Exhibit 4.10
SENIOR MANAGEMENT AGREEMENT
THIS SENIOR MANAGEMENT AGREEMENT (this "AGREEMENT") is made as of
November 2, 1998, between AppNet Systems, Inc., a Delaware corporation (the
"COMPANY") and Xxxx Xxxxxxxxx (the "EXECUTIVE").
The Company and Executive desire to enter into an agreement pursuant to
which Executive will purchase, and the Company will sell, 140,000 shares of the
Company's Common Stock, par value $.0005 per share, (the "EXECUTIVE STOCK").
Certain definitions are set forth in Section 9 of this Agreement.
The execution and delivery of this Agreement by the Company and
Executive is related to the purchase of shares of Common Stock and shares of the
Company's Class A Preferred Stock, par value $.01 per share (the "CLASS A
PREFERRED") by Smart Technology, L.L.C. ("SMART TECHNOLOGY"), GTCR Xxxxxx
Xxxxxx, L.L.C., a Delaware limited liability company ("GTCR" and, together with
Smart Technology, the "INVESTORS" and each an "INVESTOR") pursuant to a purchase
agreement between the Company and the Investors dated as of June 29, 1998 (the
"PURCHASE Agreement"). Certain provisions of this Agreement are intended for the
benefit of, and will be enforceable by, the Investors.
The parties hereto agree as follows:
PROVISIONS RELATING TO EXECUTIVE STOCK
1. RESERVED.
2. PURCHASE AND SALE OF EXECUTIVE STOCK.
(a) Upon execution of this Agreement, Executive will purchase,
and the Company will sell, 140,000 shares of Common Stock at a price of $3.00
per share. The Company will deliver to Executive the certificates representing
such Executive Stock, and Executive will deliver to the Company a check or wire
transfer of funds in the aggregate amount of $70.00 and promissory notes in the
form of ANNEX A attached hereto in an aggregate principal amount of $419,930
(the "EXECUTIVE NOTES"). Executive's obligations under the Executive Notes shall
be secured by a pledge of all of the shares of Common Stock purchased hereunder
to the Company and in connection therewith, Executive shall enter into a pledge
agreement in the form of ANNEX B attached hereto.
(b) Within 30 days after the date hereof, Executive will make
an effective election with the Internal Revenue Service under Section 83(b) of
the Internal Revenue Code and the regulations promulgated thereunder in the form
of ANNEX C attached hereto.
(c) In connection with the purchase and sale of the Executive
Stock hereunder, Executive represents and warrants to the Company that:
(i) The Executive Stock to be acquired by Executive
pursuant to this Agreement will be acquired for Executive's own account and not
with a view to, or intention of, distribution thereof in violation of the
Securities Act, or any applicable state securities laws, and the Executive Stock
will not be disposed of in contravention of the Securities Act or any applicable
state securities laws.
(ii) Executive is an executive officer of the Company, is
sophisticated in financial matters and is able to evaluate the risks and
benefits of the investment in the Executive Stock.
(iii) Executive is able to bear the economic risk of his
investment in the Executive Stock for an indefinite period of time because the
Executive Stock has not been registered under the Securities Act and, therefore,
cannot be sold unless subsequently registered under the Securities Act or an
exemption from such registration is available.
(iv) Executive has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of Executive
Stock and has had full access to such other information concerning the Company
as he has requested.
(v) This Agreement constitutes the legal, valid and
binding obligation of Executive, enforceable in accordance with its terms, and
the execution, delivery and performance of this Agreement by Executive does not
and will not conflict with, violate or cause a breach of any agreement, contract
or instrument to which Executive is a party or any judgment, order or decree to
which Executive is subject.
(vi) Executive is a resident of the District of Columbia.
(d) As an inducement to the Company to issue the Executive
Stock to Executive, as a condition thereto, Executive acknowledges and agrees
that neither the issuance of the Executive Stock to Executive nor any provision
contained herein shall entitle Executive to remain in the employment of the
Company and its Subsidiaries or affect the right of the Company to terminate
Executive's employment at any time for any reason.
3. REPURCHASE OPTION.
(a) In the event that Executive ceases to be employed by the
Company and its Subsidiaries for any reason (the "SEPARATION"), the Executive
Stock (whether held by Executive or one or more of Executive's transferees,
other than the Company) will be subject to repurchase, in each case at the
option of the Company, the Investors and Xxx X. Xxxxx ("BAJAJ") pursuant to the
terms and conditions set forth in this Section 3(a) (the "REPURCHASE OPTION"). A
percentage of the Executive Stock will be subject to repurchase at the
Executive's Original Cost for such shares, calculated in accordance with the
following schedule (the "ORIGINAL COST SHARES"):
- 2 -
DATE PERCENTAGE OF EXECUTIVE STOCK
TO BE REPURCHASED AT ORIGINAL COST
----------------------------------
Date of this Agreement until
1st Anniversary of this Agreement 100%
Date immediately following 1st Anniversary
of this Agreement until 2nd Anniversary of this Agreement 75%
Date immediately following 2nd Anniversary
of this Agreement until 3rd Anniversary of this Agreement 50%
Date immediately following 3rd Anniversary
of this Agreement until 4th Anniversary of this Agreement 25%
Date immediately following 4th Anniversary
of this Agreement and thereafter 0%
The purchase price for the remaining shares of Executive Stock shall be the Fair
Market Value of such shares (the "FAIR MARKET VALUE SHARES").
(b) The Company may elect to purchase all or any portion of
the Original Cost Shares and the Fair Market Value Shares by delivering written
notice (the "REPURCHASE NOTICE") to the holder or holders of the Executive Stock
within 180 days after the Separation. The Repurchase Notice will set forth the
number of Original Cost Shares and Fair Market Value Shares to be acquired from
each holder, the aggregate consideration to be paid for such shares and the time
and place for the closing of the transaction. The number of shares to be
repurchased by the Company shall first be satisfied to the extent possible from
the shares of Executive Stock held by Executive at the time of delivery of the
Repurchase Notice. If the number of shares of Executive Stock then held by
Executive is less than the total number of shares of Executive Stock which the
Company has elected to purchase, the Company shall purchase the remaining shares
elected to be purchased from the other holder(s) of Executive Stock under this
Agreement, pro rata according to the number of shares of Executive Stock held by
such other holder(s) at the time of delivery of such Repurchase Notice
(determined as nearly as practicable to the nearest share). The number of
Original Cost Shares and Fair Market Value Shares to be repurchased hereunder
will be allocated among Executive and the other holders of Executive Stock (if
any) pro rata according to the number of shares of Executive Stock to be
purchased from such person.
(c) If for any reason the Company does not elect to purchase
all of the Executive Stock pursuant to the Repurchase Option, the Investors and
Bajaj shall be entitled to exercise the Repurchase Option for all or any portion
of the shares of Executive Stock that the Company has not elected to purchase
(the "AVAILABLE SHARES"). As soon as practicable after the
- 3 -
Company has determined that there will be Available Shares, but in any event
within 150 days after the Separation, the Company shall give written notice (the
"OPTION Notice") to the Investors and Bajaj setting forth the number of
Available Shares and the purchase price for the Available Shares. The Investors
and Bajaj may elect to purchase any or all of the Available Shares by giving
written notice to the Company within one month after the Option Notice has been
given by the Company. If the Investors and Bajaj elect to purchase an aggregate
number of shares greater than the number of Available Shares, the Available
Shares shall be allocated among the Investors and Bajaj based upon the number of
shares of Common Stock owned by each Investor and Bajaj on a fully diluted basis
(excluding, in the case of Bajaj, shares owned by him that are subject to
repurchase at cost). As soon as practicable, and in any event within ten days,
after the expiration of the one-month period set forth above, the Company shall
notify each holder of Executive Stock as to the number of shares being purchased
from such holder by the Investors and Bajaj (the "SUPPLEMENTAL REPURCHASE
NOTICE"). At the time the Company delivers the Supplemental Repurchase Notice to
the holder(s) of Executive Stock, the Company shall also deliver written notice
to the Investors and Bajaj setting forth the number of shares the Investors and
Bajaj are entitled to purchase, the aggregate purchase price and the time and
place of the closing of the transaction. The number of Original Cost Shares and
Fair Market Value Shares to be repurchased hereunder shall be allocated among
the Company, the Investors and Bajaj pro rata according to the number of shares
of Executive Stock to be purchased by each of them. Notwithstanding the
foregoing, the Investors and Bajaj shall not exercise their Repurchase Option as
to the Original Cost Shares pursuant to this Section 3(c) if the Company has
sufficient assets to fully exercise its Repurchase Option as to the Original
Cost Shares but has not exercised such right. Furthermore, if the Investors and
Bajaj repurchase any Original Cost Shares, they shall contribute such Original
Cost Shares to the Company in exchange for a promissory note from the Company
with an aggregate principal amount equal to the purchase price paid for such
shares, bearing interest (payable quarterly) at a rate per annum equal to the
prime rate as published in the WALL STREET JOURNAL from time to time, and having
a term of no longer than five years.
(d) The closing of the purchase of the Executive Stock
pursuant to the Repurchase Option shall take place on the date designated by the
Company in the Repurchase Notice or Supplemental Repurchase Notice, which date
shall not be more than one month nor less than five days after the delivery of
the later of either such notice to be delivered. The Company will pay for the
Executive Stock to be purchased by it pursuant to the Repurchase Option by first
offsetting amounts outstanding under any bona fide debts owed by Executive to
the Company and will pay the remainder of the purchase price by, at its option,
(A) a check or wire transfer of funds, or (B) a check or wire transfer of funds
for at least one-third of the purchase price, and a subordinated note or notes
payable in two equal annual installments beginning on each of the first and
second anniversary of the closing of such purchase and bearing interest (payable
quarterly) at a rate per annum equal to the prime rate as published in THE WALL
STREET JOURNAL from time to time in the aggregate amount of the remainder of the
purchase price for such shares. The Investors and Bajaj will pay for the
Executive Stock purchased by it by a check or wire transfer of funds. The
Company, the Investors and Bajaj will be entitled to receive customary
representations and warranties from the sellers regarding such sale and to
require that all sellers' signatures be guaranteed.
- 4 -
(e) Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Executive Stock by the Company shall be subject to
applicable restrictions contained in the Delaware General Corporation Law and in
the Company's and its Subsidiaries' debt and equity financing agreements. If any
such restrictions prohibit the repurchase of Executive Stock hereunder which the
Company is otherwise entitled or required to make, the Company may make such
repurchases as soon as it is permitted to do so under such restrictions.
(f) Notwithstanding anything to the contrary contained in this
Agreement, if the Executive delivers the notice of objection described in the
definition of Fair Market Value, or if the Fair Market Value of a Fair Market
Value Share is otherwise determined to be an amount more than 10% greater than
the per share repurchase price for Fair Market Value Shares originally
determined by the Board, each of the Company, the Investors and Bajaj shall have
the right to revoke its or their exercise of the Repurchase Option for all or
any portion of the Executive Stock elected to be repurchased by it by delivering
notice of such revocation in writing to the holders of the Executive Stock
during (i) the thirty-day period beginning on the date the Company, the
Investors and Bajaj receive Executive's written notice of objection and (ii) the
thirty-day period beginning on the date the Company, the Investors and Bajaj are
given written notice that the Fair Market Value of a Fair Market Value Share was
finally determined to be an amount more than 10% greater than the per share
repurchase price for Fair Market Value Shares originally determined by the Board
(g) The provisions of this Section 3 shall terminate upon the
consummation of a Sale of the Company.
4. RESTRICTIONS ON TRANSFER OF EXECUTIVE STOCK.
(a) RETENTION OF EXECUTIVE STOCK. Until the fifth anniversary
of the date of this Agreement, Executive shall not sell, transfer, assign,
pledge or otherwise dispose of any interest in any shares of Executive Stock,
except pursuant to: (i) a Sale of the Company, (ii) Section 3 of this Agreement,
(iii) Section 4 of the Stockholders Agreement, (iv) a sale described in clause
(i) of the definition of "PUBLIC SALE," or (v) after a Public Offering, upon any
sale by the Investors or an Affiliate of the type described in clause (ii) of
the definition of "PUBLIC SALE" (a "RULE 144 SALE"), to the extent of the lesser
of (a) the number of shares of Executive Stock held by Executive that are not
subject to repurchase at Original Cost and (b) the number of shares of Executive
Stock held by Executive multiplied by a fraction, the numerator of which is the
number of shares of Common Stock sold by the Investors and their Affiliates in
the Rule 144 Sale and the denominator of which is the total number of shares of
Common Stock held by the Investors and their Affiliates immediately prior to
such sale.
(b) CERTAIN PERMITTED TRANSFERS. The restrictions in this
Section 4 will not apply with respect to (i) transfers of shares of Executive
Stock pursuant to applicable laws of descent and distribution or (ii) transfer
of shares of Executive Stock among Executive's Family Group; provided that such
restrictions will continue to be applicable to the Executive Stock after any
such transfer and the transferees of such Executive Stock have agreed in writing
to be bound by the provisions of this Agreement.
- 5 -
(c) TERMINATION OF RESTRICTIONS. The restrictions on the
Transfer of shares of Executive Stock set forth in this Section 4 will continue
with respect to each share of Executive Stock until the date on which such
Executive Stock has been transferred in a transaction permitted by this Section
4 (except in a transaction contemplated by Section 4(b)); provided that in any
event such restrictions will terminate on a Sale of the Company.
5. ADDITIONAL RESTRICTIONS ON TRANSFER OF EXECUTIVE STOCK.
(a) LEGEND. The certificates representing the Executive Stock
will bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE 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 SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN
REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN A SENIOR MANAGEMENT
AGREEMENT BETWEEN THE COMPANY AND AN EXECUTIVE OF THE COMPANY DATED AS OF
NOVEMBER 2, 1998. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF
AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE."
(b) OPINION OF COUNSEL. No holder of Executive Stock may sell,
transfer or dispose of any Executive Stock (except pursuant to an effective
registration statement under the Securities Act) without first delivering to the
Company an opinion of counsel (reasonably acceptable in form and substance to
the Company) that neither registration nor qualification under the Securities
Act and applicable state securities laws is required in connection with such
transfer.
PROVISIONS RELATING TO EMPLOYMENT
6. EMPLOYMENT. The Company agrees to employ Executive and Executive
accepts such employment for the period beginning as of the date hereof and
ending upon his separation pursuant to Section 6(c) hereof (the "EMPLOYMENT
PERIOD").
(a) POSITION AND DUTIES. During the Employment Period,
Executive shall serve as Vice President/Sales and Marketing of the Company and
shall have such duties, responsibilities and authority as may be assigned by the
President and Chief Executive Officer, subject to the power of the Board to
expand or limit such duties, responsibilities and authority and to override
actions of a Vice President/Sales and Marketing. Executive shall report to the
President and Chief Executive Officer. Executive shall devote his best efforts
and his full business time and attention to the business and affairs of the
Company and its subsidiaries.
(b) SALARY, BONUS AND BENEFITS. During the Employment Period,
the Company will pay Executive a base salary (the "ANNUAL BASE SALARY") of
$150,000 per annum,
- 6 -
subject to any increase as determined by the Board based upon the Company's
achievements of budgetary and other objectives set by the Board; plus, a
one-time bonus of $12,500 to be paid in January 1999 so long as Executive is
then employed by the Company. In addition, Executive shall be eligible to
receive a bonus of up to fifty (50%) percent of the Annual Base Salary based
upon the Company's achievement of budgetary and other objectives set by the
Board. Executive's Annual Base Salary for any partial year will be prorated
based upon the number of days elapsed in such year. In addition, during the
Employment Period, Executive will be entitled to such other benefits approved by
the Board and made available to the Company's senior management.
(c) SEPARATION. Executive's employment by the Company will
continue until Executive's resignation, disability (as determined by the Board
in its good faith judgment) or death or until the Board terminates Executive's
employment for any reason or without any reason. If the Employment Period is
terminated by the Board without Cause, subject to the provisions of this
Agreement, Executive shall be entitled to receive his Annual Base Salary and his
life insurance, medical insurance and disability insurance benefits (but no
bonuses or other fringe benefits) through the end of the Noncompete Period (as
defined below in Section 8, including any extensions pursuant to Section 8(a))
(such payment, the "SEVERANCE PAYMENT") payable in accordance with normal
payroll practices.
7. CONFIDENTIAL INFORMATION.
(a) Executive acknowledges that the Company and its
Subsidiaries are engaged in the business of acquiring businesses that provide
electronic commerce services and operating those businesses after their
acquisition (the "BUSINESS"). Executive further acknowledges that the Business
and its continued success depend upon the use and protection of a large body of
confidential and proprietary information, and that he holds a position of trust
and confidence by virtue of which he necessarily possesses, has access to and,
as a consequence of his signing this Agreement, will continue to possess and
have access to, highly valuable, confidential and proprietary information of the
Company and its Subsidiaries not known to the public in general, and that it
would be improper for him to make use of this information for the benefit of
himself and others. All of such confidential and proprietary information now
existing or to be developed in the future will be referred to in this Agreement
as "CONFIDENTIAL INFORMATION." This includes, without limitation, information
relating to the nature and operation of the Business, the persons, firms and
corporations which are customers or active prospects of the Company during
Executive's employment by the Company, the Company's development, transition and
transformation plans, methodology and methods of doing business, strategic,
acquisition, marketing and expansion plans, including plans regarding planned
and potential acquisitions and sales, financial and business plans, employee
lists, numbers and location of sales representatives, new and existing programs
and services (and those under development), prices and terms, customer service,
integration processes requirements, costs of providing service, support and
equipment and equipment maintenance costs. Confidential Information shall not
include any information that has become generally known to and available for use
by the public other than as a result of Executive's acts or omissions.
- 7 -
(b) Disclosure of any Confidential Information of the Company
shall not be prohibited if such disclosure is directly pursuant to a valid and
existing order of a court or other governmental body or agency within the United
States; provided, however, that (i) Executive shall first have given prompt
notice to the Company of any such possible or prospective order (or proceeding
pursuant to which any such order may result) and (ii) Executive shall afford the
Company a reasonable opportunity to prevent or limit any such disclosure.
(c) During the Employment Period and at all times thereafter,
Executive will preserve and protect as confidential all of the Confidential
Information known to Executive or at any time in Executive's possession or
control. In addition, during the Employment Period and at all times thereafter,
Executive will not disclose to any unauthorized person or use for his own
account any of such Confidential Information without the Board's written
consent. Executive agrees to deliver to the Company at a Separation, or at any
other time the Company may request in writing, all memoranda, notes, plans,
records, reports and other documents (and copies thereof) containing or
otherwise relating to any of the Confidential Information (including, without
limitation, all acquisition prospects, lists and contact information) which he
may then possess or have under his control. Executive acknowledges that all such
memoranda, notes, plans, records, reports and other documents are and at all
times will be and remain the property of the Company.
(d) Executive will fully comply with any agreement reasonably
required by any of the Company's affiliates, business partners, suppliers or
contractors with respect to the protection of the confidential and proprietary
information of such entities.
8. NONCOMPETITION AND NONSOLICITATION. Executive acknowledges that
in the course of his employment with the Company he will become familiar with
the Confidential Information concerning the Company and such Subsidiaries and
that his services will be of special, unique and extraordinary value to the
Company. Executive agrees that the Company has a protectable interest in the
Confidential Information acquired by Executive during the course of his
employment with the Company. Therefore, Executive agrees that:
(a) NONCOMPETITION. So long as Executive is employed or
affiliated with the Company or any Subsidiary and for an additional (i) two
years thereafter, in the event the Employment Period is terminated as a
result of Executive's resignation or is terminated with Cause or (ii) one
year thereafter, in the event the Employment Period is terminated without
Cause (the "NONCOMPETE PERIOD"), he shall not, anywhere in the United States,
directly or indirectly own, manage, control, participate in, consult with,
render services for, or in any manner engage in the Business or any other
business engaged in by the Company at the time of Separation; provided that
in the event of a termination without Cause, the Board may extend the
Noncompete Period for an additional one-year term by giving notice to
Executive ninety (90) days prior to the end of the then-existing Noncompete
Period.
(b) NONSOLICITATION. During the Noncompete Period,
Executive shall not directly or indirectly through another entity (i) induce
or attempt to induce any employee of the Company or any of its Subsidiaries
to leave the employ of the Company or such Subsidiary, or in
- 8 -
any way interfere with the relationship between the Company or any of its
Subsidiaries and any employee thereof, (ii) hire any person who was an employee
of the Company or any of its Subsidiaries within 180 days prior to the time such
employee was hired by the Executive, (iii) induce or attempt to induce any owner
of a site location, customer, supplier, licensee or other business relation of
the Company or any of its Subsidiaries to cease doing business with the Company
or such Subsidiary or in any way interfere with the relationship between any
such customer, supplier, licensee or business relation and the Company or any of
its Subsidiaries or (iv) directly or indirectly acquire or attempt to acquire an
interest in any business relating to the business of the Company or any of its
Subsidiaries and with which the Company or any of its Subsidiaries has
entertained discussions or has requested and received information relating to
the acquisition of such business by the Company or any of its Subsidiaries in
the two-year period immediately preceding a Separation.
(c) ENFORCEMENT. If, at the time of enforcement of Section 7
or 8 of this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum duration, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area and that
the court shall be allowed to revise the restrictions contained herein to cover
the maximum duration, scope and area permitted by law. Because Executive's
services are unique and because Executive has access to Confidential
Information, the parties hereto agree that money damages would be an inadequate
remedy for any breach of this Agreement. Therefore, in the event of a breach or
threatened breach of Section 7 or Section 8 of this Agreement, the Company or
any of its successors or assigns shall, in addition to other rights and remedies
existing in its favor, be entitled to specific performance and/or injunctive or
other relief in order to enforce, or prevent any violations of, the provisions
of Section 7 or Section 8 from any court of competent jurisdiction.
(d) ADDITIONAL ACKNOWLEDGMENTS. Executive acknowledges that
the provisions of this Section are in consideration of: (i) employment with the
Company and (ii) additional good and valuable consideration as set forth in this
Agreement. Executive expressly agrees and acknowledges that the restrictions
contained in Sections 7 and 8 do not preclude Executive from earning a
livelihood, nor does it unreasonably impose limitations on Executive's ability
to earn a living. In addition, Executive agrees and acknowledges that the
potential harm to the Company of its non-enforcement outweighs any harm to the
Executive of its enforcement by injunction or otherwise. Executive acknowledges
that he has carefully read this Agreement and has given careful consideration to
the restraints imposed upon the Executive by this Agreement, and is in full
accord as to their necessity for the reasonable and proper protection of the
Confidential Information. Executive expressly acknowledges and agrees that each
and every restraint imposed by this Agreement is reasonable with respect to
subject matter, time period and geographical area.
- 9 -
GENERAL PROVISIONS
9. DEFINITIONS.
"AFFILIATE" or "AFFILIATES" of an Investor means any direct or indirect
general or limited partner of such Investor, or any employee or owner thereof,
or any other person, entity or investment fund controlling, controlled by or
under common control with such Investor.
"CAUSE" means (i) the commission of a felony or a crime involving moral
turpitude or the commission of any other act or omission involving dishonesty or
fraud with respect to the Company or any of its Subsidiaries or any of their
customers or suppliers, (ii) conduct tending to bring the Company or any of its
Subsidiaries into substantial public disgrace or disrepute, (iii) substantial
and repeated failure to perform duties of the office held by Executive as
reasonably directed by the Board, (iv) gross negligence or willful misconduct
with respect to the Company or any of its Subsidiaries or (v) any breach of
Section 7 or 8 of this Agreement.
"EXECUTIVE'S FAMILY GROUP" means Executive's spouse and descendants
(whether natural or adopted), any trust solely for the benefit of Executive
and/or Executive's spouse and/or descendants and any retirement plan for the
Executive.
"EXECUTIVE STOCK" will continue to be Executive Stock in the hands of
any holder other than Executive (except for the Company and the Investors and
except for transferees in a Public Sale), and except as otherwise provided
herein, each such other holder of Executive Stock will succeed to all rights and
obligations attributable to Executive as a holder of Executive Stock hereunder.
Executive Stock will also include shares of the Company's capital stock issued
with respect to Executive Stock by way of a stock split, stock dividend or other
recapitalization.
"FAIR MARKET VALUE" of each share of Executive Stock means the average
of the closing prices of the sales of the Common Stock on all securities
exchanges on which such Common Stock may at the time be listed, or, if there
have been no sales on any such exchange on any day, the average of the highest
bid and lowest asked prices on all such exchanges at the end of such day, or, if
on any day such Common Stock is not so listed, the average of the representative
bid and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time,
or, if on any day such Common Stock is not quoted in the NASDAQ System, of the
average of the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau
Incorporated, or any similar successor organization, in each such case averaged
over a period of 21 days consisting of the day as of which the Fair Market Value
is being determined and the 20 consecutive business days prior to such day. If
at any time such Common Stock is not listed on any securities exchange or quoted
in the NASDAQ System or the over-the-counter market, the Fair Market Value will
be the fair value of such Common Stock determined in good faith by the Board
(the "BOARD CALCULATION"). If the Executive reasonably disagrees with the Board
Calculation, the Executive may, within 30 days after receipt of the Board
Calculation, deliver a notice (an "OBJECTION NOTICE") to the Company setting
forth the Executive's calculation of Fair Market Value. The Board and the
Executive will negotiate in good faith to agree on such Fair Market Value, but
if such agreement is not reached within 30 days after the Company has received
the Objection Notice, Fair Market Value shall be
- 10 -
determined by an appraiser jointly selected by the Board and the Executive,
which appraiser shall submit to the Board and the Executive a report within 30
days of its engagement setting forth such determination. If the parties are
unable to agree on an appraiser within 45 days after the Company has received
the Objection Notice, within seven days, each party shall submit the names of
four nationally recognized investment banking firms, and each party shall be
entitled to strike two names from the other party's list of firms, and the
appraiser shall be selected by lot from the remaining four investment banking
firms. The expenses of such appraiser shall be borne by the Executive unless the
appraiser's valuation is not less than 10% greater than the amount determined by
the Board, in which case, the costs of the appraiser shall be borne by the
Company. The determination of such appraiser shall be final and binding upon all
parties. If the Repurchase Option is exercised within 90 days after a
Separation, then Fair Market Value shall be determined as of the date of such
Separation; thereafter, Fair Market Value shall be determined as of the date the
Repurchase Option is exercised.
"ORIGINAL COST" means, with respect to each share of Executive Stock
purchased hereunder, $3.00 (as proportionately adjusted for all subsequent stock
splits, stock dividends and other recapitalizations).
"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.
"PUBLIC OFFERING" means the sale in an underwritten public offering
registered under the Securities Act of shares of the Company's Common Stock
approved by the Board.
"PUBLIC SALE" means (i) any sale pursuant to a registered public
offering under the Securities Act or (ii) any sale to the public pursuant to
Rule 144 promulgated under the Securities Act effected through a broker, dealer
or market maker (other than pursuant to Rule 144(k)).
"SALE OF THE COMPANY" means any transaction or series of transactions
pursuant to which any person(s) or entity(ies) other than the Investors and its
Affiliates in the aggregate acquire(s) (i) capital stock of the Company
possessing the voting power (other than voting rights accruing only in the event
of a default, breach or event of noncompliance) to elect a majority of the
Company's board of directors (whether by merger, consolidation, reorganization,
combination, sale or transfer of the Company's capital stock, shareholder or
voting agreement, proxy, power of attorney or otherwise) or (ii) all or
substantially all of the Company's assets determined on a consolidated basis;
provided that the term "SALE OF THE COMPANY" shall not include a Public
Offering.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement dated
June 29, 1998, among the Company and certain of its stockholders.
- 11 -
"SUBSIDIARY" means any corporation of which fifty percent (50%) or more
of the securities having ordinary voting power in electing the board of
directors are, at the time as of which any determination is being made, owned by
the Company either directly or through one or more Subsidiaries. The term
Subsidiary shall also include any joint venture arrangement between the Company
and any other entity, including, without limitation, the Company's joint venture
arrangement with Commerce Direct International, Inc., a Delaware corporation.
"TRANSFER" means to sell, transfer, assign, pledge or otherwise dispose
of (whether with or without consideration and whether voluntarily or
involuntarily or by operation of law).
10. NOTICES. Any notice provided for in this Agreement must be in
writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to the recipient at the address below
indicated:
If to the Company:
AppNet Systems, Inc.
0000-X Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxxxxx X. XxXxxxx
with a copy to:
GTCR Xxxxxx Xxxxxx, L.L.C.
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxx
and
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
and
Xxxxxx, Flyer & Xxxxx
0000 X Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx
- 12 -
If to the Executive:
Xxxx Xxxxxxxxx
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, X.X. 00000
If to the Investors:
GTCR Xxxxxx Xxxxxx, L.L.C.
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxx
and
Smart Technology, L.L.C.
00000 Xxxxxx Xxxx
Xxxxxxx, XX 00000
with a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
and
Xxxxxx, Flyer & Xxxxx
0000 X Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
- 13 -
11. GENERAL PROVISIONS.
(a) EXPENSES. Each of the Company and the Executive shall
pay its or his legal, accounting and other expenses incurred in connection
with the negotiation and execution of this Agreement and the consummation of
the transactions contemplated by this Agreement.
(b) TRANSFERS IN VIOLATION OF AGREEMENT. Any Transfer or
attempted Transfer of any Executive Stock in violation of any provision of
this Agreement shall be void, and the Company shall not record such Transfer
on its books or treat any purported transferee of such Executive Stock as the
owner of such stock for any purpose.
(c) SEVERABILITY. Whenever possible, each provision of
this Agreement will 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 invalid, illegal or unenforceable in any respect under any applicable law
or rule in any jurisdiction, such invalidity, illegality or unenforceability
will not affect any other provision or any other jurisdiction, but this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision had never been contained
herein.
(d) INTENDED THIRD-PARTY BENEFICIARIES. The Investors are
intended to be third-party beneficiaries to this entire Agreement and the
rights and obligations of the parties hereto. It is understood and agreed by
the parties hereto that this Agreement shall be enforceable by GTCR and,
provided GTCR is seeking to enforce substantially the same rights, the other
Investor(s) in accordance with its terms as though each of the Investors were
a party to every provision hereof. Except as expressly provided herein, no
other third parties are intended by the parties hereto to be beneficiaries
hereof.
(e) 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.
(f) COUNTERPARTS. This Agreement may be executed in
separate counterparts, each of which is deemed to be an original and all of
which taken together constitute one and the same agreement.
(g) SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be
enforceable by Executive, the Company, the Investors and their respective
successors and assigns (including subsequent holders of Executive Stock);
provided that the rights and obligations of Executive under this Agreement
shall not be assignable except in connection with a permitted transfer of
Executive Stock hereunder. The rights and obligations of GTCR under this
Agreement may be assigned at any time, in whole or in part, to any investment
fund managed by GTCR, or any successor thereto; provided that such assignment
occurs in the manner provided in the Purchase Agreement.
- 14 -
(h) CHOICE OF LAW. The corporate law of the State of
Delaware will govern all questions 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
hereto will be governed by and construed in accordance with the internal laws
of the State of Maryland, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of Maryland or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Maryland.
(i) REMEDIES. Each of the parties to this Agreement
(including the Investors) will be entitled to enforce its rights under this
Agreement specifically, to recover damages and costs (including attorney's
fees) caused by any breach of any provision of this Agreement and to exercise
all other rights existing in its favor. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach
of the provisions of this Agreement and that any party may in its sole
discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or deposit) for specific performance and/or other
injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement.
(j) AMENDMENT AND WAIVER. The provisions of this Agreement
may be amended and waived only with the written consent of the Company and
the Executive.
(k) BUSINESS DAYS. If any time period for giving notice or
taking action hereunder expires on a day which is a Saturday, Sunday or
holiday in the state in which the Company's chief executive office is
located, the time period shall be automatically extended to the business day
immediately following such Saturday, Sunday or holiday.
(l) TERMINATION. This Agreement (except for the provisions
of Section 6) shall survive a Separation and shall remain in full force and
effect after such Separation.
(m) ADJUSTMENTS OF NUMBERS. All numbers set forth herein
which refer to share prices or amounts will be appropriately adjusted to
reflect stock splits, stock dividends, combinations of shares and other
recapitalizations affecting the subject class of stock.
(n) GENDER. Unless the context clearly indicates
otherwise, where appropriate the singular shall include the plural and the
masculine shall include the feminine or neuter, and VICE VERSA, to the extent
necessary to give the terms defined herein and/or the terms otherwise used in
this Agreement the proper meanings.
[Execution Page Follows]
- 15 -
IN WITNESS WHEREOF, the parties hereto have executed this Senior
Management Agreement on the date first written above.
APPNET SYSTEMS, INC.
By: /s/ XXX X. XXXXX
------------------------------------------
Xxx X. Xxxxx
President and Chief Employee Officer
/s/ XXXX XXXXXXXXX
------------------------------------------
Xxxx Xxxxxxxxx
- 16 -
