EXHIBIT 2
EXECUTION COPY
EXCHANGE AGREEMENT
by and among
INFOCROSSING, INC.,
MIDOCEAN CAPITAL INVESTORS, L.P.,
SANDLER CAPITAL PARTNERS V, L.P.,
SANDLER CAPITAL PARTNERS V FTE, L.P.,
SANDLER CAPITAL PARTNERS V GERMANY, L.P.,
SANDLER TECHNOLOGY PARTNERS SUBSIDIARY, LLC,
SANDLER CO-INVESTMENT PARTNERS, L.P.
and
THE OTHER PARTY NAMED HEREIN
---------------------------------
Dated as of October 16, 2003
---------------------------------
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Table of Contents
Page #
ARTICLE I DEFINITIONS.........................................................2
1.1 DEFINITIONS...............................................2
ARTICLE II EXCHANGE 5
2.1 AGREEMENT TO EXCHANGE.....................................5
2.2 CLOSING...................................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................8
3.1 ORGANIZATION AND STANDING.................................8
3.2 AUTHORIZATION; ENFORCEABILITY.............................8
3.3 NO VIOLATION; CONSENTS....................................9
3.4 COMMISSION FILINGS.......................................10
3.5 ABSENCE OF CERTAIN CHANGES...............................10
3.6 PRIVATE OFFERING.........................................10
3.7 LITIGATION...............................................11
3.8 PERMITS AND LICENSES.....................................11
3.9 INVESTMENT COMPANY.......................................11
3.10 BROKERS AND FINDERS......................................11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF EACH INVESTOR...................12
4.1 ORGANIZATION; AUTHORIZATION; ENFORCEABILITY..............12
4.2 NO VIOLATION; CONSENTS...................................12
4.3 TITLE TO SECURITIES......................................13
ARTICLE V COVENANTS OF THE COMPANY...........................................13
5.1 OPERATION OF BUSINESS....................................13
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5.2 AGREEMENT TO TAKE NECESSARY AND DESIRABLE ACTIONS........15
5.3 COMPLIANCE WITH CONDITIONS...............................15
5.4 CONSENTS AND APPROVALS...................................15
5.5 PRIVATE PLACEMENT........................................16
5.6 WAIVER OF PREEMPTIVE RIGHTS..............................16
ARTICLE VI COVENANTS OF EACH INVESTOR........................................16
6.1 AGREEMENT TO TAKE NECESSARY AND DESIRABLE ACTIONS........16
6.2 COMPLIANCE WITH CONDITIONS; BEST EFFORTS.................16
6.3 CONSENTS AND APPROVALS...................................16
ARTICLE VII CONDITIONS PRECEDENT TO CLOSING..................................17
7.1 CONDITIONS TO THE COMPANY'S OBLIGATIONS..................17
7.2 CONDITIONS TO EACH INVESTOR'S OBLIGATIONS................18
ARTICLE VIII MISCELLANEOUS...................................................20
8.1 SURVIVAL; INDEMNIFICATION................................20
8.2 NOTICES..................................................22
8.3 GOVERNING LAW............................................23
8.4 TERMINATION..............................................23
8.5 ENTIRE AGREEMENT.........................................24
8.6 MODIFICATIONS AND AMENDMENTS.............................24
8.7 WAIVERS AND EXTENSIONS...................................24
8.8 TITLES AND HEADINGS......................................25
8.9 EXHIBITS AND SCHEDULES...................................25
8.10 EXPENSES.................................................25
8.11 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS..................25
8.12 ASSIGNMENT; NO THIRD PARTY BENEFICIARIES.................26
8.13 SEVERABILITY.............................................26
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8.14 COUNTERPARTS.............................................26
8.15 FURTHER ASSURANCES.......................................26
8.16 REMEDIES CUMULATIVE......................................26
8.17 SPECIFIC PERFORMANCE.....................................27
8.18 NO INVESTOR AFFILIATE LIABILITY..........................27
8.19 CONFIDENTIALITY..........................................27
8.20 LEGAL REPRESENTATION.....................................28
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SCHEDULES
Schedule A .........Exchange
Schedule 3.3 .........Violations; Consents
Schedule 3.5 .........Absence of Certain Changes
Schedule 3.7 .........Litigation
EXHIBITS
Exhibit A Form of Amended Registration Rights Agreement
Exhibit B Form of Termination of Stockholders' Agreement
Exhibit C Form of Term Loan Agreement
Exhibit D Form of Opinion of Xxxxxx & Xxxxxxx LLP
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EXCHANGE AGREEMENT
EXCHANGE AGREEMENT dated as of October 16, 2003 (this
"Agreement"), by and among Infocrossing, Inc. (f/k/a Computer Outsourcing
Services, Inc.), a Delaware corporation (the "Company"), MidOcean Capital
Investors, L.P., a Delaware limited partnership (the "MidOcean Investor"),
Sandler Capital Partners V, L.P., a Delaware limited partnership ("Sandler V"),
Sandler Capital Partners V FTE, L.P., a Delaware limited partnership ("Sandler V
FTE"), Sandler Capital Partners V Germany, L.P., a Delaware limited partnership,
("Sandler V Germany"), Sandler Technology Partners Subsidiary, LLC, a Delaware
limited liability company ("Sandler Technology"), and Sandler Co-Investment
Partners, a Delaware limited partnership ("Sandler Co-Investment" and, together
with Sandler V, Sandler V FTE, Sandler V Germany and Sandler Technology, the
"Sandler Investors"), and Price Family Limited Partners (the "Price Investor").
Each of the MidOcean Investor, the Sandler Investors and the Price Investor are
hereinafter referred to individually as an "Investor" and collectively as the
"Investors."
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W I T N E S S E T H:
WHEREAS, pursuant to that certain Securities Purchase
Agreement, dated as of April 7, 2000, by and among the Company and the other
parties thereto, the Company issued and sold 157,377 shares of its 8% Series A
Cumulative Convertible Participating Preferred Stock due 2007, par value $0.01
per share (the "Original Preferred Stock"), together with Series A Common Stock
Warrants (the "Original Warrants") to purchase initially an aggregate of
2,531,926 shares of common stock, par value $0.01 per share, of the Company (the
"Common Stock"), to be issued upon exercise of the Original Warrants;
WHEREAS, the Investors own, in the aggregate, all outstanding
shares of the Original Preferred Stock and all the outstanding Original
Warrants; and
WHEREAS, upon the terms and subject to the conditions of this
Agreement, the Investors and the Company have agreed to an exchange, pursuant to
which, among other things, the Original Preferred Stock and the Original
Warrants will be exchanged by the Investors for an aggregate consideration of
(i) $25,000,000 in aggregate principal amount of loans represented by the notes
in substantially the form attached as Exhibit A to the Term Loan Agreement (as
defined herein) (the "Notes") and (ii) $55,000,000 in cash (the "Cash
Proceeds").
NOW, THEREFORE, the parties hereto, intending to be legally
bound, hereby agree as follows.
ARTICLE I
DEFINITIONS
1.1 Definitions.
(a) As used in this Agreement, the following terms shall have the following
meanings:
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Amended Registration Rights Agreement" means the Second
Amended and Restated Registration Rights Agreement, to be dated as of the
Closing Date, to be entered into by and among the Company, the Investors and the
other parties thereto, in substantially the form attached hereto as Exhibit A.
"Applicable Law" means (a) any United States federal, state,
local or foreign law, statute, rule, regulation, order, writ, injunction,
judgment, decree or permit of any Governmental Authority and (b) any rule or
listing requirement of any applicable national stock exchange or listing
requirement of any national stock exchange or Commission recognized trading
market on which securities issued by the Company or any of the Subsidiaries are
listed or quoted.
"Business Day" means any day other than a Saturday, a Sunday,
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or a day when banks in The City of
New York are authorized by Applicable Law to
be closed.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock and (ii) with respect to any
other Person, any and all partnership or other equity interests of such Person.
"Commission" means the United States Securities and Exchange
Commission.
"Commission Filings" means all reports, registration
statements and other filings filed by the Company with the Commission (and all
notes, exhibits and schedules thereto and all documents incorporated by
reference therein).
"Company Disclosure Schedule" shall mean the Company
Disclosure Schedule delivered by the Company to the Investors concurrently with
the date hereof.
"Confidential Information" shall mean any and all secret,
confidential or proprietary technical and non-technical information, knowledge
or data regarding the business, affairs, products and accounts of the Company
and the Subsidiaries; provided, however, that any information disclosed by a
disclosing party will be considered "Confidential Information" of such party by
the receiving party only if such information (a) if provided as information
fixed in a tangible medium of expression, is conspicuously designated as
"Confidential", "Proprietary" or some similar designation, or (b) if provided
orally, is identified as confidential at the time of disclosure and confirmed in
writing within thirty (30) days of disclosure. Notwithstanding anything to the
contrary contained herein, "Confidential Information" shall not include any
information, knowledge or data which (a) was in the public domain at or
subsequent to the time such portion was communicated to the receiving party by
the disclosing party through no fault of the receiving party, (b) was rightfully
in the receiving party's possession free of any obligation of confidence at or
subsequent to the time such portion was communicated to the receiving party by
the disclosing party, (c) was developed by employees or agents of the receiving
party independently of and without reference to any information communicated to
the receiving party by the disclosing party, or (d) was communicated by the
disclosing party to an unaffiliated third party free of any obligation of
confidence.
"Contract" means any contract, lease, loan agreement,
mortgage, security agreement, trust indenture, note, bond, instrument, or other
agreement or arrangement (whether written or oral).
"Exchange Act" means the Securities Exchange Act of 1934, and
the rules and regulations of the Commission promulgated thereunder.
"Governmental Authority" means (i) any foreign, federal, state
or local court or governmental or regulatory agency or authority, (ii) any
arbitration board, tribunal or mediator and (iii) any national stock exchange or
Commission recognized trading market on which securities issued by the Company
or any of the Subsidiaries are listed or quoted.
"Investor Affiliate" means (a) any direct or indirect holder
of any equity interests or securities in any Investor (whether limited or
general partners, members, stockholders or otherwise), (b) any Affiliate of any
Investor, (c) any director, officer, employee, representative or agent of (i)
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any Investor, (ii) any Affiliate of any Investor or (iii) any holder of equity
interests or securities referred to in clause (a) above or (d) any person who is
a "control person" of any Investor, as defined under Section 15 of the
Securities Act or Section 20 of the Exchange Act.
"Lien" means any mortgage, pledge, lien, security interest,
claim, restriction, charge or encumbrance of any kind.
"Material Adverse Effect" means a material adverse effect on
the condition (financial or otherwise), business, properties, assets,
liabilities, operations or results of operations of the Company and the
Subsidiaries, taken as a whole.
"Permitted Transferee" means, with respect to any Investor, or
any Permitted Transferee of any Investor, any Investor Affiliate or an Affiliate
of such holder or any successor in interest of any of them, whether by merger,
consolidation, dissolution, liquidation, or otherwise.
"Person" means any individual, partnership, corporation,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or agency or political
subdivision thereof, or other entity.
"Private Placement" means the private placement of Common
Stock and warrants for proceeds in an amount not less than $75,000,000 on or
before November 1, 2003 on terms and conditions (including, without limitation,
the issuance price of the Common Stock) satisfactory to the MidOcean Investor,
the Sandler Investors and the Company.
"Securities Act" means the Securities Act of 1933, and the
rules and regulations of the Commission promulgated thereunder.
"subsidiary" means, with respect to any Person (i) a
corporation a majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by a subsidiary of such Person, or by such Person and one or
more subsidiaries of such Person, (ii) a partnership in which such Person or a
subsidiary of such Person is, at the date of determination, a general partner of
such partnership and has the power to direct the policies and management of such
partnership or (iii) any other Person (other than a corporation) in which such
Person, a subsidiary of such Person or such Person and one or more subsidiaries
of such Person, directly or indirectly, at the date of determination thereof,
has (a) at least a majority ownership interest or (b) the power to elect or
direct the election of a majority of the directors or other governing body of
such Person.
"Subsidiary" means a subsidiary of the Company.
"Termination of Stockholders' Agreement" means the Termination
of Stockholders' Agreement, to be dated as of the Closing Date, to be entered
into by and among the Company, the Investors and the other parties thereto, in
substantially the form attached hereto as Exhibit B.
"Term Loan Agreement" means the Term Loan Agreement, to be
dated as of the Closing Date, to be entered into by and among the Company, the
Lenders (as defined therein) and Infocrossing Agent, Inc., as agent for the
Lenders, in the form attached hereto as Exhibit C.
"Transaction Documents" means this Agreement, the Termination
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of Stockholders' Agreement, the Amended Registration Rights Agreement and the
Term Loan Agreement.
"Transactions" means the transactions contemplated by this
Agreement, including, without limitation, the Exchange and the Private
Placement.
(b) As used in this Agreement, the following terms shall have the meanings given
thereto in the Sections set forth opposite such terms:
Term Section
----- -------
Agreement Preamble
Cash Proceeds Recitals
Closing 2.2
Closing Date 2.2
Common Stock Recitals
Company Preamble
DGCL 2.2
Exchange 2.1
Governmental Licenses 3.8
Indemnified Party 8.1(c)
indemnified person 8.1(b)
Indemnifying Party 8.1(c)
Investor or Investors Preamble
Losses 8.1(b)
MidOcean Investor Preamble
Notes Recitals
Notices 8.2
Opinion 2.2(b)(v)
Original Preferred Stock Recitals
Original Warrants Recitals
Price Investor Preamble
Sandler Co-Investment Preamble
Sandler Investors Preamble
Sandler Technology Preamble
Sandler V Preamble
Sandler V FTE Preamble
Sandler V Germany Preamble
ARTICLE II
EXCHANGE
2.1 Agreement to Exchange.
On the Closing Date, and upon the terms and subject to the
conditions set forth in this Agreement, the Company agrees with each Investor,
and each Investor, severally and not jointly, agrees with the Company, as
follows:
(a) Each Investor, severally and not jointly, shall exchange with, and deliver
to, the Company (i) the aggregate number of shares of Original Preferred Stock
set forth opposite such Investor's name on Schedule A hereto and (ii) the
aggregate number of Original Warrants set forth opposite such Investor's name on
Schedule A hereto; and
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(b) The Company shall exchange with, and deliver to each Investor (i) Notes in
an aggregate principal amount set forth opposite such Investor's name on
Schedule A hereto and (ii) the pro rata portion of the Cash Proceeds set forth
opposite such Investor's name on Schedule A hereto. The Company shall use
$55,000,000 of the net proceeds from the Private Placement to pay the Cash
Proceeds to the Investors.
The transactions contemplated by this Section 2.1 are herein
referred to collectively as the "Exchange."
2.2 Closing.
Subject to the satisfaction or waiver of the conditions set
forth in this Agreement, the closing of the Exchange (the "Closing") shall take
place at 10:00 a.m. at the offices of Xxxxx Xxxx LLP at 1290 Avenue of the
Americas,
New York,
New York, on the date upon which the conditions set forth in
Article VII have been satisfied or on such other date as the parties shall
mutually agree upon (the "Closing Date").
At the Closing:
(a) each Investor shall deliver to the Company:
(i) against delivery by the Company to such Investor of the Notes in an
aggregate principal amount and the pro rata portion of the Cash Proceeds set
forth opposite such Investor's name on Schedule A hereto, (A) a certificate or
certificates representing the aggregate number of shares of Original Preferred
Stock set forth opposite such Investor's name on Schedule A hereto, which shall
be in definitive form and registered in the name of such Investor, in proper
form for transfer, and (B) a certificate or certificates representing the
aggregate number of Original Warrants set forth opposite such Investor's name on
Schedule A hereto, which shall be in definitive form and registered in the name
of such Investor, in proper form for transfer;
(ii) a copy of the Term Loan Agreement executed by such Investor;
(iii) a copy of the Amended Registration Rights Agreement executed by such
Investor;
(iv) a copy of the Termination of Stockholders' Agreement executed by such
Investor; and
(v) letters of resignation of each of the two directors designated by the
Sandler Investors as holders of Original Preferred Stock and each of the two
directors designated by the MidOcean Investor as a holder of Original Preferred
Stock.
(b) The Company shall deliver to each Investor:
(i) against delivery by such Investor to the Company of certificates
representing the aggregate number of shares of Original Preferred Stock and the
aggregate number of Original Warrants set forth opposite such Investor's name on
Schedule A hereto, (A) a Note or Notes in the aggregate principal amount set
forth opposite such Investor's name on Schedule A hereto, which shall be in
definitive form and registered in the name of such Investor or its nominee or
designee and in a single Note or several Notes as such Investor shall request
not later than two Business Days prior to the Closing Date, and (B) the pro rata
portion of the Cash Proceeds set forth opposite such Investor's name on Schedule
A hereto via wire transfer of immediately available funds to such bank account
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as such Investor shall designate not later than two Business Days prior to the
Closing Date;
(ii) a copy of the Term Loan Agreement executed by the Company;
(iii) a copy of the Amended Registration Rights Agreement executed by the
Company and the parties thereto other than the Investors;
(iv) a copy of the Termination of Stockholders' Agreement executed by the
Company and the parties thereto other than the Investors];
(v) an opinion of Xxxxxx & Xxxxxxx LLP (the "Opinion"), in connection with the
transactions contemplated by this Agreement, dated the Closing Date, covering
such matters as are customarily covered by such opinions, substantially in the
form attached hereto as Exhibit D;
(vi) an officer's certificate of the Company as contemplated by Section 7.2(d);
(vii) a certificate of the Secretary of the Company setting forth (a) copies of
all resolutions of the Company authorizing the Transactions, and (b) an
incumbency certificate setting forth the name, title and authorized signature of
each officer of the Company who will execute documents in connection with the
transactions contemplated hereby;
(viii) a long-form good standing certificate of the Company and each Subsidiary
issued by the Secretary of State of the State of Delaware; and
(ix) evidence of the payment by the Company of all costs and expenses of the
Investors required to be reimbursed by the Company pursuant to Section 8.10.
(c) The Company shall have received the written opinion of Evercore Partners,
Inc. to the effect that the consideration to be paid by the Company in the
recapitalization of the Original Preferred Stock is fair to the holders of the
Common Stock from a financial point of view.
After the Closing, the Company shall file a Certificate of
Elimination with the State of Delaware pursuant to Section 151(g) of the
Delaware General Corporation Law ("DGCL") to eliminate all shares of the
Original Preferred Stock.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Investor on
the date hereof and on and as of the Closing Date as follows:
3.1 Organization and Standing.
Each of the Company and the Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and assets and to carry on its business as it is now
being conducted and as proposed to be conducted. Each of the Company and the
Subsidiaries is duly qualified to transact business as a foreign corporation and
is in good standing in each jurisdiction in which the character of the
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properties owned or leased by it or the nature of its business makes such
qualification necessary, except for any such failures to so qualify or be in
good standing that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The Company has delivered to the
Investors true and complete copies of the Company's Certificate of
Incorporation, as amended to date, and by-laws, as in effect on the date hereof
and the certificates of incorporation, by-laws or other similar organizational
documents of the Subsidiaries, in each case, as amended through the date hereof.
3.2 Authorization; Enforceability.
The Company has all necessary power and authority to execute,
deliver and perform its obligations under each of the Transaction Documents and
the transactions contemplated thereby, and has taken all action necessary to
authorize the execution, delivery and performance by it of each of such
Transaction Documents and to consummate the Exchange and the other transactions
contemplated by the Transaction Documents to occur on the Closing Date. No
corporate or stockholder proceeding on the part of the Company is necessary for
such authorization, execution, delivery, performance and consummation. The
Company has duly executed and delivered this Agreement and, at the Closing, the
Company will have duly executed and delivered each of the other Transaction
Documents to be executed and delivered at or prior to Closing. This Agreement
constitutes, and each of the other Transaction Documents when executed and
delivered by the Company, will constitute, a legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application and as any rights to indemnity
or contribution thereunder may be limited by public policy considerations.
3.3 No Violation; Consents.
(a) The execution, delivery and performance by the Company of each of the
Transaction Documents and the consummation by the Company of the Exchange and
the other transactions contemplated by the Transaction Documents to occur on the
Closing Date do not and will not contravene any Applicable Law, including,
without limitation, Section 160 of the DGCL. Except as set forth on Schedule 3.3
of the Company Disclosure Schedule, the execution, delivery and performance by
the Company of each of the Transaction Documents and the consummation of the
Exchange and the other transactions contemplated by the Transaction Documents to
occur on the Closing Date (i) will not (a) violate, result in a breach of or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under any
Contract to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary is bound or to which any of their respective assets
are subject, or (b) result in the creation or imposition of any Lien upon any of
the assets of the Company or any Subsidiary, except for any such violations,
breaches, defaults or Liens that would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the ability of the
Company to perform its obligations under the Transaction Documents and (ii) will
not conflict with or violate any provision of the certificate of incorporation
or by-laws or other governing documents of the Company or the Subsidiaries.
(b) Except for filings by the Company, if any, required by applicable federal
and state securities laws, which shall be made (to the extent required) on or
prior to the Closing Date, no consent, authorization or order of, or filing or
registration with, any Governmental Authority or other Person is required to be
obtained or made by the Company for the execution, delivery and performance of
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this Agreement or the consummation by the Company of the Exchange or other
transactions contemplated by the Transaction Documents, or for the execution,
delivery and performance by the Company of the other Transaction Documents,
except (A) where the failure to obtain such consents, authorizations or orders,
or make such filings or registrations, would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect or a
material adverse effect on the ability of the Company to perform its obligations
under the Transaction Documents or (B) for consents that have been obtained or
will be obtained as of the Closing Date. Notwithstanding the foregoing, (i) no
vote of any class or series of the Company's Capital Stock is necessary to adopt
this Agreement and approve the Transactions, and (ii) the execution, delivery
and performance by the Company of this Agreement and the transactions
contemplated hereby, including, without limitation, the authorization and
issuance of the shares of Common Stock and warrants to purchase Common Stock in
connection with the Private Placement, shall not require the approval of The
Nasdaq National Market, or violate the listing or maintenance requirements of
the rules or regulations of The Nasdaq National Market.
3.4 Commission Filings.
The Company has timely filed all reports, registration
statements and other filings, together with any amendments or supplements
required to be made with respect thereto, that it has been required to file with
the Commission under the Securities Act and the Exchange Act. As of the
respective dates of their filing with the Commission, the Commission Filings
complied in all material respects with the applicable provisions of the
Securities Act and the Exchange Act and did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
3.5 Absence of Certain Changes.
Except as disclosed in the Commission Filings filed prior to
the date hereof or on Schedule 3.5 of the Company Disclosure Schedule, since
June 30, 2003, (i) there has not been any event, occurrence or development of a
state of circumstances or facts (or the failure of any of the foregoing to
occur) that has had, or would reasonably be expected to have a material adverse
effect on the ability of the Company to perform its obligations under this
Agreement or the other Transaction Documents.
3.6 Private Offering.
The offer and sale of the securities issued in connection with
the Private Placement is exempt from the registration and prospectus delivery
requirements of the Securities Act. Neither the Company, nor anyone acting on
behalf of it, has offered or sold or will offer or sell any securities, or has
taken or will take any other action (including, without limitation, any offering
of any securities of the Company under circumstances that would require, under
the Securities Act, the integration of such offering with the offering and sale
of the securities issued in connection with the Private Placement), which would
subject the issuance of securities in connection with the Private Placement to
the registration provisions of the Securities Act.
3.7 Litigation.
Except as disclosed in the Commission Filings or as set forth
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in Schedule 3.7 of the Company Disclosure Schedule, there is no action, suit,
proceeding at law or in equity, or any arbitration or any administrative or
other proceeding by or before (or to the knowledge of the Company any
investigation by) any Governmental Authority, pending, or, to the best knowledge
of the Company, threatened, against or affecting the Company or any of the
Subsidiaries, or any of their properties or rights which would be reasonably
likely to prevent or materially delay consummation of the Transactions. There
are no such suits, actions, claims, proceedings or investigations pending or, to
the knowledge of the Company, threatened, seeking to prevent or challenging the
transactions contemplated by this Agreement.
3.8 Permits and Licenses.
The Company and the Subsidiaries have obtained all
governmental permits, licenses, franchises and authorizations required for the
Company and the Subsidiaries to conduct their respective businesses as currently
conducted (collectively, "Governmental Licenses"), except for those of which the
failure to obtain would not be reasonably expected to prevent or materially
delay the consummation of the Transactions; the Company and the Subsidiaries,
except where the failure to so comply would not, singly or in the aggregate,
reasonably be expected to prevent or materially delay the consummation of the
Transactions, are in compliance with the terms and conditions of all such
Governmental Licenses; all of the Governmental Licenses are valid and in full
force and effect, except when the invalidity of such Governmental Licenses or
the failure of such Governmental Licenses to be in full force and effect would
not reasonably be expected to prevent or materially delay the consummation of
the Transactions; and neither the Company nor any of the Subsidiaries has
received any notice of proceedings relating to the revocation or modification of
any such Governmental Licenses which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would reasonably be expected to
prevent or materially delay the consummation of the Transactions.
3.9 Investment Company.
Neither the Company nor any Subsidiaries will be an
"investment company" or "promoter" or "principal underwriter" for an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder.
3.10 Brokers and Finders.
Except as disclosed to the Investors, no agent, broker, Person
or firm acting on behalf of the Company is, or will be, entitled to any fee,
commission or broker's or finder's fees from any of the parties hereto, or from
any Person controlling, controlled by, or under common control with any of the
parties hereto, in connection with this Agreement or any of the transactions
contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND
WARRANTIES OF EACH INVESTOR
Each Investor hereby severally, and not jointly, represents
and warrants to the Company, as to itself and as to no other person, as of the
date hereof and as of the Closing Date as follows:
4.1 Organization; Authorization; Enforceability.
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Such Investor is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and has all
requisite power and authority to own its properties and assets and to carry on
its business as it is now being conducted and as currently proposed to be
conducted. Such Investor has the power to execute, deliver and perform its
obligations under each of the Transaction Documents to which it is a party and
has taken all action necessary to authorize the execution, delivery and
performance by it of such Transaction Documents and to consummate the
transactions contemplated hereby and thereby. No other proceedings on the part
of such Investor are necessary for such authorization, execution, delivery and
consummation. Such Investor has duly executed and delivered this Agreement and,
at the Closing, such Investor will have duly executed and delivered each of the
other Transaction Documents to be executed and delivered at or prior to Closing.
This Agreement constitutes, and each of the other Transaction Documents to which
such Investor is a party, when executed and delivered by such Investor, will
constitute, a legal, valid and binding obligation of such Investor, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application and as any rights to indemnity
or contribution thereunder may be limited by public policy considerations.
4.2 No Violation; Consents.
(a) The execution, delivery and performance by such Investor of each of the
Transaction Documents to which it is a party and the consummation of the
Transactions to occur on the Closing Date do not and will not contravene any
Applicable Law. The execution, delivery and performance by such Investor of each
of the Transaction Documents to which it is a party and the consummation of the
Transactions contemplated therein to occur on the Closing Date (i) will not
violate, result in a breach of or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under any Contract to which such Investor is party
or by which such Investor is bound or to which any of its assets is subject,
except for any such violations, breaches or defaults that would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of such Investor to perform its obligations under
this Agreement, and (ii) will not conflict with or violate any provision of the
certificate of incorporation or by-laws or other governing documents of such
Investor.
(b) Except for filings by such Investor, if any, required by the Commission
pursuant to the Exchange Act, which shall be made (to the extent required) on or
prior to the Closing Date, no consent, authorization or order of, or filing or
registration with, any Governmental Authority or other Person is required to be
obtained or made by such Investor for the execution, delivery and performance of
any of the Transaction Documents to which it is a party or the consummation of
any of the transactions contemplated therein, except where the failure to obtain
such consents, authorizations or orders, or make such filings or registrations,
would not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the ability of such Investor to perform its
obligations under this Agreement.
4.3 Title to Securities.
Such Investor owns beneficially and of record the shares of
Original Preferred Stock and the aggregate number of Original Warrants set forth
opposite such Investor's name on Schedule A hereto and has good and valid title
to such shares of Original Preferred Stock and such Original Warrants, free and
Page 16
clear of all Liens (other than those Liens under the Second Amended and Restated
Stockholders' Agreement, dated as of February 1, 2002, by and among the Company
and the other parties thereto, and under applicable securities laws). Such
Investor has the unrestricted power and authority to transfer such shares of
Original Preferred Stock and such Original Warrants to the Company, free and
clear of any and all Liens (other than those Liens under the Second Amended and
Restated Stockholders' Agreement, dated as of February 1, 2002, by and among the
Company and the other parties thereto, and under applicable securities laws).
ARTICLE V
COVENANTS OF THE COMPANY
5.1 Operation of Business.
The Company covenants and agrees that, except as permitted,
required or specifically contemplated by, or otherwise described in, this
Agreement or the other Transaction Documents or otherwise consented to or
approved in writing by the MidOcean Investor and the Sandler Investors during
the period commencing on the date hereof and ending on the Closing Date:
(a) The Company and each of the Subsidiaries will conduct their respective
operations only according to their ordinary and usual course of business
consistent with past practice and will use their reasonable best efforts to
preserve intact their respective business organization, keep available the
services of their officers and employees and maintain satisfactory relationships
with licensors, suppliers, distributors, clients, joint venture partners, and
others having significant business relationships with them;
(b) Each of the Company and the Subsidiaries shall:
(i) operate its business in all material respects in the ordinary course and in
material compliance with Applicable Laws;
(ii) not adopt any amendment to its Certificate of Incorporation or by-laws or
comparable organizational documents;
(iii) not split, combine or reclassify any shares of the Company's Capital
Stock;
(iv) not declare or pay any dividend or distribution (whether in cash, stock or
property) in respect of its Capital Stock or increase the number of shares
subject to any stock incentive or option plan with respect to the Capital Stock
of the Company or any Subsidiary;
(v) not take any action, or knowingly omit to take any action, that would, or
that would reasonably be expected to, result in (a) any of the representations
and warranties of the Company set forth in Article III becoming untrue or (b)
any of the conditions to the obligations of the Investors set forth in Section
7.2 not being satisfied or (c) the triggering of any of the anti-dilution
adjustments under the Certificate of the Powers, Designations, Preferences and
Rights relating to the Original Preferred Stock;
(vi) not issue or sell any shares of its Capital Stock (other than (a) in
connection with the exercise of options or warrants outstanding on the date
hereof or (b) in connection with the Private Placement) or any of its other
securities, or issue any securities convertible into, or options, warrants or
rights to purchase or subscribe to, or enter into any arrangement or contract
Page 17
with respect to the issuance or sale of, any shares of its Capital Stock or any
of its other securities, or make any other changes in its capital structure;
(vii) not acquire (by merger, consolidation, or acquisition of stock or assets)
any corporation, partnership or other business or division thereof;
(viii) not, except to the extent required under existing employee and director
benefit plans, agreements or arrangements as in effect on the date of this
Agreement, increase the compensation or fringe benefits of any of its directors,
officers or employees, except for increases in salary or wages of employees of
the Company or any Subsidiaries who are not officers of the Company in the
ordinary course of business in accordance with past practice, or grant any
severance or termination pay not currently required to be paid under existing
severance plans or enter into any employment, consulting or severance agreement
or arrangement with any present or former director, officer or other employee of
the Company or any of the Subsidiaries, or establish, adopt, enter into or amend
or terminate any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any directors, officers or
employees;
(ix) not adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of the Subsidiaries;
(x) incur any material liability for taxes other than in the ordinary course of
business; or enter into any settlement or closing agreement with a taxing
authority that materially affects or may materially affect the tax liability of
the Company or any of the Subsidiaries; or
(xi) not enter into any agreement or commitment to do any of the foregoing.
5.2 Agreement to Take Necessary and Desirable Actions.
The Company shall (a) subject to the satisfaction of the
conditions set forth in Section 7.1, execute and deliver the Transaction
Documents and such other documents, certificates, agreements and other writings
and (b) take such other actions, in each case, as may be necessary or reasonably
requested by any Investor in order to consummate or implement the Exchange in
accordance with the terms of this Agreement.
5.3 Compliance with Conditions.
The Company shall use its reasonable best efforts to cause all
of the obligations imposed upon it by this Agreement to be duly complied with,
and to cause all conditions precedent to the obligations of the Company and the
Investors to be satisfied. Upon the terms and subject to the conditions of this
Agreement, the Company will use its reasonable best efforts to take, or cause to
be taken, all action, and do, or cause to be done, all things necessary, proper
or advisable consistent with Applicable Law to consummate and make effective in
the most expeditious manner practicable the Exchange in accordance with the
terms of this Agreement.
5.4 Consents and Approvals.
The Company (a) shall use its reasonable best efforts to
obtain all necessary consents, waivers, authorizations and approvals of all
Governmental Authorities and of all other Persons required in connection with
Page 18
the execution, delivery and performance of the Transaction Documents or the
consummation of the Exchange and (b) shall diligently assist and cooperate with
the Investors in preparing and filing all documents required to be submitted by
the Investors to any Governmental Authority in connection with the Exchange
(which assistance and cooperation shall include, without limitation, timely
furnishing to the Investors all information concerning the Company and the
Subsidiaries that counsel to any of the Investors determines is required to be
included in such documents or would be helpful in obtaining any such required
consent, waiver, authorization or approval).
5.5 Private Placement.
The Company shall use its reasonable best efforts to
consummate the Private Placement on or before November 1, 2003 on terms and
conditions (including, without limitation, the issuance price of the Common
Stock) satisfactory to the MidOcean Investor, the Sandler Investors and the
Company. The Company shall use $55,000,000 of the net proceeds from the Private
Placement to pay the Cash Proceeds to the Investors in connection with the
Exchange.
5.6 Waiver of Preemptive Rights.
Effective immediately prior to the consummation of the
transactions contemplated by this Agreement, each of the Investors, in its
capacity as a holder of shares of Original Preferred Stock, hereby waives any
preemptive rights (and any notice requirement relating thereto) to which it is
entitled under the Certificate of the Powers, Designations, Preferences and
Rights relating to the Original Preferred Stock, in connection with the
transactions contemplated by this Agreement, including, without limitation, the
Private Placement.
ARTICLE VI
COVENANTS OF EACH INVESTOR
6.1 Agreement to Take Necessary and Desirable Actions.
Each Investor shall (a) subject to the satisfaction of the
conditions set forth in Section 7.2, execute and deliver each of the Transaction
Documents to which it is a party and such other documents, certificates,
agreements and other writings and (b) take such other actions as may be
reasonably necessary, desirable or requested by the Company in order to
consummate or implement the Exchange with respect to such Investor in accordance
with the terms of this Agreement.
6.2 Compliance with Conditions; Best Efforts.
Each Investor will use its reasonable best efforts to cause
all of the obligations imposed upon it in this Agreement to be duly complied
with, and to cause all conditions precedent to the obligations of the Company
and such Investor to be satisfied. Upon the terms and subject to the conditions
of this Agreement, each Investor will use its reasonable best efforts to take,
or cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable consistent with Applicable Law to consummate and
make effective in the most expeditious manner practicable the Exchange with
respect to such Investor in accordance with the terms of this Agreement.
6.3 Consents and Approvals.
Page 19
Each Investor (a) shall use its reasonable best efforts to
obtain all necessary consents, waivers, authorizations and approvals of all
Governmental Authorities, and of all other Persons required in connection with
the execution, delivery and performance of this Agreement or the consummation of
the Exchange with respect to such Investor and (b) shall assist and cooperate
with the Company in preparing and filing all documents required to be submitted
by the Company to any Governmental Authority in connection with such
Transactions (which assistance and cooperation shall include, without
limitation, timely furnishing to the Company all information concerning such
Investor that counsel to the Company reasonably determines is required to be
included in such documents or would be helpful in obtaining any such required
consent, waiver, authorization or approval).
ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING
7.1 Conditions to the Company's Obligations.
The obligations of the Company with respect to the Investors
required to be performed on the Closing Date shall be subject to the
satisfaction or waiver in writing, at or prior to the Closing, of the following
conditions:
(a) The representations and warranties of each Investor contained in this
Agreement which are qualified by any "materiality", "material adverse effect" or
any similar qualifier shall be true and correct in all respects and the
representations and warranties of such Investor which are not so qualified shall
be true and correct in all material respects, in each case on and as of the date
hereof and on and as of the Closing Date, as if made on and as of the Closing
Date.
(b) Each Investor shall have performed in all material respects all obligations
and agreements, and complied in all material respects with all covenants
contained in this Agreement to be performed and complied with by such Investor
at or prior to the Closing Date.
(c) No provision of any Applicable Law, injunction, order or decree of any
Governmental Authority shall be in effect which has the effect of making the
Transactions illegal or shall otherwise restrain or prohibit the consummation of
the Transactions.
(d) The Company shall have received from each Investor certificates representing
the aggregate number of shares of Original Preferred Stock and the aggregate
number of Original Warrants set forth opposite such Investor's name on Schedule
A hereto concurrently with each Investor's receipt from the Company of the Notes
in an aggregate principal amount and the pro rata portion of the Cash Proceeds
set forth opposite such Investor's name on Schedule A hereto.
(e) Each Investor shall have executed and delivered the Term Loan Agreement.
(f) Each Investor shall have executed and delivered the Amended Registration
Rights Agreement.
(g) Each Investor shall have executed and delivered the Termination of
Stockholders' Agreement.
(h) The Company shall have received the written opinion of Evercore Partners,
Inc., as contemplated by Section 2.2(c).
Page 20
(i) The Company shall have received letters of resignation of each of the two
directors designated by the Sandler Investors as holders of Original Preferred
Stock and each of the two directors designated by the MidOcean Investor as a
holder of Original Preferred Stock.
7.2 Conditions to Each Investor's Obligations. The obligations of each Investor
required to be performed on the Closing Date shall be subject to the
satisfaction or waiver in writing, at or prior to the Closing, of the following
conditions:
(a) The representations and warranties of the Company contained in this
Agreement which are qualified by any "materiality", "material adverse effect" or
any similar qualifier shall be true and correct in all respects and the
representations and warranties of the Company which are not so qualified shall
be true and correct in all material respects, in each case on and as of the date
hereof and on and as of the Closing Date, as if made on and as of the Closing
Date.
(b) The Company shall have performed in all material respects all of its
obligations and agreements, and complied with covenants contained in this
Agreement to be performed and complied with at or prior to the Closing Date.
(c) No provision of any Applicable Law, injunction, order or decree of any
Governmental Authority shall be in effect which has the effect of making the
Transactions illegal or shall otherwise restrain or prohibit the consummation of
the Transactions.
(d) The Company shall have delivered to such Investor a certificate executed by
it or on its behalf by a duly authorized representative, dated the Closing Date,
to the effect that each of the conditions specified in paragraph (a) through (c)
and (l) of this Section 7.2 has been satisfied.
(e) The Company shall have delivered to such Investor the certificate executed
by the Secretary of the Company, dated the Closing Date, as contemplated by
Section 2.2(b)(vii).
(f) The Company and each of the other parties thereto (other than the Investors)
shall have executed and delivered the Term Loan Agreement, and such Investor
shall have received evidence satisfactory to it in its sole discretion that the
closing conditions under the Term Loan Agreement have been satisfied and the
transactions contemplated thereby shall be consummated simultaneously with the
Exchange.
(g) The Company and each of the parties thereto (other than the Investors) shall
have executed and delivered the Amended Registration Rights Agreement.
(h) The Company and the each of the parties thereto (other than the Investors)
shall have executed and delivered the Termination of Stockholders Agreement.
(i) Such Investor shall have received the Opinion, dated as of the Closing Date,
and addressed to such Investor in form and substance reasonably acceptable to
the MidOcean Investor and the Sandler Investors.
(j) Such Investor shall have received a long-form good standing certificate of
the Company and each Subsidiary, dated as of a date as close as practicable to
the Closing Date, issued by the Secretary of State of the State of Delaware, as
contemplated by Section 2.2(b)(viii).
Page 21
(k) Such Investor shall have received the Notes in an aggregate principal amount
and the pro rata portion of the Cash Proceeds set forth opposite such Investor's
name on Schedule A hereto concurrently with the Company's receipt of the
certificates representing the aggregate number of shares of Original Preferred
Stock and the aggregate number of Original Warrants set forth opposite such
Investor's name on Schedule A hereto.
(l) There shall not have occurred any event, circumstance, condition, fact,
effect or other matter which has had or would reasonably be expected to have a
material adverse effect (x) on the condition (financial or otherwise), business,
properties, assets, liabilities, operations or results of operations of the
Company and the Subsidiaries, taken as a whole or (y) on the ability of the
Company and the Subsidiaries to perform on a timely basis any material
obligation under this Agreement or to consummate the Exchange contemplated
hereby.
(m) The Private Placement shall have been successfully consummated by the
Company on terms and conditions (including, without limitation, the issuance
price of the Common Stock) satisfactory to the MidOcean Investor and the Sandler
Investors.
(n) The Company shall have received the written opinion of Evercore Partners,
Inc., as contemplated by Section 2.2(c).
(o) All other Investors shall have elected to consummate simultaneously the
transactions contemplated by this Agreement and the other Transaction Documents.
(p) The Company's outstanding Senior Subordinated Debentures due 2005 shall have
been repaid in full, and satisfactory evidence thereof shall have been delivered
to the Investors.
(q) The Company shall have delivered to such Investor evidence of the payment of
all costs and expenses of such Investor required to be reimbursed by the Company
pursuant to Section 8.10.
ARTICLE VIII
MISCELLANEOUS
8.1 Survival; Indemnification.
(a) All representations, warranties and covenants contained in this Agreement or
in any certificate delivered in connection with the Closing shall survive the
Closing for 12 months (except covenants that are required to be performed after
the Closing Date and the representations contained in Sections 3.1, 3.2 and 3.3,
which shall survive indefinitely). Notwithstanding the foregoing, with respect
to claims asserted pursuant to this Section 8.1 before the expiration of the
applicable representation or warranty, such claims shall survive until the date
they are finally adjudicated or otherwise resolved.
(b) The Company agrees to indemnify and hold harmless each Investor, each
Investor Affiliate and each of their respective officers, directors, agents,
employees, partners, members, representatives, heirs, successors and assigns
(each an "indemnified person") net of tax benefits, from and against (and to
reimburse each indemnified person as the same are incurred) any and all losses
(including, but not limited to, impairment of the value of the Notes as of the
date such loss first becomes known) claims, damages, liabilities, costs and
expenses (collectively, "Losses") to which any indemnified person may become
subject or which any indemnified person may incur based upon, arising out of, or
Page 22
in connection with (i) a breach of any representation or warranty of this
Agreement by the Company, (ii) any breach of any covenant or agreement contained
herein by the Company or (iii) any claim, litigation, investigation or
proceeding brought by or on behalf of any Person other than the Company relating
to the Transactions, and to reimburse each indemnified person upon demand for
any reasonable legal or other reasonable out of pocket expenses incurred in
connection with investigating or defending any of the foregoing, provided (a)
the Company shall have no obligation to indemnify any indemnified person for any
Loss resulting from any breach of any representation or warranty hereunder
(other than representations and warranties contained in Sections 3.1, 3.2 or
3.3, which shall be indemnified from the first dollar of Loss) unless and until
the aggregate amount of all such Losses exceeds $1,000,000 (and then only to the
extent of such excess) and (b) the maximum amount indemnifiable to indemnified
persons for breaches of the representations or warranties contained in this
Agreement shall not exceed $25,000,000.
(c) If a Person entitled to indemnity hereunder (an "Indemnified Party") asserts
that the Company (the "Indemnifying Party") has become obligated to the
Indemnified Party pursuant to Section 8.1(b), or if any suit, action,
investigation, claim or proceeding is begun, made or instituted as a result of
which the Indemnifying Party may become obligated to the Indemnified Party
hereunder, the Indemnified Party shall notify the Indemnifying Party promptly
and shall cooperate with the Indemnifying Party, at the Indemnifying Party's
expense, to the extent reasonably necessary for the resolution of such claim or
in the defense of such suit, action or proceedings, including making available
any information, documents and things in the possession of the Indemnified
Party. Notwithstanding the foregoing notice requirement, the right to
indemnification hereunder shall not be affected by any failure to give, or delay
in giving, notice unless, and only to the extent that, the rights and remedies
of the Indemnifying Party shall have been actually and materially prejudiced as
a result of such failure or delay.
(d) In fulfilling its obligations under this Section 8.1, after the Indemnifying
Party has provided each Indemnified Party with a written notice of its
acceptance of liability under this Section 8.1, as between such Indemnified
Party and the Indemnifying Party, the Indemnifying Party shall have the right to
investigate, defend, settle or otherwise handle, with the aforesaid cooperation,
any claim, suit, action or proceeding brought by a third party in such manner as
the Indemnifying Party may in its sole discretion reasonably deem appropriate;
provided, that (i) counsel retained by the Indemnifying Party is reasonably
satisfactory to the Indemnified Party and (ii) the Indemnifying Party will not
consent to any settlement or entry of judgment imposing any obligations on any
other party hereto other than financial obligations for which such party will be
indemnified hereunder, unless such party has consented in writing to such
settlement or judgment (which consent may be given or withheld in its sole
discretion) and (iii) the Indemnifying Party will not consent to any settlement
or entry of judgment unless, in connection therewith, the Indemnifying Party
obtains a full and unconditional release of the Indemnified Party from all
liability with respect to such suit, action, investigation claim or proceeding.
Notwithstanding the Indemnifying Party's election to assume the defense or
investigation of such claim, action or proceeding, the Indemnified Party shall
have the right to employ separate counsel and to participate in the defense or
investigation of such claim, action or proceeding, which participation shall be
at the expense of the Indemnifying Party, if (i) on the advice of counsel to the
Indemnified Party use of counsel of the Indemnifying Party's choice could be
expected to give rise to a material conflict of interest, (ii) the Indemnifying
Party shall not have employed counsel reasonably satisfactory to the Indemnified
Party to represent the Indemnified Party within a reasonable time after notice
of the assertion of any such claim or institution of any such action or
Page 23
proceeding, (iii) if the Indemnifying Party shall authorize the Indemnified
Party to employ separate counsel at the Indemnifying Party's expense or (iv)
such action shall seek relief other than monetary damages against the
Indemnified Party.
(e) The Company and the Investors agree that any payment of Losses made
hereunder will be treated by the parties on their tax returns as an adjustment
to the purchase price of and the Notes. If, notwithstanding such treatment by
the parties, a final determination with respect to the Indemnified Party or any
of its Affiliates causes any such payment not to be treated as an adjustment to
purchase price of and the Notes, then the Indemnifying Party shall indemnify the
Indemnified Party for any taxes payable by the Indemnified Party or any
subsidiary by reason of the receipt of such payment (including any payments
under this 8.1(e)), determined at an assumed marginal tax rate equal to the
highest marginal tax rate then in effect for corporate taxpayers in the relevant
jurisdiction.
(f) The obligations of the Indemnifying Party under this Section 8.1 shall
survive the transfer or redemption of the Notes, or the closing or termination
of any Transaction Document. The agreements contained in this Section 8.1 shall
be in addition to any other rights of the Indemnified Party against the
Indemnifying Party or others. The Indemnifying Party consents to personal
jurisdiction, service and venue in any court in the State of
New York.
(g) All obligations of the Investors hereunder shall be several and not joint.
If any Investor fails to exchange shares of Original Preferred Stock or Original
Warrants for the Notes and its pro rata portion of the Cash Proceeds or
otherwise defaults on any liability or obligation under this Agreement, no other
Investor will have any obligation to purchase any such Notes or take or refrain
from taking any action on account of such defaulting Investor.
8.2 Notices.
All notices, demands, requests, consents, approvals or other
communications (collectively, "Notices") required or permitted to be given
hereunder or which are given with respect to this Agreement shall be in writing
and shall be personally served, delivered by reputable air courier service with
charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
addressed as set forth below, or to such other address as such party shall have
specified most recently by written notice. Notice shall be deemed given on the
date of service or transmission if personally served or transmitted by telegram,
telex or facsimile. Notice otherwise sent as provided herein shall be deemed
given on the next Business Day following delivery of such notice to a reputable
air courier service. Notices shall be delivered as follows:
(a) If to the Company:
Infocrossing, Inc.
0 Xxxxxxxx Xxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attn: Xxxx Xxxxxxxx,
Chief Executive Officer
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Page 00
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
(b) if to any Investor, to such Investor at its address as set forth on Schedule
A:
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx
& Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxxx X. Xxxx, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
and
Xxxxxxxx & Xxxxx LLP
000 Xxxxxxxxx Xxxxxx X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxx X. Director, Esq.
Telephone: (000) 000-0000
Fax: (000) 000-0000
8.3 Governing Law.
This Agreement shall be governed by, interpreted under, and
construed in accordance with the laws of the State of
New York, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law thereof.
8.4 Termination.
(a) This Agreement may be terminated as between the Company and any Investor (i)
at any time prior to the Closing Date by mutual written agreement of the Company
and such Investor, (ii) if the Closing shall not have occurred on or prior to
November 1, 2003, by either the Company or such Investor, at any time after
November 1, 2003, provided that the right to terminate this Agreement under this
Section 8.4(a)(ii) shall not be available to any party whose failure to fulfill
any obligation under this Agreement was the cause of or resulted in the failure
of the Closing to occur on or before such date, (iii) if any Governmental
Authority shall have issued a nonappealable final order, decree or ruling or
taken any other action having the effect of permanently restraining, enjoining
or otherwise prohibiting the transactions contemplated by this Agreement, by
either the Company or such Investor, (iv) if either the Company or such Investor
shall have breached any of its material obligations under this Agreement, by the
non-breaching party, or (v) if an event described in Section 7.2(l) shall have
occurred, by such Investor. Any party desiring to terminate this Agreement
pursuant to clauses 8.4(a)(ii), (iii), (iv) or (v) shall promptly give notice of
such termination to the other parties.
(b) If this Agreement is terminated as between the Company and any Investor, as
permitted by Section 8.4(a), such termination shall be without liability of any
party (or any stockholder, director, officer, partner, employee, agent,
consultant or representative of such party) to any other party to this
Agreement; provided, that if such termination shall result from the willful (a)
Page 25
failure of any party to fulfill a condition to the performance of the
obligations of the other parties, (b) failure to perform a covenant of this
Agreement or (c) breach by any party hereto of any representation or warranty
contained herein, such failing or breaching party shall be fully liable for any
and all losses incurred or suffered by the other parties as a result of such
failure or breach. The provisions of Sections 1.1, 8.2, 8.3, this Section 8.4,
Sections 8.5, 8.8, 8.10, 8.11, 8.12, 8.13, 8.14, 8.16, 8.18 and 8.19 and shall
survive any termination hereof pursuant to Section 8.4(a).
8.5 Entire Agreement.
As between the Company and the Investors, this Agreement and
the Transaction Documents (including all agreements entered into pursuant hereto
and thereto and all certificates and instruments delivered pursuant hereto and
thereto) constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede all prior and contemporaneous agreements,
representations, understandings, negotiations and discussions between the
parties, whether oral or written, with respect to the subject matter hereof.
8.6 Modifications and Amendments.
No amendment, modification or termination of this Agreement as
between the Company and the Investors shall be binding on the Company and all
Investors unless executed in writing by the Company, the MidOcean Investor and
the Sandler Investors, provided that no such action which adversely affects the
rights of any Investor in a manner that does not adversely affect all other
Investors equally may be made without such Investor's written consent.
8.7 Waivers and Extensions.
Any party to this Agreement may waive any condition, right,
breach or default that such party has the right to waive, provided that such
waiver will not be effective against the waiving party unless it is in writing,
is signed by such party, and specifically refers to this Agreement; provided,
however, that the MidOcean Investor and the Sandler Investors may waive any
condition, right, breach or default on behalf of all Investors unless such
waiver adversely affect the rights of any Investor in a manner that does not
adversely affect all other Investors equally in which case such Investor must
consent to such waiver. Waivers may be made in advance or after the right waived
has arisen or the breach or default waived has occurred. Any waiver may be
conditional. No waiver of any breach of any agreement or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach thereof
nor of any other agreement or provision herein contained. No waiver or extension
of time for performance of any obligations or acts shall be deemed a waiver or
extension of the time for performance of any other obligations or acts.
8.8 Titles and Headings.
Titles and headings of sections of this Agreement are for
convenience only and shall not affect the construction of any provision of this
Agreement.
8.9 Exhibits and Schedules.
Each of the Exhibits and schedules referred to herein and
attached hereto is an integral part of this Agreement and is incorporated herein
by reference.
8.10 Expenses.
Page 26
All costs and expenses incurred in connection with this
Agreement shall be paid by the party incurring such cost or expense; provided,
however, that upon the Closing, the Company shall reimburse the Investors and
their Affiliates or pay, upon presentation of reasonably satisfactory
documentation, the reasonable out-of-pocket costs, fees and expenses incurred by
the Investors and their Affiliates (including, without limitation, the fees and
expenses of no more than one law firm for each of the MidOcean Investor and its
Affiliates, on the one hand, and the Sandler Investors and their Affiliates, on
the other hand, and the fees and expenses of tax and accounting consultants and
advisors) in connection with the due diligence, examination, review,
documentation, and/or the closing of the Exchange and the transactions
contemplated by this Agreement.
8.11 Press Releases and Public Announcements.
All public announcements or disclosures relating to the
Exchange or this Agreement shall be made only if mutually agreed upon by the
Company and the Investors, except to the extent the Company or any Investor
determines, in good faith, after consulting with counsel, that such disclosure
is necessary or appropriate under Applicable Law, provided that (a) any such
required disclosure shall only be made, to the extent consistent with Applicable
Law and (b) no such announcement or disclosure (except as required by Applicable
Law) shall identify any Investor without such Investor's prior consent.
8.12 Assignment; No Third Party Beneficiaries.
This Agreement and the rights, duties and obligations
hereunder may not be assigned or delegated by the Company without the prior
written consent of the MidOcean Investor and the Sandler Investors, and may not
be assigned or delegated by any Investor without the Company's prior written
consent (not to be unreasonably withheld) except that any Investor may assign
any or all of its rights and obligations under this Agreement to any one or more
of its Permitted Transferees that expressly assumes the obligations of such
Investor hereunder in a writing in form and substance reasonably satisfactory to
the Company. Any assignment or delegation of rights, duties or obligations
hereunder made by the Company without the prior written consent of the Investor,
shall be void and of no effect. This Agreement and the provisions hereof shall
be binding upon and shall inure to the benefit of each of the parties and their
respective successors and permitted assigns. This Agreement is not intended to
confer any rights or benefits on any Persons other than the parties hereto,
except as expressly set forth in Section 8.1, this Section 8.12 or Section 8.18.
8.13 Severability.
This Agreement shall be deemed severable, and the invalidity
or unenforceability of any term or provision hereof shall not affect the
validity or enforceability of this Agreement or of any other term or provision
hereof. Furthermore, in lieu of any such invalid or unenforceable term or
provision, the parties hereto intend that there shall be added as a part of this
Agreement a provision as similar in terms to such invalid or unenforceable
provision as may be possible and be valid and enforceable.
8.14 Counterparts.
This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which taken together shall constitute
one and the same instrument.
Page 27
8.15 Further Assurances.
As between the Company and the Investors, each party hereto,
upon the request of any other party hereto, shall do all such further acts and
execute, acknowledge and deliver all such further instruments and documents as
may be necessary or desirable to carry out the transactions contemplated by this
Agreement, including, in the case of the Company, such acts, instruments and
documents as may be necessary or desirable to convey and transfer to the
Investors to be purchased by them hereunder.
8.16 Remedies Cumulative.
The remedies provided herein shall be cumulative and shall not
preclude the assertion by any party hereto of any other rights or the seeking of
any remedies against the other party hereto.
8.17 Specific Performance.
The parties hereto agree that the remedy at law for any breach
of this Agreement may be inadequate, and that as between the Company and the
Investors, any party by whom this Agreement is enforceable shall be entitled to
specific performance in addition to any other appropriate relief or remedy. Such
party may, in its sole discretion, apply to a court of competent jurisdiction
for specific performance or injunctive or such other relief as such court may
deem just and proper in order to enforce this Agreement as between the Company
and the Investors, or prevent any violation hereof, and, to the extent permitted
by Applicable Law as between the Company and the Investors, each party waives
any objection to the imposition of such relief.
8.18 No Investor Affiliate Liability.
No Investor Affiliate shall have any liability or obligation
of any nature whatsoever in connection with or under this Agreement or the
transactions contemplated hereby, and the Company hereby waives and releases all
claims of any such liability and obligation, it being understood that no such
Person or entity (other than the Investors) shall be liable for or in respect of
this Agreement with the transactions contemplated hereby.
8.19 Confidentiality.
(a) Each of the parties hereto agrees that it will not (i) use, disseminate, or
in any way disclose any Confidential Information disclosed to it by the other
party hereto, to any person, firm or business, except to the extent necessary
(x) in the case of any Investor, to manage its investment (including any sale of
all or any portion thereof), to discharge its fiduciary or regulatory
obligations or for any other purpose which the Company may hereafter authorize
in writing and (y) in the case of the Company, in order to discharge any
fiduciary or regulatory obligation or for any other purpose which the MidOcean
Investor and the Sandler Investors may hereafter authorize in writing, or (ii)
use any Confidential Information of the other party for its own benefit or the
benefit of any third party. Each of the parties, agrees that such it shall treat
all Confidential Information received from the other party, with the same degree
of care as the receiving party accords to its own Confidential Information, but
in no case less than reasonable care.
(b) Notwithstanding anything to the contrary contained in the immediately
preceding paragraph (a) the disclosure by any party hereto of any Confidential
Information of the other party (i) to any Affiliate of such party, or to any
officer, director, employee, agent, representative, attorney or other advisor of
Page 28
such party or any Affiliate of such party, who agrees to be bound by the
provisions of this Section 8.19, (ii) to any foreign or domestic governmental or
quasi-governmental regulatory authority, including, without limitation, the
Federal Reserve Bank of
New York or any stock exchange or other self-regulatory
organization having jurisdiction over such party, (iii) in response to an order
by a court or other Governmental Authority, (iv) which is otherwise required by
Applicable Law or regulation (including any rule or regulation of any stock
exchange or automated quotation system on which such party is listed or traded)
or (v) which is necessary or advisable to establish the rights of either party
under this Agreement, shall not be considered to be a breach of this Agreement
by the party making such disclosure; provided, however, that the party required
to make such disclosure pursuant to clause (iii), (iv) or (v) hereof shall
provide written notice thereof to the party which owns such Confidential
Information to enable such party to seek a protective order or otherwise prevent
such disclosure of its Confidential Information.
(c) Notwithstanding anything to the contrary in this Section 8.19, any party to
this Agreement (and each employee, representative, or other agent of any party
to this Agreement) may disclose to any and all Persons, without limitation of
any kind, the tax treatment and tax structure of the transactions contemplated
by this Agreement, and all materials of any kind (including opinions or other
tax analyses) related to such tax treatment and tax structure; provided that
this sentence shall not permit any Person to disclose the name of, or other
information that would identify, any party to such transactions or to disclose
confidential commercial information regarding such transactions.
8.20 Legal Representation.
It is acknowledged by each of the Investors that the Sandler
Investors have retained Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP to act as
their counsel in connection with the transactions contemplated by the
Transaction Documents and that Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP has
not acted as counsel for any of the other Investors in connection with the
transaction contemplated by the Transaction Documents and that none of such
other Investors has the status of a client of Xxxx, Weiss, Rifkind, Xxxxxxx &
Xxxxxxxx for conflict of interest or any other purposes as a result thereof.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
INFOCROSSING, INC.
By: /s/ Xxxx Xxxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxxx
Title: Chairman and Chief Executive
Officer
Page 29
MIDOCEAN CAPITAL INVESTORS, L.P.
By: MidOcean Capital Partners, L.P.,
its General Partner
By: Existing Fund GP, Ltd.,
its General Partner
By: /s/ Xxxxxx Spring
-----------------------------------------
Name: Xxxxxx Spring
Title: Principal
SANDLER CAPITAL PARTNERS V, L.P.
By: Sandler Investment Partners, L.P.,
General Partner
By: Sandler Capital Management,
General Partner
By: MJDM Corp., a General Partner
By: /s/ Xxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxxx
Title: President
SANDLER CAPITAL PARTNERS V FTE, L.P.
By: Sandler Investment Partners, L.P.,
General Partner
By: Sandler Capital Management,
General Partner
By: MJDM Corp., a General Partner
By: /s/ Xxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxxx
Title: President
Page 30
SANDLER CAPITAL PARTNERS V GERMANY, L.P.
By: Sandler Investment Partners, L.P.,
General Partner
By: Sandler Capital Management,
General Partner
By: MJDM Corp., a General Partner
By: /s/ Xxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxxx
Title: President
SANDLER TECHNOLOGY PARTNERS SUBSIDIARY, LLC
By: Sandler Technology Partners, L.P.,
Manager
By: Sandler Investment Partners, L.P.,
General Partner
By: Sandler Capital Management,
General Partner
By: MJDM Corp., a General Partner
By: /s/ Xxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxxx
Title: President
SANDLER CO-INVESTMENT PARTNERS, L.P.
By: Sandler Capital Management,
General Partner
By: MJDM Corp., a General Partner
By: /s/ Xxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxxx
Title: President
Page 31
PRICE FAMILY LIMITED PARTNERS
By: /s/ Xxxxxxx Xxxxx
---------------------------------------
Name: Xxxxxxx Xxxxx
Title: General Partner
Schedule A
Original Preferred Original Warrants Aggregate Principal
Name Address Stock Amount of Notes Cash Proceeds
---------------------------- -------------------------- ------------------ ----------------- --------------------- -----------------
MidOcean Capital 000 Xxxx Xxxxxx 78,688.5 1,265,963.0 $ 12,520,875.00 $ 27,545,925.00
Investors, L.P. 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax:
Attn:
---------------------------- -------------------------- ------------------ ----------------- --------------------- -----------------
Sandler Capital Partners 000 Xxxxx Xxxxxx 50,892.0 818,763.0 $ 8,097,892.00 $ 17,815,362.00
V, L.P. 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attn:
---------------------------- -------------------------- ------------------ ----------------- --------------------- -----------------
Sandler Capital Partners V 000 Xxxxx Xxxxxx 18,821.0 302,799.0 $ 2,994,801.00 $ 6,588,563.00
FTE, L.P. 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attn:
---------------------------- -------------------------- ------------------ ----------------- --------------------- -----------------
Sandler Capital Partners V 000 Xxxxx Xxxxxx 1,893.5 30,464.3 $ 301,308.00 $ 662,879.00
Germany, L.P. 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attn:
---------------------------- -------------------------- ------------------ ----------------- --------------------- -----------------
Sandler Technology 000 Xxxxx Xxxxxx 5,245.9 84,397.5 $ 834,724.00 $ 1,836,392.00
Partners Subsidiary, LLC 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attn:
---------------------------- -------------------------- ------------------ ----------------- --------------------- -----------------
Sandler Co- Investment 000 Xxxxx Xxxxxx 1,311.5 21,099.4 $ 208,675.00 $ 459,084.00
Partners L.P. 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attn:
---------------------------- -------------------------- ------------------ ----------------- --------------------- -----------------
Price Family Limited 262.3 4,219.9 $ 41,725.00 $ 91,795.00
Partners
---------------------------- -------------------------- ------------------ ----------------- --------------------- -----------------
Total: 157,114.7 2,527,706.1 $ 25,000,000.00 $ 55,000,000.00
---------------------------- -------------------------- ------------------ ----------------- --------------------- -----------------
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