EXHIBIT 1There is a
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT ("Agreement") is
made as of the 7th day of March, 1996 by and among Xxxxxx, Inc.,
a Delaware corporation (the "Company") and Wand/Xxxxxx Invest
ments L.P., a Delaware limited partnership (the "Purchaser").
RECITALS
A. The Purchaser currently owns the following
securities of the Company: (1) common stock, par value $.01 per
share ("Company Common Stock"); (2) Series H Convertible Pre
ferred Stock, par value $1.00 per share ("Series H Preferred
Stock"); (3) Series D Convertible Preferred Stock, par value
$1.00 per share ("Series D Preferred Stock"); (4) Series F
Convertible Preferred Stock, par value $1.00 per share ("Series F
Preferred Stock"); (5) certain common stock purchase warrants to
purchase shares of Company Common Stock at various exercise
prices (the "Old Warrants").
B. The Company desires to sell to the Purchaser,
and the Purchaser desires to purchase from the Company, (1) 777
shares of a new class of convertible preferred stock of the
Company, par value $1.00 per share (the "Series G Preferred
Stock") having the terms set forth in the Company's Certificate
of Designation of the Terms of the Series G Preferred Stock in
the form set forth as Exhibit I, and (2) Warrants to purchase up
to an aggregate of 225,330 shares of Company Common Stock in the
form set forth as Exhibit II (the "New Warrants");
C. Concurrently herewith the Company, the
Purchaser and certain other parties are entering into the Amended
and Restated Registration Agreement, dated as of March 7, 1996,
in the form set forth as Exhibit III (the "Registration Rights
Agreement").
D. Concurrently with the consummation of this
Agreement the Company will enter into the amendments (the
"Revised Agreements") set forth on Exhibit IV hereto to certain
existing agreements and securities of the Company for the purpose
of conforming such agreements and securities to the terms of
securities to be issued pursuant to this Agreement.
NOW, THEREFORE, in consideration of the mutual
covenants contained herein, and of other good and valuable consid
eration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, each intending to be legally
bound, do hereby agree as follows:
2. SALE AND PURCHASE OF COMPANY SECURITIES; OTHER TRANSACTIONS.
The Company has authorized the issuance and sale to the
Purchaser, (i) 777 shares (the "Series G Preferred Shares") of
the Series G Preferred Stock and (ii) the New Warrants. Subject
to the terms and conditions herein set forth, the Company will
issue and sell to the Purchaser, and the Purchaser will purchase
from the Company, at the Closing (as defined below) the Series G
Preferred Shares and the New Warrants. The aggregate purchase
price for the Series G Preferred Shares and New Warrant shall be
$777,000 in cash (the "Series G Purchase Price").
3. CLOSING.
(a) Subject to the applicable provisions of Sections
7, 8, and 9 hereof, the closing of the sale of the Series G
Preferred Shares and the New Warrants (the "Closing") shall take
place at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx, 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as soon as practicable
following the satisfaction or waiver of the applicable conditions
set forth in Sections 7, 8 and 9 hereof.
(b) At the Closing, (i) the Company shall deliver to
the Purchaser certificates evidencing the respective number of
Series G Preferred Shares and New Warrants to be purchased by the
Purchaser, (ii) the Purchaser shall deliver to the Company the
Series G Purchase Price by wire transfer of immediately available
funds to an account designated by the Company, and (iii) the
parties shall make such other deliveries as are contemplated
hereby.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to the Pur
chaser as follows:
(a) Organization, Standing and Power of the Company.
The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware.
The Company has all requisite power and authority to own, lease
and operate its properties, assets and business and to conduct
its business as now being conducted and is duly qualified to do
business as a foreign corporation in good standing in those juris
dictions, other than the state of its incorporation, in which the
nature of the business conducted or property owned by it makes
such qualification necessary, except for any failures so to
qualify which would not have, individually or in the aggregate, a
material adverse effect on the business, condition or results of
operations of the Company (a "Company Material Adverse Effect").
(b) Authority; Enforceability; No Conflict. The
Company has all requisite corporate power and authority to enter
into this Agreement, the Registration Rights Agreement, the New
Warrants and the Revised Agreements (such agreements other than
this Agreement are collectively referred to hereafter as the "Re
lated Agreements") to issue and sell the Series G Preferred
Shares and the New Warrants, and to carry out its obligations
hereunder and under the Related Agreements. The execution, deliv
ery and performance of this Agreement and the Related Agreements
by the Company and the issuance and sale of the Series G
Preferred Shares and the New Warrants by the Company have been
duly and validly authorized by all requisite corporate pro
ceedings on the part of the Company. This Agreement is, and the
Related Agreements when executed and delivered by the Company
will be, and when issued and sold each of the New Warrants will
be, a valid and binding obligation of the Company, enforceable
against it in accordance with its terms, except that (i) such en
forcement may be subject to bankruptcy, insolvency, reorgani
zation, moratorium, rehabilitation, liquidation, conservatorship,
receivership or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
Subject to the receipt of the consents or approvals set forth in
Section 3(b) of the disclosure schedule delivered by the Company
to the Purchasers concurrently with the execution and delivery of
this Agreement (the "Disclosure Schedule"), the execution and
delivery of this Agreement and each Related Agreement by the
Company do not, and the consummation by the Company of the
transactions contemplated hereby and thereby will not, the
issuance and sale of the Series G Preferred Shares and the New
Warrants will not, and the performance by the Company of its
obligations under the terms of the Preferred Shares and the New
Warrants will not, result in or constitute: (i) a default,
breach or violation of or under the Certificate of Incorporation
or the By-laws of the Company, or (ii) a default, breach or xxxxx
tion of or under any mortgage, deed of trust, indenture, note,
bond, license, lease agreement or other instrument or obligation
to which the Company is a party or by which any of their proper
ties or assets are bound, except for any defaults, breaches or
violations which would not have, individually or in the
aggregate, a Company Material Adverse Effect, or (iii) a
violation of any statute, rule, regulation, order, judgment or
decree of any court, public body or authority by which the
Company or any of its properties or assets are bound, except for
any violations which would not have, individually or in the aggre
gate, a Company Material Adverse Effect, or (iv) an event which
(with notice or lapse of time or both) would permit any person to
terminate, accelerate the performance required by, or accelerate
the maturity of, any indebtedness or obligation of the Company
under any agreement or commitment to which the Company is a party
or by which the Company is bound or by which any of its proper
ties or assets are bound, except for any accelerations or termi
nations which would not have, individually or in the aggregate, a
Company Material Adverse Effect, or (v) the creation or imposi
tion of any lien, charge or encumbrance on any property of the
Company under any agreement or commitment to which the Company is
a party or by which the Company is bound or by which any of its
respective properties or assets are bound, except for any liens,
charges or encumbrances which would not have, individually or in
the aggregate, a Company Material Adverse Effect, or (vi) an
event which would require any consent under any agreement to
which the Company is a party or by which the Company is bound or
by which any of its respective properties or assets are bound,
except for any consents which, if not received, would not have,
individually or in the aggregate, a Company Material Adverse
Effect.
(c) Capitalization. The authorized capital stock of
the Company consists of (i) 30,000,000 shares of Common Stock,
par value $.01 per share, of which 7,958,786 shares (excluding
shares held in treasury) are outstanding and 10,000,000 shares of
preferred stock, par value $1.00 per share (the "Preferred
Stock"), of which (i) 452,064 shares of Series A Preferred Stock,
par value $1.00 per share (the "Series A Preferred Stock"), of
which 452,064 shares are outstanding; (ii) 2,290,000 shares of
Series B Preferred Stock, par value $1.00 per share, of which
2,290,000 shares are outstanding; (iii) 186,671 shares of Series
D Preferred Stock, par value $1.00 per share, (the "Series D Pre
ferred Stock"), of which 186,671 shares are outstanding; (iv)
1,444 shares of Series E Preferred Stock, of which 1,444 shares
are outstanding; (v) 599 shares of Series F Preferred Stock, of
which 599 shares are outstanding; (vi) 777 shares of Series G
Preferred Stock, of which no shares are outstanding; and (vii)
2,026 shares of Series H Preferred Stock, of which 2,026 shares
are outstanding. All of the outstanding shares of Common Stock,
Series A Preferred Stock, Series B Preferred Stock, Series D Pre
ferred Stock, Series E Preferred Stock, Series F Preferred Stock
and Series H Preferred Stock have been duly authorized and valid
ly issued, and are fully paid and non-assessable. Immediately
following the Closing, (i) 7,958,786 shares of Common Stock will
be outstanding; (ii) 452,064 shares of Series A Preferred Stock
will be outstanding; (iii) 2,290,000 shares of Series B Preferred
Stock will be outstanding; (iv) no shares of Series C Preferred
Stock will be outstanding; (v) 186,671 shares of Series D Pre
ferred Stock will be outstanding; (vi) 1,444 shares of Series E
Preferred Stock will be outstanding; (vii) 599 shares of Series F
Preferred Stock will be outstanding; (viii) 777 shares of Series
G Preferred Stock will be outstanding, and (ix) 2,026 shares of
Series H Stock will be outstanding. Except for the outstanding
shares of Series A Preferred Stock, Series B Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Pre
ferred Stock and Series H Preferred Stock, and except as set
forth in Section 3(c) of the Disclosure Schedule, there are no
outstanding preemptive, conversion or other rights, options,
warrants or agreements granted or issued by or binding upon the
Company for the purchase or acquisition of any shares of capital
stock of the Company or any other securities convertible into, ex
changeable for or evidencing the right to subscribe for any
shares of such capital stock. The Company is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of the capital stock of the Company
or any convertible securities, rights or options of the type de
scribed in the preceding sentence. The Company is not a party
to, and does not have knowledge of, any agreement expressly
restricting the transfer of any shares of the capital stock of
the Company.
(d) No Subsidiaries or Other Ventures. The Company
has no subsidiaries. Except as set forth in Section 3(d)(i) of
the Disclosure Schedule, the Company does not own, directly or
indirectly, any interest in any corporation, partnership, joint
venture, association or other entity.
(e) Status of Shares. The Preferred Shares to be
issued at the Closing have been duly authorized by all necessary
corporate action on the part of the Company. When issued and
paid for as provided in this Agreement, the Series G Preferred
Shares will be validly issued and outstanding, fully paid and
nonassessable, and the issuance of such Series G Preferred Shares
is not and will not be subject to preemptive rights of any other
stockholder of the Company. The shares of Common Stock to be
issued upon conversion of the Series G Preferred Shares and upon
exercise of the New Warrants have been duly authorized by all
necessary corporate action on the part of the Company and, as of
the Closing, will be duly reserved for issuance. When the shares
of Common Stock are issued upon conversion of the Series G
Preferred Shares and upon exercise of the New Warrants, such
shares will be validly issued and outstanding, fully paid and
nonassessable and the issuance of such shares will not be subject
to preemptive rights of any other stockholder of the Company.
(f) Financial Statements. (1) The Company has
heretofore delivered or made available to the Purchaser the
audited consolidated balance sheets at June 30, 1995, 1994 and
1993 of the Company and the related consolidated statements of
income, stockholders' equity and cash flows for the years then
ended, including the related notes and auditor's report thereon
(the "Financial Statements"). The Financial Statements (i)
present fairly the consolidated financial condition of the Compa
ny at the dates thereof and present fairly its consolidated
results of operations and cash flows for the years then ended and
(ii) have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied consistently with respect
to the immediately preceding fiscal year period except as set
forth in the notes to the Financial Statements or in the
auditor's report thereon.
(2) The Company has heretofore delivered or made avail
able to the Purchaser the unaudited consolidated balance sheet at
December 31, 1995 of the Company (the "December Balance Sheet")
and the related consolidated statements of income and cash flows
for the three months then ended (such December Balance Sheet and
related consolidated statements, collectively, the "December F
inancial Statements"), each of which (i) presents fairly, in all
material respects, the consolidated financial condition of the
Company at December 31, 1995, and presents fairly its xxxxxxx
dated results of operations and cash flows for the six months
then ended and (ii) has been prepared in compliance with all of
the requirements of Section 15(d) of the Securities Exchange Act
of 1934, as amended, (the "Exchange Act") and the applicable
rules and regulations thereunder.
(g) SEC Reports. The Company has filed all reports,
statements, forms and documents with the Securities Exchange
Commission ("SEC") that it was required to file since December
31, 1990 (the "SEC Reports"), all of which have complied in all
material respects with all applicable requirements of the Securi
ties Act of 1933, as amended (the "Securities Act"), and the
Exchange Act. As of their respective dates, each such report,
statement, form or document, including without limitation any
financial statements or schedules included therein, did not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading.
(h) Liabilities. As of the date hereof, except (i)
as set forth on the December Balance Sheet, (ii) as set forth in
Section 3(h) of the Disclosure Schedule or (iii) for liabilities
or obligations which were incurred after December 31, 1995 in the
ordinary course of business and consistent with past practices,
the Company has no liabilities, obligations, claims or losses
(whether liquidated or unliquidated, secured or unsecured, abso
lute, accrued, contingent or otherwise) that would be required to
be disclosed on a consolidated balance sheet of the Company
(including the notes thereto) in conformity with GAAP.
(i) Indebtedness of the Company. Section 3(i) of
the Disclosure Schedule sets forth all outstanding secured and
unsecured Indebtedness (as defined hereinafter) of the Company in
excess of $50,000 in any individual case, or for which the
Company has commitments, on the date of this Agreement. The
Company is not in default with respect to any such Indebtedness.
"Indebtedness" means at any time, (i) all indebtedness for
borrowed money, (ii) all obligations evidenced by bonds, deben
tures, notes or other similar instruments, (iii) all reimburse
ment obligations and other liabilities under letters of credit,
(iv) all obligations to pay the deferred purchase price of proper
ty or services, other than normal trade creditors in the ordinary
course, (v) all obligations in respect of capitalized leases,
(vi) all guarantees and contractual obligations of the Company,
contingent or otherwise, with respect to any indebtedness or
obligation of another, and (vii) all obligations of the Company
secured by any mortgage, pledge, lien, security interest or other
encumbrance on any asset or property of the Company, whether or
not such obligation has been assumed.
(j) Title to Properties; Liens. The Company does
not own any real property. Section 3(j) of the Disclosure Sched
ule correctly describes all real property leased by the Company,
together with a description of the lease payment obligations and
lease termination provisions relating thereto. The Company
enjoys peaceful and undisturbed possession under all leases
necessary in any material respect for the operation of its proper
ties and assets, and all such leases are valid and subsisting and
are in full force and effect.
(k) Actions Pending. There is no action, suit,
claim, investigation or proceeding pending or, to the knowledge
of the Company, threatened, against the Company which questions
the validity of this Agreement or the Related Agreements or any
action taken or to be taken pursuant hereto or thereto. There is
no action, suit, claim, investigation or proceeding pending or,
to the knowledge of the Company, threatened, against or involving
the Company or any of its properties or assets. There are no
outstanding orders, judgments, injunctions, awards or decrees of
any court, arbitrator or governmental or regulatory body against
the Company.
(l) Compliance with Law. The business of the
Company has been and is presently being conducted so as to comply
with all applicable federal, state, and local governmental laws,
rules, regulations and ordinances. The Company has all material
franchises, permits, licenses, consents and other governmental or
regulatory authorizations and approvals necessary for the conduct
of its business as now being conducted by it, and the Company is
in compliance therewith except for any non-compliances which
would not, individually or in the aggregate, have a Company
Material Adverse Effect.
(m) No Violations. Except as disclosed in Section
3(m) of the Disclosure Schedule, the Company is not in violation
of or default under (i) any term of its Certificate of Incorpora
tion or By-Laws, (ii) any of its contracts or agreements or under
any instrument by which the Company is bound, or (iii) any out
standing indenture or other debt instrument or with respect to
the payment of principal of or interest on any outstanding obliga
tions for borrowed money.
(n) Taxes.
(i) The Company has duly and timely filed, or
caused to be filed, and will duly and timely file, or cause
to file, with the appropriate taxing authority all Tax Re
turns (as defined below) required to be filed on or before
the date hereof by or with respect to the Company and such
Tax Returns were or will be true, correct and complete in
all material respects when filed.
(ii) The Company has paid or caused to be paid in
full or has made adequate provision for on its balance sheet
all material Taxes (as defined below) shown to be due on
such Tax Returns. There are no liens for Taxes upon the
assets of either the Company except for statutory Liens for
current Taxes not yet due.
(iii) None of the Tax Returns filed by or on
behalf of the Company has been examined by the appropriate
taxing authorities.
(iv) Except as set forth in Schedule 3(n)(iv) here
to, the Company has not received any notice of deficiency or
assessment from any taxing authority with respect to
liabilities or obligations for Taxes with respect to the
Company which has not been fully paid or finally settled,
and any such deficiency or assessment shown in Schedule
3(n)(iv) hereto is being contested in good faith through
appropriate proceedings. The Company has not given any out
standing waivers or comparable consents extending the
application of the statute of limitations with respect to
any Taxes or Tax Returns with respect to the Company.
(v) The Company has complied in all material re
spects with all applicable laws, rules and regulations
relating to the payment and withholding of payroll and
employment taxes and have, within the time and in the manner
prescribed by law, withheld from employee wages and paid
over to the proper governmental authorities all material
payroll and employment taxes required to be so withheld and
paid over.
(vi) No audit or other administrative proceeding
or court proceeding which is material to the financial
condition of Company is presently pending with regard to any
Taxes or Tax Returns.
(vii) The amount and character of the tax loss
carryforwards as set forth in the Company's financial
statements for the year ending June 30, 1995 are materially
accurate and, to the Company's best knowledge, are not sub
ject to any "Section 382 limitation" under Section 382 of
the Code, and any regulations promulgated thereunder. To
the Company's best knowledge, at the Closing Date, the issu
ance of the Preferred Shares, the Warrants and the Fee
Warrants in accordance with the terms of this Agreement and
the Related Agreements will not result in an "ownership
change" under Section 382 of the Code, and any regulations
promulgated thereunder. As of the Closing Date, the Company
shall not have any plan or intention to take any action
after the Closing Date, which to its best knowledge would
result in an "ownership change" under Section 382 of the
Code and any regulations promulgated thereunder.
(viii) For purposes of this Agree
ment, "Taxes" shall mean any and all taxes, charges, fees,
levies or other like assessments (and all related interest,
additions to tax and penalties), including, but not limited
to, income, transfer, gains, gross receipts, excise,
inventory, property (real, personal or intangible), custom,
duty, sales, use, license, withholding, payroll, employment,
capital stock and franchise taxes, imposed by the United
States, or any state, local or foreign taxing authority,
whether computed on a unitary, combined or any other basis
and "Tax Return" shall mean any report, return or other
information filed with any taxing authority with respect to
Taxes imposed upon or attributable to the operations of the
Company.
(o) ERISA. Section 3(o) of the Disclosure Schedule
contains a true and complete list of each employee benefit plan,
as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and any other bonus,
severance or termination pay, stock option or stock purchase,
incentive pay or other plan, program or arrangement covering
present or former employees of the Company which is maintained or
contributed to by the Company or any of its subsidiaries (the
"Plans"). None of the Plans is subject to the provisions of
Title IV of ERISA, and none of the Plans is a multiemployer Plan
as defined in Section 3(37) of ERISA (a "Multiemployer Plan").
The Company has not incurred (directly or indirectly) any liabili
ty to the Pension Benefit Guaranty Corporation or with respect to
a Multiemployer Plan. None of the Plans is subject to the
minimum funding standards set forth in Section 302 of ERISA or
Section 412 of the Internal Revenue Code of 1986, as amended (the
"Code"). None of the Company or any of its officers or employees
has engaged in a "prohibited transaction" as defined in Section
406 of ERISA or Section 4975 of the Code with respect to any Plan
which would subject any of such parties to a civil penalty under
Section 502(i) of ERISA or an excise tax under Section 4975 of
the Code. Each of the Plans has been operated in all material
respects in accordance with applicable law, including ERISA and
the Code. None of the Plans is an employee welfare plan, as
defined in Section 3(1) of ERISA, which provides health or life
insurance benefits to employees of the Company following their
retirement (other than coverage mandated by applicable law).
Each Plan that is intended to be qualified under Section 401(a)
of the Code is so qualified.
(p) Absence of Specified Changes. Except as set
forth in Section 3(p) of the Disclosure Schedule, during the
period from June 30, 1995 to the date hereof, there has not been
any:
(1) material adverse change in the business,
condition or results of operations of the Company;
(2) transactions involving the Company except in
the ordinary course of business;
(3) change in accounting principles, methods or
practices of the Company;
(4) amendment to the Certificate of Incorporation
or By-Laws of the Company; or
(5) agreement or understanding to take any of the
actions described above in this paragraph.
(q) Certain Fees. No broker's, finder's or xxxxx
cial advisory fees or commissions will be payable by the Company
with respect to the transactions contemplated by this Agreement
and the Related Agreements.
(r) Use of Proceeds. The Company will apply the
proceeds from the sale of the Series G Preferred Shares and the
New Warrants to general working capital purposes.
(s) Intellectual Property Rights.
(i) The Company is the owner of or has rights to
use (including the right to xxx for past infringement) the
intellectual and similar property of every kind and nature
used at any time in or necessary for the conduct of its busi
ness, including without limitation, (A) Patents (meaning all
United States and foreign patents and patent applications,
patent disclosures and inventions, and all patents issued
upon said patent applications or based upon said disclosures
and inventions, including all reissues, divisions, continua
tions, continuations-in-part, substitutions, extensions or
renewals of any of the foregoing), (B) Trademarks (meaning
all United States, any political subdivision thereof, and
foreign trademarks, service marks, trade names, corporate
names, company names, business names, fictitious business
names, trade styles, logos, designs and general intangibles
of like nature, all registrations and recordings thereof,
and all applications in connection therewith, including
registrations, recordings and applications in the United
States Patent and Trademark Office (the "PTO"), any State of
the United States or any other country or jurisdiction or
any political subdivision thereof, and all goodwill symbol
ized thereby and/or associated therewith and all extensions
or renewals thereof,), (C) Copyrights (meaning all copy
rights, United States and foreign copyright registrations,
and applications to register copyrights), (D) inventions,
formulae, processes, designs, know-how, show-how or other
data or information, (E) confidential or proprietary techni
cal and business information, processes and trade secrets,
(F) computer software and databases (including all embodi
ments or fixations thereof and related documentation, regis
trations and franchises, and all additions, improvements, en
hancements, updated and accessions thereto), (G) all tech
nical manuals and documentation made or used in connection
with any of the foregoing, and (H) all licenses and rights
with respect to the foregoing or property of like nature, in
each case as any of the foregoing have been at any time used
in or necessary for the conduct of the business of the
Company (collectively, the "Intellectual Property Rights").
(ii) Section 3(s)(ii) of the Disclosure Schedule
sets forth a complete and accurate list of all Copyrights,
Patents, and Trademarks owned by or under obligation of as
signment to the Company. Each owner identified thereon is
listed in the records of the appropriate United States,
State or foreign agency as the sole owner of record.
(iii) Section 3(s)(iii) of the Disclosure
Schedule sets forth a complete and accurate list of (a) all
material agreements and (b) all other agreements entered
into since January 1, 1990, in each case between the Company
and any third party granting any right to use or practice
any rights under any Intellectual Property Right (col
lectively, the "Intellectual Property Licenses"), except for
single-user licenses granting the right to use on a single
personal computer a single copy of application software
incorporating any of the Company's Intellectual Property
Rights.
(iv) There is no restriction or limitation on the
right of the Company to transfer any of the Intellectual
Property Rights.
(v) No trade secret, formula, process, invention,
design, know-how, show-how or any other confidential
information relating to the Company's business has been dis
closed or authorized to be disclosed to any third party
unless any such third party has entered into, or is bound
by, a confidentiality agreement that is sufficient to
protect fully the Company's proprietary interest and right
in and to such Intellectual Property Right.
(vi) The use of the Intellectual Property Rights
by the Company is not in conflict with the rights of others.
There are no pending legal or governmental proceedings,
including oppositions, interferences, proceedings or suits,
relating to the Intellectual Property Rights, and, to the
best knowledge of the Company, no such proceedings are
threatened. To the best knowledge of the Company, the con
duct of the business of the Company and the exercise of the
Intellectual Property Rights does not infringe upon or other
wise violate, and the exercise of any rights granted to the
Company under any Intellectual Property License would not in
fringe upon or violate any intellectual property rights of
any third party. To the best knowledge of the Company,
except as set forth in Section 3(s)(vi), no person is in
fringing upon or otherwise violating any of the Intellectual
Property Rights. None of the Company or its affiliates has
received notice of any claims, and there are no pending
claims, of any persons relating to the scope, ownership or
use of any of the Intellectual Property Rights.
(vii) Each copyright registration, patent, and
registered trademark and application therefor listed in
Section 3(s)(ii) of the Disclosure Schedule is valid, sub
sisting and in proper form, and has been duly maintained, in
cluding the submission of all necessary filings in accor
dance with the legal and administrative requirements of the
appropriate jurisdictions. There have been no failures in
complying with such requirements. Except as provided in
Section 3(s)(ii) of the Disclosure Schedule, no such Copy
right, Patent or Trademark has lapsed and there has been no
cancellation or abandonment thereof.
(viii) With respect to each patent and patent
application listed in Section 3(s) of the Disclosure
Schedule, there are no defects of form in the preparation or
filing of the applications thereof. Each pending appli
cation is being diligently prosecuted. During the prose
cution of each Patent, (A) all pertinent prior art referenc
es known to the Company or its counsel was properly dis
closed to the PTO, and (B) neither such counsel nor the
Company made any misrepresentation to, or concealed any
material fact from, the PTO.
(ix) The execution and delivery of this Agreement
and the Related Agreements and the taking of the actions
contemplated hereby and thereby will not alter any of the
rights of the Company in or to the Intellectual Property
Rights.
(t) Environmental Matters. The Company is in
compliance with the provisions of all federal, state and local
laws relating to pollution or protection of the environment
applicable to it or to real property leased by it or to the use,
operation or occupancy thereof, except for violations or
liabilities which individually or in the aggregate could not
reasonably be expected to have a Company Material Adverse Effect.
The Company has not engaged in any activity in violation of any
provision of any federal, state or local law relating to
pollution or protection of the environment, which violation could
reasonably be expected to have a Company Material Adverse Effect.
The Company has no liability, absolute or contingent, under any
federal, state or local law relating to pollution or protection
of the environment, except for liabilities which individually or
in the aggregate could not reasonably be expected to have a
Company Material Adverse Effect.
(u) Registration Rights. Except as set forth in
Section 3(u) of the Disclosure Schedule, the Company is not a
party to any agreement granting registration rights to any person
with respect to any of its equity or debt securities.
(v) Agreements. Section 3(v) of the Disclosure
Schedule contains a list of each agreement or instrument (includ
ing any and all amendments thereto) to which the Company is a
party as of the date hereof and which is or, immediately
following the consummation of the transactions contemplated by
this Agreement, will be, material to the business, condition or
results of operations of the Company. Each such agreement or in
strument (including any and all amendments thereto) is in full
force and effect and constitutes a legal, valid and binding
obligation of (i) the Company and (ii) to the best knowledge of
the Company, the other respective parties thereto, and, to the
best knowledge of the Company, no person is in default or breach
of (with or without the giving of notice or the passage of time)
any such agreement or instrument.
(w) Availability of Documents. Section 3(w) of the
Disclosure Schedule contains a true, correct and complete copy of
the Company's Certificate of Incorporation, together with all
amendments thereto. The Company has also heretofore provided or
made available to the Purchaser an accurate copy of its by-laws
and has heretofore made available for inspection by the Purchaser
all written agreements, arrangements, commitments and documents
referred to herein or in the Disclosure Schedule, in each case,
together with all amendments and supplements thereto. The
Company has heretofore made available for inspection by the
Purchaser its corporate minute books. Such corporate minute
books contain the minutes of all the meetings of stockholders,
board of directors and any committees thereof which have been
held since the Company's date of incorporation and all written
consents to action executed in lieu thereof.
Business Relations. To the knowledge of the Company,
no client, customer or supplier will cease to do business with
the Company due to the consummation of the transactions
contemplated by this Agreement or the Related Agreements.
(y) Interest in Competitors, Suppliers, Customers,
etc. Except as set forth on Section 3(y) of the Disclosure
Schedule or with respect to the ownership of less than 1% of the
outstanding publicly traded securities of an entity, neither the
Company nor its officers, directors, or affiliates have any
ownership interest in any competitor, supplier, customer or xxxx
chisee of the Company.
(z) Private Offering. Assuming the accuracy of the
Purchaser's representations set forth in Section 4(c) herein, the
offer and sale of the Series G Preferred Shares and the New
Warrants hereunder is exempt from the registration and prospectus
delivery requirements of the Securities Act. Neither the Company
nor any person acting on behalf of it has taken or will take any
action which would subject the offering and issuance of any of
such securities to the provisions of Section 5 of the Securities
Act or to the provisions of any securities law, rule or
regulation of any applicable jurisdiction.
(aa) Disclosure. No representation or warranty to
Purchaser contained in this Agreement and no statement contained
in the Disclosure Schedule or any Officer's Certificate of the
Company furnished pursuant to the provisions hereof, contains any
untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained therein
not misleading.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
Each Purchaser represents and warrants, severally and
not jointly, to the Company as follows:
(a) Organization and Standing of the Purchasers.
The Purchaser is a partnership duly organized, validly existing
and in good standing (to the extent such concept exists) under
the laws of the jurisdiction of its organization.
(b) Authority; Enforceability; No Conflict. The
Purchaser has all requisite power and authority (corporate or
otherwise) to enter into this Agreement and to carry out its
obligations hereunder. The execution, delivery and performance
of this Agreement by the Purchaser have been duly and validly
authorized by all requisite partnership proceedings on the part
of the Purchaser. This Agreement is a valid and binding obliga
tion of the Purchaser, enforceable against it in accordance with
its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium, rehabili
tation, liquidation, conservatorship, receivership or other
similar laws now or hereafter in effect relating to creditors'
rights generally and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought. The execution and
delivery of this Agreement by the Purchaser do not, and consumma
tion by the Purchaser of the transactions contemplated hereby
will not, result in or constitute (i) a default, breach or
violation of or under the organizational documents of the
Purchaser, or (ii) a default, breach or violation of or under any
mortgage, deed of trust, indenture, note, bond, license, lease
agreement or other instrument or obligation to which the
Purchaser is a party or by which any of its properties or assets
are bound, except for any defaults, breaches or violations which
would not, individually or in the aggregate, have a material
adverse effect on the Purchaser or prevent or materially delay
the consummation by the Purchaser of the transactions
contemplated hereby, or (iii) a violation of any statute, rule,
regulation, order, judgment or decree of any court, public body
or authority, except for any violations which would not,
individually or in the aggregate, have a material adverse effect
on the Purchaser or prevent or materially delay the consummation
by the Purchaser of the transactions contemplated hereby.
(c) Acquisition for Investment. The Purchaser is
either an "accredited investor," as that term is defined in
230.501(a) of the rules and regulations promulgated by the SEC
under the 1933 Act or a person described in 230.506(b)(ii) of
such rules and regulations. The Purchaser is acquiring the
Series G Preferred Shares and the New Warrants solely for its own
account for the purpose of investment and not with a view to or
for sale in connection with any distribution thereof, and has no
present intention or plan to effect any distribution of such
Series G Preferred Shares or the New Warrants. The Purchaser ac
knowledges that it is able to bear the financial risks associated
with an investment in the Series G Preferred Shares and New War
rants. The Series G Preferred Shares and New Warrants may bear a
legend to the following effect:
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE IN RELIANCE
ON CERTAIN EXEMPTIONS FROM REGISTRATION
THEREUNDER. THE SALE, PLEDGE, HYPOTHECATION
OR OTHER TRANSFER OF SUCH SECURITIES IS
SUBJECT TO COMPLIANCE WITH APPLICABLE
SECURITIES LAWS AND REGULATIONS AND CERTAIN
RESTRICTIONS AND CONDITIONS CONTAINED IN A
CERTAIN SECURITIES PURCHASE AGREEMENT AND RE
LATED AGREEMENTS DATED AS OF MARCH 7, 1996.
THE HOLDER OF THIS CERTIFICATE BY ACCEPTANCE
HEREOF AGREES TO BE BOUND BY SUCH RESTRIC
TIONS AND CONDITIONS. A COPY OF THE
SECURITIES PURCHASE AND EXCHANGE AGREEMENT IS
ON FILE WITH THE SECRETARY OF THE COMPANY."
6. CONDUCT OF BUSINESS OF THE COMPANY.
Except as expressly contemplated by this Agreement or
the Related Agreements, during the period from the date hereof
through the Closing, the Company will conduct its operations ac
cording to its ordinary course of business and consistent with
past practice, and the Company will use its best efforts to pre
serve intact its business organization, to keep available the
services of its officers and employees and to maintain existing
relationships with customers and others having business relation
ships with it. Without limiting the generality of the foregoing,
and except as otherwise expressly contemplated by this Agreement
or the Related Agreements or as set forth in Section 5 of the Dis
closure Schedule, prior to the Closing, the Company will not,
without the prior written consent of the Purchaser:
(a) amend its Certificate of Incorporation or By-
Laws;
(b) (i) except in accordance with the existing terms
of the convertible securities, warrants, options and other
agreements disclosed on Section 3(c) of the Disclosure Schedule,
authorize for issuance, issue, sell, deliver or agree or commit
to issue, sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights
to purchase or otherwise) any securities of any class, or (ii)
amend in any respect any of the terms of any such securities
outstanding as of the date hereof, except to the extent required
by the express terms on the date hereof of such securities;
(c) split, combine or reclassify any shares of its
capital stock, declare, set aside or pay any dividend or other
distribution (whether in cash, stock, or property or any
combination thereof) in respect of its capital stock (except for
dividends on the existing preferred stock in accordance with its
terms), or redeem, retire, repurchase or otherwise acquire,
directly or indirectly, any of its securities or adopt a plan of
complete or partial liquidation or resolutions providing for or
authorizing any such liquidation;
(d) incur any additional Indebtedness, except for
short-term borrowings or other Indebtedness incurred in the
ordinary course of business, or mortgage or pledge any of its
assets, tangible or intangible;
(e) acquire, sell, lease or dispose of any assets
outside the ordinary course of business;
make any change in any of the accounting principles
or practices, methods or practices or business policies used by
it;
(g) acquire (by merger, consolidation, or acqui
sition of stock or assets) any corporation, partnership or other
business organization or division thereof;
(h) pay, discharge or satisfy any claims, lia
bilities or obligations (absolute, accrued, contingent or
otherwise), other than the payment, discharge or satisfaction in
the ordinary course of business consistent with past practice or,
in accordance with their terms, of liabilities reflected or
reserved against in the September Balance Sheet (or the notes
thereto) or incurred in the ordinary course of business
consistent with past practice;
(i) increase the compensation payable to the
officers and employees of the Company, except for increases in
salary or wages (a) in accordance with past practice or (b) in
conjunction with promotions or other changes in job status in the
ordinary course of business;
(j) pay, loan or advance any amounts to, transfer or
lease any properties or assets to or enter into any contract or
agreement with any officers, directors, employees or shareholders
of the Company, except with respect to directors' fees and compen
sation to officers and employees at rates in accordance with past
practice, and except with respect to reimbursable business
expenses of a nature and in amounts reasonably related to the
requirements of the business of the Company;
(k) waive or release any rights of material value or
terminate or fail to renew any material contract; or
(l) take, or agree in writing or otherwise to take,
directly or indirectly, any of the actions described in Sections
5(a) through 5(k).
ADDITIONAL AGREEMENTS.
(a) Access to Information; Confidentiality. From
the date hereof to the Closing, the Company shall afford the offi
cers, employees and agents of the Purchaser access during normal
business hours to the Company's officers, employees, agents, prop
erties, offices and all books and records of the Company, and
shall furnish the Purchaser with all financial, operating and
other data and information concerning the Company as the Purchas
er, through its officers, employees or agents, may request and
shall cooperate fully with the Purchaser and its representatives
in their examination of the Company.
The Purchaser will, and will cause its affiliates,
partners, directors, officers, employees, agents, representatives
and financial advisors (collectively, "Representatives") to, hold
in strict confidence all Confidential Information (as hereinafter
defined), and not disclose the same to any person without the
prior consent of the Company, unless compelled to disclose any
such Confidential Information by judicial or administrative
process or, in the written opinion of their counsel, by other
requirements of law. Prior to disclosing any Confidential
Information to any such person, the Purchaser will inform such
person and its representatives of the confidential nature thereof
and will obtain from such person its agreement to be bound by the
provisions of this paragraph as if references herein to the
Purchaser were references to such person. If this Agreement is
terminated, the Purchaser will promptly return to the Company or
destroy all documents (including all copies thereof) furnished by
the Company and received by the Purchaser or any of its
Representatives containing such Confidential Information. For
purposes hereof, "Confidential Information" shall mean all confi
dential nonpublic information concerning the Company that the
Purchaser obtains from the Company, or its representatives,
excluding any such information that subsequently becomes publicly
available (other than directly or indirectly through acts of the
Purchaser.)
(b) Best Efforts. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to
use its best efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, all things reasonably necessary,
proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by
this Agreement and the Related Agreements as promptly as practi
cable. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this
Agreement and the Related Agreements, the proper officers and
directors of each party hereto shall take all such necessary
action.
(c) Public Announcements. The Purchaser and the
Company will consult with each other before issuing any press
release or otherwise making any public statements with respect to
the transactions contemplated by this Agreement and the Related
Agreements, and shall not issue any such press release or make
any such public statement prior to such consultation, except as
may be required by applicable law. Except as may be required by
applicable law, the Company shall not disclose the identify of
the Purchaser in any such press release or other public statement
without the prior written consent of the Purchaser.
(d) Supplements to Disclosure Schedule. Prior to
the Closing, the Company will supplement or amend the Disclosure
Schedule with respect to any matter hereafter arising which, if
existing or occurring at the date of this Agreement, would have
been required to be set forth or described in the Disclosure
Schedule. No supplement or amendment of the Disclosure Schedule
made pursuant to this section shall be deemed to cure any breach
of any representation or warranty made in this Agreement unless
the Purchaser specifically agrees thereto in writing.
(e) Directors. For so long as the Purchaser and its
affiliates shall own, in the aggregate, Common Stock (or Pre
ferred Stock convertible into Common Stock) equal to or exceeding
five percent of the then outstanding Common Stock of the Company,
the Purchaser and its affiliates shall be entitled to propose two
candidates (the "Purchaser Designees") for election to the Board
of Directors of the Company. Subject to its fiduciary duties to
shareholders, the Company will recommend to its shareholders that
the Purchaser Designees be elected to the Company's Board of
Directors.
8. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE
COMPANY TO SELL THE PREFERRED SHARES AND WARRANTS AND OF THE
PURCHASERS TO PURCHASE THE PREFERRED SHARES AND WARRANTS.
The respective obligations hereunder of the Company to
issue and sell the Series G Preferred Shares and New Warrants and
of the Purchaser to purchase the Series G Preferred Shares and
New Warrants are subject to the satisfaction, at or before the
Closing, of each of the following conditions set forth in
paragraphs (a) through (c) below.
(a) Consents. The consents and approvals set forth
in Section 3(b) of the Disclosure Schedule shall have been
obtained.
(b) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or enforced by any court or
governmental authority of competent jurisdiction which prohibits
the consummation of any of the transactions contemplated by this
Agreement.
(c) Related Agreements. The Related Agreements
shall have been executed and delivered by the parties thereto.
9. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE
COMPANY TO SELL THE PREFERRED SHARES AND WARRANTS.
The obligation hereunder of the Company to sell the
Series G Preferred Shares and New Warrants to the Purchaser is
further subject to the satisfaction, at or before the Closing, of
each of the following conditions set forth in paragraphs (a) and
(b) below. These conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole
discretion.
Accuracy of the Purchaser's Representations and
Warranties. The representations and warranties of the Purchaser
shall be true and correct in all material respects as of the date
when made and as of the Closing as though made at that time
(except for representations and warranties that speak as of a
particular date).
(b) Performance by the Purchaser. The Purchaser
shall have performed, satisfied and complied in all material re
spects with all covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the
Purchaser at or prior to the Closing.
10. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE
PURCHASER TO PURCHASE THE PREFERRED SHARES AND
WARRANTS.
The obligation of the Purchaser hereunder to acquire
and pay for the Series G Preferred Shares and New Warrants is sub
ject to the satisfaction, at or before the Closing, of each of
the following conditions set forth in paragraphs (a) through (e)
below. These conditions are for the Purchaser's sole benefit and
may be waived by the Purchaser at any time in its sole
discretion.
(a) Accuracy of the Company's Representations and
Warranties. The representations and warranties of the Company
shall be true and correct in all material respects as of the date
when made and as of the Closing as though made at that time
(except for representations and warranties that speak as of a
particular date).
(b) Performance by the Company. The Company shall
have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing.
Legal Opinions. The Purchaser shall have received
the opinion of Xxxx Marks & Xxxxx, substantially in the form set
forth in Exhibit V hereto.
(d) Compliance with Securities Laws. The offering
and sale by the Company, at or prior to the Closing, of the
Series G Preferred Shares and New Warrants shall have been made
in compliance with all applicable requirements of federal and
state securities laws and each Purchaser shall have received
evidence thereof in form and substance reasonably satisfactory to
it.
(e) No Offerings. Neither the Company nor any of
its subsidiaries shall have offered, placed or sold, or caused or
agreed to be offered, placed or sold, any securities or other
obligations other than as part of the contemplated sale of the
Series G Preferred Shares and New Warrants and the capital struc
ture as reflected herein.
(f) Regulatory Approvals. All regulatory approvals
shall have been obtained by the Purchaser.
11. TERMINATION.
(a) Right To Terminate. Notwithstanding anything to
the contrary set forth in this Agreement, this Agreement may be
terminated and the transactions contemplated herein abandoned at
any time prior to the Closing:
(i) at any time by mutual written consent of the
Company and the Purchaser;
(ii) by either the Company or the Purchaser if
the Closing shall not have occurred by April 1, 1996; provided,
however, that the right to terminate this Agreement under this
Section 10(a)(ii) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of the Closing to occur
on or before such date; or
(iii) by either the Company or the Purchaser if a
court of competent jurisdiction shall have issued an order,
decree or ruling permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement, and
such order, decree, ruling or other action shall have become
final and nonappealable.
(b) Obligations to Cease. In the event that this
Agreement shall be terminated pursuant to Section 10(a) hereof,
all obligations of the parties hereto under this Agreement shall
terminate and there shall be no liability of any party hereto to
any other party except that (i) the provisions of the second para
graph of Section 6(a), Section 11, and Section 12(g) shall
survive, and shall be and remain in full force and effect and
(ii) nothing herein will relieve any party from liability for any
willful breach of this Agreement.
12. INDEMNIFICATION.
(a) General Indemnity. The Company agrees to
indemnify and save harmless the Purchaser (and its directors,
officers, partners, affiliates, representatives, advisors,
successors and assigns) from and against any and all losses,
liabilities, deficiencies, costs, damages and expenses (includ
ing, without limitation, interest, penalties, reasonable
attorneys' fees, charges and disbursements) incurred by the Pur
chaser as a result of (i) any breach of the representations, war
ranties or covenants made by the Company herein or in the Related
Agreements or (ii) any action, proceeding or claim commenced or
threatened by a third party in connection with this Agreement,
the Related Agreements and the transactions contemplated hereby
and thereby. The Purchaser agrees to indemnify and save harmless
the Company (and its directors, officers, partners, affiliates,
representatives, advisors, successors and assigns) from and
against any and all losses, liabilities, deficiencies, costs,
damages and expenses (including, without limitation, interest,
penalties, reasonable attorneys' fees, charges and disbursements)
incurred by the Company as a result of any breach of the
representations, warranties or covenants made by the Purchaser
herein or in the Related Agreements. No party shall be entitled
to indemnification hereunder unless and until the aggregate
amount of such party's indemnification claims exceeds $15,000 and
then to the full extent of such claims.
(b) Indemnification Procedure. Any party entitled
to indemnification under this Section 11 (an "indemnified party")
will give prompt written notice to the indemnifying party of any
claim with respect to which it seeks indemnification promptly
after the discovery by such party of any matters giving rise to a
claim for indemnification; provided that the failure of any party
entitled to indemnification hereunder to give notice as provided
herein shall not relieve the indemnifying party of its obliga
tions under this Section 11 except to the extent that the
indemnifying party is actually prejudiced by such failure to give
notice. In case any action, proceeding or claim is brought
against an indemnified party in respect of which indemnification
is sought hereunder, the indemnifying party shall be entitled to
participate in and, unless in the reasonable judgment of the
indemnified party a conflict of interest between it and the
indemnifying party may exist in respect of such action,
proceeding or claim, to assume the defense thereof, with counsel
reasonably satisfactory to the indemnified party. In the event
that the indemnifying party advises an indemnified party that it
will contest such a claim for indemnification hereunder, or
fails, within thirty (30) days of receipt of any indemnification
notice to notify, in writing, such person of its election to
defend, settle or compromise, at its sole cost and expense, any
action, proceeding or claim (or discontinues its defense at any
time after it commences such defense), then the indemnified party
may, at its option, defend, settle or otherwise compromise or pay
such action or claim. In any event, unless and until the
indemnifying party elects in writing to assume and does so assume
the defense of any such claim, proceeding or action, the
indemnified party's costs and expenses arising out of the
defense, settlement or compromise of any such action, claim or
proceeding shall be losses subject to indemnification hereunder.
The indemnified party shall cooperate fully with the indemnifying
party in connection with any negotiation or defense of any such
action or claim by the indemnifying party and shall furnish to
the indemnifying party all information reasonably available to
the indemnified party which relates to such action or claim. The
indemnifying party shall keep the indemnified party fully
apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. If the indemni
fying party elects to defend any such action or claim, then the
indemnified party shall be entitled to participate in such
defense with counsel of its choice at its sole cost and expense.
The indemnifying party shall not be liable for any settlement of
any action, claim or proceeding effected without its written
consent, provided, however, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent. Anything
in this Section 11 to the contrary notwithstanding, the
indemnifying party shall not, without the indemnified party's
prior written consent, settle or compromise any claim or consent
to entry of any judgment in respect thereof which imposes any
future obligation on the indemnified party or which does not
include, as an unconditional term thereof, the giving by the
claimant or the plaintiff to the indemnified party of a release
from all liability in respect of such claim. The indemnification
required by this Section 11 shall be made by periodic payments of
the amount thereof during the course of the investigation or
defense, as and when bills are received or expense, loss, damage
or liability is incurred. The indemnity agreements contained
herein shall be in addition to (i) any cause of action or similar
right of the indemnified party against the indemnifying party or
others, and (ii) any liabilities the indemnifying party may be
subject to pursuant to the law.
13. MISCELLANEOUS.
(a) Brokers. The Company and the Purchaser
represent and warrant to each other that they have not taken any
action which will result in any liability of the other to pay any
broker's or finder's fee with respect to this Agreement or the
transactions contemplated hereby.
(b) Expenses. Each party hereto shall pay its own
fees and expenses incurred in connection with this Agreement
except that, simultaneously with the closing of the purchase of
the Series G Preferred Shares, the Company shall pay the reason
able out-of-pocket fees and expenses, up to a maximum amount of
$10,000, incurred by the Purchaser in connection with this Agree
ment, the Related Agreements and the transactions contemplated
hereby and thereby, including the reasonable fees and expenses of
Skadden, Arps, Slate, Xxxxxxx & Xxxx in its capacity as
Purchasers' legal counsel.
(c) Survival of Representations, Warranties and
Covenants. The representations and warranties set forth herein
shall survive the Closing until sixty days after the Company
shall have delivered to the Purchaser the audited financial
statements of the Company and its consolidated subsidiaries (if
any) for the fiscal year ended June 30, 1997, certified by the
Company's independent public accountants; provided that the repre
sentations and warranties shall survive such date to the extent
written notice of any breach thereof is given on or prior to such
date and representations and warranties relating to Taxes shall
survive until a date which is six months after the expiration of
the applicable statute of limitations. The covenants of the
Company set forth herein shall endure for so long as the
Purchaser shall continue as a stockholder of the Company or for
such shorter period as may be specified herein.
(d) Assignment and Binding Effect. Neither the
Company nor the Purchaser shall assign all or any part of this
Agreement without the prior written consent of the other;
provided, however, that the Purchaser, without such prior written
consent, may assign its rights hereunder to any entity or
entities directly or indirectly controlled by, or under common
control with, it; provided, further, that no such assignment
shall relieve the Purchaser of its obligations under this
Agreement. This Agreement shall be binding upon and inure to the
benefit of the permitted successors and assigns of the parties
pursuant to this paragraph.
(e) Headings. Subject headings are included for
convenience only and shall not affect the interpretation of any
provisions of this Agreement.
(e)
(f) Notices. Any notice, demand, request, waiver,
or other communication under this Agreement shall be in writing
and shall be deemed to have been duly given on the date of
service if personally served or on the third day after mailing if
mailed to the party to whom notice is to be given, by first class
mail, registered, return receipt requested, postage prepaid and
addressed as follows:
To the Company: Xxxxxx, Inc.
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Chief Executive Officer
With copies to: Xxxx Marks & Xxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
To the Wand (Xxxxxx) Inc.
Purchaser: c/o Wand Partners Inc.
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
With a copy to: Skadden,
Arps, Slate,
Xxxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-
3897
Attention: Xxxxx X. Xxxxx, Esq.
(g) Governing Law. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE
STATE OF DELAWARE AS APPLIED TO CONTRACTS MADE AND TO BE PER
FORMED ENTIRELY IN THE STATE OF DELAWARE.
(h) Entire Agreement. This Agreement, including the
Exhibits and Schedules hereto, sets forth the entire under
standing and agreement of the parties hereto relating to the
matters set forth herein and supersedes any and all other under
standings, negotiations or agreements between the parties hereto
relating to the matters set forth herein.
(i) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all
of which together shall constitute a single agreement.
(j) Severability. In the event that any one or more
of the provisions contained in this Agreement shall for any
reason be held to be invalid, illegal or unenforceable, the same
shall not affect any other provision of this Agreement, but this
Agreement shall be construed in a manner which, as nearly as
possible, reflects the original intent of the parties.
(k) Words in Singular and Plural Form. Words used
in the singular form in this Agreement shall be deemed to import
the plural, and vice versa, as the sense may require.
(l) Amendment and Modification. This Agreement may
be amended or modified only by written agreement executed by all
parties hereto.
(m) Waiver. At any time prior to the Closing, any
party hereto may (i) extend the time for the performance of any
of the obligations or other acts of any other party hereto, (ii)
waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto,
and (iii) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed by the party
granting such waiver but such waiver or failure to insist upon
strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or future failure.
(n) Specific Enforcement. The Purchaser and the
Company acknowledge and agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were
not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the
United States or any state thereof having jurisdiction, this
being in addition to any other remedy to which they may be enti
tled at law or equity.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first set forth above.
XXXXXX, INC.
By: /s/ Xxxxx Xxx
Name: Xxxxx Xxx
Title: President and Chief
Executive Officer
WAND/XXXXXX INVESTMENTS L.P.
By: WAND (XXXXXX) INC.
as General Partner
By: /s/ Xxxxxxx X. Xxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxx
Title: Vice President
[155176.03 s2a]
SCHEDULE I
SECURITIES TO BE PURCHASED BY WAND/XXXXXX INVESTMENTS L.P.
Security Purchase Price
777 Shares of Series G Pre $777,000
ferred Stock (together with
detachable Warrants to pur
chase 225,330 shares of Common
Stock)
