Exhibit 10.37
STOCK PURCHASE AGREEMENT
KNOWLEDGE SOLUTIONS, INC.
THIS AGREEMENT is made as of the 17th day of May, 1995 by and among
Knowledge Solutions, Inc., a Delaware corporation (the "Company"),
Safeguard Scientifics (Delaware), Inc., a Delaware corporation
("Safeguard"), Competitive Technologies, Inc., a Delaware
Corporation formerly known as University Patents, Inc. ("CTI") and
Xxxxxx Xxxxxx, a resident ("Xxxxxx")
(individually referred to as the "Purchaser" or "Safeguard", "CTI"
or "Xxxxxx" and collectively referred to as the "Purchasers").
ARTICLE I
PURCHASE, SALE AND TERMS OF SHARES
1.01. The Shares. The Company has authorized the
issuance, sale and exchange of a total of 225,000 shares (the
"Shares") of its authorized but unissued shares of Class A Common
Stock, $.001 par value (the "Stock"), at a purchase price of $1.00
per share to the Purchasers.
1.02. Purchase and Sale.
Subject to the terms and conditions herein set forth, the
Company hereby issues and sells to each Purchaser, and each
Purchaser (severally but not jointly) hereby purchase the number of
Shares set forth opposite such Purchaser's name below.
Number of
Shares of Class A
Purchaser Common Stock Purchase Price
Safeguard Scientifics
(Delaware), Inc. 100,000 $100,000
Competitive Technologies,
Inc. 75,000 $ 75,000
Xxxxxx Xxxxxx 50,000 $ 50,000
Total: 225,000 $225,000
The Company is delivering to each Purchaser a certificate for the
Shares, registered in the Purchaser's name (or its nominee),
against delivery of a certified check payable to the order of the
Company, or a transfer of funds to the account of the Company by
wire transfer, for such Purchaser's purchase price.
1.03. Representations by the Purchaser.
Each Purchaser makes the following representations and
warranties for itself only:
(a) Investment Representations. The Purchaser
represents that it is its present intention to acquire the Shares
for its own account (and it will be the sole beneficial owner
thereof) and that the Shares are being and will be acquired by it
for the purpose of investment and not with a view to distribution
or resale thereof except pursuant to registration under the
Securities Act or exemption therefrom. The Purchaser further
represents that it understands and agrees that, until registered
under the Securities Act or transferred pursuant to the provisions
of Rule 144 or Rule 144A as promulgated by the Commission, all
certificates evidencing any of the Shares, whether upon initial
issuance or upon any transfer thereof, shall bear a legend,
prominently stamped or printed thereon, reading substantially as
follows:
"The securities represented by this certificate have not
been registered under the Securities Act of 1933 or
applicable state securities laws. These securities may
not be offered for sale, sold or transferred, in the
absence of an effective registration statement under the
Act and any applicable state securities laws or an
opinion of counsel satisfactory to the Company of the
availability of an exemption from registration
thereunder."
(b) Access to Information. Purchaser has had the
opportunity to ask questions of and receive answers from management
of the Company concerning the terms and conditions of the offering
of the Shares and the additional information, documents, records
and books relative to its business, assets, financial condition,
results of operations and liabilities (contingent or otherwise) of
the Company.
(c) Sophistication and Knowledge. Purchaser has such
knowledge and experience in financial and business matters that it
is capable of evaluating the merits and risks of the purchase of
the Shares. Purchaser can bear the economic risks of this
investment and can afford a complete loss of its investment.
(d) Lack of Liquidity. Purchaser has no present need
for liquidity in connection with its purchase of the Shares.
(e) Suitability and Investment Objectives. The purchase
of the Shares by Purchaser is consistent with the general
investment objectives of the Purchaser. The Purchaser understands
that the purchase of the Shares involves a high degree of risk in
view of the fact that, among other things, the Company is a start-
up enterprise, and there may be no established market for the
Company's capital stock.
(f) Accredited Investor Status. Purchaser is an
"Accredited Investor" as that term is defined in Rule 501 of
Regulation D promulgated under the Securities Act.
1.04. Brokers or Finders. Purchaser represents that no
Person has or will have, as a result of the transactions
contemplated by this Agreement, any right, interest or valid claim
against or upon the Company for any commission, fee or other
compensation as a finder or broker because of any act or omission
by Purchaser or its agents.
ARTICLE II
CLOSING DOCUMENTATION
2.01. Documentation at Closing. The Company shall deliver
to each Purchaser all of the following materials, each in form and
substance satisfactory to the Purchaser:
(a) A copy of the Certificate of Incorporation of the
Company, as amended or restated to date; a copy of the resolutions
of the Board of Directors providing for the approval of this
Agreement, the issuance of the Shares, and all other agreements or
matters contemplated hereby or executed in connection herewith; all
of which have been certified by the Secretary of the Company to be
true, complete and correct in every particular; and certified
copies of all documents evidencing other necessary corporate or
other action and governmental approvals, if any, required to be
obtained at or prior to the Closing with respect to this Agreement
and the issuance of the Shares.
(b) A Good Standing Certificate issued by the Secretary
of State of the State of incorporation of the Company and each
other jurisdiction in which the Company is required to qualify to
do business as a foreign corporation.
(C) Simultaneously with the closing of this investment,
CTI and the Company will enter into an amendment to the KSI-UPI
Stock Exchange Agreement originally dated as of September 12, 1994
pursuant to which they will reverse and cancel the exchange of
stock made pursuant to the original agreement. The execution of
such amendment is a condition to Safeguard's obligation to close
under this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants as of the Closing as
follows:
3.01. Organization and Standing of the Company. The
Company is a duly organized and validly existing corporation in
good standing under the laws of the State of Delaware and has all
requisite corporate power and authority for the ownership and
operation of its properties and for the carrying on of its business
as now conducted and as now proposed to be conducted and to execute
and deliver this Agreement and the Voting Agreement, to issue, sell
and deliver the Share and to perform its other obligations pursuant
hereto and thereto. The Company is duly licensed or qualified and
in good standing as a foreign corporation authorized to do business
in all jurisdictions wherein the character of the property owned or
leased or the nature of the activities conducted by it makes such
licensing or qualification necessary, except where the failure to
be so licensed or qualified would not have a material adverse
effect on the business, operations or financial condition of the
Company.
3.02. Corporate Action. This Agreement has been duly
authorized, executed and delivered by the Company and constitute
the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective
terms. The Shares have been duly authorized. The issuance, sale
and delivery of the Shares have been duly authorized by all
required corporation action; the Shares have been validly issued,
are fully paid and nonassessable with no personal liability
attaching to the ownership thereof and are free and clear of all
liens, charges, restrictions, claims and encumbrances imposed by or
through the Company except as set forth in this Agreement and the
Voting Agreement, as of the Closing.
3.03. Litigation. There is no litigation or governmental
proceeding or investigation pending or, to the knowledge of the
Company, threatened against the Company affecting any of its
properties or assets, nor, to the best knowledge of the Company,
has there occurred any event or does there exist any condition on
the basis of which any litigation, proceeding or investigation
might properly be instituted. The Company is not in default with
respect to any order, writ, injunction, decree, ruling or decision
of any court, commission, board or other government agency, which
such default might have a material adverse effect on the business,
assets, liabilities, operations, Intellectual Property Rights,
management or financial condition of the Company. There are no
actions or proceedings pending or, to the Company's knowledge,
threatened (or any basis therefor known to the Company) which might
result, either in any case or in the aggregate, in any material
adverse change in the business, operations, Intellectual Property
Rights, affairs or financial condition of the Company or in any of
its properties or assets, or which might call into question the
validity of this Agreement, any of the Shares, or any action taken
or to be taken pursuant hereto or thereto. The foregoing sentences
include, without limiting their generality, actions pending or, to
the Company's knowledge, threatened (or any basis therefor known to
the Company) involving the prior employment or engagement of any of
the Company's officers, employees or consultants or their use in
connection with the Company's business of any information or
techniques allegedly proprietary to any of their former employers
or to any other Person.
3.04. Certain Agreements of Officers and Employees.
(a) No officer, employee or consultant of the Company
is, or is now, to the Company's knowledge, expected to be, in
violation of any term of any employment contract, patent disclosure
agreement, proprietary information agreement, noncompetition
agreement, nonsolicitation agreement, confidentiality agreement, or
any other similar contract or agreement or any restrictive
covenant, relating to the right of any such officer, employee, or
consultant to be employed or engaged by the Company because of the
nature of the business conducted or to be conducted by the Company
or relating to the use of trade secrets or proprietary information
of others, and to the Company's best knowledge and belief, the
continued employment or engagement of the Company's officers,
employees or consultants does not subject the Company or any
Purchaser to any liability with respect to any of the foregoing
matters.
(b) No officer, consultant or Key Employee of the Company
whose termination, either individually or in the aggregate, could
have an adverse effect on the Company, has terminated, or to the
best knowledge of the Company, has any present intention of
terminating, his employment or engagement with the Company.
3.05. Compliance with Other Instruments. The Company is
in compliance in all respects with the terms and provisions of this
Agreement and of its Certificate of Incorporation and By-laws, each
as amended and/or restated to date, and in all respects with the
material terms and provisions of all mortgages, indentures, leases,
agreements and other instruments by which it is bound or to which
it or any of its properties or assets are subject. The Company is
in compliance in all material respects with all judgments, decrees,
governmental orders, laws, statutes, rules or regulations by which
it is bound or to which it or any of its properties or assets are
subject. Neither the execution, issuance and delivery of this
Agreement or the Voting Agreement, nor the consummation of any
transaction contemplated hereby or thereby, has constituted or
resulted in or will constitute or result in a default or violation
of any term or provision of any of the foregoing documents,
instruments, judgments, agreements, decrees, orders, statutes,
rules and regulations.
3.06. Title to Assets, Patents. The Company has good and
marketable title in fee to such of its fixed assets as are real
property, and good and merchantable title to all of its other
assets, now carried on its books, which assets consist of those
reflected in the most recent balance sheet of the Company included
in Exhibit 3.07 attached hereto, or acquired since the date of such
balance sheet (except personal property disposed of since said date
in the ordinary course of business) free of any mortgages, pledges,
charges, liens, security interests or other encumbrances. The
Company enjoys peaceful and undisturbed possession under all leases
under which it is operating, and all said leases are valid and
subsisting and in full force and effect.
The Company owns or has a valid right to use the Intellectual
Property Rights being used to conduct its business as now operated
and as now proposed to be operated or under development or now
proposed to be developed by the Company, and the conduct of its
business as now operated and as now proposed to be operated and the
development, manufacture and distribution of the products under
development or now proposed to be developed by the Company does not
and will not conflict with or infringe upon the intellectual
property rights of others. Descriptions of certain Intellectual
Property Rights and products under development or now proposed to
be developed by the Company is contained in Exhibit 3.06. Such
descriptions do not necessarily describe all Intellectual Property
Rights and products under development or proposed to be developed
by the Company. A complete list of licenses and registrations of
such Intellectual Property rights is attached hereto as Exhibit
3.06. Except as set forth on Exhibit 3.06, no claim is pending or
threatened against the Company and/or its officers, employees and
consultants to the effect that any such Intellectual Property Right
owned or licensed by the Company, or which the Company otherwise
has the right to use, is invalid or unenforceable by the Company.
Except pursuant to the terms of any licenses specified on Exhibit
3.06, the Company has no obligation to compensate any Person for
the use of any such Intellectual Property Rights, no other Person
has any right, title or interest in or to such Intellectual
Property and the Company has not granted any Person any license or
other right to use any of the Intellectual Property Rights of the
Company, whether requiring payment of royalties or not.
The Company has taken all reasonable measures to protect and
preserve the security, confidentiality and value of its
Intellectual Property Rights, including its trade secrets and other
confidential information. All employees and consultants of the
Company involved in the design, review, evaluation or development
of products or Intellectual Property Rights have executed a
nondisclosure and assignment of inventions agreements sufficient to
protect the confidentiality and value of the Company's Intellectual
Property Rights and to vest in the Company exclusive ownership of
such Intellectual Property Rights. To the best knowledge of the
Company, all trade secrets and other confidential information of
the Company are presently valid and protectable and are not part of
the public domain or knowledge, nor, to the best knowledge of the
Company, have they been used, divulged or appropriated for the
benefit of any person other than the Company or otherwise to the
detriment of the Company. To the best of the Company's knowledge,
no employee or consultant of the Company has used any trade secrets
or other confidential information of any other person in the course
of their work for the Company. The Company is the exclusive owner
of all right, title and interest in its Intellectual Property
Rights as purported to be owned by the Company, and such
Intellectual Property Rights are valid and in full force and
effect. Neither the Company, nor any of its employees or
consultants has received notice of, and to the best of the
Company's knowledge after reasonable investigation, there are no
claims that the Company's Intellectual Property Rights or the use
or ownership thereof by the Company infringes, violates or
conflicts with any such right of any third party. No university,
hospital, government agency (whether federal or state) or other
organization which sponsored research and development conducted by
the Company or any employee of the Company or has any claim of
right to or ownership of or other encumbrance upon the Intellectual
Property Rights of the Company.
3.07. Financial Information. The financial statements of
the Company as of December 31, 1994 and as of March 31, 1995 (the
"Financial Statement Date"), in each case including the Company's
Statement of Income and Balance Sheet, attached hereto as Exhibit
3.07, present fairly the financial position of the Company as at
the date or dates thereof and have been prepared in accordance with
generally accepted accounting principles consistently applied,
except for the absence in the March 31, 1995 financial statements
of footnotes and normal non-material year-end adjustments (the
"Financial Statements"). The Company does not have, and has no
reasonable grounds to know of, any liability, contingent or
otherwise, not adequately reflected in or reserved against in the
Financial Statements. Except as set forth in Exhibit 3.07, since
the Financial Statement Date (i) there has been no material adverse
change in the business, assets, operations, affairs, prospects or
financial condition of the Company; (ii) neither the business,
financial condition, operations, prospects or affairs of the
Company nor any of its properties or assets, including without
limitation, its Intellectual Property Rights, have been materially
adversely affected as the result of any legislative or regulatory
change, any revocation or change in any franchise, permit, license
or right to do business, or any other event or occurrence, whether
or not insured against; and (iii) the Company has not entered into
any material transaction other than in the ordinary course of
business, made any distribution on its capital stock, or redeemed
or repurchased any of its capital stock, except as set forth on
Exhibit 3.07.
3.08. Taxes. The Company has accurately prepared and
timely filed all federal, state and other tax returns required by
law to be filed by it, has paid or made provision for the payment
of all taxes shown to be due and all additional assessments, and
adequate provisions have been made and are reflected in the
Company's financial statements for all current taxes and other
charges to which the Company is subject and which are not currently
due and payable.
3.09. ERISA. The Company presently makes no contributions
to any employee pension benefit plans for its employees which are
subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA").
3.10. Transactions with Affiliates. Except as set forth
in Exhibit 3.10, there are no outstanding loans, obligations,
leases, royalty agreements or other continuing transactions between
the Company and any officer, employee, consultant or director of
the Company or any Person owning five percent (5%) or more of the
capital stock of the Company or any member of the immediate family
of such officer, employee, consultant, director or stockholder or
any corporation or other entity controlled by such officer,
employee, consultant, director or stockholder, or a member of the
immediate family of such officer, employee, consultant, director or
stockholder.
3.11. Assumptions or Guaranties of Indebtedness of Other
Persons. The Company has not assumed, guaranteed, endorsed or
otherwise become directly or contingently liable on (including,
without limitation, liability by way of agreement, contingent or
otherwise, to purchase, to provide funds for payment, to supply
funds to or otherwise invest in the debtor or otherwise to assure
the creditor against loss), any Indebtedness of any other Person.
3.12. Disclosure. Neither this Agreement, the Financial
Statements, nor any other agreement, document, certificate,
statement, whether oral or written, furnished to any of the
Purchasers or their special counsel by or on behalf of the Company
in connection with the transactions contemplated hereby contains
any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained
herein or therein, in light of the circumstances in which made, not
misleading.
3.13. Brokers or Finders. No Person has or will have, as
a result of the transactions contemplated by this Agreement, any
right, interest or valid claim against or upon the Company for any
commission, fee or other compensation as a finder or broker because
of any act or omission by the Company or its respective agents.
3.14. Capitalization; Status of Capital Stock. As of the
Closing, the Company capitalization (including all outstanding
options, warrants, rights, and convertible securities) will be as
set forth in Exhibit 3.14 hereto. The Shares when issued and
delivered in accordance with the terms hereof. None of the
Company's outstanding securities or authorized capital stock or the
Shares are subject to any rights of redemption, repurchase, rights
of first refusal, preemptive rights or other similar rights,
whether contractual, statutory or otherwise, for the benefit of the
Company, any stockholder, or any other Person. There are no
restrictions on the transfer of shares of capital stock of the
Company other than those imposed by relevant federal and state
securities laws. The offer and sale of all capital stock and other
securities of the Company issued before the Closing complied with
or were exempt from all applicable federal and state securities
laws and no stockholder has a right of rescission or damages with
respect thereto.
3.15. Insurance. The Company carries insurance covering
its properties and business adequate and customary for the type and
scope of the properties, assets and business, and similar to
companies of comparable size and condition similarly situated in
the same industry in which the Company operates, but in any event
in amounts sufficient to prevent the Company from becoming a
co-insurer or self-insurer, with provision for reasonable
deductibles.
3.16. Books and Records. The books of account, ledgers,
order books, records and documents of the Company accurately and
completely reflect all material information relating to the
business of the Company, the location and collection of its assets,
and the nature of all transactions giving rise to the obligations
or accounts receivable of the Company.
3.17. Environmental and Safety Laws. To the best of the
Company's knowledge after due investigation, it is not in violation
of any applicable statute, law or regulation relating to the
environment or occupational safety and health, and to the best of
its knowledge after due investigation, no material expenditures
will be required in order to comply with any such statute, law or
regulation.
ARTICLE IV
MISCELLANEOUS
4.01. Amendments, Waivers and Consents. Any provision in
the Agreement to the contrary notwithstanding, and except as
hereinafter provided, changes in, termination or amendments of or
additions to this Agreement may be made, and compliance with any
covenant or provision set forth herein may be omitted or waived,
upon the written agreement of the parties hereto. Any waiver or
consent may be given subject to satisfaction of conditions stated
therein and any waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
4.02. Survival of Representations and Warranties. All
representations and warranties made in this Agreement, the Shares,
or any other instrument or document delivered in connection
herewith or therewith, shall survive the execution and delivery
hereof or thereof.
4.03. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the internal laws of the State of
Delaware, and without giving effect to choice of laws provisions.
4.04. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall
constitute one and the same instrument, and any of the parties
hereto may execute this Agreement by signing any such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Stock
Purchase Agreement to be executed as of the date first above
written.
KNOWLEDGE SOLUTIONS, INC. SAFEGUARD SCIENTIFICS
(DELAWARE), INC.
By: S/ Xxxxx X. XxXxxx, Xx. By: S/ Xxxxxx X. Xxxxxxxx
Title: Vice President Title: President
COMPETITIVE TECHNOLOGIES, INC.
By: S/ Xxxxxx X. Xxxxxxx
Title: President XXXXXX XXXXXX
