SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
June 30, 1997
XIOX CORPORATION
(Exact name of registrant as specified in its charter)
577 Airport Boulevard, Suite 700, Burlingame, California 94010
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 375-8188
Delaware 0-15797 95-3824750
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
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ITEM 5. Other Events
On July 7, 1997, the Company sold 40,000 shares of its Common Stock to
Flanders Language Valley ("Flanders") for an aggregate purchase price of
$200,000 pursuant to a June 30, 1997 agreement (the "Agreement") between the
parties providing for an aggregate investment of $2,872,000 to purchase 574,400
shares of the Company's Common Stock, subject to future adjustments. The
remaining investment is expected to be completed by mid-August subject to
certain conditions to closing. Pursuant to the Agreement, Flanders will own 5.1%
of Xiox Flanders N.V.
The Company has agreed to appoint a designee of Flanders to the Board of
Directors and in subsequent elections has agreed to cause a designee of Flanders
to be nominated for election to the Board. The right of designation will
terminate at such time as Flanders no longer owns at least 10% of the
outstanding shares of the Company, or five years after June 30, 1997, whichever
occurs first. The Company has also granted the investor certain registration
rights.
ITEM 7. Exhibits
The transaction discussed in Item 5 is to be accounted for as a sale of
Common Stock. Financial statements for the period ending June 30, 1997 will be
filed within 60 days.
(c). Exhibits
4.2 Common Stock Purchase Agreement dated June 30, 1997.
4.3 Investor Rights Agreement dated June 30, 1997.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
XIOX CORPORATION
July 22,1997 By /s/ Melanie D. Reid
--------------------------------
Melanie D. Reid
Vice-President, Finance
and Chief Financial Officer
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EXH. 4.2
COMMON STOCK PURCHASE AGREEMENT
BETWEEN
XIOX CORPORATION ("XIOX" OR "COMPANY")
AND
FLANDERS LANGUAGE VALLEY
("FLANDERS" OR "PURCHASER")
June 30, 1997
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TABLE OF CONTENTS
Page
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Section 1 Authorization and Sale of Common Stock........................................................ 1
1.1 Authorization................................................................................. 1
1.2 Sale of Common................................................................................ 1
Section 2 Closing Date; Delivery........................................................................ 1
2.1 First Closing................................................................................. 1
2.2 Second Closing Date........................................................................... 2
Section 3 Representations and Warranties of the Company................................................. 2
3.1 Organization and Standing..................................................................... 2
3.2 Corporate Power; Authorization................................................................ 2
3.3 Issuance and Delivery of the Shares........................................................... 3
3.4 SEC Documents; Financial Statements........................................................... 3
3.5 Governmental Consents......................................................................... 3
3.6 No Material Adverse Change.................................................................... 3
3.7 Authorized Capital Stock...................................................................... 4
3.8 No Dividends.................................................................................. 4
3.9 Litigation.................................................................................... 4
3.10 Regulation S Representations.................................................................. 4
3.11 Execution of Rights Agreement................................................................. 5
Section 4 Representations, Warranties and Covenants of Flanders......................................... 5
4.1 Authorization................................................................................. 5
4.2 Independent Investment Decision............................................................... 5
4.3 Investment Intent............................................................................. 5
4.4 Registration or Exemption Requirements........................................................ 6
4.5 Regulation S Representations.................................................................. 6
4.6 No Legal, Tax or Investment Advice............................................................ 7
4.7 Legends....................................................................................... 7
Section 5 Conditions to the First Closing of Purchaser.................................................. 8
5.1 Representations and Warranties................................................................ 8
5.2 Covenants..................................................................................... 8
5.3 Qualifications................................................................................ 8
5.4 Execution of Investor Rights Agreement........................................................ 8
5.5 Approval of Formation of Belgian Company...................................................... 8
5.6 Execution of License Agreement between XIOX and Lemout and Hauspie ("L&H").................... 8
5.7 Execution of Co-Sale Agreement................................................................ 9
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Section 6 Conditions to First Closing of Company........................................................ 9
6.1 Representations and Warranties................................................................ 9
6.2 Covenants..................................................................................... 9
6.3 Qualifications................................................................................ 9
Section 7 Conditions to the Second Closing of Purchaser................................................. 9
7.1 Accuracy of Conditions. ...................................................................... 9
7.2 Intellectual Property Rights.................................................................. 10
Section 8 Conditions to the Second Closing of Company................................................... 10
8.1 Accuracy of Conditions........................................................................ 10
8.2 Intellectual Property Rights.................................................................. 11
Section 9 Affirmative Covenants of the Company.......................................................... 11
9.1 Financial Information......................................................................... 11
9.2 Post Closing Covenants........................................................................ 11
9.3 Public Statements............................................................................. 12
Section 10 Post Closing Covenants of Flanders............................................................ 12
10.1 Capital Contribution by Flanders to XIOX Flanders............................................. 12
Section 11 Miscellaneous................................................................................. 13
11.1 Waivers and Amendments........................................................................ 13
11.2 Placement Agent's Fee......................................................................... 13
11.3 Governing Law and Location of Litigation...................................................... 13
11.4 Survival...................................................................................... 13
11.5 Successors and Assigns........................................................................ 13
11.6 Entire Agreement.............................................................................. 14
11.7 Notices, etc.................................................................................. 14
11.8 Severability of this Agreement................................................................ 14
11.9 Counterparts.................................................................................. 14
11.10 Further Assurances............................................................................ 14
11.11 Currency...................................................................................... 15
11.12 Attorneys' Fees............................................................................... 15
11.13 Legal Fees.................................................................................... 15
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COMMON STOCK PURCHASE AGREEMENT
BETWEEN XIOX CORPORATION AND
FLANDERS LANGUAGE VALLEY FUND
This Common Stock Purchase Agreement (the "Agreement") is made as of June
30, 1997, 4:30 p.m. eastern standard time by and among XIOX Corporation, a
Delaware corporation (the "Company") with its principal office at 577 Airport
Blvd., Suite 700; Burlingame, California 94010; and Flanders Language Valley, a
C.V.A. under Belgian law ("Flanders" or the "Purchaser") with its principal
office at 8900 Ieper, Industrielaan 31.
Unless otherwise defined herein, capitalized terms used herein and not
defined herein shall have the meanings given to them in Regulation S
("Regulation S") under the Securities Act of 1933, as amended (the "Securities
Act"). All references herein to dollars are to United States dollars.
Section 1
Authorization and Sale of Common Stock
1.1 Authorization. The Company has authorized the sale and issuance of up
to 813,429 shares of its Common Stock pursuant to this Agreement (the "Shares").
1.2 Sale of Common. Subject to the terms and conditions of this Agreement,
the Company agrees to issue and sell to Flanders and Flanders agrees to purchase
from the Company 574,400 Shares for a total purchase price of $2,872,000,
subject to adjustment as agreed between the parties. The Company shall be
responsible for any transfer or stamp taxes in respect of issuing the Shares.
Section 2
Closing Date; Delivery
2.1 First Closing. The First Closing of the Purchase and Sale of the Shares
hereunder (the "First Closing") shall be held at the offices of Brobeck, Phleger
& Harrison LLP, 550 West "C" Street, Suite 1200, San Diego, California 92101,
(619) 699-0256; (619) 234-3848 (Fax) on or before July 7, 1997, or such other
time and place upon which the Company and Flanders shall mutually agree in
writing. The date of the First Closing is hereinafter referred to as "First
Closing Date." Within five (5) days after the First Closing, the Company shall
deliver to Flanders a Certificate, registered in the Purchaser's name
representing 40,000 Shares that are
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being purchased by Flanders. It is agreed that the Certificate for the Shares
will be delivered within five (5) days after the First Closing.
2.2 Second Closing Date. The Second Closing of the purchase and sale of the
Shares hereunder (the "Second Closing") shall be held at the offices of Brobeck,
Phleger & Harrison LLP, 550 West "C" Street; Suite 1200, San Diego, California
92101 (619) 699-0256; (619) 234-3848 (fax) on August 15, 1997, or at such other
time and place upon which the Company and Flanders shall mutually agree in
writing. The date of the Second Closing is hereinafter referred to as the
"Second Closing Date." Within five (5) days after the Second Closing, the
Company will deliver to Flanders a certificate, registered in the Purchaser's
name, representing 534,400 Shares being purchased by Flanders. It is agreed that
the certificate for the Shares will be delivered within five days after the
Second Closing.
Section 3
Representations and Warranties of the Company
The Company represents and warrants to Flanders as of the Closing as
follows:
3.1 Organization and Standing. The Company is a corporation duly organized
and validly existing under, and by virtue of, the laws of the State of Delaware
and is in good standing as a domestic corporation under the laws of said state.
3.2 Corporate Power; Authorization. The Company has all requisite legal and
corporate power and has taken all requisite corporate action to execute and
deliver this Agreement, to sell and issue the Shares and to carry out and
perform all of its obligations under this Agreement. This Agreement constitutes
the legal, valid and binding obligation of the Company, enforceable in
accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization or similar laws relating to or affecting the
enforcement of creditors' rights generally and (ii) as limited by equitable
principles generally. The execution and delivery of this Agreement does not, and
the performance of this Agreement and the compliance with the provisions hereof
and the issuance, sale and delivery of the Shares by the Company will not,
materially conflict with, or result in a material breach or violation of the
terms, conditions or provisions of, or constitute a material default under, or
result in the creation or imposition of any material lien pursuant to the terms
of, the Certificate of Incorporation or Bylaws of the Company or any to the
Company's knowledge statute, law, rule or regulation or any state or to the
Company's knowledge federal order, judgment or decree or to the Company's
knowledge any indenture, mortgage, lease or other material agreement or
instrument to which the Company or any of its properties is subject.
3.3 Issuance and Delivery of the Shares. The Shares, when issued and paid
for in accordance with the provisions of this Agreement, will be validly issued
and outstanding, fully
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paid and nonassessable. The issuance and delivery of the Shares is not subject
to preemptive or any other similar rights of the stockholders of the Company or
any liens or encumbrances.
3.4 SEC Documents; Financial Statements. The Company has delivered to
Flanders its Annual Report on Form 10-KSB for the year ended December 31, 1996
(the "1996 10-KSB") and its Quarterly Report on Form 10-QSBSB for the quarter
ended March 31, 1997 (the "March 10-QSB"). The Company has filed in a timely
manner all documents that the Company was required to file with the SEC under
Sections 13, 14(a) and 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), since its initial public offering. As of their respective
filing dates, all documents filed by the Company with the SEC (the "SEC
Documents") complied in all material respects with the requirements of the
Exchange Act or the Securities Act, as applicable. None of the SEC Documents as
of their respective dates contained any untrue statement of material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading. The financial statements of the Company included in
the SEC Documents (the "Financial Statements") comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto. The Financial Statements have
been prepared in accordance with generally accepted accounting principles
consistently applied and fairly present the consolidated financial position of
the Company and any subsidiaries at the dates thereof and the consolidated
results of their operations and consolidated cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal, recurring
adjustments and the absence of footnote disclosure).
3.5 Government Consents. To the Company's knowledge, no consent, approval,
order or authorization of, or registration, qualification, designation,
declaration or filing with, any federal, state, or local governmental authority
on the part of the Company is required in connection with the consummation of
the transactions contemplated by this Agreement except for (a) such filings as
have been made prior to the Closing or such post-closing filings as may be
required under applicable state securities laws, which will be timely filed
within the applicable periods therefor, and (b) the filing of the Nasdaq
National Market Notification Form with the Nasdaq National Market.
3.6 No Material Adverse Change. Except as otherwise disclosed herein or as
disclosed to Flanders in writing prior to the Closing, since March 31, 1997,
there have not been any material changes in the assets, liabilities, financial
condition, business prospects or operations of the Company from that reflected
in the March 10-QSB and the Financial Statements except changes in the ordinary
course of business which have not been, either individually or in the aggregate,
materially adverse.
3.7 Authorized Capital Stock. The authorized capital stock of the Company
consists of 10,000,000 shares of Common Stock, and 2,372,384 shares were
outstanding as of March 31, 1997. Except as set forth in the March 10-QSB or the
1996 10-KSB or as disclosed to Flanders in writing prior to the Closing, and
except for the grant of options to purchase a total of 240,244
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shares of Common Stock, as of March 31, 1997 there are no outstanding options,
warrants or other securities exercisable for, or convertible into, or
commitments to issue securities exercisable for or convertible into, capital
stock of the Company, or other commitments to issue any capital stock of the
Company. There has been no material change in the number of outstanding shares
or outstanding options since March 31, 1997.
3.8 No Dividends. The Company has not declared or paid any dividends, or
authorized or made any distribution or established any record date for the
issuance of any dividend or other distribution upon or with respect to any class
or series of its capital stock.
3.9 Litigation. Except as disclosed in the SEC Documents, there are no
actions, suits, proceedings or investigations pending or, to the Company's
knowledge, threatened against the Company or any of its properties before or by
any court or arbitrator or any governmental body, agency or official in which
there is a reasonable likelihood (in the judgment of the Company) of an adverse
decision that (a) could have a material adverse effect on the Company's
properties or assets or the business of the Company as presently conducted or
proposed to be conducted, or (b) could impair the ability of the Company to
perform in any material respect its obligations under this Agreement.
3.10 Regulation S Representations
(a) Neither the Company nor any of its affiliates (within the meaning
of Rule 144 under the Securities Act) nor any person acting on its or their
behalf has engaged or will engage in any Directed Selling Efforts in connection
with the offer and sale of the Shares.
(b) The Company is a Reporting Issuer within the meaning of Regulation
S.
(c) The Company has not offered the Shares to any persons other than
Flanders.
(d) The offer and sale of the Shares to Flanders are not part of a plan
or scheme on the part of the Company, any of its affiliates (within the meaning
of Rule 144 under the Securities Act) or any person acting on its or their
behalf to evade the registration provisions of the Securities Act.
3.11 Execution of Rights Agreement. The Investors' Rights Agreement (the
"Rights Agreement") has been executed by the persons and entities that are
required to execute the Rights Agreement, and the Rights Amendment constitutes a
legal, valid and binding obligation of the Company.
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Section 4
Representations, Warranties and Covenants of Flanders
Flanders hereby represents and warrants to the Company as of the Closing
Date, and agrees in favor of the Company, as follows:
4.1 Authorization. Flanders represents and warrants to the Company that:
(i) Flanders has been duly formed and is validly existing in good standing under
the laws of the jurisdiction of its formation; (ii) Flanders has all requisite
legal and corporate or other power and capacity and has taken all requisite
corporate or other action to execute and deliver this Agreement, to purchase the
Shares to be purchased by it and to carry out and perform all of its obligations
under this Agreement; and (iii) this Agreement constitutes the legal, valid and
binding obligation of Flanders, enforceable in accordance with its terms, except
(a) as limited by applicable bankruptcy, insolvency, reorganization, or similar
laws relating to or affecting the enforcement of creditors' rights generally and
(b) as limited by equitable principles generally.
4.2 Independent Investment Decision. Flanders understands that no United
States federal or state agency has passed on, reviewed or made any
recommendation or endorsement of the Shares. In making the decision to purchase
the Shares in accordance with this Agreement, Flanders has relied solely upon
independent investigations made by it and not upon any representations made by
the Company other than those made pursuant to this Agreement.
4.3 Investment Intent. Flanders is purchasing the Shares for its own
account, for investment purposes only, and not with a view to a distribution
thereof. Flanders further understands that its acquisition of the Shares has not
been registered under the Securities Act or registered or qualified under any
state securities law in reliance on specific exemptions therefrom, which
exemptions may depend upon, among other things, the bona fide nature of
Flanders' investment intent as expressed herein.
4.4 Registration or Exemption Requirements. Flanders further acknowledges
and understands that the Shares have not been registered under the Securities
Act and may not be resold or otherwise transferred except in a transaction
registered under the Securities Act or unless an exemption from such
registration is available.
4.5 Regulation S Representations.
(a) Flanders is not a U.S. Person and is not acquiring the Shares for
the account or benefit of any U.S. Person, and Flanders prior to the Closing is
not an affiliate (within the meaning of Rule 144 under the Securities Act) of
the Company.
(b) At the time the buy orders for the Shares were originated, Flanders
was located outside the United States.
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(c) Neither Flanders nor any of its affiliates nor anyone acting on its
or their behalf has engaged or will engage in any Directed Selling Efforts in
connection with the offer and sale of the Shares.
(d) Flanders:
(i) will not, prior to the later of the end of the Restricted
Period and August 10, 1997, offer or sell any of the Shares (or create or
maintain any derivative position equivalent thereto) in reliance on Regulation S
and will only offer or sell any of the Shares (or create or maintain any
derivative position equivalent thereto) during such period pursuant to
registration under the Securities Act or pursuant to an available exemption from
registration other than Regulation S and, in any case, in accordance with
applicable state securities laws and the provisions of this Agreement; and
(ii) will, after August 10, 1997, offer or sell the Shares (or
create or maintain any derivative position equivalent thereto) only in
accordance with the provisions of Regulation S, pursuant to registration under
the Securities Act, or pursuant to an available exemption from registration and,
in any case, in accordance with applicable state securities laws and the
provisions of this Agreement. Purchaser further agrees that unless the transfer
is pursuant to a registration under the Securities Act, prior to the transfer
(A) Purchaser will notify the Company of the proposed transfer and will furnish
the Company with a detailed statement of the circumstances surrounding the
proposed transfer, and (B) if reasonably requested by the Company, Purchaser
will furnish the Company with an opinion of counsel, reasonably satisfactory to
the Company and its counsel, that such transfer will not require registration of
the Shares under the Securities Act. Purchaser agrees to provide an opinion of
counsel for all transfers pursuant to Regulation S.
(e) Neither Purchaser's offer to buy the Shares nor Purchaser's
acquisition of the Shares is part of a plan or scheme on the part of Purchaser,
any of its affiliates or any person acting on its or their behalf to evade the
registration requirements of the Securities Act.
(f) Purchaser's offer to buy the Shares constituted, and Purchaser's
acquisition of the Shares will constitute, an Offshore Transaction.
(g) In addition to, and without in any way limiting, the other
restrictions contained in this Agreement, during any Restricted Period
applicable to the Shares, neither Purchaser nor any of its affiliates nor any
person acting on its or their behalf will engage in any Directed Selling Efforts
with respect to such Shares.
4.6 No Legal, Tax or Investment Advice. Purchaser understands that nothing
in this Agreement or any other materials presented to Purchaser in connection
with the purchase and sale of the Shares constitutes legal, tax or investment
advice. Purchaser has consulted such legal,
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tax and investment advisors as it, in its sole discretion, has deemed necessary
or appropriate in connection with its purchase of the Shares.
4.7 Legends. To the extent applicable, each certificate or other document
evidencing any of the Shares shall be endorsed with the legends set forth in
Sections 4.7(a) and (b) below and the Purchaser covenants that, except to the
extent such restrictions are waived by the Company, the Purchaser shall not
transfer the shares represented by any such certificate without complying with
the restrictions on transfer described in the legends endorsed on such
certificate:
(a) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND HAVE BEEN SOLD IN RELIANCE ON THE EXEMPTION
FROM REGISTRATION PROVIDED BY REGULATION S UNDER THE SECURITIES ACT
("REGULATION S"). PRIOR TO AUGUST 10, 1997, THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD,
DIRECTLY OR INDIRECTLY, EXCEPT PURSUANT TO REGISTRATION UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION OTHER THAN REGULATION S. AFTER AUGUST 10, 1997, THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED OR
SOLD, DIRECTLY OR INDIRECTLY, EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER THE
SECURITIES ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION."
(b) Any other legend required by law.
Section 5
Conditions to the First Closing of Purchaser
Flander's obligation to purchase the Shares at the First Closing is, at the
option of Flanders, subject to the fulfillment or waiver (in its sole
discretion) on or before the First Closing Date of the following terms and
conditions:
5.1 Representations and Warranties. The representations and warranties of
the Company contained in Section 3 shall be true on and as of the First Closing
Date with the same effect as though such representations and warranties had been
made on and as of the date of such First Closing Date.
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5.2 Covenants. The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the First Closing
Date.
5.3 Qualifications. All authorizations, approvals, or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state that are required as of the Closing in connection with the lawful issuance
and sale of the Shares pursuant to this Agreement shall have been duly obtained
and shall be effective as of the First Closing Date.
5.4 Execution of Investor Rights Agreement. The Company and Flanders have
executed the Investors' Rights Agreement, attached as Exhibit "A".
5.5 Approval of Formation of Belgian Company. Company has approved the form
and content of organizational documents of the Belgian limited liability company
("XIOX Flanders") ("Belgian Formation Documents") attached as Exhibit "B". The
execution of this Agreement by the Company shall be deemed to be Company's
approval of the Belgian Formation Documents.
5.6 Execution of License Agreement between XIOX and Lemount and Hauspie
("L&H"). XIOX has entered into a License Agreement with Lemout and Hauspie
Speech Products, N.V. ("L&H") attached hereto as Exhibit "C".
5.7 Execution of Co-Sale Agreement. William H. Welling has entered into an
agreement with Flanders under which Mr. Welling has agreed that should he sell
certain shares of XIOX Common Stock, he will permit Flanders to sell up to a
proportional amount of the Shares held by it on the same terms and conditions
(the "Co-Sale Right") attached hereto as Exhibit "D".
Section 6
Conditions to First Closing of Company
The Company's obligation to sell and issue the Shares at the First Closing
is, at the option of the Company, subject to the fulfillment or waiver of the
following conditions:
6.1 Represenations and Warranties. The representations and warranties of
Flanders contained in Section 4 shall be true on and as of the First Closing
Date with the same effect as though such representations and warranties had been
made on and as of the date of such First Closing Date.
6.2 Covenants. Flanders shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by Flanders on or before the First
Closing Date.
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6.3 Qualifications. All authorizations, approvals, or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state that are required as of the First Closing Date in connection with the
lawful issuance and sale of the Shares pursuant to this Agreement shall have
been duly obtained and shall be effective as of the First Closing Date.
Section 7
Conditions to the Second Closing of Purchaser
Flanders' obligation to purchase the 534,400 Shares at the Second Closing
is, at the option of Flanders, subject to the fulfillment or waiver (at its sole
discretion) on or before the Second Closing Date on the following terms and
conditions:
7.1 Accuracy of Conditions. The conditions set forth in Section 5.1,
Section 5.2, Section 5.3 have been satisfied as of the Second Closing Date; and
7.2 Intellectual Property Rights. The Company and Flanders have executed
one or more distribution and/or licensing or similar agreements, which
agreements shall document the following agreement in principle:
(a) All source codes and object codes and all hardware jointly
developed by XIOX and XIOX Flanders after the Closing will be jointly owned by
both entities; provided that neither party will have a duty to account to the
other pursuant to 17 U.S.C.A. (the Copyright Act of 1976, as amended). This
joint ownership shall not apply to any intellectual property or technology
currently owned by XIOX prior to the First Closing and any revisions, updates or
enhancements of those existing products. XIOX Flanders shall have the right to
approve all licensing and transfers between XIOX and XIOX Flanders which involve
the transfer of such jointly owned source codes, object codes and hardware. XIOX
shall not license to any other party the right to distribute nor will it itself
distribute such jointly owned products in the "European Marketplace," which
shall be defined to be those countries that are in the European Union as of the
First Closing. The covenant given by XIOX in the preceding sentence will no
longer be applicable if XIOX Flanders is dissolved pursuant to a mutual
agreement of its two owners. With respect to such jointly owned products, XIOX
and XIOX Flanders shall not disclose any trade secret information embodied
therein to any third party.
(b) XIOX Flanders shall receive the right from XIOX to use existing
products and features of existing products and the technology of existing
products of XIOX to incorporate those into the new products that will be jointly
developed. XIOX Flanders shall also have the right to distribute such existing
products and new products. The parties will negotiate in good faith to
memorialize into one or more agreements the rights set forth in this paragraph.
The
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parties agree that a condition to the Second Closing shall be the entering into
of such an agreement with respect to the exclusive distribution rights and a
separate agreement with respect to utilization by XIOX Flanders of existing XIOX
technology.
Section 8
Conditions to the Second Closing of Company
The Company's obligation to sell the 534,400 Shares at the Second Closing
is, at the option of the Company, subject to the fulfillment or waiver of
following conditions:
8.1 Accuracy of Conditions. The conditions set forth in Section 6.1,
Section 6.2 and Section 6.3 have been satisfied as of the Second Closing Date.
8.2 Intellectual Property Rights. The Company and Flanders have executed
one or more distribution and/or licensing or similar agreements, which
agreements document the agreement in principle described in Section 7.2(a) and
(b), above:
Section 9
Affirmative Covenants of the Company
As long as Flanders holds 10% of the Company's Common Stock, the Company
hereby covenants and agrees as follows:
9.1 Financial Information. The Company will mail the following reports to
Flanders until Flanders transfers, assigns or sells the Shares purchased by
Flanders pursuant to this Agreement:
(a) Within one hundred (100) days after the end of each fiscal year, a
copy of its Annual Report on Form 10-KSB;
(b) Within fifty-five (55) days after the end of the first, second and
third quarterly accounting periods of each fiscal year of the Company, a copy of
its Quarterly Report on Form 10-QSB; and
(c) Within ten (10) days after the Company files any Current Report on
Form 8-K with the SEC, such Current Report on Form 8-K.
9.2 Post Closing Covenants.
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9.2.1 The Company shall make the following contributions to the capital
of XIOX Flanders made in accordance with the following schedule as long as there
has been a Second Closing Date:
(a) $600,000 by September 30, 1997;
(b) $350,000 by December 31, 1997;
(c) $350,000 by March 30, 1998;
(d) $350,000 by June 30, 1998;
(e) $350,000 by September 30, 1998;
(f) $372,000 by December 31, 1998.
The Company received a 94.9% interest in XIOX Flanders, in exchange for
its obligation to make these $2,372,000 of capital contributions.
9.2.2 Company will conduct its business and that of XIOX Flanders in
accordance with the Business Plan disclosed to Flanders before the execution of
this Agreement ("Business Plan"). XIOX will not materially amend or deviate from
the Business Plan without the approval of Flanders.
9.2.3 Company will invest an additional $3,000,000 in accordance with
the Business Plan.
9.3 Public Statements. Neither the Company nor Flanders shall use the name
of the other in any press release or filing with the SEC (excluding Schedule
13Ds and Forms 3, 4 and 5) without the prior approval of the other party, which
approval may not be unreasonably withheld or delayed; provided, however, that to
the extent such prior approval is impracticable, the party issuing the press
release or making the filing with the SEC shall provide a copy of such press
release or SEC filing to the other party as promptly as practicable thereafter;
and provided, further, that if the other party does not approve such press
release or SEC filing, the party issuing the press release or making the filing
with the SEC may still use the name of the other party in any press release or
SEC filing without the prior written approval of the other party, if the party
issuing the press release or making the filing with the SEC is advised by
counsel that such disclosure is required to comply with applicable law.
Notwithstanding the above, the parties agree that a press release describing the
transactions contemplated by this Agreement may be issued by XIOX promptly after
execution hereof and that a current report on Form 8-K may be
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<PAGE>
filed with the SEC by XIOX in each case without prior review of, or consultation
with Flanders. Flanders also has the right to issue a press release in Belgium.
Section 10
Post Closing Covenants of Flanders
10.1 Capital Contribution by Flanders to XIOX Flanders. Assuming that there
has been a Second Closing Date, Flanders shall contribute $128,000 to XIOX
Flanders
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<PAGE>
simultaneously with the contribution of $600,000 to XIOX Flanders by the
Company. In exchange for the contribution of $128,000, Flanders shall receive a
5.1% ownership interest in Flanders in accordance with the Belgian Formation
Documents.
Section 11
Miscellaneous
11.1 Waivers and Amendments. The terms of this Agreement may be waived or
amended with the written consent of the Company and Flanders.
11.2 Placement Agent's Fee. Each of the parties hereto hereby represents
that, on the basis of any actions and agreements by it, there are no other
brokers or finders entitled to compensation in connection with the sale of the
Shares to Flanders.
11.3 Governing Law and Location of Litigation. This Agreement shall be
governed in all respects by and construed in accordance with the laws of the
State of California without any regard to conflicts of laws principles, except
for corporate governance issues of XIOX Flanders, which shall be governed by
Belgian law, except as set forth below. In the event that there is a dispute,
the party who commences the litigation must file the litigation in the
jurisdiction where the principal office of the other party is located.
Therefore, if Flanders files litigation, it must be filed in the state courts of
California located in San Mateo County, California. If Company commences
litigation, it must be filed in Brussels, Belgium. Each party irrevocably waives
its rights to institute a proceeding in any other forum and agrees and consents
to the jurisdiction (personal or otherwise) of such court. Each party agrees
that service of process by first class mail is acceptable notwithstanding any
personal service requirement.
11.4 Survival. The representations, warranties, covenants and agreements
made in this Agreement shall survive any investigation made by the Company or
Flanders and the Closing. The Post Closing Covenants shall survive for such
period of time that Flanders owns 10% or more of the Company stock.
11.5 Successors and Assigns. The provisions hereof shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties to this Agreement. Notwithstanding the foregoing,
Flanders shall not assign this Agreement without the prior written consent of
the Company, which consent may be withheld by the Company in its sole discretion
for any or no reason; provided, that the benefits and obligations of Flanders
under Section 7 may be transferred by Flanders without the prior written consent
of the Company to any person that acquires at least 51% of the Shares acquired
by Flanders at the Closing, so long as the transferee agrees in writing to be
bound by the provisions of Section 7 to the same extent as Flanders from whom it
acquired the Shares.
-13-
<PAGE>
11.6 Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof.
11.7 Notices, etc. All notices and other communications required or
permitted under this Agreement shall be in writing and may be delivered in
person, by facsimile, overnight delivery service or registered or certified
United States mail or if sent by Flanders (by Belgian mail), addressed to the
Company or Flanders, as the case may be, at their respective addresses set forth
at the beginning of this Agreement, and in the case of all notices and other
communications to Flanders, a copy will be delivered to Brobeck, Phleger &
Harrison, LLP, Attention: Richard L. Kintz, 550 West "C" Street, Suite 1300, San
Diego, California 92101-3532 and with a copy to Dirk Meeus, Leoff Claeys
Verbeke, Avenue de Tervueren 268-A, B-1150, Brussels, Belgium or at such other
address as the Company or Flanders shall have furnished to the other party in
writing and to the Company with a copy to Wilson, Sonsini, Goodrich and Rosati,
Attention: Blair Stewart, 650 Page Mill Road, Palo Alto, California 94304-1050.
All notices and other communications shall be effective upon the earlier of
actual receipt thereof by the person to whom notice is directed or (i) in the
case of notices and communications sent by personal delivery or facsimile, one
business day after such notice or communication arrives at the applicable
address or was successfully sent to the applicable facsimile number, (ii) in the
case of notices and communications sent by overnight delivery service, at noon
(Pacific time) on the second business day following the day such notice or
communication was sent, and (iii) in the case of notices and communications sent
by United States mail, seven days after such notice or communication shall have
been deposited in the United States mail.
11.8 Severability of this Agreement. If any provision of this Agreement
shall be judicially determined to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
11.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
11.10 Further Assurances. Each party to this Agreement shall use its
conversely reasonable efforts to cause the Closing to occur and shall do and
perform or cause to be done and performed all such further acts and things and
shall execute and deliver all such other agreements, certificates, instruments
and documents as the other party hereto may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
11.11 Currency. All references to "dollars" or "$" in this Agreement shall
be deemed to refer to United States dollars.
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<PAGE>
11.12 Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
11.13 Legal Fees. The Company shall promptly pay the legal fees and costs
of Flanders' Belgian legal counsel, Loeff Claeys & Verbeke, and its California
legal counsel, Brobeck, Phleger & Harrison LLP.
[Remainder of This Page Intentionally Left Blank]
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<PAGE>
The foregoing agreement is hereby executed as of the date first above
written.
"XIOX" or "COMPANY"
XIOX CORPORATION, a Delaware corporation
By: /s/ William H. Welling
-------------------------------------
William H. Welling
Title: Chairman, CEO
----------------------------------
"PURCHASER"
FLANDERS LANGUAGE VALLEY,
a Belgian corporation
By: /s/ Wilfried Van Hove
-------------------------------------
Wilfried Van Hove
Title: General Manager FLVM
----------------------------------
for Philip Vermeulen and
for Wilfried Vandepoel
pursuant to the attached proxy
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<PAGE>
EXH. 4.3
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (this "Agreement") is made as of June 30,
1997, by and among Xiox Corporation, a Delaware corporation ("Xiox" or the
"Company"), and Flanders Language Valley, a company incorporated under Belgian
law ("Flanders").
Recitals
WHEREAS, the Company desires to sell to Flanders shares of the Company's
Common Stock (the "Shares") pursuant to a certain Stock Purchase Agreement of
even date herewith by and among the Company and Flanders (the "Stock Purchase
Agreement"); and
WHEREAS, the Company desires to grant the Investors certain rights, in
order to induce Flanders to purchase the Shares;
NOW, THEREFORE, in consideration of the above and of the mutual promises
set forth herein, the parties hereto agree that, subject to the closing of the
purchase of the Shares by Flanders pursuant to the Stock Purchase Agreement, the
Company hereby grants to the Investors the rights set forth below:
SECTION 1
Definitions
1.1 Certain Definitions. Hereafter, in this Agreement 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.
"Registrable Securities" means shares of Common Stock of the Company
held by Flanders which are purchased pursuant to the Stock Purchase Agreement
provided that the Shares have not be sold, assigned, transferred or pledged by
Flanders to any third party.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, except as otherwise
stated below, incurred by the Company in complying with Section 2 hereof,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of
<PAGE>
counsel for the Company, NASD fees and expenses, and the expense of any special
audits incident to or required by any such registration.
"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.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Flanders and, except as set forth above, all reasonable fees and
disbursements of counsel for Flanders.
Unless otherwise defined in this Agreement or unless the context
requires otherwise, capitalized terms used herein shall have the same meaning as
in the Stock Purchase Agreement
SECTION 2
Registration Rights
2.1 Company Registration.
(a) Notice of Registration. If at any time or from time to time the
Company shall determine to register any of its securities, either for its own
account or the account of a security holder or Flanders, other than (i) a
registration relating solely to employee benefit plans, or (ii) a registration
relating solely to a Commission Rule 145 transaction, the Company will:
(i) promptly give to Flanders written notice thereof; and
(ii) include in such registration and in any underwriting involved
therein, all the Registrable Securities specified in a written request by
Flanders, made within 20 days after receipt of such written notice from the
Company.
(b) Underwriting. If the registration of which the Company gives notice
is for a registered public offering involving an underwriting, the Company shall
so advise Flanders as a part of the written notice given pursuant to Section
2.1(a)(i). In such event the right of Flanders to registration pursuant to
Section 2.1 shall be conditioned upon such Holder's or Founder Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein. Flanders shall (together with
the Company and the other shareholders distributing their securities through
such underwriting) enter into an underwriting agreement in customary form with
the managing underwriter selected for such underwriting by the Company.
Notwithstanding any other provision of this Section 2.5, if the managing
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the managing underwriter may limit the Registrable
Securities to be included in such registration. The Company shall so advise
Flanders and other Flanders distributing their securities through such
underwriting and the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated among all
Flanders and Founder Flanders and such other Flanders in proportion, as nearly
as
<PAGE>
practicable, to the respective amounts of shares of Common Stock held by
Flanders and such other Flanders at the time of filing the registration
statement. To facilitate the allocation of shares in accordance with the above
provisions, the Company may round the number of shares allocated to any holder
of shares of Common Stock to the nearest 100 shares. If Flanders disapproves of
the terms of any such underwriting, it may elect to withdraw therefrom by
written notice to the Company and the managing underwriter. Any securities
excluded or withdrawn from such underwriting shall be withdrawn from such
registration, and shall not be transferred in a public distribution prior to 90
days after the effective date of the registration statement relating thereto, or
such other shorter period of time as the underwriters may require.
(c) Right to Terminate Registration. The Company shall have the right
to terminate or withdraw any registration initiated by it under this Section 2.1
prior to the effectiveness of such registration whether or not Flanders has
elected to include securities in such registration.
2.2 Registration on Form S-3.
(a) If Flanders requests that the Company file a registration statement
on Form S-3 (or any successor form to Form S-3) for a public offering of shares
of the Registrable Securities the reasonably anticipated aggregate offering
price to the public of which, net of underwriting discounts and commissions,
would exceed $500,000, and the Company is a registrant entitled to use Form S-3
to register the Registrable Securities for such an offering, the Company shall
use its best efforts to cause such Registrable Securities to be registered for
the offering on such form and to cause such Registrable Securities to be
qualified in such jurisdictions as the Holder or Flanders may reasonably
request; provided, however, that the Company shall not be required to effect
more than two registrations pursuant to this Section 2.2 in any twelve (12)
month period and shall not be required to effect such a registration prior to
the first anniversary of this Agreement.
(b) Notwithstanding the foregoing, the Company shall not be obligated
to take any action pursuant to this Section 2.2: (i) if the Company, within ten
(10) days of the receipt of the request of the initiating Flanders, gives notice
of its bona fide intention to effect the filing of a registration statement with
the Commission within forty-five (45) days of receipt of such request (other
than with respect to a registration statement relating to a Rule 145
transaction, an offering solely to employees or any other registration which is
not appropriate for the registration of Registrable Securities); (ii) during the
period starting with the date sixty (60) days prior to the Company's estimated
date of filing of, and ending on the date six (6) months immediately following,
the effective date of any registration statement pertaining to securities of the
Company (other than a registration of securities in a Rule 145 transaction or
with respect to an employee benefit plan), provided that the Company is actively
employing in good faith all reasonable efforts to cause such registration
statement to become effective; provided that Flanders shall not be permitted to
sell shares subject to such registration during the period from the beginning of
the last month of each fiscal quarter until two days after the Company's
financial results have been published and in accordance with the Company's
insider trading compliance policy.
(c) The Company shall be obligated to file a Form S-1 Registration or
any other form that has the same effect of registering Unregistered Securities.
In the event that XIOX cannot use Form S-3 only because of XIOX's failure to
timely file its required reports with the Securities and
<PAGE>
Exchange Commission. XIOX will not be required to file an S-1 by Flanders,
unless Flanders is registering at least two million $ of shares of XIOX for
sale. Such Registration Statement shall remain open for 45 days.
XIOX has no obligation to file an S-1 if the reason that it cannot
use an S-3 is due to cause beyond the reasonable control of XIOX.
2.3 Expenses of Registration. All Registration Expenses incurred in
connection with registrations pursuant to Sections 2.1 and 2.2 shall be borne by
the Company. All Selling Expenses relating to securities registered on behalf of
Flanders shall be borne by the Flanders.
2.4 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 2,
the Company will keep Flanders advised in writing as to the initiation of each
registration, qualification and compliance and as to the completion thereof. At
its expense the Company will:
(a) Prepare and file with the Commission a registration statement with
respect to such securities and use its best efforts to cause such registration
statement to become and remain effective for at least thirty (30) days or until
the distribution described in the Registration Statement has been completed;
(b) Furnish to Flanders and to the underwriters of the securities being
registered such reasonable number of copies of the registration statement,
preliminary prospectus, final prospectus and such other documents as such
underwriters may reasonably request in order to facilitate the public offering
of such securities.
2.5 Indemnification.
(a) The Company will indemnify Flanders, each of its officers and
directors and partners, and each person controlling Flanders within the meaning
of Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Section 2, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages or liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement, prospectus, offering
circular or other document, or any amendment or supplement thereto, incident to
any such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, or any violation by the Company of the
Securities Act or any rule or regulation promulgated under the Securities Act
applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse Flanders, each of
its officers and directors, and each person controlling Flanders, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission or alleged
<PAGE>
untrue statement or omission, made in reliance upon and in conformity with
written information furnished to the Company by an instrument duly executed by
Flanders, controlling person or underwriter and stated to be specifically for
use therein.
(b) Flanders will, if Registrable Securities held by Flanders are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company's securities covered by such
a registration statement, and each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company, such
directors, officers, persons, underwriters or control persons for any legal or
any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by an instrument
duly executed by Flanders and stated to be specifically for use therein.
Notwithstanding the foregoing, the liability of Flanders under this subsection
(b) shall be limited in an amount equal to the public offering price of the
shares sold by Flanders, unless such liability arises out of or is based on
willful conduct by Flanders.
(c) Each party entitled to indemnification under this Section 2.5 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Section 2 unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action
and provided further, that the Indemnifying Party shall not assume the defense
for matters as to which there is a conflict of interest or separate and
different defenses. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
2.6 Termination of Registration Rights. The rights granted pursuant to this
Agreement shall terminate at such time as Rule 144 will permit Flanders to sell
all the shares held by it in a single 90 day period or five (5) years after the
date of this Agreement, whichever occurs first.
2.7 Information by Holder. Flanders shall furnish to the Company such
information regarding Flanders, the Registrable Securities held by them and the
distribution proposed by Flanders
<PAGE>
as the Company may request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in this Section
2.
2.8 Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended.
(b) Use its best efforts to file with the Commission in a timely manner
all reports and other documents required of the Company under the Securities Act
and the Securities Exchange Act of 1934, as amended (at any time after it has
become subject to such reporting requirements);
(c) So long as Flanders owns any Restricted Securities to furnish to
Flanders forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 (at any time after
90 days after the effective date of the first registration statement filed by
the Company for an offering of its securities to the general public), and of the
Securities Act and the Securities Exchange Act of 1934 (at any time after it has
become subject to such reporting requirements), a copy of the most recent annual
or quarterly report of the Company, and such other reports and documents of the
Company and other information in the possession of or reasonably obtainable by
the Company as a Investor may reasonably request in availing itself of any rule
or regulation of the Commission allowing a Investor to sell any such securities
without registration.
2.9 Transfer of Registration Rights. The rights to cause the Company to
register securities granted to Flanders under Sections 2.1 and 2.2 may be not be
transferred or assigned to any third party.
2.10 Obligations of the Company. Whenever required under this Section 2 to
effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect
to such securities and use its diligent best efforts to cause such registration
statement to become effective and to keep such registration statement effective
for up to 45 days for such period of time as otherwise specified in this
Agreement.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
1933 Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to Flanders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
1933 Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them.
<PAGE>
(d) Use its reasonable commercial efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by
Flanders, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Flanders shall also enter
into and perform its obligations under such an agreement.
(f) Notify Flanders when an amended prospectus relating thereto is
required to be delivered under the 1933 Act 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.
(g) Furnish, at the request of Flanders, on the date that such
securities are delivered to the underwriters for sale in connection with a
registration pursuant to this Section 2, if such securities are being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, (i) a copy of the opinion given to the
underwriters if the registration of Flanders' securities was underwritten and
(ii) a letter dated such date, from the independent accountants of the Company,
in form and substance as is customarily given by independent accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to Flanders requesting registration of securities.
SECTION 3
Other Rights
3.1 Information Rights. So long as Flanders holds at least ten per cent
(10%) of the outstanding shares of Common Stock of the Company, the Company
shall provide Flanders with Copies of all reports filed with the Securities and
Exchange Commission and copies of all press releases.
3.2 Board Representation. Within 90 days of the date of this Agreement, the
Company will cause a designee of Flanders to be appointed to the Board of
Directors of the Company. In connection with subsequent elections of directors
by the stockholders of the Company, the Company will cause a designee of
Flanders to be nominated for election to the Board. Each such designee shall be
reasonably satisfactory to the Company. The right of designation will terminate
at such time as Flanders no longer owns at least 10% of the outstanding shares
of the Company, or five years after the date hereof, which ever occurs first. So
long as Flanders has the right to designate a nominee for
<PAGE>
election to the Board of Directors of the Company, the Company will elect a
designee of Flanders to the Board of Directors of the Belgian subsidiary to be
established by the Company.
3.3 Visitation Rights. For so long as Flanders has a right to designate a
nominee for election to the Board of Directors of the Company, an observer
designated by Flanders and reasonably satisfactory to the Company will be
invited to be present at all Board of Director meetings; provided, that such
observer shall agree in writing to keep in confidence information received and
discussions held at such meetings, and to use such information only for the
purpose of advising the director designated by Flanders, and, provided further
that the Board of Directors may in its sole discretion exclude such observer
from any meeting or portion thereof.
3.4 Right of Pro-Rata Participation. For so long as Flanders has a right to
designate a nominee for election to the Board of Directors of Xiox, Flanders
shall have the right to purchase its pro-rata shares of any New Securities (as
defined in this Section 3.4) that the Company may from time to time propose to
sell and issue. Flanders' pro rata share, for purposes of this right of
participation, is the ratio, the numerator of which is the number of shares of
Common Stock then held by Flanders, and the denominator of which is the total
number of outstanding shares of Common Stock. This right of pro-rata
participation shall be subject to the following provisions:
(a) "New Securities" shall mean any shares of Common Stock of the
Company, whether now authorized or not, and rights, options or warrants to
purchase said shares of Common Stock, and securities of any type whatsoever that
are, or may become convertible into said shares of Common Stock; provided,
however, that "New Securities" does not include (i) securities issued pursuant
to the acquisition of another corporation by the Company by merger, purchase of
all or substantially all of the assets, or other reorganization whereby the
Company owns not less that fifty-one percent (51%) of the voting power of such
corporation; (ii) shares of Common Stock (or related options) issued to
employees, officers, directors, or consultants of the Company pursuant to
incentive stock option or stock purchase plans and approved by the Board of
Directors of the Company; (iii) shares of Common Stock issued in connection with
any stock split, stock dividend or recapitalization by the Company; or (vi)
shares of Common Stock issued to a strategic partner in a transaction or
transactions approved by the Board of Directors of the Company; (vii) securities
issued to equipment lessors in connection with equipment lease transactions
approved by the Board; or (viii) securities issued to commercial lenders in
connection with line of credit or loan transactions approved by the Board.
(b) In the event that the Company proposes to undertake an issuance of
New Securities, it shall deliver to Flanders written notice of its intention,
describing the type of New Securities, the price, and the general terms upon
which the Company proposes to issue the same. Flanders shall have twenty (20)
days from the date of delivery of any such notice to agree to purchase up to its
pro rata share as provided above of such New Securities for the price and upon
the general terms specified in the notice by giving written notice to the
Company and stating therein the quantity of New Securities to be purchased. If
Flanders elects to purchase its pro rata share of New Securities, Flanders shall
enter such agreements as the Company may reasonably require in connection with
the sale of such New Securities.
<PAGE>
(c) The right of pro-rata participation granted under this Agreement
shall terminate at such time when Flanders no longer has the right to designate
a nominee for election to the Board of Directors of Xiox.
(d) This right of pro-rata participation may be not be transferred or
assigned to any third party.
3.5 Financial Rights. While Flanders owns at least ten per cent (10%) of
the outstanding shares of Common Stock of the Company, Flanders shall have the
following financial information rights: (a) to approve the auditors if they are
not employed by a "big 6" accounting firm; and (b) to employ, at cost to
Flanders, auditors of its own choosing to review the books and records of the
Company.
3.6 No New Products. Until December 31, 2000, the Company will not expand
or attempt to expand into new business or product areas, other that those
currently existing or those specified in the Business Plan disclosed to Flanders
prior to the execution of this agreement.
3.7 Business Plan. The Company will conduct its operations in accordance
with the Business Plan. Flanders shall have the right to approve any material
amendment to the Business Plan.
SECTION 4
Miscellaneous
4.1 Governing Law. This Agreement shall be governed and construed in all
respects in accordance with the laws of the State of California as applied to
agreements made and performed in California by residents of the State of
California.
4.2 Entire Agreement; Amendment. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subjects hereof, and no party shall be liable or bound to any other party in any
manner by any warranties, representations or covenants except or specifically
set forth herein. Except as expressly provided herein, neither this Agreement
nor any term hereof may be amended, waived, discharged or terminated other than
by a written instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge or termination is sought.
4.3 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by messenger,
addressed as follows:
(I) if to the Flanders:
Flanders Language Valley
8900 Ieper, Industrielaan 31
Belgium
<PAGE>
with a copy to:
Dirk Meeus, Esq.
Loeff Claeys & Verbeke
Avenue de Terrueren 268-A; B-1150
Brussels, Belgium
(ii) if to the Company:
Xiox Corporation
577 Airport Blvd., Suite 700
Burlingame, CA 94010
Attn: President
with a copy to:
Blair W. Stewart, Esq.
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered if
delivered personally, or, if sent by mail, at the earlier of its receipt or 72
hours after the same has been deposited in a regularly maintained receptacle for
the deposit of the United States mail, addressed and mailed as aforesaid.
4.4 Severability. In the event that any provision of this Agreement becomes
or is declared by a court of competent jurisdiction to be illegal, unenforceable
or void, this Agreement shall continue in full force and effect without said
provision; provided that no such severability shall be effective if it
materially changes the economic benefit of this Agreement to any party.
4.5 Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not considered in construing or
interpreting this Agreement.
4.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
XIOX CORPORATION
a Delaware corporation
By: /s/ William H. Welling
--------------------------------
William H. Welling
FLANDERS LANGUAGE VALLEY
a Belgian Company
By: /s/ Wilfried Van Hove
--------------------------------
Wilfried Van Hove
General Manager FLVM
for Philip Vermeulen and
for Wilfried Vandepoel
pursuant to the attached proxy
