EXHIBIT 2.1
AGREEMENT
Dated November 23, 1998
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The parties to this agreement are Level 8 Systems, Inc., a New York
corporation ("Level 8"), and the parties listed under "WCAS Parties" at the end
of this agreement (each, a "WCAS Party" and, collectively, the "WCAS Parties").
The parties wish to provide for the acquisition by Level 8 of all the shares
of capital stock of Seer Technologies, Inc., a Delaware corporation (the
"Company"), the WCAS Parties own, and all the rights the WCAS Parties have to
acquire shares of capital stock of the Company (collectively, the "WCAS
Securities") on the terms set forth in this agreement.
Accordingly, the parties agree as follows:
1. Exchange. At the Closing (as defined in section 2), (a) each WCAS Party
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shall (i) assign and transfer to Level 8 or a subsidiary of Level 8 all the WCAS
Securities now owned or acquired by it prior to the Closing, free and clear of
any adverse claim, and (ii) contribute to the capital of the Company, or cause
to be contributed to the capital of the Company, the percentage of the amount
referred to in section 7.1(d) set forth beside its name on schedule 7.1(g), and,
in consideration therefor, (b) Level 8 shall issue to the WCAS Parties an
aggregate of 1,000,000 shares of common stock of Xxxxx 0 (xxx "Xxxxx 0 Xxxxxx")
and warrants (the "Level 8 Warrants") to purchase an aggregate of up to 250,000
Level 8 Shares for $12.00 a share (which may be paid in cash or by reducing the
number of Level 8 Warrants as provided in clause (ii)(B) of the first sentence
of paragraph 1(b) of exhibit 8.2(a)) at any time before 5:00 p.m., New York
time, on the fourth anniversary of the Closing, free and clear of any adverse
claim.
2. Closing. The closing of the transactions contemplated by section 1 (the
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"Closing") shall take place at 10:00 a.m., New York time, at the offices of
Proskauer Rose LLP, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, on the third
business day following the fulfillment of all the conditions specified in
sections 7.1(h) and (k) and 7.2(d) and (f). At the Closing, the parties shall
execute and deliver, or use all reasonable efforts to cause to be executed and
delivered, the documents and other items referred to in section 8.
3. Termination. If the Closing shall not have occurred on or before January
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31, 1999, Level 8 or the WCAS Parties may terminate this agreement by notice
given to the others. However, the termination of this agreement pursuant to the
preceding sentence shall not relieve a party of liability for any breach of
warranty or agreement, or misrepresentation, prior to such termination.
4. Representation and Warranties of the WCAS Parties. Each WCAS Party,
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severally and not jointly, represents and warrants to Level 8 with respect to
itself as follows:
4.1 Authority. Each WCAS Party has the full authority to execute, deliver and
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perform this agreement, and this agreement constitutes the valid and binding
obligation of that WCAS Party,
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enforceable against it in accordance with its terms, except to the extent
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
in general and subject to general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
4.2 Consents of Third Parties. The execution, delivery and performance of this
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agreement by each WCAS Party will not: (a) violate or conflict with that WCAS
Party's partnership agreement; (b) conflict with, or result in the breach of,
or constitute a default under, any lease, agreement, commitment or other
instrument to which that WCAS Party is a party or by which that WCAS Party or
its properties are bound; or (c) constitute a violation of any law, regulation,
order, writ, judgment, injunction or decree applicable to that WCAS Party or any
of that WCAS Party's properties or require any governmental consent or approval.
4.3 WCAS Securities. Each WCAS Party owns all the WCAS Securities to be
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assigned and transferred by it to Level 8 under section 1. The shares of
capital stock of the Company included in the WCAS Securities to be assigned and
transferred to Level 8 under section 1 are duly authorized, validly issued,
fully paid and non-assessable, and free and clear of any adverse claim.
4.4 Litigation. To the best of the knowledge of each WCAS Party, there is no
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judicial or administrative action, proceeding or investigation pending or
threatened against it or the Company that questions the validity of this
agreement or any action taken or to be taken by it in connection with this
agreement.
4.5 Investment. Each WCAS Party will be acquiring the Level 8 Shares and Level
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8 Warrants, and any Level 8 Share issuable upon exercise of the Xxxxx 0
Xxxxxxxx, for investment purposes and not with a view to resale or distribution
in violation of applicable securities laws.
4.6 Related Party Transactions. Except as set forth in the Company's proxy
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statement for the Company's last annual meeting or in the Company's reports
filed with the Securities and Exchange Commission (the "SEC") pursuant to
section 13(a) of the Securities Exchange Act of 1934 (the "Exchange Act") and
except as provided in section 6.6, neither the Company nor any of its
subsidiaries has engaged in any transaction with any WCAS Party or any affiliate
of any WCAS Party since September 30, 1995.
5. Representations and Warranties of Level 8. Level 8 represents and warrants
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to the WCAS Parties as follows:
5.1 Authorization. The execution, delivery and performance of this agreement
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and the Level 8 Warrants by Level 8 have been duly authorized by all necessary
corporate action of Xxxxx 0, and this agreement constitutes, and, upon execution
and delivery of the Xxxxx 0 Xxxxxxxx, xxx Xxxxx 0 Xxxxxxxx will constitute, the
valid and binding obligations of Level 8, enforceable against it in accordance
with their respective terms, except to the extent enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights in general and subject to general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law).
5.2 Consents of Third Parties. The execution, delivery and performance of this
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agreement and the Level 8 Warrants by Level 8 will not: (a) violate or
conflict with the certificate of incorporation or by-laws of Level 8; (b)
conflict with, or result in the breach of, or constitute a default under, any
lease,
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agreement, commitment or other instrument to which Level 8 or any of its
subsidiaries is a party or by which Level 8's or such subsidiaries' properties
are bound; or (c) constitute a violation of any law, regulation, order, writ,
judgment, injunction or decree applicable to Level 8 or any of its subsidiaries
or Level 8's or such subsidiaries' properties or require any governmental
consent or approval.
5.3 Litigation. To the best of the knowledge of Level 8, there is no judicial
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or administrative action, proceeding or investigation pending or threatened that
questions the validity of this agreement or the Level 8 Warrants or any action
taken or to be taken by Level 8 in connection with this agreement or the Level 8
Warrants.
5.4 Investment. Level 8 will be acquiring the WCAS Securities for investment
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purposes and not with a view to resale or distribution in violation of
applicable securities laws.
6. Certain Agreements.
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6.1 Access to Information. Prior to the Closing, each WCAS Party shall use
---------------------
reasonable efforts to enable Level 8 to make such additional investigation of
the business and properties of the Company and its subsidiaries as Level 8 may
wish, and, upon reasonable notice, to cause the Company to give Level 8 and its
counsel, accountants and other representatives reasonable access, during normal
business hours throughout the period prior to the Closing, to the property,
books, agreements, records, files and personnel of the Company and its
subsidiaries and to cause the Company to furnish Level 8 during that period
copies of documents and information concerning the Company and its subsidiaries
as Level 8 may reasonably request. Level 8 shall, and shall cause its counsel,
accountants and other agents and representatives to, hold all such information
and documents in accordance with and subject to the terms of the confidentiality
agreement previously executed by Level 8 with respect to this transaction.
6.2 Conduct of the Business Pending the Closing. Prior to the Closing, each
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WCAS Party shall use reasonable efforts to cause the Company and its
subsidiaries to comply with the following provisions:
6.2.1. The Company and its subsidiaries shall operate their businesses in the
ordinary course consistent with past practice, and shall not take any
extraordinary action or make any extraordinary commitment (including the
adoption of any material employee benefit plan or benefit arrangement or the
acquisition, disposition or winding-up of a business) without the prior approval
of Level 8.
6.2.2. The Company shall promptly notify Level 8 of, and furnish Xxxxx 0 any
information Level 8 may reasonably request with respect to the occurrence of,
any event or the existence of any facts that would result in the information in
the Company's filings with the SEC since September 30, 1997, taken as a whole
(the "SEC Information"), containing any misstatement of a material fact, or
omitting to state a material fact, about the Company and its subsidiaries, as if
the filings were made at any time on or after the date of this agreement.
6.2.3. The Company shall not declare, set aside or pay any dividends or other
distributions in respect of its shares of capital stock, redeem, purchase or
otherwise acquire any shares of its capital stock or issue, sell or encumber any
shares of its capital stock or forgive any of its indebtedness.
6.2.4. The Company shall not amend its certificate of incorporation or by-laws
or enter into any merger or consolidation agreement.
6.2.5. Except as contemplated by this agreement, neither the Company nor its
subsidiaries shall amend
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any of their loan agreements or incur any indebtedness for borrowed money (other
than under their existing loan agreements).
6.3. Governmental Filings. Prior to the Closing, as promptly as practicable,
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each party shall make, or cause to be made, and shall cooperate with each other
party in making, all required governmental filings, including, without
limitation, all appropriate filings under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 0000 (xxx "XXX Xxx"), in order to carry out this agreement,
and shall take, or cause to be taken, such further action as may reasonably be
required in connection therewith.
6.4. Acquisition of Minority.
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6.4.1. Immediately after the Closing, Level 8 shall, or shall cause a
subsidiary (the "Sub") to, commence (within the meaning of Rule 14d-2 under the
Exchange Act) an offer to purchase all the outstanding shares of common stock of
the Company (other than the WCAS Securities) at a price of $0.35 a share, net to
the seller in cash (the "Offer"), and, subject to the conditions of the Offer,
shall use all reasonable efforts to make and consummate the Offer as promptly as
permitted by law. The obligation of Level 8 or the Sub to consummate the Offer
and accept for payment and pay for any shares tendered pursuant to the Offer
shall be subject to the conditions set forth in schedule 6.4.1.
6.4.2. Neither Level 8 nor the Sub shall, without the prior written consent of
the WCAS Parties, decrease the amount or change the form of consideration
payable in the Offer or decrease the number of shares sought pursuant to the
Offer, change the conditions of the Offer or impose any additional conditions of
the Offer. The conditions of the Offer are for the sole benefit of Level 8 or
the Sub and may be asserted by Xxxxx 0 or the Sub regardless of the
circumstances giving rise to the non-fulfillment of any such conditions or may
be waived by Xxxxx 0 or the Sub in whole or in part.
6.4.3. As soon as practicable on the date of commencement of the Offer, Level 8
or the Sub shall file with the SEC (i) a Tender Offer Statement on Schedule 14D-
1 with respect to the Offer, which will contain the offer to purchase and form
of the related letter of transmittal (which, together with any supplements or
amendments to those documents, are collectively referred to as the "Offer
Documents"), and (ii) Rule 13E-3 Transaction Statement on Schedule 13E-3 (which,
as amended or supplemented, is referred to as the "Schedule 13E-3") with respect
to the Offer. Level 8 or the Sub shall cause the Offer Documents and the
Schedule 13E-3 to comply in all material respects with the provisions of
applicable federal securities laws and, on the date filed with the SEC and on
the date first published, sent or given to the Company's shareholders, not to
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not misleading
(except that neither shall be responsible with respect to information supplied
by the Company or any WCAS Party in writing specifically for inclusion in the
Offer Documents). Level 8 shall promptly correct any information provided by it
for use in the Offer Documents and the Schedule 13E-3, if and to the extent such
information shall have become false or misleading in any material respect, and
Level 8 or the Sub shall take all steps necessary to cause the Offer Documents
and the Schedule 13E-3 as so corrected to be filed with the SEC and to be
disseminated to holders of shares, in each case as and to the extent required by
applicable federal securities laws.
6.4.4. Level 8 shall, or shall cause the Sub to, use its best efforts to acquire
as promptly as practicable after the completion of the Offer, through a merger,
all the outstanding shares of common stock of the Company it shall not have
acquired at the Closing or in the Offer for $0.35 a share, in cash.
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6.4.5. The Company and its shareholders are intended beneficiaries of this
section 6.4.
6.5. Other Pre-Closing Action. Each party shall use reasonable efforts to
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cause the fulfillment as soon as practicable of all the conditions to its
obligation to consummate the transactions under section 1.
6.6. Expenses. Each party shall bear its own expenses in connection with this
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agreement and all obligations to be performed by it under this agreement, except
that it is understood and agreed that the Company shall bear up to $75,000 of
the expenses of the WCAS Parties in connection with this agreement and their
obligations to be performed under this agreement.
6.7. Publicity. Without otherwise limiting any party's rights under this
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agreement or otherwise, prior to the Closing (or, if earlier, the termination of
this agreement), each party shall consult with and obtain the consent of the
other parties before issuing any press release or making any similar public
disclosure concerning this agreement or the transactions referred to in this
agreement, unless, in the reasonable judgment of the party issuing the release
or making the disclosure, the release or disclosure is required as a matter of
law (in which case it shall consult as set forth above before issuing the
release or making the disclosure).
6.8. Transfer Taxes. Each party shall pay all sales, stock transfer and other
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similar taxes and fees in respect of the transfer of securities by it under this
agreement.
6.9. Other Transactions. Each WCAS Party agrees that, prior to the Closing
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(or, if earlier, the termination of this agreement), it shall not, and shall use
reasonable efforts not to permit its officers, directors or other agents
(collectively, the "Agents"), directly or indirectly, to (a) take any action to
solicit, initiate, encourage, accept or agree to any Acquisition Proposal (as
defined below), (b) engage in negotiations with any person or entity that, to
the best of its, his or her knowledge, may be considering making, or has made,
an Acquisition Proposal or (c) except in accordance with section 6.7, disclose
any non-public information relating to the Company or afford access to the
assets, books or records of the Company to any person or entity that, to the
best of its, his or her knowledge, may be considering making, or has made, an
Acquisition Proposal. As used in this section 6.9, the term "Acquisition
Proposal" means any offer or proposal for, or any indication of interest in, any
merger or other business combination involving the Company, or the acquisition
of any equity interest in, or any material portion of the assets of, the
Company, other than the transactions contemplated by this agreement.
7. Conditions to Closing.
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7.1. Conditions to Obligation of Level 8. The obligation of Level 8 to
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consummate the transactions under section 1 is subject to the fulfillment, prior
to or at the Closing, of each of the following conditions (any or all of which
may be waived by Level 8):
(a) the representations and warranties of each WCAS Party to Level 8 shall be
true and correct in all material respects at and as of the time of the Closing
with the same effect as though made again at and as of that time;
(b) the agreements to be performed or complied with by each WCAS Party and the
Company prior to or at the Closing shall have been performed and complied with
by them;
(c) each WCAS Party shall have furnished Level 8 with a certificate (dated the
date of the Closing) with respect to itself to the effect set forth in
clauses (a) and (b) above;
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(d) the WCAS Parties shall have contributed to the capital of the Company, or
caused to be contributed to the capital of the Company, an aggregate amount
equal to the lesser of $17,000,000 or the amount of the Company's
outstanding liabilities and obligations to NationsBank, N.A. (the "Bank")
at the Closing (which amount shall not be less than the amount outstanding
at the close of business on November 18, 1998), which the Company shall use
at the Closing to pay all such liabilities and obligations to the Bank;
(e) each WCAS Party shall have executed and delivered to the Company a release
of all claims arising out of the contributions and payment referred to in
clause (d) above in form and substance satisfactory to Level 8;
(f) the Company and Greyrock Capital shall have executed and delivered
documents and instruments that reflect the terms set forth in schedule
7.1(f) in form and substance satisfactory to Level 8;
(g) the Company's authorized capital stock shall be comprised of 30,000,000
shares of common stock, 11,980,633 of which shall be outstanding, and
10,000,000 shares of preferred stock, of which 2,094,143 shares of Series A
Preferred Stock and 1,762,115 shares of Series B Preferred Stock shall be
outstanding. The WCAS Parties shall own the numbers of each class and
series of capital stock of the Company set forth on schedule 7.1(g). There
shall be no other outstanding shares or options or rights of any kind to
acquire any shares of any class of securities or any securities convertible
into any shares of any class of securities of the Company, nor shall there
be any obligations to issue any such options, rights or securities;
(h) Level 8 shall have received not less than $12,000,000 from Liraz Systems
Ltd. ("Liraz") to fund the obligations under section 9.1;
(i) there shall not be in effect any injunction or restraining order issued by
a court of competent jurisdiction in any action or proceeding against the
consummation of the transactions under this agreement;
(j) the SEC Information shall not contain any misstatement of a material fact,
or omit to state a material fact, about the Company and its subsidiaries,
as if the SEC Information were stated again as of the Closing, and there
shall have been no material adverse change in the business of the Company
and its subsidiaries taken as a whole since September 30, 1998; and
(k) the waiting period under the HSR Act shall have expired or terminated.
7.2. Conditions to Obligations of the WCAS Parties. The obligations of the
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WCAS Parties to consummate the transactions under section 1 are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions
(any or all of which may be waived by the WCAS Parties):
(a) the representations and warranties of Level 8 to the WCAS Parties shall be
true and correct in all material respects at and as of the time of the
Closing with the same effect as though made again at and as of that time;
(b) the agreements to be performed or complied with by Xxxxx 0 prior to or at
the Closing shall have been performed and complied with by Level 8;
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(c) Level 8 shall have furnished each WCAS Party with a certificate (dated the
date of the Closing) to the effect set forth in clauses (a) and (b) above;
(d) Level 8 shall have received not less than $12,000,000 from Liraz to fund
the obligations under section 9.1;
(e) there shall not be in effect any injunction or restraining order issued by
a court of competent jurisdiction in any action or proceeding against the
consummation of the transactions under this agreement;
(f) the waiting period under the HSR Act shall have expired or terminated; and
(g) the WCAS Parties shall have received a release from the Bank from all
liabilities and obligations to the Bank in respect of the Company's and its
subsidiaries' liabilities and obligations to the Bank, which release shall
be in form and substance reasonably satisfactory to the WCAS Parties.
8. Documents and Items to be Delivered at the Closing.
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8.1. Documents and Items to be Delivered by the WCAS Parties. At the Closing,
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the respective WCAS Parties shall deliver, or cause to be delivered, to Level 8
the following:
(a) stock certificates evidencing all their respective WCAS Securities, duly
endorsed in blank or accompanied by stock transfer powers, and with all
required stock transfer tax stamps attached;
(b) the respective certificates referred to in section 7.1(c);
(c) the respective releases referred to in section 7.1(e); and
(d) evidence of the payment referred to in section 7.1(d).
8.2. Documents and Items to be Delivered by Level 8. At the Closing, Level 8
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shall deliver, or cause to be delivered, to the WCAS Parties, the following:
(a) stock certificates representing the Level 8 Shares and the Level 8 Warrants
(in the form of exhibit 8.2(a)) referred to in section 1 in the names and
denominations set forth in schedule 8.2(a);
(b) the certificate referred to in section 7.2(c); and
(c) evidence of its receipt of the funds referred to in section 7.2(d).
9. Post-Closing Agreements.
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9.1. Funding of the Company. Immediately after the Closing, Xxxxx 0 shall
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provide the Company with $12,000,000 in the form of a capital contribution or a
long-term loan.
9.2. Transactions with the Company. Prior to the consummation of the merger
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referred to in section 6.4.4, Level 8 shall not engage in any transaction with
the Company on terms less favorable to the Company than the terms on which an
unaffiliated third party would engage in such transaction.
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9.3. Voting and Transfer Restrictions.
--------------------------------
9.3.1. Prior to January 1, 2001 (the "Outside Date"), at any meeting of
shareholders of Level 8, each WCAS Party shall grant a proxy to one or more
individuals named by Level 8 from time to time to vote all that WCAS Party's
Level 8 Shares as Level 8 may from time to time request by notice given to that
WCAS Party not fewer than three business days before a particular meeting.
9.3.2. Prior to the Outside Date, no WCAS Party may sell, exchange or otherwise
assign or transfer any Level 8 Shares without the prior written consent of Level
8. Nothing in the preceding sentence, however, shall be deemed to prohibit any
transfer of any Level 8 Shares to a partner or affiliate of a WCAS Party, as
long as that partner or affiliate agrees to be bound by the provisions of this
section 9.3.
9.3.3. All certificates evidencing Level 8 Shares issued under this agreement
or upon exercise of the Level 8 Warrants shall bear the following legends:
"The shares evidenced by this certificate were issued in a transaction
exempt from the registration requirements of the Securities Act of
1933, and such shares may not be transferred in the absence of an
opinion of counsel satisfactory to the Company that such transfer may
be effected without registration under the Securities Act of 1933."
"The voting and transfer of the shares evidenced by this certificate
are subject to the provisions of an agreement dated November 23,
1998, a copy of which is on file at the office of the Company."
9.3.4. If, at any time before the Outside Date, Level 8 determines to file a
registration statement under the Securities Act of 1933 for an underwritten sale
to the public of shares of its common stock in whole or in part by any of Level
8's shareholders, Level 8 shall, each such time, promptly give each WCAS Party
written notice of its intent to file a registration statement and shall include
all shares held by any WCAS Party with respect to which Level 8 has received a
written request within 15 days after Level 8 has given notice to the WCAS Party
as set forth above specifying the number of shares to be included.
Notwithstanding the foregoing, however, in connection with any such offering,
Level 8 shall not be required to include a WCAS Party's shares in the offering,
unless the WCAS Party shall have accepted the terms of the underwriting and then
only in such quantity as will not, in the written opinion of the underwriter,
exceed the maximum number of shares that can be marketed without materially and
adversely affecting the offering. If, as a consequence of the provisions of the
preceding sentence, the number of a WCAS Party's shares included in the offering
is reduced, such reduction shall be made pro rata among the shareholders to be
included in the offering on the basis of the percentage of shares of the
shareholders to be included, and the percentage of the reduction shall not be
more than the percentage of reduction applicable to any other selling
shareholder in the offering. The rights with respect to such offering by any
WCAS Party whose shares are included shall not be less, and the obligations with
respect to such offering by any such WCAS Party shall not be greater, than those
of any other shareholder whose shares are included in such offering.
9.4. Related Party Transactions. Until the earlier of the Outside Date or the
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first date on which the WCAS Parties no longer beneficially own (as defined in
the rules under the Exchange Act) at least 50% of the shares of common stock of
Level 8 represented by the Xxxxx 0 Xxxxxx xxx xxx Xxxxx 0 Xxxxxx issuable upon
exercise of the Level 8 Warrants issued pursuant to section 1, Level 8 shall
not, and shall not permit any of its subsidiaries to, engage in any transaction
with Liraz or any affiliate of Liraz on
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terms less favorable to Level 8 or any such subsidiary than the terms on which
an unaffiliated third party would engage in such transaction.
9.5. Further Assurances. From time to time after the Closing, each party shall
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take such action and execute and deliver such documents as the others may
reasonably request to carry out the transactions contemplated by this agreement.
9.6. D&O Matters.
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9.6.1. Level 8 agrees that, for a period of six years after the Closing and
except to the extent otherwise required by law, it shall cause the certificate
of incorporation and by-laws of the Company to contain provisions with respect
to indemnification and exculpation from liability no less favorable to the
individuals who, on or prior to the Closing, were directors, officers, employees
or agents of the Company (collectively, the "Indemnified Parties") than those
set forth in the Company's certificate of incorporation and by-laws in effect
immediately before the Closing.
9.6.2. For a period of six years after the Closing, Xxxxx 0 shall use all
reasonable efforts to cause the Company to maintain directors' and officers'
liability insurance covering those Indemnified Parties who are currently covered
by the Company's directors' and officers' liability insurance policy on terms no
less favorable to those Indemnified Parties than the terms of the insurance
coverage in effect on the date of the Closing for Level 8's own directors and
officers.
9.6.3. The Indemnified Parties and the Company are intended beneficiaries of
this section 9.6.
10. Indemnification.
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10.1. General.
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10.1.1. Subject to the provisions of this section 10, each WCAS Party shall
indemnify and hold Level 8 harmless from and against all losses, liabilities,
damages and expenses (including reasonable attorneys' fees) resulting from any
breach of warranty or agreement, or any misrepresentation, by it under this
agreement.
10.1.2. Subject to the provisions of this section 10, Level 8 shall indemnify
and hold each WCAS Party harmless from and against all losses, liabilities,
damages and expenses (including reasonable attorneys' fees) resulting from any
breach of warranty or agreement, or any misrepresentation, by it under this
agreement.
10.2. Exclusivity. Except as specifically set forth in this agreement, no
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party to this agreement has made, or shall have liability for, any
representation, warranty or agreement, express or implied, in connection with
the transactions contemplated by this agreement, including any representation or
warranty, express or implied, as to the accuracy or completeness of any
information regarding the Company or Level 8.
10.3. Survival; Manner of Claims. The representations and warranties in this
--------------------------
agreement shall survive the Closing. However, a party shall have no liability
under this agreement for breach of warranty or misrepresentation, unless a claim
therefor is asserted by another party in a written notice setting forth the
representations and warranties with respect to which the claim is made, the
facts giving rise to and the alleged basis for the claim and the amount of
liability asserted by reason of the claim.
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10.4. Defense of Claims by Third Parties. If any claim is made against a party
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that, if sustained, would give rise to a liability of another party under this
agreement, the party against whom the claim is made shall promptly cause notice
of the claim to be delivered to the other party or parties and shall afford the
other party or parties and its or their counsel, at its or their sole expense,
the opportunity to defend or settle the claim. The failure to provide the
notice referred to above shall not relieve the indemnifying party of liability
under this agreement, except to the extent the indemnifying party has actually
been prejudiced by such failure. If any claim is compromised or settled without
the consent of the indemnifying party, no liability shall be imposed upon the
indemnifying party by reason of the claim.
11. Miscellaneous.
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11.1. Finders. Each party represents and warrants to the others that it has
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not employed or utilized the services of any broker or finder in connection with
this agreement or the transactions contemplated by this agreement.
11.2. Governing Law. This agreement shall be governed by and construed in
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accordance with the law of the state of New York, without giving effect to its
conflicts of law principles.
11.3. Headings. The section headings of this agreement are for reference
--------
purposes only, and are to be given no effect in the construction or
interpretation of this agreement.
11.4. Notices. All notices and other communications under this agreement shall
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be in writing and may be given by any of the following methods: (a) personal
delivery; (b) facsimile transmission; (c) registered or certified mail,
postage prepaid, return receipt requested; or (d) overnight delivery service.
Notices shall be sent to the appropriate party at its address or facsimile
number given below (or at such other address or facsimile number for such party
as shall be specified by notice given under this section 11.4):
(a) if to a WCAS Party, to:
x/x Xxxxx, Xxxxxx, Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Fax no.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx
with a copy to:
Reboul, MacMurray, Xxxxxx, Xxxxxxx &
Kristol
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax no.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
(b) if to Xxxxx 0, to:
E-13
Level 8 Systems, Inc.
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax no.: (000) 000-0000
with a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax no.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
All such notices and communications shall be deemed received upon (a) actual
receipt by the addressee, (b) actual delivery to the appropriate address or (c)
in the case of a facsimile transmission, upon transmission by the sender and
issuance by the transmitting machine of a confirmation slip confirming that the
number of pages constituting the notice have been transmitted without error. In
the case of noticed sent by facsimile transmission, the sender shall
contemporaneously mail a copy of the notice to the addressee at the address
provided for above. However, such mailing shall in no way alter the time at
which the facsimile notice is deemed received.
11.5. Separability. The invalidity or unenforceability of any provision of
------------
this agreement shall not affect the validity or enforceability of any other
provision of this agreement, which shall remain in full force and effect.
11.6. Waiver. Any party may waive compliance by any other party with any
------
provision of this agreement. No waiver of any provision shall be construed as a
waiver of any other provision. Any waiver must be in writing and signed by the
waiving party.
11.7. Counterparts. This agreement may be executed in counterparts, each of
------------
which shall be an original, but all of which together shall constitute one and
the same agreement.
E-14
11.8. Entire Agreement. This agreement (with its schedules and exhibits)
----------------
contains, and is intended as, a complete statement of all the terms of the
arrangements among the parties with respect to the matters provided for,
supersedes all previous agreements and understandings among the parties with
respect to those matters, cannot be changed or terminated orally and any
amendment or modification must be in writing and signed by the parties to be
charged.
XXXXX 0 SYSTEMS, INC.
By: /s/ Xxxx Xxxxxx
WCAS PARTIES:
WELSH, CARSON, XXXXXXXX
& XXXXX VI, L.P.
By: WCAS VI Partners, L.P., General
Partner
By: /s/ Xxxxx Xxx Xxxxx
General Partner
WCAS INFORMATION PARTNERS, L.P.
By: WCAS INFO Partners,
General Partner
By: /s/ Xxxxx Xxx Xxxxx
General Partner
Attorney-in-fact
WCAS CAPITAL PARTNERS II
By: /s/ Xxxxx Xxx Xxxxx
General Partner
/s/ Xxxxx Xxx Xxxxx*
Xxxxxxx X. Xxxxx
/s/ Xxxxx Xxx Xxxxx*
Xxxxxxx X. Xxxxxx
E-15
/s/ Xxxxx Xxx Xxxxx*
Xxxxx X. Xxxxxxxx
/s/ Xxxxx Xxx Xxxxx*
Xxxxxxx X. Xxxxx
/s/ Xxxxx Xxx Xxxxx*
Xxxxxx X. Xxxx
/s/ Xxxxx Xxx Xxxxx*
Xxxxxx X. XxXxxxxxx
/s/ Xxxxx Xxx Xxxxx
Xxxxx Xxx Xxxxx
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxx, as
Trustee for the Benefit of the XXX of
Xxxxxxx X. Xxxxx
By: /s/ Xxxxxxx X. Xxxxx
* As Attorney-in-Fact /s/ Xxxxx Xxx Xxxxx*
Xxxxxxx X. xx Xxxxxx
DELAWARE CHARTER TRUST CO., as
Trustee for the Benefit of the
XXX Rollover of Xxxxx X. Xxxxxx
By: /s/ Xxxxx X. Xxxxxx
/s/ Xxxxx Xxx Xxxxx*
Xxxxxx X. Xxxxxxxxx
E-16
TRUST U/A DATED 11/26/84 for the
Benefit of Xxxx Xxxxx (Xxxxx
Xxx Xxxxx, Trustee)
By: /s/ Xxxxx Xxx Xxxxx
TRUST U/A DATED 11/26/84 for the
Benefit of Xxxxxxx Xxxxx (Xxxxx
Xxx Xxxxx, Trustee)
By: /s/ Xxxxx Xxx Xxxxx
TRUST U/A DATED 11/26/84 for the
Benefit of Xxxxxxxx Xxxxx (Xxxxx
Xxx Xxxxx, Trustee)
By: /s/ Xxxxx Xxx Xxxxx
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
* as Attorney-in-Fact REBOUL, MACMURRAY, XXXXXX,
XXXXXXX & KRISTOL
By: /s/ Xxxxxx X. Xxxxxx
E-17
Schedule 6.4.1
--------------
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) Level 8's or the Sub's right to amend the Offer at any
time in its sole discretion, but subject to the provisions of section 6.4 of the
agreement to which this schedule 6.4.1 is attached (the "Agreement") (terms used
herein and not otherwise defined having the meanings ascribed to such terms in
the Agreement), neither Level 8 nor the Sub shall be required to accept for
payment, or pay for, and may delay the acceptance for payment, or the payment,
of, any tendered shares of common stock of the Company, if, at or before the
time of payment for any such shares (whether or not any shares have theretofore
been accepted for payment or paid for pursuant to the Offer), (a) the Closing
shall not have occurred or (b) there shall have been any action or position
taken, or threatened, or any statute, rule, regulation, judgment, order or
injunction promulgated, enacted, entered or enforced, by any state, federal or
foreign government or governmental authority or by any court, domestic or
foreign, that may reasonably be expected to (i) make the acceptance for payment
of, or the payment for, some or all of the shares illegal or otherwise
prohibited, or restrict or delay consummation of the Offer, (ii) impose
limitations on the ability of Level 8 or the Sub to acquire or hold or to
exercise effectively all rights of ownership of common stock of the Company,
including, without limitation, the right to vote any shares of common stock of
the Company purchased by either of them on all matters properly presented to the
shareholders of the Company or (iii) prohibit or impose any material limitation
on Level 8's or the Sub's ownership or operation of all or a material portion of
the assets or business of the Company or any of its subsidiaries or affiliates.
E-18
SCHEDULE 7.1.(F)
AMENDMENT TO LOAN DOCUMENTS
BORROWER: SEER TECHNOLOGIES, INC.
ADDRESS: 0000 XXXXXXX XXXXXXX
XXXX, XXXXX XXXXXXXX 00000
DATE: DECEMBER __, 1998
THIS AMENDMENT ("Amendment") is entered into as of the above date between
GREYROCK CAPITAL, a Division of NationsCredit Commercial Corporation (formerly
Greyrock Business Credit) ("GBC"), and the borrower named above ("Borrower")
with respect to the Loan and Security Agreement between GBC and Borrower, dated
Xxxxx 00, 0000 (xx amended from time to time, the "Loan Agreement"). (This
Amendment, the Loan Agreement, all other prior written amendments to the Loan
Agreement signed by GBC and the Borrower, and all other written documents and
agreements between GBC and the Borrower are referred to herein collectively as
the "Loan Documents". Capitalized terms used but not defined in this Amendment,
shall have the meanings set forth in the Loan Agreement.)
Subject to the conditions set forth below, the parties agree to amend the
Loan Agreement as follows, effective on ___________:
1. CREDIT LIMIT. Section 1 of the Schedule is amended in its entirety to
read as follows:
"1. CREDIT LIMIT (Section 1.1): Loans ("Receivable Loans") up to the sum
----------------------------
of the following percentages of Borrower's Eligible Receivables (as defined
in Section 8 above), provided that the total outstanding balance of
Receivable Loans shall not at any time exceed $25,000,000:
"(i) 80% of the amount of eligible U.S. accounts; plus
----
"(ii) the lesser of 80% of Unbilled Receivables (as defined in
Section 8 above) or $3,000,000; plus
----
"(iii) the lesser of 80% of the amount of eligible Australian
accounts or $2,000,000; plus
----
"(iv) 80% of the amount of eligible Irish accounts; plus
----
"(v) 80% of the amount of eligible Netherlands accounts."
2. INTEREST RATE. Section 2 of the Schedule is amended in its entirety
to read as
E-19
follows:
"2. Interest Rate (Section 1.2): The interest rate in effect
-------------
throughout each calendar month during the term of this Agreement shall be
the following:
Period Interest Rate
------ -------------
Amendment Effective Date Prime Rate
through December 31, 1999
January 1, 2000 through Prime Rate plus 1%
December 31, 2000 per annum
January 1, 2001 and Prime Rate plus 2%
thereafter per annum
"Interest shall be calculated on the basis of a 360-day year for the actual
number of days elapsed. The interest rate applicable to all Loans shall be
adjusted monthly as of the first day of each month, and the interest to be
charged for each month shall be based on the highest "Prime Rate" in effect
during said month.
" `Amendment Effective Date' means the date the Amendment to Loan Documents
between Borrower and GBC dated December __, 1998 is effective.
" `Prime Rate' means the actual `Reference Rate' or the substitute therefor
of the Bank of America NT & SA (or its successor) whether or not that rate
is the lowest interest rate charged by said bank. If the Prime Rate, as
defined, is unavailable, `Prime Rate' shall mean the highest of the prime
rates published in the Wall Street Journal on the first business day of the
month, as the base rate on corporate loans at large U.S. money center
commercial banks."
3. MATURITY DATE. Section 4 of the Schedule is amended in its entirety to
--------------
read as follows:
"4. Maturity Date (Section 6.1): December 31, 2001, subject to
----------------------------
automatic renewal as provided in Section 6.1 above, and early termination
as provided in Section 6.2 above."
4. ADDITIONAL PROVISIONS. The following new Section 8 is added to the
----------------------
Schedule:
"8. Additional Provisions.
---------------------
"(1) Guaranty. Borrower shall concurrently cause Level 8
--------
Systems, Inc., a New York corporation (`Level 8') to execute and deliver to
GBC a Continuing Guaranty with respect to the Obligations, on GBC's
standard form (the `Level 8 Guaranty'), provided that Level 8's liability
under the Xxxxx 0 Xxxxxxxx xxxxx xx limited to the `Guaranty Limit' as
defined below. The
E-20
Guaranty Limit shall be an amount equal to the following (plus all interest
on the obligations of Xxxxx 0 xxxxx xxx Xxxxx 0 Xxxxxxxx, plus all
reasonable costs incurred in enforcing the obligations of Xxxxx 0 xxxxx xxx
Xxxxx 0 Xxxxxxxx):
"(a) During the period from the date of the Level 8 Guaranty to
December 31, 1999, the Guaranty Limit shall be an amount equal to the
amount of the Obligations at the Determination Date (as defined below) in
excess of $20,000,000.
"(b) During the period from January 1, 2000 to December 31, 2000
the Guaranty Limit shall be an amount equal to the amount of the
Obligations at the Determination Date (as defined below) in excess of
$10,000,000.
"From and after January 1, 2001 the liability of Xxxxx 0 xxxxx xxx Xxxxx 0
Xxxxxxxx shall not be limited.
" `Determination Date' shall mean, at any date, the date a written notice
of acceleration of the Obligations is given by GBC to Borrower or Xxxxx 0,
which is not subsequently waived in writing or rescinded in writing. The
Level 8 Guaranty shall continue in full force and effect after any such
waiver or rescission of a written notice of acceleration.
"Borrower shall cause the Level 8 Guaranty to continue in effect until this
Loan Agreement has been terminated and all of the Obligations have been
paid and performed in full.
"(2) Level 8. Without GBC's prior written consent: (a) Borrower
-------
shall not, and shall not permit any of its subsidiaries to, engage in any
transactions with Level 8 or Level 8's other affiliates on terms less
favorable to Borrower or such subsidiaries than the terms on which an
unaffiliated third party would engage in such transaction; and (b) Borrower
shall not make any transfer of funds or other property to Level 8 or Level
8's other affiliates (other than Borrower's subsidiaries), other than
payments not in contravention of clause (a) above; and (c) Borrower shall
not pay or declare any distributions or dividends, or redeem or repurchase
any of its stock or other securities from Level 8 or any of Level 8's other
affiliates.
"(3) Streamlined Provisions. At such time as the total unpaid
-----------------------
principal balance of all outstanding Loans is $13,000,000 or less, the
following provisions (the `Streamlined Provisions') shall apply:
"(a) Daily reporting of transactions and daily schedules and
assignments of Receivables and schedules of collections, called for by
Section 4.3 of this Loan Agreement, will not be required. Instead, the
Borrower shall provide GBC with a monthly Borrowing Base Certificate, in
such form as GBC shall from time to time specify, within 10 days after the
end of each month. In the event, as of the end of any month, the total of
all Loans and all other Obligations exceeds the Credit Limit, Borrower
shall immediately pay the
E-21
amount of the excess to GBC.
"(b) Delivery of the proceeds of Receivables and other
Collateral within one business day after receipt, as called for by Sections
4.4 and 5.4 of this Loan Agreement will not be required.
"(c) The Streamlined Provisions shall immediately terminate if
any Event of Default or any event which, with notice or passage of time or
both, would constitute an Event of Default, occurs and is continuing.
"(d) While the Streamlined Provisions are in effect, the total
principal balance of the Loans may not, thereafter, exceed $13,000,000,
unless Borrower elects, by at least three Business Days' prior written
notice to GBC, to terminate the Streamlined Provisions. In the event
Borrower wishes to terminate the Streamlined Provisions, Borrower shall
provide GBC with such information relating to the Receivables and other
Collateral as GBC shall specify in order to enable GBC to complete its
normal Receivables and Collateral review, at least three Business Days
prior to the date the Streamlined Provisions are to terminate.
"(e) Upon termination of the Streamlined Provisions under clause
(c) or (d) above, the Borrower shall, then and thereafter, provide GBC with
the daily reporting of transactions and daily schedules and assignments of
Receivables and schedules of collections, as called for by Section 4.3 of
the Loan Agreement, and the Borrower shall deliver all proceeds of
Receivables and other Collateral to GBC, within one business day after
receipt, as called for by Sections 4.4 and 5.4 of the Loan Agreement."
5. DELETE TERMINATION FEE. The portion of Section 3 of the Schedule, which
-----------------------
presently reads as follows: "Termination Fee: $20,000 per month for each month
(or portion thereof) from the effective date of termination to the Maturity
Date." is amended to read as follows:
"Termination Fee: None."
6. XXXXX XXXXXX--CONFORMING CHANGES.
---------------------------------
(a) The portion of Section 7.1(n) of the Loan Agreement, which
presently reads as follows: "Welsh Xxxxxx Xxxxxxxx & Xxxxx VI, L.P., a Delaware
limited partnership's equity ownership decreases to less than 51%" is amended to
read as follows:
"Level 8's equity ownership decreases to less than 51%".
(b) Section 7.1(r) of the Loan Agreement (which relates to a Guaranty
by Welsh Xxxxxx Xxxxxxxx & Xxxxx VI, L.P. of certain obligations of the Borrower
to NationsBank, N.A.) is hereby deleted from the Loan Agreement.
7. CONDITIONS. This Amendment is subject to the following conditions
-----------
precedent, which the Borrower agrees to use its best efforts to satisfy on or
before December 31, 1998. If, for any reason, said conditions are not satisfied
by said date, the amendments to the Loan
E-22
Documents set forth in Sections 1 through 6 above shall be of no further force
or effect.
(a) Xxxxx 0 Xxxxxxxx. Xxxxx 0 shall have executed and delivered the
----------------
Level 8 Guaranty (as defined above).
(b) Xxxxx 0 Xxxxxxxxx. Xxxxx 0 shall have executed and delivered a
-----------------
letter agreement to GBC agreeing to the provisions of Section 8(2) above which
is being added to the Schedule.
(c) Subordinated Debt. Level 8 shall have made a subordinated loan
-----------------
to Borrower in the amount of not less than $12,000,000, the proceeds of which
shall be paid to GBC to be applied to the existing Term Loan and next to the
Receivable Loans. Said subordinated loan shall be subject to a subordination
agreement in favor of GBC in form satisfactory to GBC in its discretion, and
shall not permit principal or interest payments thereon during the term of the
Loan Agreement or while any Obligations are outstanding.
(d) Stock Ownership. Level 8 shall have acquired a majority of the
----------------
outstanding shares of voting stock of the Borrower.
(e) Outstanding NationsBank Loan. The presently outstanding loan from
----------------------------
NationsBank N.A. to the Borrower shall be paid and performed in full.
8. REPRESENTATIONS TRUE. Borrower represents and warrants to GBC that all
--------------------
representations and warranties set forth in the Loan Agreement, as amended
hereby, are true and correct.
9. GENERAL PROVISIONS. This Amendment, the Loan Agreement, and the other
------------------
Loan Documents set forth in full all of the representations and agreements of
the parties with respect to the subject matter hereof and supersede all prior
discussions, representations, agreements and understandings between the parties
with respect to the subject hereof. Except as herein expressly amended, all of
the terms and provisions of the Loan Agreement and the other Loan Documents
shall continue in full force and effect and the same are hereby ratified and
confirmed.
Borrower: GBC:
SEER TECHNOLOGIES, INC. GREYROCK CAPITAL,
a Division of NationsCredit Commercial
Corporation
By
---------------------------
President or Vice-President
By
----------------------------
By Title:
----------------------------
Secretary or Ass't Secretary
E-23
CONSENT
The undersigned, guarantors, acknowledge that their consent to the
foregoing Agreement is not required, but the undersigned nevertheless do hereby
consent to the foregoing Agreement and to the documents and agreements referred
to therein and to all future modifications and amendments thereto, and any
termination thereof, and to any and all other present and future documents and
agreements between or among the foregoing parties. Nothing herein shall in any
way limit any of the terms or provisions of the Continuing Guarantees of the
undersigned, all of which are hereby ratified and affirmed. This Consent may be
executed in counterparts. The signatures of the undersigned shall be fully
effective even if other persons named below fail to sign this Consent.
SEER TECHNOLOGIES IRELAND LIMITED SEER TECHNOLOGIES BENELUX B.V.
By By
------------------------------- ------------------------------
Title Title
---------------------------- ---------------------------
By By
------------------------------- ------------------------------
Title Title
---------------------------- ---------------------------
E-24
Schedule 7.1(g)
Series A Series B
Preferred Preferred Common
Stock Stock Stock Percentage
--------------- -------------- -------------- --------------
Welsh, Carson, Xxxxxxxx & Xxxxx VI, 1,978,643 1,664,920 6,335,132 94.4842%
L.P.
WCAS Information Partners, L.P. 23,643 19,895 74,446 1.1290%
WCAS Capital Partners II 0 0 446,189 --
Xxxxxxx X. Xxxxx 11,822 9,947 37,225 0.5645%
Trust U/A dated 11/26/84 for the 1,688 1,421 5,317 0.0806%
Benefit of Xxxx Xxxxx
Trust U/A dated 11/26/84 for the 1,688 1,421 5,317 0.0806%
Benefit of Xxxxxxx Xxxxx
Trust U/A dated 11/26/84 for the 1,688 1,421 5,317 0.0806%
Benefit of Xxxxxxxx Xxxxx
Xxxxxxx X. Xxxxxx 16,887 14,210 53,174 0.8064%
Xxxxx X. Xxxxxxxx 16,887 14,210 58,174 0.8064%
Xxxxxxx X. Xxxxx 6,753 5,683 12,761 0.3226%
Xxxxxxx X. Xxxxx, as Trustee for
the Benefit of the XXX of Xxxxxxx 0 0 8,506 --
X. Xxxxx
Xxxxxx X. Xxxx 4,052 3,410 13,261 0.1935%
Xxxxxx X. XxXxxxxxx 3,377 2,842 11,635 0.1613%
Xxxxx Xxx Xxxxx 675 568 2,126 0.0322%
Xxxxx X. Xxxxxx 5,066 4,263 15,952 0.2419%
Delaware Charter Trust Co., as
Trustee for the Benefit of the XXX 1,688 1,421 5,317 0.0806%
Rollover of Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxxx 8,443 7,105 26,587 0.4032%
Xxxxxxx X. xxXxxxxx 1,012 852 3,188 0.0484%
Xxxxx X. Xxxxxx 6,754 5,684 21,270 0.3227%
Reboul, MacMurray, Hewitt, 3,377 2,842 0 0.1613%
Xxxxxxx & Kristol --------- --------- --------- --------
2,094,143 1,762,115 7,130,894 100.0000%
========= ========= ========= ========
E-25
EXHIBIT 8.2(A)
NEITHER THIS WARRANT NOR ANY SHARES ACQUIRED UPON EXERCISE OF THIS WARRANT HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR UNDER ANY STATE
SECURITIES LAWS. NEITHER THIS WARRANT NOR ANY SUCH SHARES MAY BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND STATE SECURITIES LAWS OR THE AVAILABILITY OF AN
EXEMPTION FROM SUCH REGISTRATION.
Warrant No. __ For the Purchase of _______ Shares
LEVEL 8 SYSTEMS, INC.
COMMON STOCK PURCHASE WARRANT
This certifies that, for value received, ____________ _____________________
or its successors in interest, assigns or transferees (collectively, the
"Warrant Holder") is entitled to subscribe for and purchase from Xxxxx 0
Xxxxxxx, Xxx., x Xxx Xxxx corporation (the "Company"), ______ shares of the
Company's common stock (the "Warrant Shares") for $12.00 a share. The number of
Warrant Shares and the purchase price for each Warrant Share are subject to
adjustment from time to time as provided in this Warrant (such purchase price,
as so adjusted from time to time, the "Exercise Price").
1. Exercise.
--------
(a) This Warrant may be exercised at any time and from time to time, in whole
or in part, on or prior to 5:00 p.m., New York time, on December 31, 2002.
(b) This Warrant may be exercised by the Warrant Holder, in whole or in part,
by (i) delivering to the Company a duly executed notice of exercise in the
form of annex A and (ii) at the Warrant Holder's option, either (A)
delivering a check payable to (or wire transfer to the account of) the
Company in an amount equal to the product of (1) the Exercise Price and (2)
the number of Warrant Shares as to which this Warrant is being exercised
(such product, the "Total Exercise Price") or (B) delivering to the Company
a letter (the "Cashless Exercise Letter") pursuant to which the Warrant
Holder surrenders a portion of the Warrant having a Deemed Value (as
defined below) equal to the Total Exercise Price. For these purposes, (i)
the term "Deemed Value" means the product of (A) an amount equal to (1) the
Market Price (as defined below) of a share of the Company's common stock,
reduced by (2) the Exercise Price, and (B) the number of Warrant Shares as
to which the Warrant is then being surrendered pursuant to the Cashless
Exercise Letter, and (ii) the term "Market Price" means the average market
price of the Company's common stock on the 20 trading days preceding the
date of exercise; if the common stock at the time is listed on any national
securities exchange, the Market Price on any day shall be the last sale
price of the common stock on that day; if the common stock is not so listed
but is traded on NASDAQ,
E-26
the Market Price on any day shall be the last reported sale price on that day,
or, if no sale price shall have been reported, the mean between the bid and
asked prices on that day, all as reported in the Wall Street Journal.
(c) This Warrant shall be deemed to have been exercised immediately prior to
the close of business on the date of delivery of a duly executed notice of
exercise, together with the amount (in cash or by delivering the Cashless
Exercise Letter) payable or deliverable upon exercise of this Warrant.
Thereafter, the rights of the Warrant Holder, as such, with respect to the
number of Warrant Shares as to which this Warrant is being exercised (and,
if applicable, surrendered as payment pursuant to the Cashless Exercise
Letter) shall cease, and the Warrant Holder shall be deemed to be the
record holder of the shares of common stock issuable upon such exercise.
As soon as practicable after the exercise of this Warrant, the Company
shall issue in the name of and deliver to the Warrant Holder, or as the
Warrant Holder (upon payment by the Warrant Holder of any applicable
transfer taxes) may direct, a certificate or certificates for the number of
fully paid and nonassessable shares of common stock to which the Warrant
Holder shall be entitled upon such exercise. In the event of partial
exercise of this Warrant and, if applicable, partial surrender of this
Warrant pursuant to the Cashless Exercise Letter, this Warrant shall be
delivered to the Company, and the Company shall issue and deliver to the
Warrant Holder a new Warrant evidencing the rights to purchase the
remaining Warrant Shares, which new Warrant shall in all other respects be
identical to this Warrant.
2. Certain Adjustments. This Warrant shall be subject to adjustment as
-------------------
follows:
(a) In case the Company shall (i) pay a stock dividend or make a
distribution to holders of common stock in shares of its common stock, (ii)
subdivide its outstanding shares of common stock, (iii) combine its
outstanding shares of common stock into a smaller number of shares or (iv)
issue by reclassification of its shares of common stock any shares of
capital stock of the Company, (v) the Exercise Price shall be increased or
decreased, as the case may be, to an amount that shall bear the same
relation to the Exercise Price in effect immediately prior to such action
as the total number of shares outstanding immediately prior to such action
shall bear to the total number of shares outstanding immediately after such
action and (vi) this Warrant automatically shall be adjusted so that it
shall thereafter evidence the right to purchase the kind and number of
Warrant Shares or other securities the Warrant Holder would have owned and
would have been entitled to receive after such action, if this Warrant had
been exercised immediately prior to such action or any record date with
respect thereto. An adjustment made pursuant to this subparagraph (a) shall
become effective retroactively immediately after the record date, in the
case of a dividend or distribution of common stock, and shall become
effective immediately after the effective date, in the case of a
subdivision, combination or reclassification.
(b) In case the Company shall fix a record date for the making of a
distribution to all holders of common stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of (i) assets (other than cash
dividends or cash distributions payable out of consolidated net income or
retained earnings or dividends payable in common stock), (ii) evidences of
indebtedness or other debt or equity securities of the Company, or of any
corporation other than the Company (except for the common stock of the
Company) or (iii) subscription rights, options or warrants to purchase any
of the foregoing assets or securities, whether or not such rights, options
or warrants are immediately exercisable (hereinafter collectively called
"Distributions on Common stock"), the Company shall make provision for the
Warrant Holder to receive upon exercise of this Warrant, a proportional
amount (depending upon the extent to which this Warrant is exercised) of
such
E-27
assets, evidences of indebtedness, securities or such other rights, as
if such Warrant Holder had exercised this Warrant on or before such record
date.
(c) In case of any consolidation or merger of the Company with or into
another corporation or the sale of all or substantially all the assets of
the Company to another corporation, this Warrant thereafter shall be
exercisable for the kind and amount of shares of stock or other securities
or property to which a holder of the number of shares of common stock of
the Company deliverable upon exercise of this Warrant would have been
entitled upon such consolidation, merger or sale; and, in such case,
appropriate adjustment shall be made in the application of the provisions
in this paragraph 2, to the end that the provisions set forth in this
paragraph 2 (including provisions with respect to changes in and
adjustments of the Exercise Price) shall thereafter be applicable, as
nearly as reasonably may be, in relation to any shares of stock or other
securities or property thereafter deliverable upon the exercise of this
Warrant.
(d) Upon the occurrence of each adjustment or readjustment of the
Exercise Price or any change in the number of Warrant Shares or in the
shares of stock or other securities or property deliverable upon exercise
of this Warrant pursuant to this paragraph 2, the Company at its expense
shall promptly compute such adjustment or readjustment and change in
accordance with the terms hereof and furnish to each Warrant Holder a
certificate signed by the chief financial officer of the Company, setting
forth such adjustment or readjustment and change and showing in detail the
facts upon which such adjustment or readjustment and change is based.
(e) The Company shall not be required upon the exercise of this Warrant
to issue any fraction of shares, but shall make any adjustment therefor by
rounding the number of shares obtainable upon exercise to the next higher
whole number of shares.
3. Notice to Warrant Holder. If at any time,
------------------------
(a) the Company shall take any action which would require an adjustment
in the Exercise Price or in the number of Warrant Shares pursuant to
paragraph 2; or
(b) the Company shall authorize the granting to the holders of its
common stock of any Distributions on Common Stock as set forth in paragraph
2(b), and notice thereof shall be given to holders of common stock; or
(c) the Company shall issue any additional shares of common stock or
declare any dividend (or any other distribution) on its common stock (other
than its regular quarterly dividends); or
(d) there shall be any capital reorganization or reclassification of
the common stock (other than a change in par value or from par value to no
par value or from no par value to par value of the common stock), or any
consolidation or merger to which the Company is a party, or any sale or
transfer of all or substantially all the assets of the Company; or
(e) there shall be a voluntary or involuntary dissolution, liquidation
or winding-up of the Company;
then, in any one or more of said cases, the Company shall give written notice to
the Warrant Holder, not
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fewer than 20 days before any record date or other date set for definitive
action, or of the date on which such reorganization, reclassification, sale,
consolidation, merger, dissolution, liquidation or winding up shall take place,
as the case may be. Such notice shall also set forth such facts as shall
indicate the effect of such action (to the extent such effect may be known at
the date of such notice) on the current Exercise Price and the kind and amount
of the Warrant Shares and other securities and property deliverable upon
exercise of this Warrant. Such notice shall also specify the date as of which
the holders of the Common Stock of record shall be entitled to exchange their
Common Stock for securities or other property deliverable upon such
reorganization, reclassification, sale, consolidation, merger, dissolution,
liquidation or winding up, as the case may be.
4. Transfer of Rights. This Warrant is transferable, in whole or in part, at
------------------
the option of the Warrant Holder upon delivery of the Warrant Assignment Form
annexed as annex B, duly executed. The Company shall execute and deliver a new
Warrant or Warrants in the form of this Warrant with appropriate changes to
reflect the issuance of subsequent Warrants, in the name of the assignee or
assignees named in such instrument of assignment and, if the Warrant Holder's
entire interest is not being transferred or assigned, in the name of the Warrant
Holder, and this Warrant shall promptly be cancelled. Any transfer or exchange
of this Warrant shall be without charge to the Warrant Holder and any new
Warrant or Warrants issued shall be dated the date hereof. The term "Warrant"
as used herein includes any Warrants into which this Warrant may be divided or
for which it may be exchanged.
5. Rights of Warrant Holder. The Warrant Holder shall not, by virtue hereof,
------------------------
be entitled to any voting or other rights of a shareholder of the Company,
either at law or equity, and the rights of the Warrant Holder are limited to
those expressed in this Warrant.
6. Miscellaneous.
-------------
(a) This Warrant shall be construed in accordance with and governed by
the law of the state of New York without regard to principles of
conflicts and choice of laws.
(b) The caption headings used in this Warrant are for convenience of
reference only and shall not be construed in any way to affect the
interpretation of this Warrant.
(c) Any notice pursuant to this Warrant shall be sufficiently given if
sent by first-class mail, postage prepaid, or delivered by
facsimile transmission, addressed as follows:
if to the Company, to it at:
0000 Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Financial Officer
Facsimile No.: (000) 000-0000
(or to such other address as the Company may have furnished in writing
to the Warrant Holder for this purpose);
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if to the Warrant Holder, to it at such address as the Warrant Holder may
have furnished in writing to the Company for this purpose.
Date:
-----------------
LEVEL 8 SYSTEMS, INC.
By:
-----------------------
Name:
Title:
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ANNEX A
-------
COMMON STOCK PURCHASE WARRANT
-----------------------------
Notice of Exercise
_______________, 19__
To: XXXXX 0 SYSTEMS, INC.
The undersigned, pursuant to the provisions set forth in Warrant No. __,
hereby irrevocably elects and agrees to purchase ______ shares of the Company's
common stock covered by such Warrant, and makes payment herewith in full
therefor of the Total Exercise Price of $___________ in cash.
The undersigned hereby represents that the undersigned is exercising such
Warrant for its own account or the account of an affiliate for investment
purposes and not with the view to any offering or distribution and that the
Warrant Holder will not sell or otherwise dispose of the underlying Warrant
Shares in violation of applicable securities laws. [When applicable: If said
number of shares is less than all the shares purchasable hereunder, the
undersigned requests that a new Warrant evidencing the rights to purchase the
remaining Warrant Shares (which new Warrant shall in all other respects be
identical to the Warrant exercised hereby) be registered in the name of
___________, whose address is
_________________________
_________________________
_________________________]
Signature:
----------------------
Printed Name:
-------------------
Address:
-------------------------
-------------------------
-------------------------
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ANNEX B
-------
ASSIGNMENT
FOR VALUE RECEIVED, ____________________ hereby sells, assigns and
transfers all its rights as set forth in Warrant No. ___ with respect to the
shares of the Company's common stock covered thereby as set forth below unto:
Name of Assignee(s) Address(es) No. of Shares
------------------- ----------- -------------
------------------- ---------------- --------------
----------------
All notices to be given by the Company to the Warrant Holder pursuant to
paragraph 3 of Warrant No. ___ shall be sent to the Assignee(s) at the above
listed address(es), and, if the number of shares being hereby assigned is fewer
than all the shares covered by Warrant No. ___, then also to the undersigned.
The undersigned requests that the Company execute and deliver, if
necessary to comply with the provisions of paragraph 4 of Warrant No.___, a new
Warrant or, if the number of shares being hereby assigned is fewer than all the
shares covered by Warrant No. ___, new Warrants in the name of the undersigned,
the assignee and/or the assignees, as appropriate.
Dated: , 19
----------- --
Signature:
----------------------
Printed Name:
-------------------
Address:
------------------------
------------------------
------------------------
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