EXHIBIT 10.33
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
DATATEC SYSTEMS, INC.
AND
CISCO SYSTEMS, INC.
NOVEMBER 2, 2001
DATATEC SYSTEMS, INC.
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made as of the
2nd day of November, 2001, by and between Datatec Systems, Inc., a Delaware
corporation (the "Company"), and Cisco Systems, Inc., a California corporation
(the "Purchaser").
The parties hereby agree as follows:
1. PURCHASE AND SALE OF COMMON STOCK.
1.1. SALE AND ISSUANCE OF COMMON STOCK. Subject to the terms and
conditions of this Agreement, the Purchaser agrees to purchase at the Closing
and the Company agrees to sell and issue to the Purchaser at the Closing, an
aggregate of 1,021,382 shares of Common Stock of the Company in exchange for
100,000 shares of Series A Preferred Stock (the "eDeploy Stock") of xXxxxxx.xxx,
Inc., a Delaware corporation and subsidiary of the Company (the "Subsidiary").
The 1,021,382 shares of Common Stock of the Company issued to the Purchaser
pursuant to the terms of this Agreement shall be hereinafter referred to as the
(the "Datatec Stock").
1.2. CLOSING; DELIVERY.
(a) The purchase and sale of the Datatec Stock shall take place
at the offices of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, Two Embarcadero Place, 2200
Geng Road, Palo Alto, California, at 10:00 a.m. on November 2, 2001, or at such
other time and place as the Company and the Purchaser mutually agree upon,
orally or in writing (which time and place are designated as the "Closing").
(b) At or promptly after the Closing, the Company shall deliver
to Purchaser a certificate representing the Datatec Stock, and Purchaser shall
deliver to the Company a certificate (and accompanying stock power signed in
blank) representing the eDeploy Stock being transferred to the Company in
consideration for the Datatec Stock.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Purchaser that, except as set forth on the Schedule
of Exceptions attached hereto as Exhibit A (the "Schedule of Exceptions"), which
exceptions shall be deemed to be representations and warranties as if made
hereunder:
2.1. ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company
and each of its subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and the State of
New Jersey, as the case may be, and has all requisite corporate power and
authority to carry on its business. The Company and each of its subsidiaries is
duly qualified to transact business and is in good standing in each jurisdiction
in which it is required to be qualified to transact business, except where the
failure to so qualify would not have a material adverse effect on the business,
operations, affairs or condition of the Company and its subsidiaries, and their
respective properties or assets, taken as a whole.
2.2. CAPITALIZATION. The authorized capital of the Company
consists, or will consist, immediately prior to the Closing, of 75,000,000
shares of Common Stock, 33,861,869 shares of which are issued and outstanding
immediately prior to the Closing and 4,000,000 shares of Preferred Stock, none
of which are issued or outstanding immediately prior to the Closing. All of the
outstanding shares of Common Stock have been duly authorized and validly issued,
are fully paid and are nonassessable, and were issued in compliance with all
applicable federal and state securities law.
(b) The Company has reserved 3,000,000 shares of Common Stock for
issuance to officers, directors, employees and consultants of the Company
pursuant to its 2000 Stock Option Plan duly adopted by the Board of Directors
and approved by the Company's shareholders (the "Datatec Stock Plan"). Of such
reserved shares of Common Stock, 1,736,434 options to purchase shares of Common
Stock are currently outstanding under the Datatec Stock Plan, 1,263,566 shares
of Common Stock remain available for grant pursuant to the Datatec Stock Plan,
and no options have been exercised and converted into shares of Common Stock.
(c) Except as set forth in Section 2.2(c) of the Schedule of
Exceptions, there are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal or similar rights)
or agreements, orally or in writing, for the purchase or acquisition from the
Company of any shares of its capital stock or other securities.
(d) As of immediately prior to the Closing, the authorized
capital of the Subsidiary consists of 3,000,000 shares of Common Stock, none of
which are issued and outstanding immediately prior to the Closing, and 100,000
shares of Preferred Stock, all of which are outstanding and designated as shares
of Series A Preferred Stock. All of the outstanding shares of Common Stock and
Preferred Stock have been duly authorized and validly issued, are fully paid and
are nonassessable, and were issued in compliance with all applicable federal and
state securities law. The Subsidiary has reserved a sufficient number of shares
of Common Stock for issuance upon conversion of the shares of Series A Preferred
Stock, and upon such conversion, the shares of Common Stock will be duly
authorized, validly issued, fully paid and nonassessable.
(e) The Subsidiary has reserved 1,000,000 shares of Common Stock
for issuance to officers, directors, employees and consultants of the Company
pursuant to its 2000 Stock Option Plan duly adopted by the Board of Directors
and approved by the Company's shareholders (the "eDeploy Stock Plan"). Of such
reserved shares of Common Stock, 361,667 options to purchase shares of Common
Stock are currently outstanding under the eDeploy Stock Plan, 405,000 shares of
Common Stock remain available for grant pursuant to the eDeploy Stock Plan, and
no options have been exercised and converted into shares of Common Stock. A true
and complete copy of the eDeploy Stock Plan has been made available to the
Purchaser.
(f) Except for the conversion privileges of the eDeploy Stock and
options issued or issuable pursuant to the eDeploy Stock Plan, there are no
outstanding options, warrants, rights (including conversion or preemptive rights
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and rights of first refusal or similar rights) or agreements, orally or in
writing, for the purchase or acquisition from the Subsidiary of any shares of
its capital stock or other securities.
2.3. SUBSIDIARIES. Except as set forth on Section 2.3 of the
Schedule of Exceptions, the Company does not currently own or control, directly
or indirectly, any interest in any other corporation, association, or other
entity. Except for shares of Common Stock of the Subsidiary issued upon the
exercise of options of the Subsidiary and the eDeploy Stock, all of the
outstanding shares of capital stock of the Subsidiary are owned by the Company
free and clear of all liens, pledges, security interests, rights of first
refusal or other encumbrances of any kind.
2.4. AUTHORIZATION. All corporate action on the part of the
Company, its officers, directors and shareholders necessary for the
authorization, execution and delivery of this Agreement, the Investor Rights
Agreement, in the form attached hereto as Exhibit B (the "Investor Rights
Agreement" and collectively with this Agreement, the "Agreements"), the
performance of all obligations of the Company hereunder and thereunder and the
authorization, issuance and delivery of the Datatec Stock has been taken or will
be taken prior to the Closing, and the Agreements, when executed and delivered
by the Company, shall constitute valid and legally binding obligations of the
Company, enforceable against the Company in accordance with their terms except
(i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, and other similar laws of general application affecting
enforcement of creditors' rights generally, as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies, or (ii) to the extent the indemnification provisions contained in the
Investor Rights Agreement may be limited by applicable federal or state
securities laws.
2.5. VALID ISSUANCE OF COMMON STOCK. The Datatec Stock that is
being issued to the Purchaser hereunder, when issued, sold and delivered in
accordance with the terms hereof for the consideration expressed herein, will be
duly authorized and validly issued, fully paid and nonassessable and free of
restrictions on transfer other than restrictions on transfer under this
Agreement and applicable state and federal securities laws. Based in part upon
the representations of the Purchaser in this Agreement and subject to the
provisions of Section 2.6 below, the Datatec Stock will be issued in compliance
with all applicable federal and state securities laws.
2.6. GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company or any of its subsidiaries is required in connection with the
consummation of the transactions contemplated by this Agreement, except for
filings pursuant to Section 25102(f) of the California Corporate Securities Law
of 1968, as amended, and the rules thereunder, other applicable state securities
laws and Regulation D of the Securities Act of 1933, as amended (the "Securities
Act").
2.7. LITIGATION. Except as set forth on Section 2.7 of the
Schedule of Exceptions, there is no action, suit, proceeding or investigation
pending or, to the Company's knowledge, threatened against the Company or any of
its subsidiaries that questions the validity of any of the Agreements or the
right of the Company to enter into any of them, or to consummate the
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transactions contemplated hereby or thereby, or that would be reasonably likely
to result, either individually or in the aggregate, in any material adverse
changes in the business, operations, assets, results, condition or affairs of
the Company and its subsidiaries, taken as a whole, financially or otherwise, or
any change in the current equity ownership or capitalization of the Company or
any of its subsidiaries, nor is the Company aware that there is any basis for
the foregoing. The foregoing includes, without limitation, actions pending or
threatened (or any basis therefor known to the Company) involving the prior
employment of any information or techniques allegedly proprietary to any former
employers, or their obligations under any agreements with prior employers.
Neither the Company nor any of its subsidiaries is a party or subject to the
provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality. There is no action, suit, proceeding or
investigation by the Company or any of its subsidiaries currently pending or
which the Company or any of its subsidiaries intends to initiate.
2.8. INTELLECTUAL PROPERTY. Except as set forth in Section 2.8 of
the Schedule of Exceptions, the Company and its subsidiaries own all right,
title and interest in and to, free and clear of all liens or encumbrances, or
possesses sufficient legal rights to all patents, patent applications, patent
disclosures, inventions, trademarks, service marks, tradenames, trade dress
logos, corporate names, copyrights, copyrightable works, trade secrets,
licenses, information, computer software, data, databases and proprietary rights
and processes and registrations and applications for registration thereof
("Intellectual Property Rights") necessary for the conduct of their respective
businesses as presently conducted and as presently proposed to be conducted
without any conflict with, or infringement of, the rights of others. No loss or
expiration of any Intellectual Property Right or related group of Intellectual
Property Rights owned or used by the Company or any of its subsidiaries is, to
the best of the Company's knowledge, threatened, pending or reasonably
foreseeable. The Company and each of its subsidiaries has taken all actions
reasonably necessary to maintain and protect the Intellectual Property Rights
which it owns. Neither the Company nor any of its subsidiaries has received any
communications alleging that the Company or any of its subsidiaries has violated
or, by conducting its business, would violate any of the Intellectual Property
Rights of any other person or entity and to the Company's knowledge, there are
no valid grounds for the same. The Company is not aware that any of its or its
subsidiaries' employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with the use of such employee's best efforts to promote the interest
of the Company or that would conflict with the business of the Company or any of
its subsidiaries. Neither the execution or delivery of this Agreement, nor the
carrying on of the business of the Company or any of its subsidiaries by the
employees of the Company or any of its subsidiaries, nor the conduct of the
business of the Company or any of its subsidiaries as proposed, will, to the
Company's knowledge, conflict with or result in a breach of the terms,
conditions, or provisions of, or constitute a default under, any contract,
covenant or instrument under which any such employee is now obligated. The
Company does not believe it is or will be necessary to use any inventions of any
employees of the Company or any of its subsidiaries (or persons that any of them
currently intends to hire) made prior to their employment by the Company of the
Company or any of its subsidiaries.
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2.9. COMPLIANCE WITH OTHER INSTRUMENTS.
(a) Neither the Company nor any of its subsidiaries is in
violation or default of any provisions of its Certificate of Incorporation or
Bylaws or in any material respect of any instrument, judgment, order, writ,
decree or contract to which it is a party or by which it is bound or, to its
knowledge, of any provision of federal or state statute, rule or regulation
applicable to it. The execution, delivery and performance of the Agreements and
the consummation of the transactions contemplated hereby or thereby will not
result in any such violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, either a default under any
such provision, instrument, judgment, order, writ, decree or contract or an
event which results in the creation of any lien, charge or encumbrance upon any
assets of the Company or any of its subsidiaries.
(b) To its knowledge, the Company and each of its subsidiaries
has avoided every condition, and has not performed any act, the occurrence of
which would result in the Company's or such subsidiary's loss of any right
granted under any license, distribution agreement or other agreement.
2.10. AGREEMENTS; ACTION.
(a) Since the Balance Sheet Date (as defined below), neither the
Company nor any of its subsidiaries has (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or
incurred any other liabilities individually in excess of $100,000 or in excess
of $300,000 in the aggregate, (iii) made any loans or advances to any person,
other than ordinary advances for travel expenses, or (iv) sold, exchanged or
otherwise disposed of any of its assets or rights, other than the sale of its
inventory in the ordinary course of business.
(b) Neither the Company nor any of its subsidiaries is a party to
or bound by any contract, agreement or instrument, or subject to any restriction
under its Certificate of Incorporation (as amended) or Bylaws, that would
reasonably be likely to result in a material adverse affect on its business,
operations, properties, results, or financial condition.
(c) Neither the Company nor any of its subsidiaries has engaged
in the past three (3) months in any discussion (i) with any representative of
any entity or entities regarding the merger of the Company or any of its
subsidiaries with or into any such entity or entities or other business
combination, (ii) with any representative of any corporation, partnership,
association or other business entity or any individual regarding the sale,
conveyance or disposition of all or any substantial portion of the assets of the
Company or any of its subsidiaries or a transaction or series of related
transactions in which more than 50% of the voting power of the Company or any of
its subsidiaries would be disposed of, or (iii) regarding any other form of
liquidation, dissolution or winding up of the Company or any of its
subsidiaries.
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2.11. DISCLOSURE; CURRENT PUBLIC INFORMATION.
(a) The Company has fully provided Purchaser with such
information that the Purchaser has requested deciding whether to acquire the
Datatec Stock and all information that the Company believes is reasonably
necessary to enable the Purchaser to make such a decision. No representation or
warranty of the Company contained in this Agreement and the exhibits attached
hereto, any certificate furnished or to be furnished to Purchaser at the
Closing, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made.
(b) The Company has filed each report, registration statement,
definitive proxy statement, and other filing (including any exhibits to such
filings) required to be filed with the Securities and Exchange Commission (the
"SEC") by the Company since December 31, 2000 (collectively, the "SEC
Documents"). As of their respective filing dates, the SEC Documents complied in
all material respects with the requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the Securities Act. None of the SEC
Documents, and no press release issued by the Company since December 31, 2000,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not misleading.
The financial statements of the Company, including the notes thereto, included
in the SEC Documents (the "Financial Statements") complied as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto as of their respective
dates, and were prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods covered thereby
(except as may be indicated in the notes thereto or, in the case of unaudited
statements included in Quarterly Reports on Form 10-Q, as permitted by Form 10-Q
of the SEC). The Financial Statements fairly present the consolidated financial
condition and results of operations of the Company at the dates and for the
periods indicated therein (subject, in the case of unaudited statements, to
normal, recurring year-end adjustments).
2.12. NO CONFLICT OF INTEREST. Except as set forth on Section
2.12 of the Schedule of Exceptions, neither the Company nor any of its
subsidiaries is indebted, directly or indirectly, to any of its officers or
directors or to their respective spouses or children, in any amount whatsoever
other than in connection with expenses or advances of expenses incurred in the
ordinary course of business or relocation expenses of employees. To the
Company's knowledge, none of the officers or directors of the Company or any of
its subsidiaries, or any members of their immediate families, are, directly or
indirectly, indebted to the Company or any of its subsidiaries (other than in
connection with purchases of the Company's stock) or have any direct or indirect
ownership interest in any firm or corporation with which the Company or any of
its subsidiaries is affiliated or with which the Company or any of its
subsidiaries has a business relationship, or any firm or corporation which
competes with the Company or any of its subsidiaries except that officers,
directors and/or shareholders of the Company and any of its subsidiaries may own
stock in (but not exceeding two percent of the outstanding capital stock of) any
publicly traded company that may compete with the Company or any of its
subsidiaries. To the Company's knowledge, none of the officers or directors of
the Company or any members of their immediate families are, directly or
indirectly, interested in any material contract with the Company or any of its
subsidiaries. Neither the Company nor any of its subsidiaries is a guarantor or
indemnitor of any indebtedness of any other person, firm or corporation.
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2.13. RIGHTS OF REGISTRATION AND VOTING RIGHTS. Except as
contemplated in the Investor Rights Agreement, the Company has not granted or
agreed to grant any registration rights, including piggyback rights, to any
person or entity. To the Company's knowledge, no shareholder of the Company has
entered into any agreements with respect to the voting of capital shares of the
Company.
2.14. TITLE TO PROPERTY AND ASSETS. Except as set forth on
Section 2.14 of the Schedule of Exceptions, the Company and each of its
subsidiaries owns its property and assets free and clear of all mortgages,
liens, loans and encumbrances, except such encumbrances and liens which arise in
the ordinary course of business and do not materially impair the Company's or
such subsidiary's ownership or use of such property or assets. With respect to
the property and assets it leases, the Company and each of its subsidiaries is
in compliance with such leases and, to its knowledge, holds a valid leasehold
interest free of any liens, claims or encumbrances.
2.15. NO UNDISCLOSED LIABILITIES. Except as set forth in the
Financial Statements, neither the Company nor any of its subsidiaries has any
material liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course of business subsequent to the date of the most
recent balance sheet contained in the Financial Statements (the "Balance Sheet
Date") and (ii) obligations under contracts and commitments incurred in the
ordinary course of business and not required under generally accepted accounting
principles to be reflected in the Financial Statements, which, in both cases,
individually or in the aggregate are not material to the financial condition or
operating results of the Company and its subsidiaries taken as a whole.
2.16. CHANGES. Except as set forth on Section 2.16 of the
Schedule of Exceptions, since the Balance Sheet Date, there has not been:
(a) any change in the business, operations, assets, liabilities,
financial condition or operating results of the Company and its subsidiaries
taken as a whole from that reflected in the Financial Statements, except changes
in the ordinary course of business that have not been, in the aggregate,
materially adverse;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the business, operations,
properties, or financial condition of the Company or any of its subsidiaries;
(c) any waiver or compromise by the Company or any of its
subsidiaries of a valuable right or of a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by the Company or any of its
subsidiaries, except in the ordinary course of business and that is not material
to the business, properties, prospects or financial condition of the Company and
its subsidiaries taken as a whole;
(e) any material change to a material contract or agreement by
which the Company or any of its subsidiaries or any of their respective assets
is bound or subject;
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(f) any material change in any compensation arrangement
(excluding option issuances) or agreement with any employee, officer, director
or shareholder of the Company or any of its subsidiaries;
(g) any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets of the Company or any of
its subsidiaries;
(h) any resignation or termination of employment of any officer
or key employee of the Company or any of its subsidiaries; and the Company, is
not aware of any impending resignation or termination of employment of any such
officer or key employee;
(i) any mortgage, pledge, transfer of a security interest in, or
lien, created by the Company or any of its subsidiaries, with respect to any of
its material properties or assets, except liens for taxes not yet due or
payable;
(j) any loans or guarantees made by the Company or any of its
subsidiaries to or for the benefit of its employees, officers or directors, or
any members of their immediate families, other than travel advances and other
advances made in the ordinary course of its business;
(k) any declaration, setting aside or payment or other
distribution in respect to any of the capital stock of the Company or any of its
subsidiaries, or any direct or indirect redemption, purchase, or other
acquisition of any of such stock by the Company or any of its subsidiaries;
(l) to the Company's knowledge, any other event or condition of
any character that might materially and adversely affect the business,
operations, liabilities, properties, prospects or financial condition of the
Company and its subsidiaries taken as a whole; or
(m) any arrangement or commitment by the Company or any of its
subsidiaries to do any of the things described in this Section 2.16.
2.17. EMPLOYEE BENEFIT PLANS. Except as specified in Section 2.17
of the Schedule of Exceptions:
(a) none of the employee benefit plans (as that phrase is defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) maintained or contributed to (or to which Company or any of
its subsidiaries has any obligation to contribute) for the benefit of any
current or former employee, officer or director of the Company or any of its
subsidiaries ("Company ERISA Plans") is a "multiemployer plan" within the
meaning of ERISA;
(b) no other benefit or compensation plan, program or arrangement
maintained or contributed to (or to which Company or any of its subsidiaries has
any obligation to contribute) for the benefit of any current or former employee,
officer or director of the Company or any of its subsidiaries (Company ERISA
8
Plans and such other plans being referred to as "Company Plans") promises or
provides retiree health benefits or retiree life insurance benefits to any
person;
(c) none of the Company Plans provides for payment of a benefit,
the increase of a benefit amount, the payment of a contingent benefit or the
acceleration of the payment or vesting of a benefit by reason of the execution
of this Agreement or the consummation of the transactions contemplated by this
Agreement;
(d) each Company ERISA Plan intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter from
the IRS that it is so qualified and nothing has occurred since the date of such
letter that could reasonably be expected to affect the qualified status of such
Company ERISA Plan;
(e) each Company Plan has been operated in accordance with its
terms and the requirements of all applicable law, and no prohibited transaction
described in Section 406 of ERISA or Section 4975 of the Code has occurred with
respect to any Company ERISA Plan;
(f) neither the Company or any of its subsidiaries or members of
their "controlled group" has incurred any direct or indirect liability under
ERISA or the Code in connection with the termination of, withdrawal from or
failure to fund, any Company ERISA Plan or other retirement plan or arrangement,
and no fact or event exists that could reasonably be expected to give rise to
any such liability;
(g) the aggregate accumulated benefit obligations of each Company
ERISA Plan subject to Title IV of ERISA (as of the date of the most recent
actuarial valuation prepared for such Company ERISA Plan and based on the
discount rate and other actuarial assumptions used in such valuation) do not
exceed the fair market value of the assets of such Company ERISA Plan (as of the
date of such valuation);
(h) the Company is not aware of any claims relating to the
Company Plans, other than routine claims for benefits; and
(i) None of the Company Plans provides for benefits or other
participation therein, and Company has received no claims or demands for
participation in or benefits under any Company Plan, by any individual
classified or treated by the Company as an independent contractor.
2.18. TAX RETURNS AND PAYMENTS. The Company and each of its
subsidiaries have filed all tax returns and reports as required by law. These
returns and reports are true and correct in all material respects. The Company
and each of its subsidiaries have paid all taxes and other assessments due.
2.19. INSURANCE. The Company and its subsidiaries have in full
force and effect fire and casualty insurance policies, with extended coverage,
sufficient in amount (subject to reasonable deductibles) to allow them to
replace any of their properties that might be damaged or destroyed.
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2.20. LABOR AGREEMENTS AND ACTIONS. Except as set forth on
Section 2.20 of the Schedule of Exceptions, neither the Company nor any of its
subsidiaries is bound by or subject to (and none of their assets or properties
are bound by or subject to) any written or oral, express or implied, contract,
commitment or arrangement with any labor union, and no labor union has requested
or, to the knowledge of the Company, has sought to represent any of the
employees, representatives or agents of the Company or any of its subsidiaries.
There is no strike or other labor dispute involving the Company or any of its
subsidiaries pending, or to the knowledge of the Company threatened, which could
have a material adverse effect on the assets, properties, financial condition,
operating results, operations, prospects or business of the Company and its
subsidiaries taken as a whole, nor is the Company aware of any labor
organization activity involving employees of the Company or any of its
subsidiaries. The employment of each officer and employee of the Company or any
of its subsidiaries is terminable at the will of the Company or such subsidiary.
To its knowledge, the Company and each of its subsidiaries has complied in all
material respects with all applicable state and federal equal employment
opportunity laws and with other laws related to employment. No employee of the
Company or any of its subsidiaries has been granted the right to any material
compensation following termination of employment with the Company or such
subsidiary, as the case may be.
2.21. CONFIDENTIAL AND PROPRIETARY INFORMATION. The Company and
the Subsidiary have each taken such reasonable and necessary steps to protect
its confidential and proprietary information from its employees. No employee or
contractor of the Company or the Subsidiary owns any proprietary information
that the Company or the Subsidiary believes is necessary for the conduct of
their respective businesses.
2.22. PERMITS. The Company and its subsidiaries have all
franchises, permits, licenses and any similar authority necessary for the
conduct of their respective businesses, the lack of which could materially and
adversely affect the business, operations, liabilities, operating results,
properties, or financial condition of the Company and its subsidiaries taken as
a whole. Neither the Company nor any of its subsidiaries is in default in any
material respect under any of such franchises, permits, licenses or other
similar authority.
2.23. CORPORATE DOCUMENTS. The Certificate of Incorporation and
Bylaws, in each case as amended, of the Company have been made available to the
Purchaser. The copy of the minute books of the Company which has been made
available to the Purchaser's counsel contains minutes of all meetings of
directors and shareholders and all actions by written consent without a meeting
by the directors and shareholders since the date of incorporation and reflects
all actions by the directors (and any committee of directors) and shareholders
with respect to all transactions referred to in such minutes accurately in all
material respects.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
hereby represents and warrants to the Company that:
3.1. AUTHORIZATION. The Purchaser has full power and authority to
enter into the Agreements. The Agreements, when executed and delivered by the
Purchaser, will constitute valid and legally binding obligations of the
Purchaser, enforceable in accordance with their terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and other similar laws of general application affecting enforcement
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of creditors' rights generally, and as limited by laws relating to the
availability of a specific performance, injunctive relief, or other equitable
remedies, or (b) to the extent the indemnification provisions contained in the
Investor Rights Agreement may be limited by applicable federal or state
securities laws.
3.2. PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made
with the Purchaser in reliance upon the Purchaser's representation to the
Company, which by the Purchaser's execution of this Agreement, the Purchaser
hereby confirms, that the Datatec Stock to be acquired by the Purchaser will be
acquired for investment for the Purchaser's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof
otherwise than in compliance with all applicable securities laws. By executing
this Agreement, the Purchaser further represents that the Purchaser does not
presently have any contract, undertaking, agreement or arrangement with any
person to sell or transfer to such person or to any third person, with respect
to any of the Datatec Stock. The Purchaser has not been formed for the specific
purpose of acquiring the Datatec Stock.
3.3. DISCLOSURE OF INFORMATION. The Purchaser has had an
opportunity to discuss the Company's business, management, financial affairs and
the terms and conditions of the offering of the Datatec Stock with the Company's
management and has had an opportunity to review the Company's facilities. The
Purchaser understands that such discussions and any other written information
delivered by the Company to the Purchaser, were intended to describe the aspects
of the Company's business which it believes to be material; provided, however,
that nothing in this paragraph shall affect or limit the representation or
warranties made by the Company in Section 2.
3.4. TITLE. The Purchaser has good and valid title to the eDeploy
Stock, and at the Closing, subject to the terms of the Agreements, the Purchaser
will deliver the eDeploy Stock to the Company, free and clear of any liens,
encumbrances or other restrictions (other than those imposed by the Subsidiary)
arising out of the Purchaser's ownership thereof.
3.5. LEGENDS. The Purchaser understands that the Datatec Stock,
and any securities issued in respect of or exchanged for the Datatec Stock, may
bear one or all of the following legends:
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. NO SALE OR DISTRIBUTION OF THESE
SHARES MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL IN A FORM REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF
1933."
(b) Any legend required by the Blue Sky laws of any state to the
extent such laws are applicable to the shares represented by the certificate so
legended.
3.6. ACCREDITED INVESTOR. The Purchaser is an accredited investor
as defined in Rule 501(a) of Regulation D promulgated under the Securities Act
and has substantial experience in evaluating and investing in transactions of
11
this type and, as such, is capable of evaluating the merits and risks of its
investment in the Company.
4. CONDITIONS OF THE PURCHASER'S OBLIGATIONS AT CLOSING. The
obligations of the Purchaser to the Company under this Agreement are subject to
the fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived by the Purchaser:
4.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 2 shall be true and correct in
all material respects on and as of the Closing with the same effect as though
such representations and warranties had been made on and as of the date of the
Closing.
4.2. PERFORMANCE. The Company shall have performed and complied
with all covenants, agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing.
4.3. COMPLIANCE CERTIFICATE. The President of the Company shall
deliver to the Purchaser at the Closing a certificate certifying that the
conditions specified in Sections 4.1 and 4.2 have been fulfilled.
4.4. QUALIFICATIONS. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the issuance and sale of the
Datatec Stock pursuant to this Agreement shall be obtained and effective as of
the Closing.
4.5. OPINION OF COMPANY COUNSEL. The Purchaser shall have
received from Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Wolosky LLP counsel for the
Company, an opinion, dated as of the Closing, in substantially the form of
Exhibit C.
4.6. NASDAQ LISTING. The Common Stock of the Company shall be
listed and registered for trading on the NASDAQ National Market (the "National
Market"), and trading in the Common Stock of the Company shall not have been
halted or suspended for any reason.
4.7. INVESTOR RIGHTS AGREEMENT. The Company and the Purchaser
shall have executed and delivered the Investor Rights Agreement.
4.8. GOOD STANDING CERTIFICATE. The Company shall have delivered
to the Purchaser at the Closing a certificate certified by the Secretary of
State of the State of Delaware, indicating that the Company is in good standing.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The
obligations of the Company to the Purchaser under this Agreement are subject to
the fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
5.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Purchaser contained in Section 3 shall be true and correct on and
as of the Closing with the same effect as though such representations and
warranties had been made on and as of the Closing.
12
5.2. PERFORMANCE. All covenants, agreements and conditions
contained in this Agreement to be performed by the Purchaser on or prior to the
Closing shall have been performed or complied with in all material respects.
5.3. QUALIFICATIONS. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Datatec Stock pursuant to this Agreement shall be obtained and effective as
of the Closing.
6. CERTAIN POST-CLOSING COVENANTS.
6.1. PRESERVATION OF EDEPLOY CAPITAL STRUCTURE AND OWNERSHIP.
During the 12 month period following the Closing (the "Contingency Period"), the
Company shall not, and shall not permit the Subsidiary to, take any action that
would result in (a) the Subsidiary ceasing to exist as a separate corporate
entity in good standing under the laws of the State of Delaware, (b) any change
in the authorized capital of the Subsidiary, (c) any increase in the number of
issued and outstanding shares of any class or series of capital stock of the
Subsidiary otherwise than pursuant to the terms of options granted under the
eDeploy Stock Plan that are outstanding as of the date hereof or options granted
under the eDeploy Stock Plan after the date hereof pursuant to the terms of the
eDeploy Stock Plan as in effect on the date hereof, (d) the Subsidiary selling,
leasing or otherwise disposing of all or substantially all of its assets, (e)
the liquidation, dissolution or winding up of the Subsidiary, or (f) the Company
ceasing to own any of the shares of Common Stock of the Subsidiary presently
owned by the Company or any of the eDeploy Stock, free and clear, in the case of
the eDeploy Stock, of all liens, pledges, security interests, rights of first
refusal or other encumbrances of any kind; provided, however, that the provision
of this Section 6.1 shall not prohibit (i) an underwritten public offering of
shares of Common Stock of the Subsidiary pursuant to an effective registration
statement under the Securities Act (an "IPO"), (ii) the sale by the Subsidiary
to a third party that is not an affiliate or associate of either the Subsidiary
or the Company of all or substantially all of the assets of the Subsidiary in
exchange for cash, securities or other marketable property (an "Asset Sale"), or
(iii) the sale by the Company to a third party that is not an affiliate or
associate of the Company of all of its equity interests in the Subsidiary (by
means of a stock sale or merger or otherwise) in exchange for cash, securities
or other marketable property (a "Stock Sale").
6.2. NOTICES TO THE PURCHASER.
(a) If the Subsidiary or the Company enters into a definitive
agreement during the Contingency Period providing for an IPO, Asset Sale or
Stock Sale, the Company shall cause a true, correct and complete copy thereof,
together with all such other documents and information possessed by the Company
or subject to its control (including any prospectus, offering memorandum or
other disclosure document prepared in connection with such transaction) that the
Company reasonably believes would be material to a decision by the Purchaser of
whether to exercise its rights under Section 6.3, to be delivered to the
Purchaser as promptly as practicable and shall thereafter, until the earliest of
(a) the period beginning upon consummation of such IPO, Asset Sale or Stock Sale
and ending on the 60th day thereafter (the "Exercise Period"), (b) the
termination of such definitive agreement and abandonment of such IPO, Asset Sale
or Stock Sale, and (c) the delivery by the Purchaser to the Company of a written
13
notice stating that the Purchaser is waiving its rights under Section 6.3,
supplement and update such documentation and information as promptly as
practicable to reflect any subsequent amendments or other material events,
circumstances or developments.
(b) If the Common Stock of the Company ceases to be listed for
trading on the National Market during the Contingency Period (any such cessation
being a "Delisting Event"), the Company shall give the Purchaser prompt written
notice thereof. The period commencing on the date of such delivery and ending on
the 60th day thereafter is referred to herein as the "Delisting Exercise
Period."
6.3. OPTION OF THE PURCHASER. The Purchaser shall have the right,
exercisable by delivery to the Company at any time during the Exercise Period or
the Delisting Exercise Period, as applicable, of a notice stating that the
Purchaser is exercising such right (an "Exercise Notice"):
(a) in the case of an IPO, to purchase from the Company or the
Subsidiary (as elected by the Company), in exchange for the Datatec Stock, a
number of shares of Common Stock of the Subsidiary equal to the number of shares
thereof into which the eDeploy Stock was convertible immediately prior to the
IPO;
(b) in the case of an Asset Sale, to purchase from the
Subsidiary, in exchange for the Datatec Stock, a portion of the consideration
received or receivable by the Subsidiary in connection with the Asset Sale equal
to a fraction, the numerator of which shall be equal to the number of shares of
Common Stock of the Subsidiary into which the eDeploy Stock was convertible
pursuant to the terms of the Subsidiary's certificate of incorporation as of
immediately prior to the Asset Sale and the denominator of which shall be equal
to the sum, without duplication, of the number of shares of Common Stock of the
Subsidiary outstanding immediately prior to the Asset Sale and the number of
shares of Common Stock of the Subsidiary included in the numerator of such
fraction;
(c) in the case of a Stock Sale, to purchase from the Company, in
exchange for the Datatec Stock, a portion of the consideration received or
receivable by the Company in connection with the Stock Sale equal to a fraction,
the numerator of which shall be equal to the number of shares of Common Stock of
the Subsidiary into which the eDeploy Stock was convertible pursuant to the
terms of the Subsidiary's certificate of incorporation as of immediately prior
to the Stock Sale and the denominator of which shall be equal to the sum,
without duplication, of the number of shares of Common Stock of the Subsidiary
outstanding immediately prior to the Stock Sale and the number of shares of
Common Stock of the Subsidiary included in the numerator of such fraction; and
(d) in the case of a Delisting Event, to purchase from the
Company, in exchange for the Datatec Stock, the eDeploy Stock.
The rights of the Purchaser under this Section 6.3 shall be exercisable only
with respect to all of the Datatec Stock held by Purchaser at the time of the
IPO, Asset Sale, Stock Sale or the Delisting Event as the case may be. In the
event that Purchaser has sold a portion of its Datatec Stock, the number of
14
shares of Datatec Stock to be delivered by the Purchaser, and the number or
amount of shares of other consideration to be received by the Purchaser in
exchange therefor, shall be proportionately reduced.
6.4. CONSUMMATION OF TRANSACTION. Upon the delivery by the
Purchaser to the Company of an Exercise Notice, the Purchaser and the Company
shall (and the Company shall cause the Subsidiary to) (a) promptly prepare and
enter into definitive documentation providing for the transaction contemplated
by such Exercise Notice, which documentation shall be in substantially the form
of this Agreement, except to the extent that the identity or characteristics of
the parties thereto and/or the particulars of the transaction to be provided for
therein make it necessary and appropriate to deviate from such form and (b) take
all such other actions as may be necessary or appropriate to consummate the
transactions contemplated by the Exercise Notice as expeditiously as
practicable.
6.5. REGISTRATION RIGHTS.
(a) If the Purchaser delivers an Exercise Notice in connection
with an IPO, upon the consummation of the transactions contemplated by such
Exercise Notice, the Purchaser and the Subsidiary shall enter into an agreement
in substantially the form of the Investor Rights Agreement, dated April 18,
2000, by and between the Subsidiary and the Purchaser (the "eDeploy Investor
Rights Agreement"), providing the Purchaser with registration rights with
respect to the shares of Common Stock of the Subsidiary acquired by the
Purchaser in such transaction.
(b) If the Purchaser delivers an Exercise Notice in connection
with an Asset Sale or a Stock Sale, and the consideration received by the
Subsidiary or the Company, as the case may be, therein consists in whole or in
part of securities, upon the consummation of the transactions contemplated by
such Exercise Notice, the Subsidiary or the Company, as the case may be, shall
assign to the Purchaser any registration rights that it may have with respect to
the securities acquired by the Purchaser in such transaction.
(c) At the Closing, Purchaser shall assign its rights under the
eDeploy Investor Rights Agreement to the Company. In the event that Purchaser
exercises its rights under Section 6.3 of this Agreement in connection with a
Delisting Event, the Company shall assign its rights under the eDeploy Investor
Rights Agreement to Purchaser.
6.6. NO IMPAIRMENT.
(a) The Company will not, and will cause the Subsidiary not to,
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Company or the Subsidiary, and, but will, and will
cause the Subsidiary to, at all times in good faith assist in the carrying out
of all the provisions of this Section 6 and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the Purchaser
hereunder against impairment.
(b) Without limiting the generality or effect of the preceding
provisions of this Section 6.6, during the Contingency Period, the Company shall
(i) take all necessary action to prevent the Subsidiary from amending its
15
Certificate of Incorporation (whether by merger or otherwise) in a manner that
would adversely affect the rights, privileges, preferences or powers of the
eDeploy Stock unless Purchaser has consented in writing to such amendments, (ii)
not convert the eDeploy Stock into shares of common stock of the Subsidiary and
(iii) not agree to any amendment or waiver of the eDeploy Investor Rights
Agreement unless the Purchaser shall have consented in writing to such amendment
or waiver.
(c) The provisions of this Section 6 are intended to provide to
the Purchaser economic rights in the event of an IPO, Asset Sale, Stock Sale or
Delisting Event comparable to those that the Purchaser would have if the
transactions contemplated by this Agreement had never occurred and, in the case
of an IPO, Asset Sale or Stock Sale, the Purchaser had converted the eDeploy
Stock into Common Stock of the Subsidiary in connection with such IPO, Asset
Sale or Stock Sale and, in the case of an Asset Sale or Stock Sale, had received
its pro rata share of the consideration paid by the acquiror in such
transaction. The provisions of this Section 6 shall be construed broadly to
fully effectuate the purposes and intent hereof and to fully preserve the rights
of the Purchaser hereunder.
7. MISCELLANEOUS.
7.1. TRANSFER; SUCCESSORS AND ASSIGNS. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties (including transferees of any
Stock). Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.
7.2. GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.
7.3. FURTHER ASSURANCES. At any time or from time to time after
the Closing, each party shall, at the other party's request and without further
consideration, take such other actions as the requesting party may reasonably
request and execute and deliver to the requesting party such other instruments
in order effectively to implement and effect the agreements, covenants and
transactions provided for herein, including, without limitation, the provisions
of Section 6 hereof.
7.4. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
7.5. TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
16
7.6. NOTICES. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed sufficient upon delivery, when delivered
personally or by overnight courier or sent by telegram or fax, or 48 hours after
being deposited in the U.S. mail, as certified or registered mail, with postage
prepaid, addressed to the party to be notified at such party's address as set
forth below:
i) If to the Company to:
Datatec Systems, Inc.
00 Xxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Chief Financial Officer
(with a copy to:)
Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
Tel: (000) 000-0000
ii) If to the Purchaser to:
Cisco Systems, Inc.
000 Xxxxxx Xxxxx
Xxx Xxxx, XX 00000-0000
Attention: Senior VP, Corporate Affairs
(with a copy to:)
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
Two Embarcadero Place
0000 Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Fax: (000) 000-0000
Tel: (000) 000-0000
or to such other address as any party hereto may designate for itself by notice
given as herein provided.
7.7. FINDER'S FEE. Each party represents that it neither is nor
will be obligated for any finder's fee or commission in connection with this
transaction. The Purchaser agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending against such liability or
17
asserted liability) for which Purchaser or any of its officers, employees, or
representatives is responsible. The Company agrees to indemnify and hold
harmless Purchaser from any liability for any commission or compensation in the
nature of a finder's fee (and the costs and expenses of defending against such
liability or asserted liability) for which the Company or any of its officers,
employees or representatives is responsible.
7.8. FEES AND EXPENSES. The Company and the Purchaser shall each
bear their own fees and expenses incurred with respect to this Agreement and the
transactions contemplated hereby provided, however, in the event that the
transactions contemplated by this Agreement are consummated, the Company shall
pay the Purchaser an amount not to exceed $20,000 at the Closing as
reimbursement for all or a portion of its reasonable fees and expenses incurred
in connection with the transaction.
7.9. ATTORNEY'S FEES. If any action at law or in equity
(including arbitration) is necessary to enforce or interpret the terms of any of
the Agreements, the prevailing party shall be entitled to reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.
7.10. AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or waived only pursuant to a written instrument signed by each of the
parties hereto.
7.11. SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, the parties agree to
renegotiate such provision in good faith. In the event that the parties cannot
reach a mutually agreeable and enforceable replacement for such provision, then
(a) such provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.
7.12. DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to any party under this Agreement, upon any
breach or default of any other party under this Agreement, shall impair any such
right, power or remedy of such non-breaching or non-defaulting party nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.
7.13. ENTIRE AGREEMENT. This Agreement, and the documents
referred to herein constitute the entire agreement between the parties hereto
pertaining to the subject matter hereof, and any and all other written or oral
agreements relating to the subject matter hereof existing between the parties
hereto are expressly canceled.
7.14. CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES WHICH
ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER
OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE
18
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON
THE QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.
7.15. PUBLIC DISCLOSURE. The Company shall not use Purchaser's
name or refer to Purchaser directly or indirectly in connection with Purchaser's
relationship with the Company in any advertisement, news release or professional
or trade publication, or in any other public manner, unless otherwise required
by law, or the rules, regulations or other requirements of Nasdaq or such other
exchange that the Datatec Common Stock is listed under or with Purchaser's prior
written consent (which consent may be withheld at Purchaser's sole discretion).
If the Company believes public disclosure of Purchaser's relationship with the
Company is required by law, or the rules, regulations or other requirements of
Nasdaq or such other exchange, it shall at a reasonable time before making any
such disclosure (including, without limitation, filing any document or material
with the Securities and Exchange Commission, or any other competent regulatory
authority, which contains a reference to Purchaser), consult with Purchaser
regarding such disclosure, revise such disclosure as reasonably requested by
Purchaser, and if available, seek confidential treatment for such portions of
such disclosure as may be reasonably requested by Purchaser.
[SIGNATURE PAGES FOLLOW]
19
The parties have executed this Stock Purchase Agreement as of the
date first written above.
COMPANY:
DATATEC SYSTEMS, INC.
By: /s/ Xxxxx Xxxx
-------------------------------------
Name: Xxxxx X. Xxxx
------------------------------------
(print)
Title: Chairman & CEO
----------------------------------
PURCHASER:
CISCO SYSTEMS, INC.
By: /s/ Xxxxxx Xxxxxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxxxxx
----------------------------------
(print)
Title: Sr. VP & Assistant Secretary
----------------------------------
Address: 000 Xxxx Xxxxxx, Xxx Xxxx, XX
--------------------------------
20
EXHIBITS
Exhibit A - Schedule of Exceptions to Representations and Warranties
Exhibit B - Form of Investor Rights Agreement
Exhibit C - Form of Legal Opinion of Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx &
Wolosky LLP
EXHIBIT A
SCHEDULE OF EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
The following Schedules set forth exceptions to the representations
and warranties of Datatec Systems, Inc. (the "Company") set forth in Section 2
of the Stock Purchase Agreement dated as of November 2, 2001 (the "Agreement"),
to which these Schedules are an exhibit. Terms used herein and not otherwise
defined shall have the respective meanings ascribed to such terms in the
Agreement. Each exception applies to each section of the Agreement, and is
deemed to be included in each Schedule, to which it pertains, whether or not
such exception is listed on such Schedule or referred to in such section.
SCHEDULE 2.2 - CAPITALIZATION
(c) Does not include (i) 857,097 shares of Common Stock reserved for
issuance upon exercise of options that have or may be granted to
employees, directors and consultants of the Company under the
Company's 1990 Stock Option Plan, (ii) 9,000 shares of Common Stock
reserved for issuance upon exercise of options that have or may be
granted to consultants of the Company under the Company's 1993
Consultant Stock Option Plan, (iii) 428,000 shares of Common Stock
reserved for issuance upon exercise of options that have or may be
granted to directors of the Company under the Company's 1995
Director's Option Plan, (iv) 1,101,004 shares of Common Stock
reserved for issuance upon exercise of options that have or may be
granted to employees and consultants of the Company under the
Company's 1996 Employee and Consultant Stock Option Plan, (v)
550,000 shares of Common Stock reserved for issuance upon exercise
of options that have or may be granted to executives of the Company
under the Company's Senior Executive Stock Option Plan, (vi) 106,740
shares of Common Stock reserved for issuance upon exercise of
options that have or may be granted to employees of the Company
under the Company's 1996 Stock Option Conversion Plan, (vii) 921,726
shares of Common Stock that have been issued or are reserved for
issuance to employees of the Company under the Company's Employee
Stock Purchase Plan, (viii) 465,872 shares of Common Stock reserved
for issuance upon exercise of options that have or may be granted to
employees not pursuant to any formal plan, (ix) 600,000 shares of
Common Stock reserved for issuance upon exercise of certain
outstanding warrants, and (x) rights issued to shareholders of
record as of March 9, 1998 under the Company's shareholders rights
plan to purchase from the Company one-hundredth of a share of Series
D Preferred Stock (the "Rights"). None of the Rights have been
exercised, or, to the Company's knowledge, are exercisable under the
terms of the shareholders rights plan.
SCHEDULE 2.3 - SUBSIDIARIES
SUBSIDIARIES OF THE COMPANY PERCENTAGE OWNED
--------------------------- ----------------
Datatec Industries, Inc. 100%
HH Communications of Illinois, Inc. 100%
xXxxxxx.xxx, Inc. 100%
SCHEDULE 2.7 - LITIGATION
PETsMART LITIGATION
On September 22, 2000, PETSsMART, Inc., a customer of the Company ("Plaintiff"),
filed a lawsuit in the Superior Court of the State of Arizona, Maricopa County,
against the Company alleging breach of contract, breach of covenant of good
faith and fair dealing, and negligence in connection with the Company's contract
to install and implement Plaintiff's point of sale system (the "POS Rollout").
Plaintiff alleges that the Company's performance of the POS Rollout resulted in
significant financial and operational hardship to Plaintiff and that as a result
of the Company's deficient performance, Plaintiff was forced to retain another
company to assist with the POS Rollout at an additional cost of approximately
$1.45 million above the $3.3 million contract price charged by the Company. For
each of the claims being made against the Company, Plaintiff asks for
compensatory damages in an amount to be proven at trial, attorneys' fees and
expenses, and pre- and post-judgment interest on the awarded sum at the highest
rate permitted by law. The action is in the early stages of discovery and a jury
trial date has been set for October 1, 2002.
2.12 - NO CONFLICT OF INTEREST
EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS WHO ARE ALSO DIRECTORS
EMPLOYMENT AGREEMENT WITH XXXXX XXXX
Xxxxx Xxxx is employed as the Company's Chairman of the Board and
Chief Executive Officer pursuant to an employment agreement dated as
of May 1, 2000, for a term ending on April 30, 2003. The agreement
provides for an initial base salary of $350,000 which shall be
increased annually by a percentage equal to the percentage by which
the Consumer Price Index for Urban Borrowers and Clerical Workers:
New York, N.Y.-Northeastern New Jersey shall have been increased
over the preceding year. The agreement also provides for incentive
compensation in an amount of up to 25% of the base salary based upon
profits, stock market returns and Board discretion. In the event of
his disability, Mr. Gaon is to receive the full amount of his base
salary for six months. Upon a Change of Control of the Company (as
defined) that results in Mr. Gaon's removal from the Company's Board
of Directors, a significant change in the conditions of his
employment or other breach of the agreement, he is to receive
liquidated damages equal to 2.99 times the "base amount," as defined
in the United States Internal Revenue Code of 1986, as amended (the
"Code"), of his
-2-
compensation. Upon early termination by the Company without Cause
(as defined), or by Mr. Gaon with Good Reason (as defined), the
Company is required to pay Mr. Gaon the remainder of the salary owed
him for the employment period, but in no event shall such payment be
less than $500,000. Additionally, Mr. Gaon will be entitled to
undistributed bonus payments, as well as pro-rata unused vacation
time payments. In addition, following a Change of Control,
termination by the Company without Cause, or termination by Mr. Gaon
for Good Reason, the Company is obligated to purchase all Mr. Gaon's
stock options, whether exercisable or not, for a price equal to the
difference between the fair market value of the Common Stock on the
date of termination and the exercise price of such options.
EMPLOYMENT AGREEMENTS WITH XXXXX XXXXX
Xxxxx Xxxxx, a director of the Company, is employed as the Company's
Executive Director - Office of the Chairman pursuant to an
employment agreement dated October 27, 2000, for a term ending on
October 26, 2002. The agreement provides for an annual base salary
of $125,000 and options to purchase 200,000 shares of Common Stock
which were granted on March 7, 2001. Upon early termination by the
Company without Cause (as defined), or by Xx. Xxxxx with "Good
Reason" (as defined), the Company is required, within thirty days of
the termination, to pay Xx. Xxxxx an amount equal to the lesser of
(a) the pro rata portion of his base salary on the number of
calendar days beginning on the date of termination through and
including December 31, 2002, and (b) three months of his base
salary, and all expense reimbursements due to him.
Xxxxx Xxxxx is also employed as the Executive Director of Global
Integration Services, a division of the Company, pursuant to an
employment agreement dated October 27, 2000, for a term ending on
October 26, 2002. The agreement provides for options to purchase
200,000 shares of Common Stock which were granted on March 7, 2001.
RETENTION OF XXXXXX XXXXXXXX FROME XXXXXXXXXX & XXXXXXX LLP
Xxxxxx X. Xxxxxxxx, a Director of the Company, is a member of the law firm of
Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Wolosky LLP, which law firm has been
retained by the Company during the last fiscal year. Fees received from the
Company by such firm during the last fiscal year did not exceed 5% of such
firm's or the Company's revenues.
GUARANTORS AND INDEMNITORS OF INDEBTEDNESS
The Company and HH Communications of Illinois, Inc. ("HH") have guaranteed the
obligations of Datatec Industries, Inc. ("Datatec Industries"), pursuant to the
terms and conditions of its Inventory and Working Capital Financing Agreement
(the "Credit Facility") with IBM Credit Corporation. Each of the Company, HH and
Datatec Industries has agreed to indemnify IBM Credit Corporation pursuant to
the terms and conditions of the Credit Facility.
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CONSULTING AGREEMENT WITH XXXXXXX X. XXXXX, XX.
Xxxxxxx X. Xxxxx, Xx., a director of the Company, is the President of
WhiteSpace, Inc. ("WhiteSpace"), which company was previously retained by the
Company to provide consulting services pursuant to an agreement that expired in
January 2001. To date, the Company has only paid the cash portion of
compensation it was obligated to pay to WhiteSpace pursuant to the terms of the
consulting agreement. The Company is also obligated to pay WhiteSpace an
aggregate of approximately $125,000 in eDeploy stock options or cash in lieu of
stock options. However, WhiteSpace recently proposed that the Company pay the
$125,000 in cash and/or Common Stock of the Company.
SCHEDULE 2.14 - TITLE TO PROPERTY AND ASSETS
CREDIT FACILITY - RIGHTS UNDER UCC
Under the IBM Credit Facility, upon the occurrence and during the continuancy of
any Event of Default (as defined) which has not been waived, IBM may exercise
all rights and remedies of a secured party under the U.C.C. The Credit Facility
is collateralized by the accounts and assets of the Company and its subsidiaries
including the Subsidiary.
SCHEDULE 2.16 - CHANGES
(h) RESIGNATION OF XXX XXXXXX
On or around August 10, 2001, Xxx Xxxxxx resigned from his positions
as Chief Financial Officer, Secretary and Treasurer of the Company.
SCHEDULE 2.20 - LABOR AGREEMENTS AND ACTIONS
LABOR UNIONS
A substantial portion of the Company's employees is employed under contracts
with the International Brotherhood of Electrical Workers and the International
Brotherhood of Electrical Workers Local 1430.
COMPENSATION FOLLOWING TERMINATION OF EMPLOYMENT
Pursuant to Xxxxx Xxxx'x employment agreement with the Company, upon early
termination by the Company without Cause (as defined), or by Mr. Gaon with Good
Reason (as defined), the Company is required to pay Mr. Gaon the remainder of
the salary owed him for the employment period, but in no event shall such
payment be less than $500,000. Additionally, Mr. Gaon will be entitled to
undistributed bonus payments, as well as pro-rata unused vacation time payments.
In addition, following a Change of Control (as defined), termination by the
Company without Cause, or termination by Mr. Gaon for Good Reason, the Company
is obligated to purchase all Mr. Gaon's
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stock options, whether exercisable or not, for a price equal to the difference
between the fair market value of the Common Stock on the date of termination and
the exercise price of such options.
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