Exhibit 10.3
STREAMLINE, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
DATED MAY 15, 1996
BY AND AMONG
STREAMLINE, INC.,
RELIANCE INSURANCE COMPANY
AND
XXXXXXX X. XXXXXXX
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This Agreement (the "Agreement") is made as of May 15, 1996 by and
among STREAMLINE, INC., a Delaware corporation having offices at 00 Xxxxxxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxxxxxxx 00000 ("Streamline"), RELIANCE INSURANCE
COMPANY, a Pennsylvania insurance corporation having offices at 00 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Purchaser") and XXXXXXX X. XXXXXXX
("Founder").
W I T N E S S E T H:
WHEREAS, Purchaser desires to purchase, and Streamline desires to sell,
on and subject to the terms and conditions of this Agreement, the number of
shares of Series A Cumulative Convertible Preferred Stock, $1.00 par value per
share, of Streamline ("Series A Cumulative Convertible Preferred Stock") as set
forth below;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth herein, the parties hereto agree as follows:
1. DEFINITIONS. The following terms shall have the meaning specified
when used herein, unless the context otherwise requires:
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" means the common stock, par value $0.01 per share, of
Streamline.
"CONVERSION- SHARES" means the shares of Common Stock issuable upon
conversion of the Shares.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder, or any successor act, as
the same shall be in effect at the time.
"INITIATING HOLDER" means Purchaser or any other holder or holders of
Registrable Shares holding at least 30% of the outstanding shares of Series A
Cumulative Convertible Preferred Stock (or the Conversion Shares issued upon
conversion of such shares of Series A Cumulative Convertible Preferred Stock).
"INVESTMENT" means any direct or indirect transfer or delivery of cash,
stock or other assets of value in exchange for indebtedness, stock or other
security or ownership interest or asset.
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"PERSON" means any individual, corporation, partnership, joint venture,
association, trust, unincorporated organization or government or other agency or
political subdivision thereof.
"REGISTRABLE SHARES" means the Conversion Shares, any other Common
Stock issued in respect of the Series A Cumulative Convertible Preferred Stock
(because of stock splits, stock dividends, reclassifications, recapitalizations
or similar events) and any other Common Stock owned by Purchaser or its
affiliates; provided, however, that shares of Common Stock which are Registrable
Shares cease to be Registrable Shares upon the sale thereof pursuant to an
effective Registration Statement or in accordance with the provisions of Rule
144 under the Securities Act.
"REGISTRATION EXPENSES" means all expenses incident to Streamline's
performance of or compliance with Section 9, including, without limitation, all
registration and filing fees, all fees and expenses of complying with securities
or blue sky laws (including reasonable fees and disbursement of counsel in
connection with blue sky qualifications of the Registrable Shares), rating
agency fees, all printing expenses, messenger and delivery expenses, internal
expenses (including, without limitation, all fees and expenses of its officers
and employees performing legal or accounting duties), the fees and expenses
incurred in connection with the listing of the securities, the fees and
disbursements of counsel for Streamline and of its independent public
accountants, including the expenses of any special audits required by or
incident to such performance and compliance, and the fees and expenses of
counsel for Purchaser (up to a maximum of $25,000 in any one registration), but
excluding any underwriting discounts and commissions applicable to the
Registrable Shares.
"REGISTRATION STATEMENT" means a registration statement filed by
Streamline with the SEC for a public offering and sale of Common Stock (other
than a registration statement on Form S-8 or Form S-4, or their successors, or
any other form for a similar limited purpose, or any registration statement
covering only securities proposed to be issued in exchange for securities or
assets of another corporation).
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder, or any successor act, all as the
same shall be in effect at the time.
"SHARES" means the 50,000 shares of Series A Cumulative Convertible
Preferred Stock sold by Streamline to Purchaser pursuant to the terms hereof.
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"Subsidiary" means any corporation, association or other business
entity a majority (by number of votes) of the stock of any class or classes (or
equivalent interests) of which is at the time owned by Streamline or by one or
more Subsidiaries or by Streamline and one or more Subsidiaries, if the holders
of the stock of such class 6r classes (or equivalent interests) (a) are
ordinarily, in the absence of contingencies, entitled to vote for the election
of a majority of the directors (or persons performing similar functions) of such
business entity, even though the right so to vote has been suspended by the
happening of such a contingency, or (b) are at the time entitled, as such
holders, to vote for the election of a majority of the directors (or persons
performing similar functions) of such business entity, whether or not the right
so to vote exists by reason of the happening of a contingency.
2. AUTHORIZATION AND SALE OF SHARES; USE OF PROCEEDS.
2.1. AUTHORIZATION OF SHARES. Streamline has, or prior to the
Closing (as defined in Section 3) will have, duly authorized the sale
and issuance, pursuant to the terms of this Agreement, of the Shares,
having the rights, restrictions, privileges and preferences set forth
in the Certificate of Amendment to the Certificate of Incorporation, as
amended, of Streamline (the "Certificate of Amendment") attached hereto
as EXHIBIT A. Streamline has, or prior to the Closing will have,
adopted and filed the Certificate of Amendment with the Secretary of
State of Delaware.
2.2. SALE OF SHARES. Streamline agrees to issue and sell to
Purchaser and, subject to the terms and conditions set forth herein and
on the basis of the representations, warranties and agreements herein
contained, Purchaser agrees to purchase in two installments, on the
First Closing Date and the Second Closing Date (each as hereinafter
defined), the Shares for an aggregate purchase price of $5,000,000 (the
"Purchase Price").
2.3. USE OF PROCEEDS. Streamline will use the net proceeds
from the sale of the Shares to fund expenses associated with the
opening of Streamline's prototype consumer response center and for
general working capital purposes. No portion of the proceeds hereunder
will be used to pay any finder's fees.
3. THE FIRST CLOSING AND THE SECOND CLOSING. Purchaser shall purchase
the Shares in two installments as follows:
(a) The closing of the sale of 10,000 shares of Series A
Cumulative Convertible Preferred Stock (the "First Closing") shall
occur, subject to the satisfaction of the conditions set forth in
Section 7
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hereof, at the offices of Purchaser, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, at 10:00 a.m., New York time, on May 15 , 1996, or at such
other place, time and date as Purchaser and Streamline may mutually
agree. The actual date on which the First Closing shall occur is
referred to herein as the "First Closing Date." At the First Closing,
Streamline shall deliver to Purchaser, against receipt of $1,000,000
(representing the amount of the Purchase Price payable on the First
Closing Date) by wire transfer of federal or same day funds to an
account of Streamline (details of which account shall be provided by
Streamline to Purchaser in writing not less than two business days
prior to the First Closing Date) or by such other method acceptable to
Streamline, a certificate or certificates in definitive form
representing the 10,000 shares of Series A Cumulative Convertible
Preferred Stock to be purchased by Purchaser on the First Closing Date,
registered in such name(s) as Purchaser may request (being Purchaser, a
Subsidiary of Purchaser or a nominee of either thereof) upon at least
24 hours prior notice to Streamline. If at the First Closing any of the
conditions specified in Section 7.1 shall not have been fulfilled,
Purchaser shall, at its election, be relieved of all of its obligations
hereunder without thereby waiving any other rights it may have by
reason of such failure or such nonfulfillment.
(b) The closing of the sale of 40,000 shares of Series A
Cumulative Convertible Preferred Stock (the "Second Closing"),
representing the balance of the Shares to be purchased by Purchaser,
shall occur, subject to the satisfaction of the conditions set forth in
Section 8 hereof, at the offices of Purchaser, 00 Xxxx 00xx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 (or at such other place and time as Purchaser and
Streamline may mutually agree) on the date on which Streamline delivers
to Purchaser the 1995 Audited Financial Statements (as defined in
Section 9.1 hereof). The actual date on which the Second Closing shall
occur is referred to herein as the "Second Closing Date." At the Second
Closing, Streamline shall deliver to Purchaser, against receipt of
$4,000,000 (representing the amount of the Purchase Price payable on
the Second Closing Date) in the manner set forth in paragraph (a) of
this Section 3, a certificate or certificates in definitive form
representing the 40,000 shares of Series A Cumulative Convertible
Preferred Stock to be purchased by Purchaser on the Second Closing
Date, registered in such name(s) as Purchaser may request (being
Purchaser, a Subsidiary of Purchaser or a nominee of either thereof)
upon at least 24 hours prior notice to Streamline. If at the Second
Closing any of the conditions specified in Section 8.1 shall not have
been fulfilled, Purchaser shall, at its election, be relieved of
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all of its obligations hereunder without thereby waiving any other
rights it may have by reason of such failure or such nonfulfillment.
4. REPRESENTATIONS OF STREAMLINE. Streamline represents and warrants to
Purchaser as follows:
4.1. ORGANIZATION AND QUALIFICATION: CERTIFICATE OF
INCORPORATION. Streamline is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has all requisite power and authority (corporate and other) to
carry on its business as it is now being conducted and as proposed to
be conducted by it and to own all of its properties and assets.
Streamline is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction in which the ownership of
its properties or the conduct of its business requires such
qualification, except where the failure to so qualify would not
materially adversely affect the operations or financial condition of
Streamline.
4.2. CAPITALIZATION. The authorized capital stock of
Streamline consists, or as of the Closing will consist, of (a)
25,000,000 shares of Common Stock, of which (i) 6,569,250 shares are
outstanding, (ii) 45,000 shares are issuable upon exercise of
outstanding warrants and (iii) 555,500 shares are reserved for issuance
upon exercise of outstanding stock options under Streamline's stock
option plans, and (b) 100,000 shares of Series A Cumulative Convertible
Preferred Stock (of which in excess of 50, 000 shares may only be
issued as dividends on Series A Cumulative Convertible Preferred Stock)
All of the issued and outstanding shares of Common Stock are duly
authorized, validly issued, fully paid, and non-assessable. Except as
set forth in SCHEDULE 4.2 hereto, (i) no subscription, warrant, option,
convertible security or other right (contingent or otherwise) to
purchase or acquire shares of capital stock of Streamline is authorized
or outstanding, (ii) Streamline has no obligation (contingent or
otherwise) to issue any subscription, warrant, option, convertible
security or other such right or to issue or distribute to holders of
any shares of its capital stock any evidences of indebtedness or assets
of Streamline and (iii) Streamline has no obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any shares of its
capital stock or any interest therein or to pay any dividend or make
any other distribution in respect thereof. All of the issued and
outstanding shares of capital stock of Streamline have been offered,
issued and sold by Streamline in compliance with applicable federal and
state securities laws.
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4.3. SUBSIDIARIES. Streamline has no Subsidiaries and no
Investment in any other Person.
4.4. STOCKHOLDER LIST AND AGREEMENTS. Attached as SCHEDULE 4.4
is a true and complete list of the stockholders of Streamline, showing
the number of shares of Common Stock or other securities of Streamline
held by each stockholder as of the date of this Agreement and the
consideration paid to Streamline, if any, therefor. Except as provided
in this Agreement and the Certificate of Amendment, there are no
agreements, written or oral, between Streamline and any holder of its
capital stock, or, to the best of Streamline's knowledge, among any
holders of its capital stock, relating to the acquisition (including,
without limitation, rights of first refusal or pre-emptive rights),
disposition, registration under the Securities Act or voting of the
capital stock of Streamline.
4.5. ISSUANCE OF SHARES. The issuance, sale and delivery of
the Shares in accordance with the terms hereof have been duly
authorized by all necessary corporate action on the part of Streamline
and duly reserved for issuance and, when issued and paid for on the
Closing Date, will be validly issued, fully paid and non-assessable.
The issuance and delivery of the Conversion Shares have been duly
authorized by all necessary corporate action on the part of Streamline.
The Conversion Shares have been, and will at all times be, reserved for
issuance upon the conversion of the Shares and, when issued, will be
duly and validly authorized, validly issued, fully paid and
non-assessable.
4.6. AUTHORITY FOR AGREEMENT. Streamline has the power and
authority to execute and deliver this Agreement and all other
agreements or documents required to be executed by Streamline on or
prior to the Closing as contemplated herein (the "Ancillary
Agreements") and to consummate the transactions contemplated on its
part hereby and thereby. The execution, delivery and performance by
Streamline of this Agreement and the Ancillary Agreements and the
consummation by Streamline of the transactions contemplated on its part
hereby and thereby have been duly authorized by all necessary corporate
action. This Agreement and the Ancillary Agreements have been duly
executed and delivered by Streamline and constitute legal, valid and
binding obligations of Streamline, enforceable against Streamline in
accordance with their respective terms.
4.7. NON-CONTRAVENTION. The execution, delivery and performance
of the transactions contemplated by this Agreement and
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the Ancillary Agreements by Streamline will not violate Any provision
of law and will not conflict with or result in any breach of the
Certificate of Incorporation or By-Laws of Streamline (each as amended
to date) or the Certificate of Amendment, or conflict with, violate or
result (with the giving of notice or the lapse of time or both) in a
violation of the terms, conditions or provisions of, or constitute a
default under, or require a consent or waiver under, or result in the
creation or imposition of any lien, charge, pledge, security interest
or other encumbrance upon any property of Streamline pursuant to any
provision of, any indenture, lease, agreement or other instrument to
which Streamline is a party or by which it or any of its properties is
bound, or any decree, judgment, order, statute, rule or regulation
applicable to Streamline.
4.8. CONSENTS AND APPROVALS. Except for any notice or filing
subsequent to the Closing that may be required under applicable federal
or state securities or blue sky laws (which notice or filing, if
required, shall be timely made by Streamline), no authorization,
consent, approval or other order of, or registration, qualification,
designation, declaration or filing with, any governmental agency or
body is required for the valid authorization, execution, delivery and
performance of this Agreement, the valid authorization, issuance, sale
and delivery of the Shares or the other transactions to be consummated
at or prior to the Closing, other than such as will have been made or
obtained prior to, and shall be effective on and as of, the Closing;
PROVIDED that, with respect to Purchaser, such representation does not
relate to the nature of Purchaser's activities or to insurance
regulations applicable to Purchaser, but only to the effects the
Company's business activities would have upon any purchaser which was
purchasing the Shares. The offer and sale of the Shares to Purchaser
has been made in compliance with applicable federal and state
securities laws.
4.9. FINANCIAL STATEMENTS. (a) Streamline has previously
delivered to Purchaser (i) the audited balance sheet of Streamline as
of December 31, 1994 (the "Audited Balance Sheet") and the related
statements of operations, stockholders' equity and cash flows for the
fiscal year then ended (collectively, the "Audited Financial
Statements") and (ii) unaudited balance sheet of Streamline as of March
31, 1996 (the "Unaudited Balance Sheet") and the related statements of
operations, stockholders' equity and cash flows for the three-month
period then ended (collectively, the "Unaudited Financial Statements").
The Audited Financial Statements, the Unaudited Financial Statements
and the interim financial statements (the
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"Interim Financial Statements") to be delivered pursuant to Subsection
9.2 hereof (collectively, the "Financial Statements") have been (or, in
the case of the Interim Financial Statements, will be) prepared in
accordance with generally accepted accounting principles applied
consistently with past practices (except in the case of the Unaudited
Financial Statements and the Interim Financial Statements, which do not
contain footnotes and are subject to year-end adjustments) and, in the
case of the Audited Financial Statements, have been certified without
qualification by Xxxxxx Xxxxxxxx LLP, Streamline's independent public
accountants, and, in the case of the Interim Financial Statements, have
been (or will be) certified by Streamline's chief financial officer.
The date of the Audited Balance Sheet is hereinafter referred to as the
"Balance Sheet Date."
(b) The Financial Statements fairly present, as of their
respective dates, the financial condition of Streamline and the results
of operations of Streamline's business and cash flows for the periods
indicated. The Financial Statements contain and reflect adequate
reserves, which are consistent with previous reserves taken, for all
reasonably anticipated material losses and costs and expenses. The
amounts shown as accrued for current and deferred income and other
taxes in the Financial Statements are sufficient for the payment of all
accrued and unpaid federal, state and local income taxes, interest,
penalties, assessments or deficiencies applicable to Streamline,
whether disputed or not, for the applicable period then ended and
periods prior thereto.
4.10. ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the
extent (a) reflected and reserved against in the Audited Balance Sheet,
(b) disclosed in SCHEDULE 4.10 attached hereto or (c) incurred in the
ordinary course of business after the Balance Sheet Date and not
material in amount, either individually or in the aggregate, Streamline
did not have any liability or obligation, secured or unsecured, whether
accrued, absolute, contingent, unasserted or otherwise, which is
material to the condition (financial or otherwise) of the assets,
properties, business or prospects of Streamline taken as a whole. For
purposes of this Subsection 4.10, "material" means any amount in excess
of $50,000.
4.11. FINANCIAL ADVISORS AND BROKERS. Streamline has not
employed any broker, finder, consultant, intermediary or advisor which
would be entitled to a broker's, finder's or similar fee or commission
from Streamline as a result of, or arising from, this transaction.
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4.12. LITIGATION. There are no actions, proceedings or
investigations pending or threatened (or any basis therefor known to
Streamline) which question the validity of this Agreement or any action
taken or to be taken pursuant hereto, or which might result, either
individually or in the aggregate, in any material adverse change in the
business, operations, affairs, properties, assets or condition,
financial or otherwise, of Streamline, nor is there any litigation
pending or threatened (or any basis therefor known to Streamline)
against Streamline or any of its officers or employees by reason of the
past employment relationships of such officers or employees, the
proposed activities of Streamline or negotiations by Streamline and/or
any of its officers or employees with possible investors in Streamline.
4.13. TAX RETURNS AND PAYMENTS. All of the tax returns and
reports of Streamline required by law to be filed have been duly and
timely filed and all taxes shown due thereon have been paid. The
federal income tax returns of Streamline have never been audited by the
Internal Revenue Service. No deficiency assessment or proposed
adjustment of Streamline's federal income taxes is pending and
Streamline has no knowledge of any proposed liability for any tax to be
imposed upon its properties or assets, for which there is not an
adequate reserve reflected in the Audited Balance Sheet Neither
Streamline nor any of its stockholders has ever filed (a) an election
pursuant to Section 1362 of the Code that Streamline be taxed as an "S"
Corporation or (b) a consent pursuant to Section 341(f) of the Code
relating to collapsible corporations. Streamline's net operating losses
for federal income tax purposes, as set forth in the Financial
Statements, are not subject to any limitations imposed by Section 382
of the Code, and consummation of the transactions contemplated by this
Agreement or by any other agreement, understanding or commitment,
contingent or otherwise, to which Streamline is a party or by which it
is otherwise bound will not have the effect of limiting Streamline's
ability to use such net operating losses in full to offset such taxable
income.
4.14. PROPERTY AND ASSETS. Streamline has good title to all of
its material properties and assets, including all properties and assets
reflected in the Audited Balance Sheet, except those disposed of since
the date thereof in the ordinary course of business, and none of such
properties or assets is subject to any mortgage, pledge, lien, security
interest, lease, charge or encumbrance other than those the material
terms of which are described in the Audited Balance Sheet or in.
SCHEDULE 4.14
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4.15. INTELLECTUAL PROPERTY. Set forth on SCHEDULE 4.15 is a
true and complete list of all patents, patent applications, trademarks,
service marks, trademark and service xxxx applications, trade names,
copyright registrations and licenses presently used by Streamline or
necessary for the conduct of Streamline's business as conducted and as
proposed to be conducted, as well as any agreement under which
Streamline has access to any confidential information used or to be
used by it in its business (the "Intellectual Property Rights").
Streamline owns, or has the right to use under the agreements or upon
the terms described in SCHEDULE 4.15, all of the Intellectual Property
Rights, and has taken all actions reasonably necessary to protect the
Intellectual Property Rights. The business conducted or proposed by
Streamline does not and will not cause Streamline to infringe or
violate any of the patents, trademarks, service marks, trade names,
copyrights, licenses, trade secrets or other intellectual property
rights of any other Person. Streamline is not aware that any employee
is obligated under any contract (including any license, covenant or
commitment of any nature), or subject to any judgment, decree or order
of any court or administrative agency, that would conflict or interfere
with (i) the performance of such employee's duties as an employee of
Streamline, (ii) the use of such employee's best efforts to promote the
interests of Streamline or (iii) Streamline's business as conducted or
proposed to be conducted. No other Person (including without limitation
any prior employer of any employee of Streamline) has any right to or
interest in any inventions, improvements, discoveries or other
confidential information utilized by Streamline in its business.
4.16. INSURANCE. Streamline maintains valid policies of
workers' compensation insurance, directors and officers liability
insurance and insurance with respect to its properties and business of
the kinds and in the amounts not less than is customarily obtained by
corporations of established reputation engaged in the same or similar
business and similarly situated, including, without limitation,
insurance against loss, damage, fire, theft, public liability and other
risks. SCHEDULE 4.16 lists the insurance carried, the policy limits
thereof, the insurance companies issuing such policies and the annual
premiums paid therefor.
4.17. MATERIAL CONTRACTS AND OBLIGATIONS. SCHEDULE 4.17 sets
forth a list of all material agreements or commitments of any nature to
which Streamline is a party or by which it is bound, including without
limitation (a) each agreement which requires future expenditures by
Streamline in excess of $20,000 or which might result in payments to
Streamline in excess of $20,000, (b) all employment and
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consulting agreements, employee benefit, bonus, pension,
profit-sharing, stock option, stock purchase and similar plans and
arrangements, and distributor and sales representative agreements, (c)
any agreement with any stockholder, officer or director of Streamline
or any "affiliate" or "associate" of such Person (as such terms are
defined in the rules and regulations promulgated under the Securities
Act), including without limitation any agreement or other arrangement
providing for the furnishing of services by, rental of real or personal
property from, or otherwise requiring payments to, any such Person and
(d) any agreement relating to the Intellectual Property Rights.
Streamline has delivered to counsel to Purchaser copies of such of the
foregoing agreements as such counsel has requested. All of such
agreements and contracts are valid, binding and in full force and
effect with no defaults existing thereunder.
4.18. COMPLIANCE. Streamline has complied in all material
respects with all laws, regulations and orders applicable to its
present and proposed business, has all permits, licenses and other
governmental authorizations required for the conduct of its business
and the ownership of its properties and is, and has been, in compliance
therewith. There is no term or provision of Any mortgage, indenture,
contract, agreement or instrument to which Streamline is a party or by
which it or its properties is bound, or, to the best of Streamline's
knowledge, any provision of any state or federal judgment, decree,
order, statute, rule or regulation applicable to or binding upon
Streamline, which materially adversely affects or, in the future is
reasonably likely to materially adversely affect, the business,
prospects, assets or condition, financial or otherwise, of Streamline.
None of the activities or business of Streamline are, or cause
Streamline to be, and Streamline is not, in violation of any federal or
state law, rule, regulation or order, any term of its Certificate of
Incorporation or By-Laws (each as amended to date), the Certificate of
Amendment or any agreement or instrument the violation of which would
have a material adverse effect upon the condition (financial or
otherwise), business, property, prospective results of operations or
net worth of Streamline. To the best of Streamline's knowledge, no
employee of Streamline is in violation of any term of any contract or
covenant (either with Streamline or with another entity) relating to
employment, patents, proprietary information disclosure,
non-competition or non-solicitation.
4.19. ABSENCE OF CHANGES. Except as set forth on SCHEDULE
4.19, since the Balance Sheet Date, there has not been: (a) any change
in the assets, liabilities, financial condition or operations of
Streamline
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from that reflected in the Financial Statements, except changes in the
ordinary course of business that have not been, either individually or
in the aggregate, materially adverse; (b) any change (individually or
in the aggregate), except in the ordinary course of business, in the
contingent obligations of Streamline by way of guaranty, endorsement,
indemnity, warranty or otherwise; (c) any damage, destruction or loss,
whether or not covered by insurance, materially and adversely affecting
the properties or business of Streamline; (d) any waiver or compromise
by Streamline of a valuable right or of a material debt owed to it; (e)
any loans made by Streamline to its shareholders, employees, officers
or directors, other than, in the case of employees, travel advances
made in the ordinary course of business; (f) any increases in the
compensation of any of Streamline's employees, officers or directors;
(g) any declaration or any payment of any dividend or other
distribution of the assets of Streamline; (h) any issuance or a sale by
Streamline of any shares of Common Stock or other securities; (i) to
the best of Streamline's knowledge, any other event or condition of any
character that has materially and adversely affected Streamline's
business or prospects; or (j) any agreement or commitment by Streamline
to do any of the things described in this Section 4.19.
4.20. EMPLOYEES. All employees of Streamline with access to
confidential or proprietary information have executed and delivered
Nondisclosure and Development Agreements in the form of EXHIBIT B, and
all of such agreements are in full force and effect. None of the
employees of Streamline is represented by any labor union, and there is
no labor strike or other labor trouble pending with respect to
Streamline (including, without limitation, any organizational drive)
or, to the best of Streamline's knowledge, threatened.
4.21. ERISA. Streamline does not have or otherwise contribute
to or participate in any employee benefit plan subject to the Employee
Retirement Income Security Act of 1974.
4.22 BOOKS AND RECORDS. The minute books of Streamline contain
complete and accurate records of all meetings and other corporate
actions of its stockholders and its Board of Directors and committees
thereof. The stock ledger of Streamline is complete and reflects all
issuances, transfers, repurchases and cancellations of shares of
capital stock of Streamline.
4.22. DISCLOSURES. Neither this Agreement nor any Schedule or
Exhibit hereto, nor any report, certificate or instrument furnished to
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Purchaser or its counsel in connection with the transactions
contemplated by this Agreement when read together, contains or will
contain any untrue statement of a material fact or omits or will omit
to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which
they were made, not misleading. Streamline knows of no information or
fact which has or would have a material adverse effect on the business,
prospects, assets or condition, financial or otherwise, of Streamline
which has not been disclosed to Purchaser in writing.
5. REPRESENTATIONS OF THE FOUNDER. The Founder represents to Purchaser
as follows
5.1. CONFLICTS. The Founder is not, as a result of the nature
of the business conducted or proposed to be conducted by Streamline or
for any other reason, in violation of (i) any fiduciary or confidential
relationship, (ii) any term of any contract or covenant (either with
Streamline or another entity) relating to employment, patents,
proprietary information disclosure, non-competition or non-solicitation
or (iii) any other contract or agreement or any judgment, decree or
order of any court or administrative agency relating to or affecting
the right of the Founder to be employed by Streamline. No such
relationship, term, judgment, decree or order conflicts with the
Founder's obligations to use his best efforts to promote the
Streamline's interests nor does the execution and delivery of this
Agreement, nor the carrying on of Streamline's business as an officer
or key employee of Streamline, conflict with any such relationship,
term, judgment, decree or order.
5.2. LITIGATION. There is no action, suit or proceeding, or
governmental inquiry or investigation, pending or, to the best of the
Founder's knowledge, threatened against the Founder and, to the best of
the Founder's knowledge, there is no basis for any such action, suit
proceeding or governmental inquiry or investigation.
5.3. STOCKHOLDER AGREEMENTS. Except as set forth on Schedule
5.3 hereto or as contemplated or otherwise disclosed herein, the
Founder is not a party to and has no knowledge of any agreements,
written or oral, relating to the acquisition, disposition, registration
under the Securities Act or voting of the capital stock of Streamline.
5.4. DISCLOSURE. To the best of the Founder's knowledge,
neither this Agreement nor any Schedule or Exhibit hereto, nor any
report, certificate or instrument furnished to Purchaser or its counsel
in connection with the transactions contemplated by this Agreement
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when read together, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary
in order to make the statements contained herein or therein, in light
of the circumstances under which they were made, not misleading. The
Founder knows of no information or fact which has or would have a
material adverse effect on the business, prospects, assets or
condition, financial or otherwise, of Streamline which has not been
disclosed to Purchaser in writing.
6. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents
and warrants to Streamline as follows:
6.1. ACQUISITION FOR INVESTMENT. Purchaser is acquiring the
Shares for its own account for investment and not with a view to any
sale or distribution thereof within the meaning of the Securities Act.
6.2. EXPERIENCE. Purchaser is an "accredited investor" as
defined in Rule 501 under the Securities Act, knowledgeable,
sophisticated and experienced in making investments, and is qualified
to make decisions with respect to investment in the Shares and has been
afforded the opportunity during the course of negotiating the
transactions contemplated by this Agreement to ask questions of and
secure such information from Streamline and its officers and directors
as it deems necessary to evaluate the merits of entering into the
Agreement. Purchaser represents that it has assets in excess of
$5,000,000.
7. CONDITIONS TO FIRST CLOSING.
7.1. CONDITIONS TO OBLIGATIONS OF PURCHASER. Purchaser's
obligation to purchase the 10,000 shares of Series A Cumulative
Convertible Preferred Stock to be purchased by Purchaser on the First
Closing Date is subject to the fulfillment, prior to or at the First
Closing, of each of the following conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Streamline contained in
Section 4 hereof and of the Founder contained in Section 5
hereof shall be true and correct on and as of the time of the
First Closing.
(b) PERFORMANCE; NO DEFAULT. Streamline shall have
performed all agreements and complied with all conditions
contained herein required to be performed or complied with by
it prior to or at the First Closing.
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(c) COMPLIANCE CERTIFICATES. Purchaser shall have
received (i) a certificate, dated the First Closing Date,
signed by two officers of Streamline (which officers may be
the Chairman of the Board, the President, any Vice President
or the Treasurer of Streamline), certifying that the
conditions specified in Sections 7.1(a) (as they relate to
Streamline) and 7.1(b) have been fulfilled and (ii) a
certificate, dated the First Closing Date and signed by the
Founder, certifying that the conditions specified in Section
7.1(a) (as they relate to the Founder) have been fulfilled.
(d) OPINION OF COUNSEL. Purchaser shall have received
an opinion from Xxxx and Xxxx, special counsel for Streamline,
dated the First Closing Date, in the form of EXHIBIT C hereto.
(e) All waivers and consents required to be obtained
by Streamline in connection with the transactions contemplated
hereby shall be reasonably satisfactory in substance and form
to Purchaser.
(f) Streamline shall have delivered to Purchaser:
(i) The Certificate of Incorporation of
Streamline, as amended to date, as
certified by the Secretary of State of
the State of Delaware;
(ii) Certificates, as of the most recent
practicable dates, as to the
corporate good standing of
Streamline issued by the Secretary
of State of the State of Delaware
and the Secretary of the State of
the Commonwealth of Massachusetts;
(iii) By-laws Of Streamline, as amended to
date, certified by its Secretary or
Assistant Secretary as of the First
Closing Date; and
(iv) Resolutions of the Board of
Directors of Streamline, authorizing
and approving all matters in
connection with this Agreement and
the transactions contemplated
hereby, certified by the Secretary
or Assistant Secretary of Streamline
as of the First Closing Date.
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(g) OTHER MATTERS. All corporate and other
proceedings in connection with the transactions contemplated
by this Agreement and all documents and instruments incident
to such transactions shall be reasonably satisfactory in
substance and form to Purchaser and its counsel, and Purchaser
and its counsel shall have received all such counterpart
originals or certified or other copies of such documents as
they may reasonably request.
(h) NON-COMPETITION AND NON-SOLICITATION AGREEMENTS.
Each key employee of Streamline shall have entered into a
two-year Non-Competition and Non-Solicitation Agreement with
Streamline in the form of EXHIBIT D hereto.
(i) KEY MAN LIFE INSURANCE. Streamline shall have
obtained a key man life insurance policy on the life of the
Founder in the amount of $1,000,000, with proceeds under such
policy payable to Streamline.
(j) CERTIFICATE OF AMENDMENT. The Certificate of
Incorporation, as amended, of Streamline shall have been
amended in the form of the Certificate of Amendment.
7.2. CONDITIONS TO OBLIGATIONS OF STREAMLINE. The
representations and warranties of Purchaser contained in Section 6
hereof shall be true and correct on and as of the time of the First
Closing.
8. CONDITIONS TO SECOND CLOSING.
8.1. CONDITIONS TO OBLIGATIONS OF PURCHASER. Purchaser's
obligation to purchase the 40,000 shares of Series A Cumulative
Convertible Preferred Stock to be purchased by Purchaser on the Second
Closing Date is subject to the fulfillment, prior to or at the Second
Closing, of each of the following conditions:
(a) fulfillment of each of the conditions specified
in Section 7.1 hereof (PROVIDE that (i)the phrase "Second
Closing Date" shall replace the phrase "First Closing Date"
and the phrase "Second Closing" shall replace the phrase
"First Closing" throughout Section 7.1 and (ii) it is not
necessary for Streamline to fulfill the conditions set forth
in clauses (i), (iii) and (iv) of paragraph (f) under Section
7.1 unless the documents to be delivered pursuant to such
clauses are not identical to those
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delivered to Purchaser at the First Closing pursuant to
clauses (i), (iii) and (iv) of paragraph (f) under Section
7.1).
8.2. CONDITIONS TO OBLIGATIONS OF STREAMLINE. The
representations and warranties of Purchaser contained in Section 6
hereof shall be true and correct on and as of the time of the Second
Closing.
9. COVENANTS OF STREAMLINE.
9.1. 1995 AUDITED FINANCIAL STATEMENTS. Within 30 days
following the First Closing, Streamline will deliver to Purchaser the
audited balance sheet of Streamline as of December 31, 1995 and the
related statements of operations, stockholders' equity and cash flows
for the fiscal year then ended (collectively, the "1995 Audited
Financial Statements").
9.2. FINANCIAL AND OTHER INFORMATION. Streamline will deliver
to Purchaser the following:
(a) as soon as available and in any event within 45
days after the end of the first, second and third quarterly
accounting periods in each fiscal year of Streamline, an
unaudited balance sheet of Streamline as at the end of such
period and the related unaudited statements of operations,
stockholders' equity and changes in cash flow of Streamline
for such period and (in the case of the second and third
quarterly periods) for the period from the beginning of the
current fiscal year to the end of such quarterly period,
setting forth in each case in comparative form the figures for
the corresponding periods of the previous fiscal year;
(b) as soon as available and in any event within 90
days after the end of each fiscal year of Streamline, an
audited balance sheet of Streamline as at the end of such
fiscal year and the related audited statement of operations,
stockholder's equity and changes in cash flow of Streamline
for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, all
in reasonable detail and accompanied by the report thereon of
a firm of independent public-accountants of recognized
national standing selected by Streamline, which report (i)
shall state that the examination by such accountants in
connection with such financial statements has been made in
accordance with generally accepted auditing standards and (ii)
shall include the opinion of such accountants that such
financial
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statements have been prepared in accordance with generally
accepted accounting principles consistent with those applied
in prior fiscal periods, except as otherwise specified in such
opinion;
(c) as soon as available and in any event within 30
days after the end of each month, an unaudited balance sheet
of Streamline as at the end of such month and the related
unaudited statements of operations, stockholders' equity and
changes in cash flows of Streamline for such month and for the
current fiscal year to the end of such month, setting forth in
comparative form Streamline's projected financial statements
for the corresponding periods for the current fiscal year;
(d) as soon as available, but in any event within 30
days after commencement of each new fiscal year, a business
plan and projected financial statements for such fiscal year;
and
(e) with reasonable promptness, such other notices,
information and data with respect to Streamline as Streamline
delivers to the holders of Common Stock, and such other
information and data as Purchaser may from time to time
reasonably request.
Notwithstanding the foregoing, Streamline's obligations to
deliver the information specified in paragraphs (c) and (d) shall
terminate once Streamline becomes subject to the reporting requirements
of Section 13 or 15(d) of the Exchange Act.
The foregoing financial statements shall be prepared on a
consolidated basis if Streamline then has any Subsidiaries. The
financial statements delivered pursuant to paragraphs (a) and (c) shall
be accompanied by a certificate of the chief financial officer of
Streamline stating that such statements have been prepared in
accordance with generally accepted accounting principles consistently
applied (except as noted) and fairly present the financial condition
and results of operations of Streamline at the date thereof and for the
periods covered thereby.
9.3. INSPECTION. (a) From and after the First Closing Date,
Streamline will permit any authorized representative of Purchaser to
visit and inspect any of the properties of Streamline, to examine its
and their books, reports, records and papers (and make copies thereof
and take extracts therefrom) and to discuss its and their affairs,
finances and accounts with, and to be advised as to the same by, its
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and their officers, all at such reasonable times as Purchaser may
reasonably request during normal business hours and following
reasonable notice to Streamline.
(b) Streamline will permit any authorized
representative of Purchaser to attend all meetings of the Board of
Directors of Streamline, and shall, upon the written request of
Purchaser, provide Purchaser with such notice and other information
with respect to such meetings as are delivered to the directors of
Streamline. Upon the written request of Purchaser, Streamline shall
notify Purchaser, within ten days thereafter, of the taking of any
written action by the Board of Directors of Streamline in lieu of a
meeting thereof.
9.4. MATERIAL CHANGES AND LITIGATION. Streamline shall
promptly notify Purchaser of any material adverse change in the
business, prospects, assets or condition, financial or otherwise, of
Streamline and of any litigation or governmental proceeding or
investigation brought or, to the best of Streamline's knowledge,
threatened against, Streamline, or against any officer, director, key
employee or principal stockholder of Streamline materially adversely
affecting or which, if adversely determined, would materially adversely
affect its business, prospects, assets or condition, financial or
otherwise.
9.5. KEY MAN INSURANCE. For a period of five years after the
Closing Date, Streamline shall maintain term life insurance upon the
life of the Founder in the amount of $1,000,000, with the proceeds
payable exclusively to Streamline.
9.6. XXXX-XXXXX-XXXXXX FILING. Streamline will file and pay
all filing fees of Purchaser relating to any Xxxx-Xxxxx-Xxxxxx filing
required in order for Purchaser to convert the Shares into Common
Stock.
9.7. NONDISCLOSURE AGREEMENTS. Streamline shall require all
persons now or hereafter employed by Streamline who have access to
confidential and proprietary information of Streamline to enter into
Nondisclosure and Development Agreements substantially in the form of
EXHIBIT B, or such other form as may be approved by the Board of
Directors of Streamline.
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9.8. NEGATIVE COVENANTS.
(a) So long as any shares of Series A Cumulative Convertible
Preferred Stock are outstanding, Streamline shall not, without the
prior written consent of Purchaser:
(i) Reserve for issuance under any stock option plans or
other compensatory plans, in excess of 1,000,000
shares of Common Stock;
(ii) Make (or permit any Subsidiary of Streamline to make)
any loan or advance to, or own any stock or other
securities of, any Subsidiary or other Person unless
it is wholly owned by Streamline;
(iii) Make any loan or advance to any person, including,
without limitation, any shareholder, employee,
officer or director of Streamline or any Subsidiary,
except advances and similar expenditures in the
ordinary course of business or under the terms of an
employee stock or option plan approved by the Board
of Directors; or
(iv) Guarantee directly or indirectly, any indebtedness
except for trade accounts of any Subsidiary arising
in the ordinary course of business.
(b) Streamline shall not, without the prior written
consent of Purchaser, amend the letter agreement between Streamline and
Xxxxxxxx Consulting LLP dated May 13, 1996.
9.9. EXPENSES OF DIRECTOR. Streamline shall promptly reimburse
in full each director of Streamline who is not an employee of
Streamline and who was elected as a director by the holders of Series A
Cumulative Convertible Preferred Stock for all reasonable out-of-pocket
expenses incurred in attending each meeting of the Board of Directors
of Streamline or any committee thereof.
9.10. RESERVATION OF COMMON STOCK. Streamline shall reserve
and maintain a sufficient number of shares of Common Stock for issuance
upon conversion of all of the outstanding Shares.
9.11. TERMINATION OF COVENANTS. The covenants of Streamline
contained in Sections 9.3(b), 9.4, 9.7 and 9.8 shall terminate, and be
of no further force or effect, upon Streamline's first
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public offering
of Common Stock, resulting in gross proceeds to Streamline of at least
$10,000,000 (and net proceeds of at least $9,000,000), at a price per
share of at least $5.00.
10. LEGEND.
Purchaser understands that the certificate or certificates evidencing
the Shares shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT.
Purchaser also understands that Streamline will place a stop transfer
order on the Shares with the transfer agent.
11. REGISTRATION RIGHTS.
11.1. REGISTRATION ON REQUEST. (a) At any time after the
closing of Streamline's first underwritten public offering of shares of
Common Stock pursuant to a Registration Statement, upon the written
request of one or more Initiating Holders requeSting that Streamline
effect the registration under the Securities Act of all or part of such
Initiating Holders' Registrable Shares (but not in amount less than
Registrable Shares representing the lesser of (x) 200,000 shares of
Common Stock and (y) Common Stock with an aggregate offering price,
based on the then current public market price, of at least $1,000,000)
and specifying the intended method of disposition thereof (including
without limitation the name of any proposed managing underwriter
selected by such Initiating Holders, which managing underwriter shall
be reasonably satisfactory to Streamline), Streamline will promptly
give written notice of such requested registration to all holders of at
least 30% of the Registrable Shares, and thereupon will use its best
efforts to effect the registration under the Securities Act of:
(i) the Registrable Shares which Streamline
has been so requested to register by such Initiating Holders;
and
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(ii) l other Registrable Shares which Streamline
has been requested to register by the holders thereof by
written request given to Streamline within 10 business days
after the giving of such written notice by Streamline (which
request shall specify the intended method of disposition of
such Registrable Shares), all to the extent requisite to
permit the disposition (in accordance with the intended
methods thereof as aforesaid) of the Registrable Shares so to
be registered; PROVIDED that Streamline shall not be obligated
to effect more than three registrations at the request of
Initiating Holders for Registrable Shares pursuant to this
Section 11.1; and PROVIDED, FURTHER, that Streamline shall not
be required to effect any registration pursuant to this
Section 11.1 within 90 days after the effective date of any
other Registration Statement of Streamline requested
hereunder.
(b) Each registration requested pursuant to this Section 11.1
shall be effected by the filing of a Registration Statement on Form
S-3, if available and if not available, on such other form which is
available and suitable for a secondary offering of securities under the
Securities Act.
(c) Streamline shall not register securities for sale for its
own account or for the account of any other person (except (i) to the
extent inclusion of additional securities is required by a contract
existing prior to the date hereof) in any registration requested
pursuant to this Section 11.1 unless permitted to do so by the written
consent of Initiating Holders holding at least 66 2/3% in aggregate
principal amount (or in number of shares) of the Registrable Shares as
to which registration has been requested by the Initiating Holders
pursuant to this Section 11.1. If a registration is requested pursuant
to this Section 11.1, Streamline shall not file a Registration
Statement until after the effectiveness of the requested Registration
Statement nor have a Registration Statement declared effective for any
class of securities similar to the Registrable Shares for sale for its
own account or for the account of any other person (except to the
extent required by a contract existing prior to the date hereof) until
the expiration of 90 days after the effectiveness of any registration
requested pursuant to this Section 11.1, or such shorter period as may
be agreed to in writing by the managing underwriter, if any, used by
the Initiating Holders for the sale of the Registrable Shares.
(d) A registration requested pursuant to this Section 11.1
will not be deemed to have been effected unless it has become
effective.
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(e) If at the time of any request to register Registrable
Shares pursuant to this Section 11.1, Streamline is engaged or has
fixed plans to engage within 30 days of the time of the request in a
registered public offering as to which the holders of Registrable
Shares may include Registrable Shares-or is engaged in any other
activity which, in the good faith determination of Streamline's Board
of Directors, would be adversely affected by the registration to the
material detriment of Streamline, then Streamline may at its option
direct that such request be delayed for a period not in excess of 60
days from the effective date of such offering or the date of
commencement of such other material activity, as the case may be, such
right to delay a request to be exercised by Streamline not more than
once in any two-year period.
(f) Streamline will pay all Registration Expenses in
connection with each such registration requested by Initiating Holders
pursuant to this Section 11.1.
11.2. PIGGYBACK AND INCIDENTAL REGISTRATION. (a) Subject to
the provisions of Section 11.4.3 hereof, if at any time Streamline
proposes to register any shares of Common Stock under the Securities
Act, whether or not for sale for its own account or for the account of
any stockholder (other than shares to be issued pursuant to (i)
Streamline's initial public offering to the public, (ii) an employee
compensation program or (iii) a merger, acquisition or similar
transaction) in a manner which would permit registration of Registrable
Shares for sale to the public under the Securities Act, it will each
such time give written notice to Purchaser and all holders of at least
30% of the Registrable Shares of its intention to do so and, upon the
written request of any holder of such Registrable Shares made within 10
business days after the receipt of any such notice (which request shall
specify the Registrable Shares intended to be disposed of by such
holder and the intended method of disposition thereof), Streamline will
use its best efforts to effect the registration under the Securities
Act of all Registrable Shares which Streamline has been so requested to
register by the holders thereof, to the extent requisite to permit the
disposition (in accordance with the intended methods thereof as
aforesaid) of the Registrable Shares so to be registered; Provided that
if, at any time after giving written notice of its intention to
register any securities and prior to the effective date of the
Registration Statement filed in connection with such registration,
Streamline shall determine for any reason not to register such
securities, Streamline may, at its election, give written notice of
such determination to each holder of at least 30% of the Registrable
Shares
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and, thereupon, shall be relieved of its obligation to register any
Registrable Shares in connection with such registration (but not from
its obligation to pay the Registration Expenses in connection
therewith), without prejudice, however, to the rights of any holder of
Registrable Shares entitled to do so to request that such registration
be effected as a registration under Section 11.1.
(b) No registration effected under this Section 11.2 shall
relieve Streamline of its obligation to effect registrations upon
request under Section 11.1, except as otherwise expressly provided
therein.
(c) Streamline will pay all Registration Expenses in
connection with each registration of Registrable Shares requested
pursuant to this Section 11.2.
11.3. REGISTRATION PROCEDURES. If and whenever Streamline is
required to use its best efforts to effect the registration of any
Registrable Shares under the Securities Act as provided in Section 11.1
or 11.2, Streamline will, as expeditiously as possible:
(a) prepare and (in any event within 45 days after
the request for registration is made) file with the SEC a
Registration Statement with respect to such securities, and
use its best efforts to cause such Registration Statement to
become and remain effective for such period as may be
reasonably necessary to effect the sale of such securities,
not to exceed six months (exclusive of any periods during
which sales cannot be made as a result of clauses (f) and (g)
hereof);
(b) prepare and file with the SEC such amendments to
such Registration Statement and supplements to the prospectus
contained therein as may be necessary to keep such
Registration Statement effective for such period as may be
reasonably necessary to effect the sale of such securities,
not to exceed six months (exclusive of any periods during
which sales cannot be made as a result of clauses (f) and (g)
hereof);
(c) furnish to the holders of Registrable Shares
participating in such registration and to the underwriters, if
any, of the securities being registered such reasonable number
of copies of the Registration Statement, preliminary
prospectus, final prospectus and such other documents as the
holders of such Registrable Shares or such underwriters may
reasonably request in order to facilitate the public offering
of the Registrable Shares;
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(d) use its best efforts to register or qualify the
Registrable Shares covered by such Registration Statement
under such state securities or blue sky laws of such
jurisdictions as the holders of such Registrable Shares or the
underwriters, if any, participating in such registration may
reasonably request, except that streamline shall not for any
purpose be required to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified
or execute a general consent to service of process in any
Jurisdiction (other than a consent to service of process
solely with respect to actions or proceedings arising out of
or in connection with the sale of the Registrable Shares);
(e) notify the holders of such Registrable Shares and
the underwriters, if any, participating in such registration
promptly after Streamline shall receive notice thereof, of the
time when such Registration Statement has become effective or
a supplement to any prospectus forming a part of such
Registration Statement has been filed;
(f) for a period of six months from the effective
date of the Registration Statement (or such longer period as
may be required pursuant to clause (a) or (b) hereof), prepare
and promptly file with the SEC and promptly (i) notify the
holders of such Registrable Shares and the underwriters, if
any, participating in such registration of the filing of such
amendment or supplement to such Registration Statement or
prospectus as may be necessary to correct any statements or
omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities
Act, any event shall have occurred as the result of which any
such prospectus or any other prospectus as then in effect
would include an untrue statement of a material fact or omit
to state any material fact necessary to make the statements
therein, in the light of the circumstances in which they were
made, not misleading, and (ii) advise such holders and such
underwriters that they are to cease making offers of such
Registrable Shares until receipt of revised prospectuses from
Streamline (which revised prospectuses shall be provided by
Streamline to the holders of Registrable Shares as promptly as
possible);
(g) advise the holders of such Registrable Shares and
the underwriters, if any, participating in such registration
promptly after Streamline shall receive notice or obtain
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knowledge thereof, of the issuance of any stop order by the
SEC suspending the effectiveness of such Registration
Statement or the initiation or threatening of any proceeding
for that purpose and promptly use its best efforts to prevent
the issuance of any stop order or to obtain its withdrawal if
such stop order should be issued;
(h) furnish to holders of Registrable Shares and each
underwriter, if any, participating in such registration (i) an
opinion of counsel for Streamline, dated the closing date of
the offering in an offering that is underwritten, and the
effective date of the Registration Statement in an offering
that is not underwritten and (ii) a "comfort" letter signed by
the independent public accountants who have audited
Streamline's financial statements included in the Registration
Statement, in each case covering substantially the same
matters with respect to the Registration Statement (and the
prospectus included therein) and, in the case of the
accountants' letter, with respect to events subsequent to the
date of such financial statements, as are customarily covered
in opinions of issuer's counsel and in accountants' letters
delivered to the underwriters in underwritten public offerings
for securities;
(i) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make
available to its securities holders, as soon as reasonably
practicable, an earnings statement covering a period of at
least twelve months, but not more than eighteen months,
beginning after the effective date of the Registration
Statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act; and
(j) use its best efforts to list the Registrable
Securities included in the Registration Statement on each
securities exchange, if any, on which the Common Stock is then
listed.
11.4. UNDERWRITTEN OFFERINGS.
11.4.1. UNDERWRITTEN OFFERINGS IN CONNECTION WITH
REGISTRATION ON REQUEST. Whenever a registration requested
pursuant to Section 11.1 is for an underwritten offering, only
Registrable Shares which are to be distributed by the
underwriters may be included in such registration; provided,
that shares of Common Stock owned by other holders may be
included in such registration with the consent of the
Initiating
Holders and the managing underwriter. If the managing
underwriter shall determine that the amount of Registrable
Shares to be sold in any such underwritten offering should be
limited due to market conditions or otherwise, all securities
to be sold by the Initiating Holder who requested that the
Registration Statement be filed shall be included in the
offering and the number of shares to be sold for the accounts
of holders of shares having "piggy-back" registration rights
with respect to such offering shall be reduced proportionately
to an aggregate number acceptable to the managing underwriter,
if any (such proration to be made in the ratio of the total
number of shares proposed to be sold in such offering by such
holders to the actual number to be so sold in such offering).
Each holder of Registrable Shares who will have its number of
shares to be included in the offering reduced shall have the
right to withdraw its request for inclusion of any or all of
its Registrable Shares in the Registration Statement.
11.4.2. UNDERWRITING AGREEMENT IN CONNECTION WITH
REGISTRATIONS ON REQUEST. If requested by the underwriters for
any offering pursuant to a registration requested under
Section 11.1, Streamline shall enter into an underwriting
agreement with such underwriters for such offering, such
agreement to contain such representations and warranties by
Streamline and such other terms and provisions as are
customarily contained in agreements of this type, including,
without limitation, indemnities and rights to contribution to
the effect and to the extent provided in Sections 11.6 and
11.7, respectively. The holders of Registrable Shares to be
distributed by such underwriters shall be parties to such
underwriting agreement and the representations and warranties
by, and the other agreements on the part of, Streamline to and
for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Shares and the
conditions precedent to the obligations of such holders of
Registrable Shares under such underwriting agreement shall be
reasonably satisfactory to such holders of Registrable Shares.
Such holders of Registrable Shares shall not be required to
make any representations or warranties to Streamline or its
underwriters other than representations or warranties
regarding such holder, title to its securities and such
holder's intended method of distribution.
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11.4.3. UNDERWRITTEN OFFERINGS IN CONNECTION WITH
"PIGGY-BACK" AND INCIDENTAL REGISTRATIONS. If at any time
Streamline proposes to register any of its securities under
the Securities Act for sale for its own account or for the
account of any security holder and such securities are to be
distributed by or through one or more underwriters, Streamline
will use its best efforts, if requested by any holder of
Registrable Shares, to arrange for such underwriters to
include the Registrable Shares to be offered and sold by such
holder among those to be distributed by such underwriters. The
holders of Registrable Shares to be distributed by such
underwriters shall be parties to the underwriting agreement
between Streamline and such underwriters and the
representations and warranties by, and the other agreements on
the part of, Streamline to and for the benefit of such
underwriters shall also be made to and for the benefit of such
holders of Registrable Shares and the conditions precedent to
the obligations of such holders of Registrable Shares under
such underwriting agreement shall be satisfactory to such
holders of Registrable Shares. Such holders of Registrable
Shares shall not be required to make any representations or
warranties to Streamline or its underwriters other than
representations or warranties regarding such holder, title to
its securities and such holder's intended method of
distribution but shall agree to the indemnities and rights to
contribution to the effect and to the extent provided in
Sections 11.6 and 11.7, respectively. Streamline may also
require that the Registrable Shares requested for inclusion
pursuant to this Section 11.4.3 be included in the offering on
the same financial terms as the securities otherwise being
sold through the underwriters. If in the good faith judgment
of the managing underwriter of such underwritten public
offering, the inclusion of any or all of the Registrable
Shares requested for inclusion pursuant to this Section 11.4.3
together with any other shares which have similar piggyback
registration rights (such shares and the Registrable Shares
being collectively referred to as the "Requested Stock") would
jeopardize the success of the offering, the number of shares
of Requested Stock otherwise to be included in the
underwritten public offering may be reduced pro rata (by
number of shares) among the holders thereof requesting such
registration or excluded in their entirety if so required by
such managing underwriter.
11.5. PREPARATION, REASONABLE INVESTIGATION. In connection
with the preparation and filing of each Registration
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Statement registering Registrable Shares under the Securities Act,
Streamline will give the holders of such Registrable Shares so
registered and their underwriters, if any, and their respective counsel
and accountants, the opportunity to participate in the preparation of
such Registration Statement, each prospectus included therein or filed
with the SEC, and each amendment thereof or supplement thereto, and
will give each of them such reasonable access to its books and records
and such opportunities to discuss the business of Streamline with its
officers and the independent public accountants who have certified its
financial statements as shall be necessary, in the opinion of such
holders' and such underwriters respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act. Each
holder of such Registrable Shares shall furnish to Streamline such
information regarding such holder and the distribution proposed by such
holder as Streamline may reasonably request and as shall be required in
connection with any registration referred to in this Section 11.
11.6. INDEMNIFICATION.
(a) Streamline will indemnify and hold harmless each holder of
Registrable Shares which are included in a Registration Statement
pursuant to the provisions of Section 11.1 or 11.2 hereof, its
affiliates and their respective directors and officers, each other
Person who participates as an underwriter in any offering or sale of
Securities and each Person, if any, who controls such holder within the
meaning of the Securities Act, from and against, any and all loss,
damage, liability, cost and expense, including reasonable attorney's
fees and expenses, to which such holder or controlling person may
become subject under the Securities Act or otherwise, insofar as such
losses, damages, liabilities, costs or expenses are caused by any
untrue statement or alleged untrue statement of any material fact
contained in such Registration Statement, any prospectus contained
therein or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading; PROVIDED, HOWEVER, that Streamline will not be liable in
any such case to the extent that any such loss, damage, liability, cost
or expenses arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in
reliance upon and in conformity with written information furnished
through an instrument duly executed by or on behalf of such holder or
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such controlling person specifically stating that it is for use in the
preparation thereof.
(b) Each holder of Registrable Shares included in a
registration pursuant to the provisions of Sections 11.1 or 11.2 hereof
will indemnify and hold harmless Streamline, its directors and
officers, any controlling person and any underwriter from and against,
and will reimburse Streamline, its directors and officers, any
controlling person and any underwriter with respect to, any and all
loss, damage, liability, cost or expense to which Streamline or any
controlling person and/or any underwriter may become subject under the
Securities Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement or
alleged untrue statement of any material fact contained in such
Registration Statement, any prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, in
each case to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was so made in reliance upon
and in conformity with written information furnished through an
instrument duly executed by or on behalf of such holder specifically
stating that it is for use in the preparation thereof.
(c) Promptly after receipt by an indemnified party pursuant to
the provisions of paragraph (a) or (b) of this Section 11.6 of notice
of the commencement of any action involving the subject matter of the
foregoing indemnity provisions, such indemnified party will, if a claim
thereof is to be made against the indemnifying party pursuant to the
provisions of said paragraph (a) or (b), promptly notify the
indemnifying party of the commencement thereof, but the omission so to
notify the indemnifying party will not relieve it from any liability
which it may have to any indemnified party unless such failure to give
notice shall materially prejudice the Indemnifying Party in the defense
of such claim. In case such action is brought against any indemnified
party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party shall have the right to participate in,
and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party, PROVIDED, HOWEVER,
if the defendants in any action include both the indemnified party and
the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it
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and/or other indemnified parties which are different from or in
addition to those available to the indemnified party, or if there is a
conflict of interest which would prevent counsel for the indemnifying
party from also representing the indemnified party, the indemnified
party or parties have the right to select one separate counsel to
participate in the defense of such action on behalf of such indemnified
party or parties at the expense of the indemnifying party unless in the
reasonable judgment of the indemnified parties a conflict of interest
may exist among such indemnified parties, in which event Streamline
shall be obligated to pay the fees and expenses of such additional
counsel. An indemnified party may retain its own counsel in any such
action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of the indemnified
party if the indemnifying party has assumed the defense of the action
with counsel reasonably satisfactory to the indemnified party. After
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party pursuant to the provisions of
said paragraph (a) or (b) for any legal or other expense subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
11.7. CONTRIBUTION. (a) If the indemnification provided for in
Section 11.6 from the indemnifying party is unavailable to an
indemnified party hereunder in respect of any losses, claims, damages
or liabilities referred to therein, then the indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of such indemnifying party
and indemnified parties in connection with the actions which resulted
in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any action in question,
including any untrue or. alleged untrue statement of a material fact or
omission or alleged omission to state a material fact, such statement
or omission has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such action. The amount paid or payable by a party
as a result of the losses, claims, damages and liabilities referred to
above shall be deemed to include, subject to the limitations set forth
in Section 11.6,
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any legal or other fees or expenses reasonably incurred by such party
in connection with any investigation or proceeding.
(b) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 11.7 were determined
by pro rata allocation or by any other method of allocation which does
not take account of the equitable considerations referred to in the
immediately preceding paragraph. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who
was not guilty of such fraudulent misrepresentation.
(c) If indemnification is available under Section 11.6 the
indemnifying parties shall indemnify each indemnified party to the full
extent provided in Sections 11.6(a) and 11.6(b) without regard to the
relative fault of said indemnifying party or indemnified party or any
other equitable consideration provided for in this Section 11.7.
12. INDEMNIFICATION: CONTRIBUTION.
12.1. INDEMNIFICATION. (a) In addition to all other sums due
hereunder or provided for in this Agreement, each party hereto agrees
to hold harmless and indemnify (the "Indemnifying Party") the other
parties hereto and any of such party's affiliates and any director,
officer or controlling person of any of the foregoing within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (individually referred to as an "Indemnified Person") from
and against any losses, claims, damages and, liabilities (including
reasonable attorneys' fees and expenses of investigation) incurred by
such Indemnified Person pursuant to any action, suit, proceeding or
investigation against any one or more of the Indemnifying Party and
such Indemnified Person, and arising out of or in connection with this
Agreement, or any other document or instrument executed or filed by the
Indemnifying Party with any governmental agency in connection herewith
or pursuant hereto (other than any action, suit, proceeding or
investigation alleging a wrongful action on the part of such
Indemnified Person which either (a) is unrelated to any wrongful act by
the Indemnifying Party or any of its representatives, and (b) was not
taken by such Indemnified Person in reliance upon any of the
representations, warranties or promises of the Indemnifying Party
contained herein or in the documents contemplated hereby or the
certificates delivered by the Indemnifying Party pursuant hereto or
thereto), which action, suit, proceeding or investigation requires the
participation of such Indemnified Person or is commenced or filed
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against such Indemnified Person because of this Agreement and/or the
transactions contemplated hereby; PROVIDED, HOWEVER, that the
indemnification of Purchaser pursuant to this Section 12.1 relates
solely to actions, suits, proceedings or investigations arising out of
the breach by Streamline of any of its representations, warranties or
agreements made under this Agreement. The Indemnifying Party further
agrees, promptly upon demand by an Indemnified Person, at any time or
from time to time, to reimburse such Indemnified Person for, or pay,
any loss, claim, damage, liability or expense as to which the
Indemnifying Party has indemnified such Indemnified Person pursuant to
this Agreement.
(b) Each Indemnified Person agrees to give prompt written
notice to the Indemnifying Party after the receipt by such Indemnified
Person of any written notice of the commencement of any action, suit,
proceeding or investigation or threat thereof made in writing for which
such Indemnified Person will claim indemnification or contribution
pursuant to this Agreement; PROVIDED that the failure of any
Indemnified Person to give notice as provided herein shall not relieve
the Indemnifying Party of its obligations hereunder except to the
extent that the Indemnifying Party is materially prejudiced by such
failure to give notice. Unless in the reasonable judgment of such
Indemnified Person a conflict of interest may exist between such
Indemnified Person and the Indemnifying Party with respect to such
claim, each Indemnified Person agrees to permit the Indemnifying Party
to assume the defense of such claim with counsel reasonably
satisfactory to such Indemnified Person. If the Indemnifying Party is
not entitled to, or elects not to, assume the defense of a claim, it
will not be obligated to pay the fees and expenses of more than one
counsel for the Indemnified Persons with respect to such claim, unless
in the reasonable judgment of such Indemnified Person a conflict of
interest may exist between such Indemnified Person and any other of
such Indemnified Persons with respect to such claim, in which event the
Indemnifying Party shall be obligated to pay the fees and expenses of
such additional counsel or counsels. The Indemnifying Party will not be
subject to any liability for any settlement made without its consent.
12.2. CONTRIBUTION. (a) If the indemnification provided for in
Section 12.1 from the Indemnifying Party is unavailable to an
Indemnified Person under Section 12.1 in respect of any losses, claims,
damages or liabilities referred to therein, then the Indemnifying
Party, in lieu of indemnifying such Indemnified Person, shall
contribute to the amount paid or payable by such Indemnified Person as
a result of such losses, claims, damages or liabilities in such
proportion as is
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appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Persons in connection with the actions which resulted in
such losses, claims, damages or liabilities as well as any other
relevant equitable considerations. The relative fault of the
Indemnifying Party and Indemnified Persons shall be determined by
reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact, has been taken
by, or relates to information supplied by, the Indemnifying Party or
Indemnified Persons, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above
shall be deemed to include, subject to the limitations set forth in
Section 12.1, any legal or other fees or expenses reasonable incurred
by such party in connection with any investigation or proceeding.
(b) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 12.2 were determined
by pro rata allocation or by any other method of allocation which does
not take account of the equitable considerations referred to in the
immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who
was not guilty of such fraudulent misrepresentation.
(c) If indemnification is available under Section 11.1, the
Indemnifying Party shall indemnify each Indemnified Person to the full
extent provided in Section 12.1 without regard to the relative fault of
the Indemnifying Party, of Indemnified Person or any other equitable
consideration provided for in this Section 12.2.
12.3. REGISTRATION RIGHTS. Notwithstanding anything to the
contrary in this Section 12, the indemnification and contribution
provisions of Sections 11.6 and 11.7 shall govern any claim made with
respect to Registration Statements filed pursuant to Section 12.
13. MISCELLANEOUS.
13.1. GOVERNING LAW. This Agreement shall be governed in all
respects by and construed in accordance with the laws of the State of
New York, without regard to the choice of-law principles thereof.
13.2. SUCCESSORS AND ASSIGNS. This Agreement and the rights
and obligations of Purchaser hereunder may be assigned by
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Purchaser to any person or entity to which Shares are transferred by
Purchaser, and such transferee shall be deemed to be the "Purchaser"
for purposes of this Agreement; provided that, (i) the transferee
provides written notice of such assignment to Streamline and (ii)
solely for purposes of Section 9.7 and the rights of Purchaser to be an
Initiating Holder, such transferee holds, after a transfer from
Purchaser to such transferee, at least 1,000 shares of Series A
Cumulative Convertible Preferred Stock.
13.3. CONFIDENTIALITY. Purchaser agrees that it will keep
confidential and not disclose or divulge any confidential, proprietary
or secret information which it obtains from Streamline pursuant to
financial statements, reports or other materials submitted by
Streamline to Purchaser pursuant to this Agreement or pursuant to any
visitation or inspection rights granted hereunder (the "Confidential
Information"), unless such Confidential Information is known, or until
such Confidential Information becomes known to the public; provided,
however, that Purchaser may disclose such information (a) to its
attorneys, accountants, consultants and other professionals to the
extent necessary to obtain their services in connection with its
investment in Streamline, (b) to any prospective purchaser of any
Shares from Purchaser, as long as such prospective purchaser agrees in
writing to be bound by the provisions of this Section 13.3, (c) to any
affiliate or Subsidiary of Purchaser or (d) to any regulatory body
having jurisdiction over Purchaser. For purposes of this Section 13.3,
Confidential Information shall not include the following:
(i) was in the possession of Purchaser before Purchaser
received the Corporate Information;
(ii) is rightfully acquired by Purchaser from a third
party without any restriction or any obligation of
confidentiality; or
(iii) is independently developed by Purchaser without any
use or reference to the Corporate Information.
13.4. PUBLICITY. Except as required by law or United States
regulatory authorities, no public announcements or other disclosures of
this Agreement shall be made by either party without the other party's
prior consent.
13.5. EXPENSES. Each party hereto agrees to bear all costs and
expenses that it incurs in connection with the transactions
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contemplated by this Agreement, except that Streamline will pay, at the
Closing, the costs and expenses of in-house counsel to Purchaser in
connection with the preparation of this Agreement and any other
documents contemplated hereby, up to a maximum of $15,000.
13.6. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the
other documents delivered pursuant hereto constitute the full and
entire understanding and agreement between the parties with regard to
the subjects hereof and thereof. Neither this Agreement nor any term
hereof may be amended, waived, discharged or terminated, except by a
written instrument signed by each of the parties hereto.
13.7. NOTICES. All notices and other communications required
or permitted hereunder shall be in writing and shall be mailed by
first-class air mail, postage prepaid, or delivered by hand, by
messenger or by a nationally recognized overnight courier service to:
IF TO PURCHASER, at Reliance Insurance Company, 00
Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Chief
Investment officer, or at such other address as Purchaser
shall have furnished in writing to Streamline, with a copy to
the General Counsel of Purchaser;
IF TO STREAMLINE, at Streamline, Inc., 00 Xxxxxxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxxxxxxx 00000, Attention: President,
or at such other address as Streamline shall have furnished in
writing to Purchaser, with a copy to Xxxx and Xxxx, 00 Xxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxx X.
Xxxxxx, Esq.; or
IF TO THE FOUNDER, at c/o Streamline, Inc., 00
Xxxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxxxx 00000, or at such
other address as the Founder shall have furnished in writing
to Purchaser.
Notices, provided in accordance with this Section 12.7 shall
be deemed delivered upon personal delivery or two business days after
deposit in the mail (provided that the date of deposit in the mail is
verifiable in the records of Streamline).
13.8. SEVERABILITY. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby, provided that in such case, Streamline
and Purchaser each agree to enter into good faith negotiations to
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maintain the substance of such provisions so as to carry out the
intents of the parties hereto.
13.9. TITLES AND SUBTITLES. The titles of the Articles and
Sections of this Agreement are for convenience of reference only and
are not to be considered in construing this Agreement.
13.10. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original (whether or
not executed by facsimile), but all of which together shall constitute
one instrument.
13.11. FURTHER ASSURANCES. Each of the parties hereto agrees
to take such actions and execute such documents as is necessary to
carry out the intents and purposes of this Agreement and the
transactions contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
STREAMLINE, INC.
By: /S/ XXXXXXX X. XXXXXXX
----------------------
Xxxxxxx X. XxXxxxx
CEO
RELIANCE INSURANCE COMPANY
By: /S/ XXXX X. XXXXXXXXXX
----------------------
Xxxx X. Xxxxxxxxxx
Vice President
/S/ XXXXXXX X. XXXXXXX
--------------------------
XXXXXXX X. XXXXXXX
