Exhibit 10.41
INVESTMENT AGREEMENT
DATED JULY 26, 1996
The parties to this agreement are Across Data Systems, Inc., a
Delaware corporation (the "Company"), Liraz Systems Ltd., an Israeli
company that owns shares in the Company ("Liraz"), and Candle Corporation,
a California corporation (the "Purchaser").
The Company, the Purchaser and Level 8 Systems, Inc., a Delaware
corporation ("Level 8"), have entered into a letter of intent dated July
25, 1996 (the "LOI") regarding the transfer of the Shares (as defined in
section 1) and certain software licensing, agency and technology agreements
among the parties to the LOI.
The purpose of this agreement is to implement the sale of the Shares
on the terms set forth below. To the extent any provision of this agreement
conflicts with any provision of the LOI, the provision of this agreement
shall prevail over such provision of the LOI.
The parties agree as follows:
1. SALE AND PURCHASE. Simultaneously with the execution of this
agreement, (a) the Company is issuing and selling to the Purchaser, and the
Purchaser is purchasing from the Company, free and clear of all claims,
liens, charges, security interests and other encumbrances of any nature
("Liens"), 246,800 shares of the Company's common stock, $.01 par
value per share (the shares being sold, the "Shares"), and (b) in consideration
for the issuance and sale of the Shares to the Purchaser, the Purchaser is
paying the Company, by wire transfer of immediately available funds,
$2,714,800.
2. REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
represents and warrants to the Company as follows:
2.1.1 EXISTENCE AND POWER. The Purchaser is validly existing and in good
standing under the law of its state of incorporation and has the full power
and authority to enter into and perform this agreement and the LOI
(collectively, the "Transaction Documents").
2.1.2 AUTHORIZATION. The execution, delivery and performance of each of
the Transaction Documents have been duly authorized by all necessary action,
and each of the Transaction Documents constitutes the valid and binding
obligation of the Purchaser enforceable against it in accordance with its
terms, except to the extent enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights in general and subject to general principles
of equity (regardless of whether enforceability is considered in a proceeding
in equity or at law).
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2.1.3 CONSENTS OF THIRD PARTIES. The execution, delivery and performance
by the Purchaser of each of the Transaction Documents will not: (a) violate
or conflict with its certificate of incorporation or by-laws; (b) conflict
with, or result in the breach, termination or acceleration of, or constitute
a default under, any lease, mortgage, license, agreement, commitment or other
instrument to which it is a party or by which it or any of its properties are
bound; or (c) constitute a violation of any law, regulation, order, writ,
judgment, injunction or decree applicable to it or any of its properties or
require any governmental consent, registration or approval.
2.1.4 LITIGATION. There is no judicial or administrative action or
proceeding pending or, to the best of the knowledge of the Purchaser,
threatened, nor, to the best of the knowledge of the Purchaser, is there any
governmental investigation pending or threatened, that questions the validity
of either of the Transaction Documents or any action taken or to be taken by
it in connection with either of the Transaction Documents. There is no
litigation or proceeding pending or, to the best of the knowledge of the
Purchaser, threatened, nor, to the best of the knowledge of the Purchaser, is
there any governmental investigation pending or threatened, nor is there any
order, injunction or decree outstanding, against the Purchaser that would
have a material adverse effect upon the
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Purchaser's ability to perform its obligations under either of the Transaction
Documents.
2.1.5 SEC MATTERS. The Purchaser is an accredited investor (within the
meaning of the rules and regulations under the Securities Act of 1933 (the
"1933 Act")) and is acquiring the Shares for investment and not with a view
to distribution in violation of the 1933 Act. The Purchaser has received and
reviewed copies of the Company's Registration Statement on Form S-1
(Registration No. 33-92230), the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995, the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended March 31, 1996 and the Company's proxy
statement for its annual meeting of shareholders on May 2, 1996
(collectively, the "SEC Documents"), and the Purchaser understands the
Company may effect one or more of the transactions referred to in the
confidential disclosure letter from the Company to the Purchaser dated this
date. The Purchaser is experienced in the software business, and has had an
adequate opportunity to ask all questions of the Company and its
representatives as it has deemed appropriate in connection with the
acquisition of the Shares.
2.1.6 BROKERS. The Purchaser has not entered into any agreement,
arrangement or understanding with any broker or finder in connection with the
transactions contemplated by the Transaction Documents.
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2.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to the Purchaser as follows:
2.2.1 EXISTENCE AND POWER. Each of the Company and its subsidiaries is
validly existing and in good standing under the law of its state of
incorporation and has the full power and authority to enter into and perform
each of the Transaction Documents to which it is a party.
2.2.2 AUTHORIZATION. The execution, delivery and performance of each of
the Transaction Documents have been duly authorized by all necessary action,
and each of the Transaction Documents constitutes the valid and binding
obligation of the Company and/or its subsidiary enforceable against it in
accordance with its terms, except to the extent enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights in general and subject to
general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
2.2.3 CONSENTS OF THIRD PARTIES. The execution, delivery and performance
by the Company and/or its subsidiary of each of the Transaction Documents to
which it is a party will not: (a) violate or conflict with its certificate
of incorporation or by-laws; (b) conflict with, or result in the breach,
termination or acceleration of, or constitute a default under, any lease,
mortgage, license, agreement, commitment or
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other instrument to which it is a party or by which it or any of its
properties are bound; (c) constitute a violation of any law, regulation,
order, writ, judgment, injunction or decree applicable to it or any of its
properties or require any governmental consent, registration or approval; or
(d) result in the creation of any Lien upon its properties or assets.
2.2.4 LITIGATION. There is no judicial or administrative action or
proceeding pending or, to the best of the knowledge of the Company,
threatened, nor, to the best of the knowledge of the Company, is there any
governmental investigation pending or threatened, that questions the validity
of any of the Transaction Documents or any action taken or to be taken by the
Company or any of its subsidiaries in connection with either of the
Transaction Documents. There is no litigation or proceeding pending or, to
the best of the knowledge of the Company, threatened, nor, to the best of the
knowledge of the Company, is there any governmental investigation pending or
threatened, nor is there any order, injunction or decree outstanding, against
the Company or any of its subsidiaries that would have a material adverse
effect upon its ability to perform its obligations under either of the
Transaction Documents.
2.2.5 CAPITALIZATION. The SEC Documents accurately reflect, as of the
respective dates as of which they speak, the information contained therein
respecting the authorized capital stock of the Company, the number of issued
and outstanding shares of common stock of the Company and the number of
shares of common
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stock of the Company reserved for issuance under outstanding securities,
benefit arrangements and plans and other agreements and instruments. Since
March 31, 1996, the Company has not issued any securities (other than
pursuant to the Company's stock option plan) or entered into any agreement to
issue any securities. The Company owns all the issued and outstanding shares
of capital stock of each of its subsidiaries. All the issued and outstanding
shares of capital stock of the Company and each of its subsidiaries were duly
authorized for issuance and are validly issued, fully paid and nonassessable.
2.2.6 SEC MATTERS. Assuming the accuracy of the representations and
warranties in section 2.1.5, neither the Company nor any person acting on its
behalf has taken any action that would require the offering, issuance or sale
of the Shares to be registered under the 1933 Act. The SEC Documents taken
as a whole did not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in the light of
the circumstances under which they were made, not misleading as of the
respective dates of the SEC Documents. The Company has filed with the
Securities and Exchange Commission (the "SEC") all documents required to have
been filed by it pursuant to section 13(a) of the Securities Exchange Act of
1934.
2.2.7 BROKERS. Neither the Company nor any of its subsidiaries has
entered into any agreement, arrangement or
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understanding with any broker or finder in connection with the transactions
contemplated by the Transaction Documents.
3. REGISTRATION RIGHTS
3.1 DEMAND REGISTRATION. Any time after March 1, 1999 and before
February 29, 2000, upon receipt of a notice (a "Demand Request") from the
Purchaser demanding the Company effect the registration under the 1933 Act of
any or all of the Shares then held by the Purchaser, the Company shall as
promptly as practicable file a registration statement and effect the
registration under the 1933 Act of the Shares specified in the Demand
Request. The Company shall be obligated to effect only one such registration;
however, notwithstanding anything to the contrary in this agreement, if, for
any reason (other than the fault of the Purchaser), such registration fails
to become effective and to provide for the distribution of all the Shares
specified in the Demand Request or the effectiveness is not maintained for at
least 90 days, the Purchaser shall thereafter continue to be entitled to a
registration in accordance with this section 3.1. Notwithstanding anything
to the contrary in this section 3.1, the Company's obligations under this
section 3.1 shall terminate after the Company shall have complied with a
Piggyback Request pursuant to section 3.2.
3.2 PIGGYBACK REGISTRATION. If the Company determines to register under
the 1933 Act for sale to the public any of the Company's securities on a
form that also permits the registration
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under the 1933 Act for sale to the public of any of the Shares then held by
the Purchaser, the Company shall within 10 days thereafter give the Purchaser
notice of its intent to effect a registration, and, subject to this section
3, shall include in the registration all the Shares then held by the
Purchaser with respect to which the Company shall have received a notice (a
"Piggyback Request") specifying the number of Shares to be included within 30
days after the Company shall have given the Purchaser the notice pursuant to
this section 3.2.
3.3 OBLIGATION OF PURCHASER. Any Demand Request or Piggyback Request
(a "Request") shall express the present intent to offer for sale to the
public the number of Shares to be included in the registration statement and
contain an undertaking to provide such information and materials and take
such action as may be required to permit the Company to comply with all
applicable requirements of the SEC and to obtain acceleration of the
effective date of the registration statement.
3.4 OBLIGATIONS OF THE COMPANY. With respect to any registration
statement referred to in section 3.1 or 3.2, the Company shall:
(a) promptly notify the Purchaser (i) when the registration statement
becomes effective, (ii) when any post-effective amendment to the
registration statement becomes effective and (iii) of any request by the SEC
for any amendment or supplement to the registration statement or any
prospectus
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relating to the registration statement or for additional information;
(b) use reasonable efforts to qualify, not later than the effective
date of the registration statement, the Shares under such "blue
sky" or other state securities laws as the Purchaser may reasonably request
(it being understood, however, that the obligation under this section 3.4(b)
shall not obligate the Company to qualify as a foreign corporation or a dealer
in securities or to execute or file any general consent to service of process
under the law of any such jurisdiction where it is not otherwise subject);
(c) furnish the Purchaser such number of copies of the registration
statement, each amendment to the registration statement, the prospectus
included in each such registration statement and each amendment to each
registration statement, each amendment or supplement to any prospectus and
such other documents as the Purchaser may reasonably request to facilitate the
disposition of the Shares;
(d) if at any time the SEC institutes or threatens to institute
any proceeding for the purpose of issuing a stop order suspending the
effectiveness of any such registration statement, promptly notify the
Purchaser and use reasonable efforts to prevent the issuance of any such stop
order or to obtain its withdrawal as soon as possible; and
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(e) insofar as the methods of distribution proposed to be used are
not reflected in the last prospectus filed by the Company as part of the
registration statement or pursuant to Rule 424 under the 1933 Act, the
Purchaser shall promptly provide the Company with a description of the method
or methods of distribution of the Shares from time to time contemplated by the
Purchaser, and the Company shall file any and all amendments and supplements
necessary to include the description in the registration statement.
3.5 EXPENSES OF REGISTRATION. All expenses (excluding underwriting and
brokerage commissions attributable to the Shares to be sold) incurred in
connection with all registrations under this agreement and the "blue sky"
qualifications referred to in section 3.4(b), including, without limitation,
all registration and qualification fees, printers' and accounting fees and
fees and disbursements of counsel for the Company, shall be borne by the
Company. Notwithstanding the foregoing, however, in any registration under
this section 3, the Company shall not be obligated to bear the fees or
expenses of counsel for the Purchaser.
3.6 UNDERWRITING REQUIREMENTS. The Company shall not be required to
include any Shares in any registration statement covering an underwritten
offering, unless the Purchaser accepts the terms of the underwriting and then
only in such quantity as will not, in the written opinion of the managing
underwriter(s), exceed the maximum number of Shares that can be marketed
without
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materially and adversely affecting the offering, if any, by the
Company.
3.7 HOLDBACK. At the request of the Company, the Purchaser shall agree
with the underwriters in any underwritten public offering of equity
securities of the Company not to sell or otherwise dispose of any Shares for
up to 180 days after the effective date of any registration statement
covering any such public offering.
3.8 TERMINATION OF OBLIGATIONS. The Company's obligations under this
section 3 shall terminate on the earlier of the fifth anniversary of the date
of this agreement and the date on which the Purchaser owns a number of Shares
less than 2% of the then outstanding shares of the Company's common stock.
4. SURVIVAL; INDEMNIFICATION
4.1 SURVIVAL. All representations, warranties and agreements of each
party shall survive the execution and delivery of this agreement,
notwithstanding any investigation at any time made by or on behalf of the
other party, and shall not be considered waived by consummation of the
transactions contemplated by this agreement, notwithstanding any alleged
knowledge of any breach.
4.2 INDEMNIFICATION. Each party shall indemnify and hold the other party
harmless from and against all losses, liabilities, damages and expenses
(including reasonable
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attorneys' fees) resulting from any breach of warranty or agreement or any
misrepresentation by the indemnifying party under this agreement.
5. ELECTION OF DIRECTOR. From time to time before the later of the third
anniversary of this agreement and the date on which, in the good faith
judgment of the Company's board of directors, the Purchaser and the Company
cease to have substantial, ongoing commercial relationships (it being
understood that the renewal or extension of any of the agreements referred to
in the recitals of the LOI (other than the agreement for MQ Secure) would be
deemed to constitute substantial, ongoing commercial relationships), the
Purchaser may designate (by written notice given to the Company and Liraz) a
single individual to be a member of the Company's board of directors. The
Company and Liraz shall, subject to the authority of the Company's board of
directors, cooperate and use all reasonable efforts (including, without
limitation, in the case of Liraz, to vote its shares in the Company) to cause
that designee (or his or her successor) to be elected to the board of
directors as promptly as practicable. Any director so designated may be
removed from the board of directors with or without cause at any time after
the second anniversary of this agreement.
6. MISCELLANEOUS
6.1 GOVERNING LAW. This agreement shall be governed by and construed in
accordance with the law of the state of New
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York applicable to agreements made and to be performed wholly in New York.
6.2 NOTICES. All notices and other communications under this agreement
shall be in writing and may be given by any of the following methods: (a)
personal delivery; (b) facsimile transmission; (c) registered or certified
mail, postage prepaid, return receipt requested; or (d) overnight delivery
service. Notices shall be sent to the appropriate party at its address or
facsimile number given below (or at such other address or facsimile number
for that party as shall be specified by notice given under this section 6.2):
if to the Company or Liraz, to it, c/o the Company, at:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Proskauer ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Purchaser, to it at:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
All such notices and communications shall be deemed received upon (a) actual
receipt by the addressee, (b) actual delivery to the appropriate address or
(c) in the case of a facsimile transmission, upon transmission by the sender
and issuance by the
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transmitting machine of a confirmation slip confirming the number of pages
constituting the notice have been transmitted without error. In the case of
notices sent by facsimile transmission, the sender shall contemporaneously
mail a copy of the notice to the addressee at the address provided for above.
However, such mailing shall in no way alter the time at which the facsimile
notice is deemed received.
6.3 FURTHER ASSURANCES. Each party shall, from time to time, take such
action and execute and deliver such documents as the other may reasonably
request to carry out the transactions contemplated by this agreement.
6.4 FEES AND EXPENSES. Each party shall be solely responsible for its own
fees and expenses in connection with the transactions contemplated by this
agreement.
6.5 COUNTERPARTS. This agreement may be executed in counterparts, each of
which shall be considered an original, but of which together shall constitute
the same instrument.
6.6 SEPARABILITY. If any provision of this agreement is invalid or
unenforceable, the balance of this agreement shall remain in effect, and, if
any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances.
6.7 PUBLICITY. Each party shall consult with and obtain the consent of
the other party before issuing any press
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release or making any other public disclosure using the other party's name or
otherwise making reference to the other party, unless the release or
disclosure is required to discharge the party's legal obligations (in which
case the party issuing the release or seeking the disclosure shall consult
with the other party before issuing the release or making the disclosure).
6.8 ATTORNEYS' FEES. In the event of any dispute between or among the
parties to the Transaction Documents, the prevailing party shall be entitled
to attorneys' fees and costs awarded in a final and non-appealable order by a
court having jurisdiction.
6.9 ENTIRE AGREEMENT. The Transaction Documents contain a complete
statement of all the arrangements among the parties with respect to their
subject matter, supersede all existing agreements among them with respect to
that subject matter, may not be changed or terminated orally and any amendment
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or modification must be in writing and signed by the party to be charged.
ACROSS DATA SYSTEMS, INC.
By: ------------------------
LIRAZ SYSTEMS LTD.
By: -------------------------
CANDLE CORPORATION
By: --------------------------
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INVESTMENT AGREEMENT
---------------------
July 26, 1996
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TABLE OF CONTENTS
PAGE
----
1. Sale and Purchase. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Representations and Warranties . . . . . . . . . . . . . . . . . . . . 2
2.1 Representations and Warranties of the Purchaser . . . . . . . . . 2
2.1.1 Existence and Power . . . . . . . . . . . . . . . . . . . . 2
2.1.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . 2
2.1.3 Consents of Third Parties . . . . . . . . . . . . . . . . . 3
2.1.4 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1.5 SEC Matters . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1.6 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Representations and Warranties of the Company . . . . . . . . . . .5
2.2.1 Existence and Power . . . . . . . . . . . . . . . . . . . . 5
2.2.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . 5
2.2.3 Consents of Third Parties . . . . . . . . . . . . . . . . . 5
2.2.4 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2.5 Capitalization. . . . . . . . . . . . . . . . . . . . . . . 6
2.2.6 SEC Matters . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2.7 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3. Registration Rights. . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.1 Demand Registration . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Piggyback Registration. . . . . . . . . . . . . . . . . . . . . . 8
3.3 Obligation of Purchaser . . . . . . . . . . . . . . . . . . . . . 9
3.4 Obligations of the Company. . . . . . . . . . . . . . . . . . . . 9
3.5 Expenses of Registration. . . . . . . . . . . . . . . . . . . . . 11
3.6 Underwriting Requirements . . . . . . . . . . . . . . . . . . . . 11
3.7 Holdback. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.8 Termination of Obligations. . . . . . . . . . . . . . . . . . . . 12
4. Survival; Indemnification. . . . . . . . . . . . . . . . . . . . . . . 12
5. Election of Director . . . . . . . . . . . . . . . . . . . . . . . . . 13
6. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.1 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.3 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . 15
6.4 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . 15
6.5 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.6 Separability. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.7 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.8 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.9 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 16
(i)