EXHIBIT 10.2
SECURITIES ISSUANCE AGREEMENT
This SECURITIES ISSUANCE AGREEMENT ("Agreement") is entered into as of May
2, 2000 by and between COTELLIGENT, INC., a Delaware corporation (the
"Company"), with headquarters located at 000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000 Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000, and EW & Associates, Inc. ("EW") and/or its assigns
(each, an "EW Transferee") .
RECITALS
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A. The Company and EW have executed and delivered simultaneously herewith
a Forbearance Agreement, dated as of the date hereof (the "Forbearance
Agreement"), among the Company, Cotelligent USA, Inc. (formerly known as Cotell
Florida Acquisition Corp.), EW, Xxxxxx X. Xxxxxxx ("Xxxxxxx") and Xxxxxxxx X.
Xxxxxx ("Xxxxxx"), whereby the Company agreed to issue to EW 100,000 shares of
the Company's Common Stock, par value $.01 per share (the "Common Stock"), in
consideration for extending the due date for the payment of the Earnout Amount
(as defined in the Purchase Agreement) pursuant to that certain Purchase and
Sale of Assets Agreement, dated on or about January 5, 1998, among the Company,
EW, Xxxxxxx, Xxxxxx and Xxxxxx Florida Acquisition Corp. (the "Purchase
Agreement").
B. The Company and EW are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by the
provisions of Regulation D ("Regulation D"), as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "Securities Act").
C. The Company desires to issue, and EW desires to receive, upon the terms
and conditions stated in this Agreement and the Forbearance Agreement, One
Hundred Thousand (100,000) shares of Common Stock (the "Common Shares").
AGREEMENTS
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NOW, THEREFORE, in consideration of their respective promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and EW hereby agree as follows:
ARTICLE I
ISSUANCE OF COMMON SHARES
1.1 Issuance of Common Shares. Subject to the terms and conditions of this
Agreement, the Company shall issue to EW the Common Shares in consideration for
EW's entering into and being bound by the Forbearance Agreement (the "Closing").
1.2 Form of Consideration. On the Closing Date, EW shall deliver an
executed Forbearance Agreement to the Company for the Common Shares to be issued
to it at the Closing,
and the Company shall deliver to EW a certificate registered in the name of EW
representing the Common Shares, upon satisfaction of the applicable Closing
conditions as of the Closing Date as set forth in Articles V and VI herein.
1.3 Closing. The Closing will take place at the offices of Xxxxxx, Xxxxx &
Xxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place
as the Company and EW mutually agree.
ARTICLE II
EW'S REPRESENTATIONS AND WARRANTIES
EW represents and warrants to the Company as of the date hereof solely with
respect to itself and its purchase hereunder, as set forth in this Article II:
1.4 Investment Purpose. EW is receiving the Common Shares for EW's own
account for investment only and not with a view toward or in connection with the
public sale or distribution thereof in violation of the applicable securities
laws. EW will not, directly or indirectly, offer, sell, pledge or otherwise
transfer the Common Shares or any interest therein except pursuant to
transactions that are exempt from the registration requirements of the
Securities Act and/or sales registered under the Securities Act, the rules and
regulations promulgated pursuant thereto and applicable state securities laws.
EW understands that it must bear the economic risk of this investment until the
Common Shares are registered as contemplated by the Forbearance Agreement
pursuant to the Securities Act and any applicable state securities laws or an
exemption from such registration is available.
1.5 Accredited Investor Status. EW is an "accredited investor" as that
term is defined in Rule 501(a) of Regulation D under the Securities Act.
1.6 Information. EW and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Common Shares which have been
requested by EW, including all SEC Documents (as defined below). EW and its
advisors, if any, have been afforded the opportunity to review materials and to
ask questions of the Company. EW understands that its investment in the Common
Shares involves a high degree of risk including the risks and uncertainties
disclosed in the SEC Documents. EW has sought such accounting, legal and tax
advice as it has considered necessary to make an informed investment decision
with respect to its acquisition of the Common Shares.
1.7 Governmental Review. EW understands that no United States federal or
state agency or any other government or governmental agency has passed upon or
made any recommendation or endorsement of the Common Shares.
1.8 Transfer or Resale. EW understands that (i) except as provided in the
Forbearance Agreement, the Common Shares have not been and are not being
registered under the Securities Act or any state securities laws, and may not be
offered, sold, pledged or otherwise transferred unless
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subsequently registered thereunder or an exemption from such registration is
available (which exemption the Company expressly agrees may be established as
contemplated in clauses (b) and (c) of Section 5.1 hereof); (ii) any sale of
such Common Shares made in reliance on Rule 144 under the Securities Act (or a
successor rule) ("Rule 144") may be made only in accordance with the terms of
Rule 144 and further, if Rule 144 is not applicable, any resale of such Common
Shares without registration under the Securities Act under circumstances in
which the seller may be deemed to be an underwriter (as that term is defined in
the Securities Act) may require compliance with some other exemption under the
Securities Act or the rules and regulations of the SEC thereunder; and (iii)
neither the Company nor any other person is under any obligation to register
such Common Shares under the Securities Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder (in each case,
other than pursuant to this Agreement or the Forbearance Agreement).
1.9 Legends. EW understands that, subject to Article IV hereof, the
certificates for the Common Shares, until such time as the Common Shares have
been registered under the Securities Act as contemplated by the Forbearance
Agreement or otherwise may be sold by EW pursuant to Rule 144 (subject to and in
accordance with the procedures specified in Article IV hereof), will bear a
restrictive legend (the "Legend") in substantially the following form:
THE SHARES OF COMMON STOCK EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES. THE SHARES OF COMMON STOCK
REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD OTHERWISE TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATING TO SUCH SHARES OF
COMMON STOCK UNDER APPLICABLE SECURITIES LAWS OR UNLESS OFFERED, SOLD OR
TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS OR THE COMPANY IS FURNISHED WITH AN OPINION OF
COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO IT THAT SUCH REGISTRATION IS
NOT REQUIRED.
1.10 Organization and Qualification. EW is a corporation duly organized
and existing in good standing under the laws of its jurisdiction of
incorporation, and has the requisite corporate power to own its properties and
to carry on its business as now being conducted. EW is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
where the failure so to qualify or be in good standing could have a material
adverse effect on the transactions contemplated hereby.
1.11 Authorization: Enforcement. (a) EW has the requisite corporate power
and authority to enter into and perform this Agreement and the Forbearance
Agreement and to perform its obligations hereunder and thereunder in accordance
with the terms hereof and thereof; (b) the execution, delivery and performance
of this Agreement and the Forbearance Agreement by EW and the consummation by it
of the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action and no further consent or authorization of the
Company,
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its board of directors, or its stockholders or any other person, body or agency,
and no filing with any person, body or agency, is required with respect to any
of the transactions contemplated hereby or thereby; (c) this Agreement and the
Forbearance Agreement have been duly executed and delivered by EW; and (d) this
Agreement and the Forbearance Agreement constitute legal, valid and binding
obligations of EW enforceable against it in accordance with their respective
terms, except to the extent that such validity or enforceability may be subject
to or affected by any bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights or remedies of creditors generally, or by other equitable
principles of general application.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to EW as of the date hereof, and as of
the date of each Closing, as set forth in this Article III.
1.12 Organization and Qualification. The Company is a corporation duly
organized and existing in good standing under the laws of Delaware, and has the
requisite corporate power to own its properties and to carry on its business as
now being conducted. The Company is duly qualified as a foreign corporation to
do business and is in good standing in every jurisdiction where the failure so
to qualify or be in good standing would have a Material Adverse Effect.
"Material Adverse Effect" means any effect which is (or could reasonably be
expected to be) materially adverse to the business, operations, properties,
financial condition or operating results of the Company, taken as a whole, or on
the transactions contemplated hereby.
1.13 Authorization: Enforcement. (a) The Company has the requisite
corporate power and authority to enter into and perform this Agreement and the
Forbearance Agreement and to issue and sell the Common Shares in accordance with
the terms hereof; (b) the execution, delivery and performance of this Agreement
and the Forbearance Agreement by the Company and the consummation by it of the
transactions contemplated hereby and thereby (including without limitation the
issuance of the Common Shares) have been duly authorized by all necessary
corporate action and no further consent or authorization of the Company, its
board of directors, or its stockholders or any other person, body or agency, and
no filing with any person, body or agency, is required with respect to any of
the transactions contemplated hereby or thereby; (c) this Agreement and the
Forbearance Agreement have been duly executed and delivered by the Company; and
(d) this Agreement and the Forbearance Agreement constitute legal, valid and
binding obligations of the Company enforceable against the Company in accordance
with their respective terms, except to the extent that such validity or
enforceability may be subject to or affected by any bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights or remedies of
creditors generally, or by other equitable principles of general application.
1.14 Issuance of Shares. The Common Shares have been duly authorized and,
upon issuance and sale in accordance with the terms hereof, will be validly
issued, fully paid and non-
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assessable. The Common Shares shall be entitled to be traded on the same markets
as the other shares of Common Stock of the Company are traded, and will not be
subject to preemptive rights or other similar rights of stockholders of the
Company or of any other person or entity.
1.15 No General Solicitation. Neither the Company nor any distributor
participating on the Company's behalf in the transactions contemplated hereby
(if any) nor any person acting for the Company, or any such distributor, has
conducted any "general solicitation," as described in Rule 502(c) under
Regulation D, with respect to any of the Common Shares being offered hereby.
1.16 No Integrated Offering. Neither the Company, nor any person acting on
its or their behalf, has directly or indirectly made any offers or sales of any
security or solicited any offers to buy any security under circumstances that
would either require registration of any of the Common Shares under the Act or
prevent the parties hereto from consummating, or delay or interfere with the
consummation of, the transactions contemplated hereby pursuant to an exemption
from the registration under the Securities Act pursuant to the provisions of
Regulation D.
ARTICLE IV
LEGEND REMOVAL, TRANSFER, CERTAIN SALES, ADDITIONAL SHARES
1.17 Removal of Legend. The Legend shall be removed and the Company shall
issue, or shall cause to be issued, a certificate without such Legend to the
holder of Common Shares upon which it is stamped, if, (a) the resale of such
Common Shares is registered under the Securities Act or (b) such holder provides
the Company with an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions and reasonably satisfactory
to the Company and its counsel (the reasonable cost of which shall be borne by
EW) to the effect that a public sale or transfer of such Common Shares may be
made without registration under the Securities Act pursuant to an exemption from
such registration requirements. EW agrees to sell all registered Common Shares,
including those represented by a certificate(s) from which the Legend has been
removed, or which were originally issued without the Legend, pursuant to an
effective registration statement, in accordance with the manner of distribution
described in such registration statement and to deliver a prospectus in
connection with such sale or in compliance with an exemption from the
registration requirements of the Securities Act. In the event the Legend is
removed from any certificate evidencing Common Shares or any certificate
evidencing Common Shares is issued without the Legend and such Common Shares are
to be disposed of other than pursuant to the registration statement or pursuant
to Rule 144, then prior to, and as a condition to, such disposition, the
certificate evidencing such Common Shares shall be relegended as provided herein
in connection with any disposition if the subsequent transfer thereof would be
restricted under the Securities Act. Also, in the event the Legend is removed
from any certificate evidencing Common Shares or any certificate evidencing
Common Shares is issued without the Legend and thereafter the effectiveness of a
registration statement covering the resale of such Common Shares is suspended or
the Company determines that a supplement or amendment thereto is required by
applicable securities laws, then upon reasonable advance notice to EW holding
such Common Shares, the Company may require that the Legend be placed on any
such certificate evidencing Common Shares that cannot then be sold pursuant to
an effective registration statement or Rule 144
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or with respect to which the opinion referred to in clause (b) next above has
not been rendered, which Legend shall be removed when such Common Shares may be
sold pursuant to an effective registration statement or Rule 144 or such holder
provides the opinion with respect thereto described in clause (b) next above.
ARTICLE V
CONDITIONS TO THE COMPANY'S OBLIGATION TO ISSUE COMMON SHARES
1.18 The obligation of the Company hereunder to issue the Common Shares to
EW at the Closing is subject to the satisfaction as of the Closing Date of each
of the following conditions, provided that these conditions are for the
Company's sole benefit and may be waived by the Company at any time in its sole
discretion:
(1) EW shall have executed this Agreement and the Forbearance Agreement
and delivered the same to the Company.
(2) The representations and warranties of EW shall be true and correct in
all material respects as of the Closing Date (except for representations and
warranties that speak as of a specific date, which representations and
warranties shall be true and correct as of such date), and EW shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by EW at or prior to the Closing.
ARTICLE VI
CONDITIONS TO EW'S OBLIGATION TO CLOSE
1.19 The obligations of EW hereunder is subject to the satisfaction as of
the Closing Date of each of the following conditions, provided that these
conditions are for EW's sole benefit and may be waived by EW at any time in EW's
sole discretion:
(1) The Company shall have executed this Agreement and the Forbearance
Agreement and delivered the same to EW.
(2) The Company shall have delivered to EW duly issued Common Shares at
the Closing.
(3) The representations and warranties of the Company shall be true and
correct in all material respects as of the Closing Date (except for
representations and warranties that speak as of a specific date, which
representations and warranties shall be true and correct as of such date) and
the Company shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Company at or prior
to the Closing Date. EW shall have received a certificate,
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executed by the Chief Executive Officer or Chief Financial Officer of the
Company, dated as of the Closing Date, to the foregoing effect.
ARTICLE VII
GOVERNING LAW; MISCELLANEOUS
1.20 Governing Law: Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida. The parties
hereto irrevocably consent to the jurisdiction of the United States federal
courts and state courts located in the State of Florida in any suit or
proceeding based on or arising under this Agreement or the transactions
contemplated hereby and irrevocably agree that all claims in respect of such
suit or proceeding may be determined in such courts.
1.21 Counterparts. This Agreement may be executed in two or more
counterparts, including, without limitation, by facsimile transmission, all of
which counterparts shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each party and delivered
to the other party.
1.22 Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
1.23 Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
1.24 Entire Agreement: Amendments. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor EW makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived other than by an instrument in writing signed by
the party to be charged with enforcement and no provision of this Agreement may
be amended other than by an instrument in writing signed by the Company and EW.
1.25 Notice. Any notice herein required or permitted to be given shall be
in writing and may be personally served or delivered by nationally-recognized
overnight courier or by facsimile machine confirmed telecopy, and shall be
deemed delivered at the time and date of receipt (which shall include telephone
line facsimile transmission). The addresses for such communications shall be:
If to the Company:
-----------------
Cotelligent, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
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Attn: Xxxxxxxx X. Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to each of:
XxXxx & Xxxxxxx, P.A.
0000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Xxxxxx, Xxxxx & Bockius LLP
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to EW:
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0000-X Xxxx Xxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxxx
Telephone:
Telecopy:
Each party shall provide notice to the other party of any change in address.
1.26 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Neither
the Company nor EW shall assign this Agreement or any rights or obligations
hereunder without the prior written consent of the other. Notwithstanding the
foregoing, EW may assign all or part of its rights and obligations hereunder to
any of its "affiliates," as that term is defined under the Securities Act,
without the consent of the Company so long as such affiliate is an accredited
investor (within the meaning of Regulation D under the Securities Act) and
agrees in writing to be bound by this Agreement. This provision shall not limit
EW's right to transfer the Common Shares pursuant to the terms of this Agreement
or to assign EW's rights hereunder to any such transferee pursuant to the terms
of this Agreement.
1.27 Third Party Beneficiaries. This Agreement is intended for the benefit
of the parties hereto and their respective permitted successors and assigns and
is not for the benefit of, nor may any provision hereof be enforced by, any
other person.
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1.28 Survival. The representations and warranties of the Company and EW
and the agreements and covenants set forth herein shall survive for one (1) year
after the Closing hereunder.
1.29 Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
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IN WITNESS WHEREOF, the undersigned EW and the Company have caused this
Agreement to be duly executed as of the date first above written.
EW & ASSOCIATES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: President
COTELLIGENT, INC.
By: /s/ Xxxxxxxx X. Xxxx
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Name: Xxxxxxxx X. Xxxx
Title: Vice President, General Counsel & Secretary
