[Execution Copy]
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
THIS PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (this "Agreement"),
dated as of August 17, 2001, is made and entered into between Cimnet, Inc., a
Delaware corporation (the "Company"), and General Electric Company, a New York
corporation, acting through its GE Power Systems business unit ("Purchaser").
WHEREAS, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act of 1933) as amended
(the "Securities Act"), the Company desires to issue and sell to the Purchaser,
and the Purchaser desires to purchase from the Company, (i) 746,965 shares of
the Company's Series "A" Convertible Preferred Stock (the "Shares"), and (ii)
warrants exercisable for a minimum of 100,000 shares, and up to an additional
200,000 shares, of the Company's common stock, $0.0001 par value per share (the
"Common Stock"), a form of which is attached hereto as Exhibit A (the
"Warrants"; the Shares and the Warrants shall be collectively referred to as the
"Securities").
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchaser agree
as follows:
ARTICLE 1
PURCHASE AND SALE
1.1 The Closing.
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(a) The Closing.
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(i) Subject to the terms and conditions set forth in
this Agreement, the Company shall issue and sell to the Purchaser, and the
Purchaser shall, purchase from the Company, the Securities for the purchase
price of one million dollars ($1,000,000). The closing of the purchase and sale
of the Securities (the "Closing") shall take place at the offices of Berlack,
Israels & Xxxxxxxx LLP ("Xxxxxxx Israels"), 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, immediately following the execution hereof or such later date as the
parties shall agree. The date of the Closing is hereinafter referred to as the
"Closing Date".
(ii) On the Closing Date, the parties shall deliver or
shall cause to be delivered the following: (A) the Company shall deliver to the
Purchaser: (1) a certificate representing the Shares registered in the name of
the Purchaser, (2) the Warrant, registered in the name of the Purchaser, (3) an
executed Registration Rights Agreement, dated the date hereof, between the
Company and the Purchaser, a form of which is attached hereto as Exhibit B (the
"Registration Rights Agreement"), (4) a copy of the Certificate of Designations
(as defined below) and the Certificate of Incorporation of the Company certified
by the Secretary of State of the State of Delaware; (5) incumbency certificates
dated the Closing Date for the officers of the Company executing any of the
Transaction Documents and any documents delivered in connection with the
Transaction Documents and the Closing; (6) a certificate of the Secretary or an
Assistant Secretary of the Company, dated as of the Closing Date, certifying as
to attached copies of the Certificate of Incorporation, Bylaws and resolutions
adopted by the Board of Directors of the Company authorizing the Certificate of
Designation, the execution and delivery by the Company of the Transaction
Documents and the consummation by the Company of the transactions contemplated
thereby, including the issuance and sale of the Shares and the reservation for
issuance of the Underlying Shares (as hereafter defined); (7) a certificate of
the Secretary of State of the State of Delaware dated within 10 days of the
Closing, certifying that the Company is in good standing in the State of
Delaware; (8) an opinion dated the Closing Date of Berlack, Israels & Xxxxxxxx
LLP, counsel to the Company in the form attached hereto as Exhibit D; and (9) a
Voting Agreement executed by Xxxx Xxxxxxxxxx, in the form attached hereto as
Exhibit E (the "Voting Agreement"), and (10) such other certificates or
documents as the Purchaser or its counsel may reasonably request relating to the
transactions contemplated hereby, and (B) the Purchaser shall deliver to the
Company: (1) the purchase price of one million dollars ($1,000,000) in United
States dollars in immediately available funds by wire transfer to an account
designated in writing by the Company for such purpose, and (2) an executed
Registration Rights Agreement, and (3) an executed Voting Agreement.
1.2 Certain Defined Terms. For purposes of this Agreement,
"Conversion Price" shall have the meanings set forth in the Certificate of
Designation, Rights, Preferences and Limitations of Series A Convertible
Preferred Stock of the Company, a form of which is attached hereto as Exhibit C
(the "Certificate of Designation"); "Business Day" shall mean any day except
Saturday, Sunday and any day which shall be a federal legal holiday or a day on
which banking institutions in the State of New York are authorized or required
by law or other governmental action to close; A "Person" means an individual or
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or subdivision thereof) or other entity of any kind.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the Company. The Company hereby
makes the following representations and warranties to the Purchaser:
(a) Organization and Qualification. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware with the requisite corporate power and authority to own and
use its properties and assets and to carry on its business as currently
conducted. The Company has no subsidiaries other than as set forth in Schedule
2.1(a) (collectively the "Subsidiaries"). Each of the Subsidiaries is an entity,
duly incorporated or otherwise organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted. Each
of the Company and the Subsidiaries is duly qualified to do business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the aggregate, (x)
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adversely affect the legality, validity or enforceability of the Securities or
any of this Agreement, the Registration Rights Agreement, the Certificate of
Designations, the Voting Agreement or the Warrants (collectively, the
"Transaction Documents"), (y) have or result in a material adverse effect on the
results of operations, assets, prospects, or condition (financial or otherwise)
of the Company and the Subsidiaries, taken as a whole, or (z) adversely impair
the Company's ability to perform fully on a timely basis its obligations under
any of the Transaction Documents (any of (x), (y) or (z), a "Material Adverse
Effect").
(b) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company. Each of
the Transaction Documents has been duly executed by the Company and, when
delivered in accordance with the terms hereof, will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and principles of equity. Neither the Company nor
any Subsidiary is in violation of any of the provisions of its respective
certificate or articles of incorporation, by-laws or other organizational or
charter documents.
(c) Capitalization. The number of authorized, issued and
outstanding capital stock of the Company is set forth in Schedule 2.1(c). The
Company owns all of the capital stock of each Subsidiary. The outstanding shares
of Common Stock are duly authorized, validly issued, fully paid and
nonassessable. No shares of Common Stock are entitled to preemptive or similar
rights, nor is any holder of securities of the Company entitled to preemptive or
similar rights arising out of any agreement or understanding with the Company,
whether by virtue of any of the Transaction Documents or otherwise. Except as a
result of the purchase and sale of the Securities and except as disclosed in
Schedule 2.1(c), there are no outstanding options, warrants, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into or exchangeable for, or giving any Person
any right to subscribe for or acquire, any equity securities of the Company, or
contracts, commitments, understandings, or arrangements by which the Company or
any Subsidiary is or may become bound to issue equity securities of the Company,
including without limitation additional shares of Common Stock or securities or
rights convertible or exchangeable into shares of Common Stock.
(d) Issuance of the Securities. When issued in accordance with
this Agreement, the Shares will be (i) duly authorized, validly issued, fully
paid and non-assessable, (ii) will have the rights, preferences and privileges
described in the Certificate of Designations and (iii) will not be issued in
violation of, and will not be subject to, any preemptive or subscription rights
and will not result in the antidilution provisions of any security of the
Company becoming applicable. The Company will have (and will, at all times while
the Securities are outstanding, maintain) an adequate reserve of duly authorized
shares of Common Stock, reserved for issuance to the holders of the Securities,
to enable it to perform its conversion and other obligations under this
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Agreement, the Warrant and the Certificate of Designations. All such authorized
shares of Common Stock shall be duly reserved for issuance to the holders of the
Securities. The shares of Common Stock issuable upon conversion of the Shares
and upon exercise of the Warrants are collectively referred to herein as the
"Underlying Shares". When issued in accordance with the Securities, the
Underlying Shares will be duly authorized, validly issued, fully paid and
nonassessable.
(e) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of the Company's or any Subsidiary's certificate or
articles of incorporation, bylaws or other charter documents (each as amended
through the date hereof), or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing a Company or Subsidiary
debt or otherwise) or other understanding to which the Company or any Subsidiary
is a party or by which any property or asset of the Company or any Subsidiary is
bound or affected, or result in the imposition of any lien of any nature
whatsoever upon any of the properties or assets of the Company, or (iii) result
in a violation of any law, rule, regulation, order, judgment, injunction, decree
or other restriction of any court or governmental authority to which the Company
or a Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected. The business of the Company is not being conducted in
violation of any law, ordinance or regulation of any governmental authority,
except for violations which, individually or in the aggregate, could not have or
result in a Material Adverse Effect.
(f) Filings, Consents and Approvals. Neither the Company nor any
Subsidiary is required to obtain any consent, waiver, authorization or order of,
give any notice to, or make any filing or registration with, any court or other
federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) the filing with the Commission of a
registration statement meeting the requirements set forth in the Registration
Rights Agreement and covering the resale of the Underlying Shares by the
Purchaser (the "Underlying Shares Registration Statement"), (ii) applicable Blue
Sky filings, and (iii) in all other cases where the failure to obtain such
consent, waiver, authorization or order, or to give such notice or make such
filing or registration could not have or result in, individually or in the
aggregate, a Material Adverse Effect (collectively, the "Required Approvals").
(g) Litigation; Proceedings. There is no action, suit, inquiry,
notice of violation, proceeding or investigation pending or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an "Action") which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Securities or (ii) could, if there were an
unfavorable decision, individually or in the aggregate, have or result in a
Material Adverse Effect. There is no outstanding judgment, order, injunction or
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decree of any court, arbitrator, governmental or administrative agency or
regulatory authority applicable to the Company or any of its properties, assets
or business. Neither the Company nor any Subsidiary, nor any director or officer
thereof, is or has been the subject of any Action involving a claim of violation
of or liability under federal or state securities laws or a claim of breach of
fiduciary duty. The Company does not have pending before the Commission any
request for confidential treatment of information and the Company has no
knowledge of any expected such request that would be made prior to the
Effectiveness Date (as defined in the Registration Rights Agreement). There has
not been, and to the best of the Company's knowledge there is not pending or
contemplated, any investigation by the Commission involving the Company or any
current or former director or officer of the Company.
(h) No Default or Violation.
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(i) Neither the Company nor any Subsidiary (A) is in default
under or in violation of (and no event has occurred which has not been waived
which, with notice or lapse of time or both, would result in a default by the
Company or any Subsidiary under), nor has the Company or any Subsidiary received
notice of a claim that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound, (B) is in
violation of any judgment or order of any court, arbitrator or governmental
body, or (C) is in violation of any statute, rule or regulation of any
governmental authority, in case of clause (C) above, except as could not
individually or in the aggregate, have or result in a Material Adverse Effect.
(ii) Not in limitation of the foregoing subparagraph (i), there
are no past or present (or, to the knowledge of the Company, future) events,
conditions, circumstances, activities, practices, incidents, actions or plans
which may interfere with or prevent compliance or continued compliance by the
Company with any laws relating to pollution or protection of the environment or
with any regulation, code, plan, order, decree, judgment, injunction, notice or
demand letter issued, entered, promulgated or approved thereunder, or, to the
knowledge of the Company, which may give rise to any common law or legal
liability of the Company including liability under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 or similar state
or local laws, or otherwise form the basis of any claim, action, demand, suit,
proceeding, hearing, notice of violation, study or investigation against or
affecting the Company, based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge, release or threatened release into the environment, of any
pollutant, contaminant, chemical, or industrial, toxic or hazardous substance or
waste.
(i) Private Offering. Assuming the accuracy of the
representations and warranties of the Purchaser set forth in Sections
2.2(b)-(g), the offer, issuance and sale of the Securities to the Purchaser as
contemplated hereby are exempt from the registration requirements of the
Securities Act. Neither the Company nor any Person acting on its behalf has
taken or is, to the knowledge of the Company, contemplating taking any action
which could subject the offering, issuance or sale of the Securities to the
registration requirements of the Securities Act including soliciting any offer
to buy or sell the Securities by means of any form of general solicitation or
advertising.
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(j) SEC Reports; Financial Statements. The Company has filed all
reports required to be filed by it under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), including, without limitation, all filings
required pursuant to Sections 13(a) and 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company was required by
law to file such material) (the foregoing materials being collectively referred
to herein as the "SEC Reports" and, together with the Schedules to this
Agreement, the "Disclosure Materials") on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension. As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations
of the Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
("GAAP"), except as may be otherwise specified in such financial statements or
the notes thereto, and fairly present the financial position of the Company and
its consolidated subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments. Since
March 31, 2001, except as specifically disclosed in the SEC Reports, (a) there
has been no event, occurrence or development that has or that could result in a
Material Adverse Effect, (b) the Company has not incurred any liabilities
(contingent or otherwise) other than (x) liabilities incurred in the ordinary
course of business consistent with past practice and (y) liabilities not
required to be reflected in the Company's financial statements pursuant to GAAP
or required to be disclosed in filings made with the Commission, (c) the Company
has not altered its method of accounting or the identity of its auditors and (d)
the Company has not declared or made any payment or distribution of cash or
other property to its stockholders or officers or directors (other than in
compliance with existing Company stock option plans) with respect to its capital
stock, or purchased, redeemed (or made any agreements to purchase or redeem) any
shares of its capital stock.
(k) Investment Company. The Company is not, and is not an
"affiliate" (as defined in Rule 405 under the Securities Act) of, an "investment
Company" within the meaning of the Investment Company Act of 1940, as amended.
(l) Certain Fees. No fees or commissions will be payable by the
Company to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Purchaser shall have no obligation with
respect to any fees or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this Section that may be due in
connection with the transactions contemplated by this Agreement.
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(m) Solicitation Materials. Neither the Company nor any Person
acting on the Company's behalf has solicited any offer to buy or sell the
Securities by means of any form of general solicitation or advertising.
(n) Assets. Except as disclosed on Schedule 2.1(n), the Company
has good and valid title to, or a valid leasehold interest in, as applicable,
all material properties, interests, rights and assets necessary to continue to
operate the business of the Company consistent with current and historical
practice and as presently contemplated to be conducted, free and clear of all
liens except statutory liens for the payment of current taxes that are not yet
delinquent and which do not affect the properties or assets of the Company in
any material respect.
(o) Intellectual Property and Related Matters.
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(i) "Intellectual Property" means rights in (A) any patent,
copyright, trademark, service marks, trade dress, trade name, licenses,
franchises or domain name (regardless of whether such rights have been
registered), (B) registrations and applications for registration of any of the
rights listed in clause (A) of this definition, (C) trade secrets, confidential
information, know-how, rights, processes, goodwill and any other intangible
assets of the Company, (D) data of any kind, including any rights to use
Personally-Identifiable Data (as hereafter defined), (E) the likeness, name,
signature, voice or other personal characteristics of any person, and (F) any
other proprietary or intellectual property rights of any kind.
"Personally-Identifiable Data" means data containing personally-identifiable
information relating to any natural Person, or any e-mail address. Set forth on
Schedule 2.1(o)(i) is a true and complete list of Intellectual Property owned or
filed by, or licensed to the Company, other than commercially available software
(for which the Company represents that it has adequate licenses). With respect
to registered patents and trademarks, Schedule 2.1(o)(i) sets forth a list of
all jurisdictions which such patents or trademarks are registered or applied for
and all registration and application numbers. The Company has all rights to the
Intellectual Property used in connection with the business of the Company as
presently conducted, and except as set forth on Schedule 2.1(o)(i), the Company
owns, or has the right to use, execute, reproduce, display, perform, modify,
enhance, distribute, prepare derivative works of and sublicense, without payment
to any other Person, all such Intellectual Property as currently used in the
business, free and clear of all liens (including source code escrow
arrangements). The consummation of the transactions contemplated hereby will not
conflict with, alter or impair any such right. The Company has not entered into
any agreement to indemnify any other Person against any charge of infringement
of any third party Intellectual Property, except infringement indemnities agreed
to in the ordinary course and included as part of the Company's contracts for
the license or sale of its products or services. The Company has not entered
into any agreement granting any third party the right to bring infringement
actions or otherwise to enforce rights with respect to the Company's
Intellectual Property.
(ii) Except for software licenses in the ordinary course of
business as set forth on Schedule 2.1(o)(ii), the Company has not granted any
option or right to (A) purchase its Intellectual Property or (B) to market or
distribute its Intellectual Property. To the Company's knowledge, the conduct of
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the business of the Company as presently conducted does not violate, conflict
with or infringe the Intellectual Property of any other Person. Except as set
forth in Schedule 2.1(o)(ii), no claims are pending, or to the knowledge of the
Company, threatened, against the Company by any Person with respect to the
ownership, validity, enforceability, effectiveness or use of any Intellectual
Property and, since its inception, the Company has not received any
communications alleging that the Company has violated any rights relating to
Intellectual Property of any Person.
(p) Transactions with Affiliates. Except as set forth in
Schedule 2.1(p), no current or former partner, director, officer or stockholder
(direct or indirect) of the Company or any associate or to the knowledge of the
Company, any affiliate of any thereof, or any relative with a relationship no
more remote than first cousin of any of the foregoing, is presently, or during
the 12-month period ending on the date hereof has been, (i) a party to any
transaction with the Company (including any contract, agreement or other
arrangement providing for the furnishing of services by, or rental of real or
personal property from, or otherwise requiring payments to, any such director,
officer or stockholder or such associate or affiliate or relative) or (ii) the
direct or indirect owner of an interest in any corporation, firm, association or
business organization which is a competitor, supplier or customer of the Company
(except for a passive investment (direct or indirect) in less than 5% of the
common stock of a company whose securities are traded on or quoted through a
national securities exchange or on the NASDAQ National Market System), nor does
any such Person receive income from any source other than the Company which
relates to the Company's business or should properly accrue to the Company.
(q) Taxes. The Company and the Subsidiaries have filed all tax
returns, federal, state, county and local, required to be filed by them, and the
Company and the Subsidiaries have paid all taxes shown to be due by such returns
as well as all other taxes, assessments and governmental charges which have
become due or payable, including without limitation all taxes which the Company
and the Subsidiaries are obligated to withhold from amounts owing to employees,
creditors and third parties. The Company and the Subsidiaries have established
adequate reserves for all taxes accrued but not yet payable. No deficiency
assessment with respect to or proposed adjustment of the Company's or the
Subsidiaries' federal, state, county or local taxes is pending or, to the best
of the Company's knowledge, threatened. There is no tax lien (other than for
current taxes not yet due and payable), whether imposed by any federal, state,
county or local taxing authority, outstanding against the assets, properties or
business of the Company or the Subsidiaries. These returns and reports are true
and correct in all material respects. The Company has not executed or filed with
any taxing authority any agreement, waiver or consent for the extension of the
period for assessment or collection of any taxes or the audit of any tax returns
or reports. The Company is not a party to any pending action or proceeding, nor,
to the knowledge of the Company, is any such action or proceeding threatened by
any governmental authority for the assessment or collection of taxes, interest,
penalties, assessments or deficiencies, and no claim for assessment or
collection of taxes, interest, penalties, assessments or deficiencies has been
asserted against the Company.
(r) Insurance. The Company and the Subsidiaries have maintained
valid policies of workers' compensation insurance and of insurance with respect
to their properties and business of the kinds and in the amounts not less than
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is customarily obtained by corporations of established reputation engaged in the
same or similar business and similarly situated, including, without limitation,
insurance against loss, damage, fire, theft, public liability and other risks.
(s) Labor Relations. None of the employees of the Company or any
Subsidiary is represented by any labor union, and there is no labor strike or
other labor trouble pending with respect to the Company or any Subsidiary
(including, without limitation, any organizational drive) or, to the best of the
Company's knowledge, threatened.
(t) ERISA. Except as set forth in Schedule 2.1(t), the Company
and the Subsidiaries do not have or otherwise contribute to or participate in,
and have not previously had , contributed to or participated in, within the last
three (3) years, any employee benefit plan subject to Section 3(1), and not
exempt under Section 4 of the Employee Retirement Income Security Act of 1974.
The Company and the Subsidiaries have made substantially all required
contributions or have reflected such contributions on their financial
statements. Except as set forth on Schedule 2.1(t), the Company and the
Subsidiaries have complied in all material respects with applicable laws with
respect to any such plans set forth in Schedule 2.1(t) or the liability to the
Company or the Subsidiaries does not exceed $100,000.
The Purchaser acknowledges and agrees that the Company has not made any
representations or warranties with respect to the transactions contemplated
hereby or the business, prospects or financial condition of the Company other
than those specifically set forth in this Section 2.1.
2.2 Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Company as follows:
(a) Organization; Authority. The Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by the
Transaction Documents and otherwise to carry out its obligations thereunder. The
purchase by the Purchaser of the Securities hereunder has been duly authorized
by all necessary action on the part of the Purchaser. Each of this Agreement and
the Registration Rights Agreement has been duly executed by the Purchaser, and
when delivered by the Purchaser in accordance with the terms hereof, will
constitute the valid and legally binding obligation of the Purchaser,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and principles
of equity.
(b) Investment Intent. The Purchaser is acquiring the Securities
as principal for its own account for investment purposes only and not with a
view to or for distributing or reselling such Securities or any part thereof,
without prejudice, however, to the Purchaser's right, subject to the provisions
of the Transaction Documents and the Certificate of Designation, at all times to
sell or otherwise dispose of all or any part of such Securities and/or the
Underlying Shares pursuant to an effective registration statement under the
Securities Act or under an exemption from such registration and in compliance
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with applicable federal and state securities laws. Nothing contained herein
shall be deemed a representation or warranty by the Purchaser to hold the
Securities for any period of time. The Purchaser is acquiring the Securities
hereunder in the ordinary course of its business. The Purchaser does not have
any agreement or understanding, directly or indirectly, with any Person to
distribute the Securities.
(c) Purchaser Status. At the time the Purchaser was offered the
Securities, it was, and at the date hereof it is an "accredited investor" as
defined in Rule 501(a) under the Securities Act.
(d) Experience of the Purchaser. The Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment. Purchaser understands and
acknowledges that there is limited trading volume in the shares of the Company's
common stock on the OTC Bulletin Board, and therefore, sales of shares of the
Company's common stock may cause a decrease in the market price thereof.
(e) Ability of the Purchaser to Bear Risk of Investment. The
Purchaser is able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such investment.
(f) Access to Information. The Purchaser acknowledges that it
has reviewed the SEC Reports and has been afforded (i) the opportunity to ask
such questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Company's
financial condition, results of operations, business, properties, management and
prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information which the Company possesses or
can acquire without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment and to verify the
accuracy and completeness of the information contained in the SEC Reports.
Neither such inquiries nor any other investigation conducted by or on behalf of
the Purchaser or its representatives or counsel shall modify, amend or affect
the Purchaser's right to rely on the truth, accuracy and completeness of the SEC
Reports and the Company's representations and warranties contained in the
Transaction Documents.
(g) General Solicitation. The Purchaser is not purchasing the
Securities as a result of or subsequent to any advertisement, article, notice or
other communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over television or radio or presented at
any seminar or any other general solicitation or general advertisement.
(h) Form S-3 Eligibility. The Purchaser acknowledges that the
Company is not presently eligible to register securities for resale under Form
S-3 promulgated under the Securities Act.
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(i) Reliance. The Purchaser understands and acknowledges that
(i) the Securities are being offered and sold to it without registration under
the Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption,
depends in part on, and the Company will rely upon the accuracy and truthfulness
of, the foregoing representations and the Purchaser hereby consents to such
reliance.
The Company acknowledges and agrees that the Purchaser has not made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2.
ARTICLE 3
OTHER AGREEMENTS OF THE PARTIES
3.1 Transfer Restrictions.
---------------------
(a) Other than (i) transfers to GE Capital Corporation, GE
Capital Equity Investments, Inc., or other wholly owned subsidiaries of GE
Capital Corporation or (ii) in accordance with Section 3.1(b) below, the
Purchasers may not sell, pledge, encumber, hypothecate or otherwise transfer the
Securities without the prior written approval of the Company, which approval
shall not be unreasonably withheld.
(b) The Securities and the Underlying Shares may only be
disposed of pursuant to an effective registration statement under the Securities
Act or pursuant to an available exemption from or in a transaction not subject
to the registration requirements of the Securities Act, and in compliance with
any applicable federal and state securities laws. In connection with any
transfer of Securities and the Underlying Shares other than pursuant to an
effective registration statement or to the Company, except as otherwise set
forth herein, the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor, the form and substance
of which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred Securities
under the Securities Act. Any such transferee shall agree in writing to be bound
by the terms of this Agreement and shall have the rights of a Purchaser under
this Agreement and the Registration Rights Agreement.
(c) The Purchaser agrees to the imprinting, so long as is
required by this Section 3.1(c), of the following legend on the Securities and
on any securities issued in connection with any exchange of securities
contemplated in this Agreement:
NEITHER THESE SECURITIES NOR THE SECURITIES INTO
WHICH THESE SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
11
BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.
3.2 Use of Proceeds. The Company shall use the net proceeds from the
sale of the Securities hereunder for working capital purposes.
3.3 Indemnification. The Company agrees to indemnify, defend and hold
harmless the Purchaser and its affiliates and controlling persons and their
respective officers, managers, members, partners, directors, stockholders,
employees, representatives and agents (all such Persons and entities being
collectively referred to as the "Indemnified Parties") from and against any and
all claims, demands, actions, causes of action, assessments, liabilities, costs
or expenses, including without limitation interest, penalties, fines, fees,
deficiencies, claims of damage, court and arbitration costs and reasonable fees
and disbursements of attorneys, accountants, consultants and other experts as
and when incurred or sustained by any Indemnified Party as a result of or
arising from or in connection with (i) any inaccuracy or breach of any
representation, warranty or covenant made by the Company in or pursuant to this
Agreement or any other Transaction Document, (ii) the use of proceeds of the
sale of the Securities or (iii) the fact that the Purchaser is or was an
investor in the Company. Notwithstanding the foregoing, the Company shall have
no liability for indemnification pursuant to this Section 3.3 for such losses,
demands, actions, causes of action, assessments, damages, liabilities, costs or
expenses arising out of the gross negligence or willful misconduct of the
Purchaser or arising solely out of market risk. The rights accorded to
Indemnified Parties under this Section 3.3 shall be in addition to any rights
and remedies that any Indemnified Party may have at law or in equity, by
separate agreement or otherwise. Payment of amounts due under this indemnity
shall be made promptly upon demand by the Indemnified Party as and when incurred
by wire transfer of immediately available funds to an account designated in
writing by the Indemnified Party.
3.4 Limitation on Issuance of Securities. Without the Purchaser's prior
written consent (which consent will not be unreasonably withheld, delayed or
conditioned), the Company shall not issue or sell any of its securities in a
public or private offering generating net proceeds in excess of one million
dollars ($1,000,000) until the later of: (i) the date on which a registration
statement relating to the resale of the Underlying Shares is declared effective
by the Securities and Exchange Commission ("SEC"); and (ii) March 31, 2002.
3.5 Redemption Right. In the event that a registration statement
relating to the resale of all of the Underlying Shares has not been declared
effective by the SEC within one hundred eighty (180) days following the Closing
Date or such later date as permitted under Section 2(g) of the Registration
Rights Agreement (the "Trigger Event"), then the Purchaser shall have the right
to require that the Company redeem all, but not less than all, of the Securities
at an aggregate redemption price equal to one million one hundred fifty thousand
dollars ($1,150,000), plus accrued and unpaid dividends. The Purchaser may
exercise its rights under this Section 3.5 by giving the Company written notice
thereof within twenty (20) days following the Trigger Event. The Company shall,
within thirty (30) days following receipt of such written notice, deliver the
12
redemption price to the Purchaser and this Agreement and the other Transaction
Documents shall terminate and shall be of no further force or effect. Whereupon,
the parties shall have no further obligations to the other whatsoever, this
being the Purchaser's exclusive remedy in the event such registration statement
has not been declared effective in accordance with the terms of the Transaction
Documents.
3.6 Board Representation. Immediately following the Closing, the
Company shall expand its Board of Directors and appoint a nominee of Purchaser
as a member of the Company's Board of Directors of the Purchaser to the Board of
Directors of the Company, such nominee to serve until the next annual meeting of
the Company's stockholder and until his/her successor is duly elected and
qualified. The Company shall cause a nominee of the Purchaser to be included in
the slate of directors proposed by the Company for election at each annual
meeting of the Company's stockholders until the earlier of (i) Purchaser
requests that the Company cease nominating a representative of Purchaser, (ii)
the date on which the Purchaser beneficially owns less than 375,000 shares of
the Company's common stock (or securities convertible or exercisable into shares
of the Company's common stock) (as adjusted for stock dividends, distributions,
splits, combinations or recapitalizations) and (iii) August 17, 2006.
3.7 Voting Agreement. Xxxx Xxxxxxxxxx, the founder, Chief Executive
Officer and Chairman of the Board of the Company, shall execute and deliver to
the Purchaser a Voting Agreement, a form of which is attached hereto as Exhibit
E.
3.8 D&O Insurance. As soon as practical, but no later than September
30, 2001, the Company shall obtain and maintain a directors and officers
liability insurance policy in full force and effect, and shall take all steps
necessary to fully indemnify all members of its Board of Directors to the
fullest extent permitted by law.
ARTICLE 4
MISCELLANEOUS
4.1 Fees and Expenses. Each party will pay all fees and expenses
incurred by it in connection with the transactions contemplated by this
Agreement, including legal, accounting environmental and other professional
fees.
4.2 Entire Agreement; Amendments. The Transaction Documents, together
with the Exhibits and Schedules thereto, contain the entire understanding (other
than with respect to any exchange of securities as contemplated herein) of the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters
(including but not limited to that certain Agreement for the Purchase of
Convertible Preferred Stock and Warrants for Common Stock between the Company
and the Purchaser, dated May 2001), which the parties acknowledge have been
merged into such documents, exhibits and schedules.
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4.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 6:30 p.m. (New York City
time) on a Business Day, (ii) the Business Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Agreement later than 6:30 p.m. (New York City
time) on any date and earlier than 11:59 p.m. (New York City time) on such date,
(iii) the Business Day following the date of mailing, if sent by nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given. The address for such notices and
communications shall be as follows:
14
If to the Company: CIMNET, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxxxxxxxx
With copies to: Berlack, Israels & Xxxxxxxx LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxxxx, Esq.
If to Purchaser: GE Power Systems
0000 Xxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx Xxxxxxx-Losique
Facsimile No.: (000) 000-0000
Attn: Xxxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
With a copy to: Long Xxxxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxxxx X. Short, Esq.
4.4 Amendments; Waivers. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company and the Purchaser or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.
4.5 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
4.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchaser. The Purchaser may not assign
this Agreement or any of the rights or obligations hereunder without the consent
of the Company. This provision shall not limit any Purchaser's right to transfer
securities pursuant to the other terms of this Agreement or transfer or assign
rights under the Registration Rights Agreement.
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4.7 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
4.8 Governing Law; Jurisdiction. The corporate laws of Delaware shall
govern all issues concerning the relative rights of the Company and its
stockholders. All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York, without
regard to the principles of conflicts of law thereof. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of the any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.
4.9 Survival. The representations, warranties, agreements and covenants
contained herein shall survive the Closing until the expiration of the statute
of limitations applicable to the matters covered thereby (giving effect to any
waiver, mitigation or extension of such statute of limitations), plus an
additional 60 days thereafter.
4.10 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
4.11 Severability. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affecting or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision which shall be a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.
4.12 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchaser will be entitled to specific performance of the obligations of the
Company under the Transaction Documents. The parties hereto agree that monetary
damages may not be adequate compensation for any loss incurred by reason of any
16
breach of obligations described in the foregoing sentence and hereby agrees to
waive in any action for specific performance of any such obligation the defense
that a remedy at law would be adequate.
4.13 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS, THE
SHARES, THE WARRANTS, OR THE UNDERLYING SHARES.
[Signatures located on following page.]
17
IN WITNESS WHEREOF, the parties hereto have caused this Stock and
Warrant Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
CIMNET, INC.
By: /s/ Xxxx Xxxxxxxxxx
-------------------------------------------
Name: Xxxx Xxxxxxxxxx
Title: Chief Executive Officer
GENERAL ELECTRIC COMPANY, acting
through its GE Power Systems business unit
By: /s/ Xxxxxxx Xxxxxxx Losique
----------------------------------------
Name: Xxxxxxx Xxxxxxx Losique
Title: Director, GEPS Equity Investments
18
