EXHIBIT 10.3
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TERMINATION AGREEMENT
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THIS TERMINATION AGREEMENT (this "Agreement") is made this 27th day of
May, 1998, by and among GLOBAL IMAGING SYSTEMS, INC., a Delaware corporation
(the "Company"); GOLDER, THOMA, XXXXXXX, XXXXXX FUND IV, LIMITED PARTNERSHIP, a
Delaware limited partnership ("GTCR IV"); GOLDER, THOMA, CRESSEY, RAUNER, INC.,
a Delaware corporation ("GTCR Inc."), XXXXXXX NATIONAL LIFE INSURANCE COMPANY, a
Michigan life insurance company ("JNL"), GREEN XXXXXXX & BUNCH HOLDINGS, INC., a
Colorado corporation ("GMB"), XXXXXX X. XXXXXXX ("Xxxxxxx"), XXXXXXX XXXXXXXXX
("Xxxxxxxxx"), XXXXXX X. XXXXXX ("Xxxxxx"), XXXXXXX XXXXXXX ("Xxxxxxx"), XXXXX
X. XXXXXX ("Xxxxxx") and XXXXXXX X. XXXXXXX ("Kamarek") (GTCR IV, JNL, GMB,
Johnson, Schilling, Xxxxxx Xxxxxxx, Xxxxxx and Kamarek may be referred to
hereafter collectively as the "Stockholders" and individually as a
"Stockholder"). Except for those defined in the recitals, capitalized terms used
herein have the meanings specified in Section 9 hereof.
WITNESSETH:
WHEREAS, under the Equity Purchase Agreement by and among the Company,
GTCR IV and Xxxxxxx dated as of June 9, 1994, as amended (the "Equity Purchase
Agreement"), the Company has sold 47,823.99 shares of Class B Common Stock, par
value $.01 per share ("Class B Common Shares"), and 1,195.60 Class B Common
Shares to GTCR IV and Xxxxxxx, respectively, and sold 216,666.674 shares of
Class A Common Stock, par value $.01 per share ("Class A Common Shares") and
5,416.697 Class A Common Shares to GTCR IV and Xxxxxxx, respectively.
WHEREAS, the Company, the Stockholders and all other existing
stockholders of the Company are parties to a Stockholders Agreement dated June
9, 1994, as amended (the "Stockholders Agreement"), pursuant to which the
parties thereto agreed on the composition of the Company's Board of Directors,
granted certain preemptive rights and placed certain restrictions on the
transfer of their shares of the Company's capital stock.
WHEREAS, under the terms of the Investor Purchase Agreement by and
among the Company and JNL dated August 14, 1996, as amended (the "JNL Purchase
Agreement"), the Company has sold 38,219.598 Class A Common Shares and 6,777.246
shares of Class C Common Stock, par value $.01 per share ("Class C Common
Shares") to JNL.
WHEREAS, under the terms of the Investor Purchase Agreement by and
among the Company and Green Xxxxxxx & Bunch Holdings, Inc. ("GMB") dated
September 30, 1996, as amended (the "GMB Purchase Agreement"), the Company has
sold 1,910.809 Class A Common Shares and 338.832 Class B Common Shares to GMB.
WHEREAS, under the Executive Agreement by and between the Company,
GTCR IV and Xxxxxxx dated June 9, 1994, as amended (the "Xxxxxxx Executive
Agreement"), the Company has sold 4,970.592 Class B Common Shares to Xxxxxxx.
WHEREAS, under the Xxxxxxx Executive Agreement, GTCR IV had the right
to buy a certain number of Unissued Shares (as defined therein) (the "GTCR
Executive Shares").
WHEREAS, under the Executive Agreement by and between the Company,
GTCR IV and Xxxxxxxxx dated June 9, 1994, as amended (the "Xxxxxxxxx Executive
Agreement"), the Company has sold 1,633.98 Class B Common Shares to Xxxxxxxxx.
WHEREAS, under the Executive Agreement by and between the Company,
GTCR IV and Xxxxxx dated March 31, 1997, as amended (the "Xxxxxx Executive
Agreement"), the Company has sold 1,307.18 Class B Common Shares to Xxxxxx.
WHEREAS, under the Executive Agreement by and between the Company,
GTCR IV and Xxxxxxx dated January 1, 1995, as amended (the "Xxxxxxx Executive
Agreement"), the Company has sold 1,307.18 Class B Common Shares to Xxxxxxx.
WHEREAS, the Company and GTCR Inc. are parties to a Consulting
Agreement dated as of June 9, 1994 (the "GTCR Consulting Agreement"), pursuant
to which Company pays to GTCR Inc. (i) annual management fees and (ii) certain
placement fees in connection with any debt or equity financing.
WHEREAS, the Company, the Stockholders and certain other stockholders
of the Company are parties to a Registration Agreement dated June 9, 1994, as
amended (the "Registration Agreement"), pursuant to which the parties thereto
were granted registration rights for their shares of the Company's capital
stock.
WHEREAS, the Company is in the process of preparing its Initial Public
Offering, pursuant to which the Company will be able to establish a public
market for its Common Stock and which is expected to benefit all of the parties
hereto.
WHEREAS, the managing underwriters of the Initial Public Offering have
advised the Company that the success of the Initial Public Offering is
contingent upon certain factors, including (i) the reclassification of all of
the shares of Class B Common Shares into shares of the Company's Common Stock,
par value $.01 per share (the "Common Stock"); (ii) the redemption of all of the
outstanding Class A Common Shares in cash for the original cost and unpaid yield
thereon and in shares of Common Stock in an amount equal to 10% of the
outstanding shares of Common Stock prior to the Initial Public Offering (the
"Class A Redemption"); (iii) the conversion of all of the outstanding Class C
Common Shares into shares of Common Stock, and (iv) the relinquishment of
certain rights of the Stockholders.
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WHEREAS, in connection with the Initial Public Offering, the parties
hereto desire to amend, terminate or waive certain contractual rights among them
and desire to enter into this Agreement to evidence same.
WHEREAS, 339,945.071 Class A Common Shares, 72,202.712 Class B Common
Shares, and 6,777.246 Class C Common Shares are issued and outstanding.
WHEREAS, the Stockholders hold in the aggregate approximately 82% of
the outstanding Class A Common Shares, 86% of the outstanding Class B Common
Shares, and 100% of the outstanding Class C Common Shares.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned parties, intending legally to be bound hereby,
agree to the following terms:
SECTION 1
Equity Purchase Agreement
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1.1 Termination of Equity Purchase Agreement. At the Effective Time,
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GTCR IV, Xxxxxxx and the Company hereby agree that the Equity Purchase Agreement
shall be terminated in its entirety, the rights, duties, and obligations of the
parties thereto shall be extinguished, and none of its provisions shall continue
to have any force and effect.
1.2 General Waiver for Equity Purchase Agreement. At the Effective Time,
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GTCR IV, Xxxxxxx and the Company hereby agree that any and all breaches and
violations of the terms of the Equity Purchase Agreement and any rights and
unsatisfied obligations of any party arising thereunder, whether occurring or
arising before or after the date hereof, shall be waived, including, but not
limited to, the right of any "Qualified Holder" (as defined in the Equity
Purchase Agreement) to consent to certain transactions described in Sections 5.D
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and 5.E of the Equity Purchase Agreement as well as the provisions of Section 9G
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thereof in connection with the stock split of the Common Stock.
1.3 Consents under Equity Purchase Agreement. GTCR IV and Xxxxxxx hereby
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consent under Section 5.D of the Equity Purchase Agreement to (i) the amendments
to the Company's Amended and Restated Certificate of Incorporation as set forth
on the attached Exhibit A and (ii) the Class A Redemption. GTCR IV, as defined
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as a "Qualified Holder" under the Equity Purchase Agreement, hereby consents
under Section 5.E. of the Equity Purchase Agreement to (x) the issuance of
shares of Common Stock in the Initial Public Offering; (y) the Class A
Redemption and the conversion of Class C Common Shares and Class B Common Shares
into shares of Common Stock; and (z) any other action taken or agreement
executed by the Company to accomplish the Initial Public Offering.
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SECTION 2
Stockholders Agreement
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2.1 Termination of Stockholders Agreement. At the Effective Time, each
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of the Stockholders and the Company hereby agree that the Stockholders Agreement
shall be terminated in its entirety, the rights, duties, and obligations of the
parties thereto shall be extinguished, and none of its provisions shall continue
to have any force and effect.
2.2 General Waiver for Stockholders Agreement. At the Effective Time,
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each of the Stockholders and the Company hereby agree that any and all breaches
and violations of the terms of the Stockholders Agreement and any and all rights
and unsatisfied obligations arising thereunder, whether occurring or arising
before or after the date hereof, shall be waived, including, but not limited to,
any requirement for consent thereunder and any right of any Stockholder to
purchase stock under Section 6 thereof (with respect to the issuance of the GTCR
Executive Shares or otherwise).
2.3 Waiver and Amendment of Stockholders Agreement for Initial Public
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Offering. The Stockholders and the Company hereby agree that the provisions of
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the Stockholders Agreement shall not apply to, and are hereby waived with
respect to, the Company's issuance of stock in the Initial Public Offering,
including without limitation, any preemptive rights with respect to any stock
offered in the Initial Public Offering, and no purchasers of such stock will
become parties to the Stockholders Agreement. The Stockholders and the Company
further agree that Section 21 of the Stockholders Agreement is hereby deleted in
its entirety, and, in connection with the Initial Public Offering, the Company
shall instead make the amendments to its Amended and Restated Certificate of
Incorporation set forth on the attached Exhibit A.
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SECTION 3
JNL Purchase Agreement
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3.1 Termination of JNL Purchase Agreement. At the Effective Time, JNL
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and the Company each hereby agree that the JNL Purchase Agreement shall be
terminated in its entirety, the rights, duties, and obligations of the parties
thereto shall be extinguished, and none of its provisions shall continue to have
any force and effect.
3.2 General Waiver for JNL Purchase Agreement. At the Effective Time,
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JNL and the Company each hereby agree that any and all breaches and violations
of the terms of the JNL Purchase Agreement and any and all rights and
unsatisfied obligations arising under Section 4 thereof, whether occurring or
arising before or after the date hereof, shall be waived, including, but not
limited to, any requirement for the consent of JNL (as defined therein as a
"Qualified Holder") for the issuance of equity securities of the Company.
3.3 Consents under JNL Purchase Agreement. JNL, as defined as a
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"Qualified Holder" under the JNL Purchase Agreement, hereby consents under
Sections 4.C
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and 4.D thereof to (i) the amendments to the Company's Amended and
Restated Certificate of Incorporation as set forth on the attached Exhibit A;
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(ii) the issuance of shares of Common Stock in the Initial Public Offering;
(iii) the Class A Redemption and the conversion of Class C Common Shares into
shares of Common Stock, insofar as the redemption and/or conversion may
constitute the payment of dividends or the making of a distribution on the
Company's equity securities or a recapitalization; and (iv) any other action
taken or agreement executed by the Company to accomplish the Initial Public
Offering.
SECTION 4
GMB Purchase Agreement
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4.1 Termination of GMB Purchase Agreement. At the Effective Time, GMB
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and the Company hereby agree that the GMB Purchase Agreement shall be terminated
in its entirety, the rights, duties, and obligations of the parties thereto
shall be extinguished, and none of its provisions shall continue to have any
force and effect.
4.2 General Waiver for GMB Purchase Agreement. At the Effective Time,
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GMB and the Company hereby agree that any and all breaches and violations of the
terms of the GMB Purchase Agreement and any and all rights and unsatisfied
obligations arising under Section 4 thereof, whether occurring or arising before
or after the date hereof, shall be waived, including, but not limited to, any
requirement for the consent of GMB to any action.
4.3 Consents under GMB Purchase Agreement. GMB, as defined as a
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"Qualified Holder" under the GMB Purchase Agreement, hereby consents under
Sections 4.C thereof to (i) the amendments to the Company's Amended and Restated
Certificate of Incorporation as set forth on the attached Exhibit A; (ii) the
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Class A Redemption, insofar as it may constitute the payment of dividends or the
making of a distribution on the Company's equity securities; and (iii) any other
action taken or agreement executed by the Company to accomplish the Initial
Public Offering.
SECTION 5
Executive Agreements
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5.1 Amendment and General Waiver of Xxxxxxx Executive Agreement.
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Xxxxxxx, GTCR IV and the Company hereby agree that Sections 1.5 and 2.4(e) are
hereby deleted from the Xxxxxxx Executive Agreement and shall have no further
force and effect. At the Effective Time, any and all breaches and violations of
the terms of the Xxxxxxx Executive Agreement arising before the Effective Time
shall be waived.
5.2 General Waiver of Xxxxxxxxx Executive Agreement. At the Effective
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Time, Xxxxxxxxx, GTCR IV and the Company hereby agree that Section 2.4(b) is
hereby deleted from the Xxxxxxxxx Executive Agreement and shall have no further
force and effect. At
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the Effective Time, any and all breaches and violations of the terms of the
Xxxxxxxxx Executive Agreement arising before the Effective Time shall be waived.
5.3 General Waiver of Xxxxxx Executive Agreement. At the Effective Time,
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Xxxxxx, GTCR IV and the Company hereby agree that Section 2.4(b) is hereby
deleted from the Xxxxxx Executive Agreement and shall have no further force and
effect. At the Effective Time, any and all breaches and violations of the terms
of the Xxxxxx Executive Agreement arising before the Effective Time shall be
waived.
5.4 General Waiver of Xxxxxxx Executive Agreement. At the Effective
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Time, Xxxxxxx, GTCR IV and the Company hereby agree that Section 2.4(b) is
hereby deleted from the Xxxxxxx Executive Agreement and shall have no further
force and effect. At the Effective Time, any and all breaches and violations of
the terms of the Xxxxxxx Executive Agreement, arising before the Effective Time
shall be waived.
SECTION 6
GTCR Consulting Agreement
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6.1 Termination of GTCR Consulting Agreement. At the Effective Time,
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GTCR Inc. and the Company hereby agree that the GTCR Consulting Agreement shall
be terminated in its entirety, the rights, duties, and obligations of the
parties thereto shall be extinguished, and none of its provisions shall continue
to have any force and effect.
6.2 General Waiver for GTCR Consulting Agreement. At the Effective Time,
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GTCR Inc. and the Company each agree that any and all breaches and violations of
the terms of the GTCR Consulting Agreement and any and all rights and
unsatisfied obligations arising thereunder, whether occurring or arising before
or after the date hereof, shall be waived, including, but not limited to, the
right of GTCR Inc. to receive any management fees or placement fees under
Sections 2 and 3 thereof, respectively.
6.3 Specific Waiver for GTCR Consulting Agreement for Initial Public
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Offering. GTCR Inc. agrees that the Company shall not have to pay GTCR Inc. any
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placement fee (of 1% or otherwise) under Section 3 of the GTCR Consulting
Agreement with respect to any funds raised in the Initial Public Offering.
6.4 Management Fees. Notwithstanding the foregoing provisions of this
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Section 6, GTCR Inc. and the Company hereby agree that the Company shall pay
GTCR Inc. (a) a pro rata portion of the 1998 management fee of $200,000 under
Section 4 of the GTCR Consulting Agreement for the period beginning on January
1, 1998 and ending on the date of the Offering Closing, and (b) $200,000 for the
management fee due for the calendar year of 1997.
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SECTION 7
Registration Agreement
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7.1 Waivers and Consents for Registration Agreement. Except for the
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limited right to participate in the Initial Public Offering pursuant to the
Notice set forth in Exhibit B hereto (the "IPO Piggyback Right"), the
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Stockholders hereby waive (i) any rights of any holder of registerable
securities pursuant to the Registration Agreement to participate in the Initial
Public Offering and (ii) any noncompliance by the Company with the provisions of
Section 2 of the Registration Agreement in connection with the IPO Piggyback
Right, including the right to select the underwriters of the Initial Public
Offering; provided, however, that such waiver shall not prejudice or limit the
future rights of any Stockholders under the Registration Agreement after the
consummation of the Initial Public Offering.
SECTION 8
Lock-Up Agreements; Corporate Governance Matters; Waiver
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8.1 Execution of Underwriter Lock-up Agreement. Each of the Stockholders
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shall, before the Effective Time, execute a lock-up agreement in the form
attached as Exhibit C for the benefit of the Underwriters if required by the
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Underwriters for the Initial Public Offering.
8.2 Approval of Corporate Governance Matters. Each of the Stockholders
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having voting rights shall, before the Effective Time, approve the matters set
forth in the attached Exhibit D to be voted on by the Company's stockholders.
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8.3 General Waiver. As of the Effective Time, and except as otherwise
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provided herein, each of the Company and the Stockholders hereby waives any and
all rights and claims, if any, that it may have now or later under the Equity
Purchase Agreement, the Stockholders Agreement, the JNL Purchase Agreement, the
GMB Purchase Agreement, and the GTCR Consulting Agreement and also hereby waives
any right between the date hereof and the Effective Time to receive notice
pursuant to the terms of any of these same agreements.
SECTION 9
Definitions
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9.1 Definitions. For purposes of this Agreement, the following terms
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shall have the meanings set forth below:
"Effective Time" shall mean the time at which the Registration
Statement is declared effective by the Securities and Exchange Commission.
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"Initial Public Offering" means the Company's first public offering of
Common Stock that is effected pursuant to a registration statement on Form S-1
filed with and declared effective by the Securities and Exchange Commission
("SEC") under the Securities Act of 1933, as amended, and pursuant to which (i)
the Company receives gross proceeds of at least $10,000,000 and (ii) following
the closing of such public offering, the Common Stock is traded on a national
securities exchange, the NASDAQ National Market System or any registered inter-
dealer quotation system involving at least three registered market-makers.
"Offering Closing" means the closing of the Initial Public Offering.
"Registration Statement" means the Company's registration statement on
Form S-1 filed with the SEC in order to accomplish the Initial Public Offering.
"Underwriters" shall mean Prudential Securities Incorporated, Xxxxxxx
Xxxxx Xxxxxx, Xxxxxxx Xxxxx & Company, Xxxxxxx Xxxxx & Associates, Inc., and any
other institutions who enter into an underwriting agreement with the Company
with respect to the Initial Public Offering.
SECTION 10
Miscellaneous
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10.1 Termination. This Agreement may be terminated (i) in a writing
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signed by all parties hereto at any time prior to the Effective Time; (ii) by
the written election of either the Company or any Stockholder if the Effective
Time is not prior to June 30, 1998, and if the electing party is not in default
of any of the provisions of this Agreement; or (iii) by the written election of
any Stockholder if the Offering Closing has not occurred within 60 days of the
Effective Time. In the event of the termination and abandonment of this
Agreement, each party hereto (and its respective agents, directors or officers,
where appropriate) shall not have any liability or further obligation to any
other party hereto, except that nothing herein shall relieve any party from
liability for any willful breach of this Agreement. In the event that the
Offering Closing does not occur within fifteen (15) business days after the
Effective Time, this Agreement shall be terminated, and the Equity Purchase
Agreement, the Stockholders Agreement, the JNL Purchase Agreement, the GMB
Purchase Agreement, and the GTCR Consulting Agreement shall be reinstated into
full force and effect as if they had never been terminated at the Effective Time
pursuant to Sections 1.1, 2.1, 3.1, 4.1, and 6.1 hereof.
10.2 Remedies. Any Person having any rights under any provision of this
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Agreement shall be entitled to enforce such rights specifically, to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law.
10.3 Amendment and Waiver. Any amendment, modification, supplement, or
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waiver of a provision of this Agreement shall be in a written document and shall
be effective only against parties executing the written document. The failure of
any party to
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enforce any provision of this Agreement shall not be a waiver of the provision
and shall not affect the right of the party thereafter to enforce each and every
provision of this Agreement.
10.4 Additional Documents. Each party hereto shall cooperate, shall take
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such further action and shall execute and deliver any further documents,
certificates and instruments that any other party reasonably requests in order
to carry out the provisions and purposes of this Agreement.
10.5 Successors and Assigns. Except as otherwise expressly provided
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herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto, whether so expressed or
not.
10.6 Severability. Whenever possible, each provision of this Agreement
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shall have the interpretation necessary to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, the provision shall be ineffective only to
the extent of the prohibition or invalidity, without invalidating the remainder
of this Agreement.
10.7 Counterparts; Facsimile Transmission. This Agreement may be
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executed in two or more counterparts, any one of which may contain only one
signature, and all the counterparts taken together shall constitute a single
agreement. This Agreement may also be executed and delivered by facsimile
transmission.
10.8 Governing Law. THIS AGREEMENT AND ITS EXHIBITS SHALL BE GOVERNED BY
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THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF DELAWARE.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned have each executed this Agreement
as of the date first set forth above.
GLOBAL IMAGING SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
President and Chief Executive Officer
GOLDER, THOMA, CRESSEY, RAUNER, INC.
By: /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
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Title: Authorized Officer
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STOCKHOLDERS:
GOLDER, THOMA, CRESSEY, RAUNER, FUND IV LIMITED
PARTNERSHIP
By: GTCR IV, L.P.
Its: General Partner
By: Golder, Thoma, Xxxxxxx, Xxxxxx Inc.
Its: General Partner
By: /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
Authorized Officer
XXXXXXX NATIONAL LIFE INSURANCE COMPANY
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
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Title: Managing Director
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GREEN XXXXXXX & BUNCH HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
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Title: Vice President
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/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
/s/ Xxxxxxx Xxxxxxxxx
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Xxxxxxx Xxxxxxxxx
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
/s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
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