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EXHIBIT 10.15
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT ("Agreement") is made and entered into
this 15th day of May, 2000, by and among LanguageWare.net (Company) Ltd., an
Israeli corporation (the "Company") and the investors listed on the signature
page to this Agreement (individually referred to as "Purchaser" and collectively
as the "Purchasers").
RECITALS
A. The Company and the Purchasers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("Regulation D"), as promulgated by the United
States Securities and Exchange Commission the "SEC") under the Securities Act of
1933, as amended (the "Act").
B. The Purchasers desire to purchase, upon the terms and conditions set
forth in this Agreement, a number of shares ("Shares") of the Company's Ordinary
Shares, nominal value NIS .01 per share (the "Common Stock").
IN CONSIDERATION OF the mutual promises, representations, warranties
and covenants contained herein, the parties hereto agree as follows:
ARTICLE I. PURCHASE AND SALE OF SHARES
Subject to the terms and conditions set forth in this Agreement, the
Purchasers will purchase Common Stock in the names and amounts as set forth on
Exhibit A hereto. The price per share of Common Stock shall be $0.875 per share
("Purchase Price").
ARTICLE II. CLOSING
Immediately upon the execution of this Agreement, or at such other time
as the parties may agree (the "Closing Date"), the Company shall deliver to
Purchasers certificates for the Shares being purchased by each Purchaser on the
Closing Date as set forth on Exhibit A, registered in the name of each such
Purchaser, and each Purchaser shall pay to the Company the respective Purchase
Price for the Shares as set forth on Exhibit A by wire transfer, certified check
or other method acceptable to the Company. The closing of the sale and purchase
of the Shares under this Agreement shall take place at the offices of the
Company at 102 South Tejon, Suite 320, Colorado Springs, Colorado.
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ARTICLE III. REPRESENTATIONS OF THE COMPANY
The following are representations, warranties and agreements made by
the Company as of the Closing Date.
3.1 Organization and Standing. The Company and each of its subsidiaries
is a corporation duly organized and validly existing under the laws of the
jurisdiction in which it is incorporated, and has full corporate power and
authority to conduct its business as presently conducted and as proposed to be
conducted by it and to enter into and perform this Agreement and to carry out
the transactions contemplated herein. The Company is duly qualified to do
business as a foreign corporation and is in good standing under the laws of the
State of Colorado and under the laws of any other state in which qualification
by the Company to do business is required and where failure to do so would have
a Material Adverse Effect. "Material Adverse Effect" means any material adverse
effect on (i) the Shares; (ii) the ability of the Company to perform its
obligations hereunder, or (iii) the business, operations, properties, prospects
or financial condition of the Company and its subsidiaries, taken as a whole.
3.2 Issuance of Shares. The issuance, sale and delivery of the Shares
in accordance with this Agreement, has been duly authorized and reserved for
issuance, as the case may be, by all necessary corporate action on the part of
the Company, and the Shares when so issued, sold and delivered against payment
therefor in accordance with the provisions of this Agreement, will be duly and
validly issued, fully paid and nonassessable.
3.3 Authority for Agreement. The execution, delivery and performance by
the Company of this Agreement have been duly authorized by all necessary
corporate action, including actions of the Board of Directors of the Company,
and this Agreement has been duly executed and delivered by the Company. This
Agreement constitutes a valid and binding obligation of the Company enforceable
in accordance with its terms, subject as to enforcement of remedies to
applicable bankruptcy, insolvency, reorganization or similar laws affecting
generally the enforcement of creditors' rights and subject to a court's
discretionary authority with respect to the granting of a decree ordering
specific performance or other equitable remedies. The execution of, and the
Company's performance of the transactions contemplated by, this Agreement and
compliance with its provisions by the Company will not violate any provision of
law and will not conflict with or result in any breach of any of the terms,
conditions or provisions of, or constitute a default under the Company's
Memorandum of Association or Articles of Association ("Organizational
Documents"), or any indenture, lease, agreement or other instrument to which the
Company is a party or by which it or any of its properties is bound, or any
decree, judgment, order, statute, rule or regulation applicable to the Company
and will not constitute an event which with the lapse of time or notice by a
third party could result in any default under any of the foregoing or result in
the creation of any lien, charge or encumbrance upon the assets or properties of
the Company or upon its stock.
3.4 Governmental Consents. Based on the representations made by the
Purchasers in Article IV of this Agreement, the offer and sale of the Shares to
the Purchasers will be in compliance with applicable federal and state
securities laws. All consents, approvals, orders or authorizations of, or
registrations, qualifications, designations, declarations or filings with, any
governmental authority required on the part of the Company in connection with
the execution and delivery of this Agreement, the offer, issue, sale and
delivery of the Shares, or the other transactions to be consummated at the
Closing, as contemplated by this Agreement have been, or will by the Closing be,
obtained.
3.5 Litigation. Except as disclosed the SEC Documents (as defined
below), there is no action, suit, proceeding or investigation pending, or, to
the best of the Company's knowledge, any basis therefor or threat thereof,
against the Company, which questions the validity of this Agreement or the right
of the Company to
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enter into it, or which might result, either individually or in the aggregate,
in any material adverse change in the assets, condition (financial or
otherwise), business or prospects of the Company, nor is there any litigation
pending or, to the best of the Company's knowledge, any basis therefor or threat
thereof, against the Company by reason of the past employment relationships of
any of the Company's officers, directors, employees or consultants, the proposed
activities of the Company, or negotiations by the Company with possible
investors in the Company.
3.6 Absence of Liabilities. To the knowledge of the Company, the
Company does not have any material liabilities of any type, whether absolute or
contingent, other than those reflected in the financial statements (the
"Financial Statements") included in the Company's most recent periodic reports
filed with the U.S. Securities and Exchange Commission (the "SEC") or
liabilities incurred in the ordinary course of business since the date of the
Financial Statements.
3.7 Absence of Changes. Since the dates of the Financial Statements,
there has been no material adverse change in the condition, financial or
otherwise, net worth or operations of the Company, other than changes occurring
in the ordinary course of business.
3.8 SEC Documents, Financial Statements. The Common Stock of the
Company is registered pursuant to Section 12(g) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") and the Company has filed on a timely
basis, during the twelve calendar months and any portion of the month
immediately preceding the date hereof, all reports, schedules, forms, statements
and other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the Exchange Act, including material filed pursuant to
Section 13(a) or 15(d), in addition to one or more registration statements and
amendments thereto heretofore filed by the Company with the SEC under the Act
(all of the foregoing including filings incorporated by reference therein being
referred to herein as the "SEC Documents"). The Company has not provided to the
Purchasers any information which, according to applicable law, rule or
regulation, should have been disclosed publicly by the Company but which has not
been so disclosed, other than with respect to the transactions contemplated by
this Agreement.
As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Act or the Exchange Act as the
case may be and the rules and regulations of the SEC promulgated thereunder and
other federal, state and local laws, rules and regulations applicable to such
SEC Documents, and none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC or other applicable rules and regulations with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of operations
and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
3.9 Disclosures. As of the date of this Agreement, neither this
Agreement nor any report, other written statement or certificate delivered or to
be furnished to Purchasers in connection with the transactions contemplated by
this Agreement, when read together, contains or will contain any material
misstatement of fact
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or omits or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading.
3.10 Registration and Listing. For a period of five (5) years after the
Closing Date, the Company will cause its Common Stock to continue to be
registered under Sections 12(b) or 12(g) of the Exchange Act, will comply in all
respects with its reporting and filing obligations under such Exchange Act, will
comply with all requirements related to any registration statement filed
pursuant to this Agreement and will not take any action or file any document
(whether or not permitted by the Act or the Exchange Act or the rules
thereunder) to terminate or suspend such registration or to terminate or suspend
its reporting and filing obligations under said Acts, except as permitted
herein. For a period of five (5) years after the Closing Date, the Company will
take all action within its power to continue the listing or trading of its
Common Stock on the Nasdaq Over-the-Counter Bulletin Board or on a principal
market including the New York Stock Exchange, American Stock Exchange, Nasdaq
NMS or Nasdaq SmallCap Market, and will comply in all respects with the
Company's reporting, filing and other obligations under the bylaws or rules of
such principal market. The covenants set forth in this Section 3.10 shall not be
deemed to prohibit a merger, sale of all assets or other corporate
reorganization if the entity surviving or succeeding to the Company is bound by
this Agreement with respect to its securities issued in exchange for or in
replacement of the Common Stock or the consideration received for or in
replacement of the Common Stock is cash.
ARTICLE IV. REPRESENTATIONS OF THE PURCHASER
Each Purchaser, severally and not jointly, represents and warrants to
the Company as follows:
4.1 Investment. Each Purchaser is acquiring the Shares, for their own
account, for investment and not with a view to, or for sale in connection with,
any public distribution thereof and, except as contemplated by this Agreement,
each Purchasers has no present or contemplated agreement, undertaking,
arrangement, obligation, indebtedness or commitment providing for the
disposition thereof.
4.2 Authority. Each Purchaser has full power and authority to enter
into and to perform this Agreement in accordance with its terms. No Purchaser
has been organized, reorganized or recapitalized specifically for the purpose of
investing in the Company.
4.3 Experience. Each Purchaser has reviewed the representations
concerning the Company contained in this Agreement, and has had the opportunity
to make inquiry concerning the Company, its business and its personnel; each
Purchaser has received any and all written information which it has requested
and all questions and inquiries have been answered to each Purchaser's
satisfaction; and each Purchaser has sufficient business and financial
experience to be able to evaluate the merits and risks of an investment in the
Company.
4.4 Accredited Investor. Each Purchaser is an "accredited investor"
within the definition set forth in Securities Act Rule 501 (a) and has executed
and delivered to the Company an "Accredited Investor Questionnaire" in the form
attached hereto as EXHIBIT B.
4.5 Binding Effect. This Agreement has been duly executed and delivered
by each Purchaser, constitutes a valid and binding obligation of each Purchaser,
and is enforceable in accordance with its terms, subject as to enforcement of
remedies to applicable bankruptcy, insolvency, reorganization or similar laws
affecting generally the enforcement of creditors' rights and subject to a
court's discretionary authority with respect to the granting of a decree
ordering specific performance or other equitable remedies.
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4.6 Restricted Securities. Each Purchaser understands that (i) except
as provided herein, the Shares have not been and are not being registered under
the Securities Act or any state securities laws, and may not be transferred
unless (a) subsequently registered thereunder, or (b) an exemption from such
registration is available, or (c) a Purchaser shall have delivered to the
Company an opinion of counsel (which opinion shall be in form, substance and
scope customary for opinions of counsel in comparable transactions) to the
effect that the Shares to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration, or (d) sold pursuant to Rule
144 promulgated under the Securities Act (or a successor rule) ("Rule 144") or
(e) sold or transferred to an affiliate of a Purchaser; (ii) any sale of such
Shares made in reliance on Rule 144 may be made only in accordance with the
terms of said Rule and further, if said Rule is not applicable, any resale of
such Shares under circumstances in which the seller (or the person through whom
the sale is made) may be deemed to be an underwriter (as that term is defined in
the Securities Act) may require compliance with some other exemption under the
Securities Act or the rules and regulations of the SEC thereunder; and (iii)
neither the Company nor any other person is under any obligation to register
such Shares under the Securities Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder (in each case, other
than pursuant to this Agreement).
4.7 Legends. Each Purchaser understands that until such time as the
Shares have been registered under the Securities Act as contemplated herein, or
otherwise may be sold by a Purchaser pursuant to Rule 144, the certificates for
the Shares shall bear a restrictive legend in substantially the following form:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended or the securities laws of
any state of the United States. The securities represented hereby may
not be offered or sold, in the absence of an effective registration
statement for the securities under applicable securities laws or unless
offered, sold or transferred pursuant to an available exemption from
the registration requirements of those laws.
The Company shall promptly (within three (3) business days) instruct
its stock transfer agent to issue a certificate without such legend to the
holder of any Shares if (a) the sale of such Shares are registered under the
Securities Act, or (b) such holder provides the Company with an opinion of
counsel, in form, substance and scope customary for opinions of counsel in
comparable transactions, to the effect that a public sale or transfer of such
Shares may be made without registration under the Securities Act or (c) such
holder provides the Company with reasonable assurances that such Shares can be
sold pursuant to Rule 144.
4.8 Solicitation. Each Purchaser acknowledges that the Shares are not
being purchased as a result of any form of general solicitation or general
advertising including advertisements, articles, notices or other communications
published in any newspaper, magazine or similar media or broadcast over radio,
or television or any seminar or meeting whose attendees have been invited by
general solicitation or general advertising.
ARTICLE V. CONDITIONS TO THE OBLIGATIONS OF PURCHASER
The obligation of Purchasers to purchase the Shares on Closing Date is
subject to the fulfillment, or the waiver by Purchasers, of the following
conditions on or before each of the Closing Date:
5.1 Accuracy of Representations and Warranties. Each representation and
warranty contained in Article III shall be true on and as of each of the Closing
Date with the same effect as though such representation and warranty had been
made on and as of that date.
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5.2 Performance. The Company shall have performed and complied with all
agreements and conditions contained in this Agreement required to be performed
or complied with by the Company prior to or on the Closing Date.
5.3 Compliance Certificate of the Company. The Company shall have
delivered to the Purchasers certificates, executed by the President of the
Company, dated on the Closing Date, certifying to the fulfillment of the
conditions specified in Sections 5.1 and 5.2 of this Agreement.
5.4 Regulatory Matters. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.
5.5 Consents. The Company shall have received all consents,
authorizations, approvals and orders necessary to enter into this Agreement and
consummate the transactions contemplated hereby.
5.6 Other Matters. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be reasonably satisfactory in
substance and form to Purchasers and Purchasers shall have received all such
counterpart originals or certified or other copies of such documents as they may
reasonably request.
ARTICLE VI. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
The obligations of the Company to sell the Shares at the Closing are
subject to fulfillment, on or before the Closing Date, of each of the following
conditions:
6.1 Accuracy of Representations and Warranties. The representations and
warranties of each of the Purchasers contained in Article IV shall be true on
and as of the Closing Date with the same effect as though such representations
and warranties had been made on and as of that date.
6.2 Investment. Purchasers shall have tendered, in the manner specified
in Article II hereof, the Purchase Price for the Shares on the Closing Date.
6.3 Regulatory Matters. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.
6.4 Consents. The Company shall have received all consents,
authorizations, approvals and orders necessary to enter into this Agreement and
consummate the transactions contemplated hereby.
6.5 Minimum Investment. The Purchasers shall have committed hereunder
to purchase, in the aggregate, a minimum of $2,500,000 worth of Common Stock at
the Purchase Price.
ARTICLE VII. COVENANTS OF THE COMPANY AND PURCHASERS
7.1 Registration of Shares. The Company is in the process of
undertaking procedures to redomesticate its current domicile as an Israeli
corporation to a new domicile as a Delaware, United States
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corporation ("Redomestication"). The target date for completing the
Redomestication is June 2000. As part of the Redomestication, the Shares shall
be registered under the Securities Act of 1933, as amended (the "Act") pursuant
to a registration statement on Form S-4 to be filed with the SEC ("Registration
Statement"). Company will use its best commercial efforts to file the
Registration Statement with the SEC within thirty (30) days following the
completion of the fiscal year 1999 audits of the Company and its subsidiaries.
The Company will include the Shares purchased hereunder in the Registration
Statement and will use its best commercial efforts to cause the Registration
Statement to be effective under the Act as soon as is reasonably practicable
after filing. The Company represents and warrants that except for any
"affiliate" restrictions as may be applicable to the Purchaser or the Shares
pursuant to Rule 144 promulgated under the Act, the shares issued to Purchaser
under the Redomestication in exchange for the Shares purchased hereunder and
registered on the Registration Statement will be freely tradable by the
Purchaser.
7.2 Demand Registration. In the event the Registration Statement is not
declared effective by the six (6) month anniversary of the Closing Date
("Registration Deadline") or does not include all Shares purchased hereunder
("Registrable Securities"), a holder of Registrable Securities shall have the
right to require by notice in writing that the Company register all or any part
of the Registrable Securities held by such holder (a "Demand Registration") and
the Company shall thereupon effect such registration in accordance herewith
(which may include adding such shares to an existing shelf registration). The
parties agree that if the holder of Registrable Securities demands registration
of less than all of the Registrable Securities, the Company, at its option, may
nevertheless file a registration statement covering all of the Registrable
Securities. If such registration statement is declared effective with respect to
all Registrable Securities and the Company is in compliance with its obligations
under this Agreement, the demand registration rights granted pursuant to this
Section shall cease. If such registration statement is not declared effective
with respect to all Registrable Securities or if the Company is not in
compliance with such obligations, the demand registration rights described
herein shall remain in effect. The Company shall not be obligated to effect a
Demand Registration as described above: (i) if all of the Registrable Securities
held by the holder of Registrable Securities which are demanded to be covered by
the Demand Registration are, at the time of such demand, included in an
effective registration statement and the Company is in compliance with its
obligations under this Agreement; (ii) if all of the Registrable Securities may
be sold under Rule 144(k) of the Act and the Company's transfer agent has
accepted an instruction from the Company to such effect; or (iii) at any time
after two (2) years from the Closing Date.
7.3 Obligations of the Company. In connection with any registration of
the Registrable Securities, the Company shall have the following obligations:
(a) The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the
Registration Statement and the prospectus used in connection with the
Registration Statement as may be necessary to keep the Registration Statement
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the Securities Act with respect to the disposition
of all Registrable Securities of the Company covered by the Registration
Statement until such time as all of such Registrable Securities have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof as set forth in the Registration Statement.
(b) The Company shall furnish to each Purchaser whose Registrable
Securities are included in the Registration Statement and its legal counsel (i)
promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one copy of the Registration Statement and any
amendment thereto, each preliminary prospectus and prospectus and each amendment
or supplement thereto and each letter written by or on behalf of the Company to
the SEC or the staff of the SEC (including, without limitation, any request to
accelerate the effectiveness of any Registration Statement or amendment
thereto), and each item of
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correspondence from the SEC or the staff of the SEC, in each case relating to
such Registration Statement (other than any portion, if any, thereof which
contains information for which the Company has sought confidential treatment),
(ii) on the date of effectiveness of the Registration Statement or any amendment
thereto, a notice stating that the Registration Statement or amendment has been
declared effective, and (iii) such number of copies of a prospectus, including a
preliminary prospectus, and all amendments and supplements thereto and such
other documents as such Purchaser may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Purchaser.
(c) The Company shall, at its expense, use its best efforts to
(i) register and qualify the Registrable Securities covered by the Registration
Statement under such other securities or "blue sky" laws of such jurisdictions
in the United States as each Purchaser who holds Registrable Securities being
offered reasonably requests, (ii) prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (a) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 7.2, (b) subject itself to general taxation in any such
jurisdiction, (c) file a general consent to service of process in any such
jurisdiction, (d) provide any undertakings that cause the Company undue expense
or burden, or (e) make any change in its organizational documents, which in each
case the Board of Directors of the Company determines to be contrary to the best
interests of the Company and its stockholders.
(d) In the event the Purchasers who hold a majority in interest
of the Registrable Securities being offered in an offering select underwriters
for the offering, the Company shall enter into and perform its obligations under
an underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
underwriters of such offering.
(e) As promptly as practicable after becoming aware of such
event, the Company shall notify each Purchaser of the happening of any event, of
which the Company has knowledge, as a result of which the prospectus included in
the Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and use its best
efforts promptly to prepare a supplement or amendment to the Registration
Statement to correct such untrue statement or omission, and deliver such number
of copies of such supplement or amendment to each Purchaser as such Purchaser
may reasonably request.
(f) The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, and, if such an order is issued to obtain the withdrawal
of such order at the earliest practicable moment (including in each case by
amending or supplementing such Registration Statement) and to notify each
Purchaser who holds Registrable Securities being sold (or, in the event of an
underwritten offering, the managing underwriters) of the issuance of such order
and the resolution thereof (and if such Registration Statement is supplemented
or amended, deliver such number of copies of such supplement or amendment to
each Purchaser as such Purchaser may reasonably request).
(g) The Company shall make available for inspection by (i) any
Purchaser, (ii) any underwriter participating in any disposition pursuant to the
Registration Statement, (iii) one firm of attorneys and one firm of accountants
or other agents retained by the Purchasers, and (iv) one firm of attorneys
retained by all such underwriters (collectively, the "Inspectors") all pertinent
financial and other records, and pertinent corporate
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documents and properties of the Company (collectively, the "Records"), as shall
be reasonably deemed necessary by each Inspector to enable each Inspector to
exercise its due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information which any Inspector may
reasonably request for purposes of such due diligence; provided, however, that
each Inspector shall hold in confidence and shall not make any disclosure
(except to a Purchaser) of any Record or other information which the Company
determines in good faith to be confidential, and of which determination the
Inspectors are so notified, unless (a) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement, (b) the release of such Records is ordered pursuant to a subpoena or
other order from a court or government body of competent jurisdiction, or (c)
the information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement. The
Company shall not be required to disclose any confidential information in such
Records to any Inspector until and unless such Inspector shall have entered into
confidentiality agreements (in form and substance satisfactory to the Company)
with the Company with respect thereto, substantially in the form of this Section
7.3(g). Each Purchaser agrees that it shall, upon learning that disclosure of
such Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company and allow
the Company, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential. Nothing herein shall be deemed to limit the Purchasers' ability to
sell Registrable Securities in a manner which is otherwise consistent with
applicable laws and regulations.
(h) At the request of any Purchaser, the Company shall prepare
and file with the SEC such amendments (including post-effective amendments) and
supplements to a Registration Statement and the prospectus used in connection
with the Registration Statement as may be necessary in order to change the plan
of distribution set forth in such Registration Statement.
(i) The Company shall comply with all applicable laws related to
a Registration Statement and offering and sale of securities and all applicable
rules and regulations of governmental authorities in connection therewith
(including without limitation the Securities Act of 1933 and the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated by
the SEC.)
(k) The Company shall take all such other actions as any
Purchaser or the underwriters, if any, reasonably request in order to expedite
or facilitate the disposition of such Registrable Securities.
7.3 Reporting Status. So long as the Purchasers beneficially own any of
the Shares, the Company shall timely file all reports required to be filed with
the SEC pursuant to the Exchange Act, and the Company shall not terminate its
status as an issuer required to file reports under the Exchange Act even if the
Exchange Act or the rules and regulations thereunder would permit such
termination.
7.4 Corporate Existence. So long as the Purchasers beneficially own any
of the Shares, the Company shall maintain its corporate existence, and in the
event of a merger, consolidation or sale of all or substantially all of the
Company's assets, the Corporation shall ensure that the surviving or successor
entity in such transaction (i) assumes the Company's obligations hereunder and
the agreements and instruments entered into in connection herewith and (ii) is a
publicly traded corporation whose common stock is listed for trading on the
NASDAQ, NYSE or AMEX.
7.5 Lock-Up Period. Each of the Purchasers agrees that for a period of
six (6) months beginning on the Closing Date, no Purchaser will transfer,
conduct any offering or sale or enter into an agreement to transfer or sell any
of the Shares purchased on the Closing Date without the prior written consent of
the Company.
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ARTICLE VIII. INDEMNIFICATION
8.1 Indemnification by the Company. Subject to the conditions set forth
below, in connection with any registration of Registrable Securities pursuant to
Article 7 above, the Company agrees to indemnify and hold harmless Purchasers,
each person, if any, who controls any Purchaser within the meaning of Section 15
of the Securities Act and Purchasers' officers, directors and agents, if any, as
follows:
(a) Against any and all loss, claim, damage and expense whatsoever
arising out of or based upon (including but not limited to,
any and all expense whatsoever reasonably incurred in
investigating, preparing or defending any litigation,
commenced or threatened, or any claim whatsoever based upon)
any untrue or alleged material fact contained in any
preliminary prospectus (if used prior to the effective date of
the Registration Statement), the Registration Statement or the
prospectus (as from time to time amended and supplemented), or
in any application or other document executed by the Company
or based upon written information furnished by the Company
filed in any jurisdiction in order to qualify the Company's
securities under the securities laws thereof; or the omission
or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein
not misleading; or any other violation of applicable federal
or state statutory or regulatory requirements or limitations
relating to action or inaction by the Company in the course of
preparing, filing, or implementing the Registration Statement;
provided however, that the indemnity contained in this
subsection (a) shall not apply to a holder of Registrable
Securities with respect to any loss, claim, damage, liability
or action arising out of or based upon any untrue or alleged
untrue statement or omission made in reliance upon and in
conformity with any information furnished in writing to the
Company by or on behalf of such holder expressly for use in
connection therewith or arising out of any action or inaction
of any such holder;
(b) Subject to the provision contained in subsection (a) above,
against any and all loss, liability, claim, damage and expense
whatsoever to the extent of the aggregate amount paid in
settlement of any litigation, commenced or threatened or of
any claim whatsoever based upon any such untrue statement or
omission or any such alleged untrue statement or omission
(including but not limited to, any and all expense whatsoever
reasonably incurred in investigating, preparing or defending
against any such litigation or claim) if such settlement is
effected with the written consent of the Company.
(c) The Company shall be entitled to participate at its own
expense in the defense of any suit brought to enforce any such
claim, but if the Company elects to assume the defense, such
defense shall be conducted by counsel chosen by it, provided
that such counsel is reasonably satisfactory to the Purchasers
and any other holders of Registrable Securities or controlling
persons who are defendants in any suit so brought. In the
event the Company elects to assume the defense of any such
suit and retain such counsel, such holders or controlling
persons shall, after the date they are notified of such
election, bear the fees and expenses of any counsel thereafter
retained by them as well as any other expenses thereafter
incurred by them in connection with the defense thereof
unless, in the reasonable opinion of such holders or
controlling persons, separate representation is advisable
because of conflict in the interests of the parties, in which
case the Company shall continue to pay the fees of such
counsel.
11
8.2 Indemnification of Company. Each Purchaser, severally and not
jointly, agrees to indemnify and hold harmless the Company and its officers,
directors and agents against any and all such losses, liabilities, claims,
damages and expenses arising out of information furnished in writing to the
Company by or on behalf of such Purchaser expressly for use in connection with
any preliminary prospectus, the Registration Statement or prospectus or any
amendment or supplement thereof.. In case any action shall be brought against
the Company or any other person so indemnified, in respect of which indemnity
may be sought against a Purchaser, the Purchasers shall have the rights and
duties given to the Company, and each other person so indemnified shall have the
rights and duties given to Purchasers by the provisions of Section 8(c). Any
indemnification under this Section 8.2 shall be limited to net proceeds received
by the Purchaser for shares sold under the Registration Statement.
ARTICLE IX MISCELLANEOUS
9.1 Survival of Representations, Warranties and Covenants. All
agreements, representations, warranties and covenants contained herein shall
survive the execution and delivery of this Agreement and the closing of the
transactions contemplated hereby.
9.2 Expenses. Each party shall pay its own expenses in connection with
the investment contemplated herein.
9.3 Notices. All notices, requests, consents and other communications
when deemed given under this Agreement shall be in writing and shall be
delivered by hand, which shall include delivery by express courier service, or
mailed by first class certified or registered mail, return receipt requested,
postage prepaid, and notice shall be deemed given when actually received by the
intended recipient:
If to the Company:
LanguageWare.net (Company) Ltd.
102 South Tejon, Suite 320
Colorado Springs, CO 80903
Attention: President
With a copy to:
Herbert H. Davis III
Rothgerber, Johnson & Lyons LLP
1200 17th Street, Suite 3000
Denver, Colorado 80202-5839
If to Purchasers:
or at such other address or addresses as may have been furnished in writing
pursuant to the provision of this Section 9.3.
12
9.4 Entire Agreement. This Agreement together with the other agreements
referred to herein embody the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings relating to such subject matter.
9.5 Amendments and Waivers. Except as otherwise expressly set forth in
this Agreement, any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively) with the written consent of
the Company as to any provision that is for the benefit of the Company and by
the Purchasers.
9.6 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.7 Headings. The headings of the sections, articles and paragraphs of
this Agreement have been added for convenience only and shall not be deemed to
be a part of this Agreement.
9.8 Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision.
9.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado.
9.10 Successors and Assigns. The provisions of this Agreement shall be
binding upon, and inure to the benefit of, the respective successors, assigns,
heirs, executors and administrators of the parties hereto.
9.11 Specific Enforcement, Consent to Jurisdiction. The Company and the
Purchasers acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement and
to enforce specifically the terms and provisions hereof, this being in addition
to any other remedy to which either of them may be entitled by law or equity.
The Company and the Purchasers each (i) hereby irrevocably submits to
the jurisdiction of the United States District Court and other courts of the
United States sitting in Colorado for the purposes of any suit, action or
proceeding arising out of or relating to this Agreement and (ii) hereby waives,
and agrees not to assert in any such suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. The Company and the Purchasers each
consent to process being served in any such suit action or proceeding by mailing
a copy thereof to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing in this paragraph shall affect or
limit any right to serve process in any other manner permitted by law.
13
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the day
and year first above written.
THE COMPANY:
LANGUAGEWARE.NET (COMPANY) LTD.
By: /S/ Todd Oseth
--------------------------------------------
Name: Todd Oseth
------------------------------------------
Title: President, CEO
-----------------------------------------
THE PURCHASERS:
By: /S/ Thomas Ng
--------------------------------------------
Name: Dr. Thomas Ng
------------------------------------------
Title: Director, Technology Fund II Pte. Ltd.
-----------------------------------------
By: /S/ Kazuyuki Hiraki
--------------------------------------------
Name: Mr. Kazuyuki Hiraki
------------------------------------------
Title: NIF Asian Pre-IPO Fund Limited
-----------------------------------------
By: /S/ Kazuyuki Hiraki
--------------------------------------------
Name: Mr. Kazuyuki Hiraki
------------------------------------------
Title: Asia-Pacific Ventures II Ltd.
-----------------------------------------
14
EXHIBIT A
PURCHASER SHARES PURCHASE PRICE
Technology Fund II Pte Ltd. 1,714,285 $ 1,500,000.00
NIF Asian Pre-IPO Fund Limited 571,429 $ 500,000.00
Asia-Pacific Ventures II Ltd. 571,429 $ 500,000.00
--------- ----------------
TOTAL 2,857,143 $ 2,500,000.00
TOTALS
15
EXHIBIT B
ACCREDITED INVESTOR QUESTIONNAIRE
The undersigned, as a purchaser of Ordinary Shares, nominal value NIS
.01 per share (the "Securities") of LanguageWare.net (Company) Ltd., an Israeli
corporation (the "Company"), has represented that the undersigned in an
"Accredited investor" as defined in Rule 501(a) of Regulation D promulgated
under the Securities Act of 1933, as amended (the "U.S. Securities Act"). The
undersigned has indicated below the categories which it, he or she satisfied, or
if it, he or she is purchasing for the account of another accredited investor,
which such accredited investor satisfies.
The undersigned understands that the Company is relying on this
information in determining to sell securities to the undersigned in a manner
exempt from the registration requirements of the U.S. Securities Act and
applicable state securities laws.
ACCREDITED INVESTOR STATUS
The undersigned represents and warrants that it, he or she is (CIRCLE
EACH APPLICABLE ITEM):
(1) A bank, as defined in Section 3(a)(2) of the U.S. Securities
Act, or savings and loan association or other institution as
defined in Section 3(a)(5)(A) of the U.S. Securities Act,
whether acting in its individual or fiduciary capacity.
(2) A broker or dealer registered pursuant to Section 15 of the
United States Securities Exchange Act of 1934, as amended.
(3) An insurance company (as defined in Section 2(13) of the U.S.
Securities Act).
(4) An investment company registered under the United States
Investment Company Act of 1940 (the "1940 Act").
(5) A business development company (as defined in Section 2(a)(48)
of the 1940 Act).
(6) A Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the
United States Small Business Investment Act of 1958.
(7) A plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or
its political subdivisions, for the benefit of its employees,
if such plan has total assets in excess of U.S. $5,000,000.
(8) An employee benefit plan within the meaning of the United
States Employee Retirement Income Security Act of 1974
("ERISA") (1) whose investment decision is made by a plan
fiduciary as defined in Section 3(21) of ERISA, which is
either a bank, savings and loan association, insurance company
or registered investment advisor, or (2) having total assets
in excess of U.S. $5,000,000, or (3) if a self-directed plan,
with investment decisions made solely by persons that are
accredited investors.
16
(9) A private business development company (as defined in Section
202(a)(22) of the 1940 Act.
(10) An organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of
acquiring the securities offered, having total assets in
excess of U.S. $5,000,000.
(11) A director or executive officer of the Company.
(12) A natural person with individual net worth, or joint net worth
with his or her spouse, at the time of purchase in excess of
U.S. $1,000,000.
(13) A natural person with an individual income in excess of U.S.
$200,000 in each of the last two years or joint income with
his or her spouse in excess of U.S. $300,000 in each of those
years, and who reasonably expects to reach the same income
level in the current year.
(14) A trust with total assets in excess of U.S. $5,000,000 not
formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a sophisticated person
as described in Rule 506(b)(2)(ii) of the U.S. Securities Act.
(15) An entity in which all of the equity owners are accredited
investors.
As used in this questionnaire, the term "net worth" means the excess of
total assets over total liabilities. In computing net worth for the above
purpose, the principal residence of the investor must be valued at cost,
including cost of improvements, or at recently appraised value by an
institutional lender making a secured loan, net of encumbrances. In determining
income, an investor should add to adjusted gross income any amount attributable
to tax exempt income received, losses claimed as a limited partner in any
limited partnership, deductions claimed for depletion, contributions to an IRA
or Keogh retirement plan, alimony payments, and any amount by which income from
long-term capital gains has been reduced in arriving at adjusted gross income.
17
IN WITNESS WHEREOF, the undersigned has executed this Questionnaire as
of the ______ day of March, 2000.
If a Corporation, Partnership or Other Entity: If an Individual:
-----------------------------
Name of Entity Signature
-----------------------------
Type of Entity Printed or Typed Name
-----------------------------
Signature of Person Signing Social Security or Taxpayer
ID Number