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EXHIBIT 10.10
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EXCHANGE APPLICATIONS, INC.
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SECURITIES PURCHASE AGREEMENT
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DECEMBER 4, 1997
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ATTACHMENTS
EXHIBITS
Exhibit A - Amendment and Restated Certificate
Exhibit B - Form of Registration Rights Agreement
Exhibit C - Form of Stockholders Agreement
SCHEDULES
Schedule 3.1 - Organization; Good Standing; Qualifications
Schedule 3.1.1 - Certificate of Incorporation
Schedule 3.1.2 - By-Laws
Schedule 3.4 - No Consent or Approval Required
Schedule 3.5 - Capitalization
Schedule 3.7 - Financial Statements
Schedule 3.8 - Absence of Undisclosed Liabilities
Schedule 3.9 - Events Subsequent to the Latest Balance Sheet
Schedule 3.10 - Title to Assets, Properties and Rights
Schedule 3.11 - Intellectual Property
Schedule 3.12 - Directors, Officers, Employees and Consultants
Schedule 3.14 - Agreements, Etc.
Schedule 3.15 - Permits and Orders
Schedule 3.16 - Labor Relations; Employees
Schedule 3.17 - Litigation
Schedule 3.18 - Tax Matters
Schedule 3.19 - Related Transactions
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SECURITIES PURCHASE AGREEMENT dated as
December 4, 1997, by and among EXCHANGE
APPLICATIONS, INC., a Delaware corporation (the
"CORPORATION"), INSIGHT CAPITAL PARTNERS II, L.P.,
a Delaware limited partnership ("IVP II"), WEXFORD
INSIGHT LLC, a Delaware limited liability company
("WEXFORD"; and together with IVP II, the
"INVESTORS").
The Corporation desires to sell to each Investor, and each Investor
desires to purchase from the Corporation, shares of the capital stock of the
Corporation, on the terms and subject to the conditions set forth herein. The
Corporation and the Investors are referred to herein collectively as the
"Parties."
ACCORDINGLY, in consideration of the representations, warranties,
agreements, covenants and conditions contained in this Agreement, the Parties
hereby agree as follows:
SECTION 1. FILING OF CERTIFICATES.
Prior to the Closing, the Corporation shall file with the Secretary of
State of the State of Delaware an Amended and Restated Certificate of
Incorporation, in the form of EXHIBIT A hereto (the "AMENDED AND RESTATED
CERTIFICATE"), that, among other things, (i) authorizes 12,078,698 shares of
Common Stock, $.001 par value (the "COMMON STOCK"), (ii) authorizes 6,679,510
shares of Preferred Stock, $.001 par value (the "PREFERRED Stock"), of which (A)
2,900,000 shares shall be designated Series A Preferred Stock (the "SERIES A
PREFERRED STOCK"), (B) 2,555,556 shares shall be designated Series B Convertible
Preferred Stock (the "SERIES B PREFERRED STOCK"), and (C) 1,223,954 shares shall
be designated Series C Convertible Preferred Stock (the "SERIES C PREFERRED
STOCK"), and (iii) sets forth the terms, designations, powers, preferences and
relative, participating, optional and other special rights, and the
qualifications, limitations and restrictions, of the Common Stock and the
Preferred Stock.
SECTION 2. AUTHORIZATION AND RESERVATION; ISSUANCE AND SALE; CLOSING.
2.1. AUTHORIZATION AND RESERVATION.
Subject to the terms and conditions hereof, the Corporation has
authorized (i) the issuance and sale of 1,223,954 shares of Series C Preferred
Stock (the "INSIGHT PREFERRED SHARES") to the Investors at the Closing, and (ii)
the reservation of an aggregate of 1,223,954 shares of Common Stock (the
"RESERVED SHARES") for issuance upon the conversion of the Insight Preferred
Shares.
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2.2. ISSUANCE AND SALE OF THE INSIGHT PREFERRED SHARES.
(a) At the Closing, on and subject to the terms and conditions
contained herein, the Corporation shall issue, sell and deliver to IVP II, and
IVP II shall purchase from the Corporation, upon the terms and subject to the
conditions hereinafter set forth, 611,977 Insight Preferred Shares for an
aggregate purchase price of $2,000,000 in cash (or a purchase price of $3.268
per share).
(b) At the Closing, on and subject to the terms and conditions
contained herein, the Corporation shall issue, sell and deliver to Wexford, and
Wexford shall purchase from the Corporation, upon the terms and subject to the
conditions hereinafter set forth, 611,977 Insight Preferred Shares for an
aggregate purchase price of $2,000,000 in cash (or a purchase price of $3.268
per share).
2.3. DELIVERIES AT CLOSING.
At the Closing, the Corporation shall deliver to each Investor stock
certificates representing the Insight Preferred Shares being acquired by such
Investor at the Closing, registered in the name of such Investor, against
receipt by the Corporation of a certified or official bank check payable to the
Corporation or a wire transfer of immediately available funds to an account
designated by the Corporation in an aggregate amount equal to the purchase price
for the Insight Preferred Shares being purchased by such Investor hereunder.
2.4. CLOSING.
The closing (the "CLOSING") hereunder with respect to the issuance,
sale and delivery of the Insight Preferred Shares and the consummation of the
related transactions contemplated by this Agreement and the Related Agreements
shall, subject to the satisfaction or waiver of the conditions set forth in
SECTIONS 5 and ▇, ▇▇▇▇ place at the offices of ▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP,
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ on a business day (the "CLOSING
DATE") designated by the Corporation and IVP II, which date shall be no later
than five Business Days after the date on which all such conditions shall have
been satisfied to the satisfaction of, or otherwise waived by, the Parties whose
obligations are subject thereto. As used in this Agreement, the term "BUSINESS
DAY" means any day that is not a Saturday, Sunday, legal holiday or other day on
which banks are required to be closed in New York, New York or Boston,
Massachusetts.
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SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION.
The Corporation hereby represents and warrants to the Investors as set
forth in the following SECTIONS 3.1 through 3.25:
3.1. ORGANIZATION; GOOD STANDING; QUALIFICATIONS.
(a) The Corporation is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware and has
all requisite corporate power and authority to own, lease and operate its
properties and assets and to carry on its business as now being conducted. The
Corporation has all requisite corporate power and authority to enter into this
Agreement and the Related Agreements to which it is a party, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The Corporation is duly qualified and in good
standing to do business in the Commonwealth of Massachusetts and every
jurisdiction in which such qualification is necessary because of the nature of
the property owned, leased or operated by it or the nature of the business
conducted by it therein, except where the failure to so qualify would not have a
material adverse effect (a "MATERIAL ADVERSE EFFECT") on the business,
operations, assets, condition (financial or otherwise), operating results,
liabilities, employee relations or business prospects of the Corporation and its
Subsidiaries (if any) taken as a whole (each of which jurisdictions is listed on
SCHEDULE 3.1 hereto). The Corporation has not conducted its business under any
fictitious or other names except those names listed on SCHEDULE 3.1. True and
complete copies of the Corporation's Certificate of Incorporation and By-Laws,
in each case as amended to and in effect on the date hereof, are attached hereto
as SCHEDULE 3.1.1 hereto and SCHEDULE 3.1.2 hereto, respectively. The
Corporation has in all material respects performed all of the obligations
required to be performed by it to date under its Certificate of Incorporation
and By-Laws, in each case as amended to and in effect on the date hereof, and
there exists no default, or any event which upon the giving of notice or the
passage of time, or both, would give rise to a claim of a default in the
performance by the Corporation of its obligations thereunder.
(b) As used herein, the term "GOVERNMENTAL AUTHORITY" means
any court, department, commission, board, bureau, agency or commission or other
governmental authority or instrumentality, domestic or foreign, federal, state
or local; the term "ORDER" means any judgments, writs, decrees, injunctions,
orders, compliance agreements or settlement agreements of any Governmental
Authority; and the term "LAWS" means federal, state, local or foreign laws,
statutes, rules, directives, ordinances requirements, regulations and Orders of
any Governmental Authority.
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3.2. AUTHORITY OF THE CORPORATION.
(a) The execution, delivery and performance of this Agreement
and the Related Agreements to which the Corporation is a party and the
consummation by the Corporation of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary action on the
part of the Corporation and its stockholders, and this Agreement and the Related
Agreements to which the Corporation is a party have been duly and validly
executed by the Corporation and are valid and binding obligations of the
Corporation, enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or similar Laws now or hereafter in effect, public policy and general
principles of equity. The execution, delivery and performance of this Agreement
and the Related Agreements to which the Corporation is a party, the consummation
by the Corporation of the transactions contemplated hereby and thereby,
including the reservation, issuance, sale and delivery, as the case may be, of
the Insight Preferred Shares and the Reserved Shares, and the compliance by the
Corporation with all of the provisions hereof and thereof shall not (i) conflict
with or result in a breach of any provision of the Certificate of Incorporation
or By-Laws of the Corporation, in each case as amended to and in effect on the
date hereof, (ii) cause a default or give rise to any right of termination,
cancellation or acceleration (whether upon the giving of notice or the lapse of
time or both) under any of the terms, conditions or provisions of any note,
bond, lease, mortgage, indenture, license or other instrument or agreement to
which the Corporation is a party or by which the Corporation or any of its
properties or assets is or may be bound or affected, except where such defaults,
terminations, cancellations or accelerations taken as a whole would not have a
Material Adverse Effect on the Corporation and its Subsidiaries (if any) taken
as a whole, or (iii) violate any Law applicable to the Corporation or any of its
properties or assets. As used herein, the term "PERSON" shall be construed
broadly and shall include an individual, corporation, association, partnership,
joint venture or entity, organization or Governmental Authority; and the term
"SUBSIDIARY" means any Person (other than a natural Person) with respect to
which a specified Person (or a Subsidiary thereof) has the power to vote or
direct the voting of sufficient securities to elect a majority of the board of
directors or similar governing body.
SECTION 3.3. AUTHORIZATION OF INSIGHT PREFERRED SHARES AND
RESERVED SHARES.
The reservation, issuance, sale and delivery, as the case may be, of
the Insight Preferred Shares and the Reserved Shares have been duly authorized
by all requisite board, stockholder and other corporate action on the part of
the Corporation. As of the Closing, the Insight Preferred Shares, and, upon
their issuance in accordance with the Amended and Restated Certificate, the
Reserved Shares, shall be validly
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issued and outstanding, fully paid and nonassessable, with no personal liability
attaching to the ownership thereof, and, except as contemplated by the Related
Agreements, not subject to any Encumbrances or any preemptive rights, rights of
first refusal or other similar rights of the stockholders of the Corporation.
3.4. NO CONSENT OR APPROVAL REQUIRED.
No consent or approval by, or any notification of or filing with, any
Person (governmental or private) is required in connection with the execution,
delivery and performance by the Corporation of this Agreement and the Related
Agreements to which the Corporation is a party or the consummation by the
Corporation of the transactions contemplated hereby and thereby, including the
valid reservation, issuance, sale and delivery, as the case may be, of the
Insight Preferred Shares and the Reserved Shares, except for stockholder
approval of the filings of the Amended and Restated Certificate as described in
SECTION 1, the filing of any notices subsequent to the Closing that may be
required under applicable Federal or state securities Laws (which notices shall
be filed on a timely basis following the Closing as so required) and those other
consents, approvals, notifications and filings set forth on SCHEDULE 3.4 hereto,
which, except as otherwise set forth on SCHEDULE 3.4, have been made or will be
obtained prior to the Closing.
3.5. CAPITALIZATION.
(a) Immediately upon the consummation at the Closing of
the transactions contemplated by this Agreement, the authorized capital stock of
the Corporation shall consist of:
(i) 12,078,698 shares of Common Stock, of which:
(A) 3,870,050 shares shall be validly issued
and outstanding, fully paid and nonassessable, with no personal
liability attaching to the ownership thereof;
(B) 2,555,556 shares shall be duly reserved
for issuance upon conversion of the Series B Preferred Stock;
(C) 1,223,954 shares shall be duly reserved
for issuance upon conversion of the Series C Preferred Stock; and
(D) 2,156,388 shares shall be duly reserved
for issuance upon the grant of such shares, or the exercise of options
granted therefor, pursuant to
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the 1996 Stock Incentive Plan of the Corporation, as amended to and in
effect on the Closing Date; and
(ii) 6,679,510 shares of Preferred Stock, of
which:
(A) 2,900,000 shall have been duly
designated as Series A Preferred Stock, all of which shares shall have
been validly issued and shall be outstanding, fully paid and
nonassessable, with no personal liability attaching to the ownership
thereof;
(B) 2,555,556 shares shall have been duly
designated as Series B Preferred Stock, all of which shares shall have
been validly issued and shall be outstanding, fully paid and
nonassessable, with no personal liability attaching to the ownership
thereof; and
(C) 1,223,954 shares shall have been duly
designated as Series C Preferred Stock, all of which shares shall have
been validly issued and shall be outstanding, fully paid and
nonassessable, with no personal liability attaching to the ownership
thereof; and
all such outstanding shares in each case being owned of record by the Persons
identified on SCHEDULE 3.5 hereto in the amounts set forth thereon.
(b) SCHEDULE 3.5 contains a list, as of the date hereof and
assuming the consummation at the Closing of all transactions contemplated by
this Agreement and the Related Agreements, of all outstanding warrants, options,
agreements, convertible securities or other commitments pursuant to which the
Corporation or, to the Best Knowledge of the Corporation, any stockholder
thereof is or may become obligated to issue, sell or otherwise transfer any
shares of capital stock or other securities of the Corporation, which list names
all Persons entitled to receive such shares or other securities, indicates
whether or not such securities are entitled to any anti-dilution or similar
adjustments upon the issuance of additional securities of the Corporation or
otherwise and sets forth the shares of capital stock or other securities
required to be issued thereunder (calculated after giving effect to all such
anti-dilution and other similar adjustments resulting from the issuance of the
Insight Preferred Shares and the consummation of the transactions contemplated
by this Agreement and the Related Agreements).
(c) Except as set forth on SCHEDULE 3.5 or as contemplated by
the Related Agreements, immediately upon consummation at the Closing of the
transactions contemplated by this Agreement and the Related Agreements,
including the delivery
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of each of the instruments described in SECTIONS 5 and 6, there shall be, (i) no
preemptive or similar rights to purchase or otherwise acquire any shares of the
capital stock or other securities of the Corporation pursuant to any provision
of Law, the Corporation's Certificate of Incorporation or By-Laws, in each case
as amended to and in effect on the date hereof, or any agreement to which the
Corporation or, to the Best Knowledge of the Corporation, any stockholder
thereof is a party; and (ii) with respect to the sale or voting of any shares of
capital stock or other securities of the Corporation (whether outstanding or
issuable upon the conversion, exercise or exchange of outstanding securities),
no Encumbrance or other restriction (such as a right of first refusal, right of
first offer, proxy, voting trust, voting agreement, etc.), except, in the case
of shares of Common Stock previously issued to officers, directors and employees
of the Corporation, in favor of the Corporation. As used herein, the term
"ENCUMBRANCES" means any of the following: security interests, liens, pledges,
claims, charges, escrows, encumbrances, options, rights of first refusal,
mortgages, indentures, security agreements, judgments, or other agreements,
arrangements, contracts, commitments, understandings or obligations, whether
written or oral and whether or not relating in any way to credit or the
borrowing of money.
(d) All shares of the capital stock and other securities
issued by the Corporation prior to the Closing have been issued in transactions
exempt from registration under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and the rules and regulations promulgated thereunder and all
applicable state securities or "BLUE SKY" Laws. The Corporation has not violated
the Securities Act or any applicable state securities or "BLUE SKY" Laws in
connection with the issuance of any shares of capital stock or other securities
prior to the Closing.
3.6. EQUITY INVESTMENT.
The Corporation has never owned, nor does it presently own, any capital
stock or other equity interest in any corporation, association, trust,
partnership, joint venture or other Person.
3.7. FINANCIAL STATEMENTS.
(a) SCHEDULE 3.7 hereto contains the following financial
statements: (i) the audited balance sheet (the "LATEST BALANCE SHEET") of the
Corporation dated as of December 31, 1996 (the "LATEST BALANCE SHEET DATE") and
the related audited statements of income, retained earnings and cash flows for
the fiscal year ended December 31, 1996, together with the accompanying
supplementary information and report of the auditor thereof, and (ii) the
unaudited balance sheet of the Corporation for the nine month period ended
September 30, 1997 and the related unaudited statements of income for the
Corporation,
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retained earnings for the Corporation excluding Exchange Application Limited, a
subsidiary of the Company (the "Subsidiary") and cash flows for the Corporation
excluding the Subsidiary for such nine month period together with accompanying
supplementary information (collectively, the "FINANCIAL STATEMENTS").
(b) Each of the Financial Statements (A) has been prepared in
accordance with the books and records of the Corporation (which have been
maintained in accordance with good business practices and are true and complete,
in each case in all material respects), (B) is materially true and correct, (C)
fairly presents the financial condition, results of income, retained earnings
and cash flow which it purports to present as of the date thereof and for the
periods indicated thereon and (D) except as described therein or in the
footnotes thereto, has been prepared in accordance with United States generally
accepted accounting principles consistently applied ("GAAP") throughout the
periods covered thereby. Except as set forth in the Financial Statements or in
the footnotes thereto or as required by applicable Law or GAAP, there has been
no change in (i) any accounting principle, procedure or practice followed by the
Corporation or (ii) the method of applying any such principle, procedure or
practice.
3.8. ABSENCE OF UNDISCLOSED LIABILITIES AND OBLIGATIONS.
The Corporation has no liabilities or obligations on the date hereof
not disclosed on or reflected in the Latest Balance Sheet, except for (i)
liabilities or obligations incurred after the Latest Balance Sheet Date in the
ordinary course of business consistent with past practice (none of which relates
to any breach of contract, default, breach of warranty, tort, infringement,
violation of Law or Proceeding) none of which has had, or is reasonably likely
to have, a Material Adverse Effect on the Corporation and its Subsidiaries (if
any) taken as a whole, (ii) liabilities or obligations which would not be
required to be disclosed on or reflected in a balance sheet prepared in
accordance with GAAP on the date hereof, and (iii) liabilities or obligations
incurred after the Latest Balance Sheet Date and set forth on SCHEDULE 3.8
hereto. All reserves set forth on the Latest Balance Sheet were adequate for the
purposes indicated therein at the Latest Balance Sheet Date, and, to the Best
Knowledge of the Corporation, continue to be adequate for the purposes indicated
therein as of the date hereof. There are no "LOSS CONTINGENCIES" (as such term
is used in Statement of Financial Accounting Standards No. 5 issued by the
Financial Accounting Standards Board in March 1975) that are not adequately
provided for on the Latest Balance Sheet.
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3.9. EVENTS SUBSEQUENT TO THE LATEST BALANCE SHEET.
(a) Except as set forth on SCHEDULE 3.9 hereto and the
transactions contemplated by this Agreement and the Related Agreements, since
the Latest Balance Sheet Date, the Corporation has been operated in the ordinary
course of business consistent with past practice and there has not been:
(i) any material adverse change in the condition
(financial or otherwise), assets, liabilities, operations, earnings,
business or prospects of the Corporation;
(ii) any obligation, liability or indebtedness
(whether absolute, accrued, contingent or otherwise and whether due or
to become due) in excess of $50,000 incurred, or any transaction,
contract or commitment entered into, amended or terminated, with
respect to the Corporation, other than items incurred or entered into
on an arms' length basis in the ordinary course of business of the
Corporation and consistent with past practice;
(iii) any acceleration, payment, discharge or
satisfaction by the Corporation of any liability, obligation, claim,
lien or encumbrance (whether fixed or contingent, matured or unmatured)
in excess of $50,000, except on an arms' length basis in the ordinary
course of business and consistent with past practice;
(iv) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital
stock of the Corporation, or any direct or indirect redemption,
purchase or other acquisition of any thereof, or any other payments of
any nature to any Affiliate of the Corporation whether or not on or
with respect to any shares of capital stock of the Corporation owned by
such Affiliate;
(v) any issuance or sale, or any contract entered
into for the issuance or sale, of any shares of capital stock of the
Corporation or securities convertible into or exercisable or
exchangeable for such capital stock, except commitments by the
Corporation to employees thereof to issue options to purchase shares of
Common Stock pursuant to the Corporation's 1996 Stock Incentive Plan,
as set forth in the offer letters from the Corporation to such
employees copies of which have been delivered by the Corporation to the
Investors;
(vi) any license, sale, transfer, pledge, mortgage,
or other disposition of any tangible or intangible asset of the
Corporation, except on an arms' length basis in the ordinary course of
business and consistent with past practice;
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(vii) any extraordinary increase in the compensation
paid or payable to any stockholder, director, officer, employee, agent
or Affiliate of, or consultant to, the Corporation, or any loan to any
of the foregoing Persons, or any agreement or commitment therefor
(other than advances to such Persons in the ordinary course of business
consistent with past practice in connection with travel and
travel-related expenses);
(viii) any change in the Tax or other accounting
methods or practices followed by the Corporation or any change in
depreciation or amortization policies or rates previously adopted;
(ix) any damage, destruction or loss (whether or not
covered by insurance) in excess of $10,000 affecting any asset or
property of the Corporation; or
(x) any agreement, whether in writing or otherwise,
to take any of the actions specified in the foregoing CLAUSES (ii)
through (viii).
(b) As used herein, the term "AFFILIATE" means a Person
that directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, any other Person.
3.10. TITLE TO ASSETS, PROPERTIES AND RIGHTS.
The Corporation has good and marketable title to all the properties
and interests in properties and assets, whether personal or mixed, reflected as
being owned by the Corporation on the Latest Balance Sheet or acquired
subsequent thereto (except for those properties or interests subsequently
disposed of in the ordinary course of business), free and clear of all
Encumbrances, except for (i) those Encumbrances set forth on SCHEDULE 3.10
hereto, (ii) liens for current taxes, assessments and other governmental charges
not yet due and payable or being contested in good faith by appropriate
proceedings and for which there are adequate reserves on the books and records
of the Corporation, and (iii) mechanics', landlord's, materialman's, supplier's,
vendor's or similar liens arising in the ordinary course of business securing
amounts that are not delinquent. The assets, properties and rights of the
Corporation reflected as being owned on the Latest Balance Sheet or acquired
after the date thereof or leased for use by the Corporation are in all material
respects in good operating condition and repair (normal wear and tear excepted),
are suitable in all material respects for the uses for which they are used in
the Corporation's business, are not subject to any condition which interferes
with the use thereof in any material respect, and constitute all assets,
properties and rights necessary to permit the Corporation to carry on its
business after the Closing as generally conducted by the Corporation prior
thereto.
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3.11. INTELLECTUAL PROPERTY.
(a) Except as set forth on SCHEDULE 3.11 hereto:
(i) the Corporation owns, has the right to use, sell,
license and dispose of, and, to the extent owned, has the right to
bring actions for the infringement of, all Intellectual Property Rights
necessary or required for the conduct of the business of the
Corporation (collectively, the "OWNED REQUISITE RIGHTS"), other than
those Intellectual Property Rights for which the Corporation has a
valid license (collectively, the "LICENSED REQUISITE RIGHTS"; and
together with the Owned Requisite Rights, the "REQUISITE RIGHTS");
(ii) the Requisite Rights are sufficient in all
material respects for the conduct of the business of the Corporation as
currently conducted or as contemplated to be conducted;
(iii) to the Best Knowledge of the Corporation, there
are no royalties, honoraria, fees or other payments payable by the
Corporation to any Person by reason of the ownership, use, license,
sale or disposition of the Requisite Rights;
(iv) to the Best Knowledge of the Corporation, no
activity, service or procedure currently conducted or proposed to be
conducted by the Corporation violates or shall violate any contract,
instrument, license, commitment, lease or similar document of the
Corporation with any third Person relating to any Intellectual Property
Rights, or infringe any Intellectual Property Rights of any other
Person;
(v) the Corporation has taken reasonable and
practicable steps (including, without limitation, entering into
confidentiality and nondisclosure agreements with all officers,
directors and employees of and consultants to the Corporation and other
Persons with access to or knowledge of confidential information of the
Corporation) designed to safeguard and maintain (i) the secrecy and
confidentiality of confidential information of the Corporation and (ii)
the proprietary rights of the Corporation in all Requisite Rights;
(vi) to the Best Knowledge of the Corporation, the
Corporation has not interfered with, infringed upon, misappropriated or
otherwise come into conflict in any material respect with any
Intellectual Property Rights of any Person or committed any acts of
unfair competition, and the Corporation has not received from any
Person any written notice, charge, complaint, claim or assertion
thereof, and no such claim is impliedly
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threatened by an offer to license from another Person under a claim of
use; and
(vii) the Corporation has not sent to any Person or
otherwise communicated to any Person, any written notice, charge,
complaint, claim or other assertion of any present, impending or
threatened infringement by or misappropriation of, or other conflict
with, any Intellectual Property Rights of the Corporation by such other
Person or any acts of unfair competition by such other Person with
respect to the Corporation, nor, to the Best Knowledge of the
Corporation, is any such infringement, misappropriation, conflict or
act of unfair competition occurring or threatened.
(b) SCHEDULE 3.11 contains a true and complete list of
all applications, filings and registrations pursuant to any Laws and any
licenses made, taken or obtained by the Corporation, in each case to acquire,
perfect, or protect its interest in its Intellectual Property Rights, including,
without limitation, all patents, patent applications, trademarks, trademark
applications, servicemarks and servicemark applications.
(c) As used herein, the term "INTELLECTUAL PROPERTY
RIGHTS" means all industrial and intellectual property rights, including,
without limitation, patents, patent applications, patent rights, trademarks,
trademark applications, tradenames, servicemarks, servicemark applications,
copyrights, know-how, trade secrets, proprietary processes and formulae,
confidential information, franchises, licenses, inventions, trade dress and
logos.
(d) To the Best Knowledge of the Corporation, the
Corporation's VALEX software product shall function without any material
interruption or required updates caused by the necessity to compare date
information prior to and after the change of the century (PROVIDED, HOWEVER, no
representation or warranty is being made by the Corporation pursuant to this
SECTION 3.11(d) as to any operating system on which the VALEX software product
may be used or any component part of the VALEX software product not developed by
the Corporation).
3.12. DIRECTORS, OFFICERS, EMPLOYEES AND CONSULTANTS.
Except as set forth on SCHEDULE 3.12 hereto, to the Best Knowledge of
the Corporation, no third party has asserted or threatened to assert any
material valid claim against the Corporation or any present stockholder,
director, officer or employee of, or consultant to, the Corporation, involving
(i) the employment by, or association with, the Corporation, of any of the
foregoing Persons or (ii) the use, in connection with the business of the
Corporation or any of the foregoing Persons of any information which the
Corporation or any such Persons would
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be prohibited from using under any prior agreements or arrangements or any legal
considerations applicable to unfair competition, trade secrets or proprietary
information.
3.13. ERISA PLANS AND CONTRACTS.
(a) The Corporation does not maintain nor is it a party
to (or ever maintained or was a party to) any "EMPLOYEE WELFARE BENEFIT PLAN",
as defined in Section 3(1) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or any other written, unwritten, formal or informal
plan or agreement involving direct or indirect compensation other than workers'
compensation, unemployment compensation and other government programs, under
which the Corporation has any present or future obligation or liability. The
Corporation does not maintain nor is it a party to (or ever maintained or was a
party to) any "EMPLOYEE PENSION BENEFIT PLAN", as defined in Section 3(2) of
ERISA, and the Corporation does not contribute to any "MULTIEMPLOYER PLAN" as
defined in Section 3(37) of ERISA.
(b) There is no contract, agreement, plan or arrangement
covering any employee or former employee of the Corporation that, individually
or collectively, could give rise to the payment of any amount that would not be
deductible by reason of Section 280G of the Internal Revenue Code of 1986, as
amended (the "CODE") (other than potentially on the acceleration of stock
options or the vesting of restricted stock upon a change of control).
3.14. AGREEMENTS, ETC.
(a) SCHEDULE 3.14 hereto contains a true and complete
list and brief description of all contracts, agreements, commitments and other
instruments (whether written or oral) to which the Corporation is a party (other
than this Agreement and the Related Agreements) and (x) which were entered into
or made outside the ordinary course of business or (y) which were entered into
or made in the ordinary course of business and are described in CLAUSES (i)
through (xvi) of this SECTION 3.14. Except as set forth on SCHEDULE 3.14, the
Corporation is not a party to any of the following, whether written or oral:
(i) distributorship, dealer, sales, advertising,
agency, manufacturer's representative or other contract relating to the
payment of aggregate commissions in excess of $50,000;
(ii) contract for the future purchase of products,
equipment or services which is not terminable by the Corporation
without aggregate cost, forfeiture or other liability in excess of
$30,000 individually or $100,000 in the aggregate for all such
contracts;
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(iii) contract or commitment for the employment of
any officer, employee or consultant or any other type of contract or
understanding with any officer, employee or consultant relating to the
payment of aggregate consideration or severance in excess of $50,000
(other than the Employment Agreement dated as of November 15, 1996,
between the Corporation and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and offer letters from
the Corporation to employees thereof (which are listed on SCHEDULE 3.14
and copies of which have been delivered by the Corporation to the
Investors);
(iv) formal or informal profit sharing, bonus, stock
option, pension, retirement, disability, stock purchase,
hospitalization, insurance or similar plan or agreement providing
benefits to any current or former director, officer, employee or
consultant, whether or not subject to ERISA;
(v) indenture, mortgage, promissory note, loan
agreement, pledge agreement, guarantee or other agreement or commitment
for the borrowing of money, for a line of credit or for a leasing
transaction of a type required to be capitalized in accordance with
Statement of Financial Accounting Standards No. 13 of the Financial
Accounting Standards Board;
(vi) contract or commitment for capital expenditures
in excess of $75,000 (excluding contracts or commitments for the
purchase of office equipment and personal computers in the ordinary
course of business);
(vii) agreement or arrangement for the sale of any
assets, properties or rights other than the sale of services or
products in the ordinary course of business;
(viii) lease or other agreement pursuant to which it
is a lessee of or holds or operates any machinery, equipment, motor
vehicles, office furniture, fixtures, products, merchandise or similar
personal property owned by any other Person;
(ix) contract with respect to the lending or
investing of funds in excess of $75,000;
(x) confidentiality or nondisclosure contract with
any Person (other than an Investor) who or which has (i) made or
proposed to make a financial investment in the Corporation in order to
receive from the Corporation goods, services, technology, expertise or
other value in addition to a monetary return on any such financial
investment or (ii) proposed to acquire the Corporation through a Sale
of the Corporation (as defined in the Stockholders Agreement);
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(xi) contract or commitment to issue or sell any
securities of the Corporation (excluding any offer letter from the
Corporation to an employee thereof a copy of which has been delivered
by the Corporation to the Investors);
(xii) contract which restricts the Corporation from
engaging in any aspect of its business anywhere in the world;
(xiii) contract or group of related contracts with
the same Person (excluding purchase orders entered into in the ordinary
course of business which are to be completed within three months of
entering into such purchase orders) for the purchase or sale of
products or services under which the undelivered balance of such
products and services has a selling price in excess of $10,000;
(xiv) contract (x) that is not terminable by either
party thereto without penalty upon not more than 30 days' advance
notice and involves aggregate consideration in excess of $75,000 or (y)
that involves aggregate consideration in excess of $75,000 (excluding
in the case of CLAUSES (x) and (y) above any purchase order entered
into in the ordinary course of business which is to be completed within
six months of entering into such purchase order);
(xv) contract with any Affiliate of the Corporation;
or
(xvi) other contract material to the business of the
Corporation.
(b) To the Best Knowledge of the Corporation, all items
listed on SCHEDULE 3.14 are in full force and effect, constitute legal, valid
and binding obligations of the respective parties thereto, and are enforceable
in accordance with their respective terms. The Corporation has in all material
respects performed all of the obligations required to be performed by it to
date, and there exists no default, or any event which upon the giving of notice
or the passage of time, or both, would give rise to a claim of a default in the
performance by the Corporation or any other party to any of the foregoing of
their respective obligations thereunder, except where such actual or potential
default has not had, and in the future is not reasonably likely to have, a
Material Adverse Effect on the Corporation and its Subsidiaries (if any) taken
as a whole. The Corporation has previously furnished to the Investors true,
complete and correct copies of all written items listed on SCHEDULE 3.14 and
SCHEDULE 3.14 contains complete descriptions of all oral items listed on
SCHEDULE 3.14. No consent or approval by, or any notification or filing with,
any party to any of the agreements listed on SCHEDULE 3.14 is required in
connection with the execution,
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delivery and performance by the Corporation of this Agreement or any of the
Related Agreements or the consummation by the Corporation of the transactions
contemplated hereby or thereby, except for those consents, approvals,
notifications or filings set forth on SCHEDULE 3.14, which, except as set forth
on SCHEDULE 3.14, have been or shall be made or obtained prior to the Closing.
3.15. COMPLIANCE; GOVERNMENTAL AUTHORIZATIONS.
(a) The Corporation (i) has complied with, and is in
compliance with, in all respects all Laws (including all Environmental and
Safety Requirements) applicable to it and its business (including, but not
limited to, any and all Laws relating in any manner to the environment or the
generation, treatment, storage, recycling, transportation, release or disposal
of any materials into the environment), except where such noncompliance has not
had, and is reasonably likely not to have, a Material Adverse Effect on the
Corporation and its Subsidiaries (if any) taken as a whole, and (ii) has all
federal, state, local and foreign governmental licenses and permits
(collectively, "PERMITS") used or necessary in the conduct of its business. Such
Permits are in full force and effect, no violations with respect to any thereof
have occurred or are or have been recorded, no Proceeding is pending or, to the
Best Knowledge of the Corporation, threatened to revoke or limit any thereof.
SCHEDULE 3.15 hereto contains a true and complete list of (i) all such Permits
and (ii) all Orders under which the Corporation is operating or bound. The
Corporation has performed in all material respects all of the obligations
required to be performed by it to date under all applicable Laws, Permits and
Orders, and there exists no condition, or any event which upon the giving of
notice or the passage of time, or both, would constitute a violation of any of
such Laws, Permits or Orders, except where such violation is not reasonably
likely to have a Material Adverse Effect on the Corporation and its Subsidiaries
(if any) taken as a whole.
(b) The Corporation is not responsible, or potentially
responsible, for the remediation or cost of remediation of wastes, substances or
materials at, on or beneath any facilities or at, on or beneath any land
adjacent thereto or in connection with any site or location, wherever located
(including any well, tank, pit, sump, pond, lagoon, tailings pile, spoil pile,
impoundment, ditch, trench, drain, landfill, warehouse or waste storage
container), where pollutants, contaminants or hazardous or toxic wastes,
substances or materials have been deposited, stored, treated, reclaimed,
disposed of, placed or otherwise come to be located. The Corporation is not
liable, directly or indirectly, in connection with any release by it of
hazardous substance into the environment nor do there exist any facts upon which
a finding of such liability could be based.
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(c) As used herein, the term "ENVIRONMENTAL AND SAFETY
REQUIREMENTS" means all Laws (including, but not limited to, common law), and
all contractual obligations concerning public health and safety, worker health
and safety, and pollution or protection of the environment, including, without
limitation, all those relating to the presence, use, production, generation,
handling, transportation, treatment, storage, disposal, distribution, labeling,
testing, processing, discharge, release, threatened release, control, or cleanup
of any hazardous materials, substances or wastes, chemical substances or
mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum
products or byproducts, asbestos, polychlorinated biphenyls, noise or radiation,
including, but not limited to, the Solid Waste Disposal Act, as amended, the
Clean Air Act, as amended, 42 U.S.C. ss. 7401 et seq., the Federal Water
Pollution Control Act, as amended, 33 U.S.C. ss. 1251 et seq., the Emergency
Planning and Community Right-to-Know Act, as amended, 42 U.S.C. ss. 11001 et
seq., the Comprehensive Environmental Response, Compensation, and Liability Act,
as amended, the Hazardous Materials Transportation Uniform Safety Act, as
amended, 49 U.S.C. ss. 1804 et seq., the Occupational Safety and Health Act of
1970, as amended, and the rules and regulations promulgated thereunder.
3.16. LABOR RELATIONS; EMPLOYEES.
Except as set forth on SCHEDULE 3.16 hereto, (i) the Corporation is
not delinquent in payments to any of its employees, for any wages, salaries,
commissions, bonuses or other direct compensation for any services performed by
them to the date hereof or amounts required to be reimbursed to such employees,
(ii) there is no labor strike, dispute, slowdown or stoppage actually pending
or, to the Best Knowledge of the Corporation, threatened against or involving
the Corporation and (iii) the Corporation is not a party to or bound by any
collective bargaining agreement and neither any grievance nor any arbitration
Proceeding arising out of or under a collective bargaining agreement is pending
and, to the Best Knowledge of the Corporation, no such claim has been asserted.
To the Best Knowledge of the Corporation, the Corporation has not experienced,
and is not experiencing, any material labor relations problems.
3.17. LITIGATION.
Except as set forth on SCHEDULE 3.17 hereto, there are (i) no
Proceedings at law or in equity or by or before any Governmental Authority now
pending or, to the Best Knowledge of the Corporation, threatened against, or
affecting the assets or properties of, the Corporation, nor, to the Best
Knowledge of the Corporation, does there exist any basis for any such pending or
threatened Proceedings; (ii) customer claims of any nature against the
Corporation in excess of $10,000, nor does there exist any basis therefor; or
(iii) Orders of any Governmental Authority identifying the Corporation. As used
herein, the term
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"PROCEEDING" means any action, suit, complaint, charge, hearing, inquiry,
investigation or legal or administrative or arbitration proceeding.
3.18. TAX MATTERS.
(a) Except as set forth on SCHEDULE 3.18 hereto, the
Corporation has (i) filed all returns, declarations of estimated Tax, Tax
reports, information returns and statements (collectively, the "RETURNS")
required to be filed by it prior to the Closing (other than those for which
extensions shall have been granted prior to the Closing) relating to any Taxes
with respect to any income, properties or operations of the Corporation prior to
the Closing; (ii) as of the time of filing, the Returns were complete and
correct in all material respects and the Corporation has paid all Taxes shown on
the Returns to be due; (iii) the Corporation has timely paid or made provisions
for all Taxes payable for any period that ended on or before the Closing and for
any period that began on or before the Closing and ends after the Closing, to
the extent such Taxes are attributable to the portion of any such period ending
on the Closing; (iv) the Corporation is not delinquent in the payment of any
Taxes, nor has requested any extension of time within which to file any Return,
which Return has not since been filed; (v) there are no pending Tax audits of
any Returns of the Corporation; (vi) no Tax liens have been filed and no
deficiency or addition to Taxes, interest or penalties for any Taxes with
respect to any income, properties or operations of the Corporation has been
proposed, asserted or assessed in writing against the Corporation; (vii) the
Corporation has not been granted any extension of the statute of limitations
applicable to any Return or other Tax claim with respect to any income,
properties or operations of the Corporation; (viii) the Corporation has not been
a personal holding company within the meaning of Section 542 of the Code; and
(ix) the Corporation has not made any election under Section 341(f) of the Code.
(b) As used herein, the term "TAX" means any of the Taxes, and
the term "TAXES" means, with respect to any Person, (i) all income taxes
(including any tax on or based upon net income, gross income, income as
specially defined, earnings, profits or selected items of income, earnings or
profits) and all gross receipts, sales, use, ad valorem, transfer, franchise,
license, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property or windfall profits taxes, alternative or add-on minimum
taxes, customs duties and other taxes, fees, assessments or charges of any kind
whatsoever, together with all interest and penalties, additions to tax and other
additional amounts imposed by any taxing authority (domestic or foreign) on such
Person (if any) and (ii) any liability for the payment of any amount of the type
described in CLAUSE (i) above as a result of being a "TRANSFEREE" (within the
meaning of Section 6901 of the Code or any other applicable Law) of another
Person or a member of an affiliated or combined group.
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3.19. RELATED TRANSACTIONS.
Except for this Agreement and the Related Agreements, except as set
forth on SCHEDULE 3.19 hereto and in the Financial Statements and the footnotes
thereto and except for compensation to regular employees of the Corporation for
services rendered, no current or former Affiliate of the Corporation is
presently (i) a party to any transaction with the Corporation (including, but
not limited to, any contract, agreement or other arrangement providing for the
furnishing of services by, or rental of real or personal property from, or
otherwise requiring payments to, any such Affiliate) or (ii) to the Best
Knowledge of the Corporation, the direct or indirect owner of an interest in any
Person which is a present or potential competitor, supplier or customer of the
Corporation (other than non-affiliated holdings in publicly held companies),
nor, to the Best Knowledge of the Corporation, does any such Person receive
income from any source other than the Corporation which relates to the business
of, or should properly accrue to, the Corporation. Except as set forth on
SCHEDULE 3.19, the Corporation is not a guarantor or otherwise liable for any
actual or potential liability or obligation, whether direct or indirect, of the
Corporation or any of its Affiliates.
3.20. OFFERING EXEMPTION.
Based in part upon the accuracy of the representations of the
Investors in SECTION 4.2, the offering, sale, issuance and delivery, as the case
may be, of the Insight Preferred Shares and the Reserved Shares are, or, as of
the date of issuance, shall be, exempt from registration under the Securities
Act and the rules and regulations promulgated thereunder, and such offering,
sale, issuance and delivery, as the case may be, is, or, as of the date of
issuance, shall be, also exempt from registration under applicable state
securities and "BLUE SKY" Laws. The Corporation has made or shall make all
requisite filings and has taken or shall take all action necessary to be taken
to comply with such state securities or "BLUE SKY" Laws.
3.21. BROKERS.
Neither the Corporation nor any of its officers, directors,
stockholders or employees (or any Affiliate of the foregoing) has employed any
broker or finder or incurred any actual or potential liability or obligation,
whether direct or indirect, for any brokerage fees, commissions or finders' fees
in connection with the transactions contemplated by this Agreement or any of the
Related Agreements.
3.22. REGISTRATION RIGHTS.
Except as contemplated by the Registration Rights Agreement (as
defined below), no Person has any right to cause the Corporation to effect the
registration under the Securities
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Act of any shares of common stock or any other securities (including debt
securities) of the Corporation.
3.23. INSURANCE.
All of the insurable properties of the Corporation are insured for its
benefit in amounts and against all risks that are normal and customary for
Persons conducting similar businesses and operating similar properties in the
localities where the business of the Corporation is conducted and the properties
of the Corporation are located, under policies in effect and issued by insurers
of recognized responsibility.
3.24. USE OF PROCEEDS.
The Company will use proceeds received from the sale of the Insight
Preferred Shares for the general corporate purposes of the Corporation,
including payment of expenses accrued in connection with the consummation of the
transaction contemplated hereby and by the Related Agreements. Additionally, a
portion of the proceeds may be used for the purpose of making a loan to ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ in order to purchase the Series B Preferred, PROVIDED, HOWEVER, that
such loan shall not exceed one hundred fifty thousand dollars ($150,000) and the
form shall be subject to approval by the Investors.
3.25. DISCLOSURE.
Neither this Agreement or any of the Related Agreements or any of the
SCHEDULES or EXHIBITS thereto or thereto, nor any other written material
delivered to any Investor, when taken together, contains any untrue statement of
a material fact or omits a material fact necessary to make the statements
contained herein and therein, in light of the circumstances in which they were
made, not misleading. To the Best Knowledge of the Corporation, there is no
fact, circumstance or condition which has had, or in the future is reasonably
likely to have, a Material Adverse Effect on the Corporation and its
Subsidiaries (if any) taken as a whole which has not been set forth in this
Agreement, the Related Agreements or in the SCHEDULES or the EXHIBITS hereto or
thereto.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS.
Each Investor, severally and not jointly, represents and warrants to
the Corporation as follows:
SECTION 4.1. AUTHORIZATION OF THIS AGREEMENT AND THE RELATED
AGREEMENTS.
Such Investor has all requisite power to execute, deliver and perform
this Agreement and the Related Agreements to
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which such Investor is a party and the transactions contemplated hereby and
thereby, and the execution, delivery and performance by such Investor of this
Agreement and the Related Agreements to which such Investor is a party have been
duly authorized by all requisite action by such Investor and constitute valid
and binding obligations of such Investor, enforceable against such Investor in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
Laws now or hereafter in effect and public policy and subject to general
principles of equity.
4.2. INVESTMENT REPRESENTATIONS.
(a) Investors are acquiring the Insight Preferred Shares to be
acquired by Investors hereunder and, in the event that Investors should acquire
any Reserved Shares, shall be acquiring such Reserved Shares, for its own
account, for investment and not with a view to the distribution thereof in
violation of the Securities Act or applicable state securities Laws.
(b) Investors understand that (i) the Insight Preferred Shares
to be acquired by Investors hereunder have not been, and that the Reserved
Shares shall not be, registered under the Securities Act or applicable state
securities Laws, by reason of their issuance by the Corporation in a transaction
exempt from the registration requirements of the Securities Act and applicable
state securities Laws and (ii) any Insight Preferred Shares or Reserved Shares
acquired by Investors must be held by Investors indefinitely unless a subsequent
disposition thereof is registered under the Securities Act and applicable state
securities Laws or is exempt from registration.
(c) Investors further understand that, with respect to any
Insight Preferred Shares or Reserved Shares acquired by Investors, the exemption
from registration afforded by Rule 144 (the provisions of which are known to
Investors) promulgated under the Securities Act depends on the satisfaction of
various conditions, and that, if applicable, Rule 144 may only afford the basis
for sales only in limited amounts.
(d) Investors have not employed any broker or finder in
connection with the transactions contemplated by this Agreement or any of the
Related Agreements.
(e) Investors are "ACCREDITED INVESTORS" (as defined in Rule
501(a) of Regulation D promulgated under the Securities Act). The Corporation
has made available to Investors or its representatives all agreements,
documents, records and books that Investors have requested relating to an
investment in the Insight Preferred Shares or Reserved Shares being acquired by
Investors. Investors have had an opportunity to ask questions of, and receive
answers from, a Person or Persons acting on behalf of the Corporation,
concerning the terms and conditions of
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this investment, and answers have been provided to all of such questions to the
full satisfaction of such Investors. No oral representations have been made or
furnished to, or relied on by, Investors or Investors' representatives in
connection with an investment in any Insight Preferred Shares or Reserved
Shares. Investors have such knowledge and experience in financial and business
matters that it is capable of evaluating the risks and merits of this
investment.
SECTION 5. CONDITIONS PRECEDENT TO THE INVESTORS' OBLIGATIONS AT THE
CLOSING.
The several obligations of the Investors to perform this Agreement are
subject to the satisfaction of the following conditions precedent:
SECTION 5.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Corporation set forth in
SECTION 3 (i) which are not qualified by materiality shall be true and complete
in all material respects and (ii) which are qualified by materiality shall be
true and complete in all respects, in each case on the date hereof and at and as
of the Closing Date as though then made.
SECTION 5.2. PERFORMANCE OF OBLIGATIONS.
The Corporation shall have performed and complied in all material
respects with all agreements, obligations and conditions required to be
performed or complied with by the Corporation under this Agreement.
SECTION 5.3. AUTHORIZATION.
All action necessary to authorize the execution, delivery and
performance by the Corporation of this Agreement and the Related Agreements, and
the consummation of the transactions contemplated hereby and thereby, shall have
been duly and validly taken, and the Corporation shall have full power and right
to consummate the transactions contemplated hereby and thereby.
SECTION 5.4. OPINION OF COUNSEL.
The Investors shall have received an opinion dated the Closing Date
and addressed to the Investors of ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ LLP, counsel to the
Corporation, in form and substance reasonably acceptable to the Investors.
SECTION 5.5. CONSENTS AND APPROVALS.
All corporate, stockholder and other proceedings to be taken and all
waivers, consents, approvals, qualifications and registrations required to be
obtained or effected in connection
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with the issuance, sale, execution, delivery and performance by the Corporation
of this Agreement and the Related Agreements and the transactions contemplated
hereby and thereby, including the reservation, issuance, sale and delivery, as
the case may be, of the Insight Preferred Shares and the Reserved Shares, shall
have been taken, obtained or effected (except for the filing of any notice
subsequent to the Closing that may be required under applicable Federal or state
securities Laws, which notice shall be filed on a timely basis following the
Closing as so required), and all documents incident thereto shall be
satisfactory in form and substance to the Investors. The Investors shall have
received all such originals or certified or other copies of such documents as
have been reasonably requested.
5.6. AMENDMENT OF 1996 STOCK INCENTIVE PLAN.
The 1996 Stock Incentive Plan of the Corporation shall have been
amended to provide that, notwithstanding anything contained therein to the
contrary, subject to the completion of the Closing, the aggregate number of
shares of Common Stock that may be issued after the Closing pursuant thereto
shall be 2,156,388.
5.7. GOVERNMENT CONSENTS, AUTHORIZATIONS, ETC.
All consents, authorizations, orders and approvals of, filings or
registrations with and the expiration of all waiting periods imposed by, any
third party, including, without limitation, any Governmental Authority which are
required for or in connection with the execution and delivery by the Parties of
this Agreement and the Related Agreements to which they may be parties and the
consummation by the Parties of the transactions contemplated hereby and thereby
shall have been obtained or made, in form and substance satisfactory to the
Investors and shall be in full force and effect.
5.8. DUE DILIGENCE.
The Investors shall be satisfied in their sole discretion with the
results of their business, legal, environmental and accounting due diligence
investigation and review of the Corporation and its business, properties and
assets.
5.9. LAWS; PROCEEDINGS.
No Law shall have been enacted and no Proceeding shall be pending, the
effect of which would be to prohibit, restrict, impair or delay the consummation
of the transactions contemplated by this Agreement or any of the Related
Agreements or any of the conditions to the consummation of the transactions
contemplated hereby or thereby or to prohibit, restrict or otherwise impair the
ability of the Investors to own equity interests in the Corporation.
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5.10. BOARD AND GENERAL PARTNER APPROVALS.
The Investors each shall have obtained all requisite approvals from
any governing body thereof for the execution, delivery and performance of this
Agreement and the Related Agreements to which it is a party and the consummation
of the transactions contemplated hereby and thereby.
5.11. RELATED AGREEMENTS.
Each of the following agreements (the "RELATED AGREEMENTS") shall have
been executed and delivered by the parties thereto (excluding any Investor a
party thereto whose execution and delivery of such agreement would otherwise be
a condition precedent to the performance of its own obligations hereunder) and
the transactions contemplated by the Related Agreements consummated or effected,
as the case may be, in accordance with the terms thereof:
(a) the Amended and Restated Registration Rights Agreement
dated as of the Closing Date (the "REGISTRATION RIGHTS AGREEMENT"), among the
Corporation and the Investors (as defined therein), substantially in the form of
EXHIBIT B hereto; and,
(b) the Amended and Restated Stockholders Agreement dated as
of the Closing Date (the "STOCKHOLDERS AGREEMENT"), among the Corporation and
the Stockholders (as defined therein), substantially in the form of EXHIBIT C
hereto.
5.12. RELATED CERTIFICATES.
Each of the following certificates (the "RELATED CERTIFICATES") shall
have been executed and/or delivered, as the case may be, by the Person who or
which is the subject thereof:
(i) certificate of the secretary of the Corporation,
certifying (i) that true and complete copies of the Corporation's
Certificate of Incorporation and By-Laws as amended to and in effect on the
Closing Date are attached thereto, (ii) as to the incumbency and
genuineness of the signatures of each officer of such Person executing this
Agreement or any of the Related Agreements on behalf of the Corporation;
and (iii) the genuineness of the resolutions of the board of directors of
the Corporation (the "BOARD") authorizing the execution, delivery and
performance of this Agreement and the Related Agreements and the
consummation of the transactions contemplated hereby and thereby;
(ii) certificates of the secretaries of state of the
States of Delaware and Massachusetts dated as of the Closing Date,
certifying as to the corporate good standing of the Corporation; and
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(iii) a certificate signed by a principal executive
officer of the Corporation, on behalf of the Corporation, dated as of the
Closing Date, addressed to the Investors and certifying as to the
fulfillment of the conditions set forth in SECTIONS 5.1 through 5.12 (but
not as to the execution and delivery by any of the Investors of any Related
Agreements).
SECTION 6. CONDITIONS PRECEDENT TO THE CORPORATION'S OBLIGATIONS AT THE
CLOSING.
The obligation of the Corporation to issue and sell the Insight
Preferred Shares to Investors at the Closing is subject to the following
conditions precedent:
6.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties made by Investors and set forth in
SECTION 4, as the case may be, shall (i) if not qualified by materiality, be
true, correct and complete in all material respects and (ii) if qualified by
materiality, be true, correct and complete in all respects, in each case on the
date hereof and at and as of the Closing Date as though then made.
6.2. PERFORMANCE OF OBLIGATIONS.
The Investors shall have performed and complied in all material
respects with all agreements, obligations and conditions required to be
performed or complied with by the Investors under this Agreement.
6.3. RELATED AGREEMENTS.
Each of the Related Agreements shall have been executed and delivered
by the parties thereto (other than the Corporation) and the transactions
contemplated thereby consummated or effected, as the case may be, in accordance
with the terms thereof.
6.4. RELATED CERTIFICATES.
Each of the Related Certificates shall have been executed and/or
delivered, as the case may be, by the Person (other than the Corporation) who or
which is the subject thereof.
SECTION 7. ADDITIONAL AGREEMENTS OF THE PARTIES.
7.1. EFFORTS TO CONSUMMATE.
Each Party shall use reasonable efforts to take or cause to be taken
all actions and do or cause to be done all things required under applicable
Laws, in order to consummate the
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transactions contemplated by this Agreement and the Related Agreements.
7.2. FINANCIAL INFORMATION.
(a) The Corporation shall furnish to the Investors the
following reports:
(i) As soon as practicable after the end of each
fiscal year of the Corporation, and in any event within 90 days thereafter,
consolidated balance sheets of the Corporation and its Subsidiaries (if
any) as of the end of such fiscal year, and consolidated statements of
income and consolidated statements of changes in cash flow of the
Corporation and its Subsidiaries for such fiscal year, prepared in
accordance with GAAP and setting forth in each case in comparative form the
figures for the previous fiscal year and the budgeted figures for the
current fiscal year, all in reasonable detail and audited by independent
public accountants of national standing commonly known as "BIG 6"
accountants selected by the Corporation.
(ii) As soon as practicable after the end of the
first, second and third quarterly accounting periods in each fiscal year of
the Corporation and in any event within 45 days thereafter, a consolidated
balance sheet of the Corporation and its Subsidiaries (if any) as of the
end of each such quarterly period, and consolidated statements of income
and consolidated statements of changes in cash flow of the Corporation and
its Subsidiaries for such period and for the current fiscal year to date,
prepared in accordance with GAAP (other than for accompanying notes),
subject to changes resulting from normal year-end audit adjustments, and
setting forth in each case in comparative form the figures for the same
periods of the previous fiscal year and the budgeted figures for the
current periods, all in reasonable detail and signed by the principal
financial or accounting officer of the Corporation.
(b) The Corporation shall, and shall cause its Subsidiaries
(if any) to, maintain a system of accounting sufficient to enable the
Corporation's independent certified public accountants to render the reports
specified in SECTION 7.2(a).
(c) The Corporation shall submit to the Board at least 60 days
prior to the beginning of each fiscal year, a budget (the "ANNUAL OPERATING
BUDGET") for the Corporation and its Subsidiaries (if any) that contains, at
least with respect to such fiscal year, annual, quarterly and monthly detail,
including, but not limited to, limitations on capital expenditures, operating
expenditures and the incurrence of unsecured, secured and aggregate
indebtedness, and shall be subject to the approval of the Board.
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7.3. ADDITIONAL INFORMATION.
The Corporation shall deliver or provide to the Investors (i) as soon
as practicable after the end of each month and in any event within 45 days
thereafter an unaudited consolidated balance sheet and statements of income and
cash flow of the Corporation and its Subsidiaries (if any) for such month and
for the year to date (in each case compared to the Annual Operating Budget and
to the corresponding period of the prior year), (ii) the Annual Operating Budget
as soon as practicable prior to the beginning of the next fiscal year, (iii)
other budgets or financial plans prepared by the Corporation and presented to
the Board, as soon as they are made available to the Board, (iv) a monthly
letter from the management of the Corporation discussing in reasonable detail
(A) the operations of the Corporation for the previous month period and (B) any
deviations in the actual performance for the previous month period of the
Corporation and its Subsidiaries from the projected performance of the
Corporation and its Subsidiaries set forth in the Annual Operating Budget, and
(v) with reasonable promptness, (A) all financial statements, reports, notices
and other documents sent by the Corporation to its stockholders generally or
released to the public and copies of all regular and periodic reports, if any,
filed by the Corporation with the Securities and Exchange Commission, (B) all
reports prepared for or delivered to the management of the Corporation and its
Subsidiaries by its accountants, and (C) such other information and data,
including access to books and records of the Corporation and its Subsidiaries as
any Investor may from time to time reasonably request.
7.4. EMPLOYEE COMPENSATION.
The Corporation confirms that it submitted prior to May 16, 1997 to
the Board a compensation plan (the "APPROVED COMPENSATION PLAN") acceptable to
the Board, the eligible participants (the "ELIGIBLE PARTICIPANTS") of which are
limited to the senior management and key employees of the Corporation (as
determined by the Board in its sole discretion). The Corporation shall not
provide any compensation (including bonuses) to any Eligible Participant
(whether in respect of such Eligible Participant's services during the
Corporation's fiscal year ended December 31, 1996 or any other fiscal year)
other than (i) in accordance with either existing commitments by the Corporation
to Eligible Participants or the terms and conditions of the Approved
Compensation Plan, or (ii) upon the prior approval of the Compensation
Committee.
7.5. RIGHTS OF INSPECTION.
Each Investor shall have the right, at its expense, to visit and
inspect any of the properties of the Corporation or any of its Subsidiaries and
to discuss their affairs, finances and accounts with their officers, all at such
reasonable times during
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normal business hours and as often as may be reasonably requested.
7.6. INSURANCE.
The Corporation confirms that it and its Subsidiaries (if any), have
obtained and shall, in the future, maintain such insurance, including director
and officer insurance and error and omission insurance, with such coverages and
in such amounts as shall be required to protect such Persons and their
respective directors, officers and employees against all risks usually insured
against by Persons conducting similar businesses and operating similar
properties in the localities where the business of the Corporation and its
Subsidiaries is conducted under policies issued by national insurers of
recognized responsibility.
7.7. USE OF PROCEEDS.
The Corporation shall use the proceeds from the sale of the Insight
Preferred Shares in the manner specified in SECTION 3.24.
7.8. LITIGATION.
The Corporation, promptly upon becoming aware thereof, shall notify
each Investor in writing of any Proceeding in which it or any of its
Subsidiaries is involved and which might, if determined adversely, materially
and adversely effect the Corporation or any of its Subsidiaries.
7.9. COMPLIANCE WITH LAWS.
The Corporation shall, and shall cause its Subsidiaries (if any), each
to, (i) in carrying out its business to comply in all material respects with all
Laws applicable to it, its business and the ownership of its assets and (ii)
shall obtain and maintain in full force and effect all Permits material to and
necessary in the conduct of its business and such Permits shall be maintained in
full force and effect.
7.10. TAXES.
The Corporation shall, and shall cause each of its Subsidiaries to,
pay and discharge all Taxes imposed upon it or upon its income or profits, or
upon any property belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims which, if unpaid, might become an Encumbrance
upon its property, unless contested in good faith by proceedings authorized by
the Board.
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7.11. TERMINATION.
Upon the closing of an Initial Public Offering (as defined in the
Stockholders Agreement), the provisions of SECTIONS 7.1 through 7.10 shall
terminate and shall be of no further force or effect and shall not be binding
upon the Corporation.
SECTION 8. FEES.
(a) The Corporation will pay, and save the Investors harmless
against all liability for the payment of, (i) all costs and other expenses
incurred from time to time by the Corporation in connection with the
Corporation's performance of and compliance with all agreements and conditions
contained herein on its part to be performed or complied with (including the
reasonable cost and expenses of counsel for the Corporation incurred in
connection with the review of this Agreement and the Related Agreements), and
(ii) the costs and expenses incurred by IVP II in connection with the
transactions contemplated by this Agreement and the Related Agreements,
including fees and charges of ▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP, special counsel
to IVP II, for services in connection with the consummation of transactions
contemplated by this Agreement and the Related Agreements, which fees and
charges relating to the transactions contemplated hereby and thereby shall be
paid by the Corporation at the Closing (PROVIDED, HOWEVER, that the
Corporation's obligations under this CLAUSE (ii) shall not exceed $[12],000.
(b) The Corporation further agrees that it shall pay, and will
save the Investors harmless from, any and all liability with respect to any
stamp or similar taxes which may be determined to be payable in connection with
the execution and delivery and performance of the Agreement and the Related
Agreements or any modification, amendment or alteration of the terms or
provisions of this Agreement or any of the Related Agreements, and that it shall
similarly pay and hold the Investors harmless from all issue taxes in respect of
the issuance of the Reserved Shares to the Investors.
SECTION 9. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS, ETC.
(a) All statements contained in this Agreement, any Related
Agreement, any Related Certificate or any other closing certificate (each, an
"OTHER CERTIFICATE") delivered by the Corporation to any Investor, pursuant to
this Agreement or in connection with the transactions contemplated by this
Agreement or any of the Related Agreements shall constitute representations and
warranties by the Corporation under this Agreement to the Investors identified
as being the subject thereof and shall survive the Closing and the consummation
of the transactions contemplated hereby and thereby for a period of 18 months
after the Closing Date; PROVIDED, HOWEVER, that the representations and
warranties of the Corporation set forth in SECTION 3.1 through
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SECTION 3.5 shall survive indefinitely and the representations and warranties of
the Corporation set forth in SECTIONS 3.13, 3.15, 3.18 and 3.20 shall survive
until the expiration of the respective statutes of limitations applicable to the
matters covered thereby.
(b) All statements contained in this Agreement, any Related
Agreement, any Related Certificate or any Other Certificate delivered by any
Investor to the Corporation pursuant to this Agreement or in connection with the
transactions contemplated by this Agreement or any of the Related Agreements
shall constitute representations and warranties by such Investor to the
Corporation under this Agreement and shall survive the Closing and the
consummation of the transactions contemplated hereby and thereby for a period of
18 months after the Closing Date; PROVIDED, HOWEVER, that the representations
and warranties of any Investor set forth in SECTION 4.1 shall survive
indefinitely, and the representations and warranties of any Investor set forth
in SECTION 4.2 shall survive until the expiration of the respective statutes of
limitations applicable to the matters covered thereby.
(c) All agreements contained herein shall survive indefinitely
until, by their respective terms, they are no longer operative.
SECTION 10. INDEMNIFICATION.
(a) The Corporation shall indemnify, defend and hold each
Investor harmless against all liability, loss or damage (including diminution in
value of the Insight Preferred Shares issued to such Investor pursuant to this
Agreement or any Reserved Shares issued upon the conversion of the Insight
Preferred Shares), together with all reasonable costs and expenses (including
legal and accounting fees and expenses) related thereto or incurred in enforcing
this SECTION 10(a) (collectively, "INVESTOR LOSSES"), (i) subject to SECTION 9,
arising from the untruth, inaccuracy or breach of any of the representations or
warranties of the Corporation made to such Investor contained in this Agreement
or any Related Agreement, Related Certificate or Other Certificate or any facts
or circumstances constituting any such untruth, inaccuracy or breach, (ii)
subject to SECTION 9, arising from the untruth or inaccuracy of any information
delivered to such Investor pursuant to the terms of this Agreement or any
Related Agreement, Related Certificate or Other Certificate, (iii) arising from
the breach of any covenant or agreement of the Corporation contained in this
Agreement or any Related Agreement, Related Certificate or Other Certificate or
any facts or circumstances constituting such breach, (iv) arising from any
claim, demand, assessment, judgment, order, decree, action, cause of action,
litigation, suit, investigation or other Proceeding by a third party (whenever
made) arising out of or in connection with (A) the status or conduct of the
Corporation, (B) the execution,
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performance and delivery of this Agreement or any Related Agreement, Related
Certificate or Other Certificate, or (C) any actions taken by or omitted to be
taken by such Investor in connection with this Agreement or any Related
Agreement, Related Certificate or Other Certificate, in each case by virtue of
such Investor's acquisition of Insight Preferred Shares or such Investor or any
Affiliate thereof acting as an adviser to the Corporation (unless the act or
omission giving rise to such Claim resulted primarily out of or was based
primarily upon the gross negligence, fraud or willful misconduct of such
Investor or Affiliate), or (v) with respect to any liability for any brokers' or
finders' fees or compensation owing or alleged to be owing in connection with
the transactions contemplated by this Agreement or any of the Related Agreements
due to the engagement by, or any other act of, the Corporation.
(b) Each Investor severally as to itself only and not jointly
with or as to any other Investor, shall indemnify, defend and hold the
Corporation harmless against all liability, loss or damage, together with all
reasonable costs and expenses (including legal and accounting fees and expenses)
related thereto or incurred in enforcing this SECTION 10(b) (collectively,
"CORPORATION LOSSES"), arising from the untruth, inaccuracy or breach of any of
the representations, warranties, covenants or agreements of such Investor made
to the Corporation contained in this Agreement or any Related Agreement, Related
Certificate, instrument or other writing delivered by or on behalf of such
Investor pursuant to or in connection with the consummation of the transactions
contemplated by this Agreement or any of the Related Agreements.
(c) Notwithstanding the foregoing provisions of this SECTION
10, (i) the maximum liability of the Corporation to indemnify an Investor
pursuant to SECTION 10(a) for all Investor Losses arising under CLAUSES (i),
(ii) and (iii) of SECTION 10(a) shall not exceed an amount equal to the
aggregate Original Issuance Price (as defined in the Amended and Restated
Certificate) of the Insight Preferred Shares acquired by such Investor pursuant
to this Agreement, (but excluding from such amount any Investor Losses arising
under CLAUSE (i) of SECTION 10(a) by reason of the untruth, inaccuracy or breach
of any of the representations or warranties of the Corporation made to such
Investor contained in SECTION 3.5 of this Agreement), and (ii) the maximum
liability of any Investor to indemnify the Corporation pursuant to SECTION 10(b)
for all Corporation Losses arising under SECTION 10(b) shall not exceed the
amount of the maximum liability of the Corporation to indemnify such Investor
pursuant to the foregoing CLAUSE (i).
SECTION 11. REMEDIES.
The Parties shall each have and retain all rights and remedies
existing in their favor under this Agreement, at law or equity, including rights
to bring actions for specific
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performance and injunctive and other equitable relief (including, without
limitation, the remedy of rescission) to enforce or prevent a breach or any
violation of this Agreement. All such rights and remedies shall be cumulative
and the existence, assertion, pursuit or exercise of any thereof by a Party
shall not preclude the assertion, pursuit or exercise by such Party of any other
rights or remedies available to it. Without limiting the generality of the
foregoing, the Parties hereby agree that in the event the Corporation fails to
convey, in accordance with the provisions of this Agreement, to the Investors
Insight Preferred Shares or Reserved Shares being acquired by the Investors, the
Investors' remedy at law may be inadequate. In such event, the Investors shall
have the right, in addition to all other rights and remedies it may have, to
specific performance of the obligation of the Corporation to convey the Insight
Preferred Shares or Reserved Shares in accordance with the provisions of this
Agreement.
SECTION 12. SUCCESSORS AND ASSIGNS.
Except as otherwise provided herein, this Agreement will bind and
inure to the benefit of and be enforceable by the Corporation and its successors
and assigns and the Investors and any subsequent holders of Insight Preferred
Shares or Reserved Shares and the respective successors and assigns of each of
them, so long as they hold Insight Preferred Shares or Reserved Shares.
SECTION 13. ENTIRE AGREEMENT.
This Agreement, together with the Related Agreements, embodies the
complete agreement and understanding among the Parties with respect to the
subject matter hereof and thereof and supersede and preempt any prior
understandings, agreements or representations by or among the Parties, written
or oral, which may have related to the subject matter hereof or thereof in any
way.
SECTION 14. NOTICES.
All notices, consents or other communications which are required or
otherwise delivered hereunder shall be in writing and shall be deemed to have
been duly given if (i) personally delivered or sent by telecopier, (ii) sent by
nationally recognized overnight courier or (iii) sent by registered or certified
mail, postage prepaid, return receipt requested, addressed as follows:
If to the Corporation, to:
Exchange Applications, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
If to IVP II
Insight Capital Partners II, L.P.
c/o Insight Venture Associates II, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
with a copy to:
▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to Wexford, to:
Wexford InSight LLC
c/o Wexford Management LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
Wexford InSight LLC
c/o Wexford Management LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
or to such other address as the party to whom notice is to be given may have
furnished to each other party in writing in accordance herewith. Any such notice
or communication shall be deemed to have been received (i) when delivered, if
personally delivered or sent by telecopier, (ii) on the first Business Day
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after dispatch, if sent by nationally recognized, overnight courier guaranteeing
next Business Day delivery and (iii) on the fifth Business Day following the
date on which the piece of mail containing such communication is posted, if sent
by mail.
SECTION 15. MODIFICATIONS; AMENDMENTS; AND WAIVERS.
The terms and provisions of this Agreement may not be modified or
amended, nor may any provision applicable to the Investors be waived, except
pursuant to a writing signed by the Corporation and the Investors. The failure
of any party to enforce any of the provisions of this Agreement shall in no way
be construed as a waiver of such provisions and shall not affect the right of
such party thereafter to enforce each and every provision of this Agreement in
accordance with its terms.
SECTION 16. COUNTERPARTS.
This Agreement may be executed simultaneously in two or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
SECTION 17. INTERPRETATION; CONSTRUCTION.
The term "THIS AGREEMENT" means this agreement together with all
schedules and exhibits hereto, as the same may from time to time be amended,
modified, supplemented or restated in accordance with the terms hereof. In this
Agreement, the term "BEST KNOWLEDGE" of any Person means (i) the actual
knowledge of such Person and (ii) that knowledge which should have been acquired
by such Person after making such due inquiry and exercising such due diligence
as a prudent businessperson would have made or exercised in the management of
his or her business affairs, including due inquiry of those key employees and
professional advisers (including attorneys, accountants and consultants) of the
Person who could reasonably be expected to have actual knowledge of the matters
in question. When used in the case of the Corporation, the term "BEST KNOWLEDGE"
shall include the Best Knowledge of the Corporation and its Subsidiaries (if
any). The use in this Agreement of the term "INCLUDING" means "INCLUDING,
WITHOUT LIMITATION." The words "HEREIN", "HEREOF", "HEREUNDER", "HEREBY",
"HERETO", "HEREINAFTER", and other words of similar import refer to this
Agreement as a whole, including the schedules and exhibits, as the same may from
time to time be amended, modified, supplemented or restated, and not to any
particular article, section, subsection, paragraph, subparagraph or clause
contained in this Agreement. All references to articles, sections, subsections,
clauses, paragraphs, schedules and exhibits mean such provisions of this
Agreement and the schedules and exhibits attached to this Agreement, except
where otherwise stated. The title of and the article, section and paragraph
headings in this Agreement are for
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convenience of reference only and shall not govern or affect the interpretation
of any of the terms or provisions of this Agreement. The use herein of the
masculine, feminine or neuter forms shall also denote the other forms, as in
each case the context may require. Where specific language is used to clarify by
example a general statement contained herein, such specific language shall not
be deemed to modify, limit or restrict in any manner the construction of the
general statement to which it relates. The language used in this Agreement has
been chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party. Accounting terms used but not
otherwise defined herein shall have the meanings given to them under GAAP.
SECTION 18. GOVERNING LAW.
All questions concerning the construction, interpretation and validity
of this Agreement shall be governed by and construed and enforced in accordance
with the domestic laws of the Commonwealth of Massachusetts, without giving
effect to any choice or conflict of law provision or rule (whether in the
Commonwealth of Massachusetts or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the Commonwealth of
Massachusetts. In furtherance of the foregoing, the internal law of the
Commonwealth of Massachusetts will control the interpretation and construction
of this Agreement, even if under such jurisdiction's choice of law or conflict
of law analysis, the substantive law of some other jurisdiction would ordinarily
apply. Notwithstanding the foregoing provisions of this SECTION 18, those
provisions of this Agreement that relate to the internal governance of the
Corporation shall be governed by and construed and enforced in accordance with
the internal laws of the State of Delaware.
SECTION 19. MUTUAL WAIVER OF JURY TRIAL.
BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE LAWS TO APPLY (RATHER THAN
ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A
JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION
OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO
ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT OR ANY DOCUMENTS
RELATED HERETO.
* * * * *
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IN WITNESS WHEREOF, each of the undersigned has caused this Securities
Purchase Agreement to be executed as of the date first written above.
EXCHANGE APPLICATIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
39
INVESTORS:
INSIGHT CAPITAL PARTNERS II, L.P.
BY: Insight Venture Associates II, LLC,
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title:
WEXFORD INSIGHT LLC
BY: WEXFORD MANAGEMENT LLC,
its Investment Manager
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Principal
