Exhibit 10.4
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EQUITY PURCHASE AGREEMENT
between
EMPYREAN GROUP HOLDINGS, INC.
and
XXXXXX ITECH HOLDINGS, L.L.C.
Dated August 12, 1999
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TABLE OF CONTENTS
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Page
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ARTICLE I AUTHORIZATION AND CLOSING.........................................1
1.1 Authorization of the Stock.....................................1
1.2 Purchase and Sale of the Stock at Initial Closing..............2
(a) Initial Purchase......................................2
(b) Use of Proceeds of Initial Purchase...................2
(c) Initial Closing.......................................2
1.2 Subsequent Take-Downs of Class A Preferred.....................3
(a) Request for Takedowns.................................3
(b) Subsequent Closings...................................3
(c) Termination...........................................3
ARTICLE II CONDITIONS OF THE PURCHASERS' OBLIGATIONS AT CLOSING.............4
2.1 Initial Closing Conditions.....................................4
(a) Representations and Warranties, Covenants.............4
(b) Management Agreements.................................4
(c) Stockholders Agreement................................4
(d) Professional Services Agreement.......................4
(e) Compliance with Applicable Laws.......................4
(f) Waiver................................................5
2.2 Subsequent Closing Conditions..................................5
(a) Representations and Warranties, Covenants.............5
(b) Compliance with Applicable Laws.......................5
(c) Board Approval........................................5
(d) Waiver................................................5
ARTICLE III COVENANTS.......................................................6
3.1 Financial Statements and Other Information.....................6
3.2 Inspection of Property.........................................7
3.3 Restrictions...................................................7
3.4 Unrelated Business Taxable Income..............................8
3.5 Xxxx-Xxxxx-Xxxxxx Compliance...................................8
3.6 Confidentiality................................................9
3.7 Termination....................................................9
ARTICLE IV TRANSFER OF RESTRICTED SECURITIES................................9
4.1 Transfer of Restricted Securities..............................9
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................10
5.1 Organization and Corporate Power...............................10
5.2 Capital Stock and Related Matters..............................10
5.3 Subsidiaries; Investments......................................11
5.4 Authorization; No Breach.......................................11
5.5 Violation of Laws..............................................11
5.6 Governmental Consent, etc......................................11
5.7 Disclosure.....................................................12
ARTICLE VI PURCHASER'S REPRESENTATIONS AND WARRANTIES.......................12
6.1 Purchaser's Investment Representations.........................12
6.2 Authorization; No Breach.......................................12
6.3 Brokerage......................................................13
6.4 Governmental Consent, etc......................................13
ARTICLE VII DEFINITIONS.....................................................13
ARTICLE VIII MISCELLANEOUS..................................................16
8.1 Expenses.......................................................16
8.2 Remedies.......................................................16
8.3 Consent to Amendments..........................................16
8.4 Survival of Representation and Warranties......................16
8.5 Successors and Assigns.........................................16
8.6 Severability...................................................17
8.7 Counterparts...................................................17
8.8 Descriptive Headings; Interpretation...........................17
8.9 Governing Law..................................................17
8.10 Notices.......................................................17
8.11 Entire Agreement..............................................18
LIST OF EXHIBITS
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Exhibit A Amended and Restated Certificate of Incorporation of Empyrean Group
Holdings, Inc.
Exhibit B Capitalization Schedule
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PURCHASE AGREEMENT
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THIS AGREEMENT is made as of August 12, 1999, between EMPYREAN GROUP
HOLDINGS, INC., a Delaware corporation (formerly, Business Solutions Group,
Inc.) (the "Company"), XXXXXX ITECH HOLDINGS, L.L.C., a Delaware limited
liability company ("Xxxxxx Holdings"), and each of the other persons or entities
set forth in the Schedule of Purchasers attached hereto (collectively with
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Xxxxxx Holdings, the "Purchasers" and individually a "Purchaser"). Except as
otherwise indicated herein, capitalized terms used herein are defined in Section
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7 hereof.
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Recitals:
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A. The Company is engaged in the computer software solutions and
information technology consulting business.
B. Pursuant to a Recapitalization Agreement dated August 11, 1999 (the
"Recapitalization Agreement") by and among the Company, Xxxxxx Holdings, BSG
Holdings, Inc., and each of Xxxx XxXxxxxxx, Xxxxx Xxxxxx, Xxxxxx Xxxxx and the
other stockholders of BSG Holdings, Inc. (collectively, the "BSG Stockholders"),
Xxxxxx Holdings has acquired an aggregate of (i) 20,520 shares of the Company's
Class A Preferred Stock, par value $.01 per share (the "Class A Preferred"), and
(ii) 10,800,000 shares of the Company's Common Stock, $.01 par value per share
(the "Common").
C. At the Initial Closing, the Purchasers desire to purchase from the
Company, and the Company desires to sell to the Purchasers (i) an aggregate of
36,480 shares of Class A Preferred and (ii) an aggregate of 19,200,000 shares of
the Common, in the amount set forth opposite each Purchaser's name on the
Schedule of Purchasers attached hereto.
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NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
AUTHORIZATION AND CLOSING
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1.1 Authorization of the Stock. The Company shall authorize the issuance
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and sale to the Purchasers of up to an aggregate of 36,480 shares of Class A
Preferred and an aggregate of 19,200,000 shares of Common, each having the
rights and preferences set forth in Exhibit A attached hereto. The Class A
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Preferred and the Common are collectively referred to herein as the "Stock."
1.2 Purchase and Sale of the Stock at Initial Closing.
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(a) Initial Purchase. Subject to the terms and conditions set forth in
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this Section 1.2 and in Section 2.1, at the Initial Closing, the Company shall
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sell to each Purchaser and, each Purchaser shall purchase from the Company:
(i) that number of shares of the Class A Preferred set forth
opposite such Purchaser's name in the Schedule of Purchasers attached
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hereto, at a purchase price of $1,000 per share; and
(ii) that number of shares of the Common set forth opposite such
Purchaser's name set forth in the Schedule of Purchasers attached hereto,
at a purchase price of $0.10 per share.
(b) Use of Proceeds of Initial Purchase. The funds obtained by the
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Company from the Purchasers at the Initial Closing shall, together with debt
financing provided by First Union National Bank, N.A. and NationsBank, National
Association ("Lenders") pursuant to the Credit Agreement (the "Credit
Agreement") dated August 12, 1999, as amended, between Lender, the Company and
its Subsidiaries, be used to (i) finance the Company's costs of consummating the
transactions contemplated by the Recapitalization Agreement and (ii) provide
funds for the Company's working capital requirements.
(c) Initial Closing. The closing of the purchase and sale of the Stock
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to be purchased pursuant to Sections 1.2(a) (the "Initial Closing") shall take
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place at the offices of Xxxxx & Xxxxxxx, LLP, 000 Xxxxxxxxxx Xxxxxx, XX,
Xxxxxxxxxx, X.X., 00000 at 10:00 a.m. on August 12, 1999 or at such other place
or on such other date as may be mutually agreeable to the Company and the
Purchasers. At the Initial Closing, the Company shall deliver to each Purchaser
stock certificates evidencing the Stock to be purchased by such Purchaser,
registered in such Purchaser's name, upon payment of the purchase price thereof
by, at the Company's option, either a cashier's or certified check, or by wire
transfer of immediately available funds to such account as designated by the
Company.
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1.3 Subsequent Take-Downs of Class A Preferred.
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(a) Request for Takedowns. The Company may from time to time request
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that Xxxxxx Holdings purchase from the Company up to 36,480 additional shares of
Class A Preferred at a purchase price of $1,000 per share (an aggregate purchase
price of $36,480,000) (such purchases are referred to as "Take-Downs"). Such
requests shall be made in conjunction with and for the purpose of funding future
acquisitions of information technology consulting and related businesses by the
Company and shall be presented to Xxxxxx Holdings in writing. Xxxxxx Holdings
shall accept or reject such Take-Down within 10 business days of receiving such
request, such request shall not be unreasonably refused by Xxxxxx Holdings. The
Company and Xxxxxx Holdings shall agree upon a date (the "Subsequent Closing
Date") for the closing (the "Subsequent Closing") of the additional shares of
Class A Preferred to be purchased in connection with such Take-Down.
(b) Subsequent Closings. Subsequent Closings shall take place on the
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Subsequent Closing Date at the offices of Xxxxx & Xxxxxxx LLP, 000 Xxxxxxxxxx
Xxxxxx, XX, Xxxxxxxxxx, X.X. 00000, or at such other place as shall be agreed to
by Xxxxxx Holdings and the Company. At a Subsequent Closing, upon the
satisfaction of the provisions of this Section 1.3 and of Section 2.2, the
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Company shall deliver to Xxxxxx Holdings stock certificates evidencing the
shares of Class A Preferred to be purchased by Xxxxxx Holdings registered in its
name, upon payment of the purchase price thereof by, at the Company's option,
either a cashier's or certified check, or by wire transfer of immediately
available funds to such account as designated by the Company.
(c) Termination. The provisions of this Section 1.3 shall terminate on
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the earlier to occur of the following events: (i) the written consent of the
Company and the holders of greater than 50% of the outstanding shares of Class A
Preferred sold pursuant to this Agreement; (ii) a Drag-Along Sale (as defined in
the Stockholders Agreement); (iii) a merger or other business combination
involving the Company in which the holders of the Company's capital stock
immediately prior to the effective time of such merger or business combination
own less than 50% of the capital stock of the surviving corporation (determined
on a fully-diluted basis) immediately after the effective time of such merger or
business combination; or (iv) the closing of an IPO Event (as defined in the
Stockholders Agreement).
ARTICLE II
CONDITIONS OF THE PURCHASERS' OBLIGATIONS
AT CLOSINGS
2.1 Initial Closing Conditions. The obligation of the Purchasers to
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purchase and pay for the Stock at the Initial Closing is subject to the
satisfaction as of the Initial Closing of the following conditions:
(a) Representations and Warranties, Covenants. The representations and
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warranties contained in Section 5 hereof shall be true and correct at and as of
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the Initial Closing as though then made, except to the extent of changes caused
by the transactions expressly contemplated herein; and the Company shall have
performed in all material respects all of the covenants required to be performed
by it hereunder prior to the Initial Closing.
(b) Management Agreements. The Company shall have entered into a senior
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management agreement (the "Management Agreements"), with each of Xxxxxx X.
Xxxxxxx, Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxx, Xxxxx X. Xxxxxx, Xxxxx X. Xxxxx,
Xxxxxxx X. Xxxxxx, Xxxxxxxx X. Xxxxxxx and Xxxxx X. Xx (the "Executives"), the
Management Agreements shall not have been amended or modified and shall be in
full force and effect as of the Initial Closing, and each Executive shall have
purchased the Stock proposed to be purchased by him thereunder.
(c) Stockholders Agreement. The Purchasers and the Executives shall
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have executed a joinder agreement to the Stockholders Agreement dated August 12,
1999 (the "Stockholders Agreement"), and the Stockholders Agreement shall be in
full force and effect as of the Initial Closing.
(d) Professional Services Agreement. The Company and TC Management
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Partners, L.L.C., a Delaware limited liability company, shall have entered into
a Professional Services Agreement dated August 12, 1999 (the "Professional
Services Agreement"), and the Professional Services Agreement shall be in full
force and effect as of the Initial Closing.
(e) Compliance with Applicable Laws. The purchase of Stock by the
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Purchasers hereunder shall not be prohibited by any applicable law or
governmental regulation, shall not subject the Purchasers to any penalty,
liability or, in the Purchasers' 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 Purchasers
are subject.
(f) Waiver. Any condition specified in this Section 2.1 may be waived
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only if such waiver is set forth in a writing executed by the Purchasers.
2.2 Subsequent Closing Conditions. The obligation of Xxxxxx Holdings to
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purchase and pay for shares of Class A Preferred at a Subsequent Closing in
connection with a Take-Down is subject to the satisfaction as of the Subsequent
Closing of the following conditions:
(a) Representations and Warranties, Covenants. The representations and
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warranties contained in Section 5 hereof shall be true and correct in all
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material respects at and as of the Subsequent Closing as though then made,
except:
(i) to the extent expressly made as of an earlier date;
(ii) to the extent of changes caused by the transactions expressly
contemplated herein or by the transactions for which such Take-Down is
being made (or for which prior Take-Downs have been made) and the Company
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shall have performed in all material respects all of the covenants required
to be performed by it hereunder prior to the Subsequent Closing; and
(iii) to reflect the fact that additional shares of Class A
Preferred have been issued to Xxxxxx Holdings pursuant to Section 1.3.
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(b) Compliance with Applicable Laws. The purchase of Stock by Xxxxxx
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Holdings pursuant to such Subsequent Closing shall not be prohibited by any
applicable law or governmental regulation, shall not subject Xxxxxx Holdings to
any penalty, liability or, in Xxxxxx Holdings' 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
Xxxxxx Holdings is subject.
(c) Board Approval. The Board shall have approved the purchase of Stock
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by Xxxxxx Holdings and the use of proceeds, including the consummation of any
acquisition, for which the Take-Down is being made.
(d) Waiver. Any condition specified in this Section 2.2 may be waived
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only if such waiver is set forth in a writing executed by Xxxxxx Holdings.
ARTICLE III
COVENANTS
3.1 Financial Statements and Other Information. The Company shall deliver
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to Xxxxxx Holdings so long as it holds any Investor Stock:
(a) as soon as available but in any event within 45 days after the end
of each month in each fiscal year, unaudited consolidated statements of income
and cash flows of the Company and its Subsidiaries for the period from the
beginning of the fiscal year to the end of such month, and consolidated balance
sheets of the Company and its Subsidiaries as of the end of such month, all
prepared in accordance with generally accepted accounting principles,
consistently applied, subject to the absence of footnote disclosures and to
normal year-end adjustments;
(b) 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 (i) 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 Xxxxxx Xxxxxxxx, LLP or an
independent accounting firm of recognized national
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standing acceptable to Xxxxxx Holdings, and (ii) a copy of such firm's annual
management letter to the Board;
(c) 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); and
(d) with reasonable promptness, such other information and financial
data concerning the Company and its Subsidiaries as Xxxxxx Holdings may
reasonably request.
Each of the financial statements referred to in Sections 3.1 (a) and (b)
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shall be true and correct 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).
3.2 Inspection of Property. The Company shall permit any representatives
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designated by Xxxxxx Holdings (so long as Xxxxxx Holdings holds any Investor
Stock), 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 directors, officers, key employees
and independent accountants of the Company and its Subsidiaries.
3.3 Restrictions. Except as expressly contemplated by the purchase
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agreements relating to the acquisition of Empyrean Group, Inc., this Agreement,
the Recapitalization Agreement or an agreement to be entered into in connection
with a transaction for which a Take-Down is being made, the Company shall not
without the prior written consent of either (x) a majority of the members of the
Company's Board of Directors (the "Board") appointed by Xxxxxx Holdings and
Xxxxxx Equity Investors IV, L.P. pursuant to any resolution of the Board or (y)
the holders of a majority of the outstanding Investor Preferred or, in the event
no Investor Preferred is outstanding, without the prior written consent of the
holders of a majority of the Investor Common:
(a) directly or indirectly declare or pay any dividends or make any
distributions upon any of its equity securities, other than payments of
dividends on, or redemption payments in respect of, the Class A Preferred
pursuant to the Certificate of Incorporation;
(b) except pursuant to the Management Agreements and the Stockholders
Agreement, directly or indirectly redeem, purchase or otherwise acquire, or
permit any Subsidiary to redeem, purchase or otherwise acquire, any of the
Company's equity securities (including, without limitation, warrants, options
and other rights to acquire equity securities),
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(c) except as expressly contemplated by the Management Agreements
authorize, issue, sell or enter into any agreement providing for the issuance
(contingent or otherwise), or permit any Subsidiary to authorize, issue, sell or
enter into any agreement providing for the issuance (contingent or otherwise)
of, (i) any notes or debt securities containing equity features or (ii) any
equity securities (or any securities convertible into or exchangeable for any
equity securities) or rights to acquire any equity securities, other than the
issuance of equity securities by a Subsidiary to the Company or another
Subsidiary;
(d) merge or consolidate with any Person or permit any Subsidiary to
merge or consolidate with any Person (other than a wholly owned Subsidiary);
(e) sell, lease or otherwise dispose of, or permit any Subsidiary to
sell, lease or otherwise dispose of, more than 5% of the consolidated assets of
the Company and its Subsidiaries (computed on the basis of book value,
determined in accordance with generally accepted accounting principles
consistently applied, or fair market value, determined by the Board in its
reasonable good faith judgment) in any transaction or series of related
transactions (other than sales of inventory in the ordinary course of business);
(f) liquidate, dissolve or effect a recapitalization or reorganization
in any form of transaction (including, without limitation, any reorganization
into partnership form);
(g) acquire, or permit any Subsidiary to acquire, any material interest
in any business (whether by a purchase of assets, purchase of stock, merger or
otherwise), or enter into any material joint venture;
(h) enter into, or permit any Subsidiary to enter into, the ownership,
active management or operation of any business other than the operation of
information technology consulting businesses;
(i) enter into, or permit any Subsidiary to enter into, any transaction
with any of its or any Subsidiary's officers, directors, employees or Affiliates
or any individual related by blood, marriage or adoption to any such Person or
any entity in which any such Person or individual owns a beneficial interest,
except for normal employment arrangements and benefit programs on reasonable
terms and except as otherwise expressly contemplated by this Agreement, the
Management Agreements and the Professional Services Agreement; or
(j) create, incur, assume or suffer to exist, or permit any Subsidiary
to create, incur, assume or suffer to exist, Indebtedness exceeding the amounts
approved therefor by the Board in the annual budget.
3.4 Unrelated Business Taxable Income. The Company shall not engage in any
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transaction which is reasonably likely to cause Xxxxxx Holdings or any of its
limited partners which are exempt from income taxation under Section 501(a) of
the IRC and, if applicable, any pension plan that any such trust may be a part
of, to recognize unrelated business taxable income as defined in Section 512 and
Section 514 of the IRC.
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3.5 Xxxx-Xxxxx-Xxxxxx Compliance. In connection with any transaction in
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which the Company is involved which is required to be reported under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended from time to
time (the "HSR Act"), the Company shall prepare and file all documents with the
Federal Trade Commission and the United States Department of Justice which may
be required to comply with the HSR Act, and shall promptly furnish all materials
thereafter requested by any of the regulatory agencies having jurisdiction over
such filings, in connection with the transactions contemplated thereby. The
Company shall take all reasonable actions and shall file and use reasonable best
efforts to have declared effective or approved all documents and notifications
with any governmental or regulatory bodies as may be necessary or may reasonably
be requested under federal antitrust laws for the consummation of the subject
transaction; provided that this Section 3.5 shall not be interpreted as
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requiring the Company to divest of any lines of business or other assets.
3.6 Confidentiality. Except as otherwise required by law or judicial order
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or decree or by any governmental agency or authority, Xxxxxx Holdings shall use
its best efforts to maintain the confidentiality of all nonpublic information
obtained by Xxxxxx Holdings pursuant to Section 3.1 or 3.2, which the Company
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has reasonably designated as proprietary or confidential in nature; provided
that Xxxxxx Holdings may disclose such information to other Purchasers (who
shall be bound by this provision) or in connection with the sale or transfer, or
proposed sale or transfer, of any shares of Investor Stock, if the transferee or
proposed transferee agrees in writing to be bound by the provisions hereof.
3.7 Termination. Upon (i) a Drag-Along Sale (as defined in the Stockholders
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Agreement), (ii) an IPO Event (as defined in the Stockholders Agreement) or
(iii) such time as the Investor Common constitutes less than 10% of the
fully-diluted Common Stock, Section 3.1, 3.2 and 3.3 shall terminate without
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further action and shall be of no further force and effect.
ARTICLE IV
TRANSFER OF RESTRICTED SECURITIES
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4.1 Transfer of Restricted Securities.
---------------------------------
(a) Restricted Securities are transferable only pursuant to (i) public
offerings registered under the Securities Act, (ii) Rule 144 or Rule 144A of the
Securities Act (or any similar rule or rules then in force) if such rule or
rules are available and (iii) subject to the conditions specified in Section
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4.1(b) below, any other legally available means of transfer.
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(b) In connection with the transfer of any Restricted Securities (other
than a transfer described in Section 4.1(a)(i) or (ii) above), the holder
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thereof shall deliver written notice to the Company describing in reasonable
detail the transfer or proposed transfer, together with an opinion of Xxxxx &
Xxxxxxx LLP, or other counsel which (to the Company's reasonable satisfaction)
is knowledgeable in securities law matters 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
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opinion of Xxxxx & Xxxxxxx LLP, or such other 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 a
customary Securities Act legend. 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 Section 4.1 and Section 6.1.
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(c) Upon the request of the Purchaser, the Company shall promptly
supply to the Purchasers or their respective prospective transferees all
information regarding the Company required to be delivered in connection with a
transfer pursuant to Rule 144A of the Securities Act.
(d) Each Purchaser agrees to execute and deliver to the Company and
Xxxxxx Holdings a joinder to the Stockholders Agreement and to cause any of its
prospective transferees to execute and deliver to the Company and Xxxxxx
Holdings a joinder to the Stockholders Agreement prior to making any transfer of
Stock.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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As a material inducement to the Purchasers to enter into this Agreement and
purchase the Stock, the Company hereby represents and warrants to the Purchasers
that:
5.1 Organization and Corporate Power. The Company is a corporation duly
--------------------------------
organized, validly existing and in good standing under the laws of the state of
Delaware 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.
5.2 Capital Stock and Related Matters.
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(a) As of the Closing and immediately thereafter, the authorized
capital stock of the Company shall consist of 100,000,000 shares of stock, of
which (i) 150,000 shares shall be designated as Class A Preferred and (ii)
99,850,000 shares shall be designated as Common Stock. The issued and
outstanding Class A Preferred Stock and the Common Stock are as set forth on
Exhibit B hereto. As of the Closing, the Company shall not be subject to any
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obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock or any warrants, options or other rights
to acquire its capital stock, except pursuant to this Agreement 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.
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(b) Based in part on the investment representations of (i) the Purchasers
in Section 6.1 hereof, (ii) the Executives in paragraph l(c) of the Management
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Agreements, and (iii) the purchasers in the Empyrean Merger Agreement, 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 and pursuant to Section 1.3
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hereof do not and will not require registration under the Securities Act or any
applicable state securities laws.
5.3 Subsidiaries; Investments. Prior to the Recapitalization Agreement
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closing, the Company did not own or hold any shares of stock or any other
security or interest in any other Person.
5.4 Authorization; No Breach. The execution, delivery and performance of
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this Agreement, the Management Agreements, the Stockholders Agreement, the
Professional Services Agreement, the Recapitalization Agreement and all other
agreements contemplated hereby to which the Company is a party have been duly
authorized by the Company. This Agreement, the Management Agreements, the
Stockholders Agreement, the Professional Services Agreement, the
Recapitalization Agreement 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 Management Agreements, the Stockholders Agreement, the
Professional Services Agreement, the Recapitalization Agreement and all other
agreements contemplated hereby to which the Company is a party, the offering,
sale and issuance of the Stock hereunder and pursuant to Section 1.2(a), the
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Amended and Restated Certificate of Incorporation 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
Certificate 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 is
bound.
5.5 Violations of Laws. Except as set forth in the Disclosure Schedule to
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the Recapitalization Agreement, the Company has not (i) violated any laws or
governmental rules or regulations, 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; (ii) received
notice of any such material violation; or (iii) become subject to any material
clean up liability, and the Company has no reason to believe it may become
subject to any material clean up liability, under any federal, state or local
environmental law, rule or regulation.
5.6 Governmental Consent, etc. Except for approvals under the HSR Act, no
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material permit, consent, approval or authorization of, or declaration to or
filing with, any
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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.
5.7 Disclosure. Neither this Agreement nor any of the schedules,
----------
attachments, written statements, documents, certificates or other items prepared
or supplied to the Purchasers by or on behalf of the Company with respect to the
transactions contemplated hereby contain any untrue statement of a material fact
or omit a material fact necessary to make each statement contained herein or
therein not misleading. There is no fact which the Company has not disclosed to
the Purchasers 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.
ARTICLE VI
PURCHASERS REPRESENTATIONS AND WARRANTIES
-----------------------------------------
As a material inducement to the Company to enter into this Agreement, each
Purchaser hereby represents and warrants to the Company, with respect to itself
and not jointly, as follows:
6.1 Purchaser's Investment Representations. Such Purchaser (i) is acquiring
--------------------------------------
the Restricted Securities purchased hereunder or acquired pursuant hereto for
its own account with the present intention of holding such securities for
purposes of investment, (ii) has no intention of selling such securities in a
public distribution in violation of the federal securities laws or any
applicable state securities laws and (iii) is an "accredited investor" as
defined in the Securities Act; provided that nothing contained herein shall
prevent such Purchaser and subsequent holders of Restricted Securities from
transferring such securities in compliance with the provisions of Article IV
----------
hereof. Each certificate for Restricted Securities shall be imprinted with a
customary securities legend in a form provided by the Company's counsel.
6.2 Authorization; No Breach. The execution, delivery and performance of
------------------------
this Agreement, the Stockholders Agreement and all other agreements contemplated
hereby to which such Purchaser is a party have been duly authorized by such
Purchaser. This Agreement, the Stockholders Agreement and all other agreements
contemplated hereby to which a Purchaser is a party each constitutes a valid and
binding obligation of such Purchaser, enforceable in accordance with its terms.
The execution and delivery by such Purchaser of this Agreement, the Stockholders
Agreement and all other agreements contemplated hereby to which such Purchaser
is a party, and compliance with the respective terms hereof and thereof by such
Purchaser 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 such Purchaser'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
-11-
court or administrative or governmental body pursuant to, the charter or
organizational documents of such Purchaser, if applicable, or any law, statute,
rule or regulation to which such Purchaser is subject, or any agreement,
instrument, order, judgment or decree to which such Purchaser is a party or by
which it is bound.
6.3 Brokerage. Other than the Professional Services Agreement, 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 such Purchaser. Such Purchaser shall pay,
and hold the Company harmless against, any liability, loss or expense
(including, without limitation, attorneys, fees and out-of-pocket expenses)
arising in connection with any such claim.
6.4 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 such
Purchaser of this Agreement or the other agreements contemplated hereby, or the
consummation by such Purchaser of any other transactions contemplated hereby or
thereby.
ARTICLE VII
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.
"Class A Preferred" has the meaning set forth in Recital B of this
---------
Agreement.
"Certificate of Incorporation" means the Company's amended and restated
Certificate of Incorporation filed with the Secretary of State of the State of
Delaware on August 12, 1999.
"Common" has the meaning set forth in Recital B of this Agreement.
---------
"Common Stock" means collectively, the Common and any other class of the
Company's common stock, $.01 par value per share.
"Credit Agreement" has the meaning set forth in Section 1.2(b).
--------------
"Existing Stockholders" has the meaning set forth in Recital B of this
---------
Agreement.
"HSR Act" has the meaning set forth in Section 3.5.
-----------
-12-
"Indebtedness" means all indebtedness for borrowed money (including
purchase money obligations), all indebtedness under revolving credit
arrangements, all capitalized lease obligations and all guarantees of any of the
foregoing.
"Initial Closing" has the meaning set forth in Section 1.2(c).
--------------
"Investor Common" means (i) the Common Stock issued hereunder 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) the Class A Preferred issued hereunder and
(ii) any Class A Preferred issued or issuable with respect to the Class A
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. As to any particular shares of Investor
Preferred, such shares shall cease to be Investor Preferred when they have been
(a) effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering them, (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) or (c) redeemed by the
Company.
"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.
"Management Agreements" has the meaning set forth in Section 2.1(b).
--------------
"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.
"Professional Services Agreement" has the meaning set forth in Section
-------
2.1(d).
------
"Recapitalization Agreement" has the meaning set forth in Recital D.
---------
"Restricted Securities" means (i) the Stock issued hereunder and (ii) any
securities issued with respect to the securities referred to in clause (i) above
by way of a stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization. As to
any particular Restricted Securities, such securities
-13-
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 a
customary Securities Act legend have been delivered by the Company in accordance
with Section 4.1(b). 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 customary Securities
Act legend.
"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.
"Stockholders Agreement" has the meaning set forth in Section 2.1(c).
--------------
"Stock" has the meaning set forth in Section 1.1 of this Agreement.
-----------
"Subsidiary" means any corporation of which the securities having a
majority of the ordinary voting power in electing the board of directors or
otherwise are, at the time as of which any determination is being made, owned by
the Company either directly or through one or more Subsidiaries.
"Take Downs" has the meaning set forth in Section 1.3(a).
--------------
" Xxxxxx Holdings" means Xxxxxx ITECH Holdings, L.L.C.
ARTICLE VIII
MISCELLANEOUS
-------------
8.1 Expenses. The Company agrees to pay, and hold Xxxxxx Holdings harmless
--------
against liability for the payment of, (i) the fees and expenses of its counsel
arising in connection with 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
Management Agreements, the Stockholders Agreement, the Professional Services
Agreement, the other agreements contemplated hereby and the Certificate 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 or in accordance with
Section 1.3 hereof, and (iv) the fees and expenses incurred with respect to the
-----------
interpretation or enforcement of the rights of Xxxxxx Holdings
-14-
granted under this Agreement, the Management Agreements, the Stockholders
Agreement, the Professional Services Agreement, the other agreements
contemplated hereby and the Certificate of Incorporation and the Company's
bylaws.
8.2 Remedies. Each holder of Investor Stock shall have all rights and
--------
remedies set forth in this Agreement and the Certificate 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.
8.3 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 a majority of the outstanding shares of Investor Common. 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 Certificate 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.
8.4 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 any Purchasers or on their behalf
8.5 Successors 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 permitted 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 permitted subsequent holder of such Stock. The rights and obligations of the
Xxxxxx Holdings under this Agreement and the agreements contemplated hereby may
be assigned by the Xxxxxx Holdings at any time, in whole or in part, to any
investment fund managed by TC Management Partners, L.L.C. or any other Affiliate
of Xxxxxx Holdings, or any successor thereto.
8.6 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.
8.7 Counterparts. 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.
-15-
8.8 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.
8.9 Governing Law. This Agreement and the exhibits and schedules hereto
-------------
shall be governed by and construed in accordance with the internal laws of the
State of Delaware, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of Delaware.
8.10 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 by reputable express service (charges prepaid), 24 hours after being
sent by overnight courier service (charges prepaid), 48 hours after being
deposited to the recipient by United States mail, first class, postage prepaid,
or sent by facsimile. Such notices, demands and other communications shall be
sent to the Purchasers and to the Company at the address indicated below:
If to the Company:
-----------------
Empyrean Group Holdings, Inc.
0000 Xxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Xxxxxx Xxxxxxx
Tel No: (000) 000-0000
Fax No: (000) 000-0000
Empyrean Group Holdings, Inc.
c/x Xxxxxx Capital Partners
0000 Xxxxxxxxxxxx Xxxxxx XX, Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxx
Tel No.: (000) 000-0000
Fax No.: (000) 000-0000
If to the Purchasers:
--------------------
To each Purchaser at the address set forth in the Schedule
--------
of Purchasers attached hereto
-------------
-16-
with a copy to:
Xxxxx & Xxxxxxx, LLP
Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxxxxxx X. Xxxxx
Tel No.: (000) 000-0000
Fax No.: (000) 000-0000
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
8.11 Entire Agreement. Except as otherwise expressly set forth herein, this
----------------
document embodies the complete agreement and understanding among the parties
hereto with respect to the subject matter hereof and supersedes and preempts any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
[THIS SPACE INTENTIONALLY LEFT BLANK]]
-17-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
EMPYREAN GROUP HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President & CEO
XXXXXX ITECH HOLDINGS, L.L.C.
By: Xxxxxx Equity Investors, IV, L.P.
Its: Managing Member
By: TC Equity Partners, L.L.C.
Its: General Partner
By: /s/ Xxxxxx Xxxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Vice President
[OTHER PURCHASERS]
-18-
SCHEDULE OF PURCHASERS
(INITIAL CLOSING INVESTMENT)
Number of Shares
Number of Shares of Class A Aggregate
of Common at Preferred at Investment ($)
Name and Address of Purchaser Initial Closing Initial Closing at Initial Closing
-------------------------------------------- -------------------- -------------------- --------------------
Xxxxxx Itech Holdings, LLC (Xxxxxx Equity 19,009,419 0 $1,900,941.90
Investors IV, L.P.)
c/x Xxxxxx Capital Partners
0000 Xxxxxxxxxxxx Xxxxxx, XX, Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxx
Tel No: (000) 000-0000
Fax No: (000) 000-0000
TC ITECH, L.L.C. 190,581 0 $381,158.10
c/x Xxxxxx Capital Partners
0000 Xxxxxxxxxxxx Xxxxxx, XX, Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxx
Tel No: (000) 000-0000
Fax No: (000) 000-0000
-------------------- -------------------- --------------------
TOTAL 19,200,000 2,282,100.0
==================== ==================== ====================
-19-
SCHEDULE OF PURCHASERS
(FUTURE PREFERRED INVESTMENTS)
Number of Total Number of Aggregate
Additional Shares Shares of Class A Additional
of Class A Preferred to be Investment ($)
Name and Address of Purchaser Preferred to be Purchased by such for Additional
Purchased after Purchaser Shares of
Initial Closing (including Initial Preferred Stock
Closing Shares)
-------------------------------------------- -------------------- -------------------- --------------------
Xxxxxx Itech Holdings, L.L.C. (Xxxxxx 36,117.9 36,117.9 $36,117,900
Equity Investors IV, L.P.)
c/x Xxxxxx Capital Partners
0000 Xxxxxxxxxxxx Xxxxxx, XX, Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxx
Tel No: (000) 000-0000
Fax No: (000) 000-0000
TC ITECH, L.L.C. 362.1 362.1 $362,100
c/x Xxxxxx Capital Partners
0000 Xxxxxxxxxxxx Xxxxxx, XX, Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxx
Tel No: (000) 000-0000
Fax No: (000) 000-0000
-------------------- -------------------- --------------------
TOTAL 36,480 36,480 $36,480,000
==================== ==================== ====================
-20-
