EXHIBIT 4.7
AMENDMENT #5
TO THE SCANSOFT SHARE PURCHASE AGREEMENT
This Amendment #5 is entered into as of this 30th day of September, 2002
("Effective Date") by and between ScanSoft, Inc., a Delaware corporation, having
its principal offices at ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Company") and
the purchasers listed on Schedule A attached hereto ("Purchaser").
Whereas, Company and Purchaser have entered into a Share Purchase Agreement
effective December 13, 2001 as amended by Amendment #1 dated March 12, 2002,
Amendment #2 dated July 22, 2002, Amendment #3 dated August 14, 2002, and
Amendment #4 dated September 13, 2002 (the "Original Agreement");
Whereas, Company and Purchaser wish to amend the Original Agreement;
IT HAS BEEN AGREED AS FOLLOWS:
1. Section 7.1.2 shall be deleted in its entirety and replaced with the
following:
In the event that the Registration Statement is not filed with the
Securities and Exchange Commission ("SEC") on or before October 21, 2002
the Company shall pay to each Purchaser liquidated damages in an amount
equal to 0.35% of the total purchase price of the Shares purchased by such
Purchaser pursuant to this Agreement for each week after October 21, 2002
that the Registration Statement is not filed with the SEC. Further, if
after filing the Registration Statement, the Registration Statement is not
declared effective on or before November 15, 2002, the Company shall pay
to each Purchaser liquidated damages in an amount equal to 0.35% of the
total purchase price of the Shares purchased by such Purchaser pursuant to
this Agreement for each week after November 15, 2002 that the Registration
Statement is not declared effective.
2. It is agreed to incorporate this Amendment #5 into the Original Agreement
on the Effective Date of this Amendment #5.
IN WITNESS WHEREOF, the parties to this Agreement have caused this Agreement to
be executed by their duly authorized representatives as of the day and year
first above written.
SCANSOFT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Its: SVP & CFO
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STATE OF WISCONSIN INVESTMENT BOARD
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇
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Its: Investment Director
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ScanSoft Share Purchase Agreement Page 1
AMENDMENT 5
SCHEDULE A
PURCHASERS
State of Wisconsin Investment Board
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
ScanSoft Share Purchase Agreement Page 2
AMENDMENT 5
SCANSOFT SHARE PURCHASE AGREEMENT
This SHARE PURCHASE AGREEMENT (this "Agreement"), is made and entered into as
of December 13, 2001, by and among SCANSOFT, INC., a Delaware corporation (the
"Company"), and the purchasers listed on Schedule A attached hereto
(collectively, the "Purchasers" and individually, a "Purchaser").
1. AUTHORIZATION OF SALE OF THE SHARES
Subject to the terms and conditions of this Agreement, the Company has
authorized the sale of up to 3,500,000 shares (the "Shares") of common stock,
par value $0.001 per share (the "Common Stock"), of the Company.
2. AGREEMENT TO SELL AND PURCHASE THE SHARES
2.1 PURCHASE AND SALE
Subject to the terms and conditions of this Agreement, each Purchaser
severally agrees to purchase, and the Company agrees to sell and issue to each
Purchaser, at the Closing (as defined below) that number of Shares set forth
opposite such Purchaser's name on Schedule A attached hereto.
2.2 PURCHASE PRICE
The purchase price of each Share shall be $3.10 (the "Per Share Price"). The
Company shall not, during the period beginning on the date of this Agreement and
ending ninety (90) days after the Closing Date (as defined below), without
adjusting the price per Share hereunder accordingly, sell (i) Shares at a price
per Share of less than the Per Share Price, or (ii) options, warrants or any
other securities that can be converted into, or otherwise exchanged for, shares
of the Company's common stock at a conversion, exchange or exercise price per
Share of less than the Per Share Price (excluding (w) 272,373 shares of Common
Stock of the Company issued to Bear, ▇▇▇▇▇▇▇ & Co. Inc. at $2.57 (x) 7,400,000
shares of Common Stock of the Company issued in connection with the acquisition
of the assets of the Speech and Language Technologies business of Lernout &
Hauspie Speech Products N.V. and L&H Holdings USA, Inc., which, based on the
November 26, 2001 closing price of $3.52 per share, is valued at $26 million,
(y) shares of Company capital stock issued upon exercise or conversion of
securities of the Company outstanding on the date hereof, and (z) options to
purchase Common Stock of the Company issued to employees of the Company granted
in the ordinary course of business at 100% of the fair market value of the
Common Stock and shares issued upon exercise thereof). In the event the Company
shall, during the period beginning on the date of this Agreement and ending
ninety (90) days after the Closing Date, sell any shares of the Company's common
stock at, or any instruments that can be converted into or otherwise exchanged
for the Company's common stock (the "Subsequent Sale") exercisable at, a price
per Share (the "Subsequent Purchase Price") of less than the Per Share Price,
the Company shall, within ten (10) business days of the Subsequent Sale, pay to
the Purchaser a cash amount equal to the number of Shares times the difference
between the Per Share Price and the Subsequent Purchase Price.
3. DELIVERY OF THE SHARES AT THE CLOSING
(a) The completion of the purchase and sale of the Shares (the "Closing")
shall occur at the offices of the Company, at ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ at 9:00 a.m. local time on December 13, 2001 or such other time and date
as may be agreed by the parties (the "Closing Date").
(b) At the Closing, the Company shall authorize its transfer agent (the
"Transfer Agent") to issue to each Purchaser one or more stock certificates
registered in the name of such Purchaser, or in such nominee name(s) as
designated by such Purchaser in writing, representing the number of Shares set
forth in Section 2 above and bearing an appropriate legend referring to the fact
that the Shares were sold in reliance upon the exemption from registration under
the Securities Act of 1933, as amended (the "Securities Act"). The Company will
deliver one certificate representing 2,800,000. Shares and one certificate
representing 700,000 Shares (the "Certificates") against delivery of payment for
the Shares by the Purchasers. Prior to the Purchasers' delivery of payment for
the Shares, the Company will deliver via facsimile a copy of the Certificates to
be delivered upon Closing to the office of the Purchasers (at the fax number
indicated on the signature pages attached hereto).
(c) The Company's obligation to complete the purchase and sale of the Shares
shall be subject to the following conditions, any one or more of which may be
waived by the Company:
(i) receipt by the Company from stockholders holding rights to require the
Company to register the sale of any securities owned by such holder in the
Registration Statement (as defined below) of waivers of such rights (including
the waiver of any notice requirements related to such rights);
(ii) receipt by the Company of same-day funds in the full amount of the
purchase price for the Shares being purchased under this Agreement; and
(iii) the accuracy in all material respects of the representations and
warranties made by the Purchasers and the fulfillment in all material respects
of those undertakings of the Purchasers to be fulfilled before the Closing.
(d) The Purchasers' obligations to accept delivery of such stock certificates
and to pay for the Shares evidenced by the certificates shall be subject to the
following conditions, any one or more of which may be waived by a Purchaser with
respect to such Purchaser's obligation:
(i) the representations and warranties made by the Company in this
Agreement shall be accurate in all material respects and the undertakings of the
Company shall have been fulfilled in all material respects on or before the
Closing;
(ii) the Company shall have delivered to the Purchasers a certificate
executed by the chairman of the board or president and the chief financial or
accounting officer of the Company, dated the Closing Date, in form and substance
reasonably satisfactory to the Purchasers, to the effect that the
representations and warranties of the Company set forth in Section 4 hereof are
true and correct in all material respects as of the date of this Agreement and
as of the Closing Date, and that the Company has complied with all the
agreements and satisfied all the conditions in this Agreement on its part to be
performed or satisfied on or before the Closing Date; and
(iii) the Company shall have delivered to Purchasers a legal opinion in
substantially the form attached hereto as Exhibit A.
(iv) the Company shall have obtained gross proceeds of at least
$10,850,000 from the sale of the Shares at the Closing.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
Except as set forth on the Schedule of Exceptions attached hereto as Exhibit
B, the Company hereby represents and warrants to the Purchasers as of the date
hereof as follows (which representations and warranties shall be deemed to
apply, where appropriate, to each subsidiary of the Company):
4.1 ORGANIZATION AND QUALIFICATION
The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware. The
Company has the corporate power and authority to own, lease and operate its
properties and to conduct its business as currently conducted and to enter into
and perform its obligations under this Agreement. The Company is duly qualified
as a foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure to so qualify would not, singly or in the aggregate, have a material
adverse effect on the condition, financial or otherwise, or the earnings,
assets, business affairs or business prospects of the Company.
4.2 CAPITALIZATION
(a) The authorized capital stock of the Company consists of 140,000,000
shares of Common Stock and 40,000,000 shares of Preferred Stock.
(b) As of October 31, 2001, the issued and outstanding capital stock of the
Company consists of 51,046,133 shares of Common Stock, of which 656,000 shares
of Common Stock were held in treasury of the Company. The shares of issued and
outstanding capital stock of the Company have been duly authorized and validly
issued, are fully paid and nonassessable and have not been issued in violation
of or are not otherwise subject to any preemptive or other similar rights.
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(c) As of October 31, 2001, the Company has reserved 17,141,065 shares of
Common Stock for issuance upon the exercise of stock options granted or
available for future grant under the Company's stock option plans.
(d) As of October 31, the Company has reserved 535,447 shares of Common Stock
for issuance upon the exercise of outstanding warrants to purchase Common Stock.
With the exception of the foregoing, there are no outstanding subscriptions,
options, warrants, convertible or exchangeable securities or other rights
granted to or by the Company to purchase shares of Common Stock or other
securities of the Company and there are no commitments, plans or arrangements to
issue any shares of Common Stock or any security convertible into or
exchangeable for Common Stock.
4.3 ISSUANCE, SALE AND DELIVERY OF THE SHARES
(a) The Shares have been duly authorized for issuance and sale to the
Purchasers pursuant to this Agreement and, when issued and delivered by the
Company pursuant to this Agreement against payment of the consideration set
forth in this Agreement, will be validly issued and fully paid and nonassessable
and free and clear of all pledges, liens and encumbrances. The certificates
evidencing the Shares are in due and proper form under Delaware General
Corporation Law.
(b) The issuance of the Shares is not subject to preemptive or other similar
rights. No further approval or authority of the shareholders or the Board of
Directors of the Company will be required for the issuance and sale of the
Shares to be sold by the Company as contemplated in this Agreement.
(c) Subject to the accuracy of the Purchasers' representations and warranties
in Section 5 of this Agreement, the offer, sale, and issuance of the Shares in
conformity with the terms of this Agreement constitute transactions exempt from
the registration requirements of Section 5 of the Securities Act and from the
registration or qualification requirements of the laws of any applicable state
or United States jurisdiction.
4.4 FINANCIAL STATEMENTS
The financial statements included (as exhibits or otherwise) in the Company
Documents (as defined below) present fairly the financial position of the
Company as of the dates indicated and the results of their operations for the
periods specified. Except as otherwise stated in such Company Documents, such
financial statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis, and any supporting
schedules included with the financial statements present fairly the information
stated in the financial statements. The financial and statistical data set forth
in the Company Documents were prepared on an accounting basis consistent with
such financial statements.
4.5 NO MATERIAL CHANGE
Since October 31, 2001,
(a) there has been no material adverse change or any development involving a
prospective material adverse change in or affecting the condition, financial or
otherwise, or in the earnings, assets, business affairs or business prospects of
the Company, whether or not arising in the ordinary course of business;
(b) there have been no transactions entered into by the Company other than
those in the ordinary course of business, which are material with respect to the
Company; and
(c) there has been no dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock.
The Company has no material contingent obligations.
4.6 ENVIRONMENTAL
Except as would not, singly or in the aggregate, reasonably be expected to
have a material adverse effect on the condition, financial or otherwise, or the
earnings, assets, business affairs or business prospects of the Company,
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(a) the Company is in compliance with all applicable Environmental Laws (as
defined below);
(b) the Company has all permits, authorizations and approvals required under
any applicable Environmental Laws and is in compliance with the requirements of
such permits authorizations and approvals;
(c) there are no pending or, to the best knowledge of the Company, threatened
Environmental Claims (as defined below) against the Company; and
(d) under applicable law, there are no circumstances with respect to any
property or operations of the Company that are reasonably likely to form the
basis of an Environmental Claim against the Company.
For purposes of this Agreement, the following terms shall have the following
meanings: "Environmental Law" means any United States (or other applicable
jurisdiction's) Federal, state, local or municipal statute, law, rule,
regulation, ordinance, code, policy or rule of common law and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to the environment, health, safety
or any chemical, material or substance, exposure to which is prohibited, limited
or regulated by any governmental authority. "Environmental Claims" means any and
all administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation, investigations or
proceedings relating in any way to any Environmental Law.
4.7 NO DEFAULTS
The Company is not in violation of its certificate of incorporation or bylaws
or in material default in the performance or observance of any obligation,
agreement, covenant or condition contained in any material contract, indenture,
mortgage, loan agreement, deed, trust, note, lease, sublease, voting agreement,
voting trust, or other instrument or material agreement to which the Company is
a party or by which it may be bound, or to which any of the property or assets
of the Company is subject.
4.8 LABOR MATTERS
No labor dispute with the employees of the Company exists or, to the best
knowledge of the Company, is imminent.
4.9 NO ACTIONS
There is no action, suit or proceeding before or by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of the
Company, threatened, against or affecting the Company which, singly or in the
aggregate, might result in any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company, or which, singly or in the aggregate, might materially
and adversely affect the properties or assets thereof or which might materially
and adversely affect the consummation of this Agreement, nor, to the best
knowledge of the Company, is there any reasonable basis therefor. The Company is
not in default with respect to any judgment, order or decree of any court or
governmental agency or instrumentality which, singly or in the aggregate, would
have a material adverse effect on the assets, properties or business of the
Company.
4.10 INTELLECTUAL PROPERTY
(a) The Company, to the best of its knowledge, owns or is licensed to use all
patents, patent applications, inventions, trademarks, trade names, applications
for registration of trademarks, service marks, service ▇▇▇▇ applications,
copyrights, know-how, manufacturing processes, formulae, trade secrets, licenses
and rights in any thereof and any other intangible property and assets that are
material to the business of the Company as now conducted and as proposed to be
conducted (in this Agreement called the "Proprietary Rights"), or is seeking, or
will seek, to obtain rights to use such Proprietary Rights that are material to
the business of the Company as proposed to be conducted. For the purposes
hereof, "Proprietary Rights" does not include commercially available third party
software licensed by the Company.
(b) The Company does not have any knowledge of, and the Company has not given
or received any notice of, any pending conflicts with or infringement of the
rights of others with respect to any Proprietary Rights or with respect to any
license of Proprietary Rights which are material to the business of the Company.
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(c) No action, suit, arbitration, or legal, administrative or other
proceeding, or investigation is pending, or, to the best knowledge of the
Company, threatened, which involves any Proprietary Rights, nor, to the best
knowledge of the Company, is there any reasonable basis therefor.
(d) The Company is not subject to any judgment, order, writ, injunction or
decree of any court or any Federal, state, local, foreign or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, or any arbitrator, and has not entered into or is not a party to any
contract which restricts or impairs the use of any such Proprietary Rights in a
manner which would have a material adverse effect on the use of any of the
Proprietary Rights.
(e) The Company has not received written notice of any pending conflict with
or infringement upon any third-party proprietary rights.
(f) The Company has not entered into any consent, indemnification,
forbearance to ▇▇▇ or settlement agreement with respect to Proprietary Rights
other than in the ordinary course of business. No claims have been asserted by
any person with respect to the validity of the Company's ownership or right to
use the Proprietary Rights and, to the best knowledge of the Company, there is
no reasonable basis for any such claim to be successful.
(g) The Company has complied, in all material respects, with its obligations
relating to the protection of the Proprietary Rights which are material to the
business of the Company used pursuant to licenses.
(h) To the best knowledge of the Company, no person is infringing on or
violating the Proprietary Rights.
4.11 PERMITS
The Company possesses and is operating in compliance with all material
licenses, certificates, consents, authorities, approvals and permits from all
state, federal, foreign and other regulatory agencies or bodies necessary to
conduct the businesses now operated by it, and the Company has not received any
notice of proceedings relating to the revocation or modification of any such
permit or any circumstance which would lead it to believe that such proceedings
are reasonably likely which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and adversely affect
the condition, financial or otherwise, or the earnings, assets, business affairs
or business prospects of the Company.
4.12 DUE EXECUTION, DELIVERY AND PERFORMANCE
(a) This Agreement has been duly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, arrangement, moratorium and other laws
of general applicability relating to or affecting creditors' rights, and (ii) as
limited by equitable principles generally and limitations on the availability of
equitable remedies, whether such enforceability is considered in a proceeding in
equity or at law.
(b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated in this Agreement and the
fulfillment of the terms of this Agreement, including the sale, issuance and
delivery of the Shares, (i) have been duly authorized by all necessary corporate
action on the part of the Company, its directors and stockholders; (ii) will not
conflict with or constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company pursuant to, any contract, indenture, mortgage, loan
agreement, deed, trust, note, lease, sublease, voting agreement, voting trust or
other instrument or agreement to which the Company is a party or by which it may
be bound, or to which any of the property or assets of the Company is subject;
(iii) will not trigger anti-dilution rights or other rights to acquire
additional equity securities of the Company; and (iv) will not result in any
violation of the provisions of the certificate of incorporation or bylaws of the
Company or any applicable statute, law, rule, regulation, ordinance, decision,
directive or order.
4.13 PROPERTIES
The Company has good and marketable title to its properties, free and clear
of all material security interests, mortgages, pledges, liens, charges,
encumbrances and claims of record. The properties of the Company are, in the
aggregate, in good repair (reasonable wear and tear excepted), and suitable for
their respective uses. Any real property held under lease by the Company is held
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the conduct of the business of the Company.
The Company owns or leases all such properties as are necessary to its business
or operations as now conducted.
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4.14 COMPLIANCE
The Company has conducted and is conducting its business in compliance with
all applicable Federal, state, local and foreign statutes, laws, rules,
regulations, ordinances, codes, decisions, decrees, directives and orders,
except where the failure to do so would not, singly or in the aggregate, have a
material adverse effect on the condition, financial or otherwise, or on the
earnings, assets, business affairs or business prospects of the Company.
4.15 SECURITY MEASURES
The Company takes security measures reasonably designed to enable the Company
to assert trade secret protection in its non-patented technology.
4.16 CONTRIBUTIONS
To the best of the Company's knowledge, neither the Company nor any employee
or agent of, on behalf of or at the request of, the Company has made any payment
of funds of the Company or received or retained any funds in violation of any
state or federal law, rule or regulation.
4.17 USE OF PROCEEDS; INVESTMENT COMPANY
The Company intends to use the proceeds from the sale of the Shares for
working capital and other general corporate purposes. The Company is not now,
and after the sale of the Shares under this Agreement and under all other
agreements and the application of the net proceeds from the sale of the Shares
described in the proceeding sentence will not be, an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
4.18 PRIOR OFFERINGS
All offers and sales of capital stock of the Company before the date of this
Agreement were at all relevant times duly registered or exempt from the
registration requirements of the Securities Act and were duly registered or
subject to an available exemption from the registration requirements of the
applicable state securities or Blue Sky laws.
4.19 TAXES
The Company has filed all material tax returns required to be filed, which
returns are true and correct in all material respects, and the Company is not in
default in the payment of any taxes, including penalties and interest,
assessments, fees and other charges, shown thereon due or otherwise assessed,
other than those being contested in good faith and for which adequate reserves
have been provided or those currently payable without interest which were
payable pursuant to said returns or any assessments with respect thereto.
4.20 OTHER GOVERNMENTAL PROCEEDINGS
To the Company's knowledge, there are no rulemaking or similar proceedings
before any Federal, state, local or foreign government bodies that involve or
affect the Company, which, if the subject of an action unfavorable to the
Company, could involve a prospective material adverse change in or effect on the
condition, financial or otherwise, or in the earnings, assets, business affairs
or business prospects of the Company.
4.21 NON-COMPETITION AGREEMENTS
To the knowledge of the Company, any full-time employee who has entered into
any non-competition, non-disclosure, confidentiality or other similar agreement
with any party other than the Company is neither in violation of nor is expected
to be in violation of that agreement as a result of the business currently
conducted or expected to be conducted by the Company or such person's
performance of his or her obligations to the Company. The Company has not
received written notice that any consultant or scientific advisor of the Company
is in violation of any non-competition, non-disclosure, confidentiality or
similar agreement.
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4.22 TRANSFER TAXES
On the Closing Date, all stock transfer or other taxes (other than income
taxes) that are required to be paid in connection with the sale and transfer of
the Shares to be sold to the Purchasers under this Agreement will be, or will
have been, fully paid or provided for by the Company and all laws imposing such
taxes will be or will have been fully complied with.
4.23 INSURANCE
The Company maintains insurance of the type and in the amount that the
Company reasonably believes is adequate for its business, including, but not
limited to, insurance covering all real and personal property owned or leased by
the Company against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against by similarly situated companies, all of which
insurance is in full force and effect.
4.24 GOVERNMENTAL/REGULATORY CONSENTS
No registration, authorization, approval, qualification or consent with or
required by any court or governmental/ regulatory authority or agency is
necessary in connection with the execution and delivery of this Agreement or the
offering, issuance or sale of the Shares under this Agreement.
4.25 SECURITIES AND EXCHANGE COMMISSION FILINGS
The Company has timely filed with the Securities and Exchange Commission (the
"Commission") all documents required to be filed by the Company under the
Securities Exchange Act of 1934, as amended (the "Exchange Act.")
4.26 ADDITIONAL INFORMATION
The Company represents and warrants that the information contained in the
following documents (the "Company Documents"), which have been or will be
provided or made available to Purchaser before the Closing, is or will be true
and correct in all material respects as of their respective filing dates:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000;
(b) the Company's Quarterly Reports on Form 10-Q for the fiscal quarters
ended March 31, 2001, June 30, 2001 and September 30, 2001;
(c) the Company's Proxy Statement for its Annual Meeting of Shareholders held
on June 27, 2001; and
(d) all other documents, if any, filed by the Company with the Commission
since September 30, 2001 pursuant to the reporting requirements of the Exchange
Act.
4.27 CONTRACTS
The contracts described in the Company Documents or incorporated by reference
therein are in full force and effect on the date hereof, except for contracts
which by their terms have expired or terminated, or the termination or
expiration of which would not, singly or in the aggregate, have a material
adverse effect on the business, properties or assets of the Company. Neither the
Company nor, to the best knowledge of the Company, any other party is in
material breach of or default under any such contracts.
4.28 NO INTEGRATED OFFERING
Neither the Company, nor any of its affiliates, nor any person acting on its
or their behalf, has directly or indirectly made any offers or sales in any
security or solicited any offers to buy any security under circumstances that
would require registration under the Securities Act of the issuance of the
Shares to the Purchasers. The issuance of the Shares to the Purchasers will not
be integrated with any other issuance of the Company's securities (past, current
or future) for purposes of the Securities Act or any applicable rules of Nasdaq
(or of any national securities exchange on which the Company's Common Stock is
then traded), except where such integration would not require registration of
the issuance and sale of the Shares to the Purchaser. The Company will not make
any offers or sales of any security (other than the Shares) that would cause the
offering of the Shares to be integrated with any other offering of securities
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by the Company for purposes of any registration requirement under the Securities
Act or any applicable rules of Nasdaq (or of any national securities exchange on
which the Company's Common Stock is then traded) except where such integration
would not require registration of the issuance and sale of the Shares to the
Purchaser.
4.29 LISTING OF SHARES
The Company agrees to promptly secure the listing of the Shares upon each
national securities exchange or automated quotation system upon which shares of
Common Stock are then listed and, so long as any Purchaser owns any of the
Shares, shall maintain such listing of all Shares. The Company has taken no
action designed to delist, or which is likely to have the effect of delisting,
the Common Stock from any of the national securities exchange or automated
quotation system upon which the shares of Common Stock are then listed.
4.30 NO MANIPULATION OF STOCK
The Company has not taken and will not, in violation of applicable law, take
any action outside the ordinary course of business designed to or that might
reasonably be expected to cause or result in unlawful manipulation of the price
of the Common Stock to facilitate the sale or resale of the Shares.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS
5.1 SECURITIES LAW REPRESENTATIONS AND WARRANTIES
Each Purchaser represents, warrants and covenants to the Company as follows:
(a) The Purchaser is knowledgeable, sophisticated and experienced in making,
and is qualified to make, decisions with respect to investments in shares
representing an investment decision like that involved in the purchase of the
Shares, including investments in securities issued by the Company, and has
requested, received, reviewed and considered all information it deems relevant
in making an informed decision to purchase the Shares.
(b) The Purchaser is acquiring the number of Shares set forth in Section 2
above in the ordinary course of its business and for its own account for
investment (as defined for purposes of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvement Act of 1976 and the regulations thereunder) only, and has no present
intention of distributing any of the Shares nor any arrangement or understanding
with any other persons regarding the distribution of such Shares within the
meaning of Section 2(11) of the Securities Act, other than as contemplated in
Section 7 of this Agreement.
(c) The Purchaser will not, directly or indirectly, offer, sell, pledge,
transfer or otherwise dispose of (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of) any of the Shares except in compliance
with the Securities Act and the rules and regulations promulgated thereunder
(the "Rules and Regulations").
(d) The Purchaser has completed or caused to be completed the Stock
Certificate Questionnaire and the Registration Statement Questionnaire, attached
to this Agreement as Appendices I and II, for use in preparation of the
Registration Statement (as defined in Section 7.3 below), and the answers to the
Questionnaires are true and correct as of the date of this Agreement and will be
true and correct as of the effective date of the Registration Statement;
provided that the Purchasers shall be entitled to update such information by
providing notice thereof to the Company before the effective date of such
Registration Statement.
(e) The Purchaser has, in connection with its decision to purchase the number
of Shares set forth in Section 2 above, relied solely upon the Company Documents
and the representations and warranties of the Company contained in this
Agreement.
(f) The Purchaser is an "accredited investor" within the meaning of Rule 501
of Regulation D promulgated under the Securities Act.
5.2 RESALES OF SHARES
(a) The Purchaser hereby covenants with the Company not to make any sale of
the Shares without satisfying the requirements of the Securities Act and the
Rules and Regulations, including, in the event of any resale under the
Registration Statement, the prospectus delivery requirements under the
Securities Act, and the Purchaser acknowledges and agrees that such Shares are
not transferable on
8
the books of the Company pursuant to a resale under the Registration Statement
unless the certificate submitted to the transfer agent evidencing the Shares is
accompanied by a separate officer's certificate
(i) in the form of Appendix III to this Agreement;
(ii) executed by an officer of, or other authorized person designated by,
the Purchaser; and
(iii) to the effect that (A) the Shares have been sold in accordance with
the Registration Statement and (B) the requirement of delivering a current
prospectus has been satisfied.
(b) The Purchaser acknowledges that there may occasionally be times when the
Company determines, in good faith following consultation with its Board of
Directors or a committee thereof, the use of the prospectus forming a part of
the Registration Statement (the "Prospectus," as further defined in Section
7.3.1 below) should be suspended until such time as an amendment or supplement
to the Registration Statement or the Prospectus has been filed by the Company
and any such amendment to the Registration Statement is declared effective by
the Commission, or until such time as the Company has filed an appropriate
report with the Commission pursuant to the Exchange Act. The Purchaser hereby
covenants that it will not sell any Shares pursuant to the Prospectus during the
period commencing at the time at which the Company gives the Purchaser written
notice of the suspension of the use of the Prospectus and ending at the time the
Company gives the Purchaser written notice that the Purchaser may thereafter
effect sales pursuant to the Prospectus. The Company may, upon written notice to
the Purchasers, suspend the use of the Prospectus for up to thirty (30) days in
any 365-day period based on the reasonable determination of the Company's Board
of Directors that there is a significant business purpose for such
determination, such as pending corporate developments, public filings with the
SEC or similar events. The Company shall in no event be required to disclose the
business purpose for which it has suspended the use of the Prospectus if the
Company determines in its good faith judgment that the business purpose should
remain confidential. In addition, the Company shall notify each Purchaser (i) of
any request by the SEC for an amendment or any supplement to such Registration
Statement or any related prospectus, or any other information request by any
other governmental agency directly relating to the offering, and (ii) of the
issuance by the SEC of any stop order suspending the effectiveness of such
Registration Statement or of any order preventing or suspending the use of any
related prospectus or the initiation or threat of any proceeding for that
purpose.
(c) The Purchaser further covenants to notify the Company promptly of the
sale of any of its Shares, other than sales pursuant to a Registration Statement
contemplated in Section 7 of this Agreement or sales upon termination of the
transfer restrictions pursuant to Section 7.4 of this Agreement.
5.3 DUE EXECUTION, DELIVERY AND PERFORMANCE
(a) This Agreement has been duly executed and delivered by the Purchaser and
constitutes a valid and binding obligation of the Purchaser, enforceable against
the Purchaser in accordance with its terms.
(b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated in this Agreement and the
fulfillment of the terms of this Agreement have been duly authorized by all
necessary corporate, agency or other action and will not conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Purchaser pursuant to, any contract, indenture, mortgage, loan agreement, deed,
trust, note, lease, sublease, voting agreement, voting trust or other instrument
or agreement to which the Purchaser is a party or by which it or any of them may
be bound, or to which any of the property or assets of the Purchaser is subject,
nor will such action result in any violation of the provisions of the charter or
bylaws of the Purchaser or any applicable statute, law, rule, regulation,
ordinance, decision, directive or order.
6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Purchasers in this Agreement and in the certificates for the Shares
delivered pursuant to this Agreement shall survive the execution of this
Agreement, the delivery to the Purchasers of the Shares being purchased and the
payment therefor.
9
7. FORM D FILING; REGISTRATION; COMPLIANCE WITH THE SECURITIES ACT; COVENANTS
7.1 FORM D FILING; REGISTRATION OF SHARES
7.1.1 REGISTRATION STATEMENT; EXPENSES
The Company shall:
(a) file in a timely manner a Form D relating to the sale of the Shares under
this Agreement, pursuant to Securities and Exchange Commission Regulation D.
(b) as soon as practicable after the Closing Date, but in no event later than
the 20th day following the Closing Date, prepare and file with the Commission a
Registration Statement on Form S-3 (or, if the Company is ineligible to use Form
S-3, then on Form S-1) relating to the sale of the Shares by the Purchasers from
time to time on the Nasdaq National Market (or the facilities of any national
securities exchange on which the Company's Common Stock is then traded) or in
privately negotiated transactions (the "Registration Statement");
(c) provide to Purchasers any information required to permit the sale of the
Shares under Rule 144A of the Securities Act;
(d) subject to receipt of necessary information from the Purchasers, use its
best efforts to cause the Commission to notify the Company of the Commission's
willingness to declare the Registration Statement effective on or before 90 days
after the Closing Date;
(e) notify Purchasers promptly upon the Registration Statement, and any
post-effective amendment thereto, being declared effective by the Commission;
(f) prepare and file with the Commission such amendments and supplements to
the Registration Statement and the Prospectus (as defined in Section 7.3.1
below) and take such other action, if any, as may be necessary to keep the
Registration Statement effective until the earlier of (i) the date on which the
Shares may be resold by the Purchasers without registration and without regard
to any volume limitations by reason of Rule 144(k) under the Securities Act or
any other rule of similar effect or (ii) all of the Shares have been sold
pursuant to the Registration Statement or Rule 144 under the Securities Act or
any other rule of similar effect;
(g) promptly furnish to the Purchasers with respect to the Shares registered
under the Registration Statement such reasonable number of copies of the
Prospectus, including any supplements to or amendments of the Prospectus, in
order to facilitate the public sale or other disposition of all or any of the
Shares by the Purchasers;
(h) during the period when copies of the Prospectus are required to be
delivered under the Securities Act or the Exchange Act, will file all documents
required to be filed with the Commission pursuant to Section 13, 14 or 15 of the
Exchange Act within the time periods required by the Exchange Act and the rules
and regulations promulgated thereunder;
(i) file documents required of the Company for customary Blue Sky clearance
in all states requiring Blue Sky clearance; provided, however, that the Company
shall not be required to qualify to do business or consent to service of process
in any jurisdiction in which it is not now so qualified or has not so consented;
and (j) bear all its expenses in connection with the procedures in paragraphs
(a) through (i) of this Section 7.1.1 and the registration of the Shares
pursuant to the Registration Statement.
7.1.2 DELAY IN EFFECTIVENESS OF REGISTRATION STATEMENT
In the event that the Registration Statement is not declared effective on or
before the 90th day following the Closing Date (or, where the Registration
Statement is being reviewed by the Securities and Exchange Commission, on or
before the 120th day following the Closing Date) (the "Penalty Date"), the
Company shall pay to each Purchaser liquidated damages in an amount equal to
0.25% of the total purchase price of the Shares purchased by such Purchaser
pursuant to this Agreement for each week after the Penalty Date that the
Registration Statement is not declared effective.
7.2 TRANSFER OF SHARES AFTER REGISTRATION
Each Purchaser agrees that it will not effect any disposition of the Shares
or its right to purchase the Shares that would constitute a sale within the
meaning of the Securities Act, except as contemplated in the Registration
Statement referred to in Section 7.1 or as
10
otherwise permitted by law, and that it will promptly notify the Company of any
changes in the information set forth in the Registration Statement regarding the
Purchaser or its plan of distribution.
7.3 INDEMNIFICATION
For the purpose of this Section 7.3, the term "Registration Statement" shall
include any preliminary or final prospectus, exhibit, supplement or amendment
included in or relating to the Registration Statement referred to in Section
7.1.
7.3.1 INDEMNIFICATION BY THE COMPANY
The Company agrees to indemnify and hold harmless each of the Purchasers and
each person, if any, who controls any Purchaser within the meaning of the
Securities Act, against any losses, claims, damages, liabilities or expenses,
joint or several, to which such Purchasers or such controlling person may become
subject, under the Securities Act, the Exchange Act, or any other federal or
state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company, which consent shall not be unreasonably withheld),
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof as contemplated below) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, including the Prospectus, financial statements and
schedules, and all other documents filed as a part thereof, as amended at the
time of effectiveness of the Registration Statement, including any information
deemed to be a part thereof as of the time of effectiveness pursuant to
paragraph (b) of Rule 430A, or pursuant to Rule 434, of the Rules and
Regulations, or the Prospectus, in the form first filed with the Commission
pursuant to Rule 424(b) of the Regulations, or filed as part of the Registration
Statement at the time of effectiveness if no Rule 424(b) filing is required (the
"Prospectus"), or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state in any of them a material
fact required to be stated therein or necessary to make the statements in any of
them, in light of the circumstances under which they were made, not misleading,
or arise out of or are based in whole or in part on any inaccuracy in the
representations and warranties of the Company contained in this Agreement, or
any failure of the Company to perform its obligations under this Agreement or
under applicable law, and will reimburse each Purchaser and each such
controlling person for any legal and other expenses as such expenses are
reasonably incurred by such Purchaser or such controlling person in connection
with investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the Company
will not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon (i) an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, the Prospectus or any amendment or supplement of the
Registration Statement or Prospectus in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the Purchaser
expressly for use in the Registration Statement or the Prospectus, or (ii) the
failure of such Purchaser to comply with the covenants and agreements contained
in Sections 5.2 or 7.2 of this Agreement respecting resale of the Shares, or
(iii) the inaccuracy of any representations made by such Purchaser in this
Agreement or (iv) any untrue statement or omission of a material fact required
to make such statement not misleading in any Prospectus that is corrected in any
subsequent Prospectus that was delivered to the Purchaser before the pertinent
sale or sales by the Purchaser.
7.3.2 INDEMNIFICATION BY THE PURCHASER
Each Purchaser will severally and not jointly indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of the Securities Act, against any losses, claims, damages, liabilities or
expenses to which the Company, each of its directors, each of its officers who
signed the Registration Statement or controlling person may become subject,
under the Securities Act, the Exchange Act, or any other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Purchaser, which consent shall not be unreasonably withheld)
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof as contemplated below) arise out of or are based upon (i) any
failure on the part of such Purchaser to comply with the covenants and
agreements contained in Sections 5.2 or 7.2 of this Agreement respecting the
sale of the Shares or (ii) the inaccuracy of any representation made by such
Purchaser in this Agreement or (iii) any untrue or alleged untrue statement of
any material fact contained in the Registration Statement, the Prospectus, or
any amendment or supplement to the Registration Statement or Prospectus, 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 not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Purchaser expressly
for use therein; provided, however, that the Purchaser shall not be liable for
any such untrue or alleged untrue statement or omission or alleged omission of
which the Purchaser
11
has delivered to the Company in writing a correction before the occurrence of
the transaction from which such loss was incurred, and the Purchaser will
reimburse the Company, each of its directors, each of its officers who signed
the Registration Statement or controlling person for any legal and other expense
reasonably incurred by the Company, each of its directors, each of its officers
who signed the Registration Statement or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action.
7.3.3 INDEMNIFICATION PROCEDURE
(a) Promptly after receipt by an indemnified party under this Section 7.3 of
notice of the threat or commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against an indemnifying party under
this Section 7.3, promptly notify the indemnifying party in writing of the
claim; but the omission so to notify the indemnifying party will not relieve it
from any liability which it may have to any indemnified party for contribution
or otherwise under the indemnity agreement contained in this Section 7.3 or to
the extent it is not prejudiced as a result of such failure.
(b) In case any such action is brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from an indemnifying party,
the indemnifying party will be entitled to participate in, and, to the extent
that it may wish, jointly with all other indemnifying parties similarly
notified, to assume the defense thereof with counsel reasonably satisfactory to
such indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be a conflict
between the positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be legal defenses
available to it or other indemnified parties that are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 7.3 for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless:
(i) the indemnified party shall have employed such counsel in connection
with the assumption of legal defenses in accordance with the proviso to the
preceding sentence (it being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one separate counsel, approved
by such indemnifying party representing all of the indemnified parties who are
parties to such action) or
(ii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of action, in each of which cases
the reasonable fees and expenses of counsel shall be at the expense of the
indemnifying party. Notwithstanding the provisions of this Section 7.3, the
Purchaser shall not be liable for any indemnification obligation under this
Agreement in excess of the amount of net proceeds received by the Purchaser from
the sale of the Shares.
7.3.4 CONTRIBUTION
If the indemnification provided for in this Section 7.3 is required by its
terms but is for any reason held to be unavailable to or otherwise insufficient
to hold harmless an indemnified party under this Section 7.3 in respect to any
losses, claims, damages, liabilities or expenses referred to in this Agreement,
then each applicable indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of any losses, claims, damages,
liabilities or expenses referred to in this Agreement
(a) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Purchaser from the placement of Common Stock or
(b) if the allocation provided by clause (a) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (a) above but the relative fault of the
Company and the Purchaser in connection with the statements or omissions or
inaccuracies in the representations and warranties in this Agreement that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations.
The respective relative benefits received by the Company on the one hand and
each Purchaser on the other shall be deemed to be in the same proportion as the
amount paid by such Purchaser to the Company pursuant to this Agreement for the
Shares purchased by such Purchaser that were sold pursuant to the Registration
Statement bears to the difference (the "Difference") between the amount
12
such Purchaser paid for the Shares that were sold pursuant to the Registration
Statement and the amount received by such Purchaser from such sale. The relative
fault of the Company and each Purchaser shall be determined by reference to,
among other things, whether the untrue or alleged statement of a material fact
or the omission or alleged omission to state a material fact or the inaccurate
or the alleged inaccurate representation or warranty relates to information
supplied by the Company or by such Purchaser and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. 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 7.3.3, any
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. The provisions set forth in
Section 7.3.3 with respect to the notice of the threat or commencement of any
threat or action shall apply if a claim for contribution is to be made under
this Section 7.3.4; provided, however, that no additional notice shall be
required with respect to any threat or action for which notice has been given
under Section 7.3 for purposes of indemnification. The Company and each
Purchaser agree that it would not be just and equitable if contribution pursuant
to this Section 7.3 were determined solely by pro rata allocation (even if the
Purchaser were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to in this paragraph. Notwithstanding the provisions of this Section 7.3, no
Purchaser shall be required to contribute any amount in excess of the amount by
which the Difference exceeds the amount of any damages that such Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. 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. The Purchasers' obligations to contribute pursuant
to this Section 7.3 are several and not joint.
7.4 TERMINATION OF CONDITIONS AND OBLIGATIONS
The restrictions imposed by Section 5 or this Section 7 upon the
transferability of the Shares shall cease and terminate as to any particular
number of the Shares upon the passage of two years from the Closing Date or at
such time as an opinion of counsel satisfactory in form and substance to the
Company shall have been rendered to the effect that such conditions are not
necessary in order to comply with the Securities Act.
7.5 INFORMATION AVAILABLE
From the date of this Agreement through the date the Registration Statement
covering the resale of Shares owned by any Purchaser is no longer effective, the
Company will furnish to such Purchaser:
(a) as soon as practicable after available (but in the case of the Company's
Annual Report to Shareholders, within 90 days after the end of each fiscal year
of the Company), one copy of
(i) its Annual Report to Shareholders (which Annual Report shall contain
financial statements audited in accordance with generally accepted accounting
principles by a national firm of certified public accountants);
(ii) if not included in substance in the Annual Report to Shareholders,
its Annual Report on Form 10-K;
(iii) if not included in substance in its Quarterly Reports to
Shareholders, its quarterly reports on Form 10-Q; and
(iv) a full copy of the particular Registration Statement covering the
Shares (the foregoing, in each case, excluding exhibits);
(b) upon the request of the Purchaser, a reasonable number of copies of the
Prospectus to supply to any other party requiring the Prospectus.
7.6 RULE 144 INFORMATION
Until the earlier of (i) the date on which the Shares may be resold by the
Purchasers without registration and without regard to any volume limitations by
reason of Rule 144(k) under the Securities Act or any other rule of similar
effect or (ii) all of the Shares have been sold pursuant to the Registration
Statement or Rule 144 under the Securities Act or any other rule of similar
effect, the Company shall file all reports required to be filed by it under the
Securities Act, the Rules and Regulations and the Exchange Act and shall take
such further action to the extent required to enable the Purchasers to sell the
Shares pursuant to Rule 144 under the Securities Act (as such rule may be
amended from time to time).
13
7.7 STOCK OPTION MATTERS AND PROHIBITION ON TOXICS
The Company shall, within thirty (30) days of the Closing Date, adopt such
amendments to, with respect to (i) and (ii) below, the Company's stock option
plans and By-laws, and, with respect to (iii) and (iv) below, the Company's
By-laws (together, the "Stock Option Plan and By-law Amendments") to provide
that, unless approved by the holders of a majority of the shares present and
entitled to vote at a duly convened meeting of shareholders, the company shall
not:
(i) grant any stock option, including stock appreciation right, with an
exercise price that is less than 100% of the fair market value of the underlying
stock on the date of grant;
(ii) reduce the exercise price of any stock option, including stock
appreciation right, outstanding or to be granted in the future; cancel and
re-grant options at a lower exercise price (including entering into any "6 month
and 1 day" cancellation and re-grant scheme), whether or not the cancelled
options are put back into the available pool for grant; replace underwater
options with restricted stock in an exchange, buy-back or other scheme; or
replace any options with new options having a lower exercise price or
accelerated vesting schedule in an exchange, buy-back or other scheme;
(iii) sell or issue any security of the Company convertible, exercisable
or exchangeable into shares of common stock of the Company, having a conversion,
exercise or exchange price per share which is subject to downward adjustment
based on the market price of the common stock at the time of conversion,
exercise or exchange of such security into common stock (except for appropriate
adjustments made to give effect to any stock splits or stock dividends); or
(iv) enter into (a) any equity line or similar agreement or arrangement;
or (b) any agreement to sell common stock of the Company (or any security
convertible, exercisable or exchangeable into shares of common stock ("Common
Stock Equivalent")) at a per share price (or, with respect to a Common Stock
Equivalent, at a conversion, exercise or exchange price, as the case may be
("Equivalent Price")) that is fixed after the execution date of the agreement,
whether or not based on any predetermined price-setting formula or calculation
method. Notwithstanding the foregoing, however, a price protection clause shall
be permitted in an agreement for sale of common stock or Common Stock
Equivalent, if such clause provides for an adjustment to the price per share of
common stock or, with respect to a Common Stock Equivalent, to the Equivalent
Price (provided that such price or Equivalent Price is fixed on or before the
execution date of the agreement)(the "Fixed Price") in the event that the
Company, during the period beginning on the date of the agreement and ending no
later than 90 days after the closing date of the transaction, sells shares of
common stock or Common Stock Equivalent to another investor at a price or
Equivalent Price, as the case may be, below the Fixed Price.
The Stock Option Plan and By-law Amendments may not be further amended or
repealed without the affirmative vote of the holders of a majority of the shares
present and entitled to vote at a duly convened meeting of shareholders. Upon
the adoption of the Stock Option Plan and By-law Amendments, the Company shall
promptly furnish a copy of such amendments to the Purchasers. The Company agrees
that, prior to the adoption of the Stock Option Plan and By-law Amendments by
all necessary corporate action of the Company as described above, the Company
shall not conduct any of the actions specified in (i), (ii), (iii) or (iv) above
of this Section 7.7.
8. LEGAL FEES AND OTHER TRANSACTION EXPENSES
At the Closing, the Company agrees to pay a flat fee of $5,000 to the State
of Wisconsin Investment Board for their legal and other transaction expenses
(whether internal or external) arising in connection with the transactions
contemplated by this Agreement.
9. BROKER'S FEE
Each of the parties to this Agreement hereby represents that, on the basis of
any actions and agreements by it, there are no other brokers or finders entitled
to compensation in connection with the sale of the Shares to the Purchasers. The
Company shall indemnify and hold harmless the Purchasers from and against all
fees, commissions or other payments owing by the Company to any other person or
firm acting on behalf of the Company hereunder.
10. NOTICES
All notices, requests, consents and other communications under this Agreement
shall be in writing, shall be mailed by first-class registered or certified
airmail, confirmed facsimile or nationally recognized overnight express courier
postage prepaid, and shall be delivered as addressed as follows:
14
(a) if to the Company, to:
ScanSoft, Inc.
▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
or to such other person at such other place as the Company shall designate to
the Purchaser in writing; and
(b) if to a Purchaser, at its address as set forth on the signature page to
this Agreement, or at such other address or addresses as may have been furnished
to the Company in writing.
Such notice shall be deemed effectively given upon confirmation of receipt by
facsimile, one business day after deposit with such overnight courier or three
days after deposit of such registered or certified airmail with the U.S. Postal
Service, as applicable.
11. MODIFICATION; AMENDMENT
This Agreement may not be modified or amended except pursuant to an
instrument in writing signed by the Company and each of the Purchasers.
12. TERMINATION
This Agreement may be terminated as to any Purchaser, at the option of such
Purchaser, if the Closing has not occurred on or before thirty (30) days from
the date of this Agreement.
13. HEADINGS
The headings of the various sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be part of this
Agreement.
14. SEVERABILITY
If any provision contained in this Agreement should be held to be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained in this Agreement shall not
in any way be affected or impaired thereby.
15. GOVERNING LAW; JURISDICTION
This Agreement shall be governed by and construed in accordance with the laws
of the state of Delaware and the federal law of the United States of America.
The parties hereto hereby submit to the jurisdiction of the courts of the State
of Wisconsin, or of the United States of America sitting in the State of
Wisconsin, over any action, suit, or proceeding arising out of or relating to
this Agreement. Nothing herein shall affect the right of the Purchaser to serve
process in any manner permitted by law or limit the right of the Purchaser to
bring proceedings against the Company in the competent courts of any other
jurisdiction or jurisdictions.
16. NO CONFLICTS OF INTEREST.
The Company represents, warrants, and covenants that, to the best of its
knowledge, no trustee or employee of the State of Wisconsin Investment Board
identified on the attached list, either directly or indirectly (a) currently
holds, except as may be specifically set forth below, a personal interest in the
Company or any of its affiliates (together, the "Entity") or the Entity's
property or securities, or (b) will, in connection with the investment made
pursuant to this Agreement, receive (i) a personal interest in the Entity or the
Entity's property or securities or (ii) anything of substantial economic value
for his or her private benefit from the Entity or anyone acting on its behalf.
As to ownership of an interest in the Entity's publicly traded securities,
"knowledge" hereunder is based on an examination of record holders of the
Entity's securities and actual knowledge of the undersigned.
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17. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of which
shall constitute an original, but all of which, when taken together, shall
constitute but one instrument, and shall become effective when one or more
counterparts have been signed by each party to this Agreement and delivered to
the other parties.
[Signature pages follow]
16
IN WITNESS WHEREOF, the parties to this Agreement have caused this Agreement
to be executed by their duly authorized representatives as of the day and year
first above written.
SCANSOFT, INC.
By /s/ ▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇
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Its: CEO & Chairman
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STATE OF WISCONSIN INVESTMENT BOARD
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
------------------------------
Title: Investment Director
------------------------------
Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SHARE PURCHASE AGREEMENT
SIGNATURE PAGE
17
SCHEDULE A
PURCHASERS
State of Wisconsin Investment Board 3,500,000 shares of Common Stock
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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APPENDIX I
[COMPANY]
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 3 of the Agreement, please provide us with the following
information:
1. The exact name that your Shares are to be registered in (this is the name
that will appear on your stock certificate(s)). You may use a nominee name if
appropriate:
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2. The relationship between the Purchaser of the Shares and the Registered
Holder listed in response to item 1 above:
--------------
3. The mailing address of the Registered Holder listed in response to item 1
above:
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4. The Social Security Number or Tax Identification Number of the Registered
Holder listed in response to item 1 above:
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APPENDIX II
[COMPANY]
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement, please
provide us with the following information:
5. Pursuant to the "Selling Shareholder" section of the Registration Statement,
please state your or your organization's name exactly as it should appear in
the Registration Statement:
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6. Please provide the number of shares that you or your organization will own
immediately after Closing, including those Shares purchased by you or your
organization pursuant to this Purchase Agreement and those shares purchased
by you or your organization through other transactions:
------------------
7. Have you or your organization had any position, office or other material
relationship within the past three years with the Company or its affiliates?
Yes No
--- --
If yes, please indicate the nature of any such relationships below:
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APPENDIX III
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
The undersigned, an officer of, or other person duly authorized by
--------------------------------------------------------------------------------
[fill in official name of individual or institution]
hereby certifies that he/she/it is the Purchaser of the shares evidenced by the
attached certificate, and as such, sold such shares on , 200
in accordance with Registration Statement number 333- , and complied
with the requirement of delivering a current prospectus in connection with such
sale.
PRINT OR TYPE:
Name of Purchaser (Individual or Institution):
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Name of Individual representing Purchaser (if an Institution)
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Title of Individual representing Purchaser (if an Institution):
--------------------------------------------------------------------------------
SIGNATURE:
Individual Purchaser or Individual representing Purchaser:
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