Operative Agreements to which it is a party will not, conflict
with, result in any violation of or default (with or without notice or lapse of
time or both) under, give rise to a right of termination, cancellation or
acceleration of any material obligation or to the loss of any material benefit
under or result in or require the creation, imposition or extension of any Lien
upon any of its properties or assets under (A) any Contract, (B) any provision
of its constitutive documents or (C) any Judgment or Law, except, with respect
to clauses (A) or (C), for such conflicts, violations, defaults, rights or
losses that, individually or in the aggregate, would not have a material adverse
effect on such party's ability to perform its obligations under this Agreement
and the other Operative Agreements to which it is a party in accordance with
their respective terms. No Governmental Approval or Approval of any other Person
is required to be obtained or made by such party or any of its Affiliates in
connection with the execution and delivery of this Agreement or the other
Operative Agreements to which it is a party or the consummation of the
Transactions (other than Governmental Approvals (I) relating to the Transactions
that must be obtained by such party by reason of facts peculiar to another party
which such other party has not disclosed or (II) the absence of which would not
have a material adverse effect an any party's ability to perform its obligations
under this Agreement and the other Operative Agreements to which it is a party
in accordance with their respective terms).
(ii) Notwithstanding Section 4.02(b)(i), no representation or warranty
is being given in this Section 4.02(b) as to whether the Xxxxxxx License or
the Wave Licenses, as the case may be, (A) conflicts with, results in a
violation of or default under or gives rise to a right of termination,
cancellation or acceleration of any material obligation or to the loss of
any material benefit under, any Contract or (B) requires the Approval of
any Person.
-14-
(c) BROKERS OR FINDER. No Person is or will be entitled to any broker's
or finder's fee or any other commission or similar fee from such party in
connection with any of the Transactions.
(d) SECURITIES ACT. The Initial Shares already purchased, or to be
purchased by such party pursuant to this Agreement, as the case may be, have
been or are being acquired for its own account for the purpose of investment
only and not with a view to any public distribution thereof. Such party is an
"accredited investor" within the meaning of Rule 501 under the Securities Act.
ARTICLE V
COVENANTS PENDING THE CLOSING
SECTION 5.01. (a) COVENANTS PENDING THE CLOSING. (a) From the date of
this Agreement to the Closing Date, Xxxxxxx and Wave each agree that such party
shall carry on its business (to the extent that it relates to Licensed
Intellectual Property) in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted.
(b) Each party shall take all actions reasonably necessary or
appropriate to ensure that the conditions to Closing set forth herein (other
than Section 3.01(i)) to be satisfied by such party are satisfied on or prior to
the Closing Date and to obtain (and cooperate with the other parties in
obtaining) any Governmental Approvals required to be obtained or made by it in
connection with any of the Transactions, except that such party shall not be
required to accept or comply with any Burdensome Condition.
ARTICLE VI
OTHER COVENANTS
SECTION 6.01. FINANCIAL STATEMENTS. Until the Company shall become
subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange
Act, the Company shall deliver to each Holder:
(i) as soon as practicable following the and of each fiscal year (and
in any event not later than 120 days after the end of such fiscal year),
consolidated statements of income, changes in retained earnings and cash
flows of the Company for such year and a consolidated balance sheet of the
Company as at the end of such year, together with appropriate notes to such
financial statements, in each case setting forth in comparative form the
corresponding figures for the preceding fiscal year and from the budget for
the fiscal year then ended, together with an opinion directed to the
Company of independent public accountants to the effect that such financial
statements have been prepared in conformity with GAAP applied on a basis
consistent with prior years;
(ii) as soon as practicable following the end of each fiscal quarter
(and in any event not later than 45 days after the end of such fiscal
quarter), consolidated statements of income and cash flows of the Company
for such fiscal quarter and for the period from the beginning of the then
current fiscal year to the end of such fiscal quarter and a consolidated
balance sheet of the Company as at the end of such fiscal quarter, in each
case setting forth in comparative form the corresponding figures for the
-15-
corresponding periods in the preceding fiscal year and from the budget for
such fiscal quarter and the then current fiscal year to date, all in
reasonable detail and accompanied by a certificate from the principal
accounting or financial officer of the Company to the effect that such
financial statements have been prepared under such officer's supervision
and that such financial statements have been prepared in accordance with
GAAP, consistently applied, subject to normal, recurring year-end
adjustments;
(iii) as soon as practicable following the end of each calendar month
(and in any event not later than 15 days after the end of such month),
consolidated statements of income and cash flows for the Company for such
month and for the period from the beginning of the then current fiscal year
to the and of such month and the consolidated balance sheet of the Company
as at the end of such month, in each case setting forth in comparative form
the corresponding figures for the corresponding periods in the preceding
fiscal year and from the budget for such month and the then current fiscal
year to date;
(iv) as soon practicable prior to the end of each fiscal year (and in
any event not later than 30 days prior to the end of each fiscal year), a
copy of the projections by the Company for the operating budget and cash
flow budget of the Company for the next succeeding fiscal year, such
projections to be accompanied by a certificate of principal accounting or
chief financial officer of the Company to the effect that such projections
have been prepared in good faith on the basis of reasonable assumptions and
that such officer has no reason to believe they are incorrect or misleading
in any material respect; and
(v) promptly, such additional information regarding the financial
condition, results of operations or business of the Company as any Holder
may from time to time reasonably request.
SECTION 6.02. [Intentionally Deleted].
SECTION 6.03. BUSINESS PLAN. (a) The Company shall at all times conduct
its business and affairs in a manner substantially consistent with the Business
Plan. If at any time the Company does not have a Business Plan, the Company
shall conduct its business and affairs in a manner substantially consistent with
the Business Plan in effect for the most recent fiscal year for which the
Company had a Business Plan.
(b) This Section shall terminate upon the earlier of (i) an Initial
Public Offering and (ii) Xxxxxxx and Wave ceasing to be holders of Xxxxxxx
Securities or Wave Securities, respectively.
SECTION 6.04. WAVE WORKING CAPITAL LOAN. At or promptly following the
Closing, Wave shall execute and deliver the Convertible Note pursuant to which
Wave will, on the terms set forth therein, provide up to $3,000,000 in working
capital loans to the Company.
-16-
ARTICLE VII
REGISTRATION RIGHTS
SECTION 7.01. DEMAND REGISTRATIONS. (a) Commencing upon the earlier of
(x) the fourth (4th) anniversary of the Closing Date and (y) six (6) months
after an Initial Public Offering, the Company shall, upon the written demand of
any Significant Xxxxxxx Securityholder or Significant Wave Securityholder, use
its best efforts to effect the registration (a "DEMAND REGISTRATION") under the
Securities Act of such number of Registration Shares then beneficially owned by
such party as shall be indicated in a written demand sent to the Company by such
party; PROVIDED, HOWEVER, that
(i) the Company shall be obligated to effect a total of no more than
two (2) Demand Registrations at the request of the Significant Xxxxxxx
Securityholders and no more than two (2) Demand Registrations at the
request of the Significant Wave Securityholders; PROVIDED that the
foregoing limitation shall not restrict any Significant Xxxxxxx
Securityholder or Significant Wave Securityholder from requiring the
Company to effect any number of Demand Registrations on Form S-3 (or any
comparable form adopted by the SEC) SO LONG AS the fair market value of the
securities the subject of any such Demand Registration is at least
$1,000,000 (it being understood that the Company shall only be obligated
under Section 7.09 to pay the expenses of the Participating Holders in
connection with the first two (2) such Demand Registrations by Significant
Xxxxxxx Securityholders and the first two (2) such Demand Registrations by
Significant Wave Securityholders);
(ii) the aggregate fair market value of the securities the subject of a
Demand Registration shall not be expected to be less than $5,000,000,
unless such Demand Registration relates to all the Registration Shares held
by the demanding party;
(iii) a registration shall not count as a Demand Registration until it
has become effective;
(iv) the rights of the Significant Xxxxxxx Securityholders and the
Significant Wave Securityholders under this Section 7.01(a) shall terminate
on the fifth (5th) anniversary of an Initial Public Offering.
(b) If a Demand Registration is initiated by a Significant Xxxxxxx
Securityholder or a Significant Wave Securityholder, and the Company (or any
other stockholder of the Company with registration rights other than Significant
Xxxxxxx Securityholders or Significant Wave Securityholders) then wishes to
offer any of its securities in connection with the registration, no such
securities may be offered by the Company or any other such stockholder unless
the managing underwriters advise the Company in writing that in their opinion
the number of securities requested to be included in the Demand Registration
does not exceed the number which can efficiently be sold in the offering. Upon
receipt of a written demand under Section 7.01(a), the Company shall
expeditiously effect the registration under the Securities Act of the
Registration Shares and use its best efforts to have such registration become
and remain effective as provided in Section 7.08. The demanding party shall have
the right to select the underwriters for a Demand Registration, subject to the
approval of such selection by the Company (which approval shall not be
unreasonably withheld).
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(c) If a Demand Registration is initiated by a Significant Xxxxxxx
Securityholder or a Significant Wave Securityholder and the other then wishes to
offer any of its securities in connection with the registration, the
participation provisions set forth in Section 7.02(b) shall govern the rights of
the parties, MUTATIS MUTANDIS, with respect to any limitations imposed by the
underwriters on the number of Registration Shares to be sold in the Demand
Registration.
SECTION 7.02. PIGGYBACK REGISTRATIONS. (a) If the Company proposes to
register any of its equity securities under the Securities Act for sale for cash
(otherwise than in connection with an Initial Public Offering, the registration
of securities issuable pursuant to an employee stock option, stock purchase or
similar plan or pursuant to a merger, exchange offer or a transaction of the
type specified in Rule 145(a) under the Securities Act), the Company shall give
all Xxxxxxx Securityholders and Wave Securityholders notice of such proposed
registration at least 30 days prior to the filing of a registration statement.
At the written request of any Xxxxxxx Securityholder or Wave Securityholder
delivered to the Company within 20 days after the receipt of the notice from the
Company, which request shall state the number of Registration Shares that such
party wishes to sell or distribute publicly under the registration statement
proposed to be filed by the Company, the Company shall use its best efforts to
register under the Securities Act such Registration Shares, and to cause such
registration (a "PIGGYBACK REGISTRATION") to become and remain effective as
provided in Section 7.08.
(b) If a Piggyback Registration relates to an underwritten offering by
the Company, and the managing underwriters thereof advise the Company in writing
that in their opinion the number of securities requested to be included in the
registration exceeds the number which can be sold in the offering, the Company
may exclude from the registration all or any Registration Shares that the
Xxxxxxx Securityholders and Wave Securityholders propose to sell on a PRO RATA
basis by reference to the total number of Registration Shares requested to be
included by the participating Xxxxxxx Securityholders and Wave Securityholders.
(c) If a Piggyback Registration is an underwritten secondary
registration on behalf of holders of the Company's securities who have exercised
demand registration rights and the managing underwriters thereof advise the
Company in writing that in their opinion the number of securities requested to
be included in the registration exceeds the number which can be sold in the
offering, the Company shall include in the registration the securities the
holders of the Company securities propose to sell in proportion to the number of
securities each proposes to sell. In the event the Company subsequently desires
to participate in such a registration of Securities, the Company shall include
in the registration the securities the Company and the holders of the Company's
securities propose to sell in proportion to the number of shares each proposes
to sell.
(d) The rights of the Xxxxxxx Securityholders and the Wave
Securityholders under this Section 7.02 shall terminate on the fifth (5th)
anniversary of the Initial Public Offering.
SECTION 7.03. INDEMNIFICATION BY THE COMPANY. In the event of any
registration of any Registration Shares of Xxxxxxx Securityholders or Wave
Securityholders under the Securities Act, the Company shall, and hereby does,
indemnify and hold harmless such party, its directors and officers, each other
Person who participates as an underwriter in the offering or sale of such
Registration Shares and each other Person, if any, who controls such party or
any such underwriter within the meaning of Section 15 of the Securities Act
against any losses, claims, damages or liabilities, joint or several, to which
such party or any such director or officer
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or underwriter or controlling Person may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
or proceedings, whether commenced or threatened, in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which the
Registration Shares were registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or any 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 in which they were made not
misleading, and the Company shall reimburse such party and each such director,
officer, underwriter and controlling Person for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, action or proceeding; PROVIDED, HOWEVER,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability (or action or proceeding in respect thereof)
or expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information about
such party as a stockholder of the Company furnished to the Company through an
instrument duly executed by such party specifically stating it is for use in the
preparation thereof. Such indemnity shall remain in full force and affect
regardless of any investigation made by or on behalf of such party or any such
director, officer, controlling Person or underwriter and shall survive any
Transfer of the Registration Shares.
SECTION 7.04. INDEMNIFICATION BY PARTICIPATING HOLDERS. The Company may
require, as a condition to including any Registration Shares of a Participating
Holder in any registration statement filed pursuant to Section 7.01 or 7.02,
that the Company shall have received an undertaking satisfactory to it from such
Participating Holder to indemnify and hold harmless (in the same manner and to
the same extent as set forth in section 7.03) the Company, each director of the
Company, each officer of the Company signing such registration statement, each
Person who participates as an underwriter in the offering or sale of such
Registration Shares and each other Person, if any, who controls the Company or
any such underwriter within the meaning of Section 15 of the Securities Act with
respect to any untrue statement or alleged untrue statement in or omission or
alleged omission from such registration statement, any preliminary prospectus,
final prospectus or summary prospectus contained therein or any amendment or
supplement thereto, if such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information about such Participating Holder as a stockholder of the
Company furnished to the Company through an instrument duly executed by such
Participating Holder specifically stating that it is for use in the preparation
of such registration statement, preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement. Such indemnity shall remain in full
force and effect, regardless of any investigation made by or an behalf of the
Company or any such director, officer or controlling Person and shall survive
the Transfer by the seller of the securities of the Company being registered.
SECTION 7.05. NOTICES OF CLAIMS, ETC. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in Section 7.03 or 7.04, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party,
give notice to the latter of the commencement of such action; PROVIDED, HOWEVER,
that the failure of any indemnified party to give notice as provided
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herein shall not relieve the indemnifying party of its obligations under Section
7.03 or 7.04, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist or the indemnified party may have defenses not available to
the indemnifying party in respect of such claim, the indemnifying party shall be
entitled to participate in and to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party, 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 for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall be liable for any settlement of any
action or proceeding effected without its written consent. No indemnifying party
shall, without the consent of the indemnified party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation.
SECTION 7.06. INDEMNIFICATION PAYMENTS. The indemnification required by
this Article shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
SECTION 7.07. ADJUSTMENTS AFFECTING REGISTRATION SHARES. The Company
shall not effect or permit to occur any combination, subdivision or other
recapitalization of any of its securities that would (i) materially adversely
affect the ability of the Xxxxxxx Securityholders or the Wave Securityholders to
include its Registration Shares, or reduce the number of Registration Shares
that such party would otherwise be entitled to include pursuant to this Article,
in any registration of securities of the Company contemplated by this Article or
(ii) materially adversely affect the marketability of such Registration Shares
under any such registration.
SECTION 7.08. REGISTRATION COVENANTS OF THE COMPANY. In the event that
any Registration Shares are to be registered pursuant to Section 7.01 or 7.02,
the Company covenants and agrees that it shall use its best efforts to effect
the registration and cooperate in the sale of the Registration Shares to be
registered and shall as expeditiously as possible:
(i) (A) within 90 days prepare and file with the SEC a registration
statement with respect to the Registration Shares (as well as any necessary
amendments or supplements thereto) (a "REGISTRATION STATEMENT") and (B) use
its best efforts to cause the Registration Statement to become effective;
PROVIDED, HOWEVER, that the Company may extend such 90 day period for not
more than an additional 90 days if (I) such delay would relieve the Company
of the obligation to include any interim financial statements in the
Registration Statement or (II) the Company would be required to disclose in
the Registration Statement any material nonpublic information and the
Company concludes that the disclosure of such information would be
inadvisable at that time;
-20-
(ii) prior to the filing described in clause (i), furnish to each
Participating Holder copies of the Registration Statement and any
amendments or supplements thereto and any prospectus forming a part
thereof, which documents shall be subject to the review of counsel for each
Participating Holder (but not approval of such counsel except with respect
to any statement in the Registration Statement which relates to such
Participating Holder);
(iii) notify each Participating Holder, promptly after the Company
shall receive notice thereof, of the time when the Registration Statement
becomes effective or when any amendment or supplement or any prospectus
forming a part of the Registration Statement has been filed;
(iv) notify each Participating Holder promptly of any request by the
SEC for the amending or supplementing of the Registration Statement or
prospectus or for additional information;
(v) advise each Participating Holder after the Company shall receive
notice or otherwise obtain knowledge of the issuance of any order by the
SEC suspending the effectiveness of the Registration Statement or any
amendment thereto or of the initiation or threatening of any proceeding for
that purpose and (B) promptly use its best efforts to prevent the issuance
of any stop order or to obtain its withdrawal promptly if a stop order
should be issued;
(vi) (A) prepare and file with the SEC such amendments and supplements
to the Registration Statement and the prospectus forming a part thereof as
may be necessary to keep the Registration Statement effective for a period
of time necessary to permit each Participating Holder to dispose of all its
Registration Shares and (B) comply with the provisions of the Securities
Act with respect to the disposition of all Registration Shares covered by
the Registration Statement during such period in accordance with the
intended methods of disposition by such Participating Holder set forth in
the Registration Statement;
(vii) furnish to each Participating Holder such number of copies of the
Registration Statement, each amendment and supplement thereto, the
prospectus included in the Registration Statement (including any
preliminary prospectus) and such other documents as such Participating
Holder may reasonably request in order to facilitate the disposition of the
Registration Shares owned by such Participating Holder;
(viii) use its best efforts to register or qualify such Registration
Shares under such other securities or blue sky laws of such jurisdictions
as determined by the underwriters after consultation with the Company and
each Participating Holder and do any and all other acts and things which
may be reasonably necessary or advisable to enable each Participating
Holder to consummate the disposition in such jurisdictions of the
Registration Shares;
(ix) notify each Participating Holder, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of
the happening of any event as a result of which the Registration Statement
would contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary
-21-
to make the statements therein not misleading, and, at the request of
such Participating Holder, prepare a supplement or amendment to the
Registration Statement so that the Registration Statement shall not, to the
Company's knowledge, contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading;
(x) if the Registration Shares are securities of a class then listed on
a securities exchange or NASDAQ, cause the Registration Shares to be so
listed; and if the Registration Shares are securities of a class not then
listed on a securities exchange or NASDAQ, use its best efforts to
facilitate the listing of the Registration Shares on a securities exchange
or NASDAQ;
(xi) provide a transfer agent and registrar, which may be a single
entity, for all the Registration Shares not later than the effective date
of the Registration Statement;
(xii) enter into such customary agreements (including an underwriting
agreement in customary form) and take all such other action, if any, as
each Participating Holder or the underwriters shall reasonably request in
order to expedite or facilitate the disposition of the Registration Shares;
(xiii) (A) make available for inspection by each Participating Holder,
any underwriter participating in any disposition pursuant to the
Registration Statement and any attorney, accountant or other agent retained
by such Participating Holder or any such underwriter all financial and
other records, pertinent corporate documents and properties of the Company
reasonably requested by such Participating Holder and such Persons and (B)
cause the Company's officers, directors and employees to supply all
information reasonably requested by such Participating Holder or any such
underwriter, attorney, accountant or agent in connection with the
Registration Statement;
(xiv) use its best efforts to cause the Registration Shares covered by
the Registration Statement to be registered with or approved by such other
Governmental Authorities as may be necessary to enable each Participating
Holder to consummate the disposition of such Registration Shares; and
(xv) obtain a comfort letter or letters from the Company's independent
public accountants in customary form and covering such matters of the type
customarily covered by comfort letters as each Participating Holder may
reasonably request.
SECTION 7.09. EXPENSES. The Company shall pay, on behalf of each
Participating Holder, all the expenses in connection with any Demand
Registration or Piggyback Registration, including all registration, filing and
regulatory review fees, all fees and expenses of complying with securities or
blue sky laws, all listing fees, all word processing, duplicating and printing
expenses, all messenger and delivery expenses, the fees and disbursements of
counsel for the Company and of its independent public accountants (including the
expenses of comfort letters required by or incident to such performance and
compliance), the reasonable fees and disbursements of any counsel retained by
each Participating Holder (but not more than one counsel for all Participating
Holders), any fees and disbursements of underwriters customarily paid by issuers
or sellers of securities, but excluding any underwriting discounts and
commissions and transfer taxes, if any. In any registration, each Participating
Holder shall pay for its own underwriting discounts and commissions and transfer
taxes.
-22-
SECTION 7.10. ASSIGNMENT OF REGISTRATION RIGHTS. The Xxxxxxx
Securityholders and the Wave Securityholders may assign their respective rights
under this Article, in whole or in part, to anyone to whom such party Transfers
any Registration Shares (other than in a sale exempt from registration under the
Securities Act by reason of Rule 144 under the Securities Act or a Demand
Registration or a Piggyback Registration); PROVIDED, HOWEVER, that no assignment
shall increase the Company's obligations to effect registrations or pay expenses
thereof. In order for any such assignment to be effective, on or prior to the
effective date of any such assignment the assignee shall execute a joinder
agreement in form and substance satisfactory to the Company, whereby the
assignee shall agree to be bound by the provisions of this Article.
SECTION 7.11. RULES 144 AND 144A. After an Initial Public Offering and
for so long as Xxxxxxx or Wave holds any Registration Shares, the Company shall
cause to be made available adequate current public information (within the
meaning of Rule 144(c) under the Securities Act) with respect to the Company and
the information described in Rule 144A(d)(4) under the Securities Act in the
manner described therein. Upon the request of Xxxxxxx or Wave, the Company shall
deliver to such party a written statement as to whether it has complied with
such requirements.
SECTION 7.12. NO PREFERENTIAL REGISTRATION. Notwithstanding any other
provision of this Agreement, if the Company grants registration rights with
respect to equity securities to any other Person on terms that Xxxxxxx or Wave
reasonably considers preferential to the terms of this Article, Xxxxxxx
Securityholders or Wave Securityholders or both, as the case may be, shall be
entitled to registration rights with such preferential terms.
ARTICLE VIII
Miscellaneous
SECTION 8.01. TERMINATION. If the Closing shall not have occurred on or
prior to March 1, 2000, this Agreement and all obligations of the parties
hereunder, except obligations under Sections 8.12 and 8.14, shall terminate,
unless extended by mutual agreement of the parties. Either Xxxxxxx or Wave may
at any time prior to the Closing, without liability to the other parties,
terminate this Agreement and all obligations of the parties hereunder, except as
aforesaid, by notice to the other parties if, in its reasonable opinion, a
Burdensome Condition exists; PROVIDED, HOWEVER, that prior to such termination
such party shall have exercised reasonable efforts to negotiate with the
relevant Governmental Authority for removal of the Burdensome Condition;
PROVIDED, FURTHER, HOWEVER, that no party shall have any obligation to negotiate
for the removal of any Burdensome Condition if such party has provided written
notice that it has elected in accordance with Section 3.01(i) not to consummate
the Transactions.
SECTION 8.02. NOTICES. Except as expressly provided herein, notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed or sent by telex, graphic
scanning or other' telegraphic
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communications equipment of the sending party, as follows:
(a) if to the Company,
WaveXpress, Inc.
000 Xxxxxxxxxx Xxxx, 0-000
Xxxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: President
(b) if to Sarnoff,
Xxxxxxx Corporation
000 Xxxxxxxxxx Xxxx
XX000
Xxxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxx X. XxxXxxx
with copy to:
Xxxxxxxx Ingersoll
College Centre
000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
(c) if to Wave,
Wave Systems Corp.
000 Xxxxxxxx Xxxxxx
Xxxxx X-000
Xxx, Xxxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxxxx Xxxxxx, Chief Financial Officer
with a copy to:
Xxxxxxx Xxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx, Esq.
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or to such other address or attention of such other person as any party shall
advise the other parties in writing. All notices and other communications given
to a party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the date of receipt.
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SECTION 8.03. APPLICABLE LAW; WAIVER OF JURY TRIALS; CONSENT TO
JURISDICTION. THE VALIDITY, CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES
THEREOF). WITH RESPECT TO ANY LITIGATION ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION, THE PARTIES EXPRESSLY WAIVE ANY RIGHT THEY MAY HAVE TO A JURY TRIAL
AND AGREE THAT ANY SUCH LITIGATION SHALL BE TRIED BY A JUDGE WITHOUT A JURY.
EACH PARTY AGREES TO NON-EXCLUSIVE PERSONAL JURISDICTION AND VENUE IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK (AND ANY NEW YORK
STATE COURT WITHIN THAT DISTRICT) AND FOR THAT PURPOSE.
SECTION 8.04. SEVERABILITY. If any provision of this Agreement shall be
hold to be illegal, invalid or unenforceable, that provision will be enforced to
the maximum extent permissible so as to effect the intent of the parties, and
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby. If necessary to effect the intent of
the parties, the parties will negotiate in good faith to amend this Agreement to
replace the unenforceable language with enforceable language which as closely as
possible reflects such intent.
SECTION 8.05. AMENDMENTS. This Agreement may be modified or waived only
by a written amendment signed by a person authorized to so bind each party;
PROVIDED, HOWEVER, that modifications or waivers of Article VII shall require a
written amendment signed by (i) the holders of a majority of the Registration
Shares held by the Xxxxxxx Securityholders, (ii) the holders of a majority of
the Registration Shares held by the Wave Securityholders and (iii) the Company.
SECTION 8.06. WAIVER. The waiver by any party of any instance of any
other party's noncompliance with any obligation or responsibility herein shall
not be deemed a waiver of other instances or of any party's remedies for such
noncompliance.
SECTION 8.07. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts shall have been signed
by each party and delivered to each other party.
SECTION 8.08. ENTIRE AGREEMENT. The provisions of this Agreement and
the other Operative Agreements set forth the entire agreement and understanding
among the parties as to the subject matter hereof and supersede all prior
agreements, oral or written, and all other communications between the parties
relating to the subject matter hereof.
SECTION 8.09. ASSIGNMENT. (a) Subject to Section 7.10, no party shall
assign this Agreement or any of its rights or obligations hereunder without the
prior written consent of the other parties, except that no such consent shall be
required for a transfer by
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operation of law in connection with a merger or consolidation of such party
(without prejudice to any other rights the parties may have under any other
Operative Agreement).
(b) Any attempted assignment of this Agreement in violation of this
Section shall be void and of no effect.
(a) This Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective successors and
permitted assigns.
SECTION 8.10. SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by any party herein and in the certificates
or other instruments prepared or delivered in connection with or pursuant to
this Agreement shall be considered to have been relied upon by the other parties
and shall survive the Closing, regardless of any investigation made by the other
parties hereto or on their behalf.
SECTION 8.11. NO THIRD PARTY BENEFICIARIES. This Agreement is for the
sole benefit of the parties and their permitted assigns and nothing herein
expressed or implied shall give or be construed to give to any Person, other
than the parties and such assigns, any legal or equitable rights hereunder,
except that Article VII is also intended to be for the benefit of the Xxxxxxx
Employee Purchasers and Sections 7.03 and 7.04 are intended to be for the
benefit of the Persons named therein.
SECTION 8.12. EXPENSES. (a) Whether or not any of the Transactions are
consummated, all costs and expenses incurred in connection with the Operative
Agreements and the Transactions shall be paid by the party incurring such cost
or expense; PROVIDED, HOWEVER, that if the Closing occurs and the Transactions
are consummated, the Company shall reimburse Xxxxxxx and Wave for all costs and
expenses (not to exceed $30,000 for either party) incurred by such parties in
connection with the incorporation and organization of the Company and the
negotiation, preparation, execution and delivery of this Agreement the other
Operative Agreement.
(b) The provisions of this Section shall remain operative and in full
force and effect regardless of the expiration of this Agreement or the
consummation of the Transactions.
SECTION 8.13. REMEDIES. In no event will any party be liable to another
party for incidental damages, lost profits, lost savings, or any other
consequential damages, even if such party has been advised of the possibility of
such damages, resulting from the breach of its obligations under any Operative
Agreement or from the use of any confidential or other information.
SECTION 8.14. PUBLICITY. No public release, announcement or other form
of publicity concerning the Transactions shall be issued by any party without
the prior consent of
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the other parties, except as such release or announcement may be required by Law
or the rules or regulations of NASDAQ or any securities exchange, in which case
the party required to make the release or shall, to the extent possible, allow
the other party reasonable time to comment on such release or announcement in
advance of such issuance.
SECTION 8.15. FURTHER ASSURANCES: EFFECTIVENESS. (a) The parties shall
use their best efforts to obtain and to assist the other parties in obtaining
promptly all necessary waivers, consents and approvals from any Governmental
Authority or any other Person for any exercise by any party of its rights under
this Agreement or any other Operative Agreement, except that a party shall not
be required to accept or comply with any Burdensome Condition. Upon reasonable
request from time to time, the parties shall execute and deliver all documents
and instruments and do all other acts that may be reasonably necessary or
desirable to give effect to the Transactions or the exercise by the other
parties of their respective rights hereunder.
(b) If any Law of a country provides that the implementation of this
Agreement is subject to prior Governmental Approval in such country, this
Agreement shall have no effect in such country until such Governmental Approval
shall have been obtained.
SECTION 8.16. CONSTRUCTION. This Agreement has been negotiated by the
parties and their respective counsel and will be fairly interpreted in
accordance with its terms and without any strict construction in favor of or
against any party.
[The remainder of this page is intentionally left blank]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
WAVEXPRESS, INC.
By:
-------------------------------------------
Xxxxx Xxxxxxxx
President
XXXXXXX CORPORATION
By:
-------------------------------------------
Name:
Title:
WAVE SYSTEMS CORP.
By:
-------------------------------------------
Xxxxxx Xxxxxxx
President
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LIST OF SCHEDULES
SCHEDULE 2.04 Legend
SCHEDULE 4.01(C) Outstanding Shares
LIST OF EXHIBITS
EXHIBIT A Certificate of Designations
EXHIBIT B Stockholder Agreement
EXHIBIT C Xxxxxxx License
EXHIBIT X Xxxxxxx Development Agreement
EXHIBIT E-1 Wave License - Patent License Agreement
EXHIBIT E-2 Wave License - Service Agreement
EXHIBIT F Wave Development Agreement
EXHIBIT G Convertible Note
