EXHIBIT 10.33
STOCK PURCHASE AGREEMENT
DATED NOVEMBER 14, 1994
AMONG
INFORMATION MANAGEMENT ASSOCIATES, INC.
AND
THE PURCHASERS LISTED ON SCHEDULE A ATTACHED HERETO
Table of Contents
ARTICLE 1. TRANSFER OF SHARES AND RELATED MATTERS............... 1
1.1 The Sale.............................................. 1
1.2 Delivery of Shares.................................... 1
ARTICLE 2. CLOSING.............................................. 1
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.............................................. 1
3.1 Authority and Validity................................ 1
3.2 Organization and Standing; Certificate of
Incorporation and Bylaws.............................. 2
3.3 Subsidiaries.......................................... 2
3.4 Qualification......................................... 2
3.5 Capitalization........................................ 2
3.6 Indebtedness of the Company........................... 3
3.7 Disclosure............................................ 3
3.8 Intellectual Property................................. 3
3.9 Environmental Matters................................. 3
3.10 Financial Statements.................................. 4
3.11 Changes............................................... 4
3.12 Litigation, Etc....................................... 4
3.13 Compliance with Other Instruments, etc................ 5
3.14 Use of Proceeds....................................... 5
3.15 No Violations of Securities Laws...................... 5
3.16 Brokers or Finders Fees, Etc.......................... 5
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE
PURCHASERS........................................... 5
4.1 Investment............................................ 5
4.2 Resale................................................ 5
4.3 Accredited Investor................................... 6
4.4 Access to Information................................. 6
4.5 Confidentiality....................................... 6
4.6 No Agents............................................. 6
ARTICLE 5. CONDITIONS TO OBLIGATIONS OF THE PURCHASERS.......... 7
5.1 Representations....................................... 7
5.2 Authorization......................................... 7
5.3 Acceptance by Counsel to the Purchasers............... 7
5.4 Government Consents, Authorizations, Etc.............. 7
5.5 No Litigation or Legislation.......................... 7
5.6 No Material Adverse Change............................ 7
5.7 Consents and Permits.................................. 8
ARTICLE 6. CONDITIONS TO OBLIGATIONS OF THE COMPANY............. 8
6.1 Representations....................................... 8
6.2 Legality.............................................. 8
6.3 Acceptance by Counsel to the Company.................. 8
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ARTICLE 7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION, ETC................................. 8
7.1 Survival.............................................. 8
7.2 Company's Agreement to Indemnify...................... 8
7.3 Financial Statements.................................. 8
ARTICLE 8. RESTRICTION ON TRANSFERABILITY....................... 9
8.1 Restriction; Procedure for Transfer................... 9
8.2 Notice of Proposed Transfer........................... 9
ARTICLE 9. REGISTRATION UNDER SECURITIES ACT, ETC............... 9
9.1 Right to Request Registration......................... 9
9.2 Incidental Registration............................... 11
9.3 Registration Procedures............................... 13
9.4 Underwritten Offerings................................ 17
9.5 Preparation; Reasonable Investigation................. 19
9.6 Indemnification....................................... 20
ARTICLE 10. DEFINITIONS.......................................... 23
ARTICLE 11. MISCELLANEOUS........................................ 26
11.1 Preemptive Rights..................................... 26
11.2 Amendment, Modification and Waiver.................... 28
11.3 Expenses; Transfer Taxes, Etc......................... 28
11.4 Binding Effect; Benefits; Parties in Interest......... 28
11.5 Entire Agreement...................................... 28
11.6 Headings.............................................. 28
11.7 Notices............................................... 29
11.8 Counterparts.......................................... 29
11.9 Governing Law......................................... 29
11.10 Gender................................................ 29
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STOCK PURCHASE AGREEMENT
------------------------
STOCK PURCHASE AGREEMENT dated as of November 14, 1994 by and among
the purchasers listed on Schedule A attached hereto (collectively, the
"Purchasers"), and INFORMATION MANAGEMENT ASSOCIATES, INC. (the "Company").
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto hereby agree as follows:
ARTICLE 1. TRANSFER OF SHARES AND RELATED MATTERS
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1.1 The Sale. Subject to the terms and conditions of this Agreement,
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the Company hereby agrees to issue and sell to the Purchasers, and each
Purchaser hereby agrees to purchase from the Company, on the date of the Closing
(as hereinafter defined), the number of newly issued shares set forth opposite
such Purchaser's name on Schedule A attached hereto (collectively, the "Shares")
of the common stock, no par value, of the Company ("Common Stock") free and
clear of all liens, claims, liabilities, restrictions or other encumbrances at a
purchase price of $9.00 per share (the "Purchase Price").
1.2 Delivery of Shares. On the Closing Date (as hereinafter defined),
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the Company will deliver to the Purchasers, against payment of the Purchase
Price, certificates representing the Shares.
ARTICLE 2. CLOSING
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The closing for the consummation of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of LeBoeuf, Lamb,
▇▇▇▇▇▇ & ▇▇▇▇▇▇, Hartford, Connecticut, 10:00 a.m. on November 14, 1994 or at
such other time or place as the parties hereto shall mutually agree (the
"Closing Date").
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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The Company hereby represents and warrants to the Purchasers as
follows:
3.1 Authority and Validity. The execution, delivery and performance
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of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action on the
part of the Company. This Agreement has been duly and validly executed and
delivered by the Company and is the valid and binding obligation of the Company,
enforceable in accordance with its terms, except as such enforcement may be
affected or limited by bankruptcy,
insolvency, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by applicable principles of equitable remedies.
Neither the execution, delivery and performance of this Agreement, nor the
consummation of the transactions contemplated hereby or compliance by the
Company with any of the provisions hereof will (i) conflict with or result in a
breach of any material provision of its Charter or By-laws; (ii) violate or
conflict with the terms of any material agreement to which the Company is a
party or by which it is bound; or (iii) violate any law, statute, rule or
regulation or judgement, order, writ, injunction or decree of any court,
administrative agency or governmental body applicable to Company.
3.2 Organization and Standing; Certificate of Incorporation and
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Bylaws. The Company is a corporation duly organized and existing under the laws
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of the State of Connecticut and is in good standing under such laws. (A copy of
a good standing certificate from the State of Connecticut is attached hereto as
Schedule 3.2). The Company has the requisite corporate power and authority to
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own, lease and operate its properties and assets, and to carry on its business
as presently conducted. The Company has all requisite corporate power and
authority to enter into and perform all of its obligations under this Agreement.
3.3 Subsidiaries. Information Management Associates Limited, a United
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Kingdom Company, is a wholly owned subsidiary and the only subsidiary of the
Company.
3.4 Qualification. Attached as Schedule 3.4 is a true and complete
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list of all jurisdictions in which the Company has qualified as a foreign
corporation authorized to do business. The jurisdictions identified in Schedule
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3.4 are the only jurisdictions in which the nature of the Company's activities
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or the character of the properties it owns or leases makes such qualification
necessary, other than those jurisdictions in which the failure to be so
qualified would not have a material adverse effect on the financial condition,
assets, liabilities (absolute, accrued, contingent or otherwise), reserves,
business, operations or prospects of the Company.
3.5 Capitalization. Shown on the attached Schedule 3.5 is a true and
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accurate list of the authorized capital stock of the Company and the issued and
outstanding stock of the Company. Also shown on the attached Schedule 3.5 is a
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true and accurate list of the issued or outstanding shares of capital stock or
securities convertible or exchangeable into, or outstanding stock purchase
warrants or other options or rights to purchase shares of its capital stock or
other equity securities of the Company. All issued and outstanding shares have
been duly authorized and validly issued, are fully paid and non-assessable. When
authorized and issued, the Shares will not be subject to any pre-emptive rights
or rights of first refusal. The Shares, when issued in compliance
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with the provisions of this Agreement, will be validly issued, fully paid and
non-assessable and will be free of any liens or encumbrances; provided, however,
that the Shares will be subject to restrictions on transfer imposed under
applicable state and federal securities laws.
3.6 Indebtedness of the Company. Schedule 3.6 correctly describes all
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secured and unsecured Indebtedness of the Company outstanding, or for which the
Company had commitments, as of June 30, 1994. As of June 30, 1994, the Company
was not in default with respect to any Indebtedness or any instrument or
agreement relating thereto.
3.7 Disclosure. Neither this Agreement, the Schedules hereto, nor the
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officers' certificates delivered in connection with the Closing contains (in
each case, as of its date) any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
or therein not misleading.
3.8 Intellectual Property. The Company owns or has valid rights to
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use all Intellectual Property Rights, including proprietary information,
trademarks, trade names, and copyrights, used in or necessary to conduct the
Company's business as heretofore conducted or planned to be conducted in the
foreseeable future, except for Intellectual Property Rights which are not
material to the conduct of the Company's business.
3.9 Environmental Matters. The Company is in compliance with the
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provisions of all federal, state and local laws relating to pollution or
protection of the environment applicable to it or to real property owned or
leased by it or to the ownership, use, operation or occupancy thereof, except
for violations or liabilities which individually or in the aggregate could not
reasonably be expected to have a material adverse effect on the Company. Neither
the Company nor any Person has engaged in any activity in violation of any
provision of any federal, state or local law relating to pollution or protection
of the environment, which violation could reasonably be expected to have a
material adverse effect on the Company. The Company has no liability, absolute
or contingent, under any federal, state or local law relating to pollution or
protection of the environment, except for liabilities which individually or in
the aggregate could not reasonably be expected to have a material adverse effect
on the Company.
3.10 Financial Statements. The audited balance sheet and related
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statement of operations of the Company as of December 31, 1993 (the "Audited
Financial Statements") and the unaudited balance sheet and related statement of
operations of the Company as of June, 30, 1994 (the "Interim Financial
Statements" and together with the Audited Financial Statements (the "Financial
Statements"),
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set forth in Schedule 3.11 hereto, fairly present the Company's assets,
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liabilities, financial position and results of operations as of the dates
thereof and for the periods then ended, and were prepared in accordance with
generally accepted accounting principles, consistently applied (subject, in the
case of interim statements, to normal year-end adjustments). As of the date of
this Agreement, there is no fact (other than any matters of a general economic
or political nature which do not affect the Company uniquely) known to the
Company which materially adversely affects or in the future may (so far as the
Company can now reasonably foresee) materially adversely affect the financial
condition, assets, liabilities (absolute, accrued, contingent or otherwise),
reserves, business operations or prospects of the Company which has not been set
forth in this Agreement or the Schedules hereto.
3.11 Changes. Except as set forth in Schedule 3.12 hereto, since June
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30, 1994, there has not been:
(a) any change in the Company's assets, liabilities, condition
(financial or otherwise) or business which individually or in the aggregate is
materially adverse to the Company, or which is not in the ordinary course of
business;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the Company's business or assets
or other properties;
(c) any issuance or sale by the Company of any shares of its capital
stock or other securities; and
(d) any other event or condition which has materially and adversely
affected the Company's business.
3.12 Litigation, Etc. Except as described in Schedule 3.12, there is
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no litigation or government investigation or proceeding either existing, pending
or, to the Company's knowledge, threatened against the Company or affecting any
of the Company's properties or assets, in any court or before or by any federal,
state, municipal or other governmental authority, or which affects this
Agreement or any action taken or to be taken by the Company hereunder.
3.13 Compliance with Other Instruments, etc. The Company is not in
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violation of any term of its Certificate of Incorporation or By-Laws, and the
Company is not in violation of any term of any agreement or instrument to which
it is a party or by which it is bound or any term of any applicable law,
ordinance, rule or regulation of any governmental authority or any term of any
applicable order, judgment or decree of any court, arbitrator or governmental
authority, the consequences of which violation could reasonably be expected to
have a material adverse effect on the
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financial condition, assets, liabilities (absolute, accrued, contingent or
otherwise), reserves, business, operations or prospects of the Company.
3.14 Use of Proceeds. The Company will use the proceeds from the sale
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of the Shares for general corporate purposes.
3.15 No Violations of Securities Laws. Subject to the accuracy of the
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Purchasers' representations in Article 4 hereof, the offer and sale of the
Shares hereunder is and will be exempt from the registration and prospectus
delivery requirements of the Securities Act and is and will be exempt from the
registration, permit or qualification requirements of all applicable state
securities laws or such requirements have been or will be satisfied. The Company
has not offered or sold the Shares to anyone other than the Purchasers. Neither
the Company nor any person acting on its behalf has taken any action which would
require the registration of the Shares under Section 5 of the Securities Act,
including, without limitation, engaging in any form of general solicitation.
3.16 Brokers or Finders Fees, Etc. No agent, broker, investment
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banker, person or firm acting on behalf of the Company or under its authority is
or will be entitled to any broker's or finder's fee or any other commission or
similar fee in connection with the sale of the Shares contemplated hereby.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
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Each Purchaser hereby represents and warrants to the Company as
follows:
4.1 Investment. Such Purchaser is acquiring the Shares for investment
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for its own account and not with a view to, or for resale in connection with,
any distribution thereof. The Purchaser understands that the Shares have not
been registered under the Securities Act by reason of a specific exemption from
the registration provisions of the Securities Act which depends upon, among
other things, accuracy of the Purchaser's representations herein and the bona
fide nature of the Purchaser's investment intent as expressed herein.
4.2 Resale. Such Purchaser acknowledges that the Shares must be held
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indefinitely unless the Shares are subsequently registered under the Securities
Act or an exemption from such registration is available. Each certificate
representing (i) the Shares, and (ii) any other securities issued in respect of
the Shares upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event, shall (unless otherwise permitted by law) be
stamped or otherwise imprinted with a legend in the following form (in addition
to any legend required under applicable state securities laws, rules or
regulations):
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THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, OR THE CONNECTICUT UNIFORM SECURITIES ACT. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT
EXCEPT PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED.
4.3 Accredited Investor. Such Purchaser is an "accredited investor"
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as that term is used in Rule 501 promulgated under the Securities Act. An
accredited investor is (i) an individual who either individually or jointly with
his spouse has a net worth (i.e., total assets in excess of total liabilities)
of at least $1,000,000, (ii) an individual whose individual annual income
exceeded $200,000 or whose income with that of his spouse exceeded $300,000 in
each of the last two years and who reasonably expects to reach the same income
level in the current year, (iii) an individual who is an executive officer or
director of the Company, (iv) certain institutional investors, (v) a
corporation, a Massachusetts or similar business trust or partnership, not
formed for the specific purpose of acquiring the Shares, with total assets in
excess of $5,000,000, (vi) certain other trusts directed by sophisticated
persons, or (vii) an entity in which all of the equity owners are accredited
investors. Such Purchaser is sophisticated in business and financial matters and
is capable of evaluating the merits of an investment in the Shares.
4.4 Access to Information. Such Purchaser (i) has received such
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information and made such investigation and analysis as he deems appropriate of
the business and prospects of the Company and has been afforded an opportunity
to meet with, and ask questions of and receive answers from, management of the
Company and (ii) been provided with copies of such documents as he has requested
from the Company.
4.5 Confidentiality. Such Purchaser agrees to keep permanently
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confidential the information provided or to be provided to the Purchaser by the
Company in connection with the purchase and sale of the Shares, including
without limitation this Agreement and the Schedules attached hereto and any and
all information, financial or otherwise, relating to the Company which may
hereafter be provided to such Purchaser.
4.6 No Agents. Such Purchaser acknowledges that the Shares are being
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offered by the Company through its directors and executive officers and that no
other person has acted as agent or broker in connection with the offering and
sale of the Shares and no other person has been authorized to give any
information or make any representation concerning the Company or the Shares.
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ARTICLE 5. CONDITIONS TO OBLIGATIONS OF THE PURCHASERS
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The obligations of the Purchasers to perform this Agreement are
subject to the satisfaction of the following conditions unless waived by the
Purchasers:
5.1 Representations. The representations made by the Company in
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Section 3 hereof shall be true and correct when made, and shall be true and
correct on the Closing Date with the same force and effect as if they had been
made on and as of said date.
5.2 Authorization. All action necessary to authorize the execution,
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delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby shall have been duly and validly taken by the
Company and the Company shall have full power and right to consummate the
transactions contemplated hereby.
5.3 Acceptance by Counsel to the Purchasers. The form and substance
---------------------------------------
of all legal matters contemplated hereby and of all papers delivered hereunder
shall be acceptable to counsel to the Purchasers.
5.4 Government Consents, Authorizations, Etc. All consents,
----------------------------------------
authorizations, orders or approvals of, and filings or registrations with, any
federal, state, local or foreign governmental commission, board or other
regulatory body which are required for or in connection with the execution,
delivery and performance of this Agreement by the Company, and the consummation
of the transactions contemplated hereby shall have been duly obtained or made.
5.5 No Litigation or Legislation. No federal, state, local or foreign
----------------------------
statute, rule or regulation shall have been enacted or litigation, proceeding,
government inquiry or investigation commenced or threatened which prohibits,
restricts or delays the consummation of the transactions contemplated by this
Agreement or any of the conditions to the consummation of such transactions or
adversely affects the desirability of consummating the transactions contemplated
hereby.
5.6 No Material Adverse Change. In the judgment of the Purchasers, no
--------------------------
material adverse change shall have occurred in the financial condition, assets,
liabilities (absolute, accrued, contingent or otherwise), reserves, business,
operations or prospects of the Company since June 30, 1994, other than (x)
changes which have not been, either in any case or in the aggregate, materially
adverse to the Company, and (y) any matters of a general economic or political
nature which do not affect the Company uniquely.
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5.7 Consents and Permits. The Company shall have received all
--------------------
consents, permits and other authorizations, and made all such filings and
declarations, as may be required pursuant to any law, statute, regulation or
rule (federal, state, local or foreign) in connection with the transactions
contemplated by this Agreement, or as may be required pursuant to any agreement,
order or decree to which the Company is a party or to which it is subject, in
connection with the transactions contemplated by this Agreement.
ARTICLE 6. CONDITIONS TO OBLIGATIONS OF THE COMPANY
--------- ----------------------------------------
The obligations of the Company to perform this Agreement are subject
to the satisfaction of the following conditions unless waived by the Company:
6.1 Representations. The representations made by Purchasers in
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Section 4 hereof shall be true and correct when made, and shall be true and
correct on the Closing Date with the same force and effect as if they had been
made on and as of said date.
6.2 Legality. At the time of Closing the sale of the Shares to the
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Purchasers shall be legally permitted by all laws and regulations to which the
Purchasers and the Company are subject.
6.3 Acceptance by Counsel to the Company. The form and substance of
------------------------------------
all legal matters contemplated herein and of all papers delivered hereunder
shall be acceptable to counsel to the Company.
ARTICLE 7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION, ETC.
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7.1 Survival. All representations and warranties made by any party to
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this Agreement, including, without limitation, all representations and
warranties made on any Schedule attached hereto or document delivered hereunder,
shall survive the Closing and the consummation of the transactions contemplated
hereby.
7.2 Company's Agreement to Indemnify. The Company hereby agrees to
--------------------------------
indemnify and save the Purchasers harmless from and against, for and in respect
of, any and all damages, losses, obligations, liabilities, claims, actions or
causes of action, encumbrances, costs, and expenses (including, without
limitation, reasonable attorneys' fees) arising from the untruth, inaccuracy or
breach or nonfulfillment of any representation, warranty, covenant or agreement
of the Company, contained in or made pursuant to this Agreement, including any
Schedule attached hereto or certificate delivered hereunder.
7.3 Financial Statements. Until the Company is required to file
--------------------
reports pursuant to Section 13 or 15(d) of the Exchange
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Act, at which time this provision shall terminate and be of no further force or
effect, the Company agrees to provide to the Purchasers copies of its quarterly
and annual financial statements within 45 days after the end of each fiscal
quarter and within 120 days after the end of each fiscal year, respectively. In
addition, each Purchaser shall have the right to request such additional
information regarding the Company as such Purchaser may reasonably request.
ARTICLE 8. RESTRICTION ON TRANSFERABILITY
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8.1 Restriction; Procedure for Transfer. The Shares shall not be
-----------------------------------
transferable except upon the conditions specified in this Section 8, which
conditions are intended to ensure compliance with the Securities Act and
applicable state securities laws.
8.2 Notice of Proposed Transfer. Prior to any proposed transfer of any
---------------------------
of the Shares (other than a transfer pursuant to registration under the
Securities Act), the holder thereof shall give written notice to the Company of
such holder's intention to effect such transfer at least thirty (30) days prior
to the date of transfer and shall specify the proposed purchase price and the
other terms and conditions relating to such proposed transfer. Each such notice
shall describe the manner and circumstances of the proposed transfer in
sufficient detail, and shall be accompanied by a written opinion of legal
counsel who shall be reasonably satisfactory to the Company, addressed to the
Company, to the effect that the proposed transfer of the Shares may be effected
without registration under the Securities Act.
ARTICLE 9. REGISTRATION UNDER SECURITIES ACT, ETC.
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9.1 Right to Request Registration.
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(a) If (i) Wand/IMA Investments, L.P. ("Wand/IMA") exercises its right
to require the Company to redeem the common stock purchase warrants and
shares issued or issuable upon exercise of such common stock purchase
warrants held by Wand/IMA, and the Company shall have effected such
redemption; and (ii) the Company shall not have completed a registered
public offering of Common Stock pursuant to the Securities Act, then on or
after March 26, 1999, upon the written request of one or more Initiating
Holders, requesting that the Company effect the registration under the
Securities Act of all or part of such Initiating Holders' Registrable
Securities and specifying the intended method of disposition thereof, the
Company will promptly give written notice of such requested registration to
all holders of Registrable Securities, and thereupon the Company will use
its best efforts to effect the registration under the Securities Act of:
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(i) the Registrable Securities which the Company has been so
requested to register by such Initiating Holders for disposition in
accordance with the intended method of disposition stated in such
request; and
(ii) all other Registrable Securities the holders of which shall
have made a written request to the Company for registration thereof
within 30 days after the giving of such written notice by the Company
(which request shall specify the intended method of disposition of
such Registrable Securities); and
(iii) subject to the priority provisions of Section 9.1(f), all
shares of Common Stock which the Company may elect to register in
connection with the offering of Registrable Securities pursuant to
this Section 9.1; and
(iv) subject to the priority provisions of Section 9.1(f),
shares of Common Stock held by other Persons having registration
rights;
all to the extent requisite to permit the disposition (in accordance with
the intended methods thereof as aforesaid) of the Registrable Securities
and the additional shares of Common Stock, if any so to be registered,
provided that the provisions of this Section 9.1(a) shall not require the
Company to effect more than one registration of Registrable Securities.
(b) Registration Statement Form. Registrations under this Section 9.1
---------------------------
shall be on such appropriate registration form of the Commission (i) as
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shall be selected by the Company and, as shall be reasonably acceptable to
the holders of more than 50% (by number of shares) of the Registrable
Securities so to be registered and (ii) as shall permit the disposition of
--
such Registrable Securities in accordance with the intended method or
methods of disposition specified in their request for such registration.
The Company agrees to include in any such registration statement all
information which holders of Registrable Securities being registered shall
reasonably request.
(c) Expenses. The Company will pay all Registration Expenses in
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connection with one registration requested pursuant to this Section 9.1.
(d) Effective Registration Statement. A registration requested
--------------------------------
pursuant to this Section 9.1 shall not be deemed to have been effected (i)
-
unless a registration statement with respect thereto has become effective,
provided that a registration which does not become effective after the
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Company has filed a registration statement with respect thereto solely
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by reason of the refusal to proceed of the Initiating Holders (other than a
refusal to proceed based upon the advice of counsel relating to a matter
with respect to the Company) shall be deemed to have been effected by the
Company at the request of such Initiating Holders unless the Initiating
Holders shall have elected to pay all Registration Expenses in connection
with such registration, or (ii) if, after it has become effective, such
--
registration is interfered with by any stop order, injunction or other
order or requirement of the Commission or other governmental agency or
court for any reason, or (iii) if the conditions to closing specified in
---
the purchase agreement or underwriting agreement entered into in connection
with such registration are not satisfied, other than by reason of some act
or omission by such Initiating Holders.
(e) Selection of Underwriters. If a requested registration pursuant to
-------------------------
this Section 9.1 involves an underwritten offering, the underwriter or
underwriters thereof shall be selected by the holders of at least a
majority (by number of shares) of the Registrable Securities as to which
registration has been requested and shall be acceptable to the Company,
which shall not unreasonably withhold its acceptance of such underwriters.
(f) Priority in Requested Registrations. If a requested registration
-----------------------------------
pursuant to this Section 9.1 involves an underwritten offering, and the
managing underwriter shall advise the Company in writing (with a copy to
each holder of Registrable Securities requesting registration) that, in its
opinion, the number of securities requested to be included in such
registration (including securities of the Company which are not Registrable
Securities) exceeds the number which can be sold in such offering within a
price range acceptable to the holders of a majority of the Registrable
Securities requested to be included in such registration, the Company will
include in such registration, to the extent of the number which the Company
is so advised can be sold in such offering, (i) first Registrable
-
Securities requested to be included in such registration, pro rata among
the holders thereof requesting such securities requested to be included by
such holders and (ii) second, securities the Company proposes to sell and
--
other securities of the Company included in such registration by the
holders thereof.
9.2 Incidental Registration.
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(a) Right to Include Registrable Securities. If the Company at any
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time proposes to register any of its securities under the Securities Act
(other than by a registration on Form S-4 or S-8, or any successor or
similar forms), whether or not
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for sale for its own account, it will each such time give prompt written
notice to all holders of Registrable Securities of its intention to do so
and of such holders' rights under this Section 9.2. Upon the written
request of any such holder made within 30 days after the receipt of any
such notice (which request shall specify the Registrable Securities
intended to be disposed of by such holder and the intended method of
disposition thereof), the Company will use its best efforts to effect the
registration under the Securities Act of all Registrable Securities which
the Company has been so requested to register by the holders thereof, to
the extent requisite to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities so to
be registered, by inclusion of such Registrable Securities in the
registration statement which covers the securities which the Company
proposes to register, provided that if, at any time after giving written
--------
notice of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason either not to
register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination to each holder of
Registrable Securities and, thereupon, (i) in the case of a determination
-
not to register, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration (but not from
its obligation to pay the Registration Expenses in connection therewith),
and (ii) in the case of a determination to delay registering, shall be
--
permitted to delay registering any Registrable Securities, for the same
period as the delay in registering such other securities. The Company will
pay all Registration Expenses in connection with each registration of
Registrable Securities requested pursuant to this Section 9.2.
(b) Priority in Incidental Registrations. If (i) a registration
------------------------------------ -
pursuant to this Section 9.2 involves an underwritten offering of the
securities so being registered, whether or not for sale for the account of
the Company, to be distributed (on a firm commitment basis) by or through
one or more underwriters of recognized standing under underwriting terms
appropriate for such a transaction, (ii) the Registrable Securities so
--
requested to be registered for sale for the account of holders of
Registrable Securities are not also to be included in such underwritten
offering (either because the Company has not been requested so to include
such Registrable Securities pursuant to Section 9.4(b) or, if requested to
do so, is not obligated to do so under Section 9.4(b), and (iii) the
---
managing underwriter of such underwritten offering shall inform the Company
and holders of the Registrable Securities requesting such registration by
letter of its belief that the distribution of all or a specified number of
such Registrable
-12-
Securities concurrently with the securities being distributed by such
underwriters would interfere with the successful marketing of the
securities (other than such Registrable Securities and other shares or
securities so requested to be included) being distributed by such
underwriters within a price range acceptable to the holders of securities
other than the Registrable Securities covered by such registration
requested to be included in such registration (such writing to state the
basis of such belief and the approximate number of such Registrable
Securities which may be distributed without such effect), then the Company
may, upon written notice to all holders of such Registrable Securities and
the holders of any other shares or securities which shall have exercised in
respect of such offering, registration rights comparable to the rights
granted under this Section 9.2 (which other shares or securities are not to
be included in such underwritten offering), reduce pro rata (if and to the
extent stated by such managing underwriter to be necessary to eliminate
such effect) the number of such Registrable Securities and shares or other
securities so that the resultant aggregate number of such Registrable
Securities and other shares or other securities so included in such
registration shall be equal to the number of shares stated in such managing
underwriter's letter. Notwithstanding the foregoing, with respect to any
registration initiated pursuant to the exercise of "demand" registration
rights by any holder of securities of the Company, other than the holders
of the Registrable Securities, the holders of Registrable Securities shall
have no right to include any Registrable Securities in such registration
unless all of the securities requested to be registered by the holders
exercising such "demand" registration rights have been included in such
registration and have not been subjected to any reduction by underwriters.
9.3 Registration Procedures. If and whenever the Company is required
-----------------------
to use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Section 9.2 the Company shall, as
expeditiously as possible:
(i) prepare and (within 90 days after the end of the period within
which requests for registration may be given to the Company or in any
event as soon thereafter as possible) file with the Commission the
requisite registration statement to effect such registration
(including such audited financial statements as may be required by the
Securities Act or the rules and regulations promulgated thereunder)
and thereafter use its reasonable best efforts to cause such
registration statement to become and remain effective for the time
period required by this Agreement, provided, that before filing such
--------
registration statement or any amendments thereto the Company will
furnish to the counsel selected by the holders of Registrable
Securities which are to be
-13-
included in such registration copies of all such documents proposed to be
filed, which documents will be subject to the review of such counsel;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
registration statement until the earlier of such time as all of such
securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement or the expiration of 90 days after such registration statement
becomes effective, it being understood that following the expiration of the
relevant time period, the Company shall have no further obligation to
maintain the effectiveness of such registration statement;
(iii) furnish to each seller of Registrable Securities covered by
such registration statement such number of conformed copies of such
registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, as such
seller may reasonably request in order to facilitate the public sale or
other disposition of the Registrable Securities owned by such seller;
(iv) use its reasonable best efforts to register or qualify all
Registrable Securities and other securities covered by such registration
statement under such other securities laws or blue sky laws of such
jurisdictions as any seller thereof and any underwriter of the securities
being sold by such seller shall reasonably request, to keep such
registrations or qualifications in effect for so long as such registration
statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable such seller and underwriter to
consummate the disposition in such jurisdictions of the securities owned by
such seller, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in
any jurisdiction wherein it would not but for the requirements of this
subdivision (iv) be
-14-
obligated to be so qualified, or to consent to general service of process
in any such jurisdiction;
(v) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof to consummate the disposition of such
Registrable Securities;
(vi) furnish to each seller of Registrable Securities a signed
counterpart, addressed to such seller (and the underwriters, if any) of
(vii) an opinion of counsel for the Company, dated the effective date
of such registration statement (and, if such registration includes an
underwritten public offering, an opinion dated the date of the closing
under the underwriting agreement), reasonably satisfactory in form and
substance to such seller, and
(viii) a "comfort" letter, dated the effective date of such
registration statement (and, if such registration includes an underwritten
public offering, a letter dated the date of the closing under the
underwriting agreement), signed by the independent public accountants who
have certified the Company's financial statements included in such
registration statement, covering substantially the same matters with
respect to such registration statement (and the prospectus included
therein) and, in the case of the accountants' letter, with respect to
events subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to the underwriters in underwritten public offerings of
securities and, in the case of the accountants' letter, such other
financial matters, and, in the case of the legal opinion, such other legal
matters, as such seller (or the underwriters, if any) may reasonably
request;
(ix) notify each seller of Registrable Securities covered by such
registration statement at any time when a prospectus relating to a
registered offering thereof is required to be delivered under the
Securities Act, upon discovery that, or upon the happening of any event as
a result of which, the prospectus included in such registration statement,
as then in effect, includes an untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances under which they were made,
-15-
and at the request of any such seller promptly prepare and furnish to such
seller and each underwriter, if any, a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made; otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, but not more than
eighteen months, beginning with the first full calendar month after the
effective date of such registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act, and
will furnish to each such seller at least five business days prior to the
filing thereof a copy of any amendment or supplement to such registration
statement or prospectus and shall not file any thereof to which any such
seller shall have reasonably objected on the grounds that such amendment or
supplement does not comply in all material respects with the requirements
of the Securities Act or of the rules or regulations thereunder;
(x) enter into such agreements and take such other actions as sellers
of such Registrable Securities holding 51% of the shares so to be sold
shall reasonably request in order to expedite or facilitate the disposition
of such Registrable Securities;
(xi) use its reasonable best efforts to list all Company's equity
securities covered by such registration statement on any securities
exchange on which any of the Company's equity securities are then listed.
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company such information regarding
such seller and the distribution of such securities as the Company may from time
to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
occurrence of any event of the kind described in subdivision (ix) of this
Section 9.3, such holder will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of
-16-
the supplemented or amended prospectus contemplated by subdivision (ix) of this
Section 9.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the periods mentioned in paragraph (ii) of
this Section 9.3 shall be extended by the length of the period from and
including the date when each seller of any Registrable Securities covered by
such registration statement shall have received such notice to the date on which
each such seller has received the copies of the supplemented or amended
prospectus contemplated by paragraph (ix) of this Section 9.3.
If any such registration or comparable statement refers to any holder
of Registrable Securities by name or otherwise as the holder of any securities
of the Company then such holder shall have the right to require (i) the
insertion therein of language, in form and substance satisfactory to such
holder, to the effect that the holding by such holder of such securities is not
to be construed as a recommendation by such holder of the investment quality of
the Company's securities covered thereby and that such holding does not imply
that such holder will assist in meeting any future financial requirements of the
Company, or (ii) in the event that such reference to such holder by name or
otherwise is not required by the Securities Act or any similar federal statute
or the rules and regulations promulgated thereunder then in force, the deletion
of the reference to such holder.
9.4 Underwritten Offerings.
----------------------
(a) Incidental Underwritten Offerings. If the Company at any time
---------------------------------
proposes to register any of its securities under the Securities Act as
contemplated by Section 9.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any
holder of Registrable Securities as provided in Section 9.2 and subject to
the provisions of Section 9.2(b), use its best efforts to arrange for such
underwriters to include all the Registrable Securities to be offered and
sold by such holder among the securities to be distributed by such
underwriters, provided that if the managing underwriter of such
--------
underwritten offering shall inform the holders of the Registrable
Securities requesting such registration and the holders of any other shares
or securities which shall have exercised, in respect of such underwritten
offering, registration rights comparable to the rights under Section 9.2 by
letter of its belief that inclusion in such underwritten distribution of
all or a specified number of such Registrable Securities or of such other
shares or securities so requested to be included would interfere with the
successful marketing of the securities (other than such Registrable
Securities and other shares or
-17-
securities so requested to be included) within a price range acceptable to
the Company or in the case of a secondary offering, the holders of
securities other than Registrable Securities requested to be included in
such registration by the underwriters (such writing to state the basis of
such belief and approximate number of such Registrable Securities and
shares or other securities so requested to be included which may be
included in such underwritten offering without such effect), then the
Company may, upon written notice to all holders of such Registrable
Securities and of such other shares or securities so requested to be
included, exclude pro rata from such underwritten offering (if and to the
extent stated by such managing underwriter to be necessary to eliminate
such effect) the number of such Registrable Securities and shares or such
other securities so requested to be included the registration of which
shall have been requested by each holder of Registrable Securities and by
the holders of such other securities, so that the resultant aggregate
number of such Registrable Securities and of such other shares or
securities so requested to be included which are included in such
underwritten offering shall be equal to the approximate number of shares
stated in such managing underwriter's letter. The holders of Registrable
Securities to be distributed by such underwriters shall be parties to the
underwriting agreement between the Company and such underwriters and may,
at their option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to and
for the benefit of such underwriters shall also be made to and for the
benefit of such holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
holders of Registrable Securities. Any such holder of Registrable
Securities shall not be required to make any representations or warranties
to or agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such holder, such
holder's Registrable Securities and such holder's intended method of
distribution and any other representation required by law. Notwithstanding
the foregoing, with respect to any registration initiated pursuant to the
exercise of "demand" registration rights by any holder of securities of the
Company other than the holders of Registrable Securities, the holders of
Registrable Securities shall have no right to include any Registrable
Securities in such registration unless all of the securities requested to
be registered by the holders exercising such "demand" registration rights
have been included in such registration and have not been subjected to any
reduction by underwriters.
-18-
(b) Holdback Agreements.
-------------------
(i) Each holder of Registrable Securities agrees by acquisition
of such Registrable Securities, if so required by the managing
underwriter, not to effect any public sale or distribution of any
equity securities of the Company, during the seven days prior to and
the 90 days after any underwritten registration pursuant to Section
9.1 or 9.2 has become effective, except as part of such underwritten
registration, whether or not such holder participates in such
registration.
(ii) The Company agrees (x) if so required by the managing
underwriter not to effect any public sale or distribution of its
equity securities or securities convertible into or exchangeable or
exercisable for any of such securities during the seven days prior to
and the 90 days after any underwritten registration pursuant to
Section 9.1 or 9.2 has become effective, except as part of such
underwritten registration and except pursuant to registrations on Form
S-4 and S-8, or any successor or similar forms thereto, and (y) to
cause each holder of its equity securities or any securities
convertible into or exchangeable or exercisable for any of such
securities, in each case purchased from the Company at any time after
the date of this Agreement (other than in a public offering) to agree
not to effect any such public sale or distribution of such securities
during such period.
9.5 Preparation; Reasonable Investigation. In connection with the
-------------------------------------
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such registration statement, their underwriters, if
any, and their respective counsel and accountants, the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Company with its
officers and the independent public accountants who have certified its financial
statements as shall be necessary, in the opinion of such holders' and such
underwriters' respective counsel, to conduct a reasonable investigation within
the meaning of the Securities Act.
-19-
9.6 Indemnification.
---------------
(a) Indemnification by the Company. In the event of any
------------------------------
registration of any securities of the Company under the Securities Act
pursuant to this Article 9, the Company will indemnify and hold
harmless the holder of any Registrable Securities covered by such
registration statement, its directors, officers, agents, employees,
general partners, limited partners, each other Person who participates
as an underwriter in the offering or sale of such securities and each
other Person, if any, who controls such holder or any such underwriter
within the meaning of the Securities Act, against any losses, claims,
damages or liabilities, joint or several, to which such holder or
Requesting Holder or any such underwriter within the meaning of the
Securities Act, against any losses, claims, damages or liabilities,
joint or several, to which such holder or Requesting Holder or any
such director, officer, agent, employee, general partner, limited
partner or underwriter or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such securities
were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or any omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the
Company will reimburse such holder, and each such director, officer,
agent, employee, general partner, limited partner, underwriter and
controlling person for any reasonable legal or any other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceeding;
provided that the Company shall not be liable in any such case to the
--------
extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement in reliance upon and in conformity with
written information furnished to the Company through an instrument
duly executed by such holder specifically stating that it is for use
in the preparation thereof and, provided further that the Company
-------- -------
shall not be liable to any Person who participates as an underwriter,
in the offering or sale of Registrable Securities or to any other
Person who participates as an underwriter, in the offering or sale of
Registrable Securities or to any other Person, if any, who controls
such
-20-
underwriter within the meaning of the Securities Act, in any such case
to the extent that any such loss, claim, damage, liability (or action
or proceeding in respect thereof) or expense arises out of such
Person's failure to send or give a copy of the final prospectus, as
the same may be then supplemented or amended, within the time required
by the Securities Act to the Person asserting an untrue statement or
alleged untrue statement or omission or alleged omission at or prior
to the written confirmation of the sale of Registrable Securities to
such Person if such statement or omission was corrected in such final
prospectus. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such holder or
such Requesting Holder or any such director, officer, agent, employee,
general partner, limited partner, underwriter or controlling person
and shall survive the transfer of such securities by such holder.
(b) Indemnification by the Sellers. In the event of any
------------------------------
registration of Registrable Securities under the Securities Act
pursuant to this Article 9, each seller of Registrable Securities will
(severally and not jointly) indemnify and hold harmless (in the same
manner and to the same extent as set forth in subdivision (a) of this
Section 9.6) the Company, each director of the Company, each officer
of the Company and each other person, if any, who controls the Company
within the meaning of the Securities Act, with respect to any
statement or alleged statement in or omission or alleged omission from
such registration statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment
or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company through
an instrument duly executed by such seller specifically stating that
it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement. Such indemnity shall remain in full force and
effect, regardless of any investigation made by or on behalf of the
Company or any such director, officer or controlling person and shall
survive the transfer of such securities by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an
----------------------
indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding subdivisions
of this Section 9.6, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action,
provided that the failure of any indemnified party to give notice as
--------
provided herein shall not relieve the indemnifying party of its
obligations under the preceding subdivisions of this Section
-21-
9.6, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is
brought against an indemnified party, unless in such indemnified
party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such
claim, the indemnifying party shall be entitled to participate in and
to assume the defense thereof, jointly with any other indemnifying
party similarly notified, to the extent that the indemnifying party
may wish, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof,
the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any
settlement of any such action which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to
such indemnified party of a release from all liability in respect to
such claim or litigation. No indemnified party shall consent to entry
of any judgment or enter into any settlement of any such action the
defense of which has been assumed by an indemnifying party without the
consent of such indemnifying party.
(d) Other Indemnification. Indemnification similar to that
---------------------
specified in the preceding subdivisions of this Section 9.6 (with
appropriate modifications) shall be given by the Company and each
seller of Registrable Securities with respect to any required
registration or other qualification of securities under any Federal or
state law or regulation of any governmental authority, other than the
Securities Act.
(e) Indemnification Payments. The indemnification required by
------------------------
this Section 9.6 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when
bills are received or expense, loss, damage or liability is incurred.
(f) Contribution. If for any reason the indemnification provided
------------
for in the preceding paragraphs of this Article 9 is unavailable to an
indemnified party or is insufficient to hold it harmless as
contemplated by the preceding clauses (a) and (b), then the
indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified
party as a result of such, claim, damage, liability or expense in such
proportion as is appropriate to reflect not only the relative benefits
received by the indemnified party and the indemnifying
-22-
party in connection with the actions which resulted in such loss,
claim, damage, liability or expense, as well as any other relevant
equitable considerations. The relative fault of such indemnifying
party and indemnified party shall be determined by reference to, among
other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged
omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or
payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party
in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 9.6(f) were
determined by pro rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred
to in the immediately preceding paragraph. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. No holder of
Registrable Securities shall be required to contribute in an amount
greater than the dollar amount of proceeds received by such holder with
respect to the sale of such holder's Registrable Securities.
ARTICLE 10. DEFINITIONS
---------- -----------
As used herein, unless the context otherwise requires, the following
terms have the following meanings:
Commission: The Securities and Exchange Commission or any other
----------
federal agency at the time administering the Securities Act.
Common Stock: As defined in Section 1.1 hereof, such term to include
------------
any stock into which such Common Stock shall have been changed or any stock
resulting from any reclassification of such Common Stock, and all other stock of
any class or classes (however designated) of the Company the holders of which
have the right, without limitation as to amount, either to all or to a share of
the balance of current dividends and liquidating dividends after the payment of
dividends and distributions on any shares entitled to preference.
-23-
Company: As defined in the introduction to this Agreement, such term
-------
to include any corporation which shall succeed to or assume the obligations of
the Company hereunder.
Control: The possession, directly or indirectly, of the power, whether
-------
or not exercised, to direct or cause the direction of the management or policies
of any Person, whether through the ownership of voting securities, by contract
or otherwise; "Controlling" and "Controlling" shall have meanings correlative to
the foregoing.
Copyrights: Registered or unregistered United States or foreign
----------
copyrights (including but not limited to copyrights in computer programs,
related documentation, and data bases) and United States and foreign copyright
registrations, and applications for registration and all renewals and extensions
thereof.
Exchange Act: The Securities Exchange Act of 1934, or any similar
------------
federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.
Intellectual Property Rights: All Trademarks, Patents, Copyrights, and
----------------------------
Know-How and Technical Information.
Initial Public Offering: An Initial Public Offering shall mean the
-----------------------
first time a registration statement filed under the Securities Act with the
Securities and Exchange Commission (other than a registration statement on Form
S-8, or any successor form thereto, with respect to the issuance of Common Stock
(or securities convertible into or exchangeable for Common Stock or rights to
acquire Common Stock) granted or to be granted to employees, officers or
directors of the Company pursuant to any employee stock option plan, unless as a
result thereof the Company would be required to file reports with respect to any
of its equity securities with the Securities and Exchange Commission) respecting
an offering, whether primary or secondary, of Common Stock is declared effective
by the Securities and Exchange Commission.
Initiating Holders: Any Purchasers holding at least 51% of the
------------------
Registrable Securities (by number of shares) and initiating a request pursuant
to Section 9.1 for the registration of all or part of such holder's or holders'
Registrable Securities.
NASD: The National Association of Securities Dealers, Inc.
----
New Securities: Any Common Stock or preferred stock of the Company, or
--------------
any warrants, options or other rights to acquire Common Stock or preferred stock
(other than stock options granted to employees), or any securities (including
any debt instruments) of any other type that are convertible into said Common
stock or
-24-
preferred stock, issued after the date hereof; provided that "New Securities"
does not include (i) Common Stock issued pursuant to currently outstanding
warrants or stock options; or (ii) the issuance by the Company of Common Stock
or preferred stock, or options, rights or warrants to acquire Common Stock or
preferred stock or any other security (including any debt instruments)
convertible into Common Stock or preferred stock in connection with an
acquisition by the Company of the stock or assets of another person or the
merger or consolidation by the Company with or into another corporation.
Know-How and Technical Information: Data, plans, trade secrets,
----------------------------------
technologies, processes, specifications, know-how, operating experience and
information (business, economic and technical) relating to the foregoing.
Patents: United States and foreign patents and patent applications,
-------
certificates of invention, utility models, and all renewals, extensions,
reissues, divisions, continuations and continuations-in-part thereof.
Person: An individual, a partnership, a joint venture, a corporation,
------
a trust, an unincorporated organization, an association or any other entity or a
government or any department or agency thereof.
Purchasers: As defined in the introduction to this Agreement.
----------
Registrable Securities: (a) The shares of Common Stock purchased
----------------------
pursuant to this Agreement; and (b) any securities issued or issuable with
respect to any securities referred to in the foregoing subdivision by way of
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise. As
to any particular Registrable Securities, once issued such certificates shall
cease to be Registrable Securities when (a) a registration statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in accordance
with such registration statement, (b) they shall have been distributed to the
public pursuant to Rule 144 (or any successor or similar provision) under the
Securities Act, (c) they shall have been otherwise transferred, new certificates
for them not bearing a legend restricting further transfer shall have been
delivered by the Company and subsequent disposition of them immediately
thereafter shall not require registration or qualification of them (other than
by the issuer, an underwriter or an affiliate [as such term is defined in the
Securities Act and the regulations promulgated thereunder] of the issuer) under
the Securities Act or any similar state law then in force, or (d) they shall
have ceased to be outstanding.
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Registration Expenses: All expenses incident to the Company's
---------------------
performance of or compliance with Article 9, including, without limitation, all
registration, filing and NASD fees, all fees and expenses of complying with
securities or blue sky laws, all word processing, duplicating and printing
expenses, messenger and delivery expenses, the fees and disbursements of counsel
for the Company and of its independent public accountants, including the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance, the reasonable fees and disbursements of any
counsel and accountants retained by the holder or holders of more than 51% of
the Registrable Securities being registered, premiums and other costs of
policies of insurance (if any) against liabilities arising out of the public
offering of the Registrable Securities being registered or officers and
directors insurance and any fees and disbursements of underwriters customarily
paid by issuers or sellers of securities, but excluding underwriting discounts
and commissions and transfer taxes, if any.
Securities Act: The Securities Act of 1933, or any similar federal
--------------
statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
Trademarks: All registered and unregistered trademarks, service marks,
----------
corporate names, tradenames, logos, designs, product or business identifiers and
trade dress together, in each case, with the good will of the business
symbolized thereby, and United States, state and foreign trademark or
servicemark registrations or applications for registration and all amendments,
renewals and extensions thereof.
Transfer: Any sale, assignment, pledge or other disposition of any
--------
security, or of any interest therein, which could constitute a "sale" as that
term is defined in Section 2(3) of the Securities Act.
Wand/IMA: As defined in Section 9.1 of this Agreement.
--------
ARTICLE 11. MISCELLANEOUS
---------- -------------
11.1 Preemptive Rights.
-----------------
(a) The Company hereby grants to each Purchaser the preemptive rights
to purchase such Purchaser's Proportionate Interest (as defined below) in
any issuance or sale of New Securities which the Company may, from time to
time, propose to issue or sell at a price per share of (i) less than $9.00
(subject to appropriate adjustment in the event of any increase or decrease
in the number of outstanding shares of Common Stock by virtue of any stock
split, stock dividend, reverse stock split, reclassification or
combination) in the case of Common Stock or (ii) having a conversion price
or
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option or warrant exercise price of less than $9.00 (subject to
appropriate adjustment in the event of any increase or decrease in the
number of outstanding shares of Common Stock by virtue of any stock split,
stock dividends, reverse stock split, reclassification or combination) in
the case of securities convertible into or exercisable for, Common Stock.
For purposes of this Section 11.1, a Purchaser's Proportionate Interest in
such an issuance or sale shall mean that portion of such issuance or sale
which, if purchased by such Purchaser under this Section 11.1, would allow
such Purchaser to own the same percentage of the issued and outstanding
Common Stock of the Company after giving effect to such issuance or sale as
such Purchaser owned immediately prior to such issuance or sale (calculated
on a fully-diluted basis as if all outstanding warrants, options, rights
and securities convertible into or exchangeable for Common Stock had been
exercised in full, but without regard to the adjustment provisions of any
outstanding securities).
(b) The value of any non-cash "consideration" shall be determined in
good faith by the Board of Directors of the Company.
(c) In the event the Company proposes to undertake an issuance or sale
of New Securities for consideration of less than $9.00 per share as
described in clause (a) above, the Company shall give the Purchasers
written notice of the Company's intention, describing the type of New
Securities, the price, the maximum amount to be issued or sold and the
general terms upon which the Company proposes to issue or sell the same.
Each Purchaser shall have thirty (30) days from the date of such notice to
agree (by written notice to the Company) to purchase its Proportionate
Interest in such issuance or sale upon such price and terms.
(d) The preemptive rights hereunder shall not apply to any public
offering of the Common Stock or securities convertible into or exchangeable
for Common Stock of the Company pursuant to a registration statement filed
under the Securities Act with the Securities and Exchange Commission which
is declared effective by the Securities and Exchange Commission.
(e) During the period of 60 days after the expiration of the notice
period to which the Purchasers are entitled hereunder, the Company shall be
permitted to sell or enter into an agreement (pursuant to which the sale or
other transaction shall be closed, if at all, within 60 days from the date
of said agreement) to sell the New Securities at a price and upon general
terms no more favorable to the purchasers thereof than specified in the
Company's notice to the Purchasers under clause (c) above.
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(f) The preemptive rights described in this Section 11.1 are personal
to the Purchasers and may not be assigned or transferred, whether by
agreement or by operation of law or otherwise, and any attempted transfer
shall be void.
(g) Upon the sale or transfer to any person of New Securities as to
which the preemptive rights hereunder shall not have been exercised, such
New Securities shall thereafter be transferable free of the preemptive
rights provided hereunder.
(h) The preemptive rights hereunder shall terminate upon the date on
which a registration statement relating to an Initial Public Offering is
declared effective by the Securities and Exchange Commission.
11.2 Amendment, Modification and Waiver. This Agreement shall not be
----------------------------------
altered or otherwise amended except pursuant to an instrument in writing signed
by the Purchasers and the Company, and any obligation owed to a party under this
Agreement may only be waived in a writing signed by such party. The waiver by
any party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach.
11.3 Expenses; Transfer Taxes, Etc. All fees, costs and expenses
-----------------------------
incurred by the Company in connection with, relating to or arising out of the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby shall be borne by the Company. The Company
shall pay all sales, use and excise taxes and all registration, recording or
transfer taxes which may be payable in connection with the transactions
contemplated by this Agreement.
11.4 Binding Effect; Benefits; Parties in Interest. This Agreement
---------------------------------------------
shall be binding upon, inure to the benefit of, and be enforceable by, the
respective successors, assigns, heirs and legal representatives of the parties
hereto; provided, however, that this Agreement shall not be assignable by the
-------- -------
Company or the Purchasers without the prior written consent of the other.
11.5 Entire Agreement. This Agreement (including the Schedules
----------------
attached hereto), and the other writings referred to herein or delivered
pursuant hereto contain the entire understanding of the parties with respect to
the subject matter hereof and supersede all prior agreements and understandings
with respect to such subject matter.
11.6 Headings. The Section and paragraph headings contained in this
--------
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
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11.7 Notices. All notices, claims, certificates, requests, demands and
-------
other communications hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand, mailed (by first-class mail, postage
prepaid), transmitted by telex or telecopier or sent by air courier guaranteeing
overnight delivery as follows:
If to the Company, to:
Information Management Associates, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Square
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to any Purchaser, to such Purchaser at the address set forth in
Schedule A.
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. Any such
communication shall be deemed to have been given, in the case of personal
delivery, on the date of delivery and in the case of mailing five (5) days after
such mailing.
11.8 Counterparts. This Agreement may be executed in any number of
------------
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
11.9 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of Connecticut.
11.10 Gender. Any reference to the masculine gender shall be deemed to
------
include the feminine and neuter genders unless the context otherwise requires.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered on the date first above written.
THE COMPANY:
INFORMATION MANAGEMENT ASSOCIATES, INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
THE PURCHASERS:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇▇▇▇
-30-
Schedule A
----------
List of Purchasers
------------------
Name and Address Purchase Number of Shares
Social Security Number Price of Common Stock
---------------------- -------- ----------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ $135,000 15,000
[ADDRESS]
▇▇▇▇▇▇ ▇▇▇▇ $49,995 5,555
[ADDRESS]