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EXHIBIT 10.2
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PREFERRED STOCK PURCHASE AGREEMENT
among
PROXICOM, INC.,
GENERAL ATLANTIC PARTNERS 34, L.P.,
GAP COINVESTMENT PARTNERS, L.P.,
FBR VENTURE CAPITAL MANAGERS INC.
and
THE XXXXX X. XXXXXX TRUST
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Dated: February 20, 1997
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TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Accounting Terms; Financial Statements . . . . . . . . . . . . 7
ARTICLE 2 PURCHASE AND SALE OF PREFERRED STOCK . . . . . . . . . . . . . 7
2.1 Purchase and Sale of Preferred Stock . . . . . . . . . . . . . 7
2.2 Certificate of Designations . . . . . . . . . . . . . . . . . . 7
2.3 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . 8
3.1 Corporate Existence and Power . . . . . . . . . . . . . . . . . 8
3.2 Authorization; No Contravention . . . . . . . . . . . . . . . . 8
3.3 Governmental Authorization; Third Party Consents . . . . . . . 9
3.4 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . 9
3.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.6 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . 9
3.7 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . 10
3.8 No Default or Breach; Contractual Obligations . . . . . . . . . 10
3.9 FIRPTA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.10 Financial Statements . . . . . . . . . . . . . . . . . . . . . 11
3.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.12 No Material Adverse Change; Ordinary Course of Business . . . . 12
3.13 Private Offering . . . . . . . . . . . . . . . . . . . . . . . 12
3.14 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . 12
3.15 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.16 Intellectual Property . . . . . . . . . . . . . . . . . . . . . 13
3.17 Trade Relations . . . . . . . . . . . . . . . . . . . . . . . . 14
3.18 Broker's, Finder's or Similar Fees . . . . . . . . . . . . . . 15
3.19 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS . . . . . . . 15
4.1 Existence and Power . . . . . . . . . . . . . . . . . . . . . . 15
4.2 Authorization; No Contravention . . . . . . . . . . . . . . . . 15
4.3 Governmental Authorization; Third Party Consents . . . . . . . 16
4.4 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . 16
4.5 Purchase for Own Account . . . . . . . . . . . . . . . . . . . 16
4.6 Restricted Securities . . . . . . . . . . . . . . . . . . . . . 17
4.7 Accredited Investor Status . . . . . . . . . . . . . . . . . . 17
4.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.9 Broker's, Finder's or Similar Fees . . . . . . . . . . . . . . 18
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ARTICLE 5 CONDITIONS TO THE OBLIGATION OF THE
PURCHASERS TO CLOSE . . . . . . . . . . . . . . . . . . . . 18
5.1 Representations and Warranties . . . . . . . . . . . . . . . . 18
5.2 Compliance with this Agreement . . . . . . . . . . . . . . . . 18
5.3 Secretary's Certificate . . . . . . . . . . . . . . . . . . . . 18
5.4 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . 19
5.5 Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.6 Repurchase of Common Stock . . . . . . . . . . . . . . . . . . 19
5.7 Filing of Certificate of Designations . . . . . . . . . . . . . 19
5.8 Purchased Shares . . . . . . . . . . . . . . . . . . . . . . . 19
5.9 Stockholders Agreement . . . . . . . . . . . . . . . . . . . . 19
5.10 Registration Rights Agreement . . . . . . . . . . . . . . . . . 19
5.11 Approval of Counsel to the Purchasers . . . . . . . . . . . . . 19
5.12 Consents and Approvals . . . . . . . . . . . . . . . . . . . . 20
5.13 No Material Judgment or Order . . . . . . . . . . . . . . . . . 20
5.14 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 6 CONDITIONS TO THE OBLIGATION OF THE
COMPANY TO CLOSE . . . . . . . . . . . . . . . . . . . . . 20
6.1 Representations and Warranties . . . . . . . . . . . . . . . . 21
6.2 Compliance with this Agreement . . . . . . . . . . . . . . . . 21
6.3 General Partners' Certificates . . . . . . . . . . . . . . . . 21
6.4 Trustee's Certificate . . . . . . . . . . . . . . . . . . . . . 21
6.5 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . 21
6.6 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . 21
6.7 Stockholders Agreement . . . . . . . . . . . . . . . . . . . . 22
6.8 Registration Rights Agreement . . . . . . . . . . . . . . . . . 22
6.9 Approval of Counsel to the Company . . . . . . . . . . . . . . 22
6.10 Consents and Approvals . . . . . . . . . . . . . . . . . . . . 22
6.11 No Material Judgment or Order . . . . . . . . . . . . . . . . . 22
6.12 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 7 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . 23
7.1 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 23
7.2 Notification . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.3 Limitations on Indemnification . . . . . . . . . . . . . . . . 24
ARTICLE 8 AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . 25
8.1 Preservation of Existence . . . . . . . . . . . . . . . . . . . 25
8.2 Financial Statements and Other Information . . . . . . . . . . 25
8.3 Reservation of Common Stock and Preferred Stock . . . . . . . . 26
8.4 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . 26
8.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.6 Books and Records . . . . . . . . . . . . . . . . . . . . . . . 27
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ARTICLE 9 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.1 Survival of Representations and Warranties . . . . . . . . . . 27
9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.3 Successors and Assigns; Third Party Beneficiaries . . . . . . . 29
9.4 Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . 30
9.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.7 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.9 Rules of Construction . . . . . . . . . . . . . . . . . . . . . 31
9.10 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 31
9.11 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.12 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.13 Further Assurances . . . . . . . . . . . . . . . . . . . . . . 31
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SCHEDULES
2 Purchased Shares and Purchase Price
3.1(c) Jurisdictions in which Company Leases or Owns Properties
3.3 Governmental Authorizations; Third Party Consents
3.5 Litigation
3.7 Options, Warrants, Conversion Privileges, Subscription or
Purchase Rights or Other Rights
3.8 Defaults
3.11 Taxes
3.12 Transactions Outside the Ordinary Course of Business
3.14 Title to Assets of the Company
3.15 Liabilities
3.16(a)(ii) Trademarks. Service Marks, Trade Names and Registered
Copyrights Owned by the Company and Applications therefor
3.16(a)(iii) Intellectual Property Licenses under which the Company is
a Licensor or Licensee
3.16(a)(iv) Infringements of the Company
3.16(a)(v) Intellectual Property Litigation
3.16(b) Infringement or Violations of Intellectual Property Rights
3.16(d) License Agreements which require a Material Royalty
Payment
3.17 Trade Relations
The Exhibits and Schedules to this Preferred Stock Purchase Agreement are not
included with this Registration Statement on Form S-1. The Registrant will
provide these Exhibits and Schedules upon the request of the Securities and
Exchange Commission.
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EXHIBITS
A Certificate of Incorporation
B By-laws
C Form of Certificate of Designations
D Form of Stockholders Agreement
E Form of Registration Rights Agreement
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PREFERRED STOCK PURCHASE AGREEMENT
AGREEMENT, dated February 20, 1997 (this "Agreement"), among Proxicom,
Inc., a Delaware corporation (the "Company"), General Atlantic Partners 34,
L.P., a Delaware limited partnership ("GAP LP"), GAP Coinvestment Partners,
L.P., a New York limited partnership ("GAP Coinvestment"; and, together with GAP
LP, the "GAP Entities"), The Xxxxx X. Xxxxxx Trust ("Morino Trust") and FBR
Venture Capital Managers Inc., a Delaware corporation ("FBR"; and, together with
GAP LP, GAP Coinvestment and Morino Trust, the "Purchasers").
WHEREAS, upon the terms and conditions set forth in this Agreement, the
Company proposes to issue and sell to (a) GAP LP for an aggregate purchase price
of $340,000, an aggregate of 81,535 shares, par value $.01 per share, of Series
B Convertible Preferred Stock of the Company (the "Preferred Stock"); (b) GAP
Coinvestment for an aggregate purchase price of $60,000, an aggregate of 14,388
shares of Preferred Stock; (c) FBR for an aggregate purchase price of $100,000,
an aggregate of 23,981 shares of Preferred Stock; and (c) Morino Trust for an
aggregate purchase price of $1,000,000, an aggregate of 239,808 shares of
Preferred Stock.
WHEREAS, each share of Preferred Stock is convertible (subject to
adjustment) into one share, par value $.0l per share, of Common Stock of the
Company (the "Common Stock").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Affiliate" shall mean, with respect to any Person, any other Person who
controls, is controlled by or is under common control with such Person. In
addition, the following shall be deemed to be Affiliates of GAP LP: (a) GAP LLC,
the members of GAP LLC and the limited partners of GAP LP; (b) any Affiliate of
GAP LLC, the members of GAP LLC and the limited partners of GAP LP; and (c) any
limited liability company or partnership a majority of whose members or
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partners, as the case may be, are members of GAP LLC. In addition, GAP LP and
GAP Coinvestment shall be deemed to be Affiliates of one another.
"Agreement" means this Agreement as the same may be amended, supplemented
or modified in accordance with the terms hereof.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in the State of New York are authorized or required by
law or executive order to close.
"By-laws" means the by-laws of the Company as in effect as of the Closing
Date substantially in the form attached hereto as Exhibit B.
"Capital Lease Obligations" of any Person shall mean, as of the date of
determination, the obligations of such Person to pay rent or other amounts under
any lease of (or other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are required to be
classified and accounted for as capital leases on a balance sheet of such Person
under GAAP and, for the purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at such time
determined in accordance with GAAP consistently applied.
"Certificate of Designations" means the Certificate of Designations with
respect to the Preferred Stock adopted by the Board of Directors and filed with
the Secretary of State of the State of Delaware on or before the Closing Date
substantially in the form attached hereto as Exhibit C.
"Certificate of Incorporation" means the Certificate of Incorporation of
the Company, as the same may have been amended and as in effect as of the
Closing Date substantially in the form attached hereto as Exhibit A.
"Claims" has the meaning set forth in Section 3.5 of this Agreement.
"Closing" has the meaning set forth in Section 2.4 of this Agreement.
"Closing Date" has the meaning set forth in Section 2.4 of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
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"Commission" means the Securities and Exchange Commission or any similar
agency then having jurisdiction to enforce the Securities Act.
"Common Stock" means Common Stock, par value $.01 per share, of the
Company, or any other capital stock of the Company into which such stock is
reclassified or reconstituted.
"Common Stock Equivalents" means any security or obligation which is by
its terms convertible into or exchangeable for shares of Common Stock,
including, without limitation, the Preferred Stock, and any option, warrant or
other subscription or purchase right with respect to Common Stock.
"Company" has the meaning assigned to such term in the recital to this
Agreement.
"Condition of the Company" means the assets, business, properties,
operations or financial condition of the Company, taken as a whole.
"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability of that Person with respect to any Indebtedness, lease,
dividend, guaranty, letter of credit or other obligation, contractual or
otherwise (the "primary obligation") of another Person (the "primary obligor"),
whether or not contingent, (a) to purchase, repurchase or otherwise acquire such
primary obligations or any property constituting direct or indirect security
therefor, or (b) to advance or provide funds (i) for the payment or discharge of
any such primary obligation, or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition of
the primary obligor, or (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, or (d) otherwise to assure or hold harmless the owner of any such
primary obligation against loss or failure or inability to perform in respect
thereof. The amount of any Contingent Obligation shall be deemed to be an amount
equal to the stated or determinable amount of the primary obligation in respect
of which such Contingent Obligation is made or, if not stated or determinable,
the maximum reasonably anticipated liability in respect thereof.
"Contractual Obligations" means as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument to which such Person is a
party or by which it or any of its property is bound.
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"Copyrights" means any foreign or United States copyright registrations
and applications for registration thereof, and any non-registered copyrights.
"Environmental Laws" means federal, state, local and foreign laws,
principles of common law, civil law, regulations and codes, as well as orders,
decrees, judgments or injunctions issued, promulgated, approved or entered
thereunder relating to pollution, protection of the environment or public health
and safety.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission thereunder.
"FBR" has the meaning assigned to such term in the recital to this
Agreement.
"Financial Statements" has the meaning set forth in Section 3.10.
"GAAP" means generally accepted accounting principles in effect from time
to time.
"GAP Coinvestment" has the meaning assigned to such term in the recital
to this Agreement.
"GAP LLC" means General Atlantic Partners, LLC, a Delaware limited
liability company and the general partner of GAP LP, and any successor to such
entity.
"GAP LP" has the meaning assigned to such term in the recital to this
Agreement.
"Governmental Authority" means the government of any nation, state, city,
locality or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"Indebtedness" means, as to any Person, (a) all obligations of such
Person for borrowed money (including, without limitation, reimbursement and all
other obligations with respect to surety bonds, letters of credit and bankers'
acceptances, whether or not matured), (b) all obligations of such Person
evidenced by notes, bonds, debentures or similar instruments, (c) all
obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable and accrued commercial or trade
liabilities arising in the ordinary course of business,
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(d) all interest rate and currency swaps, caps, collars and similar agreements
or hedging devices under which payments are obligated to be made by such Person,
whether periodically or upon the happening of a contingency, (e) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (f)
all obligations of such Person under leases which have been or should be, in
accordance with GAAP, recorded as capital leases, (g) all indebtedness secured
by any Lien (other than Liens in favor of lessors under leases other than leases
included in clause (f)) on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall have been assumed
by that Person or is non-recourse to the credit of that Person, and (h) any
Contingent Obligation of such Person.
"Internet Assets" means any internet domain names and other computer user
identifiers and any rights in and to sites on the Worldwide Web, including
rights in and to any text, graphics, audio and video files and html or other
code incorporated in such sites.
"Liabilities" has the meaning set forth in Section 3.15 of this
Agreement.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or preference, priority,
right or other security interest or preferential arrangement of any kind or
nature whatsoever (excluding preferred stock and equity related preferences),
including, without limitation, those created by, arising under or evidenced by
any conditional sale or other title retention agreement, the interest of a
lessor under a Capital Lease Obligation, or any financing lease having
substantially the same economic effect as any of the foregoing.
"Mask Works" means any mask works and registrations and applications for
registrations thereof.
"Patents" means any foreign or United States patents and patent
applications, including any divisions, continuations, continuations-in-part,
substitutions or reissues thereof, whether or not patents are issued on such
applications and whether or not such applications are modified, withdrawn or
resubmitted.
"Person" means any individual, firm, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
limited liability company, Governmental Authority or other entity of any kind,
and shall include any successor (by merger or otherwise) of such entity.
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"Preferred Stock" has the meaning assigned to such term in the recital to
this Agreement.
"Purchased Shares" has the meaning set forth in Section 2.1 of this
Agreement.
"Registration Rights Agreement" means the Amended and Restated
Registration Rights Agreement substantially in the form attached hereto as
Exhibit E.
"Requirements of Law" means, as to any Person, any law, statute, treaty,
rule, regulation, license or franchise or determination of an arbitrator or a
court or other Governmental Authority, in each case applicable or binding upon
such Person or any of its property or to which such Person or any of its
property is subject or pertaining to any or all of the transactions contemplated
or referred to herein.
"Securities" means the Purchased Shares and the shares of Common Stock
issuable upon conversion of the Purchased Shares.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"Series A Preferred Stock" means the Series A Convertible Preferred Stock
of the Company, par value $.01 per share.
"Software" means any computer software programs, source code, object
code and manuals and other written material with respect thereto.
"Stockholders Agreement" means the Amended and Restated Stockholders
Agreement substantially in the form attached hereto as Exhibit D.
"Subsidiaries" means, as to any Person, a corporation, partnership,
limited liability company or other entity of which 50% or more of the voting
power of the outstanding voting equity securities or 50% or more of the
outstanding economic equity interest is held, directly or indirectly, by such
Person.
"Trade Secrets" means any trade secrets, research records, processes,
procedures, manufacturing formulae, technical know-how, technology, blue prints,
designs, plans, inventions (whether patentable and whether reduced to practice),
invention disclosures and improvements thereto.
"Trademarks" means any foreign or United States trademarks, service
marks, trade dress, trade names, brand names, designs and logos, corporate
names,
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product or service identifiers, whether registered or unregistered, and all
registrations and applications for registration thereof.
"Transaction Documents" means collectively, this Agreement, the
Certificate of Designations, the Stockholders Agreement and the Registration
Rights Agreement.
1.2 Accounting Terms; Financial Statements. All accounting terms used
herein not expressly defined in this Agreement shall have the respective
meanings given to them in accordance with sound accounting practice. The term
"sound accounting practice" shall mean such accounting practice as, in the
opinion of the independent certified public accountants regularly retained by
the Company, conforms at the time to GAAP applied on a consistent basis except
for changes with which such accountants concur.
ARTICLE 2
PURCHASE AND SALE OF PREFERRED STOCK
2.1 Purchase and Sale of Preferred Stock. Subject to the terms and
conditions herein set forth, the Company agrees to issue and sell to each of the
Purchasers, and each of the Purchasers agrees that it will purchase from the
Company, on the Closing Date, the aggregate number of shares of Preferred Stock
set forth opposite such Purchaser's name on Schedule 2 hereto, for the aggregate
purchase price set forth opposite such Purchaser's name on Schedule 2 hereto
(all of the shares of Preferred Stock being purchased pursuant hereto being
referred to herein as the "Purchased Shares").
2.2 Certificate of Designations. The Purchased Shares shall have the
preferences and rights set forth in the Certificate of Designations.
2.3 Use of Proceeds. The Company shall use the proceeds from the sale
of the Purchased Shares to fund the purchase from Xxxx Xxxxxxxxx of an aggregate
of 359,712 shares of Common Stock for an aggregate purchase price of $1,500,000.
2.4 Closing. The closing of the sale and purchase of the Purchased
Shares (the "Closing") shall take place at the offices of Xxxx, Weiss, Rifkind,
Xxxxxxx & Xxxxxxxx, at 10:00 a.m., local time, on the date hereof, or at such
other time, place and date that the Company and the Purchasers may agree in
writing (the "Closing Date"). On the Closing Date, the Company shall deliver to
the Purchasers stock certificates representing the Purchased Shares against
delivery by the Purchasers
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to the Company of the aggregate purchase price therefor by wire transfer of
immediately available funds.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchasers as follows:
3.1 Corporate Existence and Power. The Company (a) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; (b) has all requisite power and authority to
own and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently, or is currently proposed to be,
engaged; (c) is duly qualified as a foreign corporation, licensed and in good
standing under the laws of the Commonwealth of Virginia; and (d) has the
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and each of the other Transaction Documents. No
jurisdiction, other than those referred to in clause (c) above, has claimed, in
writing or otherwise, that the Company is required to qualify as a foreign
corporation therein, and the Company does not file any franchise, income or
other tax returns in any other jurisdiction based upon the ownership or use of
property therein or the derivation of income therefrom. Except as set forth on
Schedule 3.1(c), the Company does not own, lease or operate property in any
jurisdiction other than its jurisdiction of incorporation and the jurisdiction
referred to in clause (c) above.
3.2 Authorization: No Contravention. The execution, delivery and
performance by the Company of this Agreement and each of the other Transaction
Documents and the transactions contemplated hereby and thereby, including,
without limitation, the sale, issuance and delivery of the Securities, (a) have
been duly authorized by all necessary corporate action of the Company; (b) do
not contravene the terms of the Certificate of Incorporation or the By-laws, or
any amendment thereof; (c) do not violate, conflict with or result in any breach
or contravention of, or the creation of any Lien under, any Contractual
Obligation of the Company, or any Requirement of Law applicable to the Company;
and (d) do not violate any judgment, injunction, writ, award, decree or order of
any nature (collectively, "Orders") of any Governmental Authority against, or
binding upon, the Company. The Company has not previously entered into any
Contractual Obligation which is currently in effect or by which the Company is
currently bound, granting any rights to any Person which are inconsistent with
the rights to be granted by the Company in this Agreement and each of the other
Transaction Documents.
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3.3 Governmental Authorization; Third Party Consents. Except as set
forth in Schedule 3.3, no approval, consent, compliance, exemption,
authorization or other action by, or notice to, or filing with, any Governmental
Authority or any other Person in respect of any Requirement of Law, and no lapse
of a waiting period under a Requirement of Law, is necessary or required in
connection with the execution, delivery or performance (including, without
limitation, the sale, issuance and delivery of the Securities) by, or
enforcement against, the Company of this Agreement and the other Transaction
Documents or the transactions contemplated hereby and thereby.
3.4 Binding Effect. This Agreement and each of the other Transaction
Documents have been duly executed and delivered by the Company, and constitute
the legal, valid and binding obligations of the Company enforceable against the
Company in accordance with their terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity relating to enforceability
(regardless of whether considered in a proceeding at law or in equity).
3.5 Litigation. Except as set forth on Schedule 3.5, there are no
actions, suits, proceedings, claims, complaints, disputes, arbitrations or
investigations (collectively, "Claims") pending or, to the knowledge of the
Company, threatened, at law, in equity, in arbitration or before any
Governmental Authority against the Company which would, if adversely determined,
have a material adverse effect on (a) the Condition of the Company or (b) the
ability of the Company to perform its obligations under this Agreement or any of
the other Transaction Documents. No Order has been issued by any court or other
Governmental Authority against the Company purporting to enjoin or restrain the
execution, delivery or performance of this Agreement or any of the other
Transaction Documents.
3.6 Compliance with Laws.
(a) The Company is in compliance with all Requirements of
Law and all Orders issued by any court or Governmental Authority against the
Company in all respects, except to the extent that the failure to comply with
such Requirements of Law or Orders would not have a material adverse effect on
the Condition of the Company.
(b) (i) The Company has all licenses, permits, orders and
approvals of any Governmental Authority (collectively, "Permits") that are
necessary for the conduct of the business of the Company, except to the extent
that the failure to have such Permits would not have a material adverse effect
on the Condition of the
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Company; (ii) such Permits are in full force and effect; and (iii) no violations
are or have been recorded in respect of any Permit.
(c) No material expenditure is presently required by the Company
to comply with any existing Requirement of Law or Order.
(d) The property, assets and operations owned or leased by the
Company are in compliance in all material respects with all applicable
Environmental Laws, while so owned or leased.
3.7 Capitalization. On the Closing Date, after giving effect to the
transactions contemplated by this Agreement, the authorized capital stock of the
Company shall consist of (a) 20,000,000 shares of Common Stock, of which
8,899,084 shares shall be issued and outstanding to Xxxx Xxxxxxxxx, (b)
5,000,000 shares of Series A Preferred Stock, of which (i) 1,389,218 shares
shall be outstanding and issued to GAP LP and (ii) 240,751 shares shall be
outstanding and issued to GAP Coinvestment and (c) 359,712 shares of Preferred
Stock, of which (i) 81,535 shares shall be outstanding and issued to GAP LP,
(ii) 14,388 shares shall be outstanding and issued to GAP Coinvestment, (iii)
23,981 shares shall be outstanding and issued to FBR and (iv) 239,808 shares
shall be outstanding and issued to Morino Trust. The Company has reserved an
aggregate of 359,712 shares of Common Stock for issuance upon conversion of the
Purchased Shares. Except as set forth on Schedule 3.7, there are no options,
warrants, conversion privileges, subscription or purchase rights or other rights
presently outstanding to purchase or otherwise acquire (x) any authorized but
unissued, unauthorized or treasury shares of the Company's capital stock, (y)
any Common Stock Equivalents or (z) other securities of the Company. The
Purchased Shares are duly authorized, and, assuming the accuracy of the
representations and warranties of the Purchasers set forth in Sections 4.6 and
4.7, when issued and sold to the Purchasers after payment therefor, will be
validly issued, fully paid and nonassessable and will be issued in compliance
with the registration and qualification requirements of all applicable federal
securities laws. The shares of Common Stock issuable upon conversion of the
Purchased Shares are duly authorized and, when issued in compliance with the
provisions of the Certificate of Incorporation and the Certificate of
Designations, will be validly issued, fully paid and nonassessable and will be
issued in compliance with the registration and qualification requirements of all
applicable federal securities laws. The issued and outstanding shares of Common
Stock are all duly authorized, validly issued, fully paid and nonassessable, and
were issued in compliance with the registration and qualification requirements
of all applicable federal securities laws.
3.8 No Default or Breach; Contractual Obligations. Except as set forth
in Schedule 3.8, the Company has not received notice of, and is not in default
under, or with respect to, any Contractual Obligation in any respect, which,
individu-
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ally or together with all such defaults, could have a material adverse effect on
(i) the Condition of the Company or (ii) the ability of the Company to perform
its obligations under this Agreement or the other Transaction Documents.
3.9 FIRPTA. The Company is not a "foreign person" within the meaning of
Section 1445 of the Code.
3.10 Financial Statements. The Company has delivered to the Purchasers
its audited financial statements (balance sheet and statements of operations,
cash flows and stockholders' equity, together with the notes thereto) for the
fiscal years ended and as at December 31, 1995 and December 31, 1994 (the
"Audited Financial Statements"), and its unaudited financial statements (balance
sheet and statement of operations) for the fiscal year ended and as at December
31, 1996 (the "Unaudited Financial Statements"; the Audited Financial Statements
and Unaudited Financial Statements being collectively referred to as the
"Financial Statements"). The Financial Statements are complete and correct in
all material respects and have been prepared in accordance with GAAP applied on
a consistent basis throughout the periods indicated and with each other, except
that the Unaudited Financial Statements do not contain footnotes or typical
year-end adjustments. The Financial Statements fairly present the financial
position, operating results and cash flows of the Company as of the respective
dates and for the respective periods indicated, subject, in the case of the
Unaudited Financial Statements, to normal year-end audit adjustments. The net
income of the Company for the fiscal year ended December 31, 1996 will not be
less than $800,000.
3.11 Taxes. (i) The Company has paid all federal, state, county, local,
foreign and other taxes, including, without limitation, income taxes, estimated
taxes, excise taxes, sales taxes, use taxes, gross receipts taxes, franchise
taxes, employment and payroll related taxes, property taxes and import duties,
whether or not measured in whole or in part by net income (hereinafter, "Taxes"
or, individually, a "Tax") which have come due and are required to be paid by it
through the date hereof, and all deficiencies or other additions to Tax,
interest and penalties owed by it in connection with any such Taxes, and shall
timely pay any Taxes including additions, interest and penalties, required to be
paid by it on, before or after the date hereof; (ii) the Company has timely
filed returns for Taxes that it is required to file on and through the date
hereof, and shall timely file all returns for Taxes that it is required to file
after the date hereof; (iii) with respect to all Tax returns of the Company, (x)
except as set forth in Schedule 3.11, to the knowledge of the Company, there is
no unassessed tax deficiency proposed or threatened against the Company and (y)
except as set forth in Schedule 3.11, no audit is in progress and no extension
of time is in force with respect to any date on which any return for Taxes was
or is to be filed and no waiver or agreement is in force for the extension of
time for the assessment or payment of any Tax; (iv) except as set forth in
Schedule 3.11, the
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Company has not agreed to or is required to make any adjustments under Section
481(a) of the Code by reason of a change in accounting methods or otherwise;
and (v) all provisions for income and other Tax liabilities of the Company with
respect to the Audited Financial Statements and the Unaudited Financial
Statements have been made in accordance with GAAP consistently applied, and all
liabilities for Taxes of the Company attributable to periods prior to or ending
on December 31, 1995 and December 31, 1996 have been adequately provided for on
the Audited Financial Statements and the Unaudited Financial Statements,
respectively. Schedule 3.11 sets forth the status of federal income tax audits
and state, local and foreign tax audits of the Tax returns of the Company for
each taxable year for which the statute of limitations has not expired.
3.12 No Material Adverse Change; Ordinary Course of Business. Since
December 31, 1996, there has not been any material adverse change, nor to the
knowledge of the Company is any such change threatened, in the Condition of the
Company. Except as set forth on Schedule 3.12, since December 31, 1996, the
Company has not participated in any transaction or otherwise acted outside the
ordinary course of business, including, without limitation, declaring or paying
any dividend or declaring or making any distribution to its stockholders, except
out of the earnings of the Company.
3.13 Private Offering. No form of general solicitation or general
advertising was used by the Company or its representatives in connection with
the offer or sale of the Purchased Shares. No registration of the Securities,
pursuant to the provisions of the Securities Act or any state securities or
"blue sky" laws, will be required by the offer, sale or issuance of the
Securities. The Company agrees that neither it, nor anyone acting on its behalf,
shall offer to sell the Securities or any other security of the Company so as to
require the registration of the Securities pursuant to the provisions of the
Securities Act or any state securities or "blue sky" laws, unless such
Securities or other security is so registered.
3.14 Title to Assets. Except as set forth on Schedule 3.14, the Company
owns and has good, valid, and marketable title to all of its properties and
assets used in its business and reflected as owned on the Financial Statements
or so described in any Schedule hereto (collectively, the "Assets"), in each
case free and clear of all Liens, except for (a) Liens specifically described
on the notes to the Financial Statements and (b) Liens on Assets not material
to the Condition of the Company.
3.15 Liabilities. Except as set forth on Schedule 3.15, the Company has
no obligation or liability ("Liabilities") other than (i) Liabilities fully and
adequately reflected or reserved against on the Financial Statements, (ii)
Liabilities not required by GAAP to be set forth on the Financial Statements
and (iii) Liabilities
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incurred since December 31, 1996 in the ordinary course of business. The Company
has no knowledge of any circumstance, condition, event or arrangement that may
hereafter give rise to any Liabilities of the Company except in the ordinary
course of business or as otherwise set forth on Schedule 3.15.
3.16 Intellectual Property.
(a)(i) The Company is the exclusive owner of or has the license
or right to use, sell, license or dispose of all of the Copyrights, Patents,
Trade Secrets, Trademarks, Internet Assets, Mask Works, Software and other
proprietary rights (collectively, "Intellectual Property") that are used in
connection with its business as presently conducted, free and clear of all
Liens.
(a)(ii) Schedule 3.16(a)(ii) sets forth all of the Intellectual
Property owned by, and applications for any of the above filed by, the Company.
None of the Intellectual Property listed on Schedule 3.16(a)(ii) is subject to
any outstanding Order, and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand is pending or, to the knowledge of the
Company, threatened, which challenges the validity, enforceability, use or
ownership of the item.
(a)(iii) Schedule 3.16(a)(iii) sets forth all Intellectual
Property licenses, sublicenses and other agreements under which the Company is
either a licensor or licensee of any Intellectual Property, except such
licenses, sublicenses and other agreements relating to software used solely on
the computers of the Company. The Company has substantially performed all
obligations imposed upon it thereunder, and the Company is not, nor to the
knowledge of the Company is any other party thereto, in breach of or default
thereunder in any respect, nor is there any event which with notice or lapse of
time or both would constitute a default thereunder. All of the Intellectual
Property licenses listed on Schedule 3.16(a)(iii) are valid, enforceable and in
full force and effect, and will continue to be so on identical terms immediately
following the Closing, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity relating to enforceability
(regardless of whether considered in a proceeding at law or in equity).
(a)(iv) To the knowledge of the Company, other than as set forth
on Schedule 3.16(a)(iv), none of the Intellectual Property currently sold or
licensed by the Company to any Person or used by or licensed to the Company
infringes upon or otherwise violates any Intellectual Property rights of others.
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14
(a)(v) Except as set forth on Schedule 3.16(a)(v), no litigation
is pending and no Claim has been made against the Company or, to the knowledge
of the Company, is threatened, contesting the right of the Company to sell or
license to any Person or use the Intellectual Property presently sold or
licensed to such Person or used by the Company.
(b) Except as set forth on Schedule 3.16(b), to the knowledge of
the Company, no Person is infringing upon or otherwise violating the
Intellectual Property rights of the Company.
(c) No former employer of any employee of the Company, and no
current or former client of any consultant of the Company, has made a claim
against the Company that such employee or such consultant is utilizing
proprietary information of such former employer or client.
(d) Except as set forth on Schedule 3.161(d), the Company is not a
party to or bound by any license or other agreement requiring the payment of any
material royalty payment, excluding such agreements relating to software
licensed for use solely on the computers of the Company.
(e) To the knowledge of the Company, no employee of the Company is
in violation of any term of any employment agreement, patent or invention
disclosure agreement or other contract or agreement relating to the relationship
of such employee with the Company.
(f) To the knowledge of the Company, none of the designs, plans,
trade secrets, inventions, processes, procedures, research records,
manufacturing know-how and formulae, wherever located, the value of which is
contingent upon maintenance of confidentiality thereof, has been disclosed to
any Person other than employees, representatives and agents of the Company,
except as required pursuant to the filing of a patent application by the
Company, or when disclosure to a Person is necessary pursuant to confidentiality
agreements entered into by the Company.
3.17 Trade Relations. Except as set forth on Schedule 3.17, there exists
no actual or, to the knowledge of the Company, threatened termination,
cancellation or limitation of, or any adverse modification or change in, the
business relationship of the Company, or the business of the Company, with any
customer or distributor or any group of customers or distributors whose
purchases are individually or in the aggregate material to the Condition of the
Company, or with any material supplier of the Company, and, to the knowledge of
the Company, there exists no present condition or state of fact or circumstances
that would materially adversely affect the Condition of the Company or prevent
the Company from conducting such
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business relationships or such business with any such customer, such group of
customers or distributors or such material supplier in the same manner as
heretofore conducted by the Company.
3.18 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by the Company
in connection with the transactions contemplated hereby based on any agreement,
arrangement or understanding with the Company or any action taken by any such
Person.
3.19 Disclosure.
(a) Agreement and Other Documents. This Agreement and the
documents and certificates furnished to the Purchasers by the Company, taken as
a whole, do not contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which they were made, not
misleading.
(b) Material Adverse Effects. There is no fact known to the
Company, which the Company has not disclosed to the Purchasers in writing, which
materially adversely affects the Condition of the Company or the ability of the
Company to perform its obligations under this Agreement, any of the other
Transaction Documents or any document contemplated hereby or thereby.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each of the Purchasers hereby represents and warrants (severally as to
itself and not jointly) to the Company as follows:
4.1 Existence and Power. Such Purchaser (a) is a partnership, trust or
corporation, as the case may be, duly organized and validly existing under the
laws of the jurisdiction of its formation and (b) has the requisite power and
authority to execute, deliver and perform its obligations under this Agreement
and each of the other Transaction Documents to which it is a party.
4.2 Authorization; No Contravention. The execution, delivery and
performance by such Purchaser of this Agreement and each of the other
Transaction Documents to which it is a party and the transactions contemplated
hereby and thereby, including, without limitation, the purchase of the Purchased
Shares, (a) have been duly authorized by all necessary action, (b) do not
contravene the terms of such
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Purchaser's organizational documents, or any amendment thereof, and (c) do not
violate, conflict with or result in any breach or contravention of or the
creation of any Lien under, any Contractual Obligation of such Purchaser, or any
Requirement of Law applicable to such Purchaser.
4.3 Governmental Authorization; Third Party Consents. No approval,
consent, compliance, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person with respect to
any Requirement of Law, and no lapse of a waiting period under any Requirement
of Law, is necessary or required in connection with the execution, delivery or
performance (including, without limitation, the purchase of the Purchased
Shares) by, or enforcement against, such Purchaser of this Agreement and each of
the other Transaction Documents to which such Purchaser is a party or the
transactions contemplated hereby and thereby.
4.4 Binding Effect. This Agreement and each of the other Transaction
Documents to which such Purchaser is a party have been duly executed and
delivered by such Purchaser and constitute the legal, valid and binding
obligations of such Purchaser, enforceable against it in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium or
similar laws affecting the enforcement of creditors' rights generally or by
equitable principles relating to enforceability (regardless of whether
considered in a proceeding at law or in equity).
4.5 Purchase for Own Account. The Purchased Shares to be acquired by
such Purchaser pursuant to this Agreement are being or will be acquired for its
own account and with no intention of distributing or reselling such Purchased
Shares or any part thereof in any transaction that would be in violation of the
securities laws of the United States of America, or any state, without
prejudice, however, to the rights of such Purchaser at all times to sell or
otherwise dispose of all or any part of such Purchased Shares under an effective
registration statement under the Securities Act, or under an exemption from such
registration available under the Securities Act, and subject, nevertheless, to
the disposition of such Purchaser's property being at all times within its
control. If such Purchaser should in the future decide to dispose of any of the
Securities, such Purchaser understands and agrees that it may do so only in
compliance with the Securities Act and applicable state securities laws, as then
in effect. Such Purchaser agrees to the imprinting, so long as required by law,
of a legend on certificates representing all of its Purchased Shares and shares
of Common Stock issuable upon conversion of its Purchased Shares to the
following effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF
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1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE. THE
SECURITIES MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS
OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF SUCH ACT AND SUCH LAWS OR PURSUANT TO A WRITTEN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
THE SALE, ASSIGNMENT, HYPOTHECATION, PLEDGE, ENCUMBRANCE OR OTHER
DISPOSITION (EACH A "TRANSFER") AND VOTING OF ANY OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE TERMS OF THE
STOCKHOLDERS AGREEMENT, DATED FEBRUARY __, 1997, AMONG PROXICOM, INC.,
GENERAL ATLANTIC PARTNERS 34, L.P., GAP COINVESTMENT PARTNERS, L.P., XXXX
XXXXXXXXX, THE XXXXX X. XXXXXX TRUST AND FBR VENTURE CAPITAL MANAGERS
INC., A COPY OF WHICH MAY BE INSPECTED AT THE COMPANY'S PRINCIPAL OFFICE.
THE COMPANY WILL NOT REGISTER THE TRANSFER OF SUCH SECURITIES ON THE
BOOKS OF THE COMPANY UNLESS AND UNTIL THE TRANSFER HAS BEEN MADE IN
COMPLIANCE WITH THE TERMS OF THE STOCKHOLDERS AGREEMENT.
4.6 Restricted Securities. Such Purchaser understands that the
Purchased Shares will not be registered at the time of their issuance under the
Securities Act for the reason that the sale provided for in this Agreement is
exempt pursuant to Section 4(2) of the Securities Act and that the reliance of
the Company on such exemption is predicated in part on such Purchaser's
representations set forth herein. Such Purchaser represents that it is
experienced in evaluating recently organized companies such as the Company, has
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of its investment and has the ability to
suffer the total loss of its investment. Such Purchaser further represents that
it has had the opportunity to ask questions of and receive answers from the
Company concerning the terms and conditions of the offering and to obtain
additional information (to the extent the Company possessed such information or
could acquire it without unreasonable effort or expense).
4.7 Accredited Investor Status. Such Purchaser is an "accredited
investor" as that term is defined by Rule 501 of Regulation D promulgated under
the Securities Act.
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4.8 Litigation. There are no Claims pending or, to the knowledge of
such Purchaser, threatened, at law, in equity, in arbitration or before any
Governmental Authority against any Purchaser which would, if adversely
determined, have a material adverse effect on the ability of such Purchaser to
perform its obligations under this Agreement or any of the other Transaction
Documents. No Order has been issued by any court or other Governmental Authority
against such Purchaser purporting to enjoin or restrain the execution, delivery
or performance of this Agreement or any of the other Transaction Documents.
4.9 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by the
Purchasers, in connection with the transactions contemplated hereby based on any
agreement, arrangement or understanding with the Purchasers or any action taken
by the Purchasers.
ARTICLE 5
CONDITIONS TO THE OBLIGATION
OF THE PURCHASERS TO CLOSE
The obligation of the Purchasers to purchase the Purchased Shares, to pay
the purchase price therefor at the Closing and to perform any obligations
hereunder shall be subject to the satisfaction as determined by, or waiver by,
the Purchasers of the following conditions on or before the Closing Date.
5.1 Representations and Warranties. The representations and warranties
of the Company contained in Article 3 hereof shall be true and correct in all
material respects at and on the Closing Date as if made at and on such date.
5.2 Compliance with this Agreement. The Company shall have performed
and complied in all material respects with all of its agreements and conditions
set forth herein that are required to be performed or complied with by the
Company on or before the Closing Date.
5.3 Secretary's Certificate. The Purchasers shall have received a
certificate from the Company, in form and substance satisfactory to the
Purchasers, dated the Closing Date and signed by the Secretary or an Assistant
Secretary of the Company, certifying (a) that the attached copies of the
Certificate of Incorporation, the By-laws and resolutions of the Board of
Directors of the Company approving this Agreement and each of the other
Transaction Documents to which the Company is a party and the transactions
contemplated hereby and thereby, are all true, complete and correct and remain
unamended and in full force and effect and (b) as to the
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incumbency and specimen signature of each officer of the Company executing this
Agreement, each other Transaction Document and any other document delivered in
connection herewith on behalf of the Company.
5.4 Officer's Certificate. The Purchasers shall have received a
certificate from the Company, in form and substance satisfactory to the
Purchaser, dated the Closing Date and signed by the Chief Executive Officer and
Treasurer of the Company, certifying that (a) the representations and warranties
of the Company contained in Article 3 hereof are true and correct in all
material respects at and on the Closing Date and (b) the Company has performed
and complied in all material respects with all of the agreements and conditions
set forth or contemplated herein that are required to be performed or complied
with by the Company on or before the Closing Date.
5.5 Documents. The Purchasers shall have received true, complete and
correct copies of such documents as they may reasonably request in connection
with or relating to the sale of the Purchased Shares and the transactions
contemplated hereby, all in form and substance reasonably satisfactory to
the Purchasers.
5.6 Repurchase of Common Stock. Simultaneously with the Closing, the
Company shall have purchased from Xxxx Xxxxxxxxx an aggregate of 359,712 shares
of Common Stock for an aggregate purchase price of $1,500,000.
5.7 Filing of Certificate of Designations. The Certificate of
Designations shall have been duly filed by the Company with the Secretary of
State of the State of Delaware in accordance with the General Corporation Law of
the State of Delaware.
5.8 Purchased Shares. The Company shall have delivered to the
Purchasers certificates in definitive form representing the number of
Purchased Shares set forth opposite such Purchaser's name on Schedule 2
hereto, registered in the name of such Purchaser.
5.9 Stockholders Agreement. The Company shall have duly executed and
delivered the Stockholders Agreement, substantially in the form attached hereto
as Exhibit D.
5.10 Registration Rights Agreement. The Company shall have duly executed
and delivered the Registration Rights Agreement, substantially in the form
attached hereto as Exhibit E.
5.11 Approval of Counsel to the Purchasers. All actions and proceedings
hereunder and all documents required to be delivered by the Company
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hereunder or in connection with the consummation of the transactions
contemplated hereby, and all other related matters, shall have been acceptable
to Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, counsel to the GAP Entities, and to
Xxxxxxxx & Xxxx, counsel to Morino Trust, in their respective reasonable
judgment as to their form and substance.
5.12 Consents and Approvals. All consents, exemptions, authorizations,
or other actions by, or notices to, or filings with, Governmental Authorities
and other Persons required in respect of all Requirements of Law and with
respect to those Contractual Obligations of the Company which are necessary in
connection with the execution, delivery or performance by, or enforcement
against, the Company of this Agreement and each of the other Transaction
Documents shall have been obtained and be in full force and effect, and the
Purchasers shall have been furnished with appropriate evidence thereof.
5.13 No Material Judgment or Order. There shall not be on the Closing
Date any Order of a court of competent jurisdiction or any ruling of any
Governmental Authority or any condition imposed under any Requirement of Law
which, in the reasonable judgment of the Purchasers, would prohibit the purchase
of the Purchased Shares or subject the Purchasers to any penalty or other
onerous condition under or pursuant to any Requirement of Law if the Purchased
Shares were to be purchased hereunder.
5.14 No Litigation. No action, suit, proceeding, claim or dispute shall
have been brought or otherwise arisen at law, in equity, in arbitration or
before any Governmental Authority against the Company which would, if adversely
determined, (a) have a material adverse effect on the Condition of the Company
or (b) have a material adverse effect on the ability of the Company to perform
its obligations under this Agreement or each of the other Transaction Documents.
ARTICLE 6
CONDITIONS TO THE OBLIGATION
OF THE COMPANY TO CLOSE
The obligation of the Company to issue and sell the Purchased Shares and
the obligation of the Company to perform its other obligations hereunder, shall
be subject to the satisfaction as determined by, or waiver by, the Company of
the following conditions on or before the Closing Date:
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6.1 Representations and Warranties. The representations and warranties
of the Purchasers contained in Article 4 hereof shall be true and correct in all
material respects at and on the Closing Date as if made at and on such date.
6.2 Compliance with this Agreement. The Purchasers shall have performed
and complied in all material respects with all of its agreements and conditions
set forth herein that are required to be performed or complied with by the
Purchasers on or before the Closing Date.
6.3 General Partners' Certificates. The Company shall have received a
certificate from the general partner of each of GAP LP and GAP Coinvestment, in
form and substance satisfactory to the Company, dated the Closing Date and
signed by such general partner(s), certifying that (a) the representations and
warranties of GAP LP or GAP Coinvestment, as the case may be, contained in
Article 4 hereof are true and correct in all material respects at and on Closing
Date and (b) GAP LP or GAP Coinvestment, as the case may be, has performed and
complied in all material respects with all of its agreements and conditions set
forth or contemplated herein that are required to be performed or complied with
by GAP LP or GAP Coinvestment, as the case may be, on or before the Closing
Date.
6.4 Trustee's Certificate. The Company shall have received a
certificate from the trustee of Morino Trust, in form and substance satisfactory
to the Company, dated the Closing Date and signed by such trustee, certifying
that (a) the representations and warranties of Morino Trust contained in Article
4 hereof are true and correct in all material respects at and on Closing Date
and (b) Morino Trust has performed and complied in all material respects with
all of its agreements and conditions set forth or contemplated herein that are
required to be performed or complied with by Morino Trust on or before the
Closing Date.
6.5 Officer's Certificate. The Company shall have received a
certificate from FBR, in form and substance satisfactory to the Company, dated
the Closing Date and signed by the chief executive officer, certifying that (a)
the representations and warranties of FBR contained in Article 4 hereof are true
and correct in all material respects at and on the Closing Date and (b) FBR has
performed and complied in all material respects with all of its agreements and
conditions set forth as contemplated herein that are required to be performed or
complied with by the Company on or before the Closing Date.
6.6 Payment of Purchase Price. The Company shall have received the
aggregate purchase price for the Purchased Shares.
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6.7 Stockholders Agreement. The Purchasers shall have duly executed and
delivered the Stockholders Agreement, substantially in the form attached hereto
as Exhibit D.
6.8 Registration Rights Agreement. The Purchasers shall have duly
executed and delivered the Registration Rights Agreement, substantially in the
form attached hereto as Exhibit E.
6.9 Approval of Counsel to the Company. All actions and proceedings
hereunder and all documents required to be delivered by the Purchasers hereunder
or in connection with the consummation of the transactions contemplated hereby,
and all other related matters, shall have been acceptable to Xxxxx & Xxxxxxx,
counsel to the Company, in their reasonable judgment as to their form and
substance.
6.10 Consents and Approvals. All consents, exemptions, authorizations,
or other actions by, or notices to, or filings with, Governmental Authorities
and other Persons required in respect of all Requirements of Law and with
respect to those Contractual Obligations of the Purchasers which are necessary
in connection with the execution, delivery or performance by, or enforcement
against, the Company of this Agreement and each of the other Transaction
Documents shall have been obtained and be in full force and effect, and the
Company shall have been furnished with appropriate evidence thereof.
6.11 No Material Judgment or Order. There shall not be on the Closing
Date any Order of a court of competent jurisdiction or any ruling of any
Governmental Authority or any condition imposed under any Requirement of Law
which, in the reasonable judgment of the Company, would prohibit the sale of the
Purchased Shares or subject the Company to any penalty or other onerous
condition under or pursuant to any Requirement of Law if the Purchased Shares
were to be sold hereunder.
6.12 No Litigation. No action, suit, proceeding, claim or dispute shall
have been brought or otherwise arisen at law, in equity, in arbitration or
before any Governmental Authority against the Purchasers which would, if
adversely determined, have a material adverse effect on the ability of the
Purchasers to perform their obligations under this Agreement or any of the other
Transaction Documents to which they are a party.
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ARTICLE 7
INDEMNIFICATION
7.1 Indemnification. Except as otherwise provided in this Article 7,
the Company (the "Indemnifying Party") agrees to indemnify, defend and hold
harmless the Purchasers and their Affiliates and their respective officers,
directors, agents, employees, subsidiaries, partners, members and controlling
persons (each, an "Indemnified Party") to the fullest extent permitted by law
from and against any and all losses, Claims, or written threats thereof
(including, without limitation, any Claim brought by the Purchasers or another
Person), damages, expenses (including reasonable fees, disbursements and other
charges of counsel incurred by the Indemnified Party in any action between the
Indemnifying Party and the Indemnified Party or between the Indemnified Party
and any third party or otherwise) or other liabilities (collectively, "Losses")
resulting from or arising out of any breach of any representation or warranty,
covenant or agreement by the Company in this Agreement or the other Transaction
Documents; provided, however, that the Indemnifying Party shall not be liable
under this Section 7.1 to an Indemnified Party to the extent that it is finally
judicially determined that such Losses resulted or arose from the breach by such
Indemnified Party of any representation, warranty, covenant or other agreement
of such Indemnified Party contained in this Agreement or the other Transaction
Documents; and provided further, that if and to the extent that such
indemnification is unenforceable for any reason, the Indemnifying Party shall
make the maximum contribution to the payment and satisfaction of such Losses
which shall be permissible under applicable laws. The amount of any payment to
any Indemnified Party herewith in respect of any Loss shall be of sufficient
amount to make such Indemnified Party whole. In connection with the obligation
of the Indemnifying Party to indemnify for expenses as set forth above, the
Indemnifying Party shall, upon presentation of appropriate invoices containing
reasonable detail, reimburse each Indemnified Party for all such expenses
(including reasonable fees, disbursements and other charges of counsel incurred
by the Indemnified Party in any action between the Indemnifying Party and the
Indemnified Party or between the Indemnified Party and any third party or
otherwise) (a) after the final resolution or disposition of the particular
action, investigation, claim or other proceeding and (b) if such Indemnified
Party prevails with respect thereto.
7.2 Notification. Each Indemnified Party under this Article 7 shall,
promptly after the receipt of notice of the commencement of any action,
investigation, claim or other proceeding against such Indemnified Party in
respect of which indemnity may be sought from the Indemnifying Party under this
Article 7, notify the Indemnifying Party in writing of the commencement thereof.
The omission of any Indemnified Party to so notify the Indemnifying Party of any
such action shall not relieve the Indemnifying Party from any liability which it
may have to such
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Indemnified Party (a) other than pursuant to this Article 7 or (b) under this
Article 7 unless, and only to the extent that, such omission results in the
Indemnifying Party's forfeiture of substantive rights or defenses. In case any
such action, claim or other proceeding shall be brought against any Indemnified
Party, and it shall notify the Indemnifying Party of the commencement thereof,
the Indemnifying Party shall be entitled to assume the defense thereof at its
own expense, with counsel satisfactory to such Indemnified Party in its
reasonable judgment; provided, however, that any Indemnified Party may, at its
own expense, retain separate counsel to participate in such defense at its own
expense. Notwithstanding the foregoing, in any action, claim or proceeding in
which both the Indemnifying Party, on the one hand, and an Indemnified Party, on
the other hand, are, or are reasonably likely to become, a party, such
Indemnified Party shall have the right to employ separate counsel and to control
its own defense of such action, claim or proceeding if, in the reasonable
opinion of counsel to such Indemnified Party, a conflict or potential conflict
exists between the Indemnifying Party, on the one hand, and such Indemnified
Party, on the other hand, that would make such separate representation
advisable; provided, however, that the Indemnifying Party (i) shall not be
liable for the fees and expenses of more than one counsel to all Indemnified
Parties and (ii) shall reimburse the Indemnified Parties for all of such fees
and expenses of such counsel incurred in any action between the Indemnifying
Party and the Indemnified Parties or between the Indemnified Parties and any
third party or otherwise (x) after the final resolution or disposition of such
action, claim or proceeding and (y) if the Indemnified Parties prevail with
respect thereto. The Indemnifying Party agrees that it will not, without the
prior written consent of the Purchasers, settle, compromise or consent to the
entry of any judgment in any pending or threatened claim, action or proceeding
relating to the matters contemplated hereby (if any Indemnified Party is a party
thereto or has been actually threatened to be made a party thereto) unless such
settlement, compromise or consent includes an unconditional release of the
Purchasers and each other Indemnified Party from all liability arising or that
may arise out of such claim, action or proceeding. The Indemnifying Party shall
not be liable for any settlement of any claim, action or proceeding effected
against an Indemnified Party without its written consent, which consent shall
not be unreasonably withheld. The rights accorded to Indemnified Party hereunder
shall be in addition to any rights that any Indemnified Party may have at common
law, by separate agreement or otherwise; provided, however, that notwithstanding
the foregoing or anything to the contrary contained in this Agreement, nothing
in this Article 7 should restrict or limit any rights that any Indemnified Party
may have to seek equitable relief.
7.3 Limitations on Indemnification. Notwithstanding anything to the
contrary contained in this Article 7, the Indemnifying Party shall have no
obligation to pay any amounts for indemnification pursuant to Section 7.1 to the
extent that the aggregate of such amounts for indemnification do not exceed
$60,000 (the "Basket
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Amount"), whereupon the Indemnifying Party shall be obligated to pay in full all
of such amounts for indemnification, including the Basket Amount.
ARTICLE 8
AFFIRMATIVE COVENANTS
The Company hereby covenants and agrees with the Purchasers as follows:
8.1 Preservation of Existence. So long as the Purchasers and/or any
Affiliate thereof own shares of Common Stock and/or shares of Preferred Stock or
other securities of the Company convertible into or exchangeable for shares of
voting capital stock of the Company that represent (after giving effect to any
adjustments) at least 5% of the total number of shares of Common Stock
outstanding on an as-converted basis, the Company shall:
(a) use its reasonable efforts to preserve and maintain in full
force and effect its existence and good standing under the laws of its
jurisdiction of formation or organization;
(b) use its reasonable efforts to preserve and maintain in full
force and effect all material rights, privileges, qualifications, applications,
estimates, licenses and franchises necessary in the normal conduct of its
business;
(c) use its reasonable efforts to preserve its business
organization;
(d) conduct its business in accordance with sound business
practices, keep its properties in good working order and condition (normal wear
and tear excepted) so that the efficiency of its business operations shall be
fully maintained and preserved; and
(e) file or cause to be filed in a timely manner all reports,
applications, estimates and licenses that shall be required by a Governmental
Authority and that, if not timely filed, would have a material adverse effect on
the Condition of the Company.
8.2 Financial Statements and Other Information. The Company shall
deliver to each Purchaser, in form and substance satisfactory to such Purchaser:
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(a) as soon as available, but not later than ninety (90) days
after the end of each fiscal year of the Company, a copy of the audited balance
sheet of the Company as of the end of such fiscal year and the related
statements of operations and cash flows for such fiscal year, setting forth in
each case in comparative form the figures for the previous year, all in
reasonable detail and accompanied by a management summary and analysis of the
operations of the Company for such fiscal year and by the opinion of a
nationally recognized independent certified public accounting firm which report
shall state without qualification that such financial statements present fairly
the financial condition as of such date and results of operations and cash flows
for the periods indicated in conformity with GAAP applied on a consistent basis;
(b) commencing with the fiscal period ending on March 31, 1997, as
soon as available, but in any event not later than forty-five (45) days after
the end of each of the first three fiscal quarters of each fiscal year, the
unaudited balance sheet of the Company, and the related statements of operations
and cash flows for such quarter and for the period commencing on the first day
of the fiscal year and ending on the last day of such quarter, all certified
by an appropriate officer of the Company as presenting fairly the financial
condition as of such date and results of operations and cash flows for the
periods indicated in conformity with GAAP applied on a consistent basis, subject
to normal year-end adjustments and the absence of footnotes required by GAAP;
and
(c) as promptly as practicable, but not later than five (5) days
after the end of each fiscal year of the Company, a certificate signed by the
Chief Executive Officer of the Company in customary form certifying that the
Company is not a "foreign person" within the meaning of Section 1445 of the
Code.
8.3 Reservation of Common Stock and Preferred Stock. The Company shall
at all times reserve and keep available out of its authorized shares of Common
Stock, solely for the purpose of issue or delivery upon conversion of the
Purchased Shares, as provided in the Certificate of Incorporation and the
Certificate of Designations, the maximum number of shares of Common Stock that
may be issuable or deliverable upon such conversion. Such shares of Common Stock
are duly authorized and, when issued or delivered in accordance with the
Certificate of Incorporation and the Certificate of Designations against payment
therefor, shall be validly issued, fully paid and non-assessable. The Company
shall issue such shares of Common Stock in accordance with the terms of the
Certificate of Incorporation and the Certificate of Designations and otherwise
comply with the terms hereof and thereof.
8.4 Compliance with Laws. The Company shall comply in all material
respects with all Requirements of Law and with the directions of any
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Governmental Authority having jurisdiction over the Company or its business or
property.
8.5 Insurance. The Company shall maintain key-man insurance with
respect to Xxxx Xxxxxxxxx in an aggregate amount of not less than $500,000.
8.6 Books and Records. The Company shall keep proper books of record
and account, in which full and correct entries shall be made of all financial
transactions and the assets and business of the Company in accordance with GAAP
consistently applied.
ARTICLE 9
MISCELLANEOUS
9.1 Survival of Representations and Warranties. All of the
representations and warranties made herein shall survive the execution and
delivery of this Agreement until the date that is ninety (90) days after the
receipt by the Purchasers of audited financial statements of the Company for the
fiscal year ending December 31, 1997 (or, if such fiscal year changes and no
such audited consolidated financial statements are available, then the successor
fiscal year), except for (a) Sections 3.1, 3.2, 3.4, 3.7, 4.1, 4.2, 4.4, 4.6 and
4.7, which representations and warranties shall survive until the second
anniversary of the Closing Date and (b) Section 3.11, which shall survive until
the later to occur of (i) the lapse of the statute of limitations with respect
to the assessment of any Tax to which such representation and warranty relates
(including any extensions or waivers thereof) and (y) sixty (60) days after the
final administrative or judicial determination of the Taxes to which such
representation and warranty relates, and no claim with respect to Section 3.11
may be asserted thereafter with the exception of claims arising out of any fact,
circumstance, action or proceeding to which the party asserting such claim shall
have given notice to the other parties to this Agreement prior to the
termination of such period of reasonable belief that a tax liability will
subsequently arise therefrom.
9.2 Notices. All notices, demands and other communications provided for
or permitted hereunder shall be made in writing and shall be by registered or
certified first-class mail, return receipt requested, telecopier, courier
service or personal delivery:
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(a) if to the Company:
Proxicom, Inc.
0000 Xxx Xxxxxx Xxxx
XxXxxx, Xxxxxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxxxxxx Xxxxxxx, Esq.,
General Counsel
with a copy to:
Xxxxxxxx & Xxxxx
440 Louisiana
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxx III, Esq.
and
Xxxxx & Xxxxxxx
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxxx, Esq.
(b) if to GAP LP or GAP Coinvestment:
c/o General Atlantic Service Corporation
0 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xx. Xxxxxxx X. Xxxxxxxx
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
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(c) if to Morio Trust:
The Xxxxx X. Xxxxxx Trust
c/o Morino Institute
0000 Xxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, trustee
with a copy to:
Xxxxxxxx & Xxxx
0000 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
XxXxxx, Xxxxxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
(d) if to FBR:
x/x XXX Xxxxxxx
Capital Managers Inc.
0000 00xx Xxxxxx
Xxxxx Xxxxxxxxx, Xxxxxxxx 00000
Telecopy: 000-000-0000
Attention: Xxxxxxx Xxxxxxxxxx
All such notices and communications shall be deemed to have been duly
given when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial courier service; five (5) Business Days
after being deposited in the mail, postage prepaid, if mailed; and when receipt
is mechanically acknowledged, if telecopied.
9.3 Successors and Assigns: Third Party Beneficiaries. This Agreement
shall inure to the benefit of and be binding upon the successors and permitted
assigns of the parties hereto. Subject to applicable securities laws, the
Purchasers may assign any of its rights under any of the Transaction Documents
to any of its Affiliates. The Company may not assign any of their rights under
this Agreement without the written consent of the Purchasers. Except as provided
in Article 7, no Person other than the parties hereto and their successors and
permitted assigns is intended to be a beneficiary of this Agreement.
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9.4 Amendment and Waiver.
(a) No failure or delay on the part of the Company or the
Purchasers in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Company or the Purchasers at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by the Company or the Purchasers from the terms of
any provision of this Agreement, shall be effective (i) only if it is made or
given in writing and signed by the Company and the Purchasers, and (ii) only in
the specific instance and for the specific purpose for which made or given.
Except where notice is specifically required by this Agreement, no notice to or
demand on the Company in any case shall entitle the Company to any other or
further notice or demand in similar or other circumstances.
9.5 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
9.6 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
9.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF VIRGINIA, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW THEREOF.
9.8 Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
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9.9 Rules of Construction. Unless the context otherwise requires,
references to sections or subsections refer to sections or subsections of this
Agreement.
9.10 Entire Agreement. This Agreement, together with the exhibits and
schedules hereto, and the other Transaction Documents are intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein. There are no
restrictions, promises, representations, warranties or undertakings, other than
those set forth or referred to herein or therein. This Agreement, together with
the exhibits and schedules hereto, and the other Transaction Documents supersede
all prior agreements and understandings between the parties with respect to such
subject matter.
9.11 Fees. The Purchasers shall bear all of their fees, disbursements
and other charges of counsel incurred in connection with this Agreement and the
transactions contemplated hereby.
9.12 Publicity. Except as may be required by applicable Requirement of
Law, none of the parties hereto shall issue a publicity release or public
announcement or otherwise make any disclosure concerning this Agreement or the
transactions contemplated hereby, without prior approval by the other parties
hereto; provided, however, that nothing in this Agreement shall restrict any
Purchaser from disclosing information (a) that is already publicly available;
(b) to the prospective transferee in connection with any contemplated transfer
of any of the Purchased Shares; and (c) to its attorneys, accountants,
consultants and other advisors to the extent necessary to obtain their services
in connection with such Purchaser's investment in the Company. If any
announcement is required by law to be made by any party hereto, prior to making
such announcement such party will deliver a draft of such announcement to the
other parties and shall give the other parties an opportunity to comment
thereon.
9.13 Further Assurances. Each of the parties shall execute such
documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations or other actions by, or
giving any notices to, or making any filings with, any Governmental Authority or
any other Person) as may be reasonably required or desirable to carry out or to
perform the provisions of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective officers hereunto duly authorized on
the date first above written.
PROXICOM, INC.
By: /s/ Xxxx Xxxxxxxxx
------------------------------------------------
Name: Xxxx Xxxxxxxxx
Title: President and Chief Executive Officer
GENERAL ATLANTIC PARTNERS 34, L.P.
By: GENERAL ATLANTIC PARTNERS, LLC,
its General Partner
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: A Managing Member
GAP COINVESTMENT PARTNERS, L.P.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: A General Partner
THE XXXXX X. XXXXXX TRUST
By: /s/ Xxxxx X. Xxxxxx
------------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Trustee
FBR VENTURE CAPITAL MANAGERS INC.
By: /s/ Xxxx Xxxxxxxx
------------------------------------------------
Name: Xxxx Xxxxxxxx
Title: Managing Director
