EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT
---------------------------
among
ZIXIT CORPORATION
and
ANACOM COMMUNICATIONS, INC., a Delaware corporation
and
ANACOM COMMUNICATIONS, INC., a Texas corporation,
XXXXXX X. XXXXXXXXX
and
XXXXXX X. XXXXXXXX
dated
October 1, 1999
TABLE OF CONTENTS
ARTICLE I PURCHASE OF COMPANY STOCK IN EXCHANGE FOR CASH AND STOCK......................................... 1
1.1 Purchase of Company Stock........................................................................ 1
1.2 Consideration.................................................................................... 1
1.3 Closing.......................................................................................... 2
1.4 Closing Deliveries of Company and Selling Shareholders........................................... 2
1.5 Closing Deliveries of Buyer...................................................................... 2
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY AND SELLING SHAREHOLDERS............................... 3
2.1 Corporate Matters................................................................................ 3
(a) Corporate Organization and Power; Fictitious Names.......................................... 3
(b) Due Execution and Enforceability............................................................ 3
(c) Subsidiaries and Other Equity Investments................................................... 4
(d) Articles and Bylaws......................................................................... 4
(e) Capitalization and Shareholders............................................................. 4
2.2 Financial Statements............................................................................. 4
(a) Financial Statements........................................................................ 4
(b) Absence of Certain Changes.................................................................. 4
(c) Outstanding Indebtedness; Liabilities....................................................... 5
2.3 Accounts Receivable.............................................................................. 5
2.4 Property......................................................................................... 5
(a) Realty Leases (as Lessee)................................................................... 5
(b) Environmental Matters....................................................................... 5
(c) Owned Personal Property..................................................................... 5
(d) Title....................................................................................... 5
(e) Ownership and Issuance of Company Stock..................................................... 6
2.5 Contracts and Commitments........................................................................ 6
2.6 Intellectual Property............................................................................ 6
(a) Intellectual Property Rights................................................................ 6
(b) Licenses of Intellectual Property Rights To or From Third Parties........................... 6
(c) Infringement................................................................................ 6
(d) Confidential Information or Trade Secrets................................................... 6
2.7 Employees; Employee Benefits..................................................................... 7
(a) Employees................................................................................... 7
(b) Employee Benefit Plans...................................................................... 7
2.8 Pending or Threatened Claims, Litigation and Governmental Proceedings............................ 7
2.9 Judgments, Orders and Consent Decrees............................................................ 7
2.10 Compliance with Laws............................................................................. 8
i
2.11 Franchises, Permits, Etc......................................................................... 8
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2.12 Tax Matters...................................................................................... 8
2.13 Required Consents................................................................................ 9
2.14 Brokers' or Finders' Fees........................................................................ 9
2.15 True and Accurate Schedules...................................................................... 9
2.16 Records.......................................................................................... 9
2.17 Access........................................................................................... 9
2.18 No Misrepresentations............................................................................ 10
2.19 Customers........................................................................................ 10
2.20 Individual Selling Shareholder Liability......................................................... 10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER AND ZIXIT................................................ 10
3.1 Corporate Matters................................................................................ 10
(a) Due Organization............................................................................ 10
(b) Power and Authority to Enter Into Agreement................................................. 10
(c) Due Execution and Enforceability............................................................ 10
3.2 Brokers' or Finders' Fees........................................................................ 11
3.3 No Breach of Statute or Contract................................................................. 11
ARTICLE IV COVENANTS........................................................................................ 11
4.1 Tax Matters...................................................................................... 11
4.2 Allocation of Purchase Price..................................................................... 12
ARTICLE V INDEMNIFICATION................................................................................... 12
5.1 Buyer's and ZixIt's Right to Indemnification..................................................... 12
(a) Misrepresentation or Breach of Warranty..................................................... 12
(b) Breach of Covenant or Agreement............................................................. 12
(c) Conduct of Business; Taxes.................................................................. 12
5.2 Company's and Selling Shareholders' Right to Indemnification..................................... 13
(a) Misrepresentation or Breach of Warranty..................................................... 13
(b) Breach of Covenant or Agreement............................................................. 13
(c) Conduct of Business......................................................................... 13
5.3 Right of Setoff.................................................................................. 13
5.4 Claims for Reimbursement......................................................................... 13
5.5 Defense and Settlement of Third-Party Claims..................................................... 14
ii
ARTICLE VI MISCELLANEOUS.................................................................................... 15
6.1 Costs and Expenses............................................................................... 15
6.2 Notices.......................................................................................... 15
6.3 Entire Agreement, Amendments and Waiver.......................................................... 15
6.4 Governing Law.................................................................................... 16
6.5 Survival......................................................................................... 16
6.6 Cumulative Remedies.............................................................................. 16
6.7 Multiple Counterparts............................................................................ 16
6.8 Further Assurances............................................................................... 17
6.9 Severability..................................................................................... 17
6.10 Public Statements................................................................................ 17
6.11 Rules of Construction............................................................................ 17
6.12 Binding Arbitration.............................................................................. 17
6.13 Binding Nature and Assignment.................................................................... 18
6.14 Rights and Obligations........................................................................... 18
6.15 Interpretation................................................................................... 19
6.16 Consent.......................................................................................... 19
iii
LIST OF EXHIBITS
to
PURCHASE AND SALE AGREEMENT
---------------------------
Exhibit Description Page Reference
------- ----------- --------------
A Form of Promissory Note................................................... 1
B Form 8023 - Election under Section 338 for
Corporations Making Qualified Stock Purchases............................. 2
C Registration Rights Agreement............................................. 3
iv
LIST OF SCHEDULES
to
PURCHASE AND SALE AGREEMENT
---------------------------
Schedule Description Page Reference
-------- ----------- --------------
2.1(e) Capitalization and Shareholders........................................... 4
2.2(a) Financial Statements...................................................... 4
2.4(a) Realty Leases (as Lessee)................................................. 5
2.4(c) Owned Personal Property................................................... 5
2.5 Contracts and Commitments................................................. 6
2.6(a) Intellectual Property Rights.............................................. 6
2.6(b) Licenses of Intellectual Property Rights to or from Third Parties......... 6
2.6(c) Disclosure Items.......................................................... 6
2.7(a) Employees................................................................. 7
2.7(b) Employee Benefit Plans.................................................... 7
2.11 Franchises, Permits, Etc.................................................. 8
2.13 Consents ................................................................. 9
2.19 Customers................................................................. 10
v
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT is made and entered into on this 1st day of October 1999, by
and among ZixIt Corporation, a Texas corporation ("ZixIt"), Anacom
Communications, Inc., a Delaware corporation and wholly-owned subsidiary of
ZixIt ("Buyer"), and Anacom Communications, Inc., a Texas corporation
("Company"), and Xxxxxx X. Xxxxxxxxx ("Xxxxxxxxx") and Xxxxxx X. XxXxxxxx
("XxXxxxxx") (collectively, "Selling Shareholders," and individually, "Selling
Shareholder"). Buyer, ZixIt, Company and each Selling Shareholder are sometimes
referred to collectively as the "Parties" and individually as a "Party."
RECITALS
WHEREAS, Company is engaged in the business of providing secure real-time
credit card payment processing for Internet transactions (the "Business");
WHEREAS, Buyer desires to purchase from Selling Shareholders, and Selling
Shareholders desire to sell to Buyer, all of the issued and outstanding shares
of common stock of Company (the "Stock Purchase"), all upon the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
in this Agreement, the Parties agree as follows:
ARTICLE I
PURCHASE OF COMPANY STOCK IN EXCHANGE FOR
-----------------------------------------
CASH AND STOCK
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1.1 Purchase of Company Stock. On the terms and subject to the conditions
-------------------------
set forth in this Agreement, Selling Shareholders agree to sell, transfer,
assign and deliver to Buyer, and Buyer agrees to purchase and acquire from
Selling Shareholders, at the Closing (as defined in Section 1.3), free and clear
of all Encumbrances (as defined in Subsection 2.1(b)), all of the issued and
outstanding shares of common stock (the "Company Stock") of Company. Buyer,
Selling Shareholders and Company agree to make an election under Section
338(h)(10) of the Internal Revenue Code of 1986, as amended (the "Code") with
respect to the Stock Purchase.
1.2 Consideration. For and in consideration of the transfer to Buyer of
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the Company Stock, the following consideration will be paid to Selling
Shareholders: The Purchase Price (herein so called) for the Company Stock will
consist of (i) $2.5 Million to be paid in cash at the Closing of the Stock
Purchase by Buyer and (ii) the Promissory Notes (herein so called) in the form
attached hereto as Exhibit A, to be delivered at the Closing to Selling
---------
Shareholders by Buyer, providing for the delivery of a number of shares of the
common stock, $.01 par value per share, of ZixIt valued at $7.5 Million (the
"ZixIt Stock") to be determined and delivered as provided in the Promissory
Notes.
1
1.3 Closing. Consummation of the Stock Purchase (the "Closing") shall
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take place at the offices of Buyer, located at One Galleria Tower, 00000 Xxxx
Xxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000-0000.
1.4 Closing Deliveries of Company and Selling Shareholders. At the
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Closing, Company and Selling Shareholders agree to take the following steps
listed below:
(a) Company shall deliver to Buyer a good standing certificate for
Company from the State of Texas;
(b) Company shall deliver to Buyer certified copies of its Articles
of Incorporation, Bylaws and resolutions duly adopted by Company's Board of
Directors and its shareholders approving this Agreement;
(c) Company and Selling Shareholders shall deliver to Buyer the
consents, approvals and authorizations of third parties, including Governmental
Bodies (as defined in Subsection 2.1(b)) set forth on Schedule 2.13, that
-------------
are required to be obtained in order to effect the transactions contemplated
hereby;
(d) Company shall deliver to Buyer evidence that all of Company's
bank indebtedness has been paid in full;
(e) Company shall deliver to Buyer all such other instruments and
documents as Buyer may reasonably request in connection with the transactions
contemplated by this Agreement;
(f) Selling Shareholders shall deliver to Buyer certificates
representing all of the Company Stock and stock powers in blank relating
thereto;
(g) Selling Shareholders shall deliver to Buyer the executed version
of Exhibit B; and
------- -
(h) Selling Shareholders shall deliver to Buyer the employment-
related documents for Xxxxx X. Xxxxxx and Xxxxxxx X. Xxxxxx previously provided
by Buyer.
1.5 Closing Deliveries of Buyer. At the Closing, Buyer agrees to take the
---------------------------
following steps listed below:
(a) Buyer shall deliver to Company and Selling Shareholders the
consents, approvals and authorizations of third parties, including Governmental
Bodies, required to effect the transactions contemplated hereby;
(b) Buyer shall pay $2.5 Million of the Purchase Price by wire
transfer of immediately available funds to the bank accounts as specified by
Selling Shareholders, of which $1,268,657 is payable to Xxxxxxxxx and $1,231,343
is payable to XxXxxxxx;
2
(c) Buyer shall deliver to each of the Selling Shareholders a
Promissory Note in the form of Exhibit A attached hereto; and
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(d) Buyer shall deliver to each of the Selling Shareholders a
Registration Rights Agreement (herein so called) in the form of Exhibit C
---------
attached hereto.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
-----------------------------------------
AND SELLING SHAREHOLDERS
------------------------
Company and Selling Shareholders represent and warrant to Buyer and ZixIt
as follows:
2.1 Corporate Matters.
-----------------
(a) Corporate Organization and Power; Fictitious Names. Company is a
--------------------------------------------------
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Texas, and is duly qualified to conduct business as a
foreign corporation in all jurisdictions where the conduct of its business or
the ownership of its assets requires qualification, except where the failure to
be so qualified would not have a material adverse effect on its business,
assets, financial condition or results of operations. Company has, and at all
times has had, full requisite corporate power and authority to own its
properties, rights and assets and to conduct its business as now conducted.
Company has the power and authority to enter into this Agreement and, subject to
the conditions provided in this Agreement, to consummate the transactions
provided for herein. The Company has not conducted business under any name
other than "Anacom" and "Anacom Communications, Inc."
(b) Due Execution and Enforceability. The execution, delivery and
--------------------------------
performance by and on behalf of Company and Selling Shareholders of this
Agreement and the Promissory Notes and Registration Rights Agreements (the
"Related Agreements") to which it is a party have been duly and validly
authorized by all necessary corporate, shareholder or other action and will not
(i) conflict with or result in a breach or violation of any term or provision
of, or constitute a default under, (a) the Articles of Incorporation or Bylaws
of Company, (b) any federal, state, county or local laws, statutes, regulations,
licenses, franchises, permits, authorizations, judgments, injunctions, awards,
decrees, orders, ordinances, variances, directives, codes or requirements of any
Governmental Body (as defined herein) (the "Legal Requirements") affecting
Company or either Selling Shareholder or (c) any material contract, material
agreement or other material instrument to which Company and/or Selling
Shareholders are a party or by which any of their properties, rights or assets
are bound; (ii) require the approval, consent or authorization of any federal,
state or local governmental body ("Governmental Body"); or (iii) result in the
creation or imposition of any Encumbrance on any of the properties or assets of
Company, or any agreement or instrument to which Company and/or Selling
Shareholders are a party or by which Company and/or Selling Shareholders are
bound or obligated or to which any of the properties or assets of Company is
subject. This Agreement constitutes, and the Related Agreements (when executed
by the parties thereto) will constitute, the valid and legally binding
obligations of Company and Selling Shareholders, enforceable against such
parties in accordance
3
with their respective terms and conditions. As used in this Agreement, the term
"Encumbrance" shall mean any lien (including Tax (as defined in Subsection
2.12(a)) lien), encumbrance, liability, obligation, claim, charge, option, right
of first refusal, lease, license, security interest, mortgage, pledge,
hypothecation, easement, encroachment, conditional sale or other title retention
agreement, defect in title, covenant, contingency, restriction on transfer or
other restriction or limitation on title of any kind in favor of any third
party.
(c) Subsidiaries and Other Equity Investments. Company does not
-----------------------------------------
have, directly or indirectly, any ownership interest or other equity investment
in any corporation, company, subsidiary, association, partnership, business,
joint venture, trust or other entity relating to Company or the Business.
(d) Articles and Bylaws. Company has previously marked for
-------------------
identification and delivered to Buyer true and complete copies of its Articles
of Incorporation and Bylaws (or their substantial equivalents), as amended and
in effect.
(e) Capitalization and Shareholders. Set forth on Schedule 2.1(e) is
------------------------------- ---------------
a true and complete list and description of the authorized, issued and
outstanding capital stock of Company, all options or warrants to purchase shares
of capital stock of Company and any securities convertible into shares of
capital stock of Company. Also set forth on Schedule 2.1(e) is a true and
---------------
correct list of the names and addresses of all holders of shares of capital
stock, options, warrants or securities convertible into shares of capital stock
of Company and the number of securities owned by each. All authorized shares of
capital stock of Company are duly and validly issued and outstanding, fully paid
and nonassessable, and owned of record as set forth on Schedule 2.1(e). Except
---------------
as set forth on Schedule 2.1(e), there are not outstanding any subscription
---------------
rights, preemptive rights, options, calls, warrants, conversion rights,
commitments or agreements of any kind for the sale and issuance by Company of
any of its capital stock or equity securities.
2.2 Financial Statements.
--------------------
(a) Financial Statements. Company has delivered to Buyer the
--------------------
unaudited balance sheets of Company as of August 31, 1999 and December 31, 1998
and 1997, and the related unaudited statements of income for the respective
eight-month and twelve-month periods then ended (collectively, the "Financial
Statements"). The Financial Statements (i) have been prepared on an income tax
cash basis consistently applied, (ii) would be materially comparable to a set of
financial statements prepared in accordance with generally accepted accounting
principles ("GAAP"), (iii) fairly present the financial position and operating
results of Company for the periods covered thereby and (iv) are not accompanied
by supplemental footnote information normally found in publicly-filed GAAP
financial statements. The Financial Statements are attached as Schedule 2.2(a).
---------------
(b) Absence of Certain Changes. Since the date of the August 31,
--------------------------
1999 Financial Statements, there has been no event or occurrence that has had a
material adverse effect on Company or the Business. Since the date of the August
31, 1999 Financial Statements,
4
Company has conducted the Business in all material respects only in the ordinary
course and in conformity with past practice.
(c) Outstanding Indebtedness; Liabilities. Except as specifically
-------------------------------------
set forth in the August 31, 1999 Financial Statements, Company has no
indebtedness for borrowed money (or any other obligations evidenced by a bond,
note, debenture or other instrument of indebtedness) which Company has directly
or indirectly created, incurred, assumed or guaranteed, or with respect to which
Company has otherwise become directly or indirectly liable. Company has no
material liability or obligation, absolute or contingent, which is not shown or
provided for in the Financial Statements, other than obligations arising in the
ordinary course of business under the Contracts (as defined in Section 2.5).
2.3 Accounts Receivable. All accounts, notes and drafts receivable
-------------------
(including unbilled receivables) of Company are bona fide, represent
transactions at the aggregate recorded amount thereof, were actually made in the
ordinary course of business in arms-length transactions with third parties
unrelated to Company or either Selling Shareholder, are valid and subject to no
counterclaim or setoff, and, to the best of Company's or Selling Shareholder's
knowledge, are collectible in the ordinary course of business.
2.4 Property.
--------
(a) Realty Leases (as Lessee). Set forth on Schedule 2.4(a) is a
------------------------- ---------------
complete and accurate list of all realty leases or similar contracts, including
options to lease (the "Leases"), under or pursuant to which Company leases or
rents (as lessee or sublessee) any land, building or other realty. The Leases
are binding and in full force and effect in accordance with their respective
terms, and no default has occurred under any such Lease by Company or any other
party thereto. Company is in compliance in all material respects with all terms
and conditions of the Leases, including the payment of rent. True and correct
copies of the Leases have been made available to Buyer.
(b) Environmental Matters. Company has been, and currently is, in
---------------------
compliance with all applicable environmental and other Legal Requirements with
respect to the operation of the Business and the use of any real property leased
or occupied by Company in respect of the Business ("Real Property").
(c) Owned Personal Property. Set forth on Schedule 2.4(c) is a list
----------------------- ---------------
of all personal property owned by Company or in which it has any equity interest
(the "Owned Personal Property").
(d) Title. Company has good and marketable title to all of Company's
-----
properties, rights and assets, in each case free and clear of all Encumbrances.
The tangible assets of Company are in good working condition and repair (subject
to ordinary wear and tear), fit for the purposes to which they are being put and
sufficient for the conduct of the Business as it is currently being conducted.
Company is not using any properties, rights or assets to conduct the Business
which are not duly owned, leased or licensed by it.
5
(e) Ownership and Issuance of Company Stock. The execution and
---------------------------------------
delivery of this Agreement and the Related Agreements by Selling Shareholders at
the Closing will convey to and vest in Buyer good and marketable title to the
Company Stock free and clear of any Encumbrances. Selling Shareholders are the
record and beneficial owners of the Company Stock and have the absolute right to
sell and transfer the Company Stock to Buyer. Such Company Stock is, and upon
transfer to Buyer will be, free and clear of any Encumbrances other than those
imposed by this Agreement. The Company Stock, when sold and delivered to Buyer
in accordance with this Agreement, will be duly and validly issued, fully paid
and nonassessable. The transfer of the Company Stock at the Closing will be
effective and rightful, and the Company Stock is genuine and has not been
altered.
2.5 Contracts and Commitments. Set forth on Schedule 2.5 is a list of all
------------------------- ------------
contracts, agreements, commitments or understandings of Company, whether oral or
written, in respect of the Business, including contracts with customers,
resellers, employees and consultants (the "Contracts"). Company is not in
default in any respect under any of its Contracts.
2.6 Intellectual Property.
---------------------
(a) Intellectual Property Rights. Set forth on Schedule 2.6(a) is a
---------------------------- ---------------
list and description of all patents, trade names, logos, licenses, trademarks,
service marks and copyrights which are presently, or by the Closing will be,
owned by Company in respect of the Business. Company presently owns all right,
title and interest in and to its intellectual properties, validly and
beneficially, free and clear of all Encumbrances, with all rights afforded
therein under applicable law. The percentage of Company's current revenue
attributable to a payment authorization architecture where there is a
communication or link between the customer computer and the Company's processing
computer is approximately 39%. To the knowledge of Company and Selling
Shareholders, none of such intellectual properties is the subject of any claim
or challenge of adverse ownership (except for the licenses set forth on Schedule
--------
2.6(b)) or invalidity asserted by any third party, nor is there any basis upon
------
which a claim or challenge could be made.
(b) Licenses of Intellectual Property Rights To or From Third
---------------------------------------------------------
Parties. Set forth on Schedule 2.6(b) is a list and description of (i) all
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agreements, licenses, assignments and other transfers of intellectual property
granted to others by Company in respect of the Business; (ii) all agreements,
licenses, assignments and other transfers of inventions, mailing lists, patents,
trade names, trademarks, service marks, copyrights, trade secrets, know-how,
industrial property, disclosures or uses of ideas, technology or other
proprietary rights granted to Company in respect of the Business by others
(other than pre-packaged or off-the-shelf software).
(c) Infringement. There have been no indemnification claims made
------------
against Company in respect of the Business or Selling Shareholders for
infringement of any patent, trade name, trademark, service xxxx, copyright,
know-how, industrial property, technology or other proprietary rights of others,
except as set forth on Schedule 2.6(c).
---------------
(d) Confidential Information or Trade Secrets. There are no written
-----------------------------------------
claims or demands of any person pertaining to, or any proceedings which are
pending or, to the knowledge
6
of Company or Selling Shareholders, threatened, which challenge the rights of
Company or Selling Shareholders in respect of the Business or any proprietary or
confidential information or trade secrets used in the conduct of the Business.
No methods, processes, procedures, apparatus or equipment used in the Business
use or include any proprietary or confidential information or trade secrets
misappropriated from any person or entity. Neither Company nor Selling
Shareholders have any confidential information owned or claimed by third parties
not rightfully in its possession, and Company and Selling Shareholders have
complied in all material respects with all agreements, understandings and
licenses governing the use of any confidential information used in the Business
that is owned or claimed by third parties.
2.7 Employees; Employee Benefits.
----------------------------
(a) Employees. Set forth on Schedule 2.7(a) is a list of the names
--------- ---------------
and titles of all current employees of Company (the "Employees"), as well as the
current rates of compensation of each of the Employees and any applicable
incentive or other compensation arrangements. There are no collective
bargaining or similar agreements between Company, on the one hand, and any group
of employees, union or labor organization, on the other hand; and no such
agreement or understanding is presently proposed or under discussion. The
Company is in compliance in all material respects with all applicable Legal
Requirements relating to employment, employment practices, terms and conditions
of employment, wages and hours. Within the last two years, Company has not
experienced any union organizing activity or any work stoppage due to any labor
disagreement with respect to the Employees. There is no strike, slowdown or
stoppage pending or threatened against Company.
(b) Employee Benefit Plans. Set forth on Schedule 2.7(b) is a list
---------------------- ---------------
of all employee benefit plans in effect for the benefit of the Employees or
former employees of Company or any group of such employees, or for the benefit
of dependents of any of them (collectively, the "Compensation and Benefit
Plans").
2.8 Pending or Threatened Claims, Litigation and Governmental Proceedings.
---------------------------------------------------------------------
There are no complaints, suits, actions, arbitrations or other regulatory,
administrative, judicial or governmental proceedings or investigations or any
other proceedings or investigations pending or, to the knowledge of Company or
Selling Shareholders, threatened against or relating to Company (or any of its
officers, directors, employees or agents (in their capacities as such)), the
Business or Selling Shareholders.
2.9 Judgments, Orders and Consent Decrees. Neither Company nor any
-------------------------------------
Selling Shareholder is subject to any judgment, writ, injunction, order,
stipulation or decree of, or agreement with, any court, arbitrator or regulatory
authority materially limiting, restricting or adversely affecting the conduct of
the Business, or binding upon Company or any of its properties, rights or assets
(including intellectual property) which has or could reasonably be expected to
have the effect of impairing any use by Buyer of Company's properties, rights or
assets or operations by Buyer of the Business following the Closing or otherwise
preventing the consummation of the Stock Purchase; and no such proceeding is
pending or, to the knowledge of Company and Selling Shareholders, threatened
against Company or any Selling Shareholder. No
7
Legal Requirement (including, without limitation, any temporary, preliminary or
permanent order) has been enacted, issued, promulgated, enforced or entered by
any Governmental Body which enjoins or prohibits the consummation of the
transactions contemplated by this Agreement.
2.10 Compliance with Laws. The Business has been conducted in compliance
--------------------
and conformity in all material respects with all applicable Legal Requirements.
2.11 Franchises, Permits, Etc. Disclosed on Schedule 2.11 are all
------------------------ -------------
material governmental and business franchises, permits, licenses, certifications
from credit card processors and other authorizations (collectively, the
"Authorizations"), including, without limitation, licensing requirements that
are necessary for Company to conduct the Business as and where it is now
conducted. Except as otherwise indicated on Schedule 2.11, Company has obtained
-------------
and is in compliance in all material respects with all terms and conditions of
each Authorization, and Company has not received any notice from a relevant
person or authority that any such Authorization is to be revoked or will not be
renewed. Company and Selling Shareholders have no knowledge of any pending or
threatened regulatory change, whether domestic or foreign, which would adversely
affect the Business or business prospects or require product changes.
2.12 Tax Matters.
-----------
(a) All Tax returns, reports and forms required to be filed on or
before the Closing by or on behalf of Company or Selling Shareholders with
respect to any income, properties or operations of Company with any taxing
authority have been timely filed in accordance with all applicable laws, and all
such returns, reports and forms accurately state the amount of Taxes required to
be paid. All Taxes owed by Company or any Selling Shareholder, in its capacity
as such, and payable on or before the Closing have been paid. Company has
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor or
other third party. There is no action, suit, proceeding, investigation, audit
or written, or, to the knowledge of Company and Selling Shareholders, any
unwritten, claim that relates in any way to Taxes now pending against, nor has
any written, or, to the knowledge of Company and Selling Shareholders, any
unwritten, claim for additional Tax or assessment been asserted by any taxing
authority relating to Company or any Selling Shareholder in its capacity as
such. There are no agreements for the extension of the time for the assessment
of any Taxes of Company or any Selling Shareholder, in its capacity as such, or
with respect to any income, properties or operations of Company. The term
"Tax," when used in this Agreement, means any and all taxes (including, without
limitation, income, gross income, gross receipts, sales, rental, use, payroll,
employment, unemployment, social security, insurance, occupation, environmental,
transfer, minimum alternative, minimum estimated, value-added, property
(tangible and intangible), excise, franchise, capital, doing business and stamp
taxes), licenses, levies, imposts, duties, recording charges or fees, charges,
assessments or withholdings of any nature whatsoever, together with any and all
assessments, penalties, fines, additions to tax and interest thereon.
8
(b) Company (and any predecessor of Company) has been a validly
electing Subchapter S corporation within the meaning of Sections 1361 and 1362
of the Code at all times since its inception. Selling Shareholders have been
the only shareholders of Company since and including January 1, 1999.
(c) Company does not own, and has not owned at any time during the
past ten years, the stock of any corporation that is a "qualified Subchapter S
subsidiary," within the meaning of Section 1361(b)(3)(B) of the Code, with
respect to Company.
(d) Company will not be liable for any Tax under Section 1374 of the
Code in connection with the deemed sale of Company's assets (including the
assets of any qualified Subchapter S subsidiary) caused by the Section
338(h)(10) Election (as defined in Subsection 4.1(b)).
2.13 Required Consents. Set forth on Schedule 2.13 is a list of any
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consent, notification, waiver, approval, order or authorization of, or exemption
by, or registration, qualification, designation, declaration or filing with, any
Governmental Body or any third party that is required to be obtained or given,
as applicable, in connection with the execution, delivery and performance by
Company and Selling Shareholders of this Agreement and the Related Agreements to
which any of them is a party.
2.14 Brokers' or Finders' Fees. No broker or finder has been, or shall
-------------------------
be, utilized by or on behalf of Company or any Selling Shareholder in connection
with the Stock Purchase, and no broker or finder is or shall be entitled to any
fee, commission or similar compensation for effecting or assisting Company or
any Selling Shareholder in the consummation of the Stock Purchase. Company and
Selling Shareholders are not aware of any claim or the basis of any claim by a
third party for a broker's or finder's fee, commission or compensation.
2.15 True and Accurate Schedules. Company has furnished Buyer with access
---------------------------
to or copies of true, accurate and complete copies of all documents listed in
any Schedule.
2.16 Records. The books and records of Company are complete and fairly and
-------
accurately set out and disclose all material transactions involving the
Business.
2.17 Access. Company and Selling Shareholders hereby represent and
------
warrant the following:
(a) Company and Selling Shareholders have reviewed ZixIt's public
filings with the Securities and Exchange Commission (the "SEC Filings") to the
extent they have deemed appropriate.
(b) Company and Selling Shareholders understand that ZixIt's Web site
contains information pertinent to ZixIt's business, prospects, operations,
results of operations and financial condition, including, but not limited to,
(i) press releases, (ii) the opening statement for the conference call held on
July 7, 1999, (iii) replays of conference calls, (iv) a replay of the annual
9
shareholders' meeting held on September 14, 1999 (collectively, "Web Site
Information") and (v) and SEC Filings. Company and Selling Shareholders have
reviewed ZixIt's Web Site Information to the extent they have deemed
appropriate.
(c) Company and Selling Shareholders have had sufficient access to
ZixIt and its officers to ask questions related to the SEC Filings and ZixIt's
business, prospects, operations, results of operations and financial condition
and Web Site Information and to review such information, financial records and
other documents relating to the SEC Filings and the ZixIt's business, prospects,
operations, results of operations and financial condition and Web Site
Information as Company or Selling Shareholders have requested.
2.18 No Misrepresentations. The representations, warranties and
---------------------
statements made by Company and Selling Shareholders in or pursuant to this
Agreement (including the Schedules hereto) are true, complete and correct in all
material respects and do not contain any untrue statement of a material fact or
omit to state any material fact necessary to make any such representation,
warranty or statement, under the circumstances in which it is made, not
misleading.
2.19 Customers. Except as set forth on Schedule 2.19, no customer
---------
accounted for more than ten percent (10%) of Company's revenues in 1998 and
1999.
2.20 Individual Selling Shareholder Liability. The liability of Selling
----------------------------------------
Shareholders inter-se with respect to a breach or inaccuracy of any
representation or warranty in this Article II is several as between the two
Selling Shareholders. Where the representation or warranty relates to a
particular Selling Shareholder, though, the representation and warranty is given
by each Selling Shareholder with respect to himself only.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER AND ZIXIT
-------------------------------------------------
Buyer and ZixIt represent and warrant to Selling Shareholders as follows:
3.1 Corporate Matters.
-----------------
(a) Due Organization. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware
and has the corporate power and authority to carry on its business as presently
conducted by it. ZixIt is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Texas and has the corporate power
and authority to carry on its business as presently conducted by it.
(b) Power and Authority to Enter Into Agreement. Each of ZixIt and
-------------------------------------------
Buyer has the corporate power and authority to enter into this Agreement and the
Related Agreements and, subject to the conditions provided in this Agreement, to
consummate the transactions provided for in this Agreement and such Related
Agreements.
10
(c) Due Execution and Enforceability. The execution, delivery and
--------------------------------
performance by and on behalf of each of Buyer and ZixIt of this Agreement and
the Related Agreements to which it is a party have been duly and validly
authorized and approved by its Board of Directors, and no other corporate action
is necessary or required to authorize it to execute this Agreement and such
Related Agreements and to perform its obligations under this Agreement and such
Related Agreements. This Agreement constitutes, and such Related Agreements
(when executed by the parties to them) will constitute, the valid and legally
binding obligations of Buyer and ZixIt, enforceable in accordance with their
respective terms and conditions.
3.2 Brokers' or Finders' Fees. No broker or finder has been, or shall be,
-------------------------
utilized by Buyer or ZixIt in connection with the Stock Purchase, and no broker
or finder is or shall be entitled to any fee, commission or similar compensation
for effecting or assisting in the consummation of the Stock Purchase. Buyer and
ZixIt are not aware of any claim or the basis of any claim by a third party for
a broker's or finder's fee, commission or compensation.
3.3 No Breach of Statute or Contract. Neither the execution and delivery
--------------------------------
by Buyer and ZixIt of this Agreement and the Related Agreements, nor compliance
by them with the terms and provisions of such agreements, will breach or violate
any applicable Legal Requirement of any Governmental Body, or any of the terms,
conditions or provisions of the Articles (Certificate) of Incorporation or
Bylaws of Buyer or ZixIt, or any judgment, order, injunction, decree, material
contract, material agreement or other material instrument to which Buyer or
ZixIt is a party or by which any of its properties, rights or assets are bound.
ARTICLE IV
COVENANTS
---------
4.1 Tax Matters.
-----------
(a) Selling Shareholders shall be responsible for and pay when due
all Taxes of Company and of Selling Shareholders attributable to the
consideration received by Selling Shareholders in exchange for the Company
Stock. Selling Shareholders shall continue to timely file within the time period
for filing, or any extension granted with respect thereto, all of Company's Tax
returns required to be filed relating to or pertaining to the period (or that
portion of any period) ending on or prior to the Closing. Such Tax returns shall
be filed in a manner that is consistent with the historical manner in which the
Tax returns of Company have been filed in the past.
(b) Company and Selling Shareholders will join with Buyer in making
an election under Section 338(h)(10) of the Code and Treasury Regulation
("Treas. Reg."), Section 1.338(h)(10)-1(a) and (d)(1)(iii), and any
corresponding elections permitted under state, local or foreign law, with
respect to the purchase and sale of the Company Stock hereunder (the "Section
338(h)(10) Election"). Selling Shareholders shall execute such instruments and
documents as may be requested and prepared by Buyer to enable the making of a
proper and timely Section 338(h)(10) Election. Selling Shareholders will include
any income, gain, loss, deduction or other
11
tax item resulting from the Section 338(h)(10) Election on their individual Tax
returns to the extent required by applicable law. Selling Shareholders shall
also be responsible for any Tax imposed on Company attributable to the making of
the Section 338(h)(10) Election, including, but not limited to, any Tax imposed
under Section 1374 of the Code, any Tax imposed under Treas. Reg.
(S)1.338(h)(10)-1(e)(5), and any state, local or foreign Tax imposed on Company
income or gain.
(c) Selling Shareholders shall, and shall cause Company to, keep
Company's election to be taxed as a Subchapter S corporation in effect for all
periods up to and including the Closing.
4.2 Allocation of Purchase Price. The consideration given by Buyer under
----------------------------
this Agreement shall be allocated among the assets of Company in accordance with
Section 338 of the Code, the regulations under the Code and in accordance with
Exhibit B. The Parties agree to reflect the allocation determined herein in
---------
filing their respective Tax returns or declarations for foreign, federal, state
or local income tax purposes, unless otherwise required by a court of competent
jurisdiction or taxing authority having jurisdiction of the matter.
ARTICLE V
INDEMNIFICATION
---------------
5.1 Buyer's and ZixIt's Right to Indemnification. Selling Shareholders
--------------------------------------------
agree to and shall indemnify, defend and hold harmless Buyer and ZixIt, their
subsidiaries, affiliates and respective employees, directors, officers, agents
and representatives (in their capacities as such) (collectively, the "Buying
Interests") from and against any and all losses, costs, expenses (including,
without limitation, those incurred in connection with all related
investigations, defenses, settlements, judgments, penalties and reasonable
attorneys' fees and costs), claims, liabilities, deficiencies, judgments or
damages ("Losses" or individually a "Loss") suffered or incurred by any of the
Buying Interests in connection with, resulting from or arising out of:
(a) Misrepresentation or Breach of Warranty. Any breach of any
---------------------------------------
warranty or inaccuracy of any representation of either Company or Selling
Shareholders of any of their representations or warranties set forth in this
Agreement (including the Schedules and Exhibits hereto) or in any certificate,
document or instrument delivered to Buyer or ZixIt pursuant to or in connection
with this Agreement at the Closing;
(b) Breach of Covenant or Agreement. Any breach, nonfulfillment or
-------------------------------
failure by Company or Selling Shareholders to perform or comply with any of
their covenants, agreements or other obligations set forth in this Agreement
(including the Schedules and Exhibits hereto) or in any document or instrument
delivered by Company or Selling Shareholders pursuant to or in connection with
this Agreement at the Closing; and
(c) Conduct of Business; Taxes. The conduct of the Business prior to
--------------------------
the Closing (including, without limitation, patent or other intellectual
property infringement claims),
12
and liability of Company or Selling Shareholders for Texas for any taxable year
or taxable period (or portion thereof) ending on or prior to the Closing and any
Taxes of Selling Shareholders for any taxable year or taxable period (or portion
thereof) ending after the Closing.
A Selling Shareholder's liability under this Section 5.1 is several as
between the Selling Shareholders.
5.2 Company's and Selling Shareholder's Right to Indemnification. Buyer
------------------------------------------------------------
and ZixIt agree to and shall indemnify and hold harmless Selling Shareholders
and their respective agents and representatives (in their capacities as such)
(collectively, the "Selling Interests") from and against any and all Losses
suffered or incurred by any of the Selling Interests in connection with,
resulting from or arising out of:
(a) Misrepresentation or Breach of Warranty. Any breach of any
---------------------------------------
warranty or inaccuracy of any representation of Buyer or ZixIt of any of its
representations or warranties set forth in this Agreement (including the
Schedules and Exhibits hereto) or in any certificate, document or instrument
delivered to Selling Shareholders pursuant to or in connection with this
Agreement at the Closing;
(b) Breach of Covenant or Agreement. Any breach, nonfulfillment or
-------------------------------
failure by Buyer or ZixIt to perform or comply with any of its covenants,
agreements or other obligations set forth in this Agreement (including the
Schedules and Exhibits hereto) or in any document or instrument delivered by
Buyer or ZixIt pursuant to or in connection with this Agreement at the Closing;
and
(c) Conduct of Business. The conduct of the Business subsequent to
-------------------
the Closing.
5.3 Right of Setoff. Selling Shareholders agree that with respect to any
---------------
claim for indemnification under this Article V or any other breach of contract
claim under this Agreement or any Related Agreement, ZixIt is not per se
--- --
precluded from attempting (nor herein granted the right) to set off and apply
any and all claims owing to Buyer or ZixIt against Buyer's obligations to
deliver or caused to be delivered the shares of ZixIt Stock constituting part of
the Purchase Price. Such setoff, if permitted, is not the sole and exclusive
remedy of Buyer or ZixIt.
5.4 Claims for Reimbursement. If any of the Buying Interests or the
------------------------
Selling Interests shall have suffered any Loss or received any notice of the
commencement of any action, proceeding or investigation or the making of any
claim or demand by a third party (a "Third-Party Claim"), in each case, in
respect of which indemnification may be sought by such party pursuant to this
Article V, the party who shall have suffered such Loss or received such notice
of such Third-Party Claim and who shall seek indemnification in respect thereof
(the "Indemnified Party") shall give Buyer, ZixIt, Company or Selling
Shareholder, as the case may be (the "Indemnifying Party"), prompt written
notice of such Loss or Third-Party Claim setting forth in reasonable detail such
information as it shall have pertaining thereto and the Indemnified Party's
demand for indemnification in respect thereof.
13
In the case of Third-Party Claims, written notice thereof shall be
given to the Indemnifying Party as promptly as practicable; provided, however,
-------- -------
that the failure of any Indemnified Party to give timely notice shall not affect
its rights to indemnification hereunder if such failure to give timely notice
does not materially affect the ability or right of the Indemnifying Party to
defend such Third-Party Claim and the Indemnifying Party is not otherwise
materially prejudiced thereby and actual notice is given to the Indemnifying
Party within a reasonable time.
In the absence of a dispute, the Indemnifying Party shall promptly,
and in any event not later than the expiration of the investigation period,
reimburse the Indemnified Party in full for such Loss, as set forth in the
notice. In the event that the Indemnifying Party shall dispute only the amount
(and not the validity) of the claim, the Indemnifying Party shall, concurrently
with the delivery of its notice of dispute, pay to the Indemnified Party any
undisputed portion of the claim.
5.5 Defense and Settlement of Third-Party Claims. In the event of a
--------------------------------------------
Third-Party Claim, if the Indemnifying Party acknowledges that, as between it
and the Indemnified Party, it is obligated to indemnify the Indemnified Party in
connection with such Third-Party Claim, then such Indemnifying Party shall have
the option to take control of the defense and investigation of such Third-Party
Claim, and to employ and engage attorneys of its own choice to handle and defend
the same, at the Indemnifying Party's sole cost, risk and expense (the "Direct
Litigation Option"). The Indemnifying Party may elect to exercise the Direct
Litigation Option by giving prior written notice to the Indemnified Party. If
the Indemnifying Party so elects, the Indemnified Party shall cooperate in all
reasonable respects with the Indemnifying Party and such attorneys in the
investigation, trial and defense of such Third-Party Claim and any appeal
arising therefrom and shall permit reasonable access to the personnel of the
Indemnified Party and to any relevant books, records and documents within the
possession or control of Indemnified Party in connection with such claim and to
take copies of such relevant materials at the expense of the Indemnifying Party;
provided, however, that the Indemnified Party may, at its own cost, participate
-------- -------
in (but not control) such investigation, trial and defense of such Third-Party
Claim and any appeal arising therefrom. If the Indemnifying Party does not
elect the Direct Litigation Option, then the Indemnified Party shall defend
against the Third-Party Claim in the manner it deems appropriate at the sole
cost, risk and expense of the Indemnifying Party. If any claim arises where
Buyer, on the one hand, and one or both Selling Shareholders, on the other hand,
share responsibility for the Loss, the Parties shall cooperate in all reasonable
respects in the conduct of the defense of the claim.
The Indemnifying Party may settle a Third-Party Claim upon reasonable
prior written notice to the Indemnified Party, and such settlement shall be
binding upon all the parties; provided, however, that without the prior written
-------- -------
consent of the Indemnified Party, the Indemnifying Party will not consent to
entry of any judgment or enter into any settlement that (a) provides for non-
monetary relief binding on the Indemnified Party or (b) does not include an
unconditional and complete release of the Indemnified Party by the claimant.
14
ARTICLE VI
MISCELLANEOUS
-------------
6.1 Costs and Expenses. Except as otherwise provided herein, each of the
------------------
Parties shall bear and be solely responsible for its costs and expenses incurred
in connection with the negotiation, execution, delivery and performance of this
Agreement and the Related Agreements and the transactions contemplated thereby.
6.2 Notices. All notices and other communications required or permitted
-------
under this Agreement and the Related Agreements shall be in writing and
delivered in person, transmitted by facsimile or other communication device
capable of creating a written record and acknowledges receipt, delivered
personally, by overnight express or sent by registered or certified mail,
postage prepaid, addressed to the addresses given below, or when sent by
facsimile to the numbers set forth below:
Company: Anacom Communications, Inc.
-------
00000 Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx
Selling Shareholder: Xxxxxx X. Xxxxxxxxx
-------------------
00000 Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Selling Shareholder: Xxxxxx X. XxXxxxxx
-------------------
00000 Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Buyer and ZixIt: ZixIt Corporation
---------------
One Galleria Tower
00000 Xxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
15
All notices and other communications required or permitted under this Agreement
and the Related Agreements that are addressed as provided in this Section 6.2
will, (i) if delivered personally or by overnight express, be deemed given upon
delivery; (ii) if delivered by facsimile transmission, be deemed given when
electronically confirmed; provided that a written record of confirmation is sent
via another mode provided for in this Section 6.2; and (iii) if sent by
registered or certified mail, be deemed given when received. Any Party from
time-to-time may change its address or facsimile number for the purpose of
notices or other communications to that Party by giving a similar written notice
specifying a new address or facsimile number, but no such notice will be deemed
to have been given until it is actually received by the Party sought to be
charged with the contents thereof.
6.3 Entire Agreement, Amendments and Waiver. This Agreement (including
---------------------------------------
the Schedules and Exhibits hereto) constitutes the full and entire understanding
and agreement between the Parties with regard to the subject matter herein and
supersedes all prior agreements and understandings, whether written or oral,
that may exist between the Parties relating to the subject matter hereof,
including that certain Letter of Intent dated August 30, 1999 (the "Letter of
Intent"), except as otherwise specifically provided in a written agreement
between one or more of the parties. No amendment, modification or waiver of
this Agreement or any term of this Agreement shall be binding or effective for
any purpose unless it is made in a writing signed by the Party against whom
enforcement of such amendment or modification is sought or by the Party making
the waiver. No delay by any Party in the exercise of any of its rights or
remedies shall operate as a waiver thereof, and no single or partial exercise by
any Party of any such right or remedy shall preclude the other or further
exercise thereof. No waiver of any provision of this Agreement or of any right
or remedy shall be deemed, or shall constitute, a waiver of any other provision,
whether or not similar, nor shall any waiver constitute a waiver of any
continuing or succeeding breach of such provision, a waiver of the provision
itself, or a waiver of any right or remedy hereunder.
6.4 Governing Law. This Agreement shall be governed by and construed and
-------------
enforced in accordance with the laws of the State of Texas (excluding its
conflict of laws rules).
6.5 Survival. The representations, warranties and covenants of the
--------
Parties set forth in this Agreement, the Related Agreements and any instrument
delivered pursuant to this Agreement shall survive the Closing.
6.6 Cumulative Remedies. Except as provided in Section 6.12, no remedy
-------------------
herein conferred upon any Party is intended to be exclusive of any other
benefits or remedy, and each and every such remedy shall be cumulative and shall
be in addition to every other benefit or remedy given hereunder or now or
hereafter existing at law or in equity or by statute or otherwise. No single or
partial exercise by any Party of any right, power or remedy hereunder shall
preclude any other or further exercise thereof.
6.7 Multiple Counterparts. This Agreement may be executed in a number of
---------------------
identical counterparts, each of which shall be considered an original
instrument, but all of which
16
together shall constitute one and the same instrument; but in making proof of
this Agreement, it shall not be necessary to produce or account for more than
one counterpart.
6.8 Further Assurances. Each of the Parties hereto agrees to execute and
------------------
deliver, or cause to be executed and delivered such documents and other papers
and take such further actions as may be reasonably necessary or desirable to
fully and effectively carry out the provisions hereof and the transactions
contemplated by this Agreement and the Related Agreements.
6.9 Severability. In the event that any provision of this Agreement or
------------
the application thereof becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, all Parties hereto shall be
relieved of all obligations arising under such provision, but only to the extent
that it is illegal, unenforceable or void, it being the intent and agreement of
the Parties that this Agreement shall be deemed amended by modifying such
provision to the extent necessary to make it legal and enforceable while
preserving its intent or, if that is not possible, by substituting therefor
another provision that is legal and enforceable and achieves the same
objectives.
6.10 Public Statements. Promptly following the Closing, ZixIt is
-----------------
permitted to issue a press release regarding the subject matter of this
Agreement. Other than aforesaid, neither Party shall, without the prior written
consent of the other Parties, disclose or publicize any of the terms or
conditions of the Stock Purchase, other than to their respective counsel, public
accountants, financial advisors or key personnel who are participating in the
evaluation or negotiation of the Stock Purchase, except to the extent required
by law or any stock exchange or inter-dealer quotation system on which the
securities of a Party are traded (a "Legally Required Public Statement"). In
the event of any Legally Required Public Statement, the Party required to make
such statement shall, to the extent practicable, afford the other Parties
advance written notice and reasonable approval rights with respect to the
Legally Required Public Statement.
6.11 Rules of Construction. The Parties waive the application of any law,
---------------------
regulation, holding or rule of construction providing that ambiguities in an
agreement or other document will be construed against the party drafting such
agreement or document.
6.12 Binding Arbitration.
-------------------
(a) To the extent that the Parties are unable to resolve their
disputes or controversies arising out of or relating to this Agreement or any
Related Agreement, or the performance, breach, validity, interpretation or
enforcement thereof, whether sounding in contract, tort or otherwise and whether
provided by statute or common law, all such disputes, claims, demands, causes of
action or controversies ("claims") will be resolved by binding arbitration in
accordance with the United States Arbitration Act and the Commercial Arbitration
Rules of the American Arbitration Association ("AAA") (the "Rules"), and
judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof.
(b) A Party may initiate arbitration by sending written notice of its
intention to arbitrate to the other Party and to the AAA office located in
Dallas, Texas (the "Arbitration
17
Notice"). The Arbitration Notice should contain a description of the dispute and
the remedy sought. The arbitration will be conducted at the offices of the AAA
in Dallas, Texas before an independent and impartial arbitrator experienced in
legal matters related to the nature of the dispute and who is an attorney
licensed in the State of Texas. The Parties will jointly select the arbitrator,
or if the Parties are unable to agree upon an arbitrator, the arbitrator will be
selected by the AAA. In no event may the demand for arbitration be made after
the date when the institution of a legal or equitable proceeding based on such
claim, dispute or other matter in question would be barred by the applicable
statute of limitations or a provision of this Agreement. Discovery will be
permitted to the extent directed by the arbitrator.
(c) Except as otherwise specifically provided herein, the
arbitration and any discovery conducted in connection therewith will be
conducted in accordance with the Rules. The arbitrator will have exclusive
authority to resolve any dispute relating to the interpretation, applicability,
enforceability or formation of this agreement to arbitrate, including, but not
limited to, any claim that all or part of this Agreement is void or voidable and
any claim that an issue is not subject to arbitration. The arbitrator shall have
the authority to award injunctive and other equitable relief. The arbitrator's
authority to make any award will be based on and limited by the laws of the
State of Texas (excluding its conflict of laws rules) and the terms and
conditions of this Agreement. The arbitrator shall issue a written decision that
identifies the factual findings and principles of law upon which any award is
based. The award and decision of the arbitrator shall be conclusive and binding
upon all Parties and their successors and permitted assigns, and judgment upon
such award may be entered in any court of competent jurisdiction. Any and all of
the arbitrator's orders, decisions and awards may be enforceable in, and
judgment upon any award rendered by the arbitrator may be confirmed and entered
by, any federal or state court having jurisdiction. The Parties intend that this
agreement to arbitrate be irrevocable. If any Party refuses to honor its
obligations under this agreement to arbitrate, the other Parties may compel
arbitration in either federal or state court.
(d) Each Party understands that by agreeing to submit claims to
arbitration, he or it gives up the right to seek a trial by court or jury and
the right to an appeal from any errors of the court and forgoes any and all
related rights he or it may otherwise have under federal and state laws.
6.13 Binding Nature and Assignment. Neither this Agreement nor any rights
-----------------------------
hereunder may be assigned by Company or Selling Shareholders. Any assignment
made or attempted in violation of this Section 6.13 shall be void and of no
effect. Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors and assigns,
except that no assignment by Buyer or ZixIt shall operate to relieve them of
their obligations hereunder. A Party shall be permitted to assert as a defense
against the attempted enforcement of any part of this Agreement by a Party's
assignee any defenses that such Party would have been entitled to assert against
the assigning Party.
6.14 Rights and Obligations. The rights and obligations of Selling
----------------------
Shareholders as stated in this Agreement are several and not joint.
18
6.15 Interpretation. Article and Section titles are inserted for
--------------
convenience of reference only and are not intended to be a part of or to affect
the meaning of this Agreement. The Schedules and Exhibits shall be construed
with and as an integral part of this Agreement. Words used herein, regardless
of the number and gender specifically used, shall be deemed and construed to
include any other number, and any other gender, as the context requires.
6.16 Consent. By signing below, the undersigned Selling Shareholders,
-------
representing all of the shareholders of Company, hereby give mutual consent and
agree to the sale of all of the issued and outstanding shares of Company to
Buyer.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
ZIXIT CORPORATION
By: /s/ Xxxxx X. York
-------------------------------
Printed Name: Xxxxx X. York
----------------------
Title: Sr. Vice President and Chief Financial Officer
-----------------------------
ANACOM COMMUNICATIONS, INC.
(a Delaware corporation)
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Printed Name: Xxxxxx X. Xxxxxxxx
----------------------
Title: President
-----------------------------
ANACOM COMMUNICATIONS, INC.
(a Texas corporation)
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------
Printed Name: Xxxxxx X. Xxxxxxxxx
----------------------
Title: CEO
-----------------------------
19
Executed this 1/st/ day of October, 1999
/s/ Xxxxxx X. Xxxxxxxxx
------------------------------------
Xxxxxx X. Xxxxxxxxx
/s/ Xxxxxx X. XxXxxxxx
------------------------------------
Xxxxxx X. XxXxxxxx
20
EXHIBIT A
---------
PROMISSORY NOTE
THIS PROMISSORY NOTE (this "Note") is made and entered into as of the 1/st/
day of October 1999 (the "Closing"), by and between Anacom Communications, Inc.,
a Delaware corporation ("Buyer"), with its principal executive offices in
Dallas, Texas, and the Selling Shareholder noted below.
This Note is the Promissory Note contemplated by Section 1.2 of that
certain Purchase and Sale Agreement among ZixIt Corporation, a Texas corporation
("ZixIt"), Buyer, Anacom Communications, Inc., a Texas corporation, and the
Selling Shareholders noted therein, dated of even date herewith (the "Purchase
Agreement"). This Note constitutes the promise by Buyer to deliver or cause to
be delivered the amount of ZixIt Stock stated below, in accordance with the
terms and conditions of the Purchase Agreement, as a portion of the
consideration for the purchase of the Company Stock. Terms used herein with
their initial letter capitalized, but not defined herein, shall have the meaning
given such term in the Purchase Agreement, unless the context requires
otherwise.
1. Delivery of Stock.
-----------------
(a) Buyer agrees to deliver or cause to be delivered, on the terms and
conditions stated herein, to Selling Shareholder [96,392] [93,556] shares of the
Common Stock, $.01 par value per share, of ZixIt ("ZixIt Stock"). The number of
shares so stated is subject to adjustment, as provided below. These shares of
ZixIt Stock shall have the registration rights set forth in the Registration
Rights Agreement (herein so called) entered into between ZixIt and Selling
Shareholder on the date hereof, a form of which is attached as Exhibit C to the
---------
Purchase Agreement. [35,665] [34,616] shares of the ZixIt Stock will be
delivered to Selling Shareholder on the first anniversary date of the Closing
(or the first business day thereafter) or such later delivery date as specified
in Subparagraph 1(d) (the "First Anniversary Date"), and the remaining [60,727]
[58,940] shares will be delivered to Selling Shareholder on the second
anniversary date of the Closing (or the first business day thereafter) or such
later delivery date as specified in Subparagraph 1(d) (the "Second Anniversary
Date"), subject to Paragraph 2. The First Anniversary Date and the Second
Anniversary Date are referred to herein as an "Anniversary Date." If Selling
Shareholder voluntarily resigns his employment with Buyer prior to the second
anniversary of the date hereof, then neither Buyer nor ZixIt shall have any
obligation to deliver or cause to be delivered to Selling Shareholder any of the
ZixIt Stock shares that, as of the date of employment separation, are not yet
required (per the terms of Paragraphs 1 and 2) to be delivered, and Selling
Shareholder waives any ownership rights or claim of ownership rights with
respect to such ZixIt Stock shares in such circumstance.
(b) If the value of the shares of ZixIt Stock to be delivered on the
First Anniversary Date (or such earlier time as may be specified in Paragraph 2)
is less than
A-1
[$1,408,208][$1,366,792], then Buyer will pay, or cause to be paid, or deliver,
or caused to be delivered, at its sole option, as applicable, an amount of cash
or ZixIt Stock, or a combination thereof, sufficient to account for the deficit.
For purposes of this Subparagraph 1(b), the ZixIt Stock will be valued using the
average closing price of a share of ZixIt Stock for the ten trading days
preceding the First Anniversary Date or such earlier date as specified in
Paragraph 2.
(c) If the value of the shares of ZixIt Stock to be delivered on the
Second Anniversary Date (or such earlier time as may be specified in Paragraph
2) is less than [$2,397,763][$2,327,237], then Buyer will pay, or cause to be
paid, or deliver, or cause to be delivered, at its sole option, as applicable,
an amount of cash or ZixIt Stock, or a combination thereof, sufficient to
account for the deficit. For purposes of this Subparagraph 1(c), the ZixIt
Stock will be valued using the average closing price of a share of ZixIt Stock
for the ten trading days preceding the Second Anniversary Date or such earlier
date as specified in Paragraph 2.
(d) Buyer may defer the delivery of the ZixIt Stock shares for a
period of up to 90 days if (a) at the time ZixIt or any of its subsidiaries is
engaged in material confidential negotiations or other material confidential
business activities, disclosure of which would be required in any registration
statement required to be filed pursuant to Subsection 2(a) of the Registration
Rights Agreement (but would not be required if such registration statement were
not filed), and the Board of Directors of ZixIt determines in good faith that
such disclosure would be materially detrimental to ZixIt and its shareholders or
would have a material adverse effect on any such confidential negotiations or
other confidential business activities; or (b) at the time ZixIt is engaged in
business activities pertaining to an underwritten public offering of ZixIt's
securities and the underwriters have advised ZixIt that the filing of the
registration statement would have a material adverse effect on its ability to
consummate such offering. A deferral of the delivery of the ZixIt Stock shares
will be lifted, and the shares shall be delivered as soon as practicable
thereafter forthwith, if the negotiations or other activities are completed,
disclosed or terminated or the underwritten public offering is completed,
terminated or postponed. In order to defer the delivery of the shares, Buyer
will deliver or cause to be delivered to Selling Shareholder a certificate
signed by a senior executive officer of ZixIt setting forth a statement of the
reason for such deferral and an approximation of the anticipated delay, which
information Selling Shareholder shall treat as confidential. Selling
Shareholder may, in his sole discretion, defer the delivery of the ZixIt Stock
shares until the effectiveness of the registration statement contemplated by
Subsection 2(a) of the Registration Rights Agreement.
2. Certain Extraordinary Events. The number of shares of ZixIt Stock
----------------------------
subject to this Note shall be subject to appropriate adjustment to preserve the
relative rights of ZixIt and Selling Shareholder under this Note in the event of
any change or exchange of ZixIt Stock for a different number or kind of
securities that results from one or more stock splits, reverse stock splits, or
stock dividends. In the event of any merger or consolidation of ZixIt in which
ZixIt is not the surviving entity or ZixIt sells all or substantially all of its
assets ("Sale Transaction"), if the ZixIt Common Stock outstanding at the time
of the Sale Transaction is converted into common stock or other property, the
term "ZixIt Stock" as used herein will mean such common
A-2
stock or other property, and the term "ZixIt" shall mean the surviving entity or
purchaser of the assets, as applicable.
Subject to the foregoing and the following provisions of this Paragraph 2,
if a Sale Transaction occurs and ZixIt and its shareholders and affiliates
immediately before such transaction beneficially own, immediately after or as a
result of such transaction, equity securities of the surviving or acquiring
corporation or such corporation's parent corporation possessing less than a
majority of the voting power of the surviving or acquiring person or such
person's parent corporation, then Selling Shareholder and Buyer shall be
entitled, by giving written notice to the other, to require that the ZixIt Stock
deliverable on the First Anniversary Date and the Second Anniversary Date be
delivered immediately prior to the consummation of the Sale Transaction. If
given by Selling Shareholder, such notice must be given to Buyer within ten
business days of receipt of notice from Buyer advising Selling Shareholder of
the transaction in question. If given by Buyer, such notice must be given to
Selling Shareholder within a reasonable time prior to the consummation of the
merger or consolidation.
3. Prepayment. Buyer has the right to prepay this Note in full by either
----------
delivering, or causing to be delivered, the ZixIt Stock required to be delivered
hereunder or paying in cash, or causing to be paid in cash, to Selling
Shareholder the value of the shares in question, subject to the provisions of
Subparagraphs 1(b) and 1(c) and Buyer complying with its obligations under the
anti-fraud rules of applicable federal and state securities regulations. If the
Note is prepaid in cash, the ZixIt Stock shares shall be valued using the
average closing price of a share of ZixIt Stock for the ten trading days
preceding the prepayment date.
4. Default. If this Note shall be in default and placed for collection,
-------
Buyer shall pay or cause to be paid all reasonable attorneys' fees and costs of
collection. Failure to satisfy the obligations of this Note on the Anniversary
Date in question or such earlier date as specified herein shall cause the
applicable amounts to be subject to interest at a rate of the lesser of (i) 10%
per annum (based on a year of 365 days) or (ii) the highest lawful rate
permitted to be charged on debts of such nature. Notwithstanding the preceding
provisions of this Paragraph 4, Buyer shall not be liable for any fees and costs
of collection or default interest attributable to that portion of the ZixIt
Stock not delivered by or on behalf of Buyer that is equivalent in value to any
amounts owing from Selling Shareholder to Buyer, ZixIt, or any subsidiary of
ZixIt.
5. Security. This Note is unsecured. However, if Buyer fails to deliver
--------
or cause to be delivered the shares of ZixIt Stock, or cash, or both, as
required hereunder, then Selling Shareholder shall automatically receive a non-
exclusive, non-transferable, license to use the "Anacom" name and the Anacom
computer real-time credit card payment processing software extant as of the date
hereof (the "Escrowed Software") and any confidential or trade secret
information relating to the Business known to them prior to the date hereof
(other than non-public information pertaining to Buyer, ZixIt or any of their
subidiaries or affiliates previously disclosed to Selling Shareholder) for the
purpose of conducting the Business. Buyer acknowledges that Selling Shareholder
maintains possession of a computer disk or disks that contain(s) the Escrowed
Software. Furthermore, Selling Shareholder shall be released from any
contractual obligations to Buyer or ZixIt that prohibit Selling Shareholder from
conducting the
A-3
Business. The preceding sentence and the foregoing license, however, are not to
be construed as allowing Selling Shareholder to disclose or use any confidential
or trade secret information of Buyer, ZixIt or any of their subidiaries or
affiliates other than as stated above. Selling Shareholder represents that he
has delivered to Buyer a copy of such computer disk(s). Selling Shareholder
acknowledges that he has no rights in, or license to, the Anacom name or the
Escrowed Software until one or more of the events specified in this Paragraph 5
occurs (other than the right to maintain possession of the Escrowed Software as
aforesaid). Upon payment of this Note in full, Selling Shareholder agrees to
deliver the disk(s) in his possession to Buyer upon Buyer's request therefore.
The rights of Selling Shareholder as provided in this Paragraph 5 are not the
sole and exclusive remedy of Selling Shareholder if Buyer fails to deliver or
cause to be delivered the shares of ZixIt Stock or cash, or both, as required
hereunder.
6. Miscellaneous.
-------------
(a) All notices and other communications required or permitted under
this Note shall be given as provided in the Purchase Agreement.
(b) This Note and the related Registration Rights Agreement and
Purchase Agreement constitute the full and entire understanding and agreement
between the parties with regard to the subject matter herein and supersede all
prior agreements and understandings, whether written or oral, that may exist
between the parties relating to the subject matter hereof, except as otherwise
specifically provided in a written agreement between one or more of the parties
hereto. No amendment, modification or waiver of this Note or any term of this
Note shall be binding or effective for any purpose unless it is made in a
writing signed by the party against whom enforcement of such amendment or
modification is sought or by the party making the waiver. No delay by any party
in the exercise of any of its rights or remedies shall operate as a waiver
thereof, and no single or partial exercise by any party of any such right or
remedy shall preclude the other or further exercise thereof. No waiver of any
provision of this Note or of any right or remedy shall be deemed, or shall
constitute, a waiver of any other provision, whether or not similar, nor shall
any waiver constitute a waiver of any continuing or succeeding breach of such
provision, a waiver of the provision itself, or a waiver of any right or remedy
hereunder.
(c) This Note shall be governed by and construed and enforced in
accordance with the laws of the State of Texas (excluding its conflict of laws
rules).
(d) The parties waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
(e) Paragraph titles are inserted for convenience of reference only
and are not intended to be a part of or to affect the meaning of this Note.
(f) ZixIt and Buyer waive demand, presentment, notice of presentment,
protest, notice of protest, and all other applicable notices relating to their
obligations under this Note.
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(g) This Note shall be binding upon ZixIt and Buyer and their
assignees and shall inure to the benefit of Selling Shareholder and his
beneficiaries, heirs, and estate. This Note is not assignable by Selling
Shareholder. Any assignment of this Note by Buyer shall not relieve it of its
obligations hereunder.
IN WITNESS WHEREOF, the parties have executed this Note as of the date
first written above.
ANACOM COMMUNICATIONS, INC.,
a Delaware corporation
By:______________________________________
Printed Name:____________________________
Title:___________________________________
ACCEPTED:
SELLING SHAREHOLDER
_________________________________________
[Xxxxxx X. Xxxxxxxxx][Xxxxxx X. XxXxxxxx]
ACCEPTANCE BY GUARANTOR:
The undersigned, ZixIt Corporation, a Texas corporation, hereby guarantees the
obligations of Buyer as stated in this Promissory Note.
By:______________________________________
Printed Name:____________________________
Title:___________________________________
A-5
EXHIBIT C
---------
REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT is made and entered into on this 1st day of October 1999, by
and between ZixIt Corporation, a Texas corporation ("Issuer"), and [Xxxxxx X.
Xxxxxxxxx][Xxxxxx X. XxXxxxxx] ("Selling Shareholder"). Issuer and Selling
Shareholder are sometimes referred to collectively as the "Parties" and
individually as a "Party."
RECITALS
WHEREAS, Issuer, Anacom Communications, Inc., a Delaware corporation
("Buyer"), Anacom Communications, Inc., a Texas corporation, Selling
Shareholder, and the other Selling Shareholder noted therein (the "Other Selling
Shareholder"), entered into that certain Purchase and Sale Agreement (the
"Purchase Agreement"), dated of even date herewith;
WHEREAS, the Shares that Buyer is obligated to deliver to Selling
Shareholder pursuant to the Purchase Agreement and related Promissory Note are
to be registered under the Act, on the terms and conditions stated herein; and
WHEREAS, Issuer desires to fulfill the obligation to register the Shares
under the Act;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
in this Agreement, the Parties agree as follows:
1. Certain Definitions. As used in this Agreement:
-------------------
"Act" shall mean the Securities Act of 1933, as amended, or any
---
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Commission" shall mean the Securities and Exchange Commission or any
----------
other federal agency administering the Act at the time.
"Promissory Note" shall mean that certain Promissory Note between
---------------
Buyer and Selling Shareholder dated of even date herewith, a form of which is
attached as Exhibit A to the Purchase Agreement.
---------
"Register," "registered," and "registration" refer to a registration
-------- ---------- ------------
effected by preparing and filing a registration statement, and any pre-effective
and post-effective amendments required to be filed, in compliance with the Act,
and the declaration or ordering of effectiveness of such registration
statements.
"Shares" shall mean the shares of ZixIt Stock (as defined in Section
------
1.2 of the Purchase Agreement).
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Other terms used herein with their initial letter capitalized, but not
defined herein, shall have the meaning given such term in the Purchase Agreement
or Promissory Note, unless the context requires otherwise.
2. Registration Rights.
-------------------
(a) Upon its receipt of a written notice given by Selling Shareholder
at any time following the sixtieth day preceding the contemplated delivery date
of the Shares, Issuer shall promptly prepare and file with the Commission a
registration statement on Form S-3 (or such successor or other form as the
Commission may stipulate or require) under the Act covering the Shares that are
requested by Selling Shareholder to be registered. Issuer shall use its
commercially reasonable efforts to cause such registration statement to become
effective prior to, or on the day of, the delivery of the Shares. Issuer shall
also file such post-effective amendments to such registration statement in order
for it to remain effective without lapse until the earliest of (i) 90 days
following the effectiveness of the applicable registration statement, (ii) all
the Shares so registered have been sold, subject to the immediately following
sentence, or (iii) the first date on which Selling Shareholder is permitted to
sell all Shares then held by him without restriction within 90 days pursuant to
Rule 144 under the Act. If, during the effectiveness of the registration
statement, the Selling Shareholder determines that he no longer desires to sell
any (or further) Shares at that time, the Selling Shareholder will so advise
Issuer so that Issuer can withdraw the registration statement. The Selling
Shareholder shall be entitled to make one registration request under this
Subsection 2(a) with respect to each delivery date.
(b) Upon its receipt of a written notice given by Selling Shareholder
at any time after 30 days has elapsed after the expiration of any registration
statement that Issuer has filed for the benefit of Selling Shareholder pursuant
to Subsection 2(a), and during the 12-month period beginning with the
effectiveness of such registration statement, Issuer shall promptly prepare and
file with the Commission a registration statement on Form S-3 (or such successor
or other form as the Commission may stipulate or require) under the Act covering
the Shares that are requested by Selling Shareholder to be registered. Issuer
shall use its commercially reasonable efforts to cause such registration
statement to become effective as promptly as practicable after receipt of the
written notice. Issuer shall also file such post-effective amendments to such
registration statement in order for it to remain effective without lapse until
the earliest of (i) 45 days following the date the registration statement is
declared effective, (ii) all the Shares so registered have been sold, subject to
the immediately following sentence, or (iii) the first date on which Selling
Shareholder is permitted to sell all Shares then held by him without restriction
within 90 days pursuant to Rule 144 under the Act. If, during the effectiveness
of the registration statement, the Selling Shareholder determines that he no
longer desires to sell any (or further) Shares at that time, the Selling
Shareholder will so advise Issuer so that Issuer can withdraw the registration
statement. The Selling Shareholder shall be entitled to make one registration
request under this Subsection 2(b) during each such 12-month period.
(c) For registrations pursuant to Subsection 2(b), Issuer may defer
the filing (but not the preparation) of the registration statement for a period
of up to 120 days if (a) at the time Issuer or any of its subsidiaries is
engaged in material confidential negotiations or other material
C-2
confidential business activities, disclosure of which would be required in such
registration statement (but would not be required if such registration statement
were not filed), and the Board of Directors of Issuer determines in good faith
that such disclosure would be materially detrimental to Issuer and its
shareholders or would have a material adverse effect on any such confidential
negotiations or other confidential business activities; or (b) at the time
Issuer is engaged in business activities pertaining to an underwritten public
offering of Issuer's securities and the underwriters have advised Issuer that
the filing of the registration statement would have a material adverse effect on
its ability to consummate such offering. A deferral of the filing of the
registration statement will be lifted, and the registration statement shall be
filed as soon as practicable thereafter forthwith, if the negotiations or other
activities are completed, disclosed or terminated or the underwritten public
offering is completed, terminated or postponed. In order to defer the filing of
a registration statement, Issuer will deliver to the Selling Shareholder a
certificate signed by a senior executive officer of Issuer setting forth a
statement of the reason for such deferral and an approximation of the
anticipated delay, which information the Selling Shareholder shall treat as
confidential. Moreover, Issuer shall have no obligation to register any Shares
under this Section 2 if Selling Shareholder is permitted to sell all Shares
sought by him to be registered without restriction within 90 days pursuant to
Rule 144 under the Act. When exercising these Section 2 demand registration
rights, Selling Shareholder agrees to take reasonable steps to coordinate his
exercise of such rights with the Other Selling Shareholder's exercise of his
demand registration rights.
3. Registration Procedures. If, and whenever, issuer is required by
-----------------------
Section 2 to effect the registration of Shares under the Act, Issuer will as
expeditiously as possible:
(a) prepare and file with the Commission a registration statement
with respect to such securities, and use its commercially reasonable efforts to
cause such registration statement to become and remain effective for the period
set forth in Section 2 (the "Effective Period");
(b) prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective for the Effective
Period as may be reasonably necessary to effect the sale of such securities;
(c) furnish to the Selling Shareholder and to the underwriters of the
securities being registered, such reasonable number of copies of the
registration statement, preliminary prospectus, final prospectus and such other
documents as the Selling Shareholder and such underwriters may reasonably
request in order to facilitate the public offering of such securities;
(d) use commercially reasonable efforts to register or qualify the
Shares covered by such registration statement under such state securities or
blue sky laws of such jurisdictions as the Selling Shareholder may reasonably
request in writing within 20 days following the original filing of such
registration statement, except that Issuer shall not for any purpose be required
to execute a general consent to service of process or to qualify to do business
as a foreign corporation in any jurisdiction wherein it is not so qualified or
subject itself to taxation in a jurisdiction where it had not previously been
subject to taxation, or take any other
C-3
action that would subject Issuer to service of process in a lawsuit other than
one arising out of the registration of the Shares;
(e) notify the Selling Shareholder, promptly after it shall receive
notice thereof, of the time when such registration statement has become
effective or a supplement to any prospectus forming a part of such registration
statement has been filed;
(f) notify the Selling Shareholder promptly of any request by the
Commission for the amending or supplementing of such registration statement or
prospectus or for additional information;
(g) prepare and file with the Commission, promptly upon the request
of the Selling Shareholder, any amendments or supplements to such registration
statement or prospectus which, in the opinion of counsel for the Selling
Shareholder (and concurred in by counsel for Issuer), is required under the Act
or the rules and regulations thereunder in connection with the distribution of
Shares by the Selling Shareholder;
(h) prepare and promptly file with the Commission and promptly notify
the Selling Shareholder of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at any time when a prospectus relating to such
securities is required to be delivered under the Act, any event shall have
occurred as the result of which any such prospectus or any other prospectus as
then in effect would include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances in which they were made, not misleading; and
(i) advise the Selling Shareholder, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance of any stop order by the
Commission suspending the effectiveness of such registration statement or the
initiation or threatening of any proceeding for that purpose and promptly use
its commercially reasonable efforts to prevent the issuance of any stop order or
to obtain its withdrawal if such stop order should be issued.
4. Expenses. All fees, costs, and expenses of and incidental to such
--------
registration and public offering of the Shares in connection therewith shall be
borne equally by the Selling Shareholder and Issuer, except for any commissions
and transfer taxes in respect of the sale of his Shares, which shall be borne
solely by the Selling Shareholder.
5. Indemnification.
---------------
(a) Issuer will indemnify and hold harmless the Selling Shareholder,
its agents, any underwriter (as defined in the Act) for the Selling Shareholder
and any person controlling such underwriter from and against, and will reimburse
such persons with respect to, any and all loss, damage, liability, cost and
expense, joint or several, to which such persons may become subject under the
Act or otherwise, insofar as such losses, damages, liabilities, costs or
expenses are caused by any untrue statement or alleged untrue statement of any
material fact contained in such registration statement, any prospectus contained
therein or any amendment or
C-4
supplement thereto, or arise out of or are based upon 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 in which
they were made, not misleading; provided, however, that Issuer will not be
-------- -------
liable in any such case to the extent that any such loss, damage, liability,
cost or expense arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished by or on behalf of the Selling Shareholder in writing
specifically for use in the preparation thereof. Issuer will not be subject to
any liability for any settlement made without its consent, which consent shall
not be unreasonably withheld.
(b) The Selling Shareholder will indemnify and hold harmless Issuer,
its directors, officers, employees, and agents, any underwriter for Issuer and
any person controlling Issuer or such underwriter from and against, and will
reimburse such persons with respect to, any and all loss, damage, liability,
cost and expense, joint or several, to which such persons may become subject
under the Act or otherwise, insofar as such losses, damages, liabilities, costs
or expenses are caused by any untrue statement or alleged untrue statement of
any material fact contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto, or arise out of or are
based upon 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 in which they were made, not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was so made in reliance upon
and in conformity with written information furnished by or on behalf of the
Selling Shareholder specifically for use in the preparation thereof. The
Selling Shareholder will not be subject to any liability for any settlement made
without its consent, which consent shall not be unreasonably withheld.
(c) Promptly after receipt by an indemnified party, pursuant to the
provisions of Subsection (a) or (b) of this Section 5, of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said
Subsection (a) or (b), promptly notify the indemnifying party of the
commencement thereof; but the omission to so notify the indemnifying party will
not relieve the indemnifying party from any liability that it may have to any
indemnified party, except to the extent that such omission materially and
adversely affects the indemnifying party's ability to defend against or
compromise such claim. In case such action is brought against any indemnified
party and it notifies the indemnifying party of the commencement thereof, the
indemnifying party shall have the right to participate in, and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party; provided, however, that if the defendants in any action
-------- -------
include both the indemnified party and the indemnifying party and there is a
conflict of interest that would prevent counsel for the indemnifying party from
also representing the indemnified party, the indemnified party or parties shall
have the right to select separate counsel to participate in the defense of such
action on behalf of such indemnified party or parties. After notice from the
indemnifying party to an indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party pursuant to the provisions of said
C-5
Subsection (a) or (b) for any legal or other expense subsequently incurred by
such indemnified party in connection with the defense thereof other than out-of-
pocket costs of investigation, unless (i) the indemnified party shall have
employed counsel in accordance with the provisions of the preceding sentence,
(ii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after the notice of the commencement of the action, or (iii)
the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party.
6. Miscellaneous.
-------------
6.1 Notices. All notices and other communications required or
-------
permitted under this Agreement shall be in writing and delivered in person,
transmitted by telegram or facsimile or other communication device capable of
creating a written record and acknowledges receipt, delivered personally, by
overnight express or sent by registered or certified mail, postage prepaid,
addressed to the addresses given below, or when sent by facsimile to the numbers
set forth below:
Selling Shareholder: 00000 Xxxxxx Xxxxxxx
-------------------
Xxxxx 000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Issuer: ZixIt Corporation
------
One Galleria Tower
00000 Xxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
All notices and other communications required or permitted under this Agreement
that are addressed as provided in this Subsection 6.1 will, (i) if delivered
personally or by overnight express, be deemed given upon delivery; (ii) if
delivered by telefacsimile or similar facsimile transmission, be deemed given
when electronically confirmed; provided that a written record of confirmation is
sent via another mode provided for in this Subsection 6.1; and (iii) if sent by
registered or certified mail, be deemed given when received. Any party from
time-to-time may change its address or facsimile number for the purpose of
notices or other communications to that party by giving a similar written notice
specifying a new address or facsimile number, but no such notice will be deemed
to have been given until it is actually received by the party sought to be
charged with the contents thereof.
6.2 Entire Agreement, Amendments and Waiver. This Agreement
---------------------------------------
constitutes the full and entire understanding and agreement between the parties
with regard to the subject matter herein and supersedes all prior agreements and
understandings, whether written or oral, that may exist between the parties
relating to the subject matter hereof, including that certain
C-6
Letter of Intent dated August 30, 1999 (the "Letter of Intent"), except as
otherwise specifically provided in a written agreement between the parties. No
amendment, modification or waiver of this Agreement or any term of this
Agreement shall be binding or effective for any purpose unless it is made in a
writing signed by the party against whom enforcement of such amendment or
modification is sought or by the party making the waiver. No delay by any party
in the exercise of any of its rights or remedies shall operate as a waiver
thereof, and no single or partial exercise by any party of any such right or
remedy shall preclude the other or further exercise thereof. No waiver of any
provision of this Agreement or of any right or remedy shall be deemed, or shall
constitute, a waiver of any other provision, whether or not similar, nor shall
any waiver constitute a waiver of any continuing or succeeding breach of such
provision, a waiver of the provision itself, or a waiver of any right or remedy
hereunder.
6.3 Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with the laws of the State of Texas (excluding its
conflict of laws rules).
6.4 Survival. The representations, warranties and covenants of the
--------
parties set forth in this Agreement and any instrument delivered pursuant to
this Agreement shall survive the Closing.
6.5 Cumulative Remedies. Except as provided in Subsection 6.12 of
-------------------
the Purchase Agreement, no remedy herein conferred upon any party is intended to
be exclusive of any other benefits or remedy, and each and every such remedy
shall be cumulative and shall be in addition to every other benefit or remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or otherwise. No single or partial exercise by any party of any right, power or
remedy hereunder shall preclude any other or further exercise thereof.
6.6 Multiple Counterparts. This Agreement may be executed in a
---------------------
number of identical counterparts, each of which shall be considered an original
instrument, but all of which together shall constitute one and the same
instrument; but in making proof of this Agreement, it shall not be necessary to
produce or account for more than one counterpart.
6.7 Further Assurances. Each party agrees to execute and deliver, or
------------------
cause to be executed and delivered, such documents and other papers and take
such further actions as may be reasonably necessary or desirable to fully and
effectively carry out the provisions hereof and the transactions contemplated by
this Agreement.
6.8 Severability. In the event that any provision of this Agreement
------------
or the application thereof becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, all parties hereto shall be
relieved of all obligations arising under such provision, but only to the extent
that it is illegal, unenforceable or void, it being the intent and agreement of
the parties that this Agreement shall be deemed amended by modifying such
provision to the extent necessary to make it legal and enforceable while
preserving its intent or, if that is not possible, by substituting therefor
another provision that is legal and enforceable and achieves the same
objectives.
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6.9 Rules of Construction. The parties waive the application of any
---------------------
law, regulation, holding, or rule of construction providing that ambiguities in
an agreement or other document will be construed against the party drafting such
agreement or document.
6.10 Binding Nature and Assignment. Neither this Agreement nor any
-----------------------------
rights hereunder may be assigned by the Selling Shareholder. Any assignment
made or attempted in violation of this Subsection 6.10 shall be void and of no
effect. Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns.
6.11 Consents. Whenever this Agreement calls for a consent or
--------
approval, such consent or approval shall not be unreasonably withheld, delayed
or conditioned. All consents or approvals shall be in writing and shall be
executed by an officer or other authorized agent.
6.12 Interpretation. Section titles are inserted for convenience of
--------------
reference only and are not intended to be a part of or to affect the meaning of
this Agreement. Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
and any other gender, as the context requires.
To evidence the binding effect of the covenants and agreements described
above, the parties hereto have executed this Agreement effective as of the date
first above written.
ISSUER:
ZIXIT CORPORATION
By:_________________________________
Xxxxx X. York,
Senior Vice President & Chief Financial Officer
SELLING SHAREHOLDER:
____________________________________
[Xxxxxx X. Xxxxxxxxx]
[Xxxxxx X. XxXxxxxx]
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