Exhibit 10.13
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (this "Agreement") is made as of May 25, 2001, by
and among each of the persons listed on the Schedule of Exchangors attached
hereto (each, an "Exchangor" and collectively the "Exchangors") and Advantage
Business Services Holdings, Inc., a Delaware corporation (the "Company"). Except
as otherwise indicated herein, capitalized terms used herein are defined in
Section 5 hereof.
WHEREAS, the Company has issued to each of the Exchangors one or more
Junior Subordinated Promissory Notes (each, a "Note" and collectively, the
"Notes").
WHEREAS, each Exchangor desires to exchange all of the outstanding
principal and interest on the Notes held by such Exchangor, as set forth
opposite such Exchangor's name on the Schedule of Exchangors attached hereto for
the number of shares of the Company's Preferred Stock, par value $.01 per share
(the "Preferred Stock") set forth opposite such Exchangor's name on the Schedule
of Exchangors attached hereto.
NOW, THEREFORE, the parties hereto agree as follows:
1. Authorization and Closings.
(a) Authorization of the Securities. The Company has authorized the
issuance and transfer to the Exchangors of up to an aggregate of 21,765,652
shares of Preferred Stock at a price of $1 per share.
(b) The Exchange. At the Closing, (i) the Company shall issue to each
Exchangor the number of shares of Preferred Stock set forth opposite such
Exchangor's name on the Schedule of Exchangors attached hereto in exchange for
delivery for cancellation by such Exchangor of the Note in the aggregate
principal amount plus accrued and unpaid interest set forth opposite such
Exchangor's name on the Schedule of Exchangors attached hereto.
(c) The Closing. The closing of the exchange of the Notes for Preferred
Stock hereunder (the "Closing") shall take place at the offices of Xxxxxxxx &
Xxxxx. At the Closing, the Company shall deliver to each Exchangor stock
certificates evidencing the Preferred Stock to be acquired by each Exchangor,
registered in the Exchangor's name, and each Exchangor shall deliver an original
copy of the Note held by such Exchangor for cancellation.
2. Representations and Warranties of the Company. As a material inducement
to the Exchangors to enter into this Agreement and exchange the Notes for shares
of Preferred Stock, the Company hereby represents and warrants that:
(a) Organization, Corporate Power and Licenses. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware and is qualified to do business in every jurisdiction in which the
failure to so qualify has had or would reasonably be expected to have a material
adverse effect on the financial condition, operating results, assets or
operations of the Company. The Company possesses 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.
(b) Capital Stock and Related Matters. All shares of Preferred
Stock to be issued to the Exchangors hereunder shall, when issued, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens,
encumbrances and charges (other than set forth in the Stockholders Agreement and
the Registration Agreement). There are no statutory or, to the Company's
knowledge, contractual stockholders preemptive rights or rights of refusal with
respect to the issuance of the Preferred Stock hereunder. To the Company's
knowledge, 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 Preferred Stock hereunder
do not require registration under the Securities Act or any applicable state
securities laws. To the Company's knowledge, there are no agreements between the
Company's stockholders with respect to the voting or transfer of the Company's
capital stock or with respect to any other aspect of the Company's affairs,
except for the Stockholders Agreement, the Registration Agreement, the
Registration Rights Agreement, dated July 23, 1999, among the Company, X. Xxxxxx
Xxxxxxxx and another shareholder of the Company, and agreements between the
Company and certain of its executives.
(c) Authorization: No Breach. This Agreement has been duly authorized,
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable in accordance with its terms, and
the execution, delivery and performance of this Agreement by the Company does
not and shall not conflict with, violate or cause a breach of any agreement,
contract or instrument to which the Company is a party or any judgment, order or
decree to which the Company is subject.
(d) Brokerage. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated
by this Agreement based on any arrangement or agreement made by or on behalf of
the Company.
3. Representations and Warranties of the Exchangor. As a material
inducement to the Company to enter into this Agreement and sell the shares of
the Preferred Stock, each Exchangor hereby represents and warrants that:
(a) Investment Representations. The Preferred Stock is being acquired
by such Exchangor for its own account and not with a view to, or intention of,
distribution thereof in violation of the Securities Act or any applicable state
securities laws, and such Exhangor agrees that it will not transfer or
otherwise dispose of the Preferred Stock in contravention of the Securities Act
or any
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applicable state securities laws. Such Exchangor is sophisticated in financial
matters and is able to evaluate the risks and benefits of its investment in the
Preferred Stock. Such Exchangor is able to bear the economic risk of its
investment in the Preferred Stock for an indefinite period of time because the
Preferred Stock has not been registered under the Securities Act and, therefore,
cannot be sold unless subsequently registered under the Securities Act or an
exemption from such registration is available. Such Exchangor has had an
opportunity to ask questions and receive answers concerning the terms and
conditions of the offering of the Preferred Stock and has had full access to
such other information concerning the Company as it has requested. Such
Exchangor has also reviewed, or has had an opportunity to review, the following
documents: (i) the Company's Certificate of Incorporation and bylaws; (ii) the
Stockholders Agreement; (iii) the Registration Agreement; and (iv) such other
material and documents (financial or otherwise) as such Exchangor has requested.
(b) Authorization; No Breach. This Agreement has been duly authorized,
executed and delivered by such Exchangor and constitutes the legal, valid and
binding obligation of such Exchangor, enforceable in accordance with its terms,
and the execution, delivery and performance of this Agreement by such Exchangor
does not and shall not conflict with, violate or cause a breach of any
agreement, contract or instrument to which such Exchangor is a party or any
judgment, order or decree to which such Exchangor is subject.
(c) Brokerage. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of
such Exchangor.
(d) Acknowledgment. Each Exchangor hereby acknowledges that the
Preferred Stock acquired hereunder is subject to the terms and conditions of the
Stockholders Agreement.
4. Transfer of Restricted Securities.
(a) Transferability. In addition to restrictions set forth in the
Stockholders Agreement, Restricted Securities are transferable only pursuant to
(i) public offerings registered under the Securities Act, (ii) Rule 144 or Rule
144A of the Securities and Exchange Commission (or any similar rule or rules
then in force) if such rule is available and (iii) subject to the conditions
specified in Section 4(b) below, any other legally available means of transfer.
(b) Opinion. In connection with the transfer of any Restricted
Securities (other than a transfer described in clause (i) or (ii) of Section
4(a) above), the holder thereof shall deliver written notice to the Company
describing in reasonable detail the transfer or proposed transfer, together with
an opinion of Xxxxxxxx & Xxxxx 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
opinion of Xxxxxxxx & Xxxxx 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
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transfer deliver new certificates for such Restricted Securities which do not
bear the Securities Act legend set forth in Section 4(c) below. 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(b) and Section 4(c)
below.
(c) Legend. Each certificate representing Restricted Securities shall
be imprinted with a legend in substantially the following form:
"The securities represented hereby have not been registered under the
Securities Act of 1933, as amended. The transfer of the securities
represented hereby is subject to the conditions specified in the Exchange
Agreement dated as of May 25, 2001, between the issuer (the "Company") and
the Exchangors party thereto, and the Company reserves the right to refuse
the transfer of such securities until such conditions have been fulfilled
with respect to such transfer. A copy of such conditions shall be furnished
by the Company to the holder hereof upon written request and without
charge."
5. Definitions. For the purposes of this Agreement, the following
terms have the meanings set forth below:
(a) "Registration Agreement" means that certain Registration
Agreement, dated as of February 10, 1998, by and among the Company and the
stockholders party thereto, as the same has been and may be amended, modified,
supplemented or waived from time to time.
(b) "Restricted Securities" means (i) the Preferred Stock issued
hereunder and (ii) any securities issued or exchanged 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 shall cease to be Restricted Securities when they
have been (a) effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering them, (b) been distributed
to the public through a broker, dealer or market maker pursuant to Rule 144 (or
any similar provision then in force) under the Securities Act or become eligible
for sale pursuant to Rule 144(k) (or any similar provision then in force) under
the Securities Act or (c) been otherwise transferred and new certificates for
them not bearing the Securities Act legend set forth in paragraph 4(c) have been
delivered by the Company in accordance with paragraph 4(c). Whenever any
particular securities cease to be Restricted Securities, the holder thereof
shall be entitled to receive from the Company, without expense, new securities
of like tenor not bearing a Securities Act legend of the character set forth in
paragraph 4(c).
(c) "Securities Act" means the Securities Act of 1933, as amended.
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(d) "Stockholders Agreement" means that certain Stockholders Agreement,
dated as of February 10, 1998, by and among the Company and its stockholders, as
the same has been and may be amended, modified, supplemented or waived from time
to time.
6. Miscellaneous.
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(a) Consent to Amendments. The provisions of this Agreement may be amended
and the Company or the Exchangors may take any action herein prohibited, or omit
to perform any act herein required to be performed by it, only with the written
consent of the Company and the Exchangors holding a majority of the Preferred
Stock acquired or to be acquired. No other course of dealing between the Company
and the Exchangors or any delay in exercising any rights hereunder shall operate
as a waiver of any rights of the Company or the Exchangors.
(b) Survival of Representations 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.
(c) 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 assigns of the parties hereto whether so expressed or not.
(d) 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.
(e) 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.
(f) Descriptive Headings; Interpretation. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement. The use of the word "including" in this Agreement shall be by way of
example rather than by limitation.
(g) Governing Law. All other issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement and any
exhibits and schedules hereto shall be governed by, and construed in accordance
with, the laws of the State of Delaware, without giving effect to any choice of
law or conflict of law rules or provisions (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. In furtherance of the foregoing,
the internal law of the State of Delaware shall control the interpretation and
construction of this Agreement (and any and all schedules and exhibits
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hereto), even though under that jurisdiction's choice of law or conflict of law
analysis, the substantive law of some other jurisdiction would ordinarily apply.
(h) Notices. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable overnight courier service
(charges prepaid) or mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to the parties at the addresses specified on the
signature pages attached hereto 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.
(i) Entire Agreement. The schedules identified in this Agreement are
incorporated herein by reference. This Agreement contains the entire agreement
between the parties and supersedes any prior understandings, agreements or
representations by or between the parties, written or oral, which may have
related to the subject matter hereof in any way.
(j) Indemnification. The Company agrees that it shall indemnify and
hold harmless each Exchangor for any liability, damage, loss, cost, tax or
expense (including, reasonable attorney's fees) arising from, resulting from or
in connection with any breach of any representation or warranty or any other
matter in connection with the transactions contemplated hereby, including the
exchange of the Notes.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Exchange
Agreement to make the transactions effective as of the date first written above.
ADVANTAGE BUSINESS SERVICES HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
------------------------------
Its: President and CEO
-----------------------------
EXCHANGOR:
XXXXXX XXXXX & PARTNERS, L.P.
By: Xxxxxx Xxxxx & Partners, L.L.C.
Its: General Partner
By: /s/ Xxxxxx Xxxx
------------------------------
Its: Managing Director
-----------------------------
/s/ Xxxxxx Xxxx
---------------------------------
Xxxxxx Xxxx
/s/ Xxxxxx Xxxxxxxxxx
---------------------------------
Xxxxxx Xxxxxxxxxx
/s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx
/s/ W. Xxxxx Xxxxx
---------------------------------
W. Xxxxx Xxxxx
/s/ Xxxxx X. Xxxxxx
---------------------------------
Xxxxx X. Xxxxxx
XXXXXXX TRUST
By: Peoples Heritage Bank
Its: Trustee
By: /s/ Xxxxxxx Xxxxxxxxx
------------------------------
Its: Senior Vice President
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SCHEDULE OF EXCHANGORS
----------------------
Aggregate Principal and Number of Shares of
Exchangor Interest on Exchanged Note Preferred Stock
--------- -------------------------- -------------------
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Xxxxxx Xxxxx & Partners, L.P. $17,922,237 17,922,237
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Xxxxxx Xxxx $34,148 34,148
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Xxxxxx Xxxxxxxxxx $46,954 46,954
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Xxxxxx X. Xxxxxx $692,999 692,999
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W. Xxxxx Xxxxx $692,999 692,999
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Xxxxx X. Xxxxxx $1,149,395 1,149,395
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Xxxxxxx Trust $1,217,920 1,217,920
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Total $21,756,652 21,756,652
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