Exhibit 10.3
PURCHASE AGREEMENT
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THIS AGREEMENT is made as of March 5, 1998, among AnswerThink
Consulting Group, Inc., a Florida corporation (the "COMPANY"), and FSC Corp., a
Massachusetts corporation (the "PURCHASER"). Except as otherwise indicated
herein, capitalized terms used herein are defined in Section 6 hereof.
The parties hereto agree as follows:
SECTION 1. AUTHORIZATION AND CLOSING.
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1A. AUTHORIZATION OF THE STOCK. The Company shall authorize the
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issuance and sale to the Purchaser of up to 33,333 shares of its Class B
Convertible Preferred Stock, par value $.001 per share (the "CLASS B CONVERTIBLE
PREFERRED") having the rights and preferences set forth in Exhibit A attached
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hereto.
1B. PURCHASE AND SALE OF THE CLASS B CONVERTIBLE PREFERRED. At the
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Closing (as defined in xxxxxxxxxxxx 0X xxxxx), the Company shall sell to the
Purchaser and, subject to the terms and conditions set forth herein, the
Purchaser shall purchase from the Company, up to 33,333 shares of the Class B
Convertible Preferred at a price of $15.00 per share.
1C. THE CLOSING. The closing of the purchase and sale of the Class B
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Convertible Preferred to be purchased pursuant to paragraph 1B (the "CLOSING")
shall take place at the offices of Xxxxx & Xxxxxxx, LLP on March 5, 1998, or at
such other place or on such other date as may be mutually agreeable to the
Company and the Purchaser, or by mail or telecopy. At the Closing, the Company
shall deliver to the Purchaser stock certificates evidencing the Class B
Convertible Preferred to be purchased by the Purchaser, registered in such
Purchaser's name, upon payment of the purchase price thereof by wire transfer of
immediately available funds to such account as designated by the Company in the
amount required to be paid pursuant to paragraph 1B.
SECTION 2. CONDITIONS OF THE PURCHASER'S OBLIGATION AT THE CLOSING.
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The obligation of the Purchaser to purchase and pay for the Class B Convertible
Preferred at the Closing is subject to the satisfaction as of the Closing of the
following conditions:
2A. REPRESENTATIONS AND WARRANTIES; COVENANTS. The representations
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and warranties contained in Section 5 hereof shall be true and correct at and as
of the Closing as though then made, except to the extent of
changes caused by the transactions expressly contemplated herein and except as
disclosed in the Loan Agreement, and the Company shall have performed in all
material respects all of the covenants required to be performed by it hereunder
prior to the Closing.
2B. RESTATED ARTICLES OF INCORPORATION. The Company's amended and
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restated articles of incorporation (the "RESTATED ARTICLES OF INCORPORATION")
shall be in form and substance substantially similar to Exhibit A hereto, shall
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not have been amended or modified and shall be in full force and effect under
the laws of Florida as of the Closing. The Company's by-laws (the "BY-LAWS")
shall be as set forth in Exhibit B hereto, shall not have been amended or
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modified and shall be in full force and effect under the laws of Florida as of
the Closing.
2C. SHAREHOLDERS AGREEMENT. The Company and the Purchaser shall have
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entered into a joinder to the Company's shareholders agreement dated April 23,
1997 and amended February 24, 1998 by and among the Company and the shareholders
of the Company (the "SHAREHOLDERS AGREEMENT"), such joinder to Shareholders
Agreement in form and substance as attached to Exhibit C attached hereto (the
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"JOINDER TO SHAREHOLDERS AGREEMENT"), and the Joinder to the Shareholders
Agreement shall be in full force and effect as of the Closing.
2D. REGISTRATION AGREEMENT. The Company and the Purchaser and
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certain of the shareholders of the Company shall have entered into a joinder to
that certain registration agreement dated April 23, 1997 by and among the
Company and certain other shareholders of the Company who are party thereto (the
"REGISTRATION AGREEMENT"), such joinder to the Registration Agreement in form
and substance substantially similar to Exhibit D attached hereto (the "JOINDER
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TO REGISTRATION AGREEMENT"), and the Joinder to the Registration Agreement shall
be in full force and effect as of the Closing.
2E WAIVER OF PREEMPTIVE RIGHTS. The parties which have preemptive
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rights to purchase shares of capital stock of the Company in connection with the
transactions contemplated by this Agreement shall have entered into a waiver
(the "WAIVER"), in form and substance satisfactory to the Purchaser, in which
such parties shall waive such preemptive rights in connection with the sale of
Class B Convertible Preferred hereunder.
2F. CLOSING DOCUMENTS. The Company shall have delivered to each
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Purchaser all of the following documents:
(i) an Officer's Certificate, dated the date of the Closing,
stating that the conditions specified in Section 1 and paragraphs 2A
through 2E, inclusive, have been fully satisfied;
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(ii) (a) certified copies of the resolutions duly adopted by the
Board authorizing the execution, delivery and performance of this
Agreement, the Joinder to Shareholders Agreement, the Joinder to
Registration Agreement, and each of the other agreements contemplated
hereby, the filing of the Restated Articles of Incorporation referred to in
paragraph 2B, the issuance and sale of the Class B Convertible Preferred
and the consummation of all other transactions contemplated by this
Agreement, and (b) the resolutions duly adopted by the Company's
shareholders adopting the Restated Articles of Incorporation referred to in
paragraph 2B;
(iii) certified copies of the Restated Articles of Incorporation
and the By-laws, each as in effect at the Closing;
(iv) an opinion of Xxxxx & Xxxxxxx, LLP that the preferred stock
issued by the Company pursuant to the terms of this Agreement is validly
issued, fully paid and non-assessable; and
(v) such other documents relating to the transactions
contemplated by this Agreement as the Purchaser or its counsel may
reasonably request.
2G. FEES AND EXPENSES. The Company shall have reimbursed the
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Purchaser for the fees and expenss as set forth in Section 7A.
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2H. COMPLIANCE WITH APPLICABLE LAWS. The purchase of Class B
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Convertible Preferred by the Purchaser hereunder shall not be prohibited by any
applicable law or governmental regulation, shall not subject the Purchaser to
any penalty, liability or, in the Purchaser's sole judgment, other onerous
conditions under or pursuant to any applicable law or governmental regulation,
and shall be permitted by laws and regulations of the jurisdictions to which the
Purchaser is subject.
2I. SALE OF CLASS B CONVERTIBLE PREFERRED TO THE PURCHASER. The
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Company shall have simultaneously sold to the Purchaser the Class B Convertible
Preferred to be purchased by the Purchaser hereunder at the Closing and shall
have received payment therefor in full.
2J. WAIVER. Any condition specified in this Section 2 may be waived
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with respect to the Purchaser only if such waiver is set forth in a writing
executed by the Purchaser.
SECTION 3. COVENANTS.
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3A. FINANCIAL STATEMENTS AND OTHER INFORMATION. The Company shall
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deliver to the Purchaser (so long as the Purchaser holds at least 1% of the
Investor Preferred or the Investor Common):
(i) as soon as available but in any event within 30 days after
the end of each quarterly accounting period in each fiscal year, unaudited
consolidating and consolidated statements of income and cash flows of the
Company and its Subsidiaries for such quarterly period and for the period
from the beginning of the fiscal year to the end of such quarter, and
consolidating and consolidated balance sheets of the Company and its
Subsidiaries as of the end of such quarterly period, all prepared in
accordance with generally accepted accounting principles, consistently
applied, subject to the absence of footnote disclosures and to normal year-
end adjustments;
(ii) accompanying the financial statements referred to in
subparagraph (i), an Officer's Certificate stating that neither the Company
nor any of its Subsidiaries is in default under any of its other material
agreements or, if any such default exists, specifying the nature and period
of existence thereof and what actions the Company and its Subsidiaries have
taken and propose to take with respect thereto;
(iii) within 120 days after the end of each fiscal year,
consolidating and consolidated statements of income and cash flows of the
Company and its Subsidiaries for such fiscal year, and consolidating and
consolidated balance sheets of the Company and its Subsidiaries as of the
end of such fiscal year, setting forth in each case comparisons to the
annual budget and to the preceding fiscal year, all prepared in accordance
with generally accepted accounting principles, consistently applied, and
accompanied by (a) with respect to the consolidated portions of such
statements (except with respect to budget data), an opinion containing no
exceptions or qualifications (except for qualifications regarding specified
contingent liabilities) of an independent accounting firm acceptable to the
holders of a majority of each of the Investor Preferred and the Investor
Common, and (b) a copy of such firm's annual management letter to the
Board;
(iv) promptly upon receipt thereof, any additional reports,
management letters or other detailed information concerning significant
aspects of the Company's operations or financial affairs given to the
Company by its independent accountants (and not otherwise contained in
other materials provided hereunder);
(v) at least 30 days prior to the beginning of each fiscal
year, an annual budget prepared on a monthly basis for the Company and its
Subsidiaries for such fiscal year (displaying anticipated statements of
income
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and cash flows), and promptly upon preparation thereof any other
significant budgets prepared by the Company and any revisions of such
annual or other budgets, and within 30 days after any monthly period in
which there is a material adverse deviation from the annual budget, an
Officer's Certificate explaining the deviation and what actions the Company
has taken and proposes to take with respect thereto;
(vi) promptly (but in any event within five business days) after
the discovery or receipt of notice of any default under any material
agreement to which it or any of its Subsidiaries is a party or any other
event or circumstance affecting the Company or any Subsidiary which is
reasonably likely to have a material adverse effect on the financial
condition, operating results, assets, operations or business prospects of
the Company or any Subsidiary (including the filing of any material
litigation against the Company or any Subsidiary or the existence of any
material dispute with any Person which involves a reasonable likelihood of
such litigation being commenced), an Officer's Certificate specifying the
nature and period of existence thereof and what actions the Company and its
Subsidiaries have taken and propose to take with respect thereto; and
(vii) reasonable promptness, such other information and financial
data concerning the Company and its Subsidiaries as any Person entitled to
receive information under this paragraph 3A may reasonably request.
Each of the financial statements referred to in subparagraph (i) and (iii) shall
fairly present the consolidated financial position of the Company and its
Subsidiaries in all material respects as of the dates and for the periods stated
therein, subject in the case of the unaudited financial statements to changes
resulting from normal year-end audit adjustments (none of which would, alone or
in the aggregate, be materially adverse to the financial condition, operating
results, assets, operations or business prospects of the Company and its
Subsidiaries taken as a whole). Nothwithstanding the foregoing, the Company
shall not be required to provide any financial information to the Purchaser in
accordance with this Paragraph 3A at any time in which the Company is required
to provide financial information to an Affiliate of the Purchaser pursuant to
the terms of the Loan Agreement.
3B. INSPECTION OF PROPERTY. The Company shall permit any
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representatives designated by any holder of at least 15% of the outstanding
Investor Preferred or at least 15% of the outstanding Investor Common, upon
reasonable notice and during normal business hours and such other times as any
such holder may reasonably request, to (i) visit and inspect any of the
properties of the Company and its Subsidiaries, (ii) examine the corporate and
financial records of the Company and its Subsidiaries and make copies thereof or
extracts therefrom and (iii) discuss the affairs, finances and accounts of any
such corporations with the
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directors, officers, key employees and independent accountants of the Company
and its Subsidiaries; provided that the Company shall have the right to have its
chief financial officer present at any meetings with the Company's independent
accountants; and provided further that, if requested by the Company, such
representatives shall first enter into a confidentiality and nondisclosure
agreement with the Company, in form and substance reasonably satisfactory to the
Company. Notwithstanding the foregoing, the Company may exclude such
representatives from receiving access to any information to the extent that the
Company has been advised by its independent legal counsel that the disclosure to
such representatives of such information would cause the Company or any
Subsidiary to waive its attorney-client privilege with respect to any such
information which is material to the Company or any of its Subsidiaries.
3C. AFFIRMATIVE COVENANTS. So long as the Purchaser holds any Stock,
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the Company shall, and shall cause each Subsidiary to:
(i) comply with all applicable laws, rules and regulations of
all governmental authorities, the violation of which would reasonably be
expected to have a material adverse effect upon the financial condition,
operating results, assets, operations or business prospects of the Company
and its Subsidiaries taken as a whole, and pay and discharge when payable
all taxes, assessments and governmental charges (except to the extent the
same are being contested in good faith and adequate reserves therefor have
been established);
(ii) enter into and maintain appropriate nondisclosure and
noncompete agreements with its key employees; and
(iii) take, or omit to take, all such actions as are necessary
so that the representation and warranty contained in Section 5D shall
continue to remain true and correct at all times as if such representation
and warranty were remade every day.
3D. CURRENT PUBLIC INFORMATION. At all times after the Company has
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filed a registration statement with the Securities and Exchange Commission
pursuant to the requirements of either the Securities Act or the Securities
Exchange Act, the Company shall file all reports required to be filed by it
under the Securities Act and the Securities Exchange Act and the rules and
regulations adopted by the Securities and Exchange Commission thereunder and, so
long as such action is not unduly burdensome on the employees of the Company,
shall take such further action as any holder of Restricted Securities may
reasonably request to comply with the provisions of (i) Rule 144 adopted by the
Securities and Exchange Commission under the Securities Act (as such rule may be
amended from time to time) or any similar rule or regulation hereafter adopted
by the Securities and Exchange Commission or (ii) General Instructions I of Form
S-2 or S-3 or any
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similar registration form hereafter adopted by the Securities and Exchange
Commission. Upon request, the Company shall deliver to any holder of Restricted
Securities a written statement as to whether it has complied with such
requirements.
3E. LIMITED PREEMPTIVE RIGHTS.
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(i) Except for the issuance of Stock (a) to executives of the
Company pursuant to their management agreements (the "MANAGEMENT
AGREEMENTS"), (b) in connection with acquisitions exempted herefrom by the
Board, (c) to employees pursuant to stock option plans, stock ownership
plans and other employment arrangements approved by the Board, or (d)
pursuant to a public offering registered under the Securities Act, if the
Company at any time after the Closing authorizes the issuance or sale of
any shares of Stock or any securities containing options or rights to
acquire any shares of Stock (other than as a dividend on the outstanding
Stock), the Company shall first offer to sell to each holder of Investor
Stock a portion of such stock or securities equal to the quotient
determined by dividing (1) the number of shares of Underlying Common Stock
held by such holder by (2) the total number of shares of Underlying Common
Stock immediately prior to such issuance. Each holder of Investor Stock
shall be entitled to purchase all or any portion of such stock or
securities at the most favorable price and on the most favorable terms as
such stock or securities are to be offered to any other Persons.
(ii) in order to exercise its purchase rights hereunder, a
holder of Investor Stock must within 15 days after receipt of written
notice from the Company describing in reasonable detail the stock or
securities being offered, the purchase price thereof, the payment terms and
such holder's percentage allotment deliver a written notice to the Company
describing its election hereunder. If all of the stock and securities
offered to the holders of Investor Stock is not fully subscribed by such
holders, the remaining stock and securities shall be reoffered by the
Company to the holders purchasing their full allotment upon the terms set
forth in this paragraph, except that such holders must exercise their
purchase rights within five days after receipt of such reoffer.
(iii) Upon the expiration of the offering periods described
above, the Company shall be entitled to sell such stock or securities which
the holders of Investor Stock have not elected to purchase during the 90
days following such expiration on terms and conditions no more favorable to
the purchasers thereof than those offered to such holders. Any stock or
securities offered or sold by the Company after such 90-day period must be
reoffered to the holders of Investor Stock pursuant to the terms of this
paragraph.
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(iv) Nothing contained in this paragraph 3E shall be deemed to
amend, modify or limit in any way the restrictions on the issuance of
shares of stock set forth in this Agreement, in the Shareholders Agreement
or in any other agreement to which the Company is bound.
3F. PUBLIC DISCLOSURES. The Company shall not, nor shall it permit
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any Subsidiary to, disclose the Purchaser's name or identity as an investor in
the Company in any press release or other public announcement or in any document
or material filed with any governmental entity, without the prior written
consent of the Purchaser, unless such disclosure is required by applicable law
or governmental regulations or by order of a court of competent jurisdiction, in
which case prior to making such disclosure the Company shall give written notice
to the Purchaser describing in reasonable detail the proposed content of such
disclosure and shall permit the Purchaser to review and comment upon the form
and substance of such disclosure.
SECTION 4. TRANSFER OF RESTRICTED SECURITIES.
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(i) Restricted Securities are transferable only pursuant to (a)
public offerings registered under the Securities Act, (b) Rule 144 or Rule
144A of the Securities and Exchange Commission (or any similar rule or
rules then in force) if such rule or rules are available and (c) subject to
the conditions specified in subparagraph (ii) below, any other legally
available means of transfer.
(ii) In connection with the transfer of any Restricted
Securities (other than a transfer described in subparagraph 4(i)(a) or (b)
above or a transfer to an Affiliate of the holder described in Section 7F
herein), the holder thereof shall deliver written notice to the Company
describing in reasonable detail the transfer or proposed transfer, together
with an opinion of counsel acceptable to the Company to the effect that
such transfer of Restricted Securities may be effected without registration
of such Restricted Securities under the Securities Act. In addition, if the
holder of the Restricted Securities delivers to the Company an opinion of
such counsel that no subsequent transfer of such Restricted Securities
shall require registration under the Securities Act, the Company shall
promptly upon such contemplated transfer deliver new certificates for such
Restricted Securities which do not bear the Securities Act legend set forth
in paragraph 7C. If the Company is not required to deliver new certificates
for such Restricted Securities not bearing such legend, the holder thereof
shall not transfer the same until the prospective transferee has confirmed
to the Company in writing its agreement to be bound by the conditions
contained in this paragraph and paragraph 7C.
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(iii) Upon the request of the Purchaser, the Company shall
promptly supply to the Purchaser or its prospective transferees all
information regarding the Company required to be delivered in connection
with a transfer pursuant to Rule 144A of the Securities and Exchange
Commission.
(iv) Notwithstanding anything contained herein to the contrary,
except for any transfer pursuant to Section 4(i)(a) or (b) or a transfer to
an Affiliate of the holder described in Section 7F herein, if any holder of
Investor Stock (the "TRANSFERRING PURCHASER") desires to transfer all or a
portion of its Restricted Securities, the Transferring Purchaser shall
deliver a written notice (the "OFFER NOTICE") to the Company, and all of
the other holders of Investor Stock (the "OTHER HOLDERS"). The Offer Notice
shall disclose in reasonable detail the proposed number of Restricted
Securities to be transferred and the proposed sale price, terms and
conditions of the transfer. Each Other Holder may elect to purchase all or
any portion of the Restricted Securities specified in the Offer Notice at
the price and on the terms specified therein by delivering written notice
(the "REPLY NOTICE") of such election to the Company and each Other Holder
as soon as practical but in any event within 20 days after the delivery of
the Offer Notice. If the Other Holders elect to purchase an aggregate
number of any type of Restricted Securities greater then the number of such
type of Restricted Securities specified in the Offer Notice, such type of
Restricted Securities shall be allocated among the Other Holders pro rata
based upon the number of shares of Underlying Common Stock owned by each
Other Holder desiring to acquire such type of Restricted Securities
pursuant to this Section 4(iv) (but in no event shall the pro rata share of
any such Other Holder result in such Other Holder acquiring a number of any
type of Restricted Securities in excess of the number of such Restricted
Securities requested by such Other Holder). If the Other Holders have
elected to purchase all or any portion of the Restricted Securities from
the Transferring Purchaser, the transfer of such shares shall be
consummated as soon as practical after the delivery of the last Reply
Notice, but in any event within 40 days after the delivery of either such
notice. To the extent that the Other Holders have not elected to purchase
all of the Restricted Securities being offered, the Transferring Purchaser
may, within 90 days after a delivery of the Offer Notice, transfer such
Restricted Securities to one or more third parties at a price no less than
the price per share specified in the Reply Notice and on other terms no
more favorable to the transferees than offered to the Other Holders. The
purchase price specified in any Offer Notice shall be payable solely in
cash at the closing of the transaction or, if mutually agreed upon by the
parties, in installments over time.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. As a
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material inducement to the Purchaser to enter into this Agreement and
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purchase the Stock, the Company hereby represents and warrants to the Purchaser
that:
5A. ORGANIZATION AND CORPORATE POWER. The Company is a corporation
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duly organized, validly existing and in good standing under the laws of Florida,
and is qualified to do business in every jurisdiction in which the failure to so
qualify might reasonably be expected to have a material adverse effect on the
financial condition, operating results, assets, operations or business prospects
of the Company and its Subsidiaries taken as a whole. The Company has all
requisite corporate power and authority and all material licenses, permits and
authorizations necessary to own and operate its properties, to carry on its
businesses as now conducted and presently proposed to be conducted and to carry
out the transactions contemplated by this Agreement. The copies of the Restated
Articles of Incorporation and By-laws being furnished to the Purchaser's counsel
on or prior to the Closing reflect all amendments made thereto at any time on or
prior to the Closing and are correct and complete.
5B. CAPITAL STOCK AND RELATED MATTERS.
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(i) As of the Closing and immediately thereafter, the authorized
capital stock of the Company shall consist of 107,300,000 shares of Stock,
of which 7,200,000 shares shall be designated as Class A Convertible
Preferred, par value $.001 per share (the "CLASS A CONVERTIBLE PREFERRED"
and collectively with the Class B Convertible Preferred, the "CONVERTIBLE
PREFERRED"), 100,000 shall be designated as Class B Convertible Preferred,
and 100,000,000 shares shall be designated as Common Stock, par value $.001
per share (the "COMMON STOCK"). Each of the outstanding shares of Class A
Convertible Preferred and each of the shares of Class B Convertible
Preferred is convertible into four shares of Common Stock and as of
February 13, 1998, there were 1,797,942 shares of Common Stock that are
subject to stock options granted under the Company's 1997 Stock Option
Plan. As of the Closing, except as contemplated hereby, and as disclosed
in the Loan Agreement, the Company shall not have outstanding any stock or
securities convertible or exchangeable for any shares of its capital stock
or containing any profit participation features, nor shall it have
outstanding any rights or options to subscribe for or to purchase its
capital stock or any stock or securities convertible into or exchangeable
for its capital stock or any stock appreciation rights or phantom stock
plans other than pursuant to and as contemplated by this Agreement and the
Management Agreements, as set forth on the Capitalization Schedule attached
hereto as Schedule 5B hereto and in connection with additional options
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which were issued (and subsequently exercised) to Golder, Thoma, Xxxxxxx,
Xxxxxx Fund V, L.P. or its affiliates and MG Capital Partners II, L.P. or
its affiliates. As of the Closing, the Company shall not be subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
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retire any shares of its capital stock or any warrants, options or other
rights to acquire its capital stock, except pursuant to this Agreement, the
Restated Articles of Incorporation and the Management Agreements. As of
the Closing, all of the outstanding shares of the Company's capital stock
shall be validly issued, fully paid and nonassessable.
(ii) There are no statutory or, to the best of the Company's
knowledge, contractual shareholders preemptive rights or rights of refusal
with respect to the issuance of the Stock hereunder, except as provided
herein and as disclosed in the Loan Agreement. Based in part on the
investment representations of the Purchaser in paragraph 7C hereof and of
the employees of the Company in their employment agreements, the Company
has not violated any applicable federal or state securities laws in
connection with the offer, sale or issuance of any of its capital stock,
and the offer, sale and issuance of the Stock hereunder do not and will not
require registration under the Securities Act or any applicable state
securities laws. To the best of the Company's knowledge, there are no
agreements between the Company's shareholders with respect to the voting or
transfer of the Company's capital stock or with respect to any other aspect
of the Company's affairs, except for the Shareholders Agreement, restricted
securities agreements with the executives of the Company, restricted stock
agreements and option agreements with other employees of the Company, other
arrangements with certain equity holders of the Company, and the Management
Agreements.
5C. SUBSIDIARIES; INVESTMENTS. Except as disclosed in the Loan
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Agreement (including, without limitation, The Xxxxxxx Group, Inc. and Delphi
Partners, Inc.), the Company does not own or hold any shares of stock or any
other security or interest in any other Person or any rights to acquire any such
security or interest, and the Company has never had any Subsidiary, except for
shares of stock or other securities or interests in any Person and Subsidiaries
acquired after November 7, 1997, in each case with the approval of the Board.
5D. AUTHORIZATION; NO BREACH. The execution, delivery and
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performance of this Agreement, the Joinder to Shareholders Agreement, the
Joinder to Registration Agreement and all other agreements contemplated hereby
to which the Company is a party and the filing of the Restated Articles of
Incorporation referred to in paragraph 2B have been duly authorized by the
Company. This Agreement, the Joinder to Shareholders Agreement, the Joinder to
Registration Agreement, the Restated Articles of Incorporation and all other
agreements contemplated hereby each constitutes a valid and binding obligation
of the Company, enforceable in accordance with its terms. The execution and
delivery by the Company of this Agreement, the Joinder to Shareholders
Agreement, the Joinder to Registration Agreement and all other agreements
contemplated hereby to which the Company is a party, the filing of the Restated
Articles of Incorporation
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referred to in paragraph 2B, and the operation by the Company of its business
and the fulfillment of and compliance with the respective terms hereof and
thereof by the Company do not and will not (i) conflict with or result in a
breach of the terms, conditions or provisions of, (ii) constitute a default
under, (iii) result in the creation of any lien, security interest, charge or
encumbrance upon the Company's capital stock or assets pursuant to, (iv) give
any third party the right to modify, terminate or accelerate any obligation
under, (v) result in a violation of, or (vi) require any authorization, consent,
approval, exemption or other action by or notice to any court or administrative
or governmental body pursuant to, the Restated Articles of Incorporation or
bylaws of the Company, or any law, statute, rule or regulation to which the
Company is subject, or any agreement, instrument, order, judgment or decree to
which the Company is a party or by which it or any of the Executives is bound,
including, without limitation, to the Company's knowledge, any agreement,
document or instrument with KPMG Peat Marwick.
5E. CONDUCT OF BUSINESS; LIABILITIES. The Company and its
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Subsidiaries do not have any material obligation or liability (whether accrued,
absolute, contingent, unliquidated or otherwise, whether or not known to the
Company or any Subsidiary, whether due or to become due and regardless of when
asserted) other than: (i) liabilities set forth on most recent balance sheet
(including any notes thereof); (ii) liabilities and obligations which have
arisen after the date of such balance sheet in the ordinary course of business
(none of which is a liability resulting from breach of contract, breach of
warranty, torn, infringement, claim or lawsuit), (iii) liabilities and
obligations disclosed in the Loan Agreement and (iv) liabilities and obligations
which have been disclosed to and approved by the Board.
5F. TAX MATTERS. The Company has filed all tax returns (if any)
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which it is required to file under applicable laws and regulations; all such
returns are complete and correct in all material respects; the Company has paid
all taxes due and owing by it and has withheld and paid over all taxes which it
is obligated to withhold from amounts paid or owing to any employee,
shareholder, creditor or other third party; the Company has not waived any
statute of limitations with respect to taxes or agreed to any extension of time
with respect to a tax assessment or deficiency; the assessment of any additional
taxes for periods for which returns have been filed is not expected; no foreign,
federal, state or local tax audits are pending or being conducted with respect
to the Company, no information related to tax matters has been requested by any
foreign, federal, state or local taxing authority and no notice indicating an
intent to open an audit or other review has been received by the Company from
any foreign, federal, state or local taxing authority; and there are no
unresolved questions or claims concerning the Company's tax liability. The
Company has not made an election under (S)341 (f) of the IRC.
5G. LITIGATION, ETC. Except as disclosed in the Loan Agreement and
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except for those other actions described in Schedule 5G, there are no actions,
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suits, proceedings, orders, investigations or claims pending or, to the best of
the Company's knowledge, threatened against or affecting the Company (or to the
best of the Company's knowledge, pending or threatened against or affecting any
of the officers, directors or employees of the Company with respect to their
businesses or proposed business activities) at law or in equity, or before or by
any governmental department, commission, board, bureau, agency or
instrumentality (including, without limitations, any actions, suit, proceedings
or investigations with respect to the transactions contemplated by this
Agreement). The Company is not subject to any arbitration proceedings under
collective bargaining agreements or otherwise or, to the best of the Company's
knowledge, any governmental investigations or inquiries; and, to the best of the
Company's knowledge, there is no basis for any of the foregoing. The Company is
not subject to any judgment, order or decree of any court or other governmental
agency.
5H. BROKERAGE. There are no claims for brokerage commissions,
---------
finders, fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement binding
upon the Company. The Company shall pay, and hold the Purchaser harmless
against, any liability, loss or expense (including, without limitation,
attorneys, fees and out-of-pocket expenses) arising in connection with any such
claim.
5I. GOVERNMENTAL CONSENT, ETC. No permit, consent, approval or
--------------------------
authorization of, or declaration to or filing with, any governmental authority
is required in connection with the execution, delivery and performance by the
Company of this Agreement or the other agreements contemplated hereby, or the
consummation by the Company of any other transactions contemplated hereby or
thereby.
5J. ERISA. The Company does not maintain or have any obligation to
-----
contribute to or any other liability with respect to or under (including but not
limited to current or potential withdrawal liability), nor has it ever
maintained or had any obligation to contribute to or any other liability with
respect to or under, (i) any plan or arrangement whether or not terminated,
which provides medical, health, life insurance or other welfare type benefits
for current or future retired or terminated employees (except for limited
continued medical benefit coverage required to be provided under Section 4980B
of the IRC or as required under applicable state law), (ii) any "multi-employer
plan" (as defined in Section 3(37) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), (iii) any employee plan which is a tax-
qualified "defined benefit plan" (as defined in Section 3(35) of ERISA),
whether or not terminated, (iv) any employee plan which is a tax-qualified
"defined contribution plan" (as defined in Section 3(34) of ERISA), whether or
not terminated, or (v) any other plan or arrangement providing benefits to
current or former employees, including any bonus plan, plan for deferred
compensation, employee health or other welfare benefit plan or other
arrangement, whether or not terminated, in each case except for such plans or
arrangements
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which have been approved by the Board. For purposes of this subparagraph 5J, the
term "COMPANY" includes all organizations under common control with the Company
pursuant to Section 414(b) or (c) of the IRC.
5K. COMPLIANCE WITH LAWS. The Company has not violated any law or
--------------------
any governmental regulation or requirement which violation would reasonably be
expected to have a material adverse effect upon the financial condition,
operating results, assets, operations or business prospects of the Company, and
the Company has not received notice of any such violation. The Company is not
subject to any clean up liability, and the Company has no reason to believe it
may become subject to any clean up liability, under any federal, state or local
environmental law, rule or regulation.
5L. DISCLOSURE. Neither this Agreement nor any of the schedules,
----------
attachments, written statements, documents, certificates or other items prepared
or supplied to the Purchaser by or on behalf of the Company with respect to the
transactions contemplated hereby or the Loan Agreement contain any untrue
statement of a material fact or omit a material fact necessary to make each
statement contained herein or therein not misleading. To the knowledge of the
Company, there is no fact which the Company has not disclosed to the Purchaser
in writing and of which any of its officers, directors or executive employees is
aware and which has had or might reasonably be anticipated to have a material
adverse effect upon the existing or expected financial condition, operating
results, assets, customer or supplier relations, employee relations or business
prospects of the Company or any of its Subsidiaries.
5M. CLOSING DATE. The representations and warranties of the Company
------------
contained in this Section 5 and elsewhere in this Agreement and all information
contained in any exhibit, schedule or attachment hereto or under the Loan
Agreement or in any writing delivered by, or on behalf of, the Company to the
Purchaser shall be true and correct in all material respects on the date of the
Closing as though then made, except as affected by the transactions expressly
contemplated by this Agreement and except as disclosed and effected by the Loan
Agreement.
SECTION 6. DEFINITIONS. For the purposes of this Agreement, the
-----------
following terms have the meanings set forth below:
"AFFILIATE" of any particular person or entity means any other person
or entity controlling, controlled by or under common control with such
particular person or entity.
"INDEBTEDNESS" means all indebtedness for borrowed money (including
purchase money obligations) maturing one year or more from the date of creation
or incurrence thereof or renewable or extendible at the option of the debtor
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to a date one year or more from the date of creation or incurrence thereof, all
indebtedness under revolving credit arrangements extending over a year or more,
all capitalized lease obligations and all guarantees of any of the foregoing.
"INVESTOR COMMON" means (i) the Common Stock issued upon conversion of
any Investor Preferred and (ii) any Common Stock issued or issuable with respect
to the Common Stock referred to in clause (i) above by way of stock dividends or
stock splits or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization. As to any particular shares of
Investor Common, such shares shall cease to be Investor Common when they have
been (a) effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering them or (b) distributed to
the public through a broker, dealer or market maker pursuant to Rule 144 under
the Securities Act (or any similar rule then in force).
"INVESTOR PREFERRED" means (i) any Convertible Preferred issued
hereunder and (ii) any Convertible Preferred issued or issuable with respect to
the Class A Convertible Preferred or the Class B Convertible Preferred by way of
stock dividends or stock splits or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular shares of Investor Preferred, such shares shall cease to be Investor
Preferred when they have been (i) effectively registered under the Securities
Act and disposed of in accordance with the registration statement covering them
or (ii) distributed to the public through a broker, dealer or market maker
pursuant to Rule 144 under the Securities Act (or any similar rule then in
force).
"INVESTOR STOCK" means the Investor Preferred and the Investor Common.
"IRC" means the Internal Revenue Code of 1986, as amended, and any
reference to any particular IRC section shall be interpreted to include any
revision of or successor to that section regardless of how numbered or
classified.
"LOAN AGREEMENT" means that certain Loan Agreement between the Company
and an Affiliate of the Purchaser dated November 7, 1997.
"OFFICER'S CERTIFICATE" means a certificate signed by the Company's
president or its chief financial officer, stating that (i) the officer signing
such certificate has made or has caused to be made such investigations as are
necessary in order to permit him to verify the accuracy of the information set
forth in such certificate and (ii) to the best of such officer's knowledge, such
certificate does not misstate any material fact and does not omit to state any
fact necessary to make the certificate not misleading.
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"PERSON" means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"RESTRICTED SECURITIES" means (i) the Convertible Preferred issued
hereunder, (ii) any Convertible Preferred issued or issuable with respect to the
Class A Convertible Preferred or the Class B Convertible Preferred referred to
in clause (i) above by way of stock dividends or stock splits or in connection
with a combination of shares, recapitalization, merger, consolidation or other
reorganization, (iii) the Common Stock issued upon conversion of any Convertible
Preferred referred to in clauses (i) or (ii) above, and (iv) any Common Stock
issued or issuable with respect to the Common Stock referred to in clause (iii)
above by way of stock dividends or stock splits or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Restricted Securities, such securities
shall cease to be Restricted Securities when they have (a) been effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering them, (b) become eligible for sale pursuant to
Rule 144(k) (or any similar provision then in force) under the Securities Act or
(c) been otherwise transferred and new certificates for them not bearing the
Securities Act legend set forth in paragraph 7C have been delivered by the
Company in accordance with paragraph 4(ii). Whenever any particular securities
cease to be Restricted Securities, the holder thereof shall be entitled to
receive from the Company, without expense, new securities of like tenor not
bearing a Securities Act legend of the character set forth in paragraph 7C.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended, or any similar federal law then in force.
"SECURITIES AND EXCHANGE COMMISSION" includes any governmental body or
agency succeeding to the functions thereof.
"STOCK" means the Convertible Preferred and the Common Stock.
"SUBSIDIARY" means any corporation of which the securities having a
majority of the ordinary voting power in electing the board of directors are, at
the time as of which any determination is being made, owned by the Company
either directly or through one or more Subsidiaries.
"UNDERLYING COMMON STOCK" means, at any time, the sum of (i) the
number of shares Common Stock of the Company outstanding as of such time plus
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(ii) the number of shares of Common Stock of the Company issuable upon the
exercise or conversion of the Convertible Preferred at such time.
7. MISCELLANEOUS.
-------------
7A. EXPENSES. The Company agrees to pay, and hold the Purchaser and
--------
all holders of Investor Stock harmless against liability for the payment of, (i)
the fees and expenses of their counsel arising in connection with their due
diligence investigation of the Company, the negotiation and execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement (ii) the fees and expenses incurred with respect to any amendments or
waivers (whether or not the same become effective) under or in respect of this
Agreement, the Joinder to Shareholders Agreement, the Joinder to Registration
Agreement, the other agreements contemplated hereby and the Restated Articles of
Incorporation, (iii) stamp and other taxes which may be payable in respect of
the execution and delivery of this Agreement or the issuance, delivery or
acquisition of any shares of Stock purchased hereunder, and (iv) the fees and
expenses incurred with respect to the interpretation or enforcement of the
rights granted under this Agreement, the Joinder to Shareholders Agreement, the
Joinder to Registration Agreement, the other agreements contemplated hereby and
the Restated Articles of Incorporation and the By-laws.
7B. REMEDIES. Each holder of Investor Stock shall have all rights
--------
and remedies set forth in this Agreement and the Restated Articles of
Incorporation and all rights and remedies which such holders have been granted
at any time under any other agreement or contract and all of the rights which
such holders have under any law. Any Person having any rights under any
provision of this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law.
7C. PURCHASER'S INVESTMENT REPRESENTATION. By its acquisition
-------------------------------------
thereof, each holder of Restricted Securities hereby represents that (i) the
Restricted Securities to be acquired by such holder pursuant to this Agreement
will be acquired for such holder's own account and not with a view to, or
intention of, distribution thereof in violation of the Securities Act, or any
applicable state securities laws, and the Restricted Securities will not be
disposed of in contravention of the Securities Act or any applicable state
securities laws; (ii) such holder is an "accredited investor" and a
sophisticated investor for purposes of applicable foreign and U.S. federal and
state securities laws and regulations and is able to evaluate the risks and
benefits of the investment in the Restricted Securities; (iii) such holder is
able to bear the economic risk of his investment in the Restricted Securities
for an indefinite period of time because the Restricted Securities have not been
registered under the Securities Act and, therefore, cannot be sold unless
subsequently registered under the Securities Act or an exemption
-17-
from such registration is available; (iv) such holder has had an opportunity to
ask questions and receive answers concerning the terms and conditions of the
offering of Restricted Securities and has had full access to such other
information concerning the Company as it has requested; and (v) this Agreement
and each of the other agreements contemplated hereby constitutes (or will
constitute) the legal, valid and binding obligation of such holder, enforceable
in accordance with its terms, and the execution, delivery and performance of
this Agreement and such other agreements by such holder does not and will not
conflict with, violate or cause a breach of any agreement, contract or
instrument to which such holder is a party or any judgment, order or decree to
which such holder is subject. Notwithstanding the foregoing, nothing contained
herein shall prevent such holder and subsequent holders of Restricted Securities
from transferring such securities in compliance with the provisions of Section 4
hereof. Each certificate for Restricted Securities shall be imprinted with a
legend in substantially the following form:
"The securities represented by this certificate were
originally issued on March 5, 1998, and have not been
registered under the Securities Act of 1933, as amended. The
transfer of the securities represented by this certificate
is subject to the conditions specified in the Purchase
Agreement, dated as of March 5, 1998, between the issuer
(the "Company") and a certain investor, and the Company
reserves the right to refuse the transfer of such securities
until such conditions have been fulfilled with respect to
such transfer. A copy of such conditions shall be furnished
by the Company to the holder hereof upon written request and
without charge."
7D. CONSENT TO AMENDMENTS. Except as otherwise expressly provided
---------------------
herein, the provisions of this Agreement may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
holders of 70% of the Investor Stock. No other course of dealing between the
Company and the holder of any Stock or any delay in exercising any rights
hereunder or under the Restated Articles of Incorporation shall operate as a
waiver of any rights of any such holders. For purposes of this Agreement,
shares of Stock held by the Company or any Subsidiaries shall not be deemed to
be outstanding.
7E. SURVIVAL OF REPRESENTATION AND WARRANTIES. All representations
-----------------------------------------
and warranties contained herein or made in writing by any party in connection
herewith shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, regardless of any
investigation made by the Purchaser or on its xxxxxx.
-00-
0X. XXXXXXXXXX AND ASSIGNS. Except as otherwise expressly provided
----------------------
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not. In addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for the Purchaser's benefit as a
purchaser or holder of Stock are also for the benefit of, and enforceable by,
any subsequent holder of such Stock. The rights and obligations of the
Purchaser under this Agreement and the agreements contemplated hereby may be
assigned by the Purchaser at any time, in whole or in part, to any Affiliate of
the Purchaser.
7G. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. Where any accounting
----------------------------------------
determination or calculation is required to be made under this Agreement or the
exhibits hereto, such determination or calculation (unless otherwise provided)
shall be made in accordance with generally accepted accounting principles,
consistently applied, except that if because of a change in generally accepted
accounting principles the Company would have to alter a previously utilized
accounting method or policy in order to remain in compliance with generally
accepted accounting principles, such determination or calculation shall continue
to be made in accordance with the Company's previous accounting methods and
policies.
7H. SEVERABILITY. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
7I. COUNTERPARTS FACSIMILE. This Agreement may be executed
----------------------
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken together
shall constitute one and the same Agreement. Signatures transmitted by
facsimile shall be binding as evidence of a party's agreement to be bound by the
terms of this Agreement.
7J. DESCRIPTIVE HEADINGS; INTERPRETATION. The descriptive headings
------------------------------------
of this Agreement are inserted for convenience only and do not constitute a
Section of this Agreement. The use of the word "including" in this Agreement
shall be by way of example rather than by limitation.
7K. GOVERNING LAW. The corporate law of Florida shall govern all
-------------
issues concerning the relative rights of the Company and its shareholders. All
other questions concerning the construction, validity and interpretation of this
Agreement and the exhibits and schedules hereto shall be governed by and
construed in
-19-
accordance with the internal laws of the Commonwealth of Massachusetts, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the Commonwealth of Massachusetts or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the Commonwealth of
Massachusetts.
7L. NOTICES. All notices, demands or other communications to be
-------
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable overnight courier service
(charges prepaid) or mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid. Such notices, demands and other
communications shell be sent to the Purchaser at 00 Xxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000 Attention: Xxxx Xxxxxxx Xxxxxx or to such other the address
or to the attention of such other person as the Purchaser has specified by prior
written notice to the sending party and to the Company at 0000 Xxxxxxxx Xxx
Xxxxx, Xxxxx 0000, Xxxxx, Xxxxxxx 00000 Attention: President or to such other
address or to the attention of such other person as the Company has specified by
prior written notice to the sending party.
7M. INDEMNIFICATION. In consideration of the execution and delivery
---------------
of this Agreement by the Purchaser and the purchase of Convertible Preferred
hereunder, the Company will indemnify and hold harmless the Purchaser and each
of its present and former respective officers, directors, members, employees,
partners and agents and Affiliates of each of the foregoing (collectively, the
"INDEMNITEES") from and against any and all actions, causes of action, suits,
losses, costs, liabilities, damages, expenses (irrespective of whether such
Indemnitee is a party to the action for which indemnification hereunder is
sought), including attorney's fees and disbursements (collectively, the
"INDEMNIFIED LIABILITIES") by any Indemnitee arising out of or relating to the
matters referred to in this Agreement or the transactions contemplated hereby,
or any investigation, litigation, or proceeding related to any such matters.
Notwithstanding the foregoing, "INDEMNIFIED LIABILITIES" will not include, as to
Purchaser, its agents or Affiliates, any liabilities to the extent arising by
reason of the Purchaser's (or its agents or Affiliate's) breach of the Loan
agreement with the Company. If and to the extent that the covenant included in
this Paragraph 7M may be unenforceable for any reason, the Company hereby agrees
to make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
ANSWERTHINK CONSULTING GROUP, INC.
By: [Signature Appears Here]
------------------------------
Name:_________________________
Title:________________________
FSC CORP.
By: [Signature Appears Here]
------------------------------
Name:_________________________
Title:________________________
The Exhibits and Schedules to this Purchase Agreement are not included with this
Registration Statement on Form S-1. AnswerThink will provide these exhibits and
schedules upon the request of the Securites and Exchange Commission.
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