Exhibit 10.1
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "AGREEMENT") is made as of June 29, 1998,
among AppNet Systems, Inc., a Delaware corporation (the "COMPANY"), Smart
Technology, L.L.C. ("SMART TECHNOLOGY") and GTCR Xxxxxx Xxxxxx, L.L.C., a
Delaware limited liability company ("GTCR"). GTCR and Smart Technology are
referred to herein collectively as the "PURCHASERS." Except as otherwise
indicated herein, capitalized terms used herein are defined in Section 7 hereof.
WHEREAS, the Company was incorporated on November 6, 1997;
WHEREAS, the Company entered into a joint venture arrangement with
Commerce Direct, Inc., a Delaware corporation, on December 18, 1997;
WHEREAS, the Company acquired the assets of Arbor Intelligent Systems,
Inc., a Michigan corporation, on March 12, 1998;
WHEREAS, the Company acquired the assets of LOGEX International,
L.L.C., a Delaware limited liability company, on April 30, 1998;
WHEREAS, the Company currently has outstanding (i) 15,230,000 shares of
its common stock, par value $.0005 per share (the "COMMON STOCK"), (ii) 266,796
shares of Series A-1 Convertible Preferred Stock, par value $.001 per share,
(iii) a warrant to purchase 31,250 shares of its Series B-1 Convertible
Preferred Stock, par value $.001 per share; and (iv) a warrant to purchase
200,000 shares of Common Stock;
WHEREAS, the Company has debt outstanding to the following entities in
the following amounts: (i) $2,262,500 in principal, plus accrued interest owing
on notes payable to Silicon Valley Bank, a California-chartered bank, (ii)
$973,599 in principal, plus accrued interest owing on a subordinated note
payable to Smart Technology, L.L.C. (the "SMART TECHNOLOGY LOAN"), (iii)
$300,000 in principal, plus accrued interest due on a convertible note payable
to LOGEX International, L.L.C. and (iv) a second loan from Smart Technology,
L.L.C. in the amount of $100,000 (the "SECOND SMART TECHNOLOGY LOAN");
WHEREAS, the Company, in consultation with GTCR, has determined that
the Company's budgetary needs for the seven-month period beginning June 1, 1998
are as set forth in the pro forma monthly budget attached as EXHIBIT A hereto;
and
WHEREAS, the Purchasers desire to invest in the Company.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, hereto agree as follows:
Section 1. AUTHORIZATION AND CLOSING.
1A. AUTHORIZATION OF THE STOCK. The Company shall authorize the
issuance and sale to the Purchasers of up to 96,500 shares of its Class A
Cumulative Redeemable Preferred Stock, par value $.01 per share (the "CLASS A
PREFERRED"), and 32,943,560 shares of Common Stock, each having the rights and
preferences set forth in EXHIBIT C attached hereto. The Class A Preferred and
the Common Stock are collectively referred to herein as the "STOCK."
1B. PURCHASE AND SALE OF THE STOCK.
(a) PURCHASE AND SALE BY GTCR. (i) At the Closing (as defined
in Xxxxxxx 0X xxxxx), the Company shall sell to GTCR and, subject to
the terms and conditions set forth herein, GTCR shall purchase from the
Company 32,279,750 shares of Common Stock at a price of $0.1055 per
share (together with the shares purchased by Smart Technology pursuant
to Section 1B(b)(i), the "PURCHASED SHARES").
(ii) The Company operates a business in the information
technology services industry and intends to make acquisitions which are
synergistic with or otherwise complementary to its existing business.
GTCR is committing to providing $98 million (including the amount
invested to purchase the Purchased Shares) in equity financing to the
Company as the equity portion of the debt and equity financing
necessary to fund the Company's working capital and such acquisitions,
in each case as approved by the Company's board of directors (the
"BOARD") and GTCR (an "APPROVED USE"). In order to implement the
foregoing, GTCR shall purchase from time to time after the Closing,
upon the written request of the Board in connection with such an
Approved Use, up to 94,570 shares of Class A Preferred at a price of
$1,000 per share as adjusted from time to time as a result of stock
dividends, stock splits, recapitalization and similar events). At the
time of any such purchase, GTCR shall be entitled to receive, and the
Company shall be obligated to deliver, satisfactory representations and
warranties and all other information and documentation as GTCR may
reasonably request. At the time of any such purchase, GTCR shall
reaffirm substantially the representations in Sections 6F and 6G of
this Agreement. At the time of any such purchase, the Company will
deliver to GTCR the certificates representing such shares of Class A
Preferred purchased by GTCR, and GTCR will deliver to the Company a
cashier's or certified check or a wire transfer of funds in the
aggregate amount of the price per share of such shares MULTIPLIED BY
the number of shares so purchased by GTCR. At the time of any such
purchase, the Company shall provide notice of such purchase to Smart
Technology (a "GTCR PURCHASE NOTICE").
(b) PURCHASE AND SALE BY SMART TECHNOLOGY. (i) At the Closing
(as defined in Xxxxxxx 0X xxxxx), the Company shall sell to Smart
Technology and, subject to the terms and conditions set forth herein,
Smart Technology shall purchase from the Company, 663,810 shares of
Common Stock at a price of $0.1055 per share. Smart Technology shall
pay the purchase price for the shares purchased pursuant to this
Section 1B(b)(i) by
cancellation of a pro rata portion of the principal amount of the Smart
Technology Loan equal to such purchase price. At the Closing, Smart
Technology shall surrender to the Company the existing promissory note
evidencing the Smart Technology Loan and shall terminate the Loan
Agreement between the Company and Smart Technology dated April 23,
1998, and the Company shall (i) pay Smart Technology the accrued
interest on the Smart Technology Loan as of Closing and (ii) issue to
Smart Technology a subordinated note (the "SUBORDINATED NOTE") with an
interest rate of 12% per annum representing the remaining amount due
under the Smart Technology Loan, in the form attached hereto as EXHIBIT
B.
(ii) Upon the purchase from time to time by GTCR of up to
94,570 shares of Class A Preferred pursuant to Section 1B(a) of the
Purchase Agreement, Smart Technology will purchase, and the Company
will sell up to an aggregate of 1,930 shares of Class A Preferred at a
price of $1,000.00 per share (as adjusted from time to time as a result
of stock splits, stock dividends, recapitalizations and similar
events). The number of shares of Class A Preferred to be sold by the
Company and purchased by Smart Technology at any time shall equal (i)
1,930 shares of Class A Preferred MULTIPLIED BY (ii) a fraction (A) the
numerator of which will be the number of shares of Class A Preferred to
be concurrently purchased by GTCR and (B) the denominator of which will
be 94,570 shares. At the time of any such purchase, Smart Technology
shall be entitled to receive, and the Company shall be obligated to
deliver, the representations, warranties, information and documentation
provided to GTCR pursuant to Section1B(a)(ii). At the time of any such
purchase, the Company will deliver to Smart Technology the certificates
representing such shares of Class A Preferred purchased by Smart
Technology. At the time of any such purchase, Smart Technology shall
reaffirm substantially the representations in Sections 6F and 6G of
this Agreement. Smart Technology shall pay the purchase price for the
shares purchased pursuant to this Section 1B(b)(ii), first, by
cancellation of a pro rata portion of the principal amount of the Smart
Technology Loan equal to such purchase price until the principal amount
due under the Smart Technology Loan has been reduced to zero, and,
thereafter, by delivery to the Company of a cashier's or certified
check or a wire transfer of funds in the aggregate amount of the price
per share of such shares MULTIPLIED BY the number of shares so
purchased by Smart Technology.
(iii) In the event that Smart Technology does not purchase for
any reason (regardless of any default or breach by the Company or any
of its Subsidiaries) the shares of Class A Preferred to be purchased by
it pursuant to Section 1B(b)(ii) above within 30 days of receipt of a
GTCR Purchase Notice, the Company shall have the right to purchase, in
which event Smart Technology and its transferees shall be obligated to
sell, all shares of Common Stock purchased pursuant to Section 1B(b)(i)
(a "STOCK REPURCHASE"), at a time and place designated by the Company
(a "STOCK REPURCHASE CLOSING). At a Stock Repurchase Closing, Smart
Technology and its transferees, as applicable, shall deliver to the
Company duly executed instruments transferring good and marketable
title to such shares of Common Stock to the Company free and clear of
all liens and encumbrances (other than the Stockholders Agreement, as
defined in Section
2E), against payment of the Stock Repurchase Price (1) by cashier's or
certified check payable to Smart Technology or its transferee, as
applicable, (2) in the form of a promissory note from the Company
having a term no longer than five years, payable in sixty equal
installments, at a market rate of interest and having other typical
market terms, or (3) by wire transfer of immediately available funds to
an account designated by Smart Technology or its transferee, as
applicable. The "STOCK REPURCHASE PRICE" of the shares of Common Stock
to be sold by Smart Technology pursuant to this Section 1B(b)(iii)
shall be the lower of (A) $0.1055 per share or (B) the Fair Market
Value of each share as of the Stock Repurchase Closing.
1C. THE CLOSING. The closing of the purchase and sale of the Stock to
be purchased pursuant to Sections 1B(a)(i) and 1B(b)(i) (the "CLOSING") shall
take place at the offices of Xxxxxxxx & Xxxxx, 000 Xxxx Xxxxxxxx Xxxxx, Xxxxxxx,
Xxxxxxxx 00000 at 10:00 a.m. on June 29, 1998, or at such other place or on such
other date as may be mutually agreeable to the Company and the Purchasers. At
the Closing, the Company shall deliver to each Purchaser stock certificates
evidencing the Purchased Shares, registered in each Purchaser's name, upon
payment of the purchase price thereof by a cashier's or certified check, or by
wire transfer of immediately available funds to such account as designated by
the Company (or, in the case of Smart Technology, in the manner described in
Section 1B(b)(i)).
Section 2. CONDITIONS OF THE PURCHASERS' OBLIGATION AT THE CLOSING. The
obligation of the Purchasers to purchase and pay for the Stock at the Closing is
subject to the satisfaction or waiver as of the Closing of the following
conditions:
2A. REPRESENTATIONS AND WARRANTIES; COVENANTS. The representations and
warranties contained in Section 5 hereof shall be true and correct at and as of
the Closing as though then made, except to the extent of changes caused by the
transactions expressly contemplated herein, and the Company shall have performed
in all material respects all of the covenants required to be performed by it
hereunder prior to the Closing
2B. SECOND RESTATED CERTIFICATE OF INCORPORATION. The Company's
certificate of incorporation shall have been amended and restated in the form
set forth in EXHIBIT C hereto (the "SECOND RESTATED CERTIFICATE OF
INCORPORATION"), shall be in full force and effect under the laws of Delaware as
of the Closing as so amended and restated and shall not have been further
amended or modified.
2C. AMENDMENT OF BYLAWS. The Company's bylaws shall have been amended
and adopted by the Board in the form set forth in EXHIBIT D hereto and shall not
have been further amended or modified.
2D. MANAGEMENT AGREEMENTS. The Company shall have entered into senior
management agreements, in form and substance substantially similar to EXHIBITS
E-1, E-2, E-3 and E-4 attached hereto (the "MANAGEMENT AGREEMENTS"), with each
of Xxx X. Xxxxx, Xxxxxx X. Xxxxxx, Xxxxxx X. XxXxxxxx and Xxxxxxxx X. XxXxxxx
(collectively, the "EXECUTIVES"), and the
Management Agreements shall not have been amended or modified and shall be in
full force and effect as of the Closing.
2E. STOCKHOLDERS AGREEMENT. The Company, the Purchasers, the
Executives, the J. Sunny Bajaj Trust, the Xxxxxx Xxxxx Trust, Silicon Valley
Bank, Anchor Financial Group, Inc. ("ANCHOR"), Pascal Luck, Xxxxxx X. Xxxxxxx,
Xxxxxx X. Xxxxxxxx and Fairfax Management Company II, L.L.C., a Delaware limited
liability company ("FMC"), shall have entered into a stockholders agreement in
form and substance substantially similar to EXHIBIT F attached hereto (the
"STOCKHOLDERS AGREEMENT"), and the Stockholders Agreement shall be in full force
and effect as of the Closing.
2F. PUT AGREEMENT. The Company and certain holders of the Company's
stock identified on the attached ARBOR STOCKHOLDERS SCHEDULE (the "ARBOR
STOCKHOLDERS") shall have entered into a stockholders agreement in form and
substance substantially similar to EXHIBIT G attached hereto (the "PUT
AGREEMENT"), and the Put Agreement shall be in full force and effect as of the
Closing.
2G. AIS LIQUIDATING CO., INC. REPURCHASE The Company and AIS
Liquidating Co., Inc. ("AIS") shall have entered into an agreement to repurchase
the shares of the Company's stock held by AIS in form and substance
substantially similar to EXHIBIT H attached hereto (the "AIS AGREEMENT"), and
the AIS Agreement shall be in full force and effect as of the Closing.
2H. PROFESSIONAL SERVICES AGREEMENTS. The Company and GTCR shall have
entered into a professional services agreement in form and substance
substantially similar to EXHIBIT I attached hereto (the "GTCR PROFESSIONAL
SERVICES AGREEMENT"), and the GTCR Professional Services Agreement shall be in
full force and effect as of the Closing. The Company, FMC and Fairfax Consulting
Company, L.L.C., a Delaware limited liability company ("FCC") shall have entered
into a professional services agreement in form and substance substantially
similar to EXHIBIT J attached hereto (the "FMC PROFESSIONAL SERVICES
AGREEMENT"), and the FMC Professional Services Agreement shall be in full force
and effect as of the Closing. The GTCR Professional Services Agreement and the
FMC Professional Services Agreement shall be collectively referred to herein as
the "PROFESSIONAL SERVICES AGREEMENTS."
2I. REGISTRATION AGREEMENT. The Company, the Purchasers, the
Executives, the J. Sunny Bajaj Trust, the Xxxxx Xxxxx Trust, Silicon Valley
Bank, Anchor, Pascal Luck, Xxxxxx X. Xxxxxxx, and Xxxxxx X. Xxxxxxxx and FMC
shall have entered into a registration agreement in form and substance
substantially similar to EXHIBIT K attached hereto (the "REGISTRATION
AGREEMENT"), and the Registration Agreement shall be in full force and effect as
of the Closing.
2J. COMMON STOCK REPURCHASE AGREEMENT. The Company and FMC shall have
entered into a stock repurchase agreement in form and substance substantially
similar to EXHIBIT L attached hereto (the "COMMON STOCK REPURCHASE AGREEMENT")
pursuant to which the Company shall purchase shares of the Company's Common
Stock from FMC and the Common Stock Repurchase Agreement shall be in full force
and effect as of the Closing.
2K. EXCHANGE OF SILICON VALLEY BANK WARRANT. Pursuant to an Exchange
Agreement dated June 12, 1998 between Silicon Valley Bank and the Company which
is attached hereto as EXHIBIT M, the warrant to purchase the Company's Series B
Convertible Preferred Stock, par value $.001 per shares (the "SERIES B
PREFERRED") held by Silicon Valley Bank, a California-chartered bank (the "SVB
WARRANT") shall have been exchanged for (i) a warrant that on exercise entitles
Silicon Valley Bank to receive 41,666 shares of Common Stock in form and
substance substantially similar to EXHIBIT N attached hereto (the "SVB COMMON
STOCK WARRANT") and (ii) a warrant that on exercise entitles Silicon Valley Bank
to receive 121 shares of Class A Preferred in form and substance substantially
similar to EXHIBIT O attached hereto (the "SVB PREFERRED STOCK WARRANT").
2L. SMART TECHNOLOGY LOAN. The warrant to purchase 200,000 shares of
Common Stock held by Smart Technology (the "SMART TECHNOLOGY WARRANT") that was
issued to Smart Technology in connection with the Smart Technology Loan shall
have been amended in the form set forth in EXHIBIT P and shall be in full force
and effect.
2M. JOINT VENTURE AGREEMENT. The Joint Venture Agreement between the
Company (under its previous name, InterNet Applications, Inc.) and Commerce
Direct International, Inc., a Delaware corporation, dated December 18, 1997
shall have been amended by the First Amendment to Joint Venture Agreement in the
form set forth in EXHIBIT Q which shall be in full force and effect.
2N. BROKERAGE RELEASES. The Company shall have obtained a release from
Anchor as to any brokerage claims or finder's fees in the form set forth in
EXHIBIT R which shall be in full force and effect (the "ANCHOR RELEASE"), and a
release from Xxxxxx Xxxxxxxx as to any brokerage claims or finder's fees in the
form set forth in EXHIBIT S which shall be in full force and effect (the
"DAVIDSON RELEASE").
2O. SILICON VALLEY BANK CONSENT. The Company shall have obtained the
consent of Silicon Valley Bank to the transactions contemplated hereunder in the
form set forth in EXHIBIT T which shall be in full force and effect (the "SVB
CONSENT").
2P. CLOSING DOCUMENTS. The Company shall have delivered to the
Purchasers all of the following documents:
(i) an Officer's Certificate, dated the date of the Closing, stating
that the conditions specified in Sections 2A through 2O, inclusive, have been
fully satisfied;
(ii) certified copies of (a) the resolutions duly adopted by the Board
authorizing the execution, delivery and performance of this Agreement, the
Management Agreements, the Stockholders Agreement, the Put Agreement, the AIS
Agreement, the Professional Services Agreements, the Registration Agreement, the
Common Stock Repurchase Agreement and each of the other agreements contemplated
hereby, the filing of the Second Restated Certificate of Incorporation referred
to in Section 2B, the amendment of the Company's bylaws, the issuance and sale
of the Stock and the consummation of all other transactions contemplated by this
Agreement, and (b) the resolutions duly adopted by the Company's stockholders
adopting the Second Restated Certificate of Incorporation referred to in Section
2B;
(iii) certified copies of the Second Restated Certificate of
Incorporation and the Company's bylaws, each as in effect at the Closing; and
(iv) such other documents relating to the transactions contemplated by
this Agreement as the Purchasers or its counsel may reasonably request.
2Q. FEES AND EXPENSES. The Company shall have reimbursed the Purchasers
for the fees and expenses as provided in Section 8A hereof.
2R. WAIVER. Any condition specified in this Section 2 may be waived
only if such waiver is set forth in a writing executed by the Purchasers.
Section 3. COVENANTS.
3A. FILING OF THIRD RESTATED CERTIFICATE OF INCORPORATION. As soon as
possible following Closing (but in any event no later than one business day
following Closing), the Company shall amend and restate its certificate of
incorporation in the form set forth in EXHIBIT U hereto (the "THIRD RESTATED
CERTIFICATE OF INCORPORATION"), and shall file the Third Restated Certificate of
Incorporation with the Delaware Secretary of State so that it shall be in full
force and effect under the laws of Delaware as so amended and restated.
3B. FINANCIAL STATEMENTS AND OTHER INFORMATION. Prior to the initial
public offering of the Common Stock of the Company, the Company shall deliver to
each Purchaser (so long as such Purchaser holds any Stock) and to each holder of
at least 15% of the Investor Preferred and each holder of at least 15% of the
Investor Common:
(i) as soon as available but in any event within 30 days after
the end of each quarterly accounting period in each fiscal year,
unaudited consolidating and consolidated statements of income and cash
flows of the Company and its Subsidiaries for such quarterly period and
for the period from the beginning of the fiscal year to the end of such
quarter, and consolidating and consolidated balance sheets of the
Company and its Subsidiaries as of the end of such quarterly period,
all prepared in accordance with generally accepted accounting
principles, consistently applied ("GAAP"), subject to the absence of
footnote disclosures and to normal year-end adjustments;
(ii) accompanying the financial statements referred to in (i)
above, an Officer's Certificate stating that neither the Company nor
any of its Subsidiaries is in default under any of its other material
agreements or, if any such default exists, specifying the nature and
period of existence thereof and what actions the Company and its
Subsidiaries have taken and propose to take with respect thereto;
(iii) within 120 days after the end of each fiscal year,
consolidating and consolidated statements of income and cash flows of
the Company and its Subsidiaries for such fiscal year, and
consolidating and consolidated balance sheets of the Company and its
Subsidiaries as of the end of such fiscal year, setting forth in each
case comparisons to the annual budget and to the preceding fiscal year,
all prepared in accordance with GAAP and accompanied by (a) with
respect to the consolidated portions of such statements (except with
respect to budget data), an opinion containing no exceptions or
qualifications (except for qualifications regarding specified
contingent liabilities) of an independent accounting firm of recognized
national standing acceptable to the holders of a majority of each of
the Investor Preferred and the Investor Common, and (b) a copy of such
firm's annual management letter to the Board;
(iv) promptly upon receipt thereof, any additional reports,
management letters or other detailed information concerning significant
aspects of the Company's operations or financial affairs given to the
Company by its independent accountants (and not otherwise contained in
other materials provided hereunder);
(v) at least 10 days prior to the beginning of each fiscal
year, an annual budget prepared on a monthly basis for the Company and
its Subsidiaries for such fiscal year (displaying anticipated
statements of income and cash flows), and promptly upon preparation
thereof any other significant budgets prepared by the Company and any
revisions of such annual or other budgets, and within 30 days after any
monthly period in which there is a material adverse deviation from the
annual budget, an Officer's Certificate explaining the deviation and
what actions the Company has taken and proposes to take with respect
thereto;
(vi) promptly (but in any event within five business days)
after the discovery or receipt of notice of any default under any
material agreement to which it or any of its Subsidiaries is a party or
any other event or circumstance affecting the Company or any Subsidiary
which is reasonably likely to have a material adverse effect on the
financial condition, operating results, assets, operations or business
prospects of the Company and its Subsidiaries, taken as a whole
(including the filing of any material litigation against the Company or
any Subsidiary or the existence of any material dispute with any Person
which involves a reasonable likelihood of such litigation being
commenced) (a "MATERIAL ADVERSE EFFECT"), an Officer's Certificate
specifying the nature and period of existence thereof and what actions
the Company and its Subsidiaries have taken and propose to take with
respect thereto; and
(vii) with reasonable promptness, such other information and
financial data concerning the Company and its Subsidiaries as any
Person entitled to receive information under this Section 3B may
reasonably request.
Each of the financial statements referred to in subsections (i) and (iii) shall
be true and correct in all material respects as of the dates and for the periods
stated therein, subject in the case of the unaudited financial statements to
changes resulting from normal year-end audit adjustments
(none of which would alone or in the aggregate, be materially adverse to the
financial condition, operating results, assets, operations or business prospects
of the Company and its Subsidiaries taken as a whole).
3C. INSPECTION OF PROPERTY. The Company shall permit any
representatives designated by a Purchaser (so long as such Purchaser holds any
Stock) or any holder of at least 15% of the outstanding Investor Preferred or at
least 15% of the outstanding Investor Common, upon reasonable notice and during
normal business hours and such other times as any such holder may reasonably
request, to (i) visit and inspect any of the properties of the Company and its
Subsidiaries, (ii) examine the corporate and financial records of the Company
and its Subsidiaries and make copies thereof or extracts therefrom and (iii)
discuss the affairs, finances and accounts of any such corporations with the
directors, officers, key employees and independent accountants of the Company
and its Subsidiaries; provided that the Company shall have the right to have its
chief financial officer present at any meetings with the Company's independent
accountants.
3D. RESTRICTIONS. The Company shall not, without the prior written
consent of the holders of a majority of the Investor Preferred or, in the event
no Investor Preferred is outstanding, without the prior written consent of the
holders of a majority of the Investor Common:
(i) directly or indirectly declare or pay any dividends or
make any distributions upon any of its equity securities, other than
payments of dividends on, or redemption payments in respect of, the
Class A Preferred pursuant to the Third Restated Certificate of
Incorporation;
(ii) directly or indirectly redeem, purchase or otherwise
acquire, or permit any Subsidiary to redeem, purchase or otherwise
acquire, any of the Company's equity securities (including, without
limitation, warrants, options and other rights to acquire equity
securities), other than (a) purchases of Common Stock held by AIS in an
amount not to exceed $789,192 and (b) purchases of Common Stock
pursuant to the Put Agreements;
(iii) except as expressly contemplated by this Agreement and
the Management Agreements and except for the issuance of the Company's
capital stock upon exercise or conversion of the SVB Common Stock
Warrant, the SVB Preferred Stock Warrant, the Smart Technology Warrant
and the issuance pursuant to the Anchor Release, authorize, issue, sell
or enter into any agreement providing for the issuance (contingent or
otherwise), or permit any Subsidiary to authorize, issue, sell or enter
into any agreement providing for the issuance (contingent or otherwise)
of, (a) any notes or debt securities containing equity features
(including, without limitation, any notes or debt securities
convertible into or exchangeable for equity securities, issued in
connection with the issuance of equity securities or containing profit
participation features) or (b) any equity securities (or any securities
convertible into or exchangeable for any equity securities) or
rights to acquire any equity securities, other than the issuance of
equity securities by a Subsidiary to the Company or another Subsidiary;
(iv) merge or consolidate with any Person or permit any
Subsidiary to merge or consolidate with any Person (other than a wholly
owned Subsidiary);
(v) sell, lease or otherwise dispose of, or permit any
Subsidiary to sell, lease or otherwise dispose of, more than 10% of the
consolidated assets of the Company and its Subsidiaries (computed on
the basis of book value, determined in accordance with generally
accepted accounting principles consistently applied, or fair market
value, determined by the Board in its reasonable good faith judgment)
in any transaction or series of related transactions (other than sales
of inventory in the ordinary course of business);
(vi) liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction (including, without
limitation, any reorganization into partnership form);
(vii) acquire, or permit any Subsidiary to acquire, any
interest in any business (whether by a purchase of assets, purchase of
stock, merger or otherwise), or enter into any joint venture;
(viii) enter into, or permit any Subsidiary to enter into, the
ownership, active management or operation of any business other than
the information technology services business;
(ix) enter into, or permit any Subsidiary to enter into, any
transaction with any of its or any Subsidiary's officers, directors,
employees or Affiliates or any individual related by blood, marriage or
adoption to any such Person (a "RELATIVE") or any entity in which any
such Person or individual owns a beneficial interest (a "RELATED
ENTITY"), except for normal employment arrangements and benefit
programs on reasonable terms and except as otherwise expressly
contemplated by this Agreement, the Management Agreements and the
Professional Services Agreements; or
(x) create, incur, assume or suffer to exist, or permit any
Subsidiary to create, incur, assume or suffer to exist, Indebtedness
exceeding 105% of the amounts approved therefor by the Board in the
annual budget.
This Section 3D shall terminate upon GTCR and the GTCR Funds collectively
failing to hold at least 15% of the Investor Common.
3E. AFFIRMATIVE COVENANTS. So long as the Purchasers hold any Stock,
the Company shall, and shall cause each Subsidiary to:
(i) comply with all applicable laws, rules and regulations of
all Governmental authorities, the violation of which would reasonably
be expected to have a Material
Adverse Effect, and pay and discharge when payable all taxes,
assessments and governmental charges (except to the extent the same are
being contested in good faith and adequate reserves therefor have been
established); and
(ii) enter into and maintain appropriate nondisclosure and
noncompete agreements with its key employees.
3F. CURRENT PUBLIC INFORMATION. At all times after the Company has
filed a registration statement with the Securities and Exchange Commission
pursuant to the requirements of either the Securities Act or the Securities
Exchange Act, the Company shall file all reports required to be filed by it
under the Securities Act and the Securities Exchange Act and the rules and
regulations adopted by the Securities and Exchange Commission thereunder and
shall take such further action as any holder or holders of Restricted Securities
may reasonably request, all to the extent required to enable such holders to
sell Restricted Securities pursuant to (i) Rule 144 adopted by the Securities
and Exchange Commission under the Securities Act (as such rule may be amended
from time to time) or any similar rule or regulation hereafter adopted by the
Securities and Exchange Commission or (ii) a registration statement on Form S-2
or S-3 or any similar registration form hereafter adopted by the Securities and
Exchange Commission. Upon request, the Company shall deliver to any holder of
Restricted Securities a written statement as to whether it has complied with
such requirements.
3G. AMENDMENT OF OTHER AGREEMENTS. The Company shall not amend, modify
or waive any provision of any Management Agreement or the FMC Professional
Services Agreement without the prior written consent of the holders of a
majority of the Investor Preferred (or, if no Investor Preferred is then
outstanding, the holders of a majority of the Investor Common), and the Company
shall enforce the provisions of the Management Agreements and the FMC
Professional Services Agreement and shall exercise all of its rights and
remedies thereunder including, without limitation, any repurchase options and
first refusal rights) unless it is otherwise directed by the holders of a
majority of the Investor Preferred (or, if no Investor Preferred is then
outstanding, the holders of a majority of the Investor Common). This Section 3G
shall terminate upon GTCR and the GTCR Funds collectively failing to hold at
least 15% of the Investor Common.
3H. PUBLIC DISCLOSURES. The Company shall not, nor shall it permit any
Subsidiary to, disclose a Purchaser's name or identity as an investor in the
Company in any press release or other public announcement or in any document or
material filed with any governmental entity, without the prior written consent
of such Purchasers, unless such disclosure is required by applicable law or
governmental regulations or by order of a court of competent jurisdiction, in
which case prior to making such disclosure the Company shall give written notice
to such Purchasers describing in reasonable detail the proposed content of such
disclosure and shall permit such Purchasers to review and comment upon the form
and substance of such disclosure.
3I. UNRELATED BUSINESS TAXABLE INCOME. The Company shall not engage in
any transaction which is reasonably likely to cause GTCR or any of its limited
partners which are exempt from income taxation under Section 501 (a) of the IRC
and, if applicable, any pension
plan that any such trust may be a part of, to recognize unrelated business
taxable income as defined in Section 512 and Section 514 of the IRC.
3J. XXXX-XXXXX-XXXXXX COMPLIANCE. In connection with any transaction in
which the Company is involved which is required to be reported under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended from time to
time (the "HSR ACT"), the Company shall prepare and file all documents with the
Federal Trade Commission and the United States Department of Justice which may
be required to comply with the HSR Act, and shall promptly furnish all materials
thereafter requested by any of the regulatory agencies having jurisdiction over
such filings, in connection with the transactions contemplated thereby. The
Company shall take all reasonable actions and shall file and use reasonable best
efforts to have declared effective or approved all documents and notifications
with any governmental or regulatory bodies, as may be necessary or may
reasonably be requested under federal antitrust laws for the consummation of the
subject transaction.
Section 4. TRANSFER OF RESTRICTED SECURITIES.
(i) Restricted Securities are transferable only pursuant to
(a) public offerings registered under the Securities Act, (b) Rule 144
or Rule 144A of the Securities and Exchange Commission (or any similar
rule or rules then in force) if such rule or rules are available and
(c) subject to the conditions specified in Section (ii) below, any
other legally available means of transfer.
(ii) In connection with the transfer of any Restricted
Securities (other than a transfer described in Section 4(i)(a) above),
the holder thereof shall deliver written notice to the Company
describing in reasonable detail the transfer or proposed transfer,
together with an opinion of Xxxxxxxx & Xxxxx or other counsel which (to
the Company's reasonable satisfaction) is knowledgeable in securities
law matters to the effect that such transfer of Restricted Securities
may be effected without registration of such Restricted Securities
under the Securities Act. In addition, if the holder of the Restricted
Securities delivers to the Company an opinion of Xxxxxxxx & Xxxxx or
such other counsel that no subsequent transfer of such Restricted
Securities shall require registration under the Securities Act, the
Company shall promptly upon such contemplated transfer deliver new
certificates for such Restricted Securities which do not bear the
Securities Act legend set forth in Section 4(iv). If the Company is not
required to deliver new certificates for such Restricted Securities not
bearing such legend, the holder thereof shall not transfer the same
until the prospective transferee has confirmed to the Company in
writing its acknowledgment of, and agreement to be bound by, the
conditions and representations contained in this Section, Section 6F
and Section 6G. This Section 4(ii) shall not apply to any transfer of
any Restricted Securities between and among GTCR and its Affiliates.
(iii) Upon the request of any Purchaser, the Company shall
promptly supply to any Purchaser or its prospective transferees all
information regarding the Company required to be delivered in
connection with a transfer pursuant to Rule 144A of the Securities and
Exchange Commission.
(iv) Each certificate for Restricted Securities shall be
imprinted with a legend in substantially the following form:
The securities represented by this certificate were originally
issued on [DATE OF ISSUANCE] and have not been registered
under the Securities Act of 1933, as amended (the "Act"), and
may not be sold or transferred in the absence of an effective
registration statement under the Act or an exemption from
registration thereunder. The transfer of the securities
represented by this certificate is subject to the conditions
specified in the Purchase Agreement, dated as of June 29,
1998, between the issuer (the "Company") and a certain
investor, and the Company reserves the right to refuse the
transfer of such securities until such conditions have been
fulfilled with respect to such transfer. A copy of such
conditions shall be furnished by the Company to the holder
hereof upon written request and without charge.
Section 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. As a material
inducement to the Purchasers to enter into this Agreement and purchase the
Stock, the Company hereby represents and warrants to each Purchaser that:
5A. ORGANIZATION AND CORPORATE POWER. The Company is a corporation duly
organized, validly existing and in good standing under the laws of Delaware and
is qualified to do business in every jurisdiction in which the failure to
qualify might be expected to have a Material Adverse Effect. The Company has all
requisite corporate power and authority and all material licenses, permits and
authorizations necessary to own and operate its properties, to carry on its
businesses as now conducted and presently proposed to be conducted and to carry
out the transactions contemplated by this Agreement. The copies of the Company's
Second Restated Certificate of Incorporation and bylaws which have been
furnished to the Purchasers' counsel reflect all amendments made thereto at any
time prior to the date of this Agreement and are correct and complete. The
Company is not in default under or in violation of any provision of its Second
Restated Certificate of Incorporation or bylaws. The minute books containing the
records of meetings of the stockholders and board of directors, the stock
certificate books and the stock record books of the Company are correct and
complete.
5B. CAPITAL STOCK AND RELATED MATTERS.
(i) The attached CAPITALIZATION SCHEDULE sets forth the
authorized capital stock of the Company, the name of each Person
holding any such capital stock (including any options, warrants or
other rights to purchase any equity securities or capital stock) and
any securities convertible or exchangeable into any equity securities
or capital stock of the Company and the amount and type of such
securities held by such Persons as of the date hereof. Except as set
forth in the CAPITALIZATION SCHEDULE, as of the Closing, the Company
shall not have outstanding any stock or securities convertible or
exchangeable
for any shares of its capital stock or containing any profit
participation features, nor shall it have outstanding any rights or
options to subscribe for or to purchase its capital stock or any stock
or securities convertible into or exchangeable for its capital stock or
any stock appreciation rights or phantom stock plans other than
pursuant to and as contemplated by this Agreement, the Management
Agreements and the Redemption Option Agreement between the Company and
Arbor Intelligent Systems, Inc. dated as of March 12, 1998 (the
"REDEMPTION OPTION AGREEMENT"). As of the Closing, the Company shall
not be subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital
stock or any warrants, options or other rights to acquire its capital
stock, except pursuant to this Agreement, the Put Agreement, the AIS
Agreement, the Common Stock Repurchase Agreement, the FMC Professional
Services Agreement, the Management Agreements and the Company's Second
Restated Certificate of Incorporation, as amended and restated pursuant
to EXHIBIT B hereof, or except as set forth in the CAPITALIZATION
SCHEDULE. As of the Closing, all of the outstanding shares of the
Company's capital stock shall be validly issued, fully paid and
nonassessable and were not issued in violation of any statutory or
contractual preemptive rights or similar restrictions.
(ii) There are no statutory or, to the Company's Knowledge,
contractual stockholders preemptive rights or rights of refusal with
respect to the issuance of the Stock hereunder or the issuance of the
Stock pursuant to Section 1B hereof, except as expressly provided
herein. Based in part on the investment representations of the
Purchasers in Section 6F and Section 6G hereof and of the Executives in
the Management Agreements, the Company has not violated any applicable
federal or state securities laws in connection with the offer, sale or
issuance of any of its capital stock, and the offer, sale and issuance
of the Stock hereunder and pursuant to Section 1B hereof do not and
will not require registration under the Securities Act or any
applicable state securities laws. To the Company's Knowledge, there are
no agreements between the Company's stockholders with respect to the
voting or transfer of the Company's capital stock or with respect to
any other aspect of the Company's affairs, except for the Stockholders
Agreement, the Put Agreement, the AIS Agreement, the Common Stock
Repurchase Agreement, the FMC Professional Services Agreement, the
Management Agreements, the Redemption Option Agreement and the
Subscription Agreements dated February 10, 1998 between the Company and
each of Xxx X.
Xxxxx and FMC that will be amended as of the Closing.
5C. SUBSIDIARIES; INVESTMENTS. The SUBSIDIARY SCHEDULE sets forth for
each Subsidiary of the Company (i) its name and jurisdiction of incorporation,
(ii) the number of shares of authorized capital stock of each class of its
capital stock, (iii) the number of issued and outstanding shares of each class
of its capital stock, the names of the holders thereof, and the number of shares
held by each such holder, and (iv) the number of shares of its capital stock
held in treasury. All of the issued and outstanding shares of capital stock of
each Subsidiary of the Company have been duly authorized and are validly issued,
fully paid, and nonassessable. Either the Company or one of its Subsidiaries
holds of record and owns beneficially all of the outstanding shares of each
Subsidiary of the Company, free and clear of any restrictions on
transfer (other than restrictions under the Securities Act and state securities
laws), taxes, Security Interests, options, warrants, purchase rights, contracts,
commitments, equities, claims, and demands. There are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
any of the Company and its Subsidiaries to sell, transfer, or otherwise dispose
of any capital stock of any of its Subsidiaries or that could require any
Subsidiary of the Company to issue, sell, or otherwise cause to become
outstanding any of its own capital stock. Except as set forth on the SUBSIDIARY
SCHEDULE, there are no outstanding stock appreciation, phantom stock, profit
participation, or similar rights with respect to any Subsidiary of the Company.
There are no voting trusts, proxies, or other agreements or understandings with
respect to the voting of any capital stock of any Subsidiary of the Company.
None of the Company and its Subsidiaries controls directly or indirectly or has
any direct or indirect equity participation in any corporation, partnership,
trust, or other business association which is not a Subsidiary of the Company.
5D. AUTHORIZATION; NO BREACH. The execution, delivery and performance
of this Agreement, the Management Agreements, the Stockholders Agreement, the
Put Agreement, the Professional Services Agreements the Registration Agreement,
the Common Stock Repurchase Agreement and all other agreements contemplated
hereby to which the Company is a party and the filing of the Second Restated
Certificate of Incorporation have been duly authorized by the Company and no
other corporate act or proceeding on the part of the Company, its board of
directors or its stockholders is necessary to authorize the execution, delivery
or performance by the Company of this Agreement or any other agreement
contemplated hereby to which it is a party or the consummation of any of the
transactions contemplated hereby or thereby. This Agreement, the Management
Agreements, the Stockholders Agreement, the Put Agreement, the Professional
Services Agreements, the Registration Agreement, the Common Stock Repurchase
Agreement, the Second Restated Certificate of Incorporation and all other
agreements contemplated hereby each constitutes a valid and binding obligation
of the Company, enforceable in accordance with its terms. The execution and
delivery by the Company of this Agreement, the Management Agreements, the
Stockholders Agreement, the Put Agreement, the Professional Services Agreements,
the Registration Agreement, the Common Stock Repurchase Agreement and all other
agreements contemplated hereby to which the Company is a party, the offering,
sale and issuance of the Stock hereunder and pursuant to Section 1B, the
amendment and restatement of the Company's certificate of incorporation and the
fulfillment of and compliance with the respective terms hereof and thereof by
the Company do not and will not (i) conflict with or result in a breach of the
terms, conditions or provisions of, (ii) constitute a default under, (iii)
result in the creation of any lien, security interest, charge or encumbrance
upon the capital stock or assets of the Company or any of its Subsidiaries
pursuant to, (iv) give any third party the right to modify, terminate or
accelerate any obligation under, (v) result in a violation of, or (vi) require
any authorization, consent, approval, exemption or other action by or notice to
any court or administrative or governmental body pursuant to, the Company's
certificate of incorporation or bylaws of the Company or any of its
Subsidiaries, or any law, statute, rule or regulation to which the Company or
any of its Subsidiaries is subject, or any agreement, instrument, order,
judgment or decree to which the Company or any of its Subsidiaries is a party or
by which it is bound (except for the SVB Consent, which will be delivered at
Closing).
5E. FINANCIAL STATEMENTS. Attached hereto as the FINANCIAL STATEMENTS
SCHEDULE is the unaudited consolidated and consolidating balance sheet as of May
31, 1998 (the "LATEST BALANCE SHEET") and the related statements of income and
cash flows for the 5-month period then ended. The foregoing financial statements
(including in all cases the notes thereto, if any) is accurate and complete in
all material respects, is consistent with the books and records of the Company
(which, in turn, are accurate and complete in all material respects) (i) has
been prepared in accordance with GAAP and (ii) presents fairly the financial
condition, results of operations, shareholders' equity, and cash flows of the
Company, as applicable, as of the times and for the periods referred to therein
in accordance with GAAP subject, in the case of interim financial statements, to
the absence of footnotes and to normal year-end adjustments (none of which would
be material, individually or in the aggregate).
5F. INDEBTEDNESS. Except as set forth on the attached INDEBTEDNESS
SCHEDULE, the Company has no Indebtedness. The INDEBTEDNESS SCHEDULE accurately
reflects the amount required to prepay as of the Closing Date all of the
Company's Indebtedness, including all accrued interest and prepayment premiums
or penalties.
5G. LIABILITIES. Except as set forth on the attached LIABILITIES
SCHEDULE, the Company and its Subsidiaries do not have any material obligations
or liability (whether accrued, absolute, contingent, unliquidated or otherwise,
whether or not known to the Company or any Subsidiary, whether due or to become
due and regardless of when asserted) other than: (i) liabilities set forth on
the Latest Balance Sheet; (ii) liabilities and obligations which have arisen
after the date of the Latest Balance Sheet in the ordinary course of business
(none of which is a liability resulting from breach of contract, breach of
warranty, tort, infringement, claim or lawsuit); (iii) other liabilities and
obligations expressly disclosed in the other schedules to this Agreement.
5H. NO MATERIAL ADVERSE EFFECT. Since the date of the Latest Balance
Sheet, there has occurred no fact, event or circumstance which has had, or could
reasonably be expected to have, a Material Adverse Effect. Except as set forth
on the attached EXTRAORDINARY TRANSACTIONS SCHEDULE, since the date of the
Latest Balance Sheet, the Company and its Subsidiaries have conducted its
business only in the ordinary course of business consistent with past practice.
5I. ABSENCE OF CERTAIN DEVELOPMENTS.
(i) Except as expressly contemplated by this Agreement or as
set forth on the attached DEVELOPMENTS SCHEDULE, since the date of the
Latest Balance Sheet, the Company and its Subsidiaries have not:
(a) issued any notes, bonds or other debt securities
or any capital stock or other equity securities or any
securities convertible, exchangeable or exercisable into any
capital stock or other equity securities;
(b) borrowed any amount or incurred or become subject
to any liabilities, except current liabilities incurred in the
ordinary course of business and liabilities under contracts
entered into in the ordinary course of business;
(c) discharged or satisfied any Lien or paid any
obligation or liability, other than current liabilities paid
in the ordinary course of business;
(d) declared or made any payment or distribution of
cash or other property to holders of its capital stock or
ownership interests with respect to such stock or ownership
interests or purchased or redeemed any shares of its capital
stock or other equity securities or ownership interests
(including, without limitation, any warrants, options or other
rights to acquire its capital stock or other equity securities
or ownership interests);
(e) mortgaged or pledged any of its properties or
assets or subjected them to any material Lien, except for any
Permitted Liens;
(f) sold, assigned, leased or transferred any of its
tangible assets, except in the ordinary course of business, or
canceled any material debts or claims;
(g) sold, assigned, leased, licensed or transferred
any Intellectual Property Rights or other intangible assets,
or disclosed any material proprietary confidential information
to any Person, or abandoned or permitted to lapse any
Intellectual Property Rights or other intangible asset;
(h) suffered any extraordinary losses or waived any
rights of material value, whether or not in the ordinary
course of business or consistent with past practice;
(i) delayed or postponed the payment of any accounts
or commissions payable or any other liability or obligations
or agreed or negotiated with any party to extend the payment
date of any accounts or commissions payable or accelerated the
collection of any notes, accounts or commissions receivable;
(j) made capital expenditures or commitments that
aggregate in excess of $10,000;
(k) made any charitable contributions or pledges;
(l) suffered any damage, destruction or casualty loss
exceeding in the aggregate $10,000 whether or not covered by
insurance;
(m) made any loans or advances to, Investment in, or
guarantees for the benefit of, any Person or taken steps to
incorporate any Subsidiary;
(n) made any change in any method of accounting or
accounting policies;
(o) entered into any other transaction, other than in
the ordinary course of business, or entered into any other
material transactions, whether or not in the ordinary course
of business;
(p) entered into any employment or consulting
contract (written or oral) or changed the employment terms for
any employee or agent or made or granted any bonus or any
wage, salary or compensation increase to any director,
officer, employee or sales representative, group of employees
or consultant or made or granted any increase in any employee
benefit plan or arrangement, or amended or terminated any
existing employee benefit plan or arrangement or adopted any
new employee benefit plan or arrangement; or
(q) agreed, whether orally or in writing, to do any
of the foregoing.
(ii) The Company and its Subsidiaries have not at any time
made any payments for political contributions or made any bribes,
kickback payments or other illegal payments.
5J. ASSETS. Except as set forth on the attached ASSETS SCHEDULE, the
Company and its Subsidiaries have good and marketable title to, or a valid
leasehold interest in, or a valid license to use, the properties and assets,
tangible or intangible, used by it, located on its premises or, if applicable,
shown on the Latest Balance Sheet or acquired thereafter, free and clear of all
Liens, except for inventory disposed of in the ordinary course of business since
the date of the Latest Balance Sheet and except for Permitted Liens. Except as
described on the ASSETS SCHEDULE, all of the Company and its Subsidiaries's
equipment and other tangible assets (whether owned or leased) are in good
condition (except for ordinary wear and tear) and are fit for use in the
ordinary course of business. Except as set forth on the ASSETS SCHEDULE, as of
the Closing, the Company and its Subsidiaries shall own, or have a valid
leasehold interest in, or a valid license to use, all the assets or rights
necessary for the conduct of its businesses as presently conducted.
5K. REAL PROPERTY.
(i) LEASED PROPERTIES. The attached LEASED REAL PROPERTY
SCHEDULE sets forth a list of all of the leases and subleases
("LEASES") and each leased and subleased parcel of real property in
which the Company and its Subsidiaries have a leasehold and
subleasehold interest (the "LEASED REAL PROPERTY"). The Company and its
Subsidiaries hold a valid and existing leasehold or subleasehold
interest under each of the Leases. With respect to each Lease listed on
the LEASED REAL PROPERTY SCHEDULE, there are no disputes, oral
agreements, or forbearance programs in effect as to such Lease and the
Company and its Subsidiaries have not assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in such Lease.
With respect to each lease and sublease listed on the LEASED REAL
PROPERTY SCHEDULE: (a) the lease or sublease is legal, valid, binding,
enforceable and in full force and effect and will continue to be so on
identical terms immediately following the Closing; (b) neither the
Company and its Subsidiaries nor any other party to the lease or
sublease is in material breach or default, and no event has occurred
which, with notice of lapse of time, would constitute such a material
breach or default or permit termination, modification or acceleration
under the lease or sublease; (c) neither the Company and its
Subsidiaries nor any Seller has assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the leasehold
or subleasehold; (d) all buildings, improvements or other property
leased or subleased thereunder are supplied with utilities and other
services necessary for the operation thereof (including gas,
electricity, water, telephone, sanitary and storm sewer, and access to
public roads); and (e) with respect to each sublease, to the Knowledge
of the Company the representations and warranties set forth in
subparagraphs (a) through (d) above are true and correct with respect
to the underlying lease.
(ii) REAL PROPERTY DISCLOSURE. Except as disclosed on the
attached LEASED REAL PROPERTY SCHEDULE, there is no real property
leased or owned which is used in the business of the Company and its
Subsidiaries. The Company and its Subsidiaries do not own any real
property.
(iii) CURRENT USE. There is no known violation of any
covenant, condition, restriction, easement, agreement or order of any
governmental authority having jurisdiction over any the Leased Real
Property that affects such real property or the use or occupancy
thereof. No damage or destruction has occurred with respect to any of
the Leased Real Property that, individually or in the aggregate, has
had or resulted in, or will have or result in, a significant adverse
effect on the operation of the business the Company and its
Subsidiaries. To the Company's Knowledge, no current use by the Company
and its Subsidiaries of the Leased Real Property is dependent on a
nonconforming use or other approval from a governmental authority, the
absence of which would significantly limit the use of any of the
properties or assets in the operation of the business.
(iv) CONDITION AND OPERATION OF IMPROVEMENTS. All buildings
and all components of all buildings, structures and other improvements
included within the Leased Real Property (the "IMPROVEMENTS"), are in
good condition and repair and adequate to operate such facilities as
currently used. All utilities and other similar systems serving the
Leased Real Property are installed and operating and are sufficient to
enable the Leased Real Property to continue to be used and operated in
the manner currently being used and operated.
5L. TAX MATTERS. Except as set forth on the attached TAXES SCHEDULE:
(i) The Company and its Subsidiaries have filed all Tax
Returns which they are required to file under applicable laws and
regulations, and all such Tax Returns are complete and correct and have
been prepared in compliance with all applicable laws and regulations;
the Company and its Subsidiaries have paid all Taxes due and owing by
them (whether or not such Taxes are shown or required to be shown on a
Tax Return) and has withheld and paid over to the appropriate taxing
authority all Taxes which they are required to withhold from amounts
paid or owing to any employee, shareholder, creditor or other third
party;
(ii) The Company and its Subsidiaries have not (a) waived any
statute of limitations with respect to any Taxes or agreed to any
extension of time for filing any Tax Return which has not been filed or
(b) consented to extend to a date later than the date hereof the period
in which any Tax may be assessed or collected by any foreign, federal,
state or local taxing authority;
(iii) The accrual for Taxes on the Latest Balance Sheet would
be adequate to pay all Tax liabilities of the Company and its
Subsidiaries if their current tax year were treated as ending on the
Closing Date (excluding any amount recorded which is attributable
solely to timing differences between book and Tax income);
(iv) The Company and its Subsidiaries have not received from
any foreign, federal, state or local taxing authority (including, but
not limited to, jurisdictions where the Company and its Subsidiaries
have filed Tax Returns) any (a) notice indicating an intent to open an
audit or other review, (b) request for information related to Tax
matters or (c) notice of deficiency or proposed adjustment for any
amount of Tax proposed, asserted or assessed by any taxing authority
against the Company and its Subsidiaries and furthermore, the Company
and its Subsidiaries have no pending foreign, federal, state or local
Tax audits or administrative or judicial proceedings;
(v) The Company and its Subsidiaries have never been a member
of an Affiliated Group, other than one in which the Company was the
common parent, or filed or been included in a combined, consolidated or
unitary income Tax Return other than one filed by the Company;
(vi) The Company and its Subsidiaries have not made an
election under Section 341(f) of the IRC and Purchasers will not be
required to deduct and withhold any amount pursuant to IRC Section
1445(a) upon the purchase of the Stock; and
(vii) The Company and its Subsidiaries have not made any
payments, and are not and will not become obligated (under any contract
entered into on or before the Closing Date) to make any payments, that
will be non-deductible under Section 280G of the IRC (or any
corresponding provision of state, local or foreign income Tax law).
5M. CONTRACTS AND COMMITMENTS.
(i) Except as expressly contemplated by this Agreement or as
set forth on the attached CONTRACTS SCHEDULE or the attached EMPLOYEE
BENEFITS SCHEDULE, the Company and its Subsidiaries are not party to or
bound by any written or oral: (a) pension, profit sharing, stock
option, employee stock purchase or other plan or arrangement providing
for deferred or other compensation to employees or any other employee
benefit plan or arrangement, or any collective bargaining agreement or
any other contract with any labor union, or severance agreements,
programs, policies or arrangements; (b) contract for the employment of
any officer, individual, employee or other Person on a full-time,
part-time, consulting or other basis providing annual compensation in
excess of $50,000 or contract relating to loans to officers, directors
or Affiliates or contract providing for the payment of any cash
compensation or benefits upon the consummation of the transactions
contemplated hereby; (c) contract under which the Company and its
Subsidiaries have advanced, loaned or invested or agreed to advance,
loan or invest monies to or in any other Person; (d) agreement or
indenture relating to borrowed money or other Indebtedness or the
mortgaging, pledging or otherwise placing a Lien on any material asset
or material group of assets of the Company and its Subsidiaries; (e)
guaranty of any obligation or any letter of credit arrangement; (f)
lease or agreement under which the Company or its Subsidiaries are
lessees of or holds or operates any property, real or personal, owned
by any other party, except for any lease of real or personal property
under which the aggregate annual rental payments do not exceed $10,000;
(g) lease or agreement under which the Company or its Subsidiaries is a
lessor of or permits any third party to hold or operate any property,
real or personal, owned or controlled by the Company and its
Subsidiaries; (h) contract or group of related contracts with the same
party or group of affiliated parties the performance of which involves
consideration in excess of $10,000; (i) assignment, license,
indemnification or agreement with respect to any intangible property
(including, without limitation, any Intellectual Property); (j)
warranty agreement with respect to its services rendered or any
products sold or leased; (k) agreement under which it has granted any
Person any registration rights (including, without limitation, demand
and piggyback registration rights); (l) sales representative, sales,
distribution or franchise agreement; (m) outstanding power of attorney
or other agency agreement; (n) nondisclosure or confidentiality
agreements; (o) contract relating to the marketing, advertising or
promotion of its services or products; (p) agreement with a term of
more than six (6) months which is not terminable by the Company and its
Subsidiaries upon 30 days' or less notice without penalty; (q)
contract, agreement or other arrangement with any officer, director,
stockholder, employee or Affiliate or any Affiliate of any officer,
director, stockholder or employee, or any Affiliate of the Company and
its Subsidiaries or any individual related by blood, marriage or
adoption to any such individual or any entity in which any such Person
or individual owns any beneficial interest; (r) contract or agreement
prohibiting it from freely engaging in any business or competing
anywhere in the world; or (s) any other agreement which is material to
its operations and business prospects or involves a consideration in
excess of $10,000 annually, whether or not in the ordinary course of
business.
(ii) All of the contracts, agreements and instruments set
forth or required to be set forth on the CONTRACTS SCHEDULE are valid,
binding and enforceable in accordance with
their respective terms and shall be in full force and effect without
penalty in accordance with their terms upon consummation of the
transactions contemplated hereby. The Company and its Subsidiaries have
performed all material obligations required to be performed by it under
such contracts, agreements and instruments and are not in material
default under or in material breach of nor in receipt of any claim of
default or breach under any contract, agreement or instrument to which
the Company and its Subsidiaries are subject; no event has occurred
which it is foreseeable with the passage of time or the giving of
notice or both would result in a material default, breach or event of
noncompliance by the Company and its Subsidiaries under any contract,
agreement or instrument to which the Company and its Subsidiaries are
subject; the Company and its Subsidiaries do not have any present
expectation or intention of not fully performing all such obligations
on a timely basis; the Company has no Knowledge of any material breach
or anticipated breach by the other parties to any contract, agreement,
instrument or commitment to which the Company and its Subsidiaries are
a party; and the Company and its Subsidiaries are not a party to any
contract or commitment that might reasonably be expected to have a
Material Adverse Effect.
(iii) The Purchasers' special counsel has been supplied with a
true and correct copy of, or been provided access to, each of the
written instruments, plans, contracts and agreements and an accurate
description of each of the oral arrangements, contracts and agreements
which are referred to on the CONTRACTS SCHEDULE, together with all
amendments, waivers or other changes thereto.
5N. INTELLECTUAL PROPERTY RIGHTS.
(a) The attached INTELLECTUAL PROPERTY SCHEDULE contains a complete and
accurate list of all (a) patented or registered Intellectual Property Rights
owned or used by the Company and its Subsidiaries, (b) pending patent
applications and applications for registrations of other Intellectual Property
Rights filed by the Company and its Subsidiaries, and (c) material unregistered
Intellectual Property Rights owned or used by the Company and its Subsidiaries.
The INTELLECTUAL PROPERTY SCHEDULE also contains a complete and accurate list of
all material licenses and other rights granted by the Company and its
Subsidiaries to any third party with respect to any Intellectual Property Rights
and all licenses and other rights granted by any third party to the Company and
its Subsidiaries with respect to any Intellectual Property Rights, in each case
identifying the subject Intellectual Property Rights. The Company and its
Subsidiaries own all right, title and interest to, free and clear of all Liens,
or has the right to use pursuant to a valid license, all Intellectual Property
Rights necessary for the operation of the businesses of the Company and its
Subsidiaries as presently conducted. Except as set forth on the INTELLECTUAL
PROPERTY SCHEDULE, the loss or expiration of any Intellectual Property Right or
related group of Intellectual Property Rights owned or used by the Company and
its Subsidiaries would not reasonably be expected to have a Material Adverse
Effect, and no such loss or expiration is pending or, to the Company's
Knowledge, threatened. The Company has taken all reasonably necessary actions to
maintain and protect the Intellectual Property Rights which it owns.
(b) Except as set forth on the INTELLECTUAL PROPERTY SCHEDULE, (a) the
Company and its Subsidiaries own all right, title and interest in and to all of
the Intellectual Property Rights listed on such schedule, free and clear of all
Liens, (b) there have been no claims made asserting the invalidity, misuse or
unenforceability of any of such Intellectual Property Rights, and, to the
Company's Knowledge, there are no valid grounds for the same, (c) to the
Company's Knowledge, there is no infringement or misappropriation by, or
conflict with, any third party with respect to such Intellectual Property Rights
(including, without limitation, any demand or request that the Company license
any rights from a third party), (d) the conduct of the businesses of the Company
and its Subsidiaries has not infringed, misappropriated or conflicted with and
does not infringe, misappropriate or conflict with any Intellectual Property
Rights of other Persons and (e) to the Company's Knowledge, the Intellectual
Property Rights owned by or licensed to the Company and its Subsidiaries have
not been infringed, misappropriated or conflicted by other Persons. The
transactions contemplated by this Agreement shall have no material adverse
effect on the right, title and interest of the Company and its Subsidiaries in
and to the Intellectual Property Rights listed on the INTELLECTUAL PROPERTY
SCHEDULE.
(c) To the Company's Knowledge, none of the computer software (other
than commercially available licensed software), computer firmware, computer
hardware (whether general or special purpose) or other similar or related items
of automated, computerized or software systems that are used or relied on by the
Company or its Subsidiaries in the conduct of their respective businesses will
malfunction, will cease to function, will generate incorrect data or will
produce incorrect results when processing, providing or receiving (i)
date-related data from, into and between the twentieth and twenty-first
centuries or (ii) date-related data in connection with any valid date in the
twentieth and twenty-first centuries.
(d) None of the products and services sold, licensed, rendered, or
otherwise provided by the Company or its Subsidiaries in the conduct of their
respective businesses will malfunction, will cease to function, will generate
incorrect data or will produce incorrect results when processing, providing or
receiving (i) date-related data from, into and between the twentieth and
twenty-first centuries or (ii) date-related data in connection with any valid
date in the twentieth and twenty-first centuries; and, accordingly, neither the
Company nor its Subsidiaries will be subject to any claim, demand, action, suit,
liability, damage, material loss, or material expense arising from, or related
to, circumstances where such products and services malfunction, cease to
function, generate incorrect data, or produce incorrect results when processing,
providing or receiving (i) date-related data from, into and between the
twentieth and twenty-first centuries or (ii) date-related data in connection
with any valid date in the twentieth and twenty-first centuries.
5O. GOVERNMENT LICENSES AND PERMITS. The attached PERMITS SCHEDULE
contains a complete listing and summary description of all permits, licenses,
franchises, certificates, approvals and other authorizations of foreign,
federal, state and local governments or agencies or other similar rights owned,
possessed or used by the Company and its Subsidiaries in the conduct of their
business and the ownership of their properties (collectively, the "LICENSES").
The Company and its Subsidiaries own or possess all right, title and interest in
and to all of the Licenses and the Licenses constitute all permits, licenses,
franchises, certificates, approvals and other authorizations necessary for the
conduct of the business of the Company and its
Subsidiaries. The Company and its Subsidiaries are in compliance with the terms
and conditions of the Licenses and have received no notices that they are in
violation of any of the terms or conditions of such Licenses or alleging the
failure to hold or obtain any permit, license, franchise, certificate, approval
or authorization. The Company and its Subsidiaries have taken all necessary
action to maintain such Licenses. No loss or expiration of any License is
pending or, to the Knowledge of the Company, threatened, other than expiration
in accordance with the terms thereof and all of such Licenses shall be owned or
available for use by the Company and its Subsidiaries on substantially identical
terms immediately after the Closing.
5P. LITIGATION, ETC. There are no actions, suits, proceedings, orders,
investigations or claims pending or, to the Company's Knowledge, threatened
against or affecting the Company and its Subsidiaries (or to the Company's
Knowledge, pending or threatened against or affecting any of the officers,
directors or employees of the Company and its Subsidiaries with respect to their
businesses or proposed business activities) at law or in equity, or before or by
any governmental department, commission, board, bureau, agency or
instrumentality (including, without limitation, any actions, suit, proceedings
or investigations with respect to the transactions contemplated by this
Agreement) which could have a Material Adverse Effect; the Company and its
Subsidiaries are not subject to any arbitration proceedings under collective
bargaining agreements or otherwise or, to the Company's Knowledge, any
governmental investigations or inquiries; and, to the Company's Knowledge, there
is no basis for any of the foregoing. The Company and its Subsidiaries are not
subject to any judgment, order or decree of any court or other governmental
agency.
5Q. BROKERAGE. Except as set forth on the attached BROKERAGE SCHEDULE,
there are no claims for brokerage commissions, finders' fees or similar
compensation in connection with the transactions contemplated by this Agreement
based on any arrangement or agreement binding upon the Company and its
Subsidiaries. The Company and its Subsidiaries shall pay, and hold the
Purchasers harmless against, any liability, loss or expense (including, without
limitation, attorneys' fees and out-of-pocket expenses) arising in connection
with any such claim.
5R. GOVERNMENTAL CONSENT, ETC. No permit, consent, approval or
authorization of, or declaration to or filing with, any governmental authority
is required in connection with the execution, delivery and performance by the
Company and its Subsidiaries of this Agreement or the other agreements
contemplated hereby, or the consummation by the Company and its Subsidiaries of
any other transactions contemplated hereby or thereby.
5S. INSURANCE. The attached INSURANCE SCHEDULE contains a list of each
insurance policy maintained by the Company and its Subsidiaries with respect to
their properties, assets and businesses, and each such policy is in full force
and effect. The Company and its Subsidiaries are not in default with respect to
its obligations under any insurance policy maintained by it, and has not been
denied insurance coverage. Except as set forth on the INSURANCE SCHEDULE, the
Company and its Subsidiaries do not have any self-insurance or co-insurance
programs, and the reserves set forth on the Latest Balance Sheet are adequate to
cover all of the anticipated liabilities of the Company and its Subsidiaries
with respect to any such self-insurance or co-insurance programs.
5T. EMPLOYEES. Except as set forth on the attached EMPLOYEES SCHEDULE,
the Company has no Knowledge that any executive or any key employee of the
Company and its Subsidiaries or any group of employees of the Company and its
Subsidiaries has any plans to terminate his or her employment with the Company
or its Subsidiaries. The Company and its Subsidiaries have complied in all
material respects with all laws relating to the employment of labor (including,
without limitation, provisions thereof relating to wages, hours, equal
opportunity, collective bargaining and the payment of social security and other
taxes), and the Company has no Knowledge of and has never experienced any
material labor relations problems (including, without limitation, any union
organization activities, threatened or actual strikes or work stoppages or
material grievances). Neither the Company nor, to the Company's Knowledge, any
of the employees of the Company and its Subsidiaries are subject to any
noncompete, nondisclosure, confidentiality, employment, consulting or similar
agreements relating to, affecting or in conflict with the present or proposed
business activities of the Company, except for agreements between the Company
and its present and former employees.
5U. ERISA. Except as set forth on the attached EMPLOYEE BENEFITS
SCHEDULE, the Company and its Subsidiaries do not maintain or have any
obligation to contribute to or any other liability with respect to or under
(including but not limited to current or potential withdrawal liability), nor
has it ever maintained or had any obligation to contribute to or any other
liability with respect to or under, (i) any plan or arrangement whether or not
terminated, which provides medical, health, life insurance or other welfare type
benefits for current or future retired or terminated employees (except for
limited continued medical benefit coverage required to be provided under Section
4980B of the IRC or as required under applicable state law), (ii) any
"multiemployer plan"(as defined in Section 3(37) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), (iii) any employee plan which
is a tax-qualified "defined benefit plan" (as defined in Section 3(35) of
ERISA), whether or not terminated, (iv) any employee plan which is a
tax-qualified "defined contribution plan" as defined in Section 3(34) of ERISA),
whether or not terminated, or (v) any other plan or arrangement providing
benefits to current or former employees, including any bonus plan, plan for
deferred compensation, employee health or other welfare benefit plan or other
arrangement, whether or not terminated. For purposes of this Section 5U, the
term "Company" includes all organizations under common control with the Company
pursuant to Section 414(b) or (c) of the IRC. With respect to the plans set
forth on the EMPLOYEE BENEFITS SCHEDULE (the "PLANS"), all required or
recommended (in accordance with historical practices) payments, premiums,
contributions, reimbursements or accruals for all periods ending prior to or as
of the Closing shall have been made or properly accrued. The Plans and all
related, insurance contracts and funds have been maintained, funded and
administered in compliance in all material respects with the applicable
provisions of ERISA, the IRC and other applicable laws. The Company has timely
complied in all material respects with all reporting and disclosure obligations
as they apply to the Plans, and the Company has complied in all material
respects with the requirements of COBRA.
5V. LEGAL COMPLIANCE. Each of the Company and its Subsidiaries has
complied with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local, and foreign governments (and all
agencies thereof), and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced against
any of them alleging any failure so to comply, except where the failure to
comply would not have a Material Adverse Effect.
5W. AFFILIATED TRANSACTIONS. Except as set forth on the attached
AFFILIATED TRANSACTIONS SCHEDULE, no officer, director, employee, shareholder or
Affiliate of the Company and its Subsidiaries or any individual related by
blood, marriage or adoption to any such individual or any entity in which any
such Person or individual owns any beneficial interest, is a party to any
agreement, contract, commitment or transaction with the Company or its
Subsidiaries or has any interests in any property used by the Company or its
Subsidiaries.
5X. OFFICERS AND DIRECTORS; BANK ACCOUNTS. The attached OFFICERS,
DIRECTORS AND BANK ACCOUNTS SCHEDULE lists all officers and directors of the
Company and its Subsidiaries, and all of the bank accounts of the Company and
its Subsidiaries (designating each authorized signatory and the level of each
signatory's authorization).
5Y. PRODUCT WARRANTY. All of the products manufactured, sold, leased,
and delivered by the Company and its Subsidiaries have conformed with all
applicable contractual commitments and all express and implied warranties, and
except as set forth on the attached PRODUCT WARRANTY SCHEDULE, none of the
Company and its Subsidiaries has any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due) for replacement or repair thereof or other damages in connection therewith,
subject only to the reserve for product warranty claims set forth on the face of
the Latest Balance Sheet (rather than in any notes thereto) as adjusted for
operations and transactions through the Closing Date in accordance with the past
custom and practice of the Company and its Subsidiaries. All of the products
manufactured, sold, leased, and delivered by the Company and its Subsidiaries
are subject to standard terms and conditions of sale or lease. The PRODUCT
WARRANTY SCHEDULE includes copies of the standard terms and conditions of sale
or lease for each of the Company and its Subsidiaries (containing applicable
guaranty, warranty, and indemnity provisions).
5Z. ENVIRONMENTAL AND SAFETY MATTERS. Except as set forth on the
attached ENVIRONMENTAL SCHEDULE, the Company and its Subsidiaries have complied
and are in compliance with all Environmental and Safety Requirements (including
without limitation all permits and licenses required thereunder). The Company
and its Subsidiaries have received no oral or written notice of any violation
of, or any liability (contingent or otherwise), investigatory, corrective or
remedial obligation under, any Environmental and Safety Requirements. Neither
this Agreement nor the consummation of the transaction that is the subject of
this Agreement will result in any obligations for site investigation or cleanup,
or notification to or consent of government agencies or third parties, pursuant
to any so-called "transaction-triggered" or "responsible property transfer"
Environmental and Safety Requirements. To the Company's Knowledge, the Company
and its Subsidiaries have not released, disposed of or transported or arranged
for the disposal of any hazardous substance or owned or operated any property or
facility (and no such property or facility is contaminated by any such
substance) in a manner that has given or would give rise to liabilities under
CERCLA, the Resource Conservation and Recovery Act (as amended) or any
other Environmental and Safety Requirements. To the Company's Knowledge, there
are no underground storage tanks, asbestos-containing material in any form and
condition, polychlorinated biphenyls or landfills, surface impoundments or
disposal areas at any property or facility owned or operated by the Company or
its Subsidiaries. To the Company's Knowledge, no Environmental Lien has attached
to any property owned, leased or operated by the Company or its Subsidiaries. To
the Company's Knowledge, no facts or circumstances with respect to the past or
current operation or facilities of the Company and its Subsidiaries or any
predecessor or affiliate thereof (including, without limitation any onsite or
offsite disposal or release of hazardous materials, substances or wastes) would
give rise to any liability or corrective or remedial obligation under any
Environmental and Safety Requirements. Except as set forth on the Environmental
Schedule, to the Company's Knowledge, neither the Company and its Subsidiaries,
nor any of its predecessors or affiliates has, either expressly or by operation
of law, assumed or undertaken any liability or obligation of any other Person
relating to Environmental and Safety Requirements.
5AA. SUPPLIERS AND CUSTOMERS. The SUPPLIERS AND CUSTOMERS SCHEDULE
attached hereto accurately sets forth a list of the top ten vendors and service
providers and the top fifteen customers of the Company by volume of commissions
for the fiscal year ended December 31, 1997. No material supplier, vendor or
service provider of the Company or its Subsidiaries has given the Company or its
Subsidiaries notice that it shall stop, or materially decrease the rate of, or
materially and adversely change the terms with respect to, paying any
commissions to the Company and its Subsidiaries or supplying materials, products
or services to the Company and its Subsidiaries (whether as a result of the
transaction contemplated hereby or otherwise). No material customer of the
Company or its Subsidiaries has given the Company or its Subsidiaries notice
that it shall stop, or materially decrease the rate of, buying services or any
materials or products from the Company or its Subsidiaries (whether as a result
of the transaction contemplated hereby or otherwise).
5BB. DISCLOSURE. Neither this Agreement nor any of the schedules,
attachments, written statements, documents, certificates or other items prepared
or supplied to the Purchasers by or on behalf of the Company and its
Subsidiaries with respect to the transactions contemplated hereby contain any
untrue statement of a material fact or omit a material fact necessary to make
each statement contained herein or therein not misleading. There is no fact
which the Company and its Subsidiaries have not disclosed to the Purchasers and
of which any of its officers, directors or executive employees is aware and
which has had or might reasonably be anticipated to have a material adverse
effect upon the existing or expected financial condition, operating results,
assets, customer or supplier relations, employee relations or business prospects
of the Company and its Subsidiaries.
5CC. ACQUISITION PROPOSALS. The Company and its Subsidiaries are not a
party to or bound by any agreement with respect to any Acquisition Proposal
(other than this Agreement) and the Company and its Subsidiaries have terminated
all discussions with any third party (other than Purchasers) regarding any
Acquisition Proposal.
Section 6. REPRESENTATION AND WARRANTIES OF THE PURCHASERS. As a
material inducement to the Company to enter into this Agreement and sell the
Purchased Shares hereunder, each Purchaser hereby represents and warrants, as to
itself (as applicable) and not as to any other Purchaser, that:
6A. ORGANIZATION, CORPORATE POWERS AND LICENSES OF SMART TECHNOLOGY.
Smart Technology is duly organized, validly existing and in good standing under
the laws of the jurisdiction in which Smart Technology is organized. Smart
Technology possesses all requisite power and authority and all material
licenses, permits and authorizations necessary to carry on its businesses as now
conducted and to carry out the transactions contemplated by this Agreement.
6B. AUTHORIZATION; NO BREACH BY SMART TECHNOLOGY. The execution,
delivery and performance of this Agreement, the Management Agreements, the
Stockholders Agreement, the Professional Services Agreements, the Registration
Agreement, and all other agreements contemplated hereby to which Smart
Technology is a party or a beneficiary have been duly authorized by Smart
Technology. This Agreement, the Management Agreements, the Stockholders
Agreement, the FMC Professional Services Agreement, the Registration Agreement,
and all other agreements contemplated hereby to which Smart Technology is a
party or beneficiary each constitutes a valid and binding obligation of Smart
Technology, enforceable in accordance with its terms. This Agreement, the
Management Agreements, the Stockholders Agreement, the FMC Professional Services
Agreements, the Registration Agreement, and all other agreements contemplated
hereby and the fulfillment of and compliance with the respective terms hereof
and thereof by Smart Technology, do not and shall not (i) conflict with or
result in a breach of the terms, conditions or provisions, (ii) constitute a
default under, (iii) result in the violation of, or require any authorization,
consent, approval, exemption or other action by or notice or declaration to, or
filing with any court, administrative or governmental body or agency pursuant
to, the organizational documents of Smart Technology, or any law, statute, rule
or regulation to which Smart Technology is subject, or any agreement,
instrument, order, judgement or decree to which Smart Technology is subject.
6C. ORGANIZATION, CORPORATE POWERS AND LICENSES OF GTCR. GTCR is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which GTCR is organized. GTCR possesses all requisite power and
authority and all material licenses, permits and authorizations necessary to
carry on its businesses as now conducted and to carry out the transactions
contemplated by this Agreement.
6D. AUTHORIZATION; NO BREACH BY GTCR. The execution, delivery and
performance of this Agreement, the Management Agreements, the Stockholders
Agreement, the Professional Services Agreements, the Registration Agreement, and
all other agreements contemplated hereby to which GTCR is a party or a
beneficiary have been duly authorized by GTCR. This Agreement, the Management
Agreements, the Stockholders Agreement, the Professional Services Agreements,
the Registration Agreement,
and all other agreements contemplated hereby to which GTCR is a party or a
beneficiary each constitutes a valid and binding obligations of GTCR,
enforceable in accordance with its terms. This Agreement, the Management
Agreements, the Stockholders Agreement, the Professional Services Agreements,
the Registration Agreement, and all other agreements contemplated hereby and the
fulfillment of and compliance with the respective terms hereof and thereof by
GTCR, do not and shall not (i) conflict with or result in a breach of the terms,
conditions or provisions, (ii) constitute a default under, (iii) result in the
violation of, or require any authorization, consent, approval, exemption or
other action by or notice or declaration to, or filing with any court,
administrative or governmental body or agency pursuant to, the organizational
documents of GTCR, or any law, statute, rule or regulation to which GTCR is
subject, or any agreement, instrument, order, judgement or decree to which GTCR
is subject.
6E. BROKERAGE. There are no claims for brokerage commissions, finder's
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement binding upon such
Purchaser.
6F. INVESTMENT INTENTION. Such Purchaser is acquiring the Purchased
Shares to be acquired by it solely for its own account as an investment and not
with a view to any distribution or resale thereof within the meanings of such
terms under the Securities Act. Such Purchaser has been advised that the
Purchased Shares have not been registered under the Securities Act or under the
provisions of any state securities or "blue sky" law. Such Purchaser, by
accepting the Purchased Shares, agrees and acknowledges that it will not,
directly or indirectly, offer, transfer, sell, assign, pledge, encumber,
hypothecate or dispose of such Purchased Shares (or solicit any offers to
purchase or otherwise acquire or take a pledge of any of the Purchased Shares)
unless such offer, transfer, sale, assignment, pledge, encumbrance,
hypothecation or other disposition is made (i) pursuant to an effective
registration statement under the Securities Act and in compliance with all
applicable state securities or "blue sky" laws or (ii) pursuant to an available
exemption from registration under, or otherwise in compliance with, the
Securities Act and all applicable state securities or "blue sky" laws. Nothing
contained herein shall prevent such Purchaser and subsequent holders of
Purchased Shares from transferring such securities in compliance with the
provisions of Section 4 hereof.
6G. ACCREDITED INVESTOR, ABILITY TO BEAR RISK; EVALUATION OF RISKS.
Such Purchaser is an "Accredited Investor" (as such term is defined in Rule 501
of Regulation D of the Securities Act). The financial situation of the Purchaser
is such that it can afford to bear the economic risk of holding the unregistered
Purchased Shares for an indefinite period of time. Such Purchaser can afford to
suffer the complete loss of their investment in the Purchased Shares. The
knowledge and experience of such Purchaser in financial and business matters is
such that it is capable of evaluating the risk of the investment in the
Purchased Shares. Such Purchaser acknowledges that it has had access to such
financial and other information, and has been afforded the opportunity to ask
questions of representatives of the Company and receive answers thereto, as such
Purchaser has deemed necessary in connection with its decision to purchase the
Purchased Shares, and that no representation or warranties, express or implied,
are being made by the Company with respect to the Company or the Purchased
Shares, other than those expressly set forth herein.
Section 7. DEFINITIONS. For the purposes of this Agreement, the
following terms have the meanings set forth below:
"ACQUISITION PROPOSAL" means any proposal or offer to acquire
all or a substantial part of the business or properties of the Company
or any capital stock of the Company, whether by merger, tender offer,
exchange offer, sale of assets or similar transaction involving the
Company, division or operating or principal business unit of the
Company.
"AFFILIATE" of any particular person or entity means any other
person or entity controlling, controlled by or under common control
with such particular person or entity and with respect to a Purchaser
shall also include any general or limited partner of such Purchaser.
"AFFILIATED GROUP" means an affiliated group as defined in
Section 1504 of the IRC (or any analogous combined, consolidated or
unitary group defined under state, local or foreign income Tax law) of
which the Company or any Subsidiary is or has been a member.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"COBRA" means part 6 of Subtitle B of Title I of ERISA.
"ENVIRONMENTAL AND SAFETY REQUIREMENTS" means all federal,
state, local and foreign statutes, regulations, ordinances and other
provisions having the force or effect of law, all judicial and
administrative orders and determinations, all contractual obligations
and all common law in each case concerning public health and safety,
worker health and safety and pollution or protection of the
environment.
"ENVIRONMENTAL LIEN" means any Lien, whether recorded or
unrecorded, in favor of any governmental entity, relating to any
liability of the Company arising under any Environmental and Safety
Requirements.
"GTCR FUNDS" means GTCR Fund VI, L.P., a Delaware limited
partnership, GTCR VI Executive Fund, L.P., a Delaware limited
partnership, and GTCR Associates VI, a Delaware general partnership.
"INDEBTEDNESS" means at a particular time, without
duplication, (i) any indebtedness for borrowed money or issued in
substitution for or exchange of indebtedness for borrowed money, (ii)
any indebtedness evidenced by any note, bond, debenture or other debt
security, (iii) any indebtedness for the deferred purchase price of
property or services with respect to which a Person is liable,
contingently or otherwise, as obligor or otherwise (other than trade
payables and other current liabilities incurred in the ordinary course
of business which are not more than six months past due), (iv) any
commitment by which a Person assures a creditor against loss
(including, without limitation, contingent reimbursement obligations
with respect to letters of credit), (v) any indebtedness guaranteed
in any manner by a Person (including, without limitation,
guarantees in the form of an agreement to repurchase or reimburse),
(vi) any obligations under capitalized leases with respect to which
a Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or with respect to which obligations a
Person assures a creditor against loss.
"INTELLECTUAL PROPERTY RIGHTS" means all (i) patents, patent
applications, patent disclosures and inventions, (ii) trademarks,
service marks, trade dress, trade names, logos and corporate names and
registrations and applications for registration thereof together with
all of the goodwill associated therewith, (iii) copyrights (registered
or unregistered) and copyrightable works and registrations and
applications for registration thereof, (iv) mask works and
registrations and applications for registration thereof, (v) computer
software, data, data bases and documentation thereof, (vi) trade
secrets and other confidential information (including, without
limitation, ideas, formulas, compositions, inventions (whether
patentable or unpatentable and whether or not reduced to practice),
know-how, manufacturing and production processes and techniques,
research and development information, drawings, specifications,
designs, plans, proposals, technical data, copyrightable works,
financial and marketing plans and customer and supplier lists and
information), (vii) other intellectual property rights and (viii)
copies and tangible embodiments thereof (in whatever form or medium).
"INVESTMENT" as applied to any Person means (i) any direct or
indirect purchase or other acquisition by such Person of any notes,
obligations, instruments, stock, securities or ownership interest
(including partnership interests and joint venture interests) of any
other Person and (ii) any capital contribution by such Person to any
other Person.
"INVESTOR COMMON" means (i) the Common Stock issued hereunder
and (ii) any Common Stock issued or issuable with respect to the Common
Stock referred to in clause (i) above by way of stock dividends or
stock splits or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to
any particular shares of Investor Common, such shares shall cease to be
Investor Common when they have been (a) effectively registered under
the Securities Act and disposed of in accordance with the Registration
statement covering them or (b) distributed to the public through a
broker, dealer or market maker pursuant to Rule 144 under the
Securities Act (or any similar rule then in force).
"INVESTOR PREFERRED" means (i) the Class A Preferred issued
hereunder and (ii) any Class A Preferred issued or issuable with
respect to the Class A Preferred referred to in clause (i) above by way
of stock dividends or stock splits or in connection with a combination
of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular shares of Investor Preferred, such
shares shall cease to be Investor Preferred when they have been (a)
effectively registered under the Securities Act and disposed of in
accordance with the Registration Statement covering them or (b)
distributed to the public through a broker, dealer or market maker
pursuant to Rule 144 under the Securities Act (or any similar rule then
in force).
"INVESTOR STOCK" means the Investor Preferred and the Investor
Common.
"IRC" means the Internal Revenue Code of 1986, as amended, and
any reference to any particular IRC Section shall be interpreted to
include any revision of or successor to that Section regardless of how
numbered or classified.
"KNOWLEDGE" means the actual knowledge, without investigation,
of Xxx X. Xxxxx, Xxxxxx X. Xxxxxx, Xxxxxx X. XxXxxxxx and Xxxxxxxx X.
XxXxxxx.
"LIEN" or "LIENS" means any mortgage, pledge, security
interest, encumbrance, lien or charge of any kind (including, without
limitation, any conditional sale or other title retention agreement or
lease in the nature thereof, any sale of receivables with recourse
against such Person, any of its Subsidiaries or any Affiliate, any
filing or agreement to file a financing statement as debtor under the
Uniform Commercial Code or any similar statute other than to reflect
ownership by a third party of property leased to such Person under a
lease which is not in the nature of a conditional sale or title
retention agreement, or any subordination arrangement in favor of
another Person (other than any subordination arising in the ordinary
course of business)).
"LOSS" or "LOSSES" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands,
injunctions, orders, decrees, rulings, damages, dues, penalties, fines,
costs, amounts paid in settlement, liabilities, obligations, Taxes,
liens, losses, expenses, and fees, including court costs and reasonable
attorneys' fees and expenses.
"OFFICER'S CERTIFICATE" means a certificate signed by the
Company's president or its chief financial officer, stating that (i)
the officer signing such certificate has made or has caused to be made
such investigations as is intended to permit him to verify the accuracy
of the information set forth in such certificate and (ii) to the best
of such officer's knowledge, such certificate does not misstate any
material fact and does not omit to state any fact necessary to make the
certificate not misleading.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of
business consistent with past custom and practice (including with
respect to quantity and frequency).
"PERMITTED LIENS" means (i) Tax Liens with respect to Taxes
not yet due and payable or which are being contested in good faith by
appropriate proceedings and for which appropriate reserves have been
established in accordance with GAAP; (ii) deposits or pledges made in
connection with, or to secure payment of, utilities or similar
services, workers' compensation, unemployment insurance, old age
pensions or other social security obligations; (iii) interests or title
of a lessor under any of the Leases; (iv) mechanics', materialmen's or
contractors' Liens or encumbrances or any similar Lien or restriction
for amounts not yet due and payable; and (v) easements, rights-of-way,
restrictions and other similar charges and encumbrances not interfering
with the ordinary
conduct of the business of such Person or detracting from the value of
the assets of such Person.
"PERSON" means an individual, a partnership, a limited
liability company, a corporation, an association, a joint stock
company, a trust, a joint venture, an unincorporated organization and a
governmental entity or any department, agency or political subdivision
thereof.
"RESTRICTED SECURITIES" means (i) the Stock issued hereunder
and pursuant to Section 1B(a) and Section 1B(b) hereof and (ii) any
securities issued with respect to the securities referred to in clause
(i) above by way of a stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation
or other reorganization. As to any particular Restricted Securities,
such securities shall cease to be Restricted Securities when they have
(a) been effectively registered under the Securities Act and disposed
of in accordance with the registration statement covering them, (b)
become eligible for sale pursuant to Rule 144(k) (or any similar
provision then in force) under the Securities Act or otherwise
transferred and new certificates for them not bearing the Securities
Act legend set forth in Section 4(iv) have been delivered by the
Company in accordance with Section 4(ii). Whenever any particular
securities cease to be Restricted Securities, the holder thereof shall
be entitled to receive from the Company, without expense, new
certificates of like tenor not bearing a Securities Act legend of the
character set forth in Section 4(iv).
"SECURITIES ACT" means the Securities Act of 1933, as amended,
or any similar federal law then in force.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended, or any similar federal law then in force.
"SECURITIES AND EXCHANGE COMMISSION" includes any governmental
body or agency succeeding to the functions thereof.
"SECURITY INTEREST" means any mortgage, pledge, lien,
encumbrance, charge or other security interest, other than (a)
mechanic's, materialmen's, and similar liens, (b) liens for taxes not
yet due and payable, (c) purchase money liens and liens securing rental
payments under capital lease arrangements, and (d) other liens arising
in the Ordinary Course of Business and not incurred in connection with
the borrowing of money.
"SUBSIDIARY" means, with respect to any Person, any
corporation, limited liability company, partnership, association, joint
venture or other business entity of which (i) if a corporation, fifty
percent (50%) or more of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof is at the
time owned or controlled, directly or indirectly, by that Person or one
or more of the other Subsidiaries of that Person or a combination
thereof, or (ii) if a limited liability company, partnership,
association or
other business entity, fifty percent (50%) or more of the partnership
or other similar ownership interest thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that person or a combination thereof. For purposes
hereof, a Person or Persons shall be deemed to have a fifty percent
(50%) or greater ownership interest in a limited liability company,
partnership, association or other business entity if such Person or
Persons shall be allocated fifty percent (50%) or more of limited
liability company, partnership, association or other business entity
gains or losses or shall be or control the managing general partner of
such limited liability company, partnership, association or other
business entity. The term Subsidiary shall include, without limitation,
the Company's joint venture arrangement with Commerce Direct
International, Inc., a Delaware corporation.
"TAX" means any (A) federal, state, local or foreign income,
gross receipts, franchise, estimated, alternative minimum, add-on
minimum, sales, use, transfer, registration, value added, excise,
natural resources, severance, stamp, occupation, premium, windfall
profit, environmental, customs, duties, real property, personal
property, capital stock, social security, unemployment, disability,
payroll, license, employee or other withholding, or other tax, of any
kind whatsoever, including any interest, penalties or additions to tax
or additional amounts in respect of the foregoing; (B) liability of the
Company or any Subsidiary for the payment of any amounts of the type
described in clause (A) arising as a result of being (or ceasing to be)
a member of any Affiliated Group (or being included (or required to be
included) in any Tax Return relating thereto); and (C) liability of the
Company for the payment of any amounts of the type described in clause
(A) as a result of any express or implied obligation to indemnify or
otherwise assume or succeed to the liability of any other person.
"TAX RETURNS" means returns, declarations, reports, claims for
refund, information returns or other documents (including any related
or supporting schedules, statements or information) filed or required
to be filed in connection with the determination, assessment or
collection of Taxes of any party or the administration of any laws,
regulations or administrative requirements relating to any Taxes.
Section 8. MISCELLANEOUS.
8A. EXPENSES. The Company agrees to pay, and hold the Purchasers and
all holders of Investor Stock harmless against liability for the payment of, (i)
the reasonable fees and expenses of their counsel arising in connection with the
negotiation and execution of this Agreement and the consummation of the
transactions contemplated by this Agreement (including but not limited to fees
and expenses arising with respect to any subsequent purchase of Stock pursuant
to Section 1B(a)(ii) and Section 1B(b)(ii) hereof), (ii) the reasonable fees and
expenses incurred with respect to any amendments or waivers (whether or not the
same become effective) under or in respect of this Agreement, the Management
Agreements, the Stockholders Agreement, the Put Agreement, the Professional
Services Agreements, the Registration Agreement, the Common Stock Repurchase
Agreement and the other agreements contemplated hereby and the Second and Third
Restated Certificates of Incorporation, (iii) stamp and other taxes which may be
payable in
respect of the execution and delivery of this Agreement or the issuance,
delivery or acquisition of any shares of Stock purchased hereunder or in
accordance with Section 1B(a) or Section 1B(b) hereof, and (iv) the fees and
expenses incurred with respect to the interpretation or enforcement of the
rights granted under this Agreement, the Management Agreements, the Stockholders
Agreement, the Put Agreement, the Professional Services Agreements, the
Registration Agreement, the Common Stock Repurchase Agreement and the other
agreements contemplated hereby and the Second and Third Restated Certificate of
Incorporation and the Company's bylaws.
8B. REMEDIES. Each holder of Investor Stock shall have all rights and
remedies set forth in this Agreement and the Second and Third Restated
Certificate of Incorporation and all rights and remedies which such holders have
been granted at any time under any other agreement or contract and all of the
rights which such holders have under any law. Any Person having any rights under
any provision of this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law.
8C. CONSENT TO AMENDMENTS. Except as otherwise expressly provided
herein, the provisions of this Agreement may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
holders of a majority of the Investor Stock. In addition, any amendment of
Section 1B(b) of this Agreement shall require the written consent of Smart
Technology. No other course of dealing between the Company and the holder of any
Stock or any delay in exercising any rights hereunder or under the Second or
Third Restated Certificates of Incorporation shall operate as a waiver of any
rights of any such holders. For purposes of this Agreement, shares of Stock held
by the Company or any Subsidiaries shall not be deemed to be outstanding.
8D. COMPLETE AGREEMENT. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
8E. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained herein or made in writing by any party in connection
herewith shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, regardless of any
investigation made by any Purchaser or on its behalf, and shall terminate on the
second anniversary of this Agreement.
8F. SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not. In addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for the Purchasers' benefit as a
purchaser
or holder of Stock are also for the benefit of, and enforceable by, any
subsequent holder of such Stock. The rights and obligations of GTCR under this
Agreement and the agreements contemplated hereby may be assigned at any time, in
whole or in part, to any investment fund managed by GTCR, or any successor
thereto; provided that (i) such investment fund has adequate capital to purchase
the rights and obligations to be assigned by the assigning party, (ii) such
investment fund provides the representations pursuant to Sections 6F and 6G of
this Agreement and (iii) the assigning party shall only assign its rights under
this Agreement to the assignee in proportion to the amount of stock to be
transferred by the assignor to the assignee (as compared to the total amount of
Company stock owned by the assignor).
8G. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. Where any accounting
determination or calculation is required to be made under this Agreement or the
exhibits hereto, such determination or calculation (unless otherwise provided)
shall be made in accordance with GAAP, except that if because of a change in
GAAP the Company would have to alter a previously utilized accounting method or
policy in order to remain in compliance with GAAP, such determination or
calculation shall continue to be made in accordance with the Company's previous
accounting methods and policies.
8H. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
8I. COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together shall constitute one
and the same Agreement.
8J. DESCRIPTIVE HEADINGS; INTERPRETATION. The descriptive headings of
this Agreement are inserted for convenience only and do not constitute a Section
of this Agreement. The use of the word "including" in this Agreement shall be by
way of example rather than by limitation.
8K. GOVERNING LAW. The corporate law of Delaware shall govern all
issues concerning the relative rights of the Company and its stockholders. All
other questions concerning the construction, validity and interpretation of this
Agreement and the exhibits and schedules hereto shall be governed by and
construed in accordance with the internal laws of the State of Delaware, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
8L. NOTICES. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable express courier service (charges
prepaid) or mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to the Purchasers and to the Company at the address
indicated below:
IF TO THE COMPANY:
AppNet Systems, Inc.
0000X Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attention: President
WITH A COPY TO:
GTCR Xxxxxx Xxxxxx, L.L.C.
Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxxx
AND
Xxxxxxxx & Xxxxx
Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
AND
Xxxxxx, Flyer & Xxxxx
L Street, N.W.
Washington, D.C. 20036-5612
Attention: Xxxxxx X. Xxxxxxxxx
IF TO THE PURCHASERS:
GTCR Xxxxxx Xxxxxx, L.L.C.
Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxx
AND
Smart Technology, L.L.C.
Xxxxxx Xxxx
Xxxxxxx, XX 00000
WITH A COPY TO:
Xxxxxxxx & Xxxxx
Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
AND
Xxxxxx, Flyer & Xxxxx
L Street, N.W.
Washington, D.C. 20036-5612
Attention: Xxxxxx X. Xxxxxxxxx
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Purchase
Agreement on the date first written above.
APPNET SYSTEMS, INC.
By: /s/ Xxx X. Xxxxx
------------------------------
Name: Xxx X. Xxxxx
Its: Chairman and President
GTCR XXXXXX XXXXXX, L.L.C.
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxx
Its: Principal
SMART TECHNOLOGY, L.L.C.
By: /s/ K Bajaj
------------------------------
Name: K. R. Bajaj
Its: Managing Partner
LIST OF EXHIBITS
Exhibit A Pro Forma Monthly Budget
Exhibit B Smart Technology Subordinated Note
Exhibit C Second Restated Certificate of Incorporation
Exhibit D Company's Bylaws
Exhibits E1 to E4 Form of Management Agreements
Exhibit F Stockholders Agreement
Exhibit G Put Agreement
Exhibit H AIS Agreement
Exhibit I GTCR Professional Services Agreement
Exhibit J FMC Professional Services Agreement
Exhibit K Registration Agreement
Exhibit L Common Stock Repurchase Agreement
Exhibit M Exchange Agreement
Exhibit N SVB Common Stock Warrant
Exhibit O SVB Preferred Stock Warrant
Exhibit P Amended Smart Technology Warrant
Exhibit Q First Amendment to Joint Venture Agreement
Exhibit R Anchor Release
Exhibit S Davidson Release
Exhibit T SVB Consent
Exhibit U Third Restated Certificate of Incorporation
LIST OF SCHEDULES
Arbor Stockholders Schedule
Capitalization Schedule
Subsidiary Schedule
Financial Statements Schedule
Indebtedness Schedule
Liabilities Schedule
Extraordinary Transactions Schedule
Developments Schedule
Assets Schedule
Leased Real Property Schedule
Taxes Schedule
Contracts Schedule
Employee Benefits Schedule
Intellectual Property Schedule
Permits Schedule
Brokerage Schedule
Insurance Schedule
Employees Schedule
Employee Benefits Schedule
Affiliated Transactions Schedule
Officer, Director and Bank Accounts Schedule
Product Warranty Schedule
Environmental Schedule
Suppliers and Customers Schedule
FIRST AMENDMENT TO PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO PURCHASE AGREEMENT (this "AMENDMENT") is made
as of August 1, 1998 by and among AppNet Systems, Inc., a Delaware corporation
("APPNET"), Smart Technology, L.L.C. ("SMART TECHNOLOGY"), GTCR Xxxxxx Xxxxxx,
L.L.C., a Delaware limited liability company ("GTCR"), GTCR Fund VI, L.P., a
Delaware limited partnership ("GTCR FUND VI"), GTCR VI Executive Fund, L.P., a
Delaware limited partnership ("EXECUTIVE FUND"), and GTCR Associates VI, a
Delaware general partnership ("ASSOCIATES FUND" and together with GTCR Fund VI
and the Executive Fund, the "GTCR FUNDS").
WHEREAS, GTCR, Smart Technology and AppNet entered into a
Purchase Agreement dated as of June 29, 1998 (the "PURCHASE AGREEMENT");
WHEREAS, pursuant to a Stock Purchase Agreement by and among
GTCR, GTCR Fund VI, the Executive Fund and the Associates Fund dated July 1,
1998 (the "STOCK PURCHASE AGREEMENT"), each of the GTCR Funds purchased from
GTCR the following number of shares of Common Stock at a price of $0.1055 per
share: (i) GTCR Fund VI, 31,978,095 shares; (ii) Executive Fund, 229,251 shares;
and (iii) Associates Fund, 72,404 shares (the "GTCR TRANSFER");
WHEREAS, in connection with the GTCR Transfer, GTCR assigned
to the GTCR Funds the obligation of GTCR to purchase shares of AppNet's Class A
Cumulative Redeemable Preferred Stock, par value $.01 per share (the "CLASS A
PREFERRED") pursuant to Section 1(B)(a)(ii) of the Purchase Agreement;
WHEREAS, pursuant to a Merger Agreement dated July 31, 1998 by
and among AppNet, SSC Acquisition Sub #1, Inc., a wholly owned subsidiary of
AppNet, Software Services Corporation ("SSC") and certain shareholders of SSC,
SSC Acquisition Sub #1, Inc. has agreed to merge with SSC (the "PROPOSED
MERGER") and as partial consideration therefore the SSC shareholders and
optionholders will receive 11,580 shares of Class A Preferred (the "PREFERRED
STOCK CONSIDERATION");
WHEREAS, the Preferred Stock Consideration affects the
commitments of the GTCR Funds and Smart Technology to purchase shares of Class A
Preferred pursuant to the terms of the Purchase Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements set forth herein, and for the purpose of setting forth the terms
and conditions of this Amendment, the parties, intending to be bound, hereby
agree as follows:
1. INCORPORATION OF PURCHASE AGREEMENT. All capitalized terms which are
not defined herein shall have the same meanings as set forth in the Purchase
Agreement. Except as specifically set forth herein, the Purchase Agreement shall
remain in full force and effect and its provisions shall be binding on the
parties hereto.
2. AMENDMENT OF PURCHASE AGREEMENT. The Purchase Agreement is hereby
amended as follows:
The second and third sentences of Section 1B(a)(ii) of the Purchase
Agreement are amended to read as follows:
GTCR is committing to providing $86,627,114 (including the amount
invested to purchase the Purchased Shares) in equity financing to the
Company as the equity portion of the debt and equity financing
necessary to fund the Company's working capital and such acquisitions,
in each case as approved by the Company's board of directors (the
"BOARD") and GTCR (an "APPROVED USE"). In order to implement the
foregoing, GTCR shall purchase from time to time after the Closing,
upon the written request of the Board in connection with such an
Approved Use, up to 83,221.6 shares of Class A Preferred at a price of
$1,000 per share as adjusted from time to time as a result of stock
dividends, stock splits, recapitalization and similar events).
The first two sentences of Section 1B(b)(ii) of the Purchase Agreement
are amended to read as follows:
Upon the purchase from time to time by GTCR of up to 83,221.6 shares of
Class A Preferred pursuant to Section 1B(a) of the Purchase Agreement,
Smart Technology will purchase, and the Company will sell up to an
aggregate of 1,698.4 shares of Class A Preferred at a price of
$1,000.00 per share (as adjusted from time to time as a result of stock
splits, stock dividends, recapitalizations and similar events). The
number of shares of Class A Preferred to be sold by the Company and
purchased by Smart Technology at any time shall equal (i) 1,698.4
shares of Class A Preferred MULTIPLIED BY (ii) a fraction (A) the
numerator of which will be the number of shares of Class A Preferred to
be concurrently purchased by GTCR and (B) the denominator of which will
be 83,221.6 shares.
3. EFFECTUATION. The amendments to the Purchase Agreement contemplated
by this Amendment shall be deemed effective upon the consummation of the
Proposed Merger without any further action required by the parties hereto.
4. CHOICE OF LAW. The construction, validity, interpretation and
enforcement of this Amendment shall be governed by the internal law, and not the
law of conflicts, of the State of Delaware.
5. COUNTERPARTS. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
* * * * *
IN WITNESS WHEREOF, this Amendment has been duly executed by the
parties as of the date first above written.
GTCR XXXXXX XXXXXX, L.L.C.
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxx
Its: Principal
GTCR FUND VI, L.P.
By: GTCR Partners VI, L.P.
Its: General Partner
By: GTCR Xxxxxx Xxxxxx, L.L.C.
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxx
Its: Principal
GTCR VI EXECUTIVE FUND, L.P.
By: GTCR Partners VI, L.P.
Its: General Partner
By: GTCR Xxxxxx Xxxxxx, L.L.C.
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxx
Its: Principal
[Continuation of Purchase Agreement Amendment Signature Page]
GTCR ASSOCIATES VI
By: GTCR Partners VI, L.P.
Its: Managing General Partner
By: GTCR Xxxxxx Xxxxxx, L.L.C.
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxx
Its: Principal
APPNET SYSTEMS, INC.
By: /s/ Xxx X. Xxxxx
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
SMART TECHNOLOGY, L.L.C.
By: /s/ K. Bajaj
-----------------------------------
Name: K. BAJAJ
-----------------------------------
Its: MANAGING PARTNER
-----------------------------------
FORM OF SECOND AMENDMENT TO THE PURCHASE AGREEMENT
THIS SECOND AMENDMENT TO THE PURCHASE AGREEMENT (this "Amendment") is
made as of June ____, 1999, among AppNet Systems, Inc., a Delaware corporation
(the "Company"), Smart Technology, L.L.C. ("Smart Technology"), GTCR Fund VI,
L.P., a Delaware limited partnership ("GTCR Fund VI"), GTCR VI Executive Fund,
L.P., a Delaware limited partnership ("Executive Fund"), and GTCR Associates VI,
a Delaware general partnership ("Associates Fund" and together with GTCR Fund VI
and Executive Fund, the "GTCR Funds"). The GTCR Funds and Smart Technology are
referred to herein collectively as the "Purchasers".
WHEREAS, the Company, Smart Technology and GTCR Xxxxxx Xxxxxx, L.L.C.,
a Delaware limited liability company ("Xxxxxx Xxxxxx"), entered into a Purchase
Agreement, dated as of June 29, 1998, as amended (the "Purchase Agreement"),
which set forth the terms pursuant to which Smart Technology and Xxxxxx Xxxxxx
would purchase Common Stock, par value .0005 per share of the Company ("Common
Stock") and Class A Preferred Stock, par value $.01 per share, of the Company
(the "Class A Preferred Stock");
WHEREAS, pursuant to the Stock Purchase Agreement by and among Xxxxxx
Xxxxxx, GTCR Fund VI, Executive Fund and Associates Fund dated July 1, 1998, the
GTCR Funds purchased all of the Common Stock from Xxxxxx Xxxxxx and Xxxxxx
Xxxxxx assigned to the GTCR Funds its obligations to purchase shares of Class A
Preferred Stock pursuant to Section 1(B)(a)(ii) of the Purchase Agreement;
WHEREAS, the Company expects to offer its Common Stock, par value
$.0005 per share, for sale to the public in an initial public offering pursuant
to a Registration Statement on Form S-1 registered with the Securities and
Exchange Commission (the "Initial Public Offering");
WHEREAS, the Company intends to use certain proceeds of the Initial
Public Offering to redeem the issued and outstanding shares of Class A Preferred
Stock; and
WHEREAS, the Company and the Purchasers desire to amend the Purchase
Agreement as set forth herein.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, hereby agree as follows:
1. INCORPORATION OF PURCHASE AGREEMENT. All capitalized terms which are
not defined herein shall have the same meanings as set forth in the Purchase
Agreement. Except as specifically set forth herein, the Purchase Agreement shall
remain in full force and effect and its provisions shall be binding on the
parties hereto.
2. TERMINATION OF CERTAIN PROVISIONS OF THE PURCHASE AGREEMENT. Upon
the consummation of the Initial Public Offering, each of the following
provisions of the Purchase Agreement shall terminate and shall have no further
force or effect:
(a) Section 1B(a)(ii);
(b) Section 1B(b)(ii);
(c) Section 1B(b)(iii);
(d) Section 3C;
(e) Section 3D;
(f) Section 3E; and
(g) Section 3I.
3. AMENDMENT TO SECTION 3H OF THE PURCHASE AGREEMENT. Section 3H of the
Purchase Agreement is hereby amended and restated in its entirety as follows:
"The Company shall not, nor shall it permit any Subsidiary to, disclose
a Purchaser's name or identity as an investor in the Company in any
press release or other public announcement or in any document or
material filed with any governmental entity, without the prior written
consent of such Purchasers, unless such disclosure is required by
applicable law or governmental regulations or by order of a court of
competent jurisdiction, in which case prior to making any such required
disclosure which is materially inconsistent with the Company's
then-previous disclosure the Company shall give written notice to such
Purchasers describing in reasonable detail the proposed content of such
disclosure and shall permit such Purchasers to review and comment upon
the form and substance of such disclosure."
4. COMPOSITION OF BOARD OF DIRECTORS; COMPENSATION COMMITTEE. The
Company covenants that it shall, subject to any limitations imposed by Delaware
law, use its best efforts to nominate and ensure that the GTCR Funds will be
entitled to appoint one designee to the Company's Board of Directors and to the
Company's Compensation and Stock Option Committee of the Board of Directors.
This Section 4 shall terminate upon the GTCR Funds collectively failing to hold
at least 15% of the GTCR Funds' holdings, as of the date hereof, of the
Corporation's Common Stock.
5. EFFECTUATION. The amendments to the Purchase Agreement contemplated
by this Amendment shall be deemed effective upon the consummation of the
Company's Initial Public Offering without any further action required by the
parties.
-2-
6. GOVERNING LAW. This Amendment shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware, without giving
effect to the conflict of law principles thereof.
7. AMENDMENT. No provision of this Amendment may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by holders of a majority of the Investor Stock and the Company;
provided that no amendment may be made to the terms of Sections 2(a), 2(b) or
2(c) hereof without the written consent of Smart Technology.
8. COUNTERPARTS. This Amendment may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Amendment.
[Execution Page Follows]
-3-
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amendment to the Purchase Agreement as of the date first written above.
APPNET SYSTEMS, INC.
By:
-------------------------------
Name:
Title:
SMART TECHNOLOGY, L.L.C.
By:
-------------------------------
Name:
Title:
GTCR FUND VI, L.P.
By: GTCR Partners VI, L.P.
Its: General Partner
By: GTCR Xxxxxx Xxxxxx, L.L.C.
Its: General Partner
By:
-------------------------------
Name: Xxxxxx X. Xxxxxxxx
Its: Principal
GTCR VI EXECUTIVE FUND, L.P.
By: GTCR Partners VI, L.P.
Its: General Partner
By: GTCR Xxxxxx Xxxxxx, L.L.C.
Its: General Partner
By:
-------------------------------
Name: Xxxxxx X. Xxxxxxxx
Its: Principal
-4-
GTCR ASSOCIATES VI
By: GTCR Partners VI, L.P.
Its: General Partner
By: GTCR Xxxxxx Xxxxxx, L.L.C.
Its: General Partner
By:
-------------------------------
Name: Xxxxxx X. Xxxxxxxx
Its: Principal
-5-
