ALPHANET SOLUTIONS, INC.
0 Xxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxx Xxxxxx 00000
April 27, 2000
Fallen Angel Capital, LLC
000 Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxxxx
AlphaNet Solutions, Inc. (the "Company") is a New Jersey corporation.
Fallen Angel Equity Fund, L.P. (the "Partnership") is a Delaware limited
partnership. The general partner of the Partnership is Fallen Angel Capital,
LLC, a Delaware limited liability company (the "General Partner"). Xxxx Gang is
a shareholder of the Company and joins in this agreement, as shown on the last
page hereof, solely with respect to the confirmation of his intention to vote in
favor of the Company's proposal to issue certain warrants, as set forth herein,
and Mr. Gang is not in any way bound by any of the terms, conditions, covenants
or other agreements set forth herein.
On May 20, 1999, the Company's Board of Directors authorized the
issuance of warrants to Fallen Angel to purchase Common Stock of the Company,
subject to agreement on the terms of the warrants and the terms of issuance
thereof. The warrants were to entitle the General Partner to purchase 200,000
shares of Common Stock of the Company at a purchase price of $5.00 per share,
which, on the date of approval thereof by the Board of Directors of the Company,
was approximately 125% of the $3.938 closing price of the Common Stock.
The consideration for the issuance of the warrants is the services
provided by the General Partner in negotiating the business and financial terms
of the Company's preferred stock investment in xxx-x.xxx inc., a New Jersey
corporation. The issuance of the warrants for this purpose is being submitted
for approval by the Company's shareholders at the Company's 2000 Annual Meeting
currently scheduled for May 19, 2000.
As consideration for the furnishing of the services described above,
the Company will issue, and the General Partner will accept therefor, the
issuance by the Company of one or more warrants (each a "Warrant," together, the
"Warrants") to purchase an aggregate of 200,000 common shares of the Company
("Common Stock") as follows:
1. Upon approval by the Company's shareholders at the Company's 2000
Annual Meeting or any adjournment thereof, the Company shall promptly issue to
the General Partner a Warrant or Warrants in the form attached hereto to
purchase up to an aggregate of 200,000 shares of Common Stock, for a term of one
year, at $5.00 per share.
2. At any time after delivery of the Warrants to the General Partner
(the "Grant Date") until the earlier of (i) one day prior to the third
anniversary of the Grant Date, and (ii) 90 days prior to the date on which all
the shares issuable upon the exercise of the Warrants (the "Warrant Shares") may
be immediately sold without registration pursuant to Rule 144(k) of the
Securities Act of 1933, as amended, without being subject to volume limitations
thereof, the holders of no less than 60% of the Warrant Shares, may request the
Company to file a Registration Statement with the SEC registering the Warrant
Shares for resale (a "Registration Request"). In the event that a Registration
Request is made to the Company, the Company shall promptly and diligently pursue
the filing of a Registration Statement with the SEC, provided, that: (i) holders
of the Warrants shall excuse any delay in the filing of such Registration
Statement for so long as the Company, in good faith, determines that the
disclosure required in the Registration Statement would constitute a premature
disclosure of confidential information that would have an adverse affect on the
Company's ability to transact business at such time; and (ii) if the Company is
eligible to file a Registration Statement on Form S-3, or a similar Form, the
Company may file such Registration Statement on such form. The Company shall at
all times, and at its sole discretion, have the right to include the Warrant
Shares in any Registration Statement that the Company files with the SEC. The
Company shall maintain the effectiveness of any Registration Statement filed by
it pursuant to a Registration Request for a period of 270 days after the
effective date thereof.
In the event that the Company prepares and files a Registration
Statement pursuant to a Registration Request, all reasonable expenses incurred
in connection therewith, including, without limitation, all underwriting
discounts and commissions, registration, listing and qualification fees, printer
and accounting fees, all fees and disbursements of counsel for the Company and
all other outside costs, shall be borne by the General Partner; provided, that
the General Partner shall not be required to pay for any allocated internal
staff costs incurred by the Company in connection with the preparation and
filing of such Registration Statement.
Upon the exercise of the Warrants, the Company shall list the Warrant
Shares on the Nasdaq National Market System or such other market or exchange on
which the Common Stock is listed at such time. The Company agrees that until the
holders sell all the Warrant Shares, the Company will file on or before the
required date therefor all regular or periodic reports (pursuant to the
Securities Exchange Act of 1934) with the Securities and Exchange Commission
(the "SEC") and will deliver to the holders promptly upon their becoming
available one copy of each report, notice or proxy statement sent by the Company
to its stockholders generally, and of each regular or periodic report (pursuant
to the Securities Exchange Act of 1934) and any Registration Statement,
prospectus or written communication (other than transmittal letters) (pursuant
to the Securities Act of 1933), filed by the Company with (i) the SEC or (ii)
any securities exchange on which shares of Common stock are listed.
In the event that Warrant Shares are to be sold pursuant to a
Registration Statement filed by the Company pursuant to a Registration Request
is to be an underwritten offering, the Company shall enter into and perform its
obligations under an underwriting agreement in usual and customary form
including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering.
In the event any Warrant Shares are included in a Registration
Statement filed by the Company pursuant to a Registration Request:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each holder of Warrant Shares, each of its
directors, officers, partners, managers, employees and agents, and any other
person who controls such holder within the meaning of the Securities Act of 1933
(each, an "Indemnified Holder"), against any losses, claims, damages, expenses
or liabilities (joint or several) (collectively "Claims") to which any of them
become subject under the Securities Act of 1933, the Securities Exchange Act of
1934 or otherwise, insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations in the Registration
Statement, or any post-effective amendment thereof, or any prospectus included
therein: (i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any post-effective amendment thereof
or the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
(ii) any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus if used prior to the effective date of
such Registration Statement, or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, not misleading, or (iii) any
violation or alleged violation by the Company of the Securities Act of 1933, the
Securities Exchange Act of 1934 or any state securities law or any rule or
regulation (the matters in the foregoing clauses (i) through (iii) being,
collectively, "Violations"). The Company shall reimburse the Indemnified
Holders, promptly as such expenses are incurred and are due and payable, for the
legal fees of one such Indemnified Holder as to any Claim or other reasonable
expenses incurred by them in connection with investigating or defending any such
Claim. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this paragraph: (A) shall not apply to a
Claim by any Indemnified Holder arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished in writing
to the Company by such Indemnified Holder expressly for use in connection with
the preparation of the Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available by the Company
for review by the Indemnified Holder (B) with respect to any preliminary
prospectus shall not inure to the benefit of any person from whom the person
asserting any such Claim purchased the Warrant Shares that are the subject
thereof (or to the benefit of any person controlling such person) if the untrue
statement or omission of material fact contained in the preliminary prospectus
was corrected in the prospectus, as then amended or supplemented, if a
prospectus was timely made available by the Company for review by the
Indemnified Holder or such person; and (C) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Holder and shall survive the transfer of
the Warrant Shares by the Indemnified Holder.
(b) In connection with any Registration Statement in which
Warrant Shares of a holder are included, each such holder agrees to indemnify
and hold harmless, to the same extent and in the same manner set forth in the
preceding paragraph, the Company, each of its directors, each of its officers
who sign the Registration Statement, each person, if any, who controls the
Company within the meaning of the Securities Act of 1933 or the Securities
Exchange Act of 1934, any underwriter and any other stockholder selling
securities pursuant to the Registration Statement or any of its directors or
officers or any person who controls such stockholder or underwriter within the
meaning of the Securities Act of 1933 or the Securities Exchange Act of 1934
(each, an "Indemnified Party"), against any Claim to which any of them may
become subject, under the Securities Act of 1933, the Securities Exchange Act of
1934 or otherwise, insofar as such Claim arises out of or is based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such holder expressly for use in connection with
such Registration Statement, and such holder will promptly reimburse any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such Claim; provided, however, that the indemnity agreement
contained in this paragraph shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of such
holder, which consent shall not be unreasonably withheld; provided further,
however, that the holder shall be liable under this paragraph for only that
amount of a Claim as does not exceed the net proceeds to such holder as a result
of the sale of the Warrant Shares included in such Registration Statement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive the transfer of
the Warrant Shares by the holder. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this paragraph with
respect to any preliminary prospectus shall not inure to the benefit of an
Indemnified Party if the untrue statement or omission of material fact contained
in the preliminary prospectus was corrected on a timely basis in the prospectus,
as then amended or supplemented.
3. In connection with the furnishing of services by the General
Partner to the Company, information concerning the Company including its
subsidiaries and affiliates, which may have been and may be in verbal, visual,
written, electronic, or other form ("Evaluation Material"), was made available
to the General Partner. The Evaluation Material does not include information
which was rightfully in the possession of the General Partner prior to
disclosure by the Company, was independently developed by the General Partner
without use of any Evaluation Material, or is now or hereafter becomes available
to the public other than as a result of a disclosure by the General Partner in
violation of this Agreement. The General Partner represents that it has used the
Evaluation Material solely in connection with providing services to the Company,
and shall keep such Evaluation Material strictly confidential. The Evaluation
Material was provided by the General Partner solely to those of its
representatives to whom such disclosure was reasonably deemed to be required to
facilitate the General Partner's furnishing of services to the Company. The
General Partner acknowledges to the Company that the Evaluation Material may
contain material nonpublic information concerning the Company. The General
Partner acknowledges its awareness of the restrictions imposed by federal and
state securities laws on persons in possession of material nonpublic information
and hereby agrees that while it is in possession of material nonpublic
information with respect to the Company, the General Partner has not purchased,
and shall not purchase, and has not permitted and shall not permit the
Partnership, to purchase or sell any securities of the Company, other than
purchases pursuant to the exercise of the Warrants, or to communicate such
information to any third party in violation of such laws. Nothing herein shall
constitute an admission by the General Partner or the Partnership that any of
the Evaluation Material in fact contains material nonpublic information
concerning the Company.
4. The holder of the Warrants or any Warrant Shares may, at any time
and from time to time, without obtaining the prior consent or approval of the
Company, assign or otherwise transfer the Warrants or the Warrant Shares, or any
part thereof, and all or any part of such holder's rights under this Agreement,
provided that in connection with any assignment or transfer that is not
registered under the Securities Act of 1933, such holder must deliver a written
Opinion of Counsel, in form and substance satisfactory to the Company and from
Counsel that is satisfactory to the Company, to the Company no less than ten
calendar days prior to such proposed transfer, that (i) provides that the
proposed transfer is exempt from registration requirements under the Securities
Act of 1933 and (ii) sets forth the basis for such exemption.
5. The parties expressly acknowledge that issuance of the Warrant is
being submitted for approval of the Company's shareholders at the Company's 2000
Annual Meeting (currently scheduled for May 19, 2000), or any adjournment
thereof. Accordingly, the parties understand and agree that, unless and until
such approval has been secured, this Agreement shall have no force or effect.
If the foregoing correctly sets forth our agreement with respect to the matter
set forth herein, please so indicate by executing two copies of this letter and
returning one executed copy to the Company, whereupon this letter shall
constitute our binding agreement with respect to the matters set forth herein.
ALPHANET SOLUTIONS, INC.
By: XXXX GANG
------------------
Accepted and Agreed to as of the 26th day of Xxxx Gang
April, 2000
FALLEN ANGEL CAPITAL, L.L.C.
By: XXX XXXXX
---------------
Xxx Xxxxx
This is to confirm that I, Xxxx Gang, a shareholder of AlphaNet
Solutions, Inc. (the "Company"), am in favor of the proposal (the "Proposal")
submitted to the shareholders of the Company to issue certain warrants to Fallen
Angel Capital, L.L.C. ("Fallen Angel") and that I hereby commit to Fallen Angel
that I, as a shareholder of the Company, will vote all shares of the Company
that I own, or otherwise have the power to vote, in favor of the Proposal. I am
not bound by any of the provisions of the agreement set forth above this
paragraph.
XXXX GANG
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Xxxx Gang
