STOCK EXCHANGE AGREEMENT
BY AND BETWEEN
HOUSTON ECONOMIC OPPORTUNITY FUND, L.P.,
AND
CYNET, INC.
STOCK EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT ("Agreement") is made as of this 26th
day of May 2000, among Houston Economic Opportunity Fund, L.P., a Delaware
limited partnership ("HEOF"), and CYNET, Inc., a Texas corporation (the
"Company").
WITNESSETH:
WHEREAS, the Company and HEOF desire to memorialize (i) an exchange
by HEOF of one million six hundred thousand (1,600,000) shares of Series C
Redeemable Callable Preferred Stock, no par value ("Series C Preferred
Stock"), of the Company for one million three hundred ninety five thousand
two hundred (1,395,200) shares of Series D Redeemable Convertible Preferred
Stock, no par value, ("Series D Preferred Stock") of the Company;
WHEREAS, the Company and HEOF have agreed to a revaluation of the
Series D Preferred Stock from $1.37 per share to $1.25 per share in exchange
for a modification of the terms of the Series D Preferred Stock to delete
HEOF's right to put ("Put Option") to the Corporation for mandatory
redemption of all or a portion of outstanding Series D Preferred Stock held
by HEOF (the "Revaluation");
WHEREAS, the Revaluation will cause the Statement of the Powers,
Designations, Preferences and Rights of the Series D Redeemable Convertible
Preferred Stock, No Par Value ("Series D Certificate of Designation") to be
amended and will cause the issuance of an additional one hundred sixty nine
thousand five hundred seventy seven (169,577) shares of Series D Preferred
Stock to HEOF; and
WHEREAS, the Company, contemporaneously with or prior to the closing
of the transaction contemplated herein, has issued one thousand six hundred
(1,600) shares of Series E Convertible Preferred Stock, no par value (the
"Series E Preferred Stock") and two thousand one hundred eighty-five (2,185)
shares of Series F Convertible Preferred Stock, no par value (the "Series F
Preferred Stock").
NOW, THEREFORE, in consideration of their respective covenants,
agreements, representations and warranties contained herein, the sufficiency
of which are acknowledged by all parties, and intending to be legally bound,
HEOF and the Company agree as follows:
ARTICLE ONE
EXCHANGE OF SERIES C PREFERRED STOCK FOR SERIES D PREFERRED STOCK AND
ISSUANCE OF SERIES D PREFERRED STOCK
1.01 EXCHANGE OF SERIES C PREFERRED STOCK FOR SERIES D PREFERRED
STOCK. Subject to the terms and conditions of this Agreement, at the Closing,
the Company shall issue and deliver the Series D Preferred Stock to HEOF, and
HEOF shall deliver and exchange the Series C Preferred Stock (the "Exchanged
Shares") for Series D
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Preferred Stock from the Company.
ARTICLE TWO
SERIES D PREFERRED STOCK ADJUSTMENTS
2.01 The Company and HEOF agree to amend the terms of the Series D Preferred
Stock to (i) remove the $1.51 Put Option, (ii) to a revaluation of the Series D
Preferred Stock from $1.37 per share to $1.25 per share in exchange for a
modification of the terms of the Series D Preferred Stock to delete HEOF's Put
Option, and (iii) to amend and restate the Series D Certificate of Designation.
ARTICLE THREE
THE CLOSING
3.01 CLOSING. The closing of the transactions contemplated herein (the
"Closing") will take place at the offices of HEOF, 0000 Xxxxx Xxxxxx, Xxxxxxx,
Xxxxx 00000-0000 on May 26, 2000 or at a place or time agreed upon by the
parties (the "Closing Date").
ARTICLE FOUR
DELIVERIES AT CLOSING
4.01 DELIVERIES AT CLOSING.
(i) THE COMPANY'S OBLIGATIONS. At the Closing, the Company shall
deliver to HEOF and its counsel the items set forth below against delivery of
the items by HEOF as provided in Section 4.01 (ii) below:
(1) Fully executed Stock Exchange Agreement with
schedules;
(2) Fully executed Secretary's Certificate (with
incumbency signatures);
(3) Consent Resolutions of the Board of Directors of
Company;
(4) Fully executed Stock Certificate - No. D-2 to HEOF
representing one million five hundred sixty four
thousand seven hundred seventy seven (1,564,777)
shares of Series D Preferred Stock of the Company;
and
(5) Cash or company check in the amount of $15,606.85,
representing the closing fees designated in this
Agreement.
(ii) HEOF OBLIGATIONS. At the Closing, HEOF shall deliver to the
Company the items set forth below against delivery of the items by the Company
and HEOF as provided in Section 4.01 (i):
(1) Fully executed Stock Exchange Agreement;
(2) Stock Certificate No. C-1, fully executed for
transfer in blank, representing one million six
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hundred thousand shares of Series C Preferred Stock.
ARTICLE FIVE A
COMPANY REPRESENTATIONS AND WARRANTIES
To induce HEOF to enter into this Agreement, the Company makes the following
representations and warranties to HEOF:
5A.01 ORGANIZATION.
The Company is a Texas corporation duly organized and validly existing under the
laws of the State of Texas. The Company has delivered to HEOF true, correct and
complete copies of the Articles of Incorporation and Bylaws of the Company and
such documents are in full force and effect as of the date of this Agreement.
5A.02 AUTHORITY.
The Company has duly authorized, executed and delivered this Agreement and this
Agreement constitutes a valid and binding obligation of the Company, enforceable
against the Company according to its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies.
5A.03 GOVERNMENTAL AND OTHER AUTHORIZATIONS.
Neither the Company's execution, delivery and performance of this Agreement,
nor the Company's consummation of the transactions contemplated by this
Agreement, require any consent, approval or action by or in respect of, or
any declaration, filing or registration with, any governmental or regulatory
body, court, agency, official or authority (each, a "Governmental Authority").
5A.04 NON-CONTRAVENTION.
Neither the Company's execution, delivery and performance of this Agreement,
nor the Company's consummation of the transactions contemplated by this
Agreement, with or without the giving of notice, the lapse of time or both:
(i) contravene or conflict with the Articles of Incorporation or Bylaws of
the Company or the terms of any series of preferred stock of the Company
issued and outstanding, (ii) contravene or conflict or constitute a violation
of any provision of any law, rule, regulation, judgment, injunction, order or
decree currently in effect and binding upon or applicable to the Company,
(iii) require any consent, approval or other action by any person, (iv)
contravene or conflict with or constitute a violation of or a default under,
or give rise to any right of termination, cancellation or acceleration of any
right or obligation of the Company or to a loss of any benefit to which the
Company is entitled, under any provision of (A) any agreement, contract,
indenture, lease or other instrument binding upon the Company or (B) any
license, franchise, permit or other similar authorization held by the Company
or (v) result in the creation or imposition of any mortgage, pledge, security
interest, lien, claim, charge, restriction, encumbrance or assessment
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of any kind (each, a "Lien") on any asset of the Company, and that, in the case
of clauses (ii) through (v), would individually or in the aggregate have a
Material Adverse Effect on the Company or its business.
5A.05 CAPITALIZATION.
The capital stock of the Company consists of 70,000,000 authorized shares of
capital stock of which 60,000,000 are designated as common stock and 10,000,000
are designated as preferred stock, no par value ("Preferred Stock"). The common
stock consists of 40,000,000 shares designated as Class A Voting Common Stock,
no par value ("Class A Common Stock"), and 20,000,000 shares designated as Class
B Nonvoting Common Stock, no par value ("Class B Common Stock"). Prior to the
closing of the transaction contemplated herein, the Company had 26,111,813
shares of Class A Common Stock, 2,255,452 shares of Class B Common Stock,
1,600,000 shares of Series C Preferred Stock, no par value, 1,766,423 shares of
Series D Preferred Stock issued and outstanding. After the issuance contemplated
herein, the Company will have 26,111,813 shares of Class A Common Stock,
2,255,452 shares of Class B Common Stock, 3,331,200 shares of Series D Preferred
Stock, 1,600 shares of Series E Preferred Stock, and 2,185 shares of Series F
Preferred Stock (the "Capital Stock") issued and outstanding. All issued and
outstanding shares of Capital Stock of the Company are validly issued, fully
paid and nonassessable, and have not been issued in violation of any preemptive,
first refusal or other subscription rights of any shareholder of the Company.
Other than the Capital Stock, there are no outstanding (A) Class A Common Stock
or Class B Common Stock (collectively, the "Common Stock") of the Company or
other voting or ownership interests of the Company, (B) securities of the
Company convertible into or exchangeable for Common Stock or other voting or
ownership interest of the Company or (C) options, warrants, exchange rights,
subscription rights or other agreements, commitments or rights to purchase or
otherwise acquire from the Company, or agreements, commitments or obligations of
the Company to issue or sell, any Common Stock, other voting or ownership
interests or securities convertible into or exchangeable for Common Stock or
other voting or ownership interests of the Company (the items in clauses (A),
(B) and (C) being referred to collectively as the "Company Securities"), except
for (i) the convertible capital stock, options and warrants listed on Exhibit
0X.00, xxxxxxxx xxxxxx, (xx) the conversion privileges of the Series D Preferred
Stock, the Series E Preferred Stock and the Series F Preferred Stock, (iii) the
rights provided in the Investor Rights and Preferential Purchase Rights
Agreement, dated September 30, 1999 and amended on November 29, 1999 and January
31, 2000, by and among the Company, certain members of management of the Company
and HEOF, (iv) the rights provided in the Registration Rights Agreement, dated
September 30, 1999, as amended and restated as of the date hereof, by and among
the Company and HEOF and (v) the Subscription Agreement, dated July 27, 1998 and
amended December 31, 1999, between the Company and CyNet Holdings, L.L.C. There
are no outstanding obligations of the Company to sell, issue or deliver, or to
repurchase, redeem or otherwise acquire, any Company Securities, except for (x)
the rights of HEOF to put shares of Class A Common Stock to the Company provided
in the Option Agreement, dated September 30, 1999 and amended on November 29,
1999 and February 3, 2000, between the Company and HEOF, which option is being
relinquished in this Agreement, and (y) the obligations of the Company to issue
shares of Class A Common Stock to the holders of the Series D Preferred Stock,
the Series E Preferred Stock and the Series F Preferred Stock, respectively,
upon conversion thereof.
5A.06 SUBSIDIARIES.
Except as set forth in that certain registration statement, Registration
number 333-92099, filed by the Company with the Securities Exchange
Commission on December 3, 1999 and declared effective on December 6, 1999
(the "Registration Statement"), there are no subsidiaries of the Company.
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5A.07 FINANCIAL INFORMATION.
The Company has delivered to HEOF a true, correct and complete copy of the
audited financial statements of the Company as of December 31, 1999 and
subsequent interim unaudited financial statements ("Financial Statements"). The
Financial Statements have been prepared in accordance with generally accepted
accounting principles and fairly present the financial condition of the Company
for the period indicated, subject to normal year-end audit adjustments. The
Company represents and warrants that since the date of the Financial Statements
no material changes have occurred within the Company which would have a Material
Adverse Affect on the financial condition of the Company or its properties (the
"Additional Information"), except as disclosed on the schedule attached hereto
as Exhibit 5A.07.
5A.08 SOLVENCY. The Company represents that as of the date hereof it is
solvent.
5A.09 ABSENCE OF UNDISCLOSED LIABILITIES.
The Company has no liabilities or obligations, except those liabilities or
obligations that are disclosed in the Registration Statement, the Financial
Statements or the schedule attached hereto as Exhibit 5A.09. To the best
knowledge of the Company, there is no basis for any assertion against the
Company of any liability or obligation of any nature or in any amount not
disclosed in the Registration Statement, the Financial Statements or in the
schedule attached hereto as Exhibit 5A.09. For purposes of this Agreement, the
phrase "liabilities or obligations" includes any direct or indirect
indebtedness, claim, loss, damage, deficiency (including deferred income tax and
other net tax deficiencies), cost, expense, obligation, guarantee, or financial
responsibility, whether accrued, absolute or contingent, known or unknown, fixed
or unfixed, liquidated or unliquidated, secured or unsecured.
5A.10 PROPERTIES.
All of the material assets and properties of the Company are reflected on the
Financial Statements or disclosed in the Registration Statement or the schedule
attached hereto as Exhibit 5A.10. As of the Closing Date the Company, except as
otherwise noted in the Financial Statements or disclosed in the Registration
Statement or the schedule attached hereto as Exhibit 5A.10, has good, valid and
marketable title to all of the assets and properties, whether real, personal or
mixed, tangible or intangible, of the Company free and clear of all Liens,
except (a) Liens for current Taxes (as defined hereinafter) not delinquent or
being contested in good faith by appropriate proceedings and for which
appropriate reserves have been established in accordance with generally accepted
accounting principles as disclosed in the Registration Statement or the schedule
attached hereto as Exhibit 5A.10, and (b) deposits or pledges to secure bids,
tenders, contracts (other than contracts for the payment of money), leases,
statutory obligations, surety and appeal bonds and other obligations of like
nature arising in the ordinary course of business with respect to obligations
which are not due or which are being contested in good faith as disclosed in the
Registration Statement or the schedule attached hereto as Exhibit 5A.10.
5A.11 PROPRIETARY RIGHTS.
Except as disclosed in the Registration Statement or the schedule attached
hereto as Exhibit 5A.11, the Company does not own, possess or use any patents,
patent applications, trademarks, trademark applications, service marks, trade
names, franchises, permits, copyrights and copyright registrations for its
business (collectively, the "Patents
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and Trademarks").
5A.12 LITIGATION.
Except as disclosed in the Registration Statement and the schedule attached
hereto as Exhibit 5A.12 , there is no action, suit, arbitration,
investigation or legal, administrative or other proceeding (collectively,
"Claims and Litigation") pending against or, to the best knowledge of the
Company, threatened against or affecting, the Company before any court or
arbitrator or any Governmental Authority. The Company is not subject to any
judgment, order or decree entered in any lawsuit or proceeding or issued by
any Governmental Authority.
5A.13 MATERIAL CONTRACTS.
(i) Except for the agreements, contracts, plans, leases, arrangements and
commitments, oral or written, formal or informal, disclosed in the
Registration Statement, the schedule attached hereto as Exhibit 5A.13, the
Financial Statements or any other Exhibits to this Agreement (collectively,
"Contracts"), the Company is not a party to or subject to any other material
contract.
(ii) Except as otherwise disclosed in the Registration Statement or the
schedule attached hereto as Exhibit 5A.13, each Contract is a valid and
binding agreement of the Company and is in full force and effect. The Company
is not in default or breach under the terms of any Contract, and, to the best
knowledge of the Company, no other party to any Contract is in default or
breach under the terms of such Contract.
(iii) Except as otherwise disclosed in the Registration Statement or the
schedule attached hereto as Exhibit 5A.13, the copies of the Contracts
delivered to HEOF set forth the entire agreement between the parties to such
Contracts pertaining to the subject matter contained therein and are correct
and complete. There are no other material agreements, representations or
understandings between or among the Company and the parties to the Contracts
except as set forth in the Contracts.
(iv) Except as otherwise disclosed in the Registration Statement or the
schedule attached hereto as Exhibit 5A.13, the Company has not received
notice that any party to any of the Contracts intends to terminate any of the
Contracts or to exercise or not to exercise any option under any Contract.
5A.14 TAXES.
The Company has: (i) timely filed, or joined in the filing of, all returns
required to be filed by it with respect to all federal, state and local
income, payroll, withholding, excise, sales, use, personal property, use and
occupancy, business and occupation, mercantile, real estate, capital stock
and franchise or other taxes (all the foregoing taxes, including interest and
penalties thereon and including estimated taxes, being hereinafter
collectively called "Taxes"); (ii) paid all Taxes due, whether pursuant to
such returns or otherwise, except those contested by it in good faith; (iii)
paid all other Taxes for which a notice of or assessment or demand for
payment has been received, except those contested in good faith; and (iv)
adequately accrued and reserved for the payment of all Taxes not yet due and
payable. All such returns have been prepared in accordance with all
applicable laws and requirements and accurately reflect the taxable income
(or other measure of Tax) of the corporation or person filing the same.
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5A.15 INSURANCE.
The Company has obtained all required insurance and bonds necessary to
operate its business as it is currently operated or required by the terms of
the Company's Contracts.
5A.16 FULL DISCLOSURE.
To the best of the Company's knowledge, none of the representations and
warranties made by the Company in this Agreement, the Registration Statement
or in any Exhibit furnished by the Company, or on its behalf, and attached
hereto contains any untrue statement of material fact, or omits to state any
material fact the omission of which would be misleading considering the
context in which such statements were made, which would have a Material
Adverse Effect on the Company or its properties.
ARTICLE FIVE B
INVESTOR REPRESENTATIONS AND WARRANTIES
HEOF (INDIVIDUALLY, AN "INVESTOR") HEREBY REPRESENTS AND WARRANTS THAT:
5B.01 AUTHORIZATION. HEOF has full power and authority to enter into this
Agreement, and this Agreement constitutes its valid and legally binding
obligation, enforceable in accordance with its terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally, and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies.
5B.02 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with HEOF in
reliance upon HEOF's representation to the Company, which by HEOF's execution of
this Agreement HEOF hereby confirms, that the Series D Preferred Stock to be
received by HEOF in exchange for the Series C Preferred Stock (the "HEOF
Securities") will be received for investment for HEOF's own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof, and that HEOF has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing this
Agreement, HEOF further represents that HEOF does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to HEOF or to any third person, with respect to any of the HEOF
Securities.
5B.03 DISCLOSURE OF INFORMATION. HEOF believes it has received all the
information it considers necessary or appropriate for deciding whether to
exchange its Series C Preferred Stock for the Series D Preferred Stock,
permit the change in valuation of the Series D Preferred Stock and the
amendment of the Series D Certificate of Designation. HEOF further represents
that it has had an opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of the exchange of its Series C
Preferred Stock for the Series D Preferred Stock, the change in valuation of
Series D Preferred Stock, the amendment of the Series D Certificate of
Designation and the business, properties, prospects and financial conditions
of the Company.
5B.04 INVESTMENT EXPERIENCE. HEOF is a sophisticated investor in securities
of companies in the development stage and acknowledges that it is able to
fend for itself, can bear the economic risk of its investment, and has such
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knowledge and experience in financial or business matters that it is capable
of evaluating the merits and risks of the exchange of the Series C Preferred
Stock for the Series D Preferred Stock, the change in valuation of the Series
D Preferred Stock and the amendment of the Series D Certificate of
Designation. HEOF was not organized for the purpose of exchanging the Series
C Preferred Stock for the Series D Preferred Stock.
5B.05 ACCREDITED INVESTOR. HEOF is an "accredited investor" within the
meaning of Securities and Exchange Commission ("SEC") Rule 501 of Regulation
D, as presently in effect.
5B.06 RESTRICTED SECURITIES. HEOF understands that the HEOF Securities it is
purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration
under the Securities Act of 1933, as amended (the "Act"), only in certain
limited circumstances. In this connection, HEOF represents that it is
familiar with SEC Rule 144, as presently in effect, and understands the
resale limitations imposed thereby and by the Act.
5B.07 TITLE TO SHARES. HEOF has good and indefeasible title to the Exchanged
Shares, free and clear of all pledges, liens, charges and other encumbrances
whatsoever.
5B.08 FURTHER LIMITATIONS ON DISPOSITION. Without in any way limiting the
representations set forth above, HEOF further agrees not to make any
disposition of all or any portion of the Securities unless and until the
transferee has agreed in writing for the benefit of the Company to be bound
by this Section provided and to the extent this Section is then applicable,
and:
(a) There is then in effect a Registration Statement under the Act
covering such proposed disposition and such disposition is made in accordance
with such Registration Statement; or
(b) (i) HEOF shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and (ii) if
reasonably requested by the Company, HEOF shall have furnished the Company
with an opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of such shares under the Act. It is
agreed that the Company will not require opinions of counsel for transactions
made pursuant to Rule 144 except in unusual circumstances.
5B.08 LEGENDS. It is understood that the certificates evidencing the HEOF
Securities will bear the following restrictive legend:
"The shares represented by this certificate have been acquired for
investment and have not been registered under the Securities Act of 1933, as
amended, or the securities laws of any state. Except upon such registration,
such shares may not be sold or transferred at any time whatsoever except upon
delivery to the Company of an opinion of counsel satisfactory to the Company
that registration is not required for such transfer and/or submission to the
Company of such other evidence as may be satisfactory to the Company to the
effect that any such transfer shall not be in violation of the Securities Act
of 1933, as amended, and/or applicable state securities laws and/or any rule
or regulation promulgated thereunder."
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ARTICLE SIX
CONDITIONS PRECEDENT TO HEOF'S PERFORMANCE
The obligations of HEOF to surrender the Exchanged Shares and complete the
Closing are subject to the satisfaction or waiver, at or before the Closing
Date, of all the conditions set out below in this Article Six. HEOF may waive
any or all of these conditions in whole or in part without prior notice.
6.01 ACCURACY OF THE COMPANY'S REPRESENTATIONS.
All representations and warranties by the Company in this Agreement of will be
true, correct and complete in all material respects on and as of the Closing
Date as though made on and as of the Closing Date.
6.02 PERFORMANCE BY THE COMPANY.
The Company will have performed, satisfied and complied with all covenants and
agreements required by this Agreement to be performed, satisfied or complied
with by the Company on or before the Closing Date, including without limitation,
(i) the Company shall have completed the conversion of the $1,600,000 principal
amount of Series A 8% Convertible Notes due 2002 (the "Debentures") issued on or
about January 31, 2000, plus any accrued but unpaid dividends thereon and
$2,150,000 cash for an aggregate of one thousand six hundred (1,600) shares of
Series E Convertible Preferred Stock and two thousand one hundred eighty five
(2185) shares of the Series F Convertible Preferred Stock, No Par Value.
6.03 ABSENCE OF LITIGATION.
No action, suit, or proceeding before any court or any governmental body or
authority, pertaining to the Company (except as disclosed in the Registration
Statement or the schedule attached hereto as Exhibit 5A.12) or the transactions
contemplated by this Agreement or to its Closing will have been instituted or,
to the Company's knowledge, threatened on or before the Closing Date.
6.04 CONSENTS AND APPROVALS.
All certifications, consents or approvals necessary to permit consummation of
the Closing will have been received on or before the Closing Date.
6.06 LEGAL REPRESENTATION.
The Company acknowledges that it has the opportunity to seek and receive legal
advice from its own legal counsel on all the documents involved in this
transaction.
6.07 Cancellation and Retirement of Series C Preferred Stock
The Company agrees to effect the cancellation and retirement of the Series C
Preferred Stock.
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ARTICLE SEVEN
CONDITIONS PRECEDENT TO THE COMPANY'S PERFORMANCE
The obligations of the Company to issue the Series D Preferred Stock for the
exchange and surrender of the Series C Preferred Stock, to issue the
additional Series D Preferred Stock in consideration of HEOF agreeing to the
Revaluation contemplated by this Agreement and complete the Closing are
subject to the satisfaction, at or before the Closing Date, of all the
conditions in this Article Seven. The Company may waive any or all of these
conditions in whole or in part without prior notice.
7.01 ACCURACY OF REPRESENTATIONS.
All representations and warranties by HEOF in this Agreement will be true,
correct and complete in all material respects on and as of the Closing Date as
though made on and as of the Closing Date.
7.02 PERFORMANCE.
HEOF will have performed, satisfied and complied with all covenants and
agreements required by this Agreement to be performed, satisfied or complied
with by such person on or before the Closing Date.
7.03 LEGAL REPRESENTATION.
HEOF acknowledges that it has sought and received legal advice from its own
legal counsel on all the documents involved in this transaction.
ARTICLE EIGHT
Intentionally omitted
ARTICLE NINE
FORM OF AGREEMENT
9.01 SURVIVAL OF WARRANTIES. The warranties and representations of the Company
and HEOF contained in or made pursuant to or in connection with this Agreement
shall survive the execution and delivery of this Agreement and the Closing and
shall in no way be affected by any investigation of the subject matter thereof
made by or on behalf of the Company or HEOF.
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9.02 MODIFICATION AND WAIVER.
No supplement, modification, or amendment of this Agreement is binding unless
executed in writing by all the parties. No waiver of any of the provisions of
this Agreement is deemed, or constitutes, a waiver of any other provision,
whether or not similar, nor shall any waiver constitute a continuing waiver. No
waiver is binding unless executed in writing by the party making the waiver.
9.03 COUNTERPARTS.
This Agreement may be executed simultaneously in one or more counterparts, each
of which is deemed an original, but all of which together constitute one and the
same instrument. The parties may deliver executed counterparts by telecopier
which counterparts have the same effect as the Agreement itself.
9.04 GOVERNING LAW.
This Agreement is construed according to, and governed by, the laws of the State
of Texas, conflict of laws provisions notwithstanding. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed according to their specific terms or were otherwise
breached. It is accordingly agreed that the parties are entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the Southern District of Texas or any Texas state
court, this being in addition to any other remedy to which they are entitled at
law or in equity. In addition, each of the parties (a) consents to submit itself
to the personal jurisdiction of any Federal court located in the Southern
District of Texas or any Texas state court if any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a Federal court sitting
in the Southern District of Texas or any Texas state court.
9.05 DEFINITIONS.
For purposes of this Agreement:
(a) an "Affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person;
(b) "Material Adverse Effect" on a party means a material adverse
effect upon the financial condition, results of operations, business,
properties, assets or operations of such party;
(c) "Person" means an individual, corporation, company, joint
venture, association, trust, unincorporated organization or other entity;
(d) a "Subsidiary" of any person means another person, an amount of
the voting securities, other voting ownership or voting Company interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more
of the equity interests of which) is owned directly or indirectly by such
first person.
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9.06 INTERPRETATION.
When a reference is made in this Agreement to an Article, Section, or
Exhibit, such reference is to an Article or Section of, or an Exhibit to,
this Agreement unless otherwise indicated. The headings contained in this
Agreement are for reference purposes only and do not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation." The words "hereof," "herein"
and "hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of
this Agreement. All terms defined in this Agreement have the defined meanings
when used in any certificate or other document made or delivered pursuant
hereto unless otherwise defined therein. The definitions contained in this
Agreement are applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neuter genders of
such term. Any agreement, instrument or statute defined or referred to herein
or in any agreement or instrument that is referred to herein means such
agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver
or consent and (in the case of statutes) by succession of comparable
successor statutes and references to all attachments thereto and instruments
incorporated therein. References to a person are also to its permitted
successors and assigns.
9.07 ENTIRE AGREEMENT: NO THIRD-PARTY BENEFICIARIES.
This Agreement (including the documents and instruments referred to herein) (a)
constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement and (b) are not intended to confer upon any
person other than the parties any rights or remedies.
9.08 EFFECTIVE DATE OF THIS AGREEMENT.
This Agreement is effective as of the date first written above upon the
execution hereof by HEOF and the Company.
9.09 FINDER'S FEES.
Each party represents that it neither is nor will be obligated for any finder's
fee or commission in connection with this transaction except as described
herein.
9.10 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision.
ARTICLE TEN
SUCCESSORS AND ASSIGNS
10.01 SUCCESSORS AND ASSIGNS; ASSIGNMENT.
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This Agreement is binding on, and inures to the benefit of, the parties hereto
and their respective heirs, legal representatives, successors, and assigns.
ARTICLE ELEVEN
REMEDIES
11.01 INDEMNITY.
(a) The Company shall defend, indemnify and save and hold harmless
HEOF, and its partners, directors, officers, employees and agents against all
Liabilities that relate to: (i) the ownership and operation of the business
of the Company attributable to the period prior to the date hereof; (ii) the
Company's breach of any of the terms, covenants, conditions or
representations of this Agreement; or (iii) the Company's misrepresentations
or breaches of warranty contained in this Agreement or any of the documents
entered into or delivered in connection herewith.
(b) The right to indemnification set forth in this Section 11.01
survives this Agreement.
(c) As used in this Section 11.01, the following terms mean:
"Liabilities" means all debts, liabilities, obligations,
losses, damages, costs and expenses (including, without limitation,
prejudgment interest and post-judgment interest), penalties, fines, taxes,
liens, court costs, judgments, awards, settlements, assessments, and
attorneys' and accountants' fees and expenses (including, without limitation,
those incurred in investigating and defending any items indemnified and those
incurred in enforcing any indemnity obligation).
11.02 OTHER REMEDIES.
If any party, without legal cause, fails or refuses to consummate the
transactions contemplated by this Agreement according to the terms and
conditions hereof, then the other parties have all rights and remedies
available at law or in equity, specifically including, but not limited to,
the right of specific performance.
11.03 DISPUTE RESOLUTION.
If, after the consummation of Closing, a dispute relating to this
Agreement arises between the parties hereto, the parties agree to use the
following procedure prior to any party pursuing other available remedies.
(a) A meeting shall be held promptly between the parties, attended
by individuals with decision-making authority regarding the dispute, to
attempt in good faith to negotiate a resolution of the dispute.
(b) If the parties are not successful in resolving the dispute
within thirty (30) days following the meeting described in Section 11.03(a)
above, then the parties agree to submit the matter to binding arbitration in
Houston, Texas in accordance with the rules and regulations of the American
Arbitration Association.
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Notwithstanding the foregoing, nothing herein is construed as
limiting a party's right to seek at any time injunctive relief from any court
of appropriate jurisdiction.
ARTICLE TWELVE
NOTICES
12.01 NOTICES
All notices, claims, requests, demands and other communications under this
Agreement must be in writing and are deemed duly given or made on the date of
service if served personally or on the third day after mailing if mailed to
the party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, and properly addressed:
(a) if to Houston Economic Opportunity Fund, L.P., addressed to it at:
Houston Economic Opportunity Fund, L.P.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: President
with copies to:
Houston Economic Opportunity Fund, L.P.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxx
and
Warner & Washington, L.L.P.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: T. Xxxx Xxxxxx
(b) if to the Company, addressed to:
CyNet, Inc.
00000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: President
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with copies to:
Xxxxxx X. Xxxxx
Vice President and General Counsel
CyNet, Inc.
00000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
and
Xxxxx X. Spring, III
Chamberlain, Hrdlicka, White, Xxxxxxxx & Xxxxxx
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Any party may change its address for the purposes of this Section by giving the
other party written notice of the new address in the manner set forth above.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it on the
day and year first written above.
HOUSTON ECONOMIC OPPORTUNITY FUND, L.P.
BY: HEOF Management Corp.
Its corporate general partner
BY: /s/ Xxxx Xxxxxxxx
-------------------------------------
Xxxx Xxxxxxxx
President
CYNET, INC.
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx, Vice President and General Counsel
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