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EXHIBIT 10.3
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PREFERRED STOCK PURCHASE AGREEMENT
between
PROXICOM, INC.
and
GENERAL ELECTRIC CAPITAL CORPORATION
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Dated: November 24, 1997
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TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINITIONS.................................................1
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1.1 DEFINITIONS.......................................................1
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1.2 ACCOUNTING TERMS; FINANCIAL STATEMENTS............................6
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ARTICLE 2 PURCHASE AND SALE OF PREFERRED STOCK........................7
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2.1 Purchase and Sale of Preferred Stock............................7
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2.2 Certificate of Designations.....................................7
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2.3 Use of Proceeds.................................................7
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2.4 Closing ........................................................7
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ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............7
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3.1 Corporate Existence and Power...................................8
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3.2 Authorization; No Contravention.................................8
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3.3 Governmental Authorization; Third Party Consents................8
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3.4 Binding Effect..................................................9
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3.5 Litigation......................................................9
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3.6 Compliance with Laws............................................9
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3.7 CAPITALIZATION..................................................10
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3.8 No Default or Breach; Contractual Obligations...................10
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3.9 FIRPTA..........................................................11
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3.10 Financial Statements...........................................11
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3.11 Taxes..........................................................11
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3.12 No Material Adverse Change; Ordinary Course of Business........12
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3.13 Private Offering...............................................12
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3.14 Title to Assets................................................12
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3.15 Liabilities....................................................13
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3.16 Intellectual Property..........................................13
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3.17 Trade Relations; Computer Systems..............................14
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3.18 Broker's, Finder's or Similar Fees.............................15
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3.19 Disclosure.....................................................15
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ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.............15
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4.1 Existence and Power.............................................16
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4.2 Authorization; No Contravention.................................16
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4.3 Governmental Authorization; Third Party Consents................16
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4.4 Binding Effect..................................................16
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4.5 Purchase for Own Account........................................16
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4.6 Restricted Securities...........................................18
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4.7 Accredited Investor Status......................................18
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4.8 Litigation......................................................18
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4.9 Broker's, Finder's or Similar Fees..............................18
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ARTICLE 5 CONDITIONS TO THE OBLIGATION OF THE PURCHASER TO CLOSE......18
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5.1 Representations and Warranties..................................19
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5.2 Compliance with this Agreement..................................19
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5.3 Secretary's Certificate.........................................19
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5.4 Officer's Certificate...........................................19
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5.5 Documents.......................................................19
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5.6 Filing of Certificate of Designations...........................20
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5.7 Purchased Shares................................................20
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5.8 Stockholders Agreement..........................................20
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5.9 Registration Rights Agreement...................................20
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5.10 Approval of Counsel to the Purchaser...........................20
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5.11 Consents and Approvals.........................................20
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5.12 No Material Judgment or Order..................................20
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5.13 No Litigation..................................................21
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5.14 Opinions.......................................................21
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ARTICLE 6 CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSE.......21
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6.1 Representations and Warranties..................................21
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6.2 Compliance with this Agreement..................................21
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6.3 Officers' Certificate...........................................21
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6.4 Payment of Purchase Price.......................................22
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6.5 Stockholders' Agreement.........................................22
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6.6 Registration Rights Agreement...................................22
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6.7 Approval of Counsel to the Company..............................22
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6.8 Consents and Approvals..........................................22
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6.9 No Material Judgment or Order...................................22
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6.10 No Litigation..................................................23
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ARTICLE 7 INDEMNIFICATION.............................................23
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7.1 Indemnification.................................................23
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7.2 Notification....................................................24
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7.3 Limitations on Indemnification..................................25
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ARTICLE 8 AFFIRMATIVE COVENANTS.......................................25
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8.1 Preservation of Existence.......................................25
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8.2 Financial Statements and Other Information......................26
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8.3 Reservation of Common Stock and Preferred Stock.................26
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8.4 Compliance with Laws............................................27
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8.5 Insurance.......................................................27
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8.6 Books and Records...............................................27
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8.7 Future Issuances................................................27
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8.8 Directors and Officers' Liability Insurance.....................27
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ARTICLE 9 MISCELLANEOUS...............................................28
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9.1 Survival of Representations and Warranties......................28
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9.2 Notices.........................................................28
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9.3 Successors and Assigns; Third Party Beneficiaries...............29
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9.4 Amendment and Waiver............................................30
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9.5 Professional Services; Seminars.................................30
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9.6 Counterparts....................................................30
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9.7 Headings........................................................31
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9.8 GOVERNING LAW...................................................31
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9.9 Severability....................................................31
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9.10 Rules of Construction..........................................31
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9.11 Entire Agreement...............................................31
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9.12 Fees...........................................................31
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9.13 Publicity......................................................31
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9.14 Further Assurances.............................................32
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9.15 Confidentiality................................................32
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EXHIBITS
A Certificate of Incorporation
B By-laws
C Form of Certificate of Designations
D Stockholders Agreement
E Form of Registration Rights Agreement
F Form of Amendment No. 1 to Amended and Restated
Stockholders Agreement
The Exhibits and Schedules to this Preferred Stock Purchase Agreement are not
included with this Registration Statement on Form S-1. The Registrant will
provide these Exhibits and Schedules upon the request of the Securities and
Exchange Commission.
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SCHEDULES
2 Purchased Shares and Purchase Price
3.1(c) Jurisdictions in which Company Leases or Owns Properties
3.3 Governmental Authorizations; Third Party Consents
3.5 Litigation
3.7 Options, Warrants, Conversion Privileges, Subscription
or Purchase Rights or Other Rights
3.8 Defaults
3.11 Taxes
3.12 Transactions Outside the Ordinary Course of Business
3.14 Title to Assets of the Company
3.15 Liabilities
3.16(a)(ii) Trademarks, Service Marks, Trade Names and Registered
Copyrights Owned by the Company and Applications
therefor
3.16(a)(iii) Intellectual Property Licenses under which the Company
is a Licensor or Licensee
3.16(a)(iv) Infringements of the Company
3.16(a)(v) Intellectual Property Litigation
3.16(b) Infringement or Violations of Intellectual
Property Rights
3.16(d) License Agreements which require a Material
Royalty Payment
3.17 Trade Relations
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EXECUTION COPY
PREFERRED STOCK PURCHASE AGREEMENT
PREFERRED STOCK PURCHASE AGREEMENT, dated November 24, 1997 (this
"Agreement"), between PROXICOM, INC., a Delaware corporation (the "Company") and
GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation (the "Purchaser").
WHEREAS, upon the terms and conditions set forth in this Agreement,
the Company proposes to issue and sell to the Purchaser for an aggregate
purchase price of $2,000,000, an aggregate of 419,302 shares, par value $.01 per
share, of Series C Convertible Preferred Stock of the Company (the "Preferred
Stock").
WHEREAS, each share of Preferred Stock is convertible (subject to
adjustment) into one share, par value $.01 per share, of Common Stock of the
Company (the "Common Stock").
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Affiliate" shall mean, with respect to any Person, any other Person
who controls, is controlled by or is under common control with such Person.
"Amendment No. 1 to Amended and Restated Stockholders Agreement" means
the Amendment No. 1 to Amended and Restated Stockholders Agreement substantially
in the form attached hereto as Exhibit F.
"Agreement" means this Agreement as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"Board of Directors" means the Board of Directors of the Company.
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"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in the State of New York are authorized or
required by law or executive order to close.
"By-laws" means the by-laws of the Company as in effect as of the
Closing Date substantially in the form attached hereto as Exhibit B.
"Capital Lease Obligations" of any Person shall mean, as of the date
of determination, the obligations of such Person to pay rent or other amounts
under any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are required to
be classified and accounted for as capital leases on a balance sheet of such
Person under GAAP and, for the purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at such time
determined in accordance with GAAP consistently applied.
"Certificate of Designations" means the Certificate of Designations
with respect to the Preferred Stock adopted by the Board of Directors and filed
with the Secretary of State of the State of Delaware on or before the Closing
Date substantially in the form attached hereto as Exhibit C.
"Certificate of Incorporation" means the Certificate of Incorporation
of the Company, as the same may have been amended and as in effect as of the
Closing Date substantially in the form attached hereto as Exhibit A.
"Claims" has the meaning set forth in Section 3.5 of this Agreement.
"Closing" has the meaning set forth in Section 2.4 of this Agreement.
"Closing Date" has the meaning set forth in Section 2.4 of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
"Commission" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act.
"Common Stock" means Common Stock, par value $.01 per share, of the
Company, or any other capital stock of the Company into which such stock is
reclassified or reconstituted.
"Common Stock Equivalents" means any security or obligation which is
by its terms convertible into or exchangeable for shares of Common Stock,
including, without limitation, the Preferred Stock, and any option, warrant or
other subscription or purchase right with respect to Common Stock.
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"Company" has the meaning assigned to such term in the recital to this
Agreement.
"Condition of the Company" means the assets, business, properties,
operations or financial condition of the Company, taken as a whole.
"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability of that Person with respect to any Indebtedness, lease,
dividend, guaranty, letter of credit or other obligation, contractual or
otherwise (the "primary obligation") of another Person (the "primary obligor"),
whether or not contingent, (a) to purchase, repurchase or otherwise acquire such
primary obligations or any property constituting direct or indirect security
therefor, or (b) to advance or provide funds (i) for the payment or discharge of
any such primary obligation, or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition of
the primary obligor, or (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, or (d) otherwise to assure or hold harmless the owner of any such
primary obligation against loss or failure or inability to perform in respect
thereof. The amount of any Contingent Obligation shall be deemed to be an amount
equal to the stated or determinable amount of the primary obligation in respect
of which such Contingent Obligation is made or, if not stated or determinable,
the maximum reasonably anticipated liability in respect thereof.
"Contractual Obligations" means as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument to which such Person is a
party or by which it or any of its property is bound.
"Copyrights" means any foreign or United States copyright
registrations and applications for registration thereof, and any non-registered
copyrights.
"Environmental Laws" means federal, state, local and foreign laws,
principles of common law, civil law, regulations and codes, as well as orders,
decrees, judgments or injunctions issued, promulgated, approved or entered
thereunder relating to pollution, protection of the environment or public health
and safety.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.
"FBR" means FBR Venture Capital Managers Inc., a Delaware corporation.
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"Financial Statements" has the meaning set forth in Section 3.10.
"GAAP" means generally accepted accounting principles in effect from
time to time.
"GAP Coinvestment" means GAP Coinvestment Partners, L.P., a New York
limited partnership.
"GAP LP" means General Atlantic Partners 34, L.P., a Delaware limited
partnership.
"Governmental Authority" means the government of any nation, state,
city, locality or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"Indebtedness" means, as to any Person, (a) all obligations of such
Person for borrowed money (including, without limitation, reimbursement and all
other obligations with respect to surety bonds, letters of credit and bankers'
acceptances, whether or not matured), (b) all obligations of such Person
evidenced by notes, bonds, debentures or similar instruments, (c) all
obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable and accrued commercial or trade
liabilities arising in the ordinary course of business, (d) all interest rate
and currency swaps, caps, collars and similar agreements or hedging devices
under which payments are obligated to be made by such Person, whether
periodically or upon the happening of a contingency, (e) all indebtedness
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), (f) all obligations of
such Person under leases which have been or should be, in accordance with GAAP,
recorded as capital leases, (g) all indebtedness secured by any Lien (other than
Liens in favor of lessors under leases other than leases included in clause (f))
on any property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is
non-recourse to the credit of that Person, and (h) any Contingent Obligation of
such Person.
"Internet Assets" means any internet domain names and other computer
user identifiers and any rights in and to sites on the Worldwide Web, including
rights in and to any text, graphics, audio and video files and html or other
code incorporated in such sites.
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"Liabilities" has the meaning set forth in Section 3.15 of this
Agreement.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or preference, priority,
right or other security interest or preferential arrangement of any kind or
nature whatsoever (excluding preferred stock and equity related preferences),
including, without limitation, those created by, arising under or evidenced by
any conditional sale or other title retention agreement, the interest of a
lessor under a Capital Lease Obligation, or any financing lease having
substantially the same economic effect as any of the foregoing.
"Mask Works" means any mask works and registrations and applications
for registrations thereof.
"Morino Trust" means The Xxxxx X. Xxxxxx Trust.
"Patents" means any foreign or United States patents and patent
applications, including any divisions, continuations, continuations-in-part,
substitutions or reissues thereof, whether or not patents are issued on such
applications and whether or not such applications are modified, withdrawn or
resubmitted.
"Person" means any individual, firm, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
limited liability company, Governmental Authority or other entity of any kind,
and shall include any successor (by merger or otherwise) of such entity.
"Preferred Stock" has the meaning assigned to such term in the recital
to this Agreement.
"Purchased Shares" has the meaning set forth in Section 2.1 of this
Agreement.
"Registration Rights Agreement" means the Amended and Restated
Registration Rights Agreement dated November __, 1997 among the Company, GAP LP,
GAP Coinvestment, Xxxx Xxxxxxxxx, Morino Trust, FBR and the Purchaser.
"Requirements of Law" means, as to any Person, any law, statute,
treaty, rule, regulation, license or franchise or determination of an arbitrator
or a court or other Governmental Authority, in each case applicable or binding
upon such Person or any of its property or to which such Person or any of its
property is subject or pertaining to any or all of the transactions contemplated
or referred to herein.
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"Securities" means the Purchased Shares and the shares of Common Stock
issuable upon conversion of the Purchased Shares.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"Series A Preferred Stock" means the Series A Convertible Preferred
Stock of the Company, par value $.01 per share.
"Series B Preferred Stock" means the Series B Convertible Preferred
Stock of the Company, par value $.01 per share.
"Software" means any computer software programs, source code, object
code and manuals and other written material with respect thereto.
"Stockholders Agreement" means the Amended and Restated Stockholders
Agreement, dated February 20, 1997, among the Company, Xxxx Xxxxxxxxx, GAP LP,
GAP Coinvestment, Morino Trust and FBR in the form attached hereto as Exhibit D.
"Subsidiaries" means, as to any Person, a corporation, partnership,
limited liability company or other entity of which 50% or more of the voting
power of the outstanding voting equity securities or 50% or more of the
outstanding economic equity interest is held, directly or indirectly, by such
Person.
"Trade Secrets" means any trade secrets, research records, processes,
procedures, manufacturing formulae, technical know-how, technology, blue prints,
designs, plans, inventions (whether patentable and whether reduced to practice),
invention disclosures and improvements thereto.
"Trademarks" means any foreign or United States trademarks, service
marks, trade dress, trade names, brand names, designs and logos, corporate
names, product or service identifiers, whether registered or unregistered, and
all registrations and applications for registration thereof.
"Transaction Documents" means collectively, this Agreement, the
Certificate of Designations, Amendment No. 1 to Amended and Restated
Stockholders Agreement, the Stockholders Agreement, and the Registration Rights
Agreement.
1.2 Accounting Terms; Financial Statements. All accounting terms used
herein not expressly defined in this Agreement shall have the respective
meanings given to them in accordance with sound accounting practice. The term
"sound accounting practice" shall mean such accounting practice as, in the
opinion of the independent certified public accountants regularly retained by
the Company,
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conforms at the time to GAAP applied on a consistent basis except for changes
with which such accountants concur.
ARTICLE 2
PURCHASE AND SALE OF PREFERRED STOCK
2.1 Purchase and Sale of Preferred Stock. Subject to the terms and
conditions herein set forth, the Company agrees to issue and sell to the
Purchaser, and the Purchaser agrees that it will purchase from the Company, on
the Closing Date, the aggregate number of shares of Preferred Stock set forth
opposite the Purchaser's name on Schedule 2 hereto, for the aggregate purchase
price set forth opposite the Purchaser's name on Schedule 2 hereto (all of the
shares of Preferred Stock being purchased pursuant hereto being referred to
herein as the "Purchased Shares").
2.2 Certificate of Designations. The Purchased Shares shall have the
preferences and rights set forth in the Certificate of Designations.
2.3 Use of Proceeds. The Company shall use the proceeds from the sale
of the Purchased Shares for working capital purposes.
2.4 Closing. The closing of the sale and purchase of the Purchased
Shares (the "Closing") shall take place at the offices of Xxxxx & Xxxxxxx, at
10:00 a.m., local time, on the date hereof, or at such other time, place and
date that the Company and the Purchaser may agree in writing (the "Closing
Date"). On the Closing Date, the Company shall deliver to the Purchaser a stock
certificate representing the Purchased Shares against delivery by the Purchaser
to the Company of the aggregate purchase price therefor by wire transfer of
immediately available funds.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchaser as follows:
3.1 Corporate Existence and Power. The Company (a) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; (b) has all requisite power and authority to
own and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently, or is currently proposed to be,
engaged; (c) is duly qualified as a foreign corporation, licensed and in good
standing under the
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laws of the Commonwealth of Virginia and the State of New York; and (d) has the
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and each of the other Transaction Documents. The Company
does not file (and is not required to file) any franchise, income or other tax
returns in any other jurisdiction other than set forth in clause (c) above based
upon the ownership or use of property in other jurisdictions or the derivation
of income therefrom. Except as set forth on Schedule 3.1(c), the Company does
not own, lease or operate property in any jurisdiction other than its
jurisdiction of incorporation and the jurisdictions referred to in clause (c)
above.
3.2 Authorization; No Contravention. The execution, delivery and
performance by the Company of this Agreement and each of the other Transaction
Documents and the transactions contemplated hereby and thereby, including,
without limitation, the sale, issuance and delivery of the Securities, (a) have
been duly authorized by all necessary corporate action of the Company; (b) do
not contravene the terms of the Certificate of Incorporation or the By-laws, or
any amendment thereof; (c) do not violate, conflict with or result in any breach
or contravention of, or the creation of any Lien under, any Contractual
Obligation of the Company, or any Requirement of Law applicable to the Company;
and (d) do not violate any judgment, injunction, writ, award, decree or order of
any nature (collectively, "Orders") of any Governmental Authority against, or
binding upon, the Company. The Company has not previously entered into any
Contractual Obligation which is currently in effect or by which the Company is
currently bound, granting any rights to any Person which are inconsistent with
the rights to be granted by the Company in this Agreement and each of the other
Transaction Documents.
3.3 Governmental Authorization; Third Party Consents. Except as set
forth in Schedule 3.3, no approval, consent, compliance, exemption,
authorization or other action by, or notice to, or filing with, any Governmental
Authority or any other Person in respect of any Requirement of Law, and no lapse
of a waiting period under a Requirement of Law, is necessary or required in
connection with the execution, delivery or performance (including, without
limitation, the sale, issuance and delivery of the Securities) by, or
enforcement against, the Company of this Agreement and the other Transaction
Documents or the transactions contemplated hereby and thereby.
3.4 Binding Effect. This Agreement and each of the other Transaction
Documents have been duly executed and delivered by the Company, and constitute
the legal, valid and binding obligations of the Company enforceable against the
Company in accordance with their terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or similar laws affecting the enforcement of
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creditors' rights generally and by general principles of equity relating to
enforceability (regardless of whether considered in a proceeding at law or in
equity).
3.5 Litigation. Except as set forth on Schedule 3.5, there are no
actions, suits, proceedings, claims, complaints, disputes, arbitrations or
investigations (collectively, "Claims") pending or, to the knowledge of the
Company, threatened, at law, in equity, in arbitration or before any
Governmental Authority against the Company which would, if adversely determined,
have a material adverse effect on (a) the Condition of the Company or (b) the
ability of the Company to perform its obligations under this Agreement or any of
the other Transaction Documents. No Order has been issued by any court or other
Governmental Authority against the Company purporting to enjoin or restrain the
execution, delivery or performance of this Agreement or any of the other
Transaction Documents.
3.6 Compliance with Laws.
(a) The Company is in compliance with all Requirements of Law and
all Orders issued by any court or Governmental Authority against the Company in
all respects, except to the extent that the failure to comply with such
Requirements of Law or Orders would not have a material adverse effect on the
Condition of the Company.
(b) (i) The Company has all licenses, permits, orders and
approvals of any Governmental Authority (collectively, "Permits") that are
necessary for the conduct of the business of the Company, except to the extent
that the failure to have such Permits would not have a material adverse effect
on the Condition of the Company; (ii) such Permits are in full force and effect;
and (iii) no violations are or have been recorded in respect of any Permit.
(c) No material expenditure is presently required by the Company
to comply with any existing Requirement of Law or Order.
(d) The property, assets and operations owned or leased by the
Company are in compliance in all material respects with all applicable
Environmental Laws, while so owned or leased.
3.7 CAPITALIZATION. ON THE CLOSING DATE, AFTER GIVING EFFECT TO THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE AUTHORIZED CAPITAL STOCK OF THE
COMPANY SHALL CONSIST OF 20,000,000 SHARES OF COMMON STOCK, OF WHICH 8,539,371
SHARES SHALL BE ISSUED AND OUTSTANDING TO XXXX XXXXXXXXX, AND 5,000,000 SHARES
OF PREFERRED STOCK (WHICH MAY BE ISSUED IN ONE OR MORE SERIES), WHICH SHALL BE
ISSUED AND OUTSTANDING AS FOLLOWS: (a) 1,629,969 SHARES OF SERIES A PREFERRED
STOCK, OF WHICH (i) 1,389,218 SHARES SHALL BE OUTSTANDING AND ISSUED TO GAP LP,
AND (ii) 240,751 SHARES
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SHALL BE OUTSTANDING AND ISSUED TO GAP COINVESTMENT, (b) 359,712 SHARES OF
SERIES B PREFERRED STOCK, OF WHICH (i) 81,535 SHARES SHALL BE OUTSTANDING AND
ISSUED TO GAP LP, (ii) 14,388 SHARES SHALL BE OUTSTANDING AND ISSUED TO GAP
COINVESTMENT, (iii) 23,981 SHARES SHALL BE OUTSTANDING AND ISSUED TO FBR AND
(iv) 239,808 SHARES SHALL BE OUTSTANDING AND ISSUED TO MORINO TRUST, AND (c)
419,302 SHARES OF PREFERRED STOCK, ALL OF WHICH SHALL BE OUTSTANDING AND ISSUED
TO THE PURCHASER. THE COMPANY HAS RESERVED AN AGGREGATE OF 419,302 SHARES OF
COMMON STOCK FOR ISSUANCE UPON CONVERSION OF THE PURCHASED SHARES. EXCEPT AS SET
FORTH ON SCHEDULE 3.7, THERE ARE NO OPTIONS, WARRANTS, CONVERSION PRIVILEGES,
SUBSCRIPTION OR PURCHASE RIGHTS OR OTHER RIGHTS PRESENTLY OUTSTANDING TO
PURCHASE OR OTHERWISE ACQUIRE (x) ANY AUTHORIZED BUT UNISSUED, UNAUTHORIZED OR
TREASURY SHARES OF THE COMPANY'S CAPITAL STOCK, (y) ANY COMMON STOCK EQUIVALENTS
OR (z) OTHER SECURITIES OF THE COMPANY. THE PURCHASED SHARES ARE DULY
AUTHORIZED, AND, ASSUMING THE ACCURACY OF THE REPRESENTATIONS AND WARRANTIES OF
THE PURCHASER SET FORTH IN SECTIONS 4.6 AND 4.7, WHEN ISSUED AND SOLD TO THE
PURCHASER AFTER PAYMENT THEREFOR, WILL BE VALIDLY ISSUED, FULLY PAID AND
NONASSESSABLE AND WILL BE ISSUED IN COMPLIANCE WITH THE REGISTRATION AND
QUALIFICATION REQUIREMENTS OF ALL APPLICABLE FEDERAL SECURITIES LAWS. THE SHARES
OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE PURCHASED SHARES ARE DULY
AUTHORIZED AND, WHEN ISSUED IN COMPLIANCE WITH THE PROVISIONS OF THE CERTIFICATE
OF INCORPORATION AND THE CERTIFICATE OF DESIGNATIONS, WILL BE VALIDLY ISSUED,
FULLY PAID AND NONASSESSABLE AND WILL BE ISSUED IN COMPLIANCE WITH THE
REGISTRATION AND QUALIFICATION REQUIREMENTS OF ALL APPLICABLE FEDERAL SECURITIES
LAWS. THE ISSUED AND OUTSTANDING SHARES OF COMMON STOCK ARE ALL DULY AUTHORIZED,
VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE, AND WERE ISSUED IN COMPLIANCE WITH
THE REGISTRATION AND QUALIFICATION REQUIREMENTS OF ALL APPLICABLE FEDERAL
SECURITIES LAWS. THE COMPANY HAS NO SUBSIDIARIES.
3.8 No Default or Breach; Contractual Obligations; Insurance. Except
as set forth in Schedule 3.8, the Company has not received notice of, and is not
in default under, or with respect to, any Contractual Obligation in any respect,
which, individually or together with all such defaults, could have a material
adverse effect on (i) the Condition of the Company or (ii) the ability of the
Company to perform its obligations under this Agreement or the other Transaction
Documents. The Company maintains directors and officers' liability insurance
covering certain claims against the directors and officers of the Company, and
such insurance is in full force and effect. Such policy provides annual coverage
of $3,000,000 for such claims (including defense costs).
3.9 FIRPTA. The Company is not a "foreign person" within the meaning
of Section 1445 of the Code.
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3.10 Financial Statements. The Company has delivered to the Purchaser
its (i) audited financial statements (balance sheet and statements of
operations, cash flows and stockholders' equity, together with the notes
thereto) for the fiscal years ended and as at December 31, 1996, December 31,
1995 and December 31, 1994 (the "Audited Financial Statements"), and (ii) its
unaudited financial statements (balance sheet and statement of operations) for
the fiscal quarters ended and as at March 31, 1997, June 30, 1997 and September
30, 1997 (the "Unaudited Financial Statements"; the Audited Financial Statements
and Unaudited Financial Statements being collectively referred to as the
"Financial Statements"). The Financial Statements are complete and correct in
all material respects and have been prepared in accordance with GAAP applied on
a consistent basis throughout the periods indicated and with each other, except
that the Unaudited Financial Statements do not contain footnotes or typical
year-end adjustments. The Financial Statements fairly present the financial
position, operating results and cash flows of the Company as of the respective
dates and for the respective periods indicated, subject, in the case of the
Unaudited Financial Statements, to normal year-end audit adjustments.
3.11 Taxes. (i) The Company has paid all federal, state,
county, local, foreign and other taxes, including, without limitation, income
taxes, estimated taxes, excise taxes, sales taxes, use taxes, gross receipts
taxes, franchise taxes, employment and payroll related taxes, property taxes and
import duties, whether or not measured in whole or in part by net income
(hereinafter, "Taxes" or, individually, a "Tax") which have come due and are
required to be paid by it through the date hereof, and all deficiencies or other
additions to Tax, interest and penalties owed by it in connection with any such
Taxes, and shall timely pay any Taxes including additions, interest and
penalties, required to be paid by it on, before or after the date hereof; (ii)
the Company has timely filed returns for Taxes that it is required to file on
and through the date hereof, and shall timely file all returns for Taxes that it
is required to file after the date hereof; (iii) with respect to all Tax returns
of the Company, (x) except as set forth in Schedule 3.11, to the knowledge of
the Company, there is no unassessed tax deficiency proposed or threatened
against the Company and (y) except as set forth in Schedule 3.11, no audit is in
progress and no extension of time is in force with respect to any date on which
any return for Taxes was or is to be filed and no waiver or agreement is in
force for the extension of time for the assessment or payment of any Tax; (iv)
except as set forth in Schedule 3.11, the Company has not agreed nor is it
required to make any adjustments under Section 481(a) of the Code by reason of a
change in accounting methods or otherwise; and (v) all provisions for income and
other Tax liabilities of the Company with respect to the Financial Statements
have been made in accordance with GAAP consistently applied, and all liabilities
for Taxes of the Company attributable to periods prior to or ending on December
31, 1995 and December 31, 1996 have been adequately provided for on the
Financial Statements. Schedule 3.11 sets forth the status of federal income tax
audits and state, local and
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foreign tax audits of the Tax returns of the Company for each taxable year for
which the statute of limitations has not expired.
3.12 No Material Adverse Change; Ordinary Course of Business. Since
December 31, 1996, there has not been any material adverse change, nor to the
knowledge of the Company is any such change threatened, in the Condition of the
Company. To the knowledge of the Company there is no material adverse change
threatened with respect to the prospects of the Company, taken as a whole.
Except as set forth on Schedule 3.12, since December 31, 1996, the Company has
not participated in any transaction or otherwise acted outside the ordinary
course of business, including, without limitation, declaring or paying any
dividend or declaring or making any distribution to its stockholders, except out
of the earnings of the Company.
3.13 Private Offering. No form of general solicitation or general
advertising was used by the Company or its representatives in connection with
the offer or sale of the Purchased Shares. No registration of the Securities,
pursuant to the provisions of the Securities Act or any state securities or
"blue sky" laws, will be required by the offer, sale or issuance of the
Securities. The Company agrees that neither it, nor anyone acting on its behalf,
shall offer to sell the Securities or any other security of the Company so as to
require the registration of the Securities pursuant to the provisions of the
Securities Act or any state securities or "blue sky" laws, unless such
Securities or other security is so registered.
3.14 Title to Assets. Except as set forth on Schedule 3.14, the
Company owns and has good, valid, and marketable title to all of its properties
and assets used in its business and reflected as owned on the Financial
Statements or so described in any Schedule hereto (collectively, the "Assets"),
in each case free and clear of all Liens, except for (a) Liens specifically
described on the notes to the Financial Statements and (b) Liens on Assets which
Liens individually or in the aggregate are not material to the Condition of the
Company.
3.15 Liabilities. Except as set forth on Schedule 3.15, the Company
has no obligation or liability ("Liabilities") other than (i) Liabilities fully
and adequately reflected or reserved against on the Financial Statements, (ii)
Liabilities not required by GAAP to be set forth on the Financial Statements and
(iii) Liabilities incurred since December 31, 1996 in the ordinary course of
business. The Company has no knowledge of any circumstance, condition, event or
arrangement that may hereafter give rise to any Liabilities of the Company
except in the ordinary course of business or as otherwise set forth on Schedule
3.15.
3.16 Intellectual Property.
(a)(i) The Company is the exclusive owner of or has the license
or right to use, sell, license or dispose of all of the Copyrights, Patents,
Trade
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Secrets, Trademarks, Internet Assets, Mask Works, Software and other proprietary
rights (collectively, "Intellectual Property") that are used in connection with
its business as presently conducted, free and clear of all Liens.
(a)(ii) Schedule 3.16(a)(ii) sets forth all of the Intellectual
Property owned by, and applications for any of the above filed by, the Company.
None of the Intellectual Property listed on Schedule 3.16(a)(ii) is subject to
any outstanding Order, and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand is pending or, to the knowledge of the
Company, threatened, which challenges the validity, enforceability, use or
ownership of the item.
(a)(iii) Schedule 3.16(a)(iii) sets forth all Intellectual
Property licenses, sublicenses and other agreements under which the Company is
either a licensor or licensee of any Intellectual Property, except such
licenses, sublicenses and other agreements relating to software used solely on
the computers of the Company (such as standard office products and products not
necessary in the use or operation of the Company's products or services). The
Company has substantially performed all obligations imposed upon it thereunder,
and the Company is not, nor to the knowledge of the Company is any other party
thereto, in breach of or default thereunder in any respect, nor is there any
event which with notice or lapse of time or both would constitute a default
thereunder. All of the Intellectual Property licenses listed on Schedule
3.16(a)(iii) are valid, enforceable and in full force and effect, and will
continue to be so on identical terms immediately following the Closing, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity relating to enforceability (regardless of whether
considered in a proceeding at law or in equity).
(a)(iv) To the knowledge of the Company, other than as set forth
on Schedule 3.16(a)(iv), none of the Intellectual Property currently sold or
licensed by the Company to any Person or used by or licensed to the Company
infringes upon or otherwise violates any Intellectual Property rights of others.
(a)(v) Except as set forth on Schedule 3.16(a)(v), no litigation
is pending and no Claim has been made against the Company or, to the knowledge
of the Company, is threatened, contesting the right of the Company to sell or
license to any Person or use the Intellectual Property presently sold or
licensed to such Person or used by the Company.
(b) Except as set forth on Schedule 3.16(b), to the knowledge of
the Company, no Person is infringing upon or otherwise violating the
Intellectual Property rights of the Company.
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(c) No former employer of any employee of the Company, and no
current or former client of any consultant of the Company, has made a claim
against the Company that such employee or such consultant is utilizing
proprietary information of such former employer or client.
(d) Except as set forth on Schedule 3.16(d), the Company is not a
party to or bound by any license or other agreement requiring the payment of any
material royalty payment, excluding such agreements relating to software
licensed for use solely on the computers of the Company.
(e) To the knowledge of the Company, no employee of the Company
is in violation of any term of any employment agreement, patent or invention
disclosure agreement or other contract or agreement relating to the relationship
of such employee with the Company.
(f) To the knowledge of the Company, none of the designs, plans,
trade secrets, inventions, processes, procedures, research records,
manufacturing know-how and formulae, wherever located, the value of which is
contingent upon maintenance of confidentiality thereof, has been disclosed to
any Person other than employees, representatives and agents of the Company,
except as required pursuant to the filing of a patent application by the
Company, or when disclosure to a Person is necessary pursuant to confidentiality
agreements entered into by the Company.
3.17 Trade Relations; Computer Systems. Except as set forth on
Schedule 3.17, there exists no actual or, to the knowledge of the Company,
threatened termination, cancellation or limitation of, or any adverse
modification or change in, the business relationship of the Company, or the
business of the Company, with any customer or distributor or any group of
customers or distributors whose purchases are individually or in the aggregate
material to the Condition of the Company, or with any material supplier of the
Company, and, to the knowledge of the Company, there exists no present condition
or state of fact or circumstances that would materially adversely affect the
Condition of the Company or prevent the Company from conducting such business
relationships or such business with any such customer, such group of customers
or distributors or such material supplier in the same manner as heretofore
conducted by the Company. The Company represents and warrants that its computer
systems and software are able to accurately process date data, including but not
limited to, calculating, comparing and sequencing from, into and between the
twentieth century (through year 1999), the year 2000 and the twenty-first
century, including leap year calculations.
3.18 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by the Company
in connection with the transactions contemplated hereby based on any agreement,
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arrangement or understanding with the Company or any action taken by any such
Person.
3.19 Disclosure.
(a) Agreement and Other Documents. This Agreement and the
documents and certificates furnished to the Purchaser by the Company, taken as a
whole, do not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which they were made, not
misleading.
(b) Material Adverse Effects. There is no fact known to the
Company, which the Company has not disclosed to the Purchaser in writing, which
materially adversely affects the Condition of the Company or the ability of the
Company to perform its obligations under this Agreement, any of the other
Transaction Documents or any document contemplated hereby or thereby.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as
follows:
4.1 Existence and Power. The Purchaser (a) is a partnership, trust or
corporation, as the case may be, duly organized and validly existing under the
laws of the jurisdiction of its formation and (b) has the requisite power and
authority to execute, deliver and perform its obligations under this Agreement
and each of the other Transaction Documents to which it is a party.
4.2 Authorization; No Contravention. The execution, delivery and
performance by the Purchaser of this Agreement and each of the other Transaction
Documents to which it is a party and the transactions contemplated hereby and
thereby, including, without limitation, the purchase of the Purchased Shares,
(a) have been duly authorized by all necessary action, (b) do not contravene the
terms of the Purchaser's organizational documents, or any amendment thereof, and
(c) do not violate, conflict with or result in any breach or contravention of or
the creation of any Lien under, any Contractual Obligation of the Purchaser, or
any Requirement of Law applicable to the Purchaser.
4.3 Governmental Authorization; Third Party Consents. No approval,
consent, compliance, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person with
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respect to any Requirement of Law, and no lapse of a waiting period under any
Requirement of Law, is necessary or required in connection with the execution,
delivery or performance (including, without limitation, the purchase of the
Purchased Shares) by, or enforcement against, the Purchaser of this Agreement
and each of the other Transaction Documents to which the Purchaser is a party or
the transactions contemplated hereby and thereby.
4.4 Binding Effect. This Agreement and each of the other Transaction
Documents to which the Purchaser is a party have been duly executed and
delivered by the Purchaser and constitute the legal, valid and binding
obligations of the Purchaser, enforceable against it in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium or
similar laws affecting the enforcement of creditors' rights generally or by
equitable principles relating to enforceability (regardless of whether
considered in a proceeding at law or in equity).
4.5 Purchase for Own Account. The Purchased Shares to be acquired by
the Purchaser pursuant to this Agreement are being or will be acquired for its
own account and with no intention of distributing or reselling such Purchased
Shares or any part thereof in any transaction that would be in violation of the
securities laws of the United States of America, or any state, without
prejudice, however, to the rights of the Purchaser at all times to sell or
otherwise dispose of all or any part of such Purchased Shares under an effective
registration statement under the Securities Act, or under an exemption from such
registration available under the Securities Act, and subject, nevertheless, to
the disposition of the Purchaser's property being at all times within its
control. If the Purchaser should in the future decide to dispose of any of the
Securities, the Purchaser understands and agrees that it may do so only in
compliance with the Securities Act and applicable state securities laws, as then
in effect. The Purchaser agrees to the imprinting, so long as required by law,
of a legend on certificates representing all of its Purchased Shares and shares
of Common Stock issuable upon conversion of its Purchased Shares to the
following effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR THE SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO
AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH
ACT AND SUCH LAWS OR PURSUANT TO A WRITTEN OPINION OF COUNSEL
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REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
THE SALE, ASSIGNMENT, HYPOTHECATION, PLEDGE, ENCUMBRANCE OR OTHER
DISPOSITION (EACH A "TRANSFER") AND VOTING OF ANY OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE TERMS OF THE
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT, DATED FEBRUARY 20,
1997, AMONG PROXICOM, INC. (THE "COMPANY"), GENERAL ATLANTIC
PARTNERS 34, L.P., GAP COINVESTMENT PARTNERS, L.P., XXXX XXXXXXXXX,
THE XXXXX X. XXXXXX TRUST, AND FBR VENTURE CAPITAL MANAGERS INC.
(COLLECTIVELY, THE "ORIGINAL STOCKHOLDERS"), AS AMENDED BY AMENDMENT
NO. 1 TO AMENDED AND RESTATED STOCKHOLDERS AGREEMENT DATED NOVEMBER
__, 1997 AMONG THE COMPANY, THE ORIGINAL STOCKHOLDERS AND GENERAL
ELECTRIC CAPITAL CORPORATION (COLLECTIVELY, THE "STOCKHOLDERS
AGREEMENT"), A COPY OF WHICH MAY BE INSPECTED AT THE COMPANY'S
PRINCIPAL OFFICE. THE COMPANY WILL NOT REGISTER THE TRANSFER OF SUCH
SECURITIES ON THE BOOKS OF THE COMPANY UNLESS AND UNTIL THE TRANSFER
HAS BEEN MADE IN COMPLIANCE WITH THE TERMS OF THE STOCKHOLDERS
AGREEMENT.
4.6 Restricted Securities. The Purchaser understands that the
Purchased Shares will not be registered at the time of their issuance under the
Securities Act for the reason that the sale provided for in this Agreement is
exempt pursuant to Section 4(2) of the Securities Act and that the reliance of
the Company on such exemption is predicated in part on the Purchaser's
representations set forth herein. The Purchaser represents that it is
experienced in evaluating recently organized companies such as the Company, has
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of its investment and has the ability to
suffer the total loss of its investment. The Purchaser further represents that
it has had the opportunity to ask questions of and receive answers from the
Company concerning the terms and conditions of the offering and to obtain
additional information (to the extent the Company possessed such information or
could acquire it without unreasonable effort or expense).
4.7 Accredited Investor Status. The Purchaser is an "accredited
investor" as that term is defined by Rule 501 of Regulation D promulgated under
the Securities Act.
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4.8 Litigation. There are no Claims pending or, to the knowledge of
the Purchaser, threatened, at law, in equity, in arbitration or before any
Governmental Authority against any Purchaser which would, if adversely
determined, have a material adverse effect on the ability of the Purchaser to
perform its obligations under this Agreement or any of the other Transaction
Documents. No Order has been issued by any court or other Governmental Authority
against the Purchaser purporting to enjoin or restrain the execution, delivery
or performance of this Agreement or any of the other Transaction Documents.
4.9 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by the
Purchaser, in connection with the transactions contemplated hereby based on any
agreement, arrangement or understanding with the Purchaser or any action taken
by the Purchaser.
ARTICLE 5
CONDITIONS TO THE OBLIGATION
OF THE PURCHASER TO CLOSE
The obligation of the Purchaser to purchase the Purchased Shares, to
pay the purchase price therefor at the Closing and to perform any obligations
hereunder shall be subject to the satisfaction as determined by, or waiver by,
the Purchaser of the following conditions on or before the Closing Date.
5.1 Representations and Warranties. The representations and
warranties of the Company contained in Article 3 hereof shall be true and
correct in all material respects at and on the Closing Date as if made at and on
such date.
5.2 Compliance with this Agreement. The Company shall have performed
and complied in all material respects with all of its agreements and conditions
set forth herein that are required to be performed or complied with by the
Company on or before the Closing Date.
5.3 Secretary's Certificate. The Purchaser shall have received a
certificate from the Company, in form and substance satisfactory to the
Purchaser, dated the Closing Date and signed by the Secretary or an Assistant
Secretary of the Company, certifying (a) that the attached copies of the
Certificate of Incorporation, the By-laws and resolutions of the Board of
Directors of the Company approving this Agreement and each of the other
Transaction Documents to which the Company is a party and the transactions
contemplated hereby and thereby, are all true, complete and correct and remain
unamended and in full force and effect and (b) as to the incumbency and specimen
signature of each officer of the Company
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executing this Agreement, each other Transaction Document and any other document
delivered in connection herewith on behalf of the Company.
5.4 Officer's Certificate. The Purchaser shall have received a
certificate from the Company, in form and substance satisfactory to the
Purchaser, dated the Closing Date and signed by the Chief Executive Officer of
the Company, certifying that (a) the representations and warranties of the
Company contained in Article 3 hereof are true and correct in all material
respects at and on the Closing Date and (b) the Company has performed and
complied in all material respects with all of the agreements and conditions set
forth or contemplated herein that are required to be performed or complied with
by the Company on or before the Closing Date.
5.5 Documents. The Purchaser shall have received true, complete and
correct copies of such documents as it may reasonably request in connection with
or relating to the sale of the Purchased Shares and the transactions
contemplated hereby, all in form and substance reasonably satisfactory to the
Purchaser.
5.6 Filing of Certificate of Designations. The Certificate of
Designations shall have been duly filed by the Company with the Secretary of
State of the State of Delaware in accordance with the General Corporation Law of
the State of Delaware.
5.7 Purchased Shares. The Company shall have delivered to the
Purchaser certificates in definitive form representing the number of Purchased
Shares set forth opposite the Purchaser's name on Schedule 2 hereto, registered
in the name of the Purchaser.
5.8 Stockholders Agreement. The Company shall have duly executed and
delivered the Amendment No. 1 to Amended and Restated Stockholders Agreement,
substantially in the form attached hereto as Exhibit F.
5.9 Registration Rights Agreement. The Company shall have duly
executed and delivered the Registration Rights Agreement, substantially in the
form attached hereto as Exhibit E.
5.10 Approval of Counsel to the Purchaser. All actions and proceedings
hereunder and all documents required to be delivered by the Company hereunder or
in connection with the consummation of the transactions contemplated hereby, and
all other related matters, shall have been acceptable to Paul, Hastings,
Xxxxxxxx & Xxxxxx LLP, counsel to the Purchaser, in its reasonable judgment as
to their form and substance.
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5.11 Consents and Approvals. All consents, exemptions, authorizations,
or other actions by, or notices to, or filings with, Governmental Authorities
and other Persons required in respect of all Requirements of Law and with
respect to those Contractual Obligations of the Company which are necessary in
connection with the execution, delivery or performance by, or enforcement
against, the Company of this Agreement and each of the other Transaction
Documents shall have been obtained and be in full force and effect, and the
Purchaser shall have been furnished with appropriate evidence thereof.
5.12 No Material Judgment or Order. There shall not be on the Closing
Date any Order of a court of competent jurisdiction or any ruling of any
Governmental Authority or any condition imposed under any Requirement of Law
which, in the reasonable judgment of the Purchaser, would prohibit the purchase
of the Purchased Shares or subject the Purchaser to any penalty or other onerous
condition under or pursuant to any Requirement of Law if the Purchased Shares
were to be purchased hereunder.
5.13 No Litigation. No action, suit, proceeding, claim or dispute
shall have been brought or otherwise arisen at law, in equity, in arbitration or
before any Governmental Authority against the Company which would, if adversely
determined, (a) have a material adverse effect on the Condition of the Company
or (b) have a material adverse effect on the ability of the Company to perform
its obligations under this Agreement or each of the other Transaction Documents.
5.14 Opinions. The Purchaser shall have received the opinion of Xxxxx
& Xxxxxxx and the opinion of Xxxxxxxx & Xxxxx, counsel to the Company,
substantially in the forms attached hereto as Exhibit G-1 and Exhibit G-2,
respectively.
ARTICLE 6
CONDITIONS TO THE OBLIGATION
OF THE COMPANY TO CLOSE
The obligation of the Company to issue and sell the Purchased Shares
and the obligation of the Company to perform its other obligations hereunder,
shall be subject to the satisfaction as determined by, or waiver by, the Company
of the following conditions on or before the Closing Date:
6.1 Representations and Warranties. The representations and
warranties of the Purchaser contained in Article 4 hereof shall be true and
correct in all material respects at and on the Closing Date as if made at and
on such date.
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6.2 Compliance with this Agreement. The Purchaser shall have
performed and complied in all material respects with all of its agreements and
conditions set forth herein that are required to be performed or complied with
by the Purchaser on or before the Closing Date.
6.3 Officers' Certificate. The Company shall have received a
certificate from the Purchaser, in form and substance satisfactory to the
Company, dated the Closing Date and signed by an authorized signatory of the
Purchaser, certifying that (a) the representations and warranties of the
Purchaser contained in Article 4 hereof are true and correct in all material
respects at and on Closing Date, and the Purchaser has performed and complied in
all material respects with all of its agreements and conditions set forth or
contemplated herein that are required to be performed or complied with by the
Purchaser on or before the Closing Date.
6.4 Payment of Purchase Price. The Company shall have received the
aggregate purchase price for the Purchased Shares.
6.5 Stockholders' Agreement. The Purchaser shall have duly executed
and delivered the Amendment No. 1 to Amended and Restated Stockholders'
Agreement, substantially in the form attached hereto as Exhibit F.
6.6 Registration Rights Agreement. The Purchaser shall have duly
executed and delivered the Registration Rights Agreement, substantially in the
form attached hereto as Exhibit E.
6.7 Approval of Counsel to the Company. All actions and proceedings
hereunder and all documents required to be delivered by the Purchaser hereunder
or in connection with the consummation of the transactions contemplated hereby,
and all other related matters, shall have been acceptable to Xxxxx & Xxxxxxx,
counsel to the Company, in its reasonable judgment as to their form and
substance.
6.8 Consents and Approvals. All consents, exemptions, authorizations,
or other actions by, or notices to, or filings with, Governmental Authorities
and other Persons required in respect of all Requirements of Law and with
respect to those Contractual Obligations of the Purchaser which are necessary in
connection with the execution, delivery or performance by, or enforcement
against, the Company of this Agreement and each of the other Transaction
Documents shall have been obtained and be in full force and effect, and the
Company shall have been furnished with appropriate evidence thereof.
6.9 No Material Judgment or Order. There shall not be on the Closing
Date any Order of a court of competent jurisdiction or any ruling of any
Governmental Authority or any condition imposed under any Requirement of Law
which, in the reasonable judgment of the Company, would prohibit the sale of the
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Purchased Shares or subject the Company to any penalty or other onerous
condition under or pursuant to any Requirement of Law if the Purchased Shares
were to be sold hereunder.
6.10 No Litigation. No action, suit, proceeding, claim or dispute
shall have been brought or otherwise arisen at law, in equity, in arbitration or
before any Governmental Authority against the Purchaser which would, if
adversely determined, have a material adverse effect on the ability of the
Purchaser to perform its obligations under this Agreement or any of the other
Transaction Documents to which it is a party.
ARTICLE 7
INDEMNIFICATION
7.1 Indemnification. Except as otherwise provided in this Article 7,
the Company (the "Indemnifying Party") agrees to indemnify, defend and hold
harmless the Purchaser and its Affiliates and its officers, directors, agents,
employees, subsidiaries, partners, members and controlling persons (each, an
"Indemnified Party") to the fullest extent permitted by law from and against any
and all losses, Claims, or written threats thereof (including, without
limitation, any Claim brought by the Purchaser or another Person), damages,
expenses (including reasonable fees, disbursements and other charges of counsel
incurred by the Indemnified Party in any action between the Indemnifying Party
and the Indemnified Party or between the Indemnified Party and any third party
or otherwise) or other liabilities (collectively, "Losses") resulting from or
arising out of any breach of any representation or warranty, covenant or
agreement by the Company in this Agreement or the other Transaction Documents;
provided, however, that the Indemnifying Party shall not be liable under this
Section 7.1 to an Indemnified Party to the extent that it is finally judicially
determined that such Losses resulted or arose from the breach by such
Indemnified Party of any representation, warranty, covenant or other agreement
of such Indemnified Party contained in this Agreement or the other Transaction
Documents; and provided further, that if and to the extent that such
indemnification is unenforceable for any reason, the Indemnifying Party shall
make the maximum contribution to the payment and satisfaction of such Losses
which shall be permissible under applicable laws. The amount of any payment to
any Indemnified Party herewith in respect of any Loss shall be of sufficient
amount to make such Indemnified Party whole. In connection with the obligation
of the Indemnifying Party to indemnify for expenses as set forth above, the
Indemnifying Party shall, upon presentation of appropriate invoices containing
reasonable detail, reimburse each Indemnified Party for all such expenses
(including reasonable fees, disbursements and other charges of counsel incurred
by the Indemnified Party in any action between the
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Indemnifying Party and the Indemnified Party or between the Indemnified Party
and any third party or otherwise) (a) after the final resolution or disposition
of the particular action, investigation, claim or other proceeding and (b) if
such Indemnified Party prevails with respect thereto.
7.2 Notification. Each Indemnified Party under this Article 7 shall,
promptly after the receipt of notice of the commencement of any action,
investigation, claim or other proceeding against such Indemnified Party in
respect of which indemnity may be sought from the Indemnifying Party under this
Article 7, notify the Indemnifying Party in writing of the commencement thereof.
The omission of any Indemnified Party to so notify the Indemnifying Party of any
such action shall not relieve the Indemnifying Party from any liability which it
may have to such Indemnified Party (a) other than pursuant to this Article 7 or
(b) under this Article 7 unless, and only to the extent that, such omission
results in the Indemnifying Party's forfeiture of substantive rights or
defenses. In case any such action, claim or other proceeding shall be brought
against any Indemnified Party, and it shall notify the Indemnifying Party of the
commencement thereof, the Indemnifying Party shall be entitled to assume the
defense thereof at its own expense, with counsel satisfactory to such
Indemnified Party in its reasonable judgment; provided, however, that any
Indemnified Party may, at its own expense, retain separate counsel to
participate in such defense at its own expense. Notwithstanding the foregoing,
in any action, claim or proceeding in which both the Indemnifying Party, on the
one hand, and an Indemnified Party, on the other hand, are, or are reasonably
likely to become, a party, such Indemnified Party shall have the right to employ
separate counsel and to control its own defense of such action, claim or
proceeding if, in the reasonable opinion of counsel to such Indemnified Party, a
conflict or potential conflict exists between the Indemnifying Party, on the one
hand, and such Indemnified Party, on the other hand, that would make such
separate representation advisable; provided, however, that the Indemnifying
Party (i) shall not be liable for the fees and expenses of more than one counsel
to all Indemnified Parties and (ii) shall reimburse the Indemnified Parties for
all of such fees and expenses of such counsel incurred in any action between the
Indemnifying Party and the Indemnified Parties or between the Indemnified
Parties and any third party or otherwise (x) after the final resolution or
disposition of such action, claim or proceeding and (y) if the Indemnified
Parties prevail with respect thereto. The Indemnifying Party agrees that it will
not, without the prior written consent of the Purchaser, settle, compromise or
consent to the entry of any judgment in any pending or threatened claim, action
or proceeding relating to the matters contemplated hereby (if any Indemnified
Party is a party thereto or has been actually threatened to be made a party
thereto) unless such settlement, compromise or consent includes an unconditional
release of the Purchaser and each other Indemnified Party from all liability
arising or that may arise out of such claim, action or proceeding. The
Indemnifying Party shall not be liable for any settlement of any claim, action
or proceeding effected against an Indemnified Party without its
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written consent, which consent shall not be unreasonably withheld. The rights
accorded to Indemnified Party hereunder shall be in addition to any rights that
any Indemnified Party may have at common law, by separate agreement or
otherwise; provided, however, that notwithstanding the foregoing or anything to
the contrary contained in this Agreement, nothing in this Article 7 should
restrict or limit any rights that any Indemnified Party may have to seek
equitable relief.
7.3 Limitations on Indemnification. Notwithstanding anything to the
contrary contained in this Article 7, the Indemnifying Party shall have no
obligation to pay any amounts for indemnification pursuant to Section 7.1 to the
extent that the aggregate of such amounts for indemnification do not exceed
$50,000 (the "Basket Amount"), whereupon the Indemnifying Party shall be
obligated to pay in full all of such amounts for indemnification, including the
Basket Amount.
ARTICLE 8
AFFIRMATIVE COVENANTS
The Company hereby covenants and agrees with the Purchaser as follows:
8.1 Preservation of Existence. So long as the Purchaser and/or any
Affiliate thereof owns shares of Common Stock and/or shares of Preferred Stock
or other securities of the Company convertible into or exchangeable for shares
of voting capital stock of the Company that represent (after giving effect to
any adjustments) at least 1% of the total number of shares of Common Stock
outstanding on an as-converted basis, the Company shall:
(a) use its reasonable best efforts to preserve and maintain in
full force and effect its existence and good standing under the laws of its
jurisdiction of formation or organization;
(b) use its reasonable best efforts to preserve and maintain in
full force and effect all material rights, privileges, qualifications,
applications, estimates, licenses and franchises necessary in the normal conduct
of its business;
(c) use its reasonable best efforts to preserve its business
organization;
(d) conduct its business in accordance with sound business
practices, keep its properties in good working order and condition (normal wear
and tear excepted) so that the efficiency of its business operations shall be
fully maintained and preserved; and
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(e) file or cause to be filed in a timely manner all reports,
applications, estimates and licenses that shall be required by a Governmental
Authority and that, if not timely filed, would have a material adverse effect on
the Condition of the Company.
8.2 Financial Statements and Other Information. The Company shall
deliver to each Purchaser, in form and substance satisfactory to the Purchaser:
(a) as soon as available, but not later than ninety (90) days
after the end of each fiscal year of the Company, a copy of the audited balance
sheet of the Company as of the end of such fiscal year and the related
statements of operations and cash flows for such fiscal year, setting forth in
each case in comparative form the figures for the previous year, all in
reasonable detail and accompanied by a management summary and analysis of the
operations of the Company for such fiscal year and by the opinion of a
nationally recognized independent certified public accounting firm which report
shall state without qualification that such financial statements present fairly
the financial condition as of such date and results of operations and cash flows
for the periods indicated in conformity with GAAP applied on a consistent basis;
(b) commencing with the fiscal period ending on September 30,
1997, as soon as available, but in any event not later than forty-five (45) days
after the end of each of the first three fiscal quarters of each fiscal year,
the unaudited balance sheet of the Company, and the related statements of
operations and cash flows for such quarter and for the period commencing on the
first day of the fiscal year and ending on the last day of such quarter, all
certified by an appropriate officer of the Company as presenting fairly the
financial condition as of such date and results of operations and cash flows for
the periods indicated in conformity with GAAP applied on a consistent basis,
subject to normal year-end adjustments and the absence of footnotes required by
GAAP; and
(c) as promptly as practicable, but not later than five (5) days
after the end of each fiscal year of the Company, a certificate signed by the
Chief Executive Officer of the Company in customary form certifying that the
Company is not a "foreign person" within the meaning of Section 1445 of the
Code.
8.3 Reservation of Common Stock and Preferred Stock. The Company
shall at all times reserve and keep available out of its authorized shares of
Common Stock, solely for the purpose of issue or delivery upon conversion of the
Purchased Shares, as provided in the Certificate of Incorporation and the
Certificate of Designations, the maximum number of shares of Common Stock that
may be issuable or deliverable upon such conversion. Such shares of Common Stock
are duly authorized and, when issued or delivered in accordance with the
Certificate of Incorporation and the Certificate of Designations against payment
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therefor, shall be validly issued, fully paid and non-assessable. The Company
shall issue such shares of Common Stock in accordance with the terms of the
Certificate of Incorporation and the Certificate of Designations and otherwise
comply with the terms hereof and thereof.
8.4 Compliance with Laws. The Company shall comply in all material
respects with all Requirements of Law and with the directions of any
Governmental Authority having jurisdiction over the Company or its business or
property.
8.5 Insurance. The Company shall maintain key-man insurance with
respect to Xxxx Xxxxxxxxx in an aggregate amount of not less than $500,000.
8.6 Books and Records. The Company shall keep proper books of record
and account, in which full and correct entries shall be made of all financial
transactions and the assets and business of the Company in accordance with GAAP
consistently applied.
8.7 Future Sales of Company Stock to Third Parties. Following the
Closing Date for a period of six (6) months, if the Company or the Xxxxxxxxx
Stockholders (as defined in the Stockholders Agreement) issue or sell shares of
Common Stock or Common Stock Equivalents to any purchaser at a price per share
less than the Preferred Stock price of $4.77 per share (as adjusted for items in
Section 7, Conversion, of the Certificate of Designations) or on terms and
conditions more favorable to such purchaser than the terms and conditions set
forth herein (taken as a whole), the Preferred Stock conversion price, terms and
conditions shall be adjusted accordingly to protect against dilution of such a
future transaction. In addition, if the Company offers any shares of Common
Stock or Common Stock Equivalents prior to December 31, 1998 pursuant to an
initial public offering at a price per share of less than $4.77 per share (as
adjusted for items in Section 7, Conversion, of the Certificate of
Designations), the Preferred Stock conversion price shall be adjusted
accordingly to protect against dilution. Notwithstanding the foregoing, this
Section 8.7 shall not apply to (a) capital stock of the Company which may be
issued to employees, consultants or directors of the Company pursuant to a stock
option plan or other employee benefit arrangement approved by the Board of
Directors, (b) a subdivision of the outstanding shares of common stock of the
Company into a larger number of shares of common stock, (c) capital stock issued
upon exercise, conversion or exchange of any Common Stock Equivalent (as defined
in the Stockholders Agreement, (d) capital stock of the Company issued in
consideration of the acquisition, approved by the Board of Directors, by the
Company or any of its Subsidiaries of another Person, if the Company wishes to
issue any shares of capital stock or any other securities convertible into or
exchangeable for capital stock of the Company to any Person, (e) any Permitted
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Transfer by Xxxxxxxxx or (f) any transfer pursuant to the death of any of the
Xxxxxxxxx Stockholders.
8.8 Directors and Officers' Liability Insurance. The Company shall at
all times maintain in full force and effect Directors and Officers' Liability
Insurance covering the Company's officers and directors and having an annual
coverage limit in an amount equal to at least the annual coverage limit in
effect as of the date hereof.
ARTICLE 9
MISCELLANEOUS
9.1 Survival of Representations and Warranties. All of the
representations and warranties made herein shall survive the execution and
delivery of this Agreement until the date that is ninety (90) days after the
receipt by the Purchaser of audited financial statements of the Company for the
fiscal year ending December 31, 1997 (or, if such fiscal year changes and no
such audited consolidated financial statements are available, then the successor
fiscal year), except for (a) Sections 3.1, 3.2, 3.4, 3.7, 4.1, 4.2, 4.4, 4.6 and
4.7, which representations and warranties shall survive until the second
anniversary of the Closing Date and (b) Section 3.11, which shall survive until
the later to occur of (i) the lapse of the statute of limitations with respect
to the assessment of any Tax to which such representation and warranty relates
(including any extensions or waivers thereof) and (ii) sixty (60) days after the
final administrative or judicial determination of the Taxes to which such
representation and warranty relates, and no claim with respect to Section 3.11
may be asserted thereafter with the exception of claims arising out of any fact,
circumstance, action or proceeding to which the party asserting such claim shall
have given notice to the other parties to this Agreement prior to the
termination of such period of reasonable belief that a tax liability will
subsequently arise therefrom.
9.2 Notices. All notices, demands and other communications provided
for or permitted hereunder shall be made in writing and shall be by registered
or certified first-class mail, return receipt requested, telecopier, courier
service or personal delivery:
(a) if to the Company:
Proxicom, Inc.
00000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxxxxxx Xxxxxxx, Esq.,
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General Counsel
with a copy to:
Xxxxx & Xxxxxxx
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxxx, Esq.
(b) if to the Purchaser:
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
Managing Director
with a copy to:
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxx, Esq.
All such notices and communications shall be deemed to have been duly
given when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial courier service; five (5) Business Days
after being deposited in the mail, postage prepaid, if mailed; and when receipt
is mechanically acknowledged, if telecopied.
9.3 Successors and Assigns; Third Party Beneficiaries. This Agreement
shall inure to the benefit of and be binding upon the successors and permitted
assigns of the parties hereto. Subject to applicable securities laws, the
Purchaser may assign any of its rights under any of the Transaction Documents to
any of its Affiliates. The Company may not assign any of its rights under this
Agreement without the written consent of the Purchaser. Except as provided in
Article 7, no Person other than the parties hereto and their successors and
permitted assigns is intended to be a beneficiary of this Agreement.
9.4 Amendment and Waiver.
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(a) No failure or delay on the part of the Company or the
Purchaser in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Company or the Purchaser at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by the Company or the Purchaser from the terms of
any provision of this Agreement, shall be effective (i) only if it is made or
given in writing and signed by the Company and the Purchaser, and (ii) only in
the specific instance and for the specific purpose for which made or given.
Except where notice is specifically required by this Agreement, no notice to or
demand on the Company in any case shall entitle the Company to any other or
further notice or demand in similar or other circumstances.
9.5 Professional Services; Seminars Within 12 months following the
Closing Date hereof, the Purchaser or its Affiliates shall engage the Company to
provide the Purchaser or its Affiliates with at least $250,000 of professional
services offered by the Company. Such professional services provided by the
Company under this Agreement will be identified by the Purchaser and/or its
Affiliates and offered by the Company at preferred billing rates. In addition,
the Company and the Purchaser agree to co-sponsor two industry seminars by
December 31, 1998 that will cover topics related to the internet and intranet.
The Company and the Purchaser will identify and agree on the specific subject
matter of such seminars subsequent to the Closing. For each seminar, the
Purchaser will fund the first $25,000 of seminar cost, and the Company will fund
the next $25,000 of seminar cost. Costs in excess of $50,000 for each seminar
shall be mutually agreed to by the Company and the Purchaser, and, if such
excess costs are agreed to, such excess costs will be evenly shared by the
Purchaser and the Company. Any fees charged to participants for attending the
seminars will first be used to reimburse the costs of the Purchaser and the
Company on a pro rata basis and subsequently after such costs have been
reimbursed in full will be shared evenly between the Purchaser and the Company.
9.6 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
9.7 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
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9.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW THEREOF.
9.9 Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
9.10 Rules of Construction. Unless he context otherwise requires,
references to sections or subsections refer to sections or subsections of this
Agreement.
9.11 Entire Agreement. This Agreement, together with the exhibits and
schedules hereto, and the other Transaction Documents are intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein. There are no
restrictions, promises, representations, warranties or undertakings, other than
those set forth or referred to herein or therein. This Agreement, together with
the exhibits and schedules hereto, and the other Transaction Documents supersede
all prior agreements and understandings between the parties with respect to such
subject matter.
9.12 Fees. The Purchaser shall bear all of its fees, disbursements and
other charges of counsel incurred in connection with this Agreement and the
transactions contemplated hereby.
9.13 Publicity. Except as may be required by applicable Requirement of
Law, none of the parties hereto shall issue a publicity release or public
announcement or otherwise make any disclosure concerning this Agreement or the
transactions contemplated hereby, without prior approval by the other parties
hereto; provided, however, that nothing in this Agreement shall restrict the
Purchaser from disclosing information (a) that is already publicly available;
(b) to the prospective transferee in connection with any contemplated transfer
of any of the Purchased Shares; and (c) to its attorneys, accountants,
consultants and other advisors to the extent necessary to obtain their services
in connection with the Purchaser's investment in the Company. If any
announcement is required by law to be made by any party hereto, prior to making
such announcement such party will deliver a draft of such announcement to the
other parties and shall give the other parties an opportunity to comment
thereon.
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9.14 Further Assurances. Each of the parties shall execute such
documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations or other actions by, or
giving any notices to, or making any filings with, any Governmental Authority or
any other Person) as may be reasonably required or desirable to carry out or to
perform the provisions of this Agreement.
9.15 Confidentiality. Each party agrees that it shall be providing
certain proprietary and confidential information concerning its business to the
other party; accordingly, each party agrees to hold such other party's
information confidential, and such party shall not disclose such information to
any other person except for such persons who need to know such information for
purposes of evaluating the acquisition of the Purchased Shares and who agree to
be bound by confidentiality obligations not less restrictive than this
provision.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their respective officers hereunto duly authorized
on the date first above written.
PROXICOM, INC.
By: /s/ Xxxx Xxxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxxx
Title: President and
Chief Executive Officer
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxx
Managing Director - Technology Ventures
(As Attorney in fact)
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