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Exhibit 4.6
NOTE PURCHASE AGREEMENT
dated October 30, 1987 between
TELEBASE SYSTEMS, INC., a
Pennsylvania corporation (the
"Company") and ▇▇▇▇ ▇. ▇▇▇▇▇▇
(the "Lender")
WHEREAS, the Company has requested bridge financing assistance
from the Lender for funding working capital requirements pending consummation of
a subsequent equity financing; and
WHEREAS, the Lender desires to provide such financing in the
form of a loan evidenced by a note convertible into equity securities of the
Company on the terms set forth herein;
NOW, THEREFORE, the Company and the Lender hereby agree as
follows:
SECTION 1. Authorization of the Note. Subject to the terms and
conditions hereof, the Company has authorized the issuance at the Closing (as
hereinafter defined) of a Convertible Promissory Note Due January 30, 1988 in
the aggregate principal amount of $500,000 in substantially the form of Exhibit
A attached hereto (the "Note"), which Note is convertible into shares of Series
A Preferred Stock (as hereinafter defined), having the powers, preferences and
other rights as set forth on Exhibit I to the Note.
SECTION 2. Agreement to Sell and Purchase the Note. At the
Closing, the Company shall sell to the Lender, and the Lender shall purchase
from the Company, upon the terms and conditions hereinafter set forth, the Note.
The aggregate purchase price for the Note shall be $500,000.
SECTION 3. Delivery of the Note. The closing (the "Closing")
hereunder with respect to the purchase and sale of the Note shall take place
simultaneously with the execution and delivery of this Agreement at the offices
of ▇'▇▇▇▇▇▇▇▇ Graev & Karabell, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
At the Closing, the Company shall deliver to the Lender the Note, payable to the
order of the Lender. Delivery shall be made against receipt by the Company of a
wire transfer in immediately available funds or a check payable to the order of
the Company (or receipt of funds by the Company in other form satisfactory to
the Company), in the amount of $500,000, representing the full amount of the
purchase price of the Note.
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SECTION 4. Representations and Warranties of the Company. The
Company hereby represents and warrants to the Lender as follows:
SECTION 4.01. Organization: Good Standing: Qualification and
Power. The Company (i) is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania, (ii) has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted and as contemplated to be
conducted, and to carry out the transactions contemplated hereby, and (iii) is
duly qualified as a foreign corporation and in good standing to do business in
all such other jurisdictions, if any, in which the conduct of its business or
its ownership, leasing or operation of property requires such qualification,
except for those jurisdictions in which failure to so qualify would not have a
material adverse effect on the business or assets of the Company. The Company
has provided the Lender with correct and complete copies of its Articles of
Incorporation and By-laws as in effect on the date hereof.
SECTION 4.02. Equity Investments. The Company has never had,
nor does it presently have, any subsidiaries, nor has it owned, nor does it
presently own, any capital stock or other proprietary interest, directly or
indirectly, in any corporation, association, trust, partnership, joint venture
or other entity.
SECTION 4.03. Capitalization. The authorized capital stock of
the Company immediately upon consummation at the Closing of the transactions
contemplated hereby shall consist of 20,000,000 shares of Common Stock, no par
value (the "Common Stock") of which:
(a) 4,773,000 shares of Common Stock shall have been validly
issued and be outstanding, fully paid and nonassessable, with no
personal liability attaching to the ownership thereof, and
(b) 1,565,000 shares shall have been reserved for issuance
upon exercise of outstanding options and warrants, and 400,000 shares
shall be available for issuance pursuant to options available for grant
under the Company's incentive stock option plan.
(c) The Board of Directors of the Company (the "Board") has
also approved resolutions pursuant to which, subject to and upon
approval by stockholders of the Company of the amendment to the
Articles of Incorporation of the Company in the form attached to the
Note as Exhibit I hereto (the "Amendment"), (i) 5,000,000 shares of
Preferred Stock shall have been
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authorized, of which 500,000 shares shall have been designated "Series
A Preferred Stock" (having such other designations, preferences and
relative, participating, optional or other rights and qualifications,
limitations and restrictions set forth in the Certificate of
Designation attached as Exhibit I to the Note), of which 465,910 shares
shall have been reserved for issuance upon conversion of the Note (the
"Reserved Preferred Shares") and (ii) 465,910 shares of Common Stock
shall have been duly reserved initially for issuance upon conversion of
the Reserved Preferred Shares (the "Reserved Common Shares", and the
Reserved Common Shares and Reserved Preferred Shares being herein
referred to as the "Reserved Shares").
The Company has previously delivered to the Lender a list (the "Stockholders
List") of (a) all holders of Common Stock who hold not less than one hundred
thousand (100,000) shares of such Common Stock, including the number of shares
of each class of Common Stock held by each such holder, and (b) all outstanding
warrants, options, agreements, convertible securities or other commitments
pursuant to which the Company is or may become obligated to issue any shares of
its capital stock or other securities of the Company, and names of all persons
entitled to receive such shares or other securities and the shares of capital
stock or other securities required to be issued thereunder. The number of shares
of capital stock (if any) reserved for issuance in connection with clause (b) of
the immediately preceding sentence is not subject to adjustment by reason of the
issuance of the Note or the Reserved Shares. There are, and immediately upon
consummation at the Closing of the transactions contemplated hereby there will
be, no preemptive or similar rights to purchase or otherwise acquire shares of
capital stock of the Company pursuant to any provision of law, the Articles of
Incorporation or By-laws or any agreement to which the Company is a party, or
otherwise, except as contemplated by this Agreement and the Stockholders'
Agreement (as defined in Section 6.01(g) hereof), except for the right of first
refusal granted to The Western Union Telegraph Company ("Western Union")
pursuant to Section 7(d) of the Supply Agreement dated July 11, 1985 between the
Company and Western Union (the "Supply Agreement") (which right has been
effectively waived hereunder) and except for a right of first refusal granted to
Krieger, Wunderlich, Fialkov & Co. ("KWF") pursuant to paragraph 9 of a letter
agreement dated November 1985 between the Company and KWF (the "KWF Letter
Agreement") (which is not applicable to this transaction); and there is, and
immediately upon consummation at the Closing of the transactions contemplated
hereby there will be, no agreement, restriction or encumbrance (such as a right
of first refusal, right of first offer, proxy, voting
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agreement, etc.) with respect to the sale or voting of any shares of capital
stock of the Company (whether outstanding or issuable upon conversion or
exercise of outstanding securities), except as contemplated by this Agreement
and the Stockholders' Agreement and as set forth on the Stockholders' List, and
except for the right of first refusal granted to Western Union pursuant to
Section 7(d) of the Supply Agreement (which right has been effectively waived)
and except for a right of first refusal granted to KWF pursuant to paragraph 9
of the KWF Letter Agreement (which is not applicable to this transaction). All
shares of Common Stock and any other securities issued by the Company prior to
the Closing have been issued in transactions exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"). The Company has not
violated the Securities Act or any applicable state securities or "blue sky"
laws in connection with the issuance of any shares of Common Stock or other
securities prior to the Closing.
SECTION 4.04. Authority. The execution, delivery and
performance by the Company of this Agreement, the Stockholders' Agreement, the
Voting Agreement (as defined in Section 6.01(i) hereof) and the Note have been
duly and validly authorized by all necessary corporate action; this Agreement,
the Stockholders' Agreement and the Note have been duly and validly executed and
delivered by the Company and each of this Agreement, the Stockholders' Agreement
and the Note constitutes the valid and binding obligation of the Company, and
the Voting Agreement constitutes the valid and binding obligations of the
stockholders of the Company signatory thereto enforceable in accordance with its
terms. The issuance, sale and delivery of the Reserved Shares have been duly
authorized by the Board, subject to the approval by the stockholders of the
Company of the Amendment, the Reserved Preferred Shares have been duly reserved
for issuance upon conversion of the Note and the Reserved Common Shares have
been duly reserved for issuance upon conversion of the Reserved Preferred
Shares, and when so issued, sold and delivered, the Reserved Shares shall be
validly issued and outstanding, fully paid and non-assessable with no personal
liability attaching to the ownership thereof, and not subject to preemptive or
any other similar rights of the stockholders of the Company or others, all of
the foregoing being subject to the approval by the stockholders of the Company
of the Amendment. The execution, delivery and performance of this Agreement, the
Stockholders' Agreement and the Note by the Company, and subject to the approval
by the stockholders of the Company of the Amendment, the reservation, issuance,
sale and delivery of the Reserved Shares Upon conversion of the Note or the
Reserved Preferred Shares and compliance by the Company with any provision
hereof or thereof will not (a) violate any provision of law
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or statute or any order of any court or any order, rule or regulation of any
other agency of government or (b) conflict with or result in any breach of any
of the terms, conditions or provisions of, or constitute (with due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties, assets or
outstanding capital stock of the Company, under the Articles of Incorporation or
By-laws of the Company, in each case as amended and/or restated through the date
hereof, or any note, indenture, mortgage, lease, agreement or other instrument
to which the Company is a party or by which it or any of its properties or
assets are or may be bound or affected. Each permit, authorization, consent or
approval of or by, or any notification of or filing with, any person
(governmental or private) required for the valid authorization, execution,
delivery and performance by the Company of this Agreement, the Stockholders'
Agreement and the Note, or for the valid authorization, reservation (as the case
may be), issuance, sale and delivery of the Note or the Reserved Shares has been
obtained or made or, subject to the approval by the stockholders of the Company
of the Amendment, will have been obtained or made as of the date required or,
subject to the approval by the stockholders of the Company of the Amendment,
will have been obtained or made as of the date required (as the case may be).
SECTION 4.05. Financial Information. (a) The Company has
previously delivered to the Lender the following financial information:
(i) the balance sheet of the Company as of December 31, 1986,
and the related statement of operations, stockholders' equity and
changes in financial position for the year then ended (in each case
including the notes thereto) audited by ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Co., the
independent certified public accountants of the Company; and
(ii) the unaudited balance sheet of the Company as of August
31, 1987 (the "Interim Balance Sheet") and the related unaudited
statements of operations, stockholders' equity and changes in financial
position for the eight-month period then ended, prepared by the Company
(collectively, the "Interim Financial Statements").
(b) The financial statements referred to in the foregoing
clause (a) of this Section 4.05(i) are in accordance with the books and records
of the Company, (ii) fairly present in all material respects the financial
condition of the Company as of the respective dates
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indicated and the results of operations, stockholders' equity and changes in
financial position of the Company for the respective periods indicated and (iii)
in the case of financial statements described in Section 4.05(a)(i), have been
prepared in accordance with generally accepted accounting principles
consistently applied.
SECTION 4.06. Absence of Undisclosed Liabilities. Except as
disclosed in the Interim Financial Statements and Schedule 4.06 attached hereto,
at August 31, 1987, (a) the Company had no liability of any nature (matured or
unmatured, fixed or contingent) which was not provided for or reflected on the
Interim Balance Sheet, and (b) all liability reserves established by the Company
and set forth on the Interim Balance Sheet were adequate for the purposes
indicated therein, and (c) there were no loss contingencies (as such term is
used in statement of Financial Accounting standards No. 5 issued by the
Financial Accounting Standards Board in March 1975) which were not adequately
provided for on the Interim Balance Sheet.
SECTION 4.07. Absence of Changes. Except as set forth on
Schedule 4.07 attached hereto, since August 31, 1987, there has not been (a) any
material adverse change in the financial condition, results of operations,
assets, liabilities or business of the Company, (b) any material liability or
obligation of any nature whatsoever (contingent or otherwise) incurred by the
Company, other than current liabilities or obligations incurred in the ordinary
course of business, (c) any asset or property of the Company made subject to a
material lien of any kind, (d) any waiver of any valuable right of the Company,
or the cancellation of any debt or claim held by the Company, (e) any payment of
dividends on, or other distributions with respect to, or any direct or indirect
redemption or acquisition of, any shares of the capital stock of the Company, or
any agreement or commitment therefor, (f) any issuance of any stock, bonds or
other securities of the Company or options, warrants or rights or agreements or
commitments to purchase or issue such securities or grant such options warrants
or rights other than pursuant to or in connection with the transactions
contemplated by this Agreement, (g) any mortgage, pledge, sale, assignment or
transfer of any tangible or intangible assets of the Company, except in the
ordinary course of business, (h) any loan by the Company to any officer,
director, employee or stockholder of the Company, or any agreement or commitment
therefor, (i) any damage, destruction or loss (whether or not covered by
insurance) which is or may materially adversely affect the assets, property or
business of the Company, (j) any extraordinary increase, direct or indirect, in
the compensation paid or payable to any officer, director,
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employee or agent of the Company or (k) any change in the accounting methods or
practices followed by the Company.
SECTION 4.08. Tax Matters. All Federal, state and local or
foreign tax returns and tax reports required to be filed by the Company have
been filed with the appropriate governmental agencies in all jurisdictions in
which such returns and reports are required to be filed (except, with respect to
tax returns and tax reports which may have been required to be filed in respect
of state or local sales, lease, occupation, property and excise tax, where the
failure to do so would not have a material adverse effect on the Company's
business) and all of the foregoing are true, correct and complete. Except with
respect to taxes required to have been paid or accrued by the Company in respect
of state or local sales, lease, occupation, property and excise tax, where the
failure to do so would not have a material adverse effect on the Company's
business, and except as set forth on Schedule 4.08 attached hereto, all Federal,
state, local and foreign income, profits, franchise, sales, use, occupation,
property, excise, payroll, withholding and other taxes (including interest and
penalties) required to have been paid or accrued by the Company have been fully
paid or are adequately provided for on the Interim Balance Sheet, except for tax
liabilities arising in the ordinary course of business since August 31, 1987. No
issues have been raised (and are currently pending) by the Internal Revenue
Service or any other taxing authority in connection with any of the returns and
reports referred to above, and no waivers of statutes of limitations have been
given or requested with respect to the Company. All deficiencies asserted or
assessments (including interest and penalties) made as a result of any
examination by the Internal Revenue Service or by appropriate state or
departmental tax authorities of the Federal, state or local or foreign income
tax, sales tax or franchise tax returns of or, with respect to the Company, have
been fully paid or are adequately provided for on the Interim Balance Sheet and
no proposed (but unassessed) additional taxes, interest or penalties have been
asserted. Except with respect to state or local sales, lease, occupation,
property and excise taxes which may have been required to be paid or provided
for, where the failure to do so would not have a material adverse effect on the
Company's business, the provisions for taxes on the Interim Balance Sheet are
sufficient for the payment of all accrued and unpaid Federal, state or local and
foreign taxes as of such date. Neither the Company or, to the "best knowledge of
the Company" (as such term, as used herein and in each case where it appears in
this Section 4, is defined in Section 4.31 hereof), nor its officers has ever
filed a consent pursuant to Section 341(f) of the Internal Revenue Code of 1954,
as amended (the "Code") relating to collapsible
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corporations. The Company is not currently subject to federal taxation as a
Subchapter S corporation.
SECTION 4.09. Intellectual Property. (a) Except as listed on
Schedule 4.09 attached hereto, the Company owns, possesses, has the right to use
or has the right to bring actions for the infringement of, all Intellectual
Property Rights (as hereinafter defined) which it believes to be necessary or
required for the conduct of its business as presently conducted.
(b) Except as listed on Schedule 4.09 attached hereto, no
royalties, honorariums or fees are payable by the Company to other persons by
reason of the ownership or use of the Intellectual Property Rights.
(c) To the best knowledge of the Company, no product
manufactured, marketed or sold, and no product proposed in the Business Plan to
be manufactured, marketed or sold, by the Company, violates or will violate, any
Intellectual Property Rights or assumed name of another; and there is no pending
or, to the best knowledge of the Company, threatened claim or litigation against
the Company contesting the validity or right to use of any of the foregoing, nor
has the Company received any notice that any of the Intellectual Property Rights
or the operation or proposed operation of the Company's business as set forth in
the Business Plan conflicts, or will conflict, with the asserted rights of
others.
As used herein, the term "Intellectual Property Rights" means all intellectual
property rights, including, without limitation, patents, patent applications,
patent rights, trademarks, trademark applications, trade names, service marks,
copyrights, computer programs, inventions, know-how, licenses, trade secrets,
proprietary processes and formulae.
SECTION 4.10. Litigation, Etc. Except as listed on Schedule
4.10 attached hereto, there are no (i) actions, suits, claims, investigations or
legal or administrative or arbitration proceedings pending or, to the best
knowledge of the Company, threatened against or affecting the Company, whether
at law or in equity, or before or by any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which, if adversely determined, would have a material
adverse effect on the Company's business, or (ii) judgments, decrees,
injunctions or orders of any court, governmental department, commission, agency,
instrumentality or arbitrator against the Company which could have a material
adverse effect on the business, prospects, condition (financial or otherwise),
affairs or operations of the Company or which could materially impair the
Company's
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ability to perform its obligations hereunder nor, to the best knowledge of the
Company, does there exist any basis for any of the foregoing.
SECTION 4.11. Compliance; Governmental Authorizations. The
Company has complied in all material respects with all Federal, state, local or
foreign laws, ordinances, regulations and orders applicable to its business. The
Company has all material Federal, state, local and foreign governmental licenses
and permits necessary in the conduct of its business, such licenses and permits
are in full force and effect, no material violations are occurring or have
occurred in respect of any thereof and no proceeding is pending or, to the best
knowledge of the Company, threatened to revoke or limit any thereof. None of the
aforesaid licenses and permits shall be affected in any material respect by this
Agreement, the Stockholders' Agreement, the Voting Agreement or the Note.
SECTION 4.12. Compliance With ERISA; Benefit Plans; Etc. The
Company does not (a) maintain and has never maintained any employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or (b) contribute to and has never contributed to any such employee
benefit plan maintained by any other person or entity.
SECTION 4.13. No Defaults. Except as set forth on Schedule
4.13 attached hereto, the Company is not in default (a) under its Articles of
Incorporation or its By-laws, in each case as amended to the date hereof, or any
material indenture, mortgage, lease agreement, contract, purchase order or other
instrument or agreement to which the Company is a party or by which it or any of
its property is bound or affected or (b) with respect to any order, writ,
injunction or decree of any court or any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign and (c) there exists no condition, event or act which
constitutes, or which after notice, lapse of time or both could constitute, a
default under any of the foregoing.
SECTION 4.14. Employment of Officers, Employees and
Consultants. No third party has asserted, and, to the best knowledge of the
Company, no third party has a valid basis for asserting, any valid claim against
the Company, or any of the Stipulated Persons (as hereinafter defined) with
respect to (a) the continued employment by, or association with, the Company of
any of its officers or employees of, or consultants to the Company (the
"Stipulated Persons") or (b) the use by the Company or any of the Stipulated
Persons of any information which the Company or any of the Stipulated Persons
would be prohibited from using under any
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prior agreements or arrangements or under any laws applicable to unfair
competition, trade secrets or proprietary information.
SECTION 4.15. Encumbrances. Except as disclosed on Schedule
4.15 attached hereto, the Company owns outright all the property and assets,
real, personal or mixed, tangible or intangible, reflected as assets in the
Interim Balance Sheet or acquired by the Company since August 31, 1987 (other
than assets disposed of in the ordinary course of business since August 31,
1987), subject to no mortgages, liens, security interests, pledges, charges or
other encumbrances of any kind, except as reflected in the Interim Financial
Statements. Except as set forth on Schedule 4.15 attached hereto, the Company
owns, or has a valid leasehold interest in, or valid license for, all assets
necessary for the conduct of its business as presently conducted or as proposed
to be conducted.
SECTION 4.16. Agreements. Except as listed on Schedule 4.16
attached hereto, the Company is not a party to any written or oral (a) contract
with any labor union; (b) contract for the future purchase of fixed assets or
for the future purchase of materials, supplies or equipment in excess of normal
operating requirements; (c) contract for the employment of any officer,
individual employee or other person on a full-time basis or any contract with
any person on a consulting basis; (d) bonus, pension, profit-sharing,
retirement, stock purchase, stock option, hospitalization, medical insurance or
similar plan, contract or understanding in effect with respect to employees or
any of them or the employees of others; (e) agreement or indenture relating to
the borrowing of money or to the mortgaging, pledging or otherwise placing of a
lien on any assets of the Company; (f) guaranty of any obligation for borrowed
money or otherwise; (g) lease or agreement under which the Company is lessee of
or holds or operates any property, real or personal, owned by any other party;
(h) lease, license or other agreement under which the Company is lessor of, or
permits any third party to hold or operate, any property, real or personal,
owned or controlled by the Company; (i) agreement or other commitment for
capital expenditures in excess of normal operation requirements; (j) contract,
agreement or commitment under which the Company is obligated to pay any broker's
fees, finder's fees or any such similar fees, to any third party; (k) contract,
agreement or commitment under which the Company has issued, or may become
obligated to issue, any shares of capital stock of the Company, or any warrants,
options, convertible securities or other commitments pursuant to which the
Company is or may become obligated to issue any shares of its capital stock,
other than as contemplated by this Agreement; or (1) any other contract,
agreement, arrangement or understanding
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which is material to the business of the Company or which is material to, and
which a prudent investor would need to review in order to make, an informed
investment decision with respect to the purchase of the Note hereunder. The
Company has furnished to the Lender true and correct copies of all such written
agreements and other documents.
SECTION 4.17. Related Transactions. Except as set forth on
Schedule 4.17 attached hereto, no current or former stockholder, director,
officer or employee of the Company nor any "associate" (as defined in the rules
and regulations promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) of any such person, is presently, or since
December 31, 1986 has been, directly or indirectly through his affiliation with
any other person or entity, a party to any transaction (other than as an
employee or a consultant) with the Company providing for the furnishing of
services by, or rental of real or personal property from, or otherwise requiring
cash payments to any such person (a "Related Transaction").
SECTION 4.18. Offering Exemption. The offering and sale of the
Note and the issuance of the Reserved Shares upon conversion of the Note or the
Reserved Preferred Shares, as the case may be, are each exempt from registration
under the Securities Act. With respect to the aforesaid offering and sale, the
Company has complied, or, prior to issuance will have complied, with all
applicable state securities or blue sky laws.
SECTION 4.19. Insurance. Listed on Schedule 4.19 attached
hereto, are all policies of insurance maintained by the Company. Such policies
are in full force and effect and all premiums with respect to such policies are
currently paid. Except as listed on Schedule 4.19 attached hereto, the Company
has never been denied or had revoked or rescinded any policy of insurance.
SECTION 4.20. Burdensome Restrictions. Except as listed on
Schedule 4.16 attached hereto, the Company is not obligated under any contract
or agreement or subject to any charter or other corporate restriction which
presently materially adversely affects, or in the future may reasonably be
expected to materially adversely affect, its financial condition, operations,
results of operations, earnings, business or prospects.
SECTION 4.21. Investment Company Act. The Company is not an
"investment company" as that term is defined in, and is not otherwise subject to
regulation under, the Investment Company Act of 1940.
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SECTION 4.22. Use of Proceeds. Proceeds from the sale of the
Note shall be used by the Company for the purposes set forth on Schedule 4.22
attached hereto.
SECTION 4.23. Disclosure. Neither this Agreement, the
Stockholders' Agreement, the Note, the Business Plan, the financial statements
referred to in Section 4.05 hereof, nor the Operations Reports to the Board of
Directors dated September 2, 1987 and October 7, 1987, respectively contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein and therein not misleading.
There is no fact known to the Company which materially adversely affects or in
the future may materially adversely affect the business, operations, affairs,
prospects, condition, properties or assets of the Company which has not been set
forth in this Agreement or in the other documents, certificates, instruments, or
written statements furnished to the Lender by or on behalf of the Company
pursuant hereto (and listed herein).
SECTION 4.24. Brokers. Neither the Company, nor any of the
Company's officers, directors, employees or stockholders has employed any broker
or finder in connection with the transactions contemplated by this Agreement.
SECTION 4.25. No Governmental Consent or Approval Required. No
consent, approval or authorization of, or declaration to, or filing with, any
governmental or regulatory authority is required for the valid authorization,
execution, delivery and performance by the Company of this Agreement, the Note
or the Stockholders' Agreement or for the valid authorization, issuance, sale
and delivery to the Lender of the Note or for the valid authorization,
reservation, issuance, sale and delivery to the Lender of the Reserved Shares
upon conversion of the Note (or if so required, such consent, authorization or
approval shall have been obtained or filing shall have been effected on or prior
to the Closing). The registration of the Note and the Reserved Shares under the
Securities Act is not required for the valid issuance, sale, delivery and/or
performance (as the case may be) thereof hereunder.
SECTION 4.26. Business Plan. The Company has previously
presented and delivered to the Lender (on or about October 17, 1987) the
Company's Business Plan 1987 through 1989 (the "Business Plan"), and the Company
acknowledges that it has been advised by the Lender that the Business Plan has
been material to it in its decision to enter into this Agreement and the
Stockholders' Agreement and to purchase the Note hereunder. The description of
the business, operations (as presently conducted), properties and assets of the
Company contained in the Business Plan, as
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well as all other factual statements contained therein, are true and correct. To
the best knowledge of the Company, except as set forth on Schedule 4.26 attached
hereto, the financial projections and other estimates contained in the Business
Plan are based on reasonable assumptions of the Company at the time such
projections and estimates were made. The Company has no reason to believe, and
does not believe, that any assumptions of fact or statements of opinion
contained in the Business Plan are unreasonable, untrue or false.
SECTION 4.27. Books and Records. The books and records of the
Company have been maintained in accordance with sound business practices and, as
of the date hereof, present fairly the respective assets, financial condition
and results of operations of the Company.
SECTION 4.28. Non-Competition, Non-Disclosure and Patent and
Invention Assignment Agreements and Covenant Relating Thereto. Except as set
forth on Schedule 4.28 attached hereto, each current key employee of the Company
who has or is proposed to have access to confidential and proprietary
information of the Company is a signatory to, and is bound by, an agreement with
the Company relating to non-competition, non-disclosure, proprietary information
and patent and invention assignment (copies of the form of which are attached to
such Schedule 4.28), each of which shall not be modified or amended in any
respect without the prior consent of a majority of the entire Board of Directors
of the Company.
SECTION 4.29. Corporate Action. Minutes of all meetings of the
Board of Directors (and any committees thereof) and stockholders (and all
resolutions adopted thereat or thereby, including written action in lieu of a
meeting) of the Company have been provided to the Lender and ▇'▇▇▇▇▇▇▇▇, Graev &
Karabell, counsel for the Lender. Such minutes, resolutions or other corporate
action have not been altered, amended or rescinded and are in full force and
effect on the date hereof.
SECTION 4.30. Registration Rights. Except as contemplated by
this Agreement and as set forth on Schedule 4.30 attached hereto, no person has
any right to cause the Company to effect the registration under the Securities
Act of any shares of Common Stock or any other securities (including debt
securities) of the Company.
SECTION 4.31. Definition of Best Knowledge. As used herein,
the term "to the best knowledge" of the Company shall mean and include (i)
actual knowledge and (ii) that knowledge which a prudent business person
(including, in the case of the Company, the officers, directors, and key
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employees of the Company) could have obtained in the management of his or her
business affairs after making due inquiry and exercising due diligence which a
prudent businessperson should have made or exercised, as applicable, with
respect thereto. In connection therewith, the knowledge (both actual and
constructive) of any director, officer or key employee of the Company shall be
imputed to be the knowledge of the Company. For purposes of this Section 4.31,
key employees shall mean ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇.
SECTION 5. Representations and Warranties of the Lender. The
Lender represents and warrants to the Company as follows:
(a) The Lender is acquiring the Note, and in the event of the
issuance of Reserved Shares he will be acquiring the Reserved Shares,
for his own account, for investment and not with a view to the
distribution thereof within the meaning of the Securities Act; it being
understood and agreed that the Lender may transfer the Note (or
Reserved Shares) to a partnership consisting primarily of members of
the Lender's family in which the Lender shall act as the sole general
partner.
(b) The Lender understands that the Note has not been, and the
Reserved Shares will not be, registered under the Securities Act or
under any state securities acts by reason of their issuance by the
Company in a transaction exempt from the registration requirements of
applicable state securities acts and the Securities Act pursuant to
Section 4(2) thereof; and that they must be held indefinitely unless a
subsequent disposition thereof is registered under the Securities Act
and any applicable state securities acts or is exempt from such
registration.
(c) The Lender further understands that the exemption from
registration afforded by Rule 144 (the provisions of which are known to
the Lender) issued under the Securities Act depends on the satisfaction
of various conditions and that, if applicable, Rule 144 affords the
basis for sales only in limited amounts and under limited
circumstances.
(d) The Lender further represents, warrants and covenants to
the Company that it will not transfer the Note or any of the Reserved
Shares except in compliance with Section 8 of this Agreement, the
Stockholders' Agreement and applicable securities laws.
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(e) The Lender confirms that he (a) is familiar with the
business of the Company, (b) has had the opportunity to ask questions
of the Company's officers and directors and to acquire such information
about the business and financial condition of the Company has requested
and (c) has had the opportunity to obtain such other information as the
Lender deemed necessary, and the Lender has relied upon, among other
things, his independent investigation in making a decision to enter
into this Agreement; provided, however, that nothing herein shall be
construed to derogate or otherwise limit the representations,
warranties and covenants of the Company contained in this Agreement,
the Note or the Stockholders' Agreement, or the Lender's reliance
thereon.
(f) The Lender has made such independent investigations of the
Company and of the business and financial condition of the Company, as
the Lender in the exercise of the sound business judgment, considers to
be appropriate under the circumstances.
(g) The Lender consents to the imprinting of the
legend set forth in Section 8.03 hereof on the Note and Reserved
Shares.
(h) The Lender represents and warrants that he is an
"accredited investor" as that term is defined in Regulation D
promulgated pursuant to the Securities Act.
SECTION 6. Conditions Precedent to Closing.
SECTION 6.01. Closing. The obligation of the Lender to
purchase and pay for the Note at the Closing is subject to the following
conditions precedent:
(a) Receipt of Note. The Lender shall have received the Note
duly executed by the Company and payable to the Lender in the principal
amount of $500,000.
(b) Corporate Proceedings; Consents, Etc. All corporate and
other proceedings to be taken and all waivers and consents to be
obtained in connection with the transactions contemplated by this
Agreement and the Note shall have been taken or obtained and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Lender and to its counsel, ▇'▇▇▇▇▇▇▇▇ Graev &
Karabell, each of whom shall have received all such originals or
certified or other copies of such documents either may reasonably
request.
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(c) Opinion of Counsel. At the Closing, the Lender shall have
received the favorable written opinion of Dilworth, Parson, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, special counsel for the Company, dated the date of the
Closing and addressed to the Lender, in the form of Exhibit B
attached hereto.
(d) Secretary's Certificate. The Lender shall have received a
certificate, dated the date of the Closing, of the Secretary or an
Assistant Secretary of the Company to the effect (i) that attached
thereto is a true and complete copy of the Articles of Incorporation
and the By-laws of the Company, in each case as in effect on the date
thereof, (ii) that attached thereto is a true and complete copy of
resolutions adopted by the Board of Directors of the Company
authorizing the execution, delivery and performance of this Agreement
and the Note and consummation of the transactions contemplated hereby
and thereby and reserving the Reserved Shares for issuance upon the
conversion of the Note and the Preferred Stock, (iii) that the Company
is in good standing under the laws of the Commonwealth of Pennsylvania
and any other state in which the conduct of its business or its
ownership or leasing of property requires qualification of the Company,
except for those jurisdictions in which failure to so qualify would not
have a material adverse effect on the business or assets of the
Company, and has paid all required franchise taxes in such states, and
(iv) of such other matters as may reasonably be requested by the Lender
or its counsel, ▇'▇▇▇▇▇▇▇▇ Graev & Karabell.
(e) Reconstitution of Board of Directors; Election of
Directors. The Lender shall have been appointed to the Board of
Directors of the Company.
(f) Blue Sky Matters. All consents, approvals, filings,
qualifications and/or registrations required to be obtained or effected
under any applicable state securities or blue sky laws in connection
with the issuance, sale and delivery to the Lender of the Note or the
reservation, issuance, sale and delivery to the Lender of the Reserved
Shares shall have been obtained or effected (except for the filing of
any notice subsequent to the Closing which may be required under
applicable state securities laws which, if required, shall be filed on
a timely basis as may be so required) and copies of the same delivered
to the Lender.
(g) Stockholders' Agreement. A stockholders' agreement (the
"Stockholders' Agreement"), among the Company and the other signatories
thereto, in the form
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of Exhibit C attached hereto, shall have been executed and delivered by
the Company and such parties. In addition, the Company and such parties
shall have complied with all terms and conditions of the Stockholders'
Agreement, including, among other things, the placement of the legends
required to be placed on certificates representing securities owned by
such parties.
(h) Legal Matters Satisfactory. On the date of the Closing,
all legal matters incident to this Agreement and the Closing shall be
reasonably satisfactory to ▇'▇▇▇▇▇▇▇▇ Graev & Karabell, counsel for the
Lender.
(i) Voting Agreement Regarding Amendment to Articles of
Incorporation. Stockholders of the Corporation holding a majority of
the issued and outstanding Shares of Common Stock of the Company shall
have entered into an agreement (the "Voting Agreement") with the
Company to vote in favor of an amendment to the Articles of
Incorporation in the form of Exhibit I attached to the Note at a
special meeting of stockholders to be held as soon as practicable
following the Closing.
(j) Warrant. The Company shall have obtained an acknowledgment
of KWF to the effect that the delivery of the warrant for 40 shares of
Common Stock previously delivered to KWF constitutes the warrant
meeting the requirements of paragraph 7 of the letter dated November,
1985 with the Company, and that there are no continuing obligations of
the Company to KW except pursuant to the warrant previously delivered.
SECTION 7. Covenants of the Company.
SECTION 7.01. Board Meetings, Access. (a) At any time that a
nominee of the Lender (whether such nominee is the Lender or otherwise) shall no
longer be a member of the Board of Directors, so long as the Lender is not
engaged in, and does not hold any controlling interest in, a business
competitive with the Company, and so long as the Lender (including any
partnership consisting primarily of the Lender's family members for which the
Lender acts as sole general partner) maintains ownership of the Note and/or the
Reserved Shares, the Lender shall be entitled to receive notice of and to
attend, Board meetings; provided, however, that the right provided hereunder
shall be so provided only for so long as the provision of such right will not,
in the reasonable judgment of the Company, be determined to be detrimental to
the Company's relationship with existing and potential suppliers and customers.
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(b) The Company will (i) give the Lender such prior notice of
each meeting of the Board of Directors and of any other committee or group
exercising responsibilities comparable to those exercised by the Board of
Directors as is given each Director, which notice shall specify the time and
place of such meeting, and, to the extent then known, the matters to be
discussed thereat and inviting the Lender to attend such meeting (provided,
however, that, at any time the Lender is not a director of the Company, (A) the
Lender shall not have the right to vote at such meeting, and (B) the Lender
shall agree to maintain the confidentiality of information conveyed as a result
of such meeting in accordance with such terms as approved by the Board of
Directors), (ii) furnish the Lender with copies of all written notices, minutes,
consents (including draft consents) and other written materials that the Company
provides to its directors, and (iii) afford to the Lender free and full access,
at all reasonable times, to all of the books, records and properties of the
Company and to all officers and employees of the Company, for any reasonable
purpose whatsoever; provided, however, that the access and information provided
hereunder shall be so provided only for so long as the provision of such access
and information will not, in the reasonable judgment of the Company, be
determined to be detrimental to the Company's relationship with existing and
potential suppliers and customers.
SECTION 7.02. Right of First Refusal. (a) Except in the case
of Excluded Securities, the Company shall not issue, sell or exchange, agree to
issue, sell or exchange, or reserve or set aside for issuance sale or exchange,
any (i) shares of Common Stock, Preferred Stock or any other equity security of
the Company, (ii) any debt security of the Company which is convertible or has
other equity features, or (iii) any option, warrant or other right to subscribe
for, purchase or otherwise acquire any equity security or any such debt security
of the Company, unless in each case the Company shall have first offered to sell
to the Lender its Proportionate Percentage (as defined below) of such securities
(the "Offered Securities"), at a price and on such other terms as shall have
been specified by the Company in writing delivered to the Lender (the "Offer"),
which Offer by its terms shall remain open and irrevocable for a period of 10
days from the date it is delivered by the Company to the Lender.
(b) Notice of the Lender's intention to accept, in whole or in
part, the Offer made pursuant to Section 7.02(a) shall be evidenced by a writing
signed by the Lender and delivered to the Company prior to the end of the 10-day
period of such Offer, setting forth such portion of the Offered Securities as
the Lender elects to purchase (the "Notice of Acceptance").
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(c) In the event that a Notice of Acceptance is not given by
the Lender in respect of all its Proportionate Percentage of the Offered
Securities, the Company shall have 90 days from the expiration of the foregoing
10-day period to sell all or any part of such Offered Securities as to which a
Notice of Acceptance has not been given by the Lender (the "Refused
Securities"), but only in all respects upon the terms and conditions no more
favorable than those contained in the Offer. Upon the closing, the Lender shall
purchase from the Company, and the Company shall sell to the Lender, the Offered
Securities in respect of which a Notice of Acceptance was delivered to the
Company by the Lender, at the terms specified in the Offer. The purchase by the
Lender of any Offered Securities is subject in all cases to the terms and
conditions set forth in the purchase agreement (if any) with the third party
initially proposing the Offer unless such agreement relating to such Offered
Securities is not reasonably satisfactory in form and substance to the Lender.
(d) In each case, any Offered Securities not purchased by the
Lender or the other person or persons in accordance with Section 7.02(c) may not
be sold or otherwise disposed of until they are again offered to the Lender
under the procedures specified in Sections 7.02(a), (b) and (c).
(e) The rights of the Lender under this Section 7.03 shall not
apply to the following securities ("Excluded Securities"):
(i) Common Stock, or options to purchase or rights to
subscribe for such Common Stock, or securities by their terms
convertible into or exchangeable for such Common Stock, or options to
purchase or rights to subscribe for such convertible or exchangeable
securities, issued to officers, employees or directors of, or
consultants to, the Company and in each case approved by the Board of
Directors of the Corporation; provided, however, that the maximum
number of shares of Common Stock hereafter issued or issuable to
officers, employees or directors of, or consultants to, the Company to
which this clause (i) shall apply shall not exceed the mum of (A) up to
800,000 shares, including 400,000 shares subject to issuance pursuant
to options granted to employees prior to the date hereof and 400,000
shares reserved prior to the date hereof for issuance pursuant to the
Company's qualified incentive plan (including any Common Stock issued
pursuant to the exercise of any such options) and (B) the greater of
seven and one-half percent (7-1/2%) of all shares of Common Stock then
outstanding or 600,000 shares of Common Stock;
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(ii) Common Stock issued as a stock dividend or upon any
subdivision or combination of shares of Common Stock;
(iii) the Reserved Shares;
(iv) any Common Stock issued pursuant to the exercise of
options, warrants and rights outstanding as of the date hereof and
listed on Schedule 7.02 attached hereto (including any replacements or
options, warrants or rights issued in like amount upon the expiration
of any such options, warrants or rights); or
(v) provided that Western Union shall exercise its right of
first refusal, any securities sold or to be sold pursuant to an
exercise of the right of first refusal granted to Western Union
pursuant to Section 7(d) of the Supply Agreement.
(f) Subject to such restrictions on transfer as are set forth
in the Stockholders Agreement, the rights of the Lender under this Section 7.02
shall be assignable to any transferee of the Lender (or any permitted assignee
of any such rights) who or which acquires the Note or the Reserved Shares in
accordance with the terms of this Agreement.
(g) "Proportionate Percentage" shall mean that percentage
figure which expresses the ratio which (x) the number of shares of Common Stock
then owned by the Lender bears to (y) the aggregate number of shares of Common
Stock then issued and outstanding (or deemed to be issued and outstanding) to
all holders of Common Stock of the Company. For purposes solely of the
computation required under clauses (x) and (y) above, the Note and any other
then issued and outstanding securities convertible into or exercisable or
exchangeable for shares of Common Stock shall be treated as having been
converted into or exercised or exchanged for shares of Common Stock at the rate
at which such securities are convertible into or exercisable or exchangeable for
shares of Common Stock in effect at the time of delivery by the Company of the
Offer as contemplated by Section 7.02(a) hereof.
SECTION 7.03. Termination of Covenant. Notwithstanding
anything herein to the contrary, the provisions of Section 7.02 hereof shall
terminate and shall cease to be effective upon the consummation of a public
offering of Common Stock registered under the Securities Act with an aggregate
gross offering price to the public (prior to deduction of expenses,
underwriter's commissions, etc.) of at least $2,500,000.
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SECTION 8. Transfer of Securities; Registration Rights .
SECTION 8.01. Restriction on Transfer. The Restricted
Securities (as hereinafter defined), and any shares of capital stock received in
respect thereof, whether by reason of a stock split or share reclassification
thereof, a stock dividend thereon or otherwise, shall not be transferable except
upon the conditions specified in this Section 8.
SECTION 8.02. Definitions. As used in this Section 8, the
following terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange
Commission, or any other Federal agency at the time administering the
Securities Act.
"Person" shall mean and include an individual, a corporation,
a partnership, a trust, an unincorporated organization and a government
or any department, agency or political subdivision thereof.
"Restricted Securities" shall mean the Note, the Reserved
Shares and any shares of capital stock received in respect of any
thereof, evidenced by certificates bearing the restrictive legend set
forth in Section 8.03.
"Restricted Shares" shall mean the shares of Common Stock
constituting Restricted Securities.
"Securities Act" shall mean the Securities Act of 1933, as
amended, 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.
"Transfer" shall include any disposition of any shares of
Restricted Securities or of any interest therein which would constitute
a sale thereof within the meaning of the Securities Act.
SECTION 8.03. Restrictive Legends. Each certificate for the
Restricted Securities and any shares of capital stock received in respect
thereof, whether by reason of a stock split or share reclassification thereof, a
stock dividend thereon or otherwise, and each certificate for any such
securities issued to subsequent transferees of any such certificate shall
(unless otherwise permitted by the provisions of Section 8.04 or 8.11) be
stamped or otherwise imprinted with legends in substantially the following form:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED OR ANY STATE SECURITIES ACTS. THESE SECURITIES MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
OPINION OF COUNSEL ACCEPTABLE TO TELEBASE SYSTEMS, INC. AND IN
ACCEPTABLE FORM AND SUBSTANCE THAT AN EXEMPTION THEREFROM IS AVAILABLE
UNDER SAID ACTS. ADDITIONALLY, THE TRANSFER OF THESE SECURITIES IS
SUBJECT TO (A) CERTAIN RESTRICTIONS PURSUANT TO A STOCKHOLDERS'
AGREEMENT DATED OCTOBER 30, 1987 AMONG TELEBASE SYSTEMS, INC. AND OTHER
SIGNATORIES THERETO (AND NO TRANSFER OF THESE SECURITIES SHALL BE VALID
OR EFFECTIVE UNLESS SUCH TRANSFER IS IN ACCORD THEREWITH) AND (B) THE
CONDITIONS SPECIFIED IN SECTION 8 OF THE NOTE PURCHASE AGREEMENT DATED
AS OF OCTOBER 30, 1987, BETWEEN TELEBASE SYSTEMS, INC. AND ▇▇▇▇ ▇.
▇▇▇▇▇▇ (AND NO TRANSFER OF THESE SECURITIES SHALL BE VALID OR EFFECTIVE
UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED). UPON THE FULFILLMENT OF
CERTAIN OF SUCH CONDITIONS, TELEBASE SYSTEMS, INC. HAS AGREED TO
DELIVER TO THE HOLDER HEREOF A NEW CERTIFICATE, NOT BEARING THIS
LEGEND, FOR THE SECURITIES REPRESENTED HEREBY REGISTERED IN THE NAME OF
THE HOLDER HEREOF. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST
BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO
THE SECRETARY OF TELEBASE SYSTEMS, INC.
SECTION 8.04. Notice of Transfer. The holder of any Restricted
Securities, by acceptance thereof, agrees, prior to any transfer of any
Restricted Securities, to give written notice to the Company of such holder's
intention to effect such transfer and to comply in all other respects with the
provisions of this Section 8.04. Each such notice shall describe the manner and
circumstances of the proposed transfer and shall be accompanied by (a) the
written opinion, addressed to the Company, of counsel reasonably acceptable to
the Company for the holder of Restricted Securities, as to whether in the
opinion of such counsel such proposed transfer involves a transaction requiring
registration of such Restricted Securities under the Securities Act and state
securities acts and, if not, a description of the exemptions available, and (b)
in the case of Restricted Shares, if in the opinion of such counsel such
registration is required, a written request addressed to the Company by the
holder of Restricted Securities, describing in detail the proposed method of
disposition and requesting the Company to effect the registration of such
Restricted Shares pursuant to the terms and provisions of Section 8.05 or 8.06
hereof, as the case may be; provided, however, that no such opinion shall be
required in connection with a transfer by any holder to a partnership consisting
primarily of such holder's family members for which such holder acts
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as the sole general partner. If in the opinion of such counsel (if such opinion
is required hereunder) the proposed transfer of Restricted Securities may be
effected without registration under the Securities Act and state securities
acts, the holder of Restricted Securities shall thereupon be entitled to
transfer Restricted Securities in accordance with the terms of the notice
delivered by it to the Company. Each certificate or other instrument evidencing
the securities issued upon the transfer of any Restricted Securities (and each
certificate or other instrument evidencing any untransferred balance of such
securities) shall bear the legends set forth in Section 8.03 unless (a) in the
opinion of such counsel registration of future transfer is not required by the
applicable provisions of the Securities Act and state securities acts or (b) the
Company shall have waived the requirement of such legends; provided, however,
that such legend shall not be required on any certificate or other instrument
evidencing the securities issued upon such transfer in the event such transfer
shall be made in compliance with the requirements of Rule 144 (as amended from
time to time) promulgated under the Securities Act (or successor Rule thereto).
The holder of Restricted Securities shall not transfer such Restricted
Securities until such opinion of counsel has been given to the Company (unless
waived by the Company or unless such opinion is not required in accordance with
the provisions of this Section 8.04) or until registration of the Restricted
Shares involved in the above-mentioned request has become effective under the
Securities Act.
SECTION 8.05. Incidental Registration. If the Company proposes
for any reason to register any of its securities on its own behalf under the
Securities Act (other than pursuant to a registration statement on Forms S-8 or
S-4 or similar or successor forms), it shall each such time promptly give
written notice to all holders of outstanding Restricted Securities of its
intention to do so, and, upon the written request, given within 30 days after
receipt of any such notice, of the holder of any such Restricted Securities to
register any Restricted Shares (which request shall specify the Restricted
Shares intended to be sold or disposed of by such holders), the Company shall
use its best efforts to cause all such Restricted Shares to be included in such
registration under the Securities Act, all to the extent requisite to permit the
sale or other disposition (in accordance with the Company's intended methods
thereof, as aforesaid) by the prospective seller or sellers of the Restricted
Shares so registered. In the event that the proposed registration by the Company
is, in whole or in part, an underwritten public offering of securities of the
Company, if the managing underwriter determines and advises in writing that the
inclusion of all Restricted Shares proposed to be included in the underwritten
public offering
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and other issued and outstanding shares of Common Stock proposed to be included
therein by persons other than the holders of Restricted Securities (the "Other
Shares") would interfere with the successful marketing of such securities, then
the number of Restricted Shares and Other Shares shall be reduced, pro rata
among the holders of Other Shares and the holders of Restricted Shares (based
upon the number of shares of Common Stock requested by the holders thereof to be
registered in such underwritten public offering), and (ii) in each case those
shares of Common Stock which are excluded from the underwritten public offering
shall be withheld from the market by the holders thereof for a period, not to
exceed 90 days, which the managing underwriter reasonably determines as
necessary in order to effect the underwritten public offering.
SECTION 8.06. Registrations on Form S-2 or S-3. At such time
as the Company shall have qualified for the use of Form S-2 or S-3 (or any
similar form or forms promulgated by the Securities and Exchange Commission),
the holders of Restricted Securities shall have the right to request an
unlimited number of registrations on Form S-2 or S-3 (which request or requests
shall be in writing, shall specify the Restricted Shares intended to be sold or
disposed of by the holders thereof, shall state the intended method of
disposition of such Restricted Shares by the holder(s) requesting such
registration and shall relate to Restricted Shares having a proposed aggregate
gross offering price (before deduction of underwriting discounts and expenses of
sale) of at least $500,000), and the Company shall be obligated to effect such
registration or registrations on S-2 or S-3 (as the case may be); provided,
however, that the Company shall in no event be obligated to cause the
effectiveness of more than one such registration statement in any calendar year.
SECTION 8.07. Granting of Registration Rights. (a) The Company
shall not, without the prior written consent of persons holding a majority of
the Restricted Securities then outstanding, grant any rights to any persons to
register any shares of capital stock or other securities of the Company if such
rights would be superior to the rights of the holders of Restricted Securities
granted pursuant to this Agreement, unless the Lender is given the same or
comparable rights.
(b) The Company shall not grant any registration rights to any
persons which would give such person or persons the right to require the Company
to register shares of capital stock or other securities of the Company on Form
S-1 or any other comparable form unless the Lender is given the same or
comparable registration rights.
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SECTION 8.08. Preparation and Filing. If and whenever the
Company is under an obligation pursuant to the provisions of this Section 8 to
use its best efforts to effect the registration of any Restricted Shares, the
Company shall, as expeditiously as practicable:
(a) prepare and file with the Commission a registration
statement with respect to such securities land use its best efforts to
cause such registration statement to become and remain effective;
(b) prepare and file with the Commission such amendments and
supplements to such registration statements and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for at least nine months and to comply with the
provisions of the Securities Act with respect to the sale or other
disposition of all Restricted Shares covered by such registration
statement;
(c) furnish to each selling stockholder such number of copies
of a summary prospectus or other prospectus, including a preliminary
prospectus, 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 such Restricted
Shares;
(d) use its best efforts to register or qualify the Restricted
Shares covered by such registration statement under the securities or
blue sky laws of such jurisdictions as each such seller shall
reasonably request (provided, however, that the Company shall not be
required to consent to general service of process for all purposes in
any jurisdiction where it is not then qualified) and do any and all
other acts or things which may be necessary or advisable to enable such
seller to consummate the public sale or other disposition in such
jurisdictions of such securities;
(e) notify each seller of Restricted Shares covered by such
registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered
under the Securities Act within the appropriate period mentioned in
clause (b) of this Section 8.08, of 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 a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of
the circumstances then existing and at the request of such
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seller, prepare and furnish to such seller 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
shares, 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 then existing; and
(f) furnish, at the request of any holder or holders
requesting registration of Restricted Shares pursuant to this Section
8, on the date that such Restricted Shares are delivered to the
underwriters for sale in connection with a registration pursuant to
this Section 8, if such securities are being sold through underwriters,
or, if such securities are not being sold through underwriters, on the
date that the registration statement with respect to such securities
becomes effective, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an
underwritten public offering, addressed to the underwriters, if any,
and to the holder or holders making such request; and (ii) a letter
dated such date, from the independent certified public accountants of
the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an
underwritten public offering, addressed to the underwriters, if any,
and to the holder or holders making such request.
SECTION 8.09. Expenses. All expenses incurred by the Company
in complying with Section 8.08, including, without limitation, all registration
and filing fees, fees and expenses of complying with securities and blue sky
laws, printing expenses and fees and disbursements of counsel, including the
fees and all disbursements of not more than one counsel for the holders of
Restricted Securities requesting registration hereunder, and reasonable fees and
disbursements of the independent certified public accountants (but excluding the
compensation of regular employees of the Company which shall be paid in any
event by the Company) shall be paid by the Company; provided, however, that (a)
the Company shall not be obligated for more than $10,000 in the aggregate of the
fees and disbursements of counsel for the holders of Restricted Securities
engaged in any one registration under Section 8.05 or 8.06 hereof and (b) all
underwriting discounts and selling commissions and other similar fees and costs
applicable to the Restricted Shares covered by registrations effected pursuant
to Sections 8.05 and 8.06 hereof shall be
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borne by the seller or sellers thereof, in proportion to the number of
Restricted Shares sold by such seller or sellers.
SECTION 8.10. Indemnification. In the event of any
registration of any Restricted Shares under the Securities Act pursuant to this
Section 8 or registration or qualification of any Restricted Shares pursuant to
Section 8.08(d), the Company shall indemnify and hold harmless the seller of
such shares, or any other person acting on behalf of such seller and each other
person, if any, who controls any of the foregoing persons, within the meaning of
the Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which any of the foregoing persons may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
registration statement under which such Restricted Shares were registered under
the Securities Act, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, or any document prepared and/or
furnished by the Company incident to the registration or qualification of any
Restricted Shares pursuant to Section 8.08(d), or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading or,
with respect to any prospectus, necessary to make the statements therein in
light of the circumstances under which they were made, not misleading, or any
violation by the Company of the Securities Act or state securities or blue sky
laws applicable to the Company and relating to action or inaction required of
the Company in connection with such registration or qualification under such
state securities or blue sky laws; and shall reimburse such seller, underwriter
or other person acting on behalf of such seller and each such controlling person
for any legal or any other expenses reasonably incurred by any of them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in said registration statement, said
preliminary prospectus or said prospectus or said amendment or supplement or any
document incident to the registration or qualification of any Restricted Shares
pursuant to Section 8.08(d) in reliance upon and in conformity with written
information furnished to the Company by such seller or such seller's agent or
representative specifically for use in the preparation thereof.
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Before Restricted Shares held by any prospective seller shall
be included in any registration pursuant to Section 8, such prospective seller
and any underwriter acting on its behalf shall have agreed to indemnify and hold
harmless (in the same manner and to the same extent as set forth in the
preceding paragraph of this Section 8.10) the Company, each director of the
Company, each officer of the Company who shall sign such registration statement,
and any person who controls the Company within the meaning of the Securities
Act, with respect to any untrue statement or omission from such registration
statement, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, if such untrue statement or omission was
made in reliance upon and in conformity with written information furnished to
the Company by such seller or such seller's agent or representative specifically
for use in the preparation of such registration statement, preliminary
prospectus, final prospectus or amendment or supplement; provided, however, that
the maximum amount of liability in respect of such indemnification shall be
limited, in the case of each prospective seller of Restricted Shares, to an
amount equal to the net proceeds actually received by such prospective seller
from the sale of Restricted Shares effected pursuant to such registration.
Promptly after receipt by an indemnified party of notice of
the commencement of any action involving a claim referred to in the preceding
paragraphs of this Section 8.10, such indemnified party will, if a claim in
respect thereof is made against an indemnifying party, give written notice to
the latter of the commencement of such action. In case any such action is
brought against an indemnified party, the indemnifying party will be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that it 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 responsible for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof; provided, however, that if any indemnified
party shall have reasonably concluded that there may be one or more legal
defenses available to such indemnified party which are different from or
additional to those available to the indemnifying party, or that such claim or
litigation involves or could have an effect upon matters beyond the scope of the
indemnity agreement provided in this Section 8.10, the indemnifying party shall
not have the right to assume the defense of such action on behalf of such
indemnified party and such indemnifying party shall reimburse such indemnified
party and any person controlling such indemnified party for that
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portion of the fees and expenses of any counsel retained by the indemnified
party which are reasonably related to the matters covered by the indemnity
agreement provided in this Section 8.10.
The failure to notify an indemnifying party promptly of the
commencement of any such action, if materially prejudicial to the ability of the
indemnifying party to defend such action, shall relieve such indemnifying party
of any liability to the indemnified party under this paragraph, but the omission
so to notify the indemnifying party will not relieve the indemnifying party of
any liability that it may have to any indemnified party otherwise than under
this Section 8.
The indemnifying party shall not make any settlement of any
claims indemnified against hereunder without the written consent of the
indemnified party or parties, which consent shall not be unreasonably withheld.
SECTION 8.11. Removal of Legends, Etc. Notwith- standing the
foregoing provisions of this Section 8, the restrictions imposed by this Section
8 upon the transferability of any Restricted Securities shall cease and
terminate when any such Restricted Securities are sold or otherwise disposed of
in accordance with the intended method of disposition by the seller or sellers
thereof set forth in the registration statement or as otherwise contemplated by
Section 8.04 hereof which does not in the opinion of counsel reasonably
satisfactory to the Company require that the securities transferred bear the
legend set forth in Section 8.03. Whenever the restrictions imposed by this
Section 8 shall terminate, as herein provided, and in accordance with such
opinion of counsel, the holder of any Restricted Securities as to which such
restrictions have terminated shall be entitled to receive from the Company,
without expense, a new certificate not bearing the restrictive legends set forth
in Section 8.03 and not containing any other reference to the restrictions
imposed by this Section 8.
SECTION 9. Securities Act Registration Statements. The Company
shall not file any registration statement under the Securities Act covering any
securities unless it shall first have given the Lender written notice thereof.
The Company further covenants that the Lender shall have the right, at any time
when in its sole and exclusive judgment exercised in good faith it is or might
be deemed to be a controlling person of the Company, to participate in the
preparation of such registration statement and to request the insertion therein
of material furnished to the Company in writing which in the Lender's judgment
should be included. In connection with any
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registration statement referred to in Section 8 or this Section 9, the Company
will indemnify, to the extent permitted by law, the Lender against all losses,
claims, damages, liabilities and expenses caused by any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement or prospectus or any preliminary prospectus or any amendment thereof
or supplement thereto or caused by 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, except insofar as such losses, claims,
damages, liabilities or expenses are caused by any untrue statement or alleged
untrue statement or omission or alleged omission contained in written
information furnished to the Company by the Lender expressly for use in such
registration statement. If, in connection with any such registration statement,
the Lender shall furnish written information to the Company expressly for use in
the registration statement, the Lender will indemnify to the extent permitted by
law, the Company, its directors, each of its officers who sign such registration
statement and each person, if any, who controls the Company within the meaning
of the Securities Act against all losses, claims, damages, liabilities and
expenses caused by any untrue statement or alleged untrue statement of a
material fact or any omission or alleged omission of a material fact required to
be stated in the registration statement or prospectus or any preliminary
prospectus or any amendment thereof or supplement thereto or necessary to make
the statements therein not misleading, but only to the extent that such untrue
statement or alleged untrue statement or such omission or alleged omission is
contained in information so furnished in writing by the Lender for use therein.
SECTION 10. Events of Default. For so long as the Note shall
be outstanding, in the case of the happening of any of the following events
(hereinafter called "Events of Default"):
(a) any representation or warranty made by the Company under
or in connection with this Agreement or with the execution and delivery
of the Note or any statement or representation made in any report,
certificate, financial statement or other instrument furnished by the
Company pursuant to this Agreement shall prove to have been false or
misleading in any material respect when made or delivered;
(b) default shall be made with respect to any agreement or
other evidence of indebtedness or liability for borrowed money (other
than the Note) of the Company involving indebtedness (other than trade
payables in the ordinary course of business) with a
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principal amount in excess of $100,000, if the effect of such default
is (i) to accelerate the maturity of such indebtedness or liability or
to require the prepayment thereof or (ii) to permit the holder thereof
(or a trustee on behalf of the holder or holders thereof) to cause such
indebtedness to become due prior to the stated maturity thereof, or any
such indebtedness or liability shall not be paid when due Company (it
being understood that defaults under certain agreements as set forth on
Schedule 4.13 shall not by themselves constitute Events of Default
under this clause (b));
(c) default shall be made in any material respect in the due
observance or performance of any covenant, condition or agreement on
the part of the Company (it being understood that defaults under
certain agreements as set forth on Schedule 4.13 shall not by
themselves constituted Events of Default under this clause (c));
(d) the Company shall (i) voluntarily commence any proceeding
or file any petition seeking relief under Title 11 of the United States
Code or any other Federal or state bankruptcy, insolvency or similar
law, (ii) consent to the institution of, or fail to controvert in a
timely and appropriate manner, any such proceeding or the filing of any
such petition, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator or similar official for the
Company or for the substantial part of its properties, (iv) file an
answer admitting the material allegations of a petition filed against
it in any such proceeding, (v) make a general assignment for the
benefit of creditors, or (vi) take any formal action for the purpose of
effecting any of the foregoing;
(e) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Company, or of a
substantial part of its properties, under Title 11 of the United States
Code or any other Federal or state bankruptcy, insolvency or similar
law, (ii) the appointment of a receiver, trustee, custodian,
sequestrator or similar official for the Company or for a substantial
part of its properties or (iii) the winding up or liquidation of the
Company; and such proceeding or petition shall continue unremedied for
60 days or an order or decree approving or ordering any of the
foregoing shall continue unstayed and in effect for 60 days;
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(f) the Company shall have dissolved or any proceedings shall
have commenced, or any formal action shall have been taken, with a view
to the dissolution of the Company; or
(g) final judgment for the payment of money in excess of an
aggregate of $100,000 and not fully covered by insurance shall be
rendered against the Company for a period of 30 consecutive days during
which execution shall not be effectively stayed;
then, and in every such event and at any time thereafter during the continuance
of such event, the holders of the Note may by written notice to the Company
declare the Note to be forthwith due and payable in accordance with the terms of
the Note, whereupon the Note shall become forthwith due and payable, both as to
principal and interest, without presentment, demand, protest or any other notice
of any kind, all of which are hereby expressly waived.
SECTION 11. Fees. The Company will reimburse the Lender for
fifty percent (50%) of the aggregate legal fees and disbursements of ▇'▇▇▇▇▇▇▇▇
Graev & Karabell incurred in connection with the preparation of this Agreement
in excess of $5,000 (it being understood and agreed that the Lender will bear
the first $5,000 of the aggregate of such legal fees and disbursements);
provided, however, that the Company shall reimburse the Lender for all the fees
and disbursements of ▇'▇▇▇▇▇▇▇▇ Graev & Karabell in the event that, at any time
prior to December 31, 1988, either the Company permits another investor
introduced by the Lender to the Company to invest in the Company upon terms
substantially similar to the terms of this transaction, or (b) Western Union
exercises its right of first refusal, or otherwise successfully institutes a
claim, with respect to the issuance of the Note or Reserved Shares or
consummation of the transactions contemplated hereunder. The Company further
agrees that it will pay, and will save the Lender harmless from, any and all
liability with respect to any stamp or similar taxes which may be determined to
be payable in connection with the execution and delivery of this Agreement or
any modification, amendment or alteration of the terms or provisions of this
Agreement, and that it will similarly pay and hold the Lender harmless from all
issue taxes, if any, in respect of the issuance of the Note and the Reserved
Shares to the Lender.
SECTION 12. Exchanges; Lost, Stolen or Mutilated Certificates.
Upon surrender by the Lender to the Company of certificates for securities
purchased or acquired by the Lender hereunder, the Company at its expense will
issue in exchange therefor, and deliver to the Lender, a new certificate or
certificates representing such securities, in
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such denomination or denominations as may be requested by the Lender. Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of any certificate representing any securities purchased or
acquired by the Lender hereunder, and in case of any such loss, theft or
destruction, upon delivery of any indemnity agreement satisfactory to the
Company, or in case of any such mutilation, upon surrender and cancellation of
such certificate, the Company at its expense will issue and deliver to the
Lender a new certificate for such securities of like tenor, in lieu of such
lost, stolen or mutilated certificate.
SECTION 13. Survival of Representations Warranties and
Agreements; Etc. All representations and warranties made by the Company and the
Lender hereunder shall survive the Closing for a period of 3 years following the
Closing (except for the representations and warranties set forth in Sections
4.08 and 4.15 hereof which shall survive indefinitely) and all covenants and
agreements made by the Company hereunder shall survive in accordance with their
terms (or, if not specified by such terms indefinitely). All statements
contained in any certificate or other instrument delivered by the Company
pursuant to this Agreement or in connection with the transactions contemplated
by this Agreement shall constitute representations and warranties by the Company
under this Agreement.
SECTION 14. Indemnification. Each party shall, with respect to
the representations, warranties and agreements made by such party herein,
indemnify, defend and hold the other harmless against all liability, loss or
damage, together with all reasonable costs and expenses related thereto
(including legal and accounting fees and expenses), arising from the untruth,
inaccuracy or breach of any such representations, warranties or agreements of
such party; provided, however, that the Company shall not be liable for any
liability, loss or damage with respect to representations and warranties of the
Company (other than as set forth in Section 4.03 or 4.04 hereof) unless and
until the aggregate of the liability loss or damage suffered equals or exceeds
$250,000 at which time the Company shall be liable hereunder for all such
liabilities, losses or damages. Without limiting the generality of the
foregoing, the Lender shall be deemed to have suffered liability, loss or damage
as a result of the untruth, inaccuracy or breach of any such representations,
warranties, covenants or agreements if such liability, loss or damage shall be
suffered by the Company as a result of, or in connection with, such untruth,
inaccuracy or breach or any facts or circumstances constituting such untruth,
inaccuracy or breach.
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SECTION 15. Remedies.
(a) General. In case any one or more of the covenants and/or
agreements set forth in this Agreement shall have been breached by the Company,
the Lender may proceed to protect and enforce its rights either by suit in
equity and/or by action at law, including, but not limited to, an action for
damages as a result of any such breach and/or an action for specific performance
of any such covenant or agreement contained in this Agreement, provided that the
foregoing shall not change the time period during which a claim for
indemnification pursuant to Section 13 or 14 hereof shall be made.
(b) Exclusive Remedies Under the Note. It is understood and
agreed that, notwithstanding the foregoing provisions of Section 15(a), for the
90-day period immediately following the Closing and for any period of extension
pursuant to Section 15(c) hereof, the remedies provided under the Note and such
Section 15(c) shall be exclusive with respect to any claim under this Agreement
and shall preclude assertion during such time by the Lender of any other remedy
with respect to any claim arising out of or in respect to a breach by the
Company of its representations, warranties or covenants hereunder.
(c) Additional Default Shares. In the event of a dispute
initiated prior to January 30, 1988 in accordance with Section 3.2 of the Note
regarding the existence of an Event of Default, which dispute has not culminated
in a Final Determination of Event of Default (as defined in the Note) prior to
such date, then the Corporation shall, within ten (10) days following any such
Final Determination, issue to the Lender an additional number of shares of
Preferred Stock which would have been issued to the Lender under Section 4.1(b)
of the Note had the Final Determination occurred prior to January 30, 1988.
SECTION 16. Miscellaneous.
16.01. Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or duly sent by first
class registered or certified mail, postage prepaid, addressed to such party at
the address set forth below or such other address as may hereafter be designated
in writing by the addressee to the addressor listing all parties:
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(i) If to the Company, to:
Telebase Systems, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, President
with a copy to:
Dilworth, Paxson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
(ii) If to the Lender, to:
▇▇▇▇ ▇▇▇▇▇▇
c/o ▇.▇ ▇▇▇▇▇▇ & Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇'▇▇▇▇▇▇▇▇ Graev & Karabell
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Esq.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of delivery if personally delivered, on the business day after the date
when sent if sent by air courier, and on the earlier of receipt by the sender of
an official postal acknowledgment therefor or of telephonic confirmation of
receipt by the addressee, if sent by mail, in each case addressed to such party
as provided in this Section 16.01 or in accordance with the latest unrevoked
direction from such party.
SECTION 16.02. No Waivers. No failure or delay of the Lender
in exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Lender hereunder are cumulative
and not exclusive of any rights or remedies which they would otherwise have. No
notice or demand on the Company in any case shall entitle the Company to any
other or further notice or demand in similar or other circumstances.
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SECTION 16.03. Payments on Business Days. Other than as
specifically provided elsewhere herein, whenever any payment to be made
hereunder or under any Note shall be stated to be due on a day other than a
business day, such payment may be made on the next succeeding business day and
such extension of time shall in such case be included in computing interest, if
any, in connection with such payment.
SECTION 16.04. Governing Law. This Agreement shall be
construed in accordance with and governed by the laws of the Commonwealth of
Pennsylvania.
SECTION 16.05. Changes, Waivers, Etc. Neither this Agreement
nor any provision hereof may be changed, waived, discharged or terminated
orally, but only by a statement in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought.
SECTION 16.06. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Company, the Lender and each of
their respective successors and assigns. The Company may not assign or transfer
any of its rights or obligations hereunder without the written consent of the
Lender.
SECTION 16.07. Severability. In case any one or more of the
provisions contained in this Agreement or the Note should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
SECTION 16.08. Section Headings. The section headings used
herein are for convenience of reference only, are not part of this Agreement and
are not to affect the construction of or be taken into consideration in
interpreting this Agreement.
SECTION 16.09. Jurisdiction. The parties hereto agree that any
suit, action or proceeding instituted against one or more of them with respect
to this Agreement (including any Exhibits or Schedules attached hereto) may be
brought in any Federal or state court located in the State of New York or the
Commonwealth of Pennsylvania. The parties hereto, by the execution and delivery
of this Agreement, irrevocably waive any obligation or any right of immunity on
the ground of venue, the convenience of the
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forum or the jurisdiction of such courts, or from the execution of judgments
resulting therefrom, and the parties hereto hereby irrevocably accept and submit
to the jurisdiction of the aforesaid courts in any suit, action or proceeding
and consent to service of process by certified mail at the address set forth in
Section 16.01 hereof.
SECTION 16.10. Counterparts. This Agreement may be signed in
any number of counterparts with the same effect as if the signatures thereto and
hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on their behalf as of the day and year first above
written.
TELEBASE SYSTEMS, INC.
By__________________________________
THE LENDER:
____________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
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