1
Exhibit 10.6
PREFERRED STOCK
PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.,
THE SHAREHOLDERS OF
TRANSACTION INFORMATION SYSTEMS, INC.,
GS CAPITAL PARTNERS III, L.P.,
GS CAPITAL PARTNERS III OFFSHORE, X.X.
XXXXXXX, XXXXX & CO. XXXXXXXXXXX XxxX
XXXXX XXXXXX XXXX 0000, L.P. AND
BRIDGE STREET FUND 1998, L.P.
2
TABLE OF CONTENTS
Page
----
SECTION 1. Issuance and Sale of the Series A Preferred Stock.............. 2
1.1. The Purchase.................................................. 2
1.2. The Use of Proceeds from the Purchase......................... 2
1.3. Pro Rata Redemption; Option Cashout........................... 3
1.4. The Closing .................................................. 3
1.5. Actions at the Closing........................................ 3
1.6. Deliveries at the Closing..................................... 5
1.7. Dividend ..................................................... 5
1.8. Shareholders Equity Adjustment................................ 6
1.9. Post-Closing Adjustment....................................... 8
1.10. Additional Issuances; Purchase Price Adjustment.............. 12
SECTION 2. Representations and Warranties of the Corporation.............. 13
2.1. Organization and Good Standing; Power and Authority;
Qualifications........................................... 13
2.2. Authorization of the Documents................................ 13
2.3. Capitalization................................................ 14
2.4. Authorization and Issuance of Capital Stock................... 15
2.5. Subsidiaries.................................................. 16
2.6. Financial Statements.......................................... 17
2.7. Absence of Undisclosed Liabilities............................ 17
2.8. Absence of Changes............................................ 18
2.9. No Conflict................................................... 19
2.10. Agreements .................................................. 19
2.11. Intellectual Property Matters................................ 20
2.12. "Year 2000."................................................. 22
2.13. Corporate Minute Books....................................... 22
2.14. Personal Property; Real Property............................. 22
2.15. Employee Benefit Plans....................................... 24
2.16. Labor Relations; Employees................................... 26
2.17. Litigation; Orders........................................... 27
2.18. Compliance with Laws; Permits................................ 27
2.19. Commissions, Etc............................................. 27
2.20. Offering Exemption........................................... 28
2.21. Related Transactions......................................... 28
2.22. Taxes ....................................................... 29
2.23. Consents .................................................... 31
2.24. Insurance ................................................... 31
2.25. Brokers ..................................................... 31
- i -
3
2.26. Suppliers and Customers...................................... 31
2.27. Investment Banking Services.................................. 32
2.28. Suitability.................................................. 32
2.29. Use of Proceeds.............................................. 32
2.30. Disclosure .................................................. 32
2.31. Contribution of TIS Equipment Stock.......................... 32
2.32. Closing Actions.............................................. 33
SECTION 3. Representations and Warranties of Each Investor................ 33
SECTION 4. Certain Covenants.............................................. 34
4.1. Access to Records............................................. 34
4.2. Financial Reports............................................. 34
4.3. System of Accounting.......................................... 36
4.4. Maintenance of Corporate Existence, Etc....................... 37
4.5. Compliance with Laws.......................................... 37
4.6. Maintenance of Properties and Leases.......................... 37
4.7. Insurance .................................................... 37
4.8. Licenses and Permits.......................................... 37
4.9. Employee Nondisclosure Agreements............................. 37
4.10. Disclosure of Investment..................................... 38
4.11. Restrictive Covenant........................................ 38
4.12. Change in Tax Accounting Method............................. 38
4.13. TIS Equipment Options....................................... 39
SECTION 5. Certain Taxes ................................................. 39
SECTION 6. Legends; Exchanges; Lost, Stolen or Mutilated Certificates..... 39
SECTION 7. Survival of Representations, Warranties, Agreements and
Covenants, Etc............................................. 41
SECTION 8. Expenses ...................................................... 41
SECTION 9. Indemnification................................................ 41
9.1. General Indemnification....................................... 42
9.2. Indemnification Principles.................................... 43
9.3. Claim Notice.................................................. 43
SECTION 10. Special Indemnification of the Corporation.................... 44
SECTION 11. Appointment of Agent for the Existing Stockholders............ 45
SECTION 12. Remedies ..................................................... 46
- ii -
4
SECTION 13. Further Assurances............................................ 46
SECTION 14. Successors and Assigns........................................ 46
SECTION 15. Entire Agreement.............................................. 47
SECTION 16. Notices ...................................................... 47
SECTION 17. Amendments; Enforcement....................................... 49
SECTION 18. Counterparts ................................................. 49
SECTION 19. Headings ..................................................... 49
SECTION 20. Nouns and Pronouns............................................ 49
SECTION 21. Governing Law ................................................ 50
SECTION 22. Severability ................................................. 50
- iii -
5
Schedules
Schedule 1.2 Option Cashout
Schedule 1.3 Pro Rata Percentage
Schedule 1.7 Shareholder Allocation
Schedule 2.1 Qualifications in Certain Jurisdictions
Schedule 2.3(a)/(b) Capitalization
Schedule 2.5 TIS and SSN Options
Schedule 2.7 Liabilities
Schedule 2.8 Adverse Changes
Schedule 2.10 Agreements
Schedule 2.11 Intellectual Property Matters
Schedule 2.11(a) Intellectual Property Rights
Schedule 2.11(b) Third Party Intellectual Property Rights
Schedule 2.14(a)/(b) Personal Property, Real Property
Schedule 2.15/(a) Employee Benefits Matters
Schedule 2.16 Labor
Schedule 2.17 Litigation
Schedule 2.18 Compliance with Laws, Permits
Schedule 2.19 Commissions, Etc.
Schedule 2.21(a) Related Transactions
Schedule 2.22(a)/(b)(i)/(b)(ii)/(d) Taxes
Schedule 2.23 Consents
Schedule 2.24 Insurance
Schedule 2.27 Investment Banking Services
- iv -
6
Exhibits
Exhibit A Form of Dividend Notes
Exhibit B Form of Option Purchase Agreement
Exhibit C Form of Notes
Exhibit D Form of Stockholders Agreement
Exhibit E Form of Registration Rights Agreement
Exhibit F Form of Amendment to Certificate of Incorporation
Exhibit G Form of Certificate of Designations
Exhibit H Form of Amended By-Laws
Exhibit I Form of Corporation Secretary's Certificate
Exhibit J Form of Opinion of Counsel to the Corporation
Exhibit K Form of Employee Nondisclosure Agreements
Exhibit L Investor Purchase Option Agreements
Exhibit M Existing Stockholder Purchase Option Agreement
Annexes
Annex I List of Existing Stockholders
Annex II List of Investors
Annex III List of Shares Being Repurchased
- v -
7
INDEX OF DEFINED TERMS
Term Section
---- -------
AAA Amount.........................................................Recitals
Accounting Firm.........................................................2.6
Accredited Investor....................................................3(e)
Actual Income........................................................1.9(i)
Adjusted Shareholders Equity.........................................1.8(a)
Agent for the Existing Stockholders......................................11
Aggregate Redemption Price..............................................1.3
Arbitrator...........................................................1.8(c)
Benefit Plan........................................................2.15(a)
Bridge 1998........................................................Preamble
By-Laws..............................................................1.5(h)
Cash Payment............................................................1.3
Certificate of Designations..........................................1.5(g)
Certificate of Incorporation.........................................1.5(g)
Claim Notice............................................................9.3
Closing.................................................................1.4
Closing Actions.........................................................1.5
Closing Date............................................................1.4
Code...............................................................Recitals
Common Stock.......................................................Recitals
Contract............................................................2.10(a)
Contribution.........................................................1.5(b)
Conversion Shares....................................................2.3(b)
Corporation........................................................Preamble
Dividend...........................................................Recitals
Dividend Amount....................................................Recitals
Dividend Notes.....................................................Recitals
Documents............................................................1.5(e)
Employee............................................................2.15(a)
Employee Agreement..................................................2.15(a)
Employee Nondisclosure Agreements......................................2.16
Encumbrances........................................................2.14(a)
Environmental Laws..................................................2.14(c)
ERISA...............................................................2.15(a)
Exchange Act........................................................2.21(a)
Existing Options.................................................2.3(a)(ii)
- iv -
8
Existing Stockholders..............................................Preamble
FGM Audited Financial Statements........................................2.6
Final Post-Closing Statement.........................................1.8(d)
Final Shareholders Equity Amount.....................................1.8(d)
Fully Diluted Basis.....................................................1.1
GAAP.................................................................1.8(a)
GS Germany.........................................................Preamble
GSCP...............................................................Preamble
GSCP Offshore......................................................Preamble
Hazardous Substances................................................2.14(c)
HMO ................................................................2.15(e)
Hurdle Amount........................................................1.9(i)
Income Excess Percentage.............................................1.9(i)
Income Shortfall Percentage..........................................1.9(i)
Income Target........................................................1.9(i)
Indemnitors.............................................................9.1
Initial Amount..........................................................1.1
Intellectual Property Rights........................................2.11(c)
Investor Indemnitee.....................................................9.1
Investor(s)........................................................Preamble
Law ....................................................................2.9
Leased Real Property................................................2.14(b)
Litigation.............................................................2.17
Losses..................................................................9.2
Management Letter....................................................4.2(a)
Management Options...............................................2.3(a)(ii)
Material Adverse Effect.................................................2.8
Measurement Period...................................................1.9(i)
Monthly Financials...................................................4.2(a)
Negative Amount......................................................1.8(f)
Note Amount.............................................................1.3
Notes...................................................................1.3
Option Cashout..........................................................1.2
Option Cashout Amount...................................................1.2
Permitted Encumbrances..............................................2.14(a)
Post-Closing Financials..............................................1.9(b)
Post-Closing Statement...............................................1.8(a)
Preferred Stock...................................................2.3(a)(i)
Pro Rata Percentage.....................................................1.3
Pro Rata Redemption.....................................................1.2
Purchase................................................................1.1
- vii -
9
Purchase Price..........................................................1.1
PW Audited Financial Statements.........................................2.6
Quarterly Financials.................................................4.2(b)
Registration Rights Agreement........................................1.5(e)
Sales Transaction....................................................1.9(i)
SEC .................................................................4.2(d)
Securities Act.........................................................2.20
Series A Preferred Stock...........................................Recitals
Share Percentage..................................................1.9(a)(i)
Shareholders Equity Amount...........................................1.8(a)
Software............................................................2.11(c)
Stockholders Agreement...............................................1.5(d)
Stone 1998.........................................................Preamble
Tax Return..........................................................2.22(e)
Tax(es).............................................................2.22(e)
Third Party Intellectual Property Rights............................2.11(c)
TIS Entities..............................................................2
TIS Entity................................................................2
TIS Equipment........................................................1.5(b)
- viii -
10
TRANSACTION INFORMATION SYSTEMS, INC.
PREFERRED STOCK PURCHASE AGREEMENT
AGREEMENT, dated as of September 4, 1998, by and among
TRANSACTION INFORMATION SYSTEMS, INC., a corporation formed under the laws of
the State of Delaware (the "Corporation"), GS CAPITAL PARTNERS III, L.P., a
Delaware limited partnership ("GSCP"), GS CAPITAL PARTNERS III OFFSHORE, L.P.
("GSCP Offshore"), XXXXXXX, XXXXX & CO. VERWALTUNGS GMBH ("GS Germany"), XXXXX
XXXXXX XXXX 0000, X.X. ("Stone 1998" ), BRIDGE STREET FUND 1998, L.P. ("Bridge
1998," collectively with GSCP, GSCP Offshore, GSCP Germany and Stone 1998, the
"Investors," each individually referred to as an "Investor") and the Existing
Stockholders listed in Annex I hereto (the "Existing Stockholders").
W I T N E S S E T H:
WHEREAS, on the day immediately prior to the date hereof, the
Corporation has (a) declared a dividend (the "Dividend") payable to the Existing
Stockholders, upon the terms in the board resolutions relating thereto, in an
aggregate amount (the "Dividend Amount" ), equal to the lesser of (i)
$4,500,000, or (ii) the aggregate amount of the Corporation's accumulated
adjustments account (as defined in Section 1368(e)(1) of the Internal Revenue
Code of 1986, as amended (the "Code")) as of the close of business on the day
immediately prior to the date hereof, computed as if the previous distributions
during 1998 of an aggregate of $503,000 to certain of the Existing Stockholders
had not been made (the "AAA Amount" "), and (b) issued the Dividend Notes;
WHEREAS, $503,000 of the Dividend has been previously paid to
certain of the Existing Stockholders by the Corporation, and the remainder of
the Dividend was paid by means of and in the form of the issuance by the
Corporation to the Existing Stockholders, on the day immediately prior to the
date hereof (as defined below), of subordinated notes, each substantially in the
form of Exhibit A hereto (the "Dividend Notes") each with a principal amount
determined as set forth herein with respect to each Existing Stockholder; and
WHEREAS, the Corporation wishes to sell to the Investors and
the Investors wish to purchase from the Corporation shares of newly issued
Series A Convertible Preferred Stock, par value $.01 per share (the "Series A
Preferred Stock"), the terms of which will be set forth in the Certificate of
Designations; and a portion of the proceeds from such sale will be used to
purchase certain shares of
11
Common Stock of the Corporation, par value $.01 per share ("Common Stock"), held
by the Existing Stockholders.
ACCORDINGLY, the parties hereto hereby agree as follows:
SECTION 1. Issuance and Sale of the Series A Preferred Stock.
1.1. The Purchase. At the Closing the Investors shall purchase from the
Corporation, and the Corporation shall sell to the Investors (as set forth on
Annex II hereto), an aggregate of 6,549,788 shares of Series A Preferred Stock
(the "Purchase") at a purchase price of $7.6339 per share and an aggregate
purchase price of $50,000,000 (the "Purchase Price"). Following the Purchase,
the Pro Rata Redemption and the Option Cashout, but prior to any adjustment
pursuant to Section 1.9, the Investors shall own 29.2% (the "Initial Amount") of
the shares of Common Stock on a fully diluted basis (i.e., assuming (i) the
conversion of all convertible securities and the exercise of all outstanding
options and warrants as of the Closing, and (ii) the issuance of 165,000 shares
of Common Stock reserved for issuance upon the future granting of 165,000 stock
options under the Corporation's stock option plan ("Fully Diluted Basis")).
1.2. The Use of Proceeds from the Purchase. The Corporation shall use
$45,500,000 in cash from the proceeds of the Purchase as funds in connection
with (a) the cashout (the "Option Cashout"), on October 1, 1998, of certain of
the Existing Options, in the amounts and from the holders thereof as set forth
on Schedule 1.2, upon execution and delivery of the option purchase agreements,
each substantially in the form of Exhibit B hereto, for an amount for each such
option equal to (i) $6.15, multiplied by (ii) the number of shares of Common
Stock covered by such option, for an aggregate amount of $1,368,375 for all such
options (the "Option Cashout Amount" ); (b) the redemption, which shall take
place immediately following the Closing, of Common Stock held by each Existing
Stockholder of the Corporation on a pro rata basis (the "Pro Rata Redemption")
in accordance with Section 1.3, the number of such shares being so redeemed
being set forth opposite the name of each Existing Stockholder on Annex III
hereto; and (c) the payment of the aggregate principal amount of the Dividend
Notes. The remaining $4,500,000 in cash of the proceeds of the Purchase shall be
used by the Corporation as funds for the repayment of indebtedness of the
Corporation outstanding on the date hereof (excluding the Notes) or as working
capital.
1.3. Pro Rata Redemption; Option Cashout. Subject to Section 1.8(f),
the aggregate redemption price to be paid to the Existing Stockholders for their
shares of Common Stock redeemed pursuant to the Pro Rata Redemption, which will
be paid immediately following the Closing, will be an amount (the "Aggregate
Redemption
- 2 -
12
Price") equal to: (i) cash (the "Cash Payment") in the amount equal to (a)
$40,500,000 minus (b) the Option Cashout Amount, and (ii) subordinated notes
(the "Notes"), each substantially in the form attached as Exhibit C hereto, in
an aggregate principal amount (the "Note Amount") equal to (A) $2,250,000 plus
(B) the Final Shareholders Equity Amount (which Final Shareholders Equity Amount
may be a negative number), minus (C) the aggregate amount paid on the Dividend
Notes after the date hereof, plus (D) if the AAA Amount is less than $3,253,000,
the excess of $3,253,000 over the AAA Amount. In consideration of the shares of
Common Stock redeemed from each Existing Stockholder pursuant to the Pro Rata
Redemption, each Existing Shareholder shall receive a portion of the Cash
Payment and a Note in a principal amount calculated by multiplying the Cash
Payment and the Note Amount, respectively, by a fraction (the "Pro Rata
Percentage"), for such Existing Stockholder as set forth on Schedule 1.3.
1.4. The Closing. The closing of the transactions contemplated by the
Purchase (the "Closing") shall take place simultaneously with the execution and
delivery of this Agreement at the offices of Fried, Frank, Harris, Xxxxxxx &
Xxxxxxxx, Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 on September 4, 1998 or
on such other date as the Corporation and GSCP may mutually determine (such
date, the "Closing Date").
1.5. Actions at the Closing. Simultaneously with, or prior to, the
execution and delivery of this Agreement, the following actions shall occur (the
"Closing Actions"):
(a) The Corporation shall issue the Notes in an aggregate
principal amount equal to the Note Amount.
(b) Each of the Existing Stockholders shall contribute (the
"Contribution") all of their shares of capital stock of TIS Equipment Corp., a
Delaware corporation ("TIS Equipment" ) to the Corporation with no consideration
being paid for such shares.
(c) Except as set forth on Schedule 2.5, each of the options of
TIS Equipment will be canceled and each of the corresponding Existing Options
shall be amended to increase the exercise price thereof by the exercise price of
the corresponding TIS Equipment option.
(d) A stockholders' agreement (the "Stockholders' Agreement" )
among the Corporation, the Investors and the Existing Stockholders,
substantially in the form of Exhibit D hereto, shall be duly executed and
delivered by the parties thereto.
- 3 -
13
(e) A registration rights agreement (the "Registration Rights
Agreement," together with this Agreement (including the exhibits hereto) and the
Stockholders' Agreement, the "Documents" ) among the Corporation, the Investors
and the Existing Stockholders, substantially in the form of Exhibit E hereto,
shall be duly executed and delivered by the parties thereto.
(f) Each TIS Entity shall deliver to the Investors long form
certificates of good standing from the jurisdictions set forth on Schedule 2.1
under its name dated as of a date no earlier than five days prior to the
Closing.
(g) The Corporation shall deliver to the Investors a copy of (i)
its amended certificate of incorporation (the "Certificate of Incorporation" )
certified by the Secretary of State of the State of Delaware, which Certificate
of Incorporation shall have been duly amended by the filing of (A) the amendment
to the Certificate of Incorporation, in the form of Exhibit F hereto, and (B)
the Certificate of Designations on the Series A Preferred Stock (the
"Certificate of Designations" ) in the form of Exhibit G hereto and (ii) a copy
of the certificate of incorporation, certified as set forth above, of each of
the TIS Entities other than the Corporation.
(h) The Corporation shall deliver to the Investors a certified
copy of (i) its amended by-laws (the "By-Laws"), which By-Laws shall have been
duly amended by the amendment to the By-Laws, in the form of Exhibit H hereto
and (b) the by-laws of each TIS Entity other than the Corporation.
(i) The Corporation shall deliver to the Investors a certificate
executed by its Secretary, substantially in the form of Exhibit I hereto,
certifying (i) resolutions authorizing the transactions contemplated in the
Documents and (ii) incumbency matters.
(j) The Investors shall receive from Esanu Katsky Xxxxxx & Siger,
LLP, counsel for the Corporation, an opinion addressed to the Investors, dated
as of the Closing, satisfactory in form and substance to the Investors, which
shall include the opinions set forth in Exhibit J hereto.
(k) Xxxxxx Xxxxxxxxx and Xxxxxxx Xxxxxxxxxx shall have been
elected to the board of directors of the Corporation and shall hold such
position as of the date hereof.
(l) All certificates representing shares of capital stock of the
Corporation outstanding as of the date hereof shall bear the legends required
pursuant to Xxxxxxx 0 xxxxxx.
- 0 -
00
(x) An option agreement (the "Existing Stockholder Purchase Option
Agreement") among the Investors and the Existing Stockholders, substantially in
the form of Exhibit M hereto, shall be duly executed and delivered by the
parties thereto.
(n) An option agreement (the "Investor Purchase Option Agreement")
among the Investors and the Existing Stockholders, substantially in the form of
Exhibit L hereto, shall be duly executed and delivered by the parties thereto.
1.6. Deliveries at the Closing. At the Closing, the Corporation shall
deliver to each Investor a certificate or certificates representing the shares
of Series A Preferred Stock purchased by such Investor, registered in the name
of such Investor or its nominee, against receipt at the Closing by the
Corporation from the Investors of the Purchase Price, which shall be paid by
wire transfer to an account designated at least one business day prior to the
Closing Date by the Corporation.
1.7. Dividend. On the day immediately prior to the day hereof, the
Corporation (a) declared the Dividend payable to the Existing Stockholders in an
amount equal to the Dividend Amount, and (b) paid that portion of the Dividend
equal to the Dividend Amount minus $503,000 by means of and in the form of the
issuance by the Corporation to the Existing Stockholders of the Dividend Notes.
The Corporation shall pay at the Closing, using proceeds of the Purchase,
$2,750,000 of the aggregate principal amount of the Dividend Notes (which
aggregate principal amount shall be subject to adjustment after the Closing as
set forth herein) to the Existing Shareholders in the amounts as set forth on
Schedule 1.7 with respect to each Existing Shareholder. The remaining aggregate
principal amount of the Dividend Notes, if any, shall be determined and shall be
payable following determination of the AAA Amount. In the event that the AAA
Amount is less than or equal to $3,253,000, then the Dividend Notes shall be
canceled and the Existing Stockholders shall be jointly and severally liable to
pay to the Corporation an aggregate amount equal to the excess of $3,253,000
over the AAA Amount, each Existing Stockholder being primarily responsible for
immediately paying to the Corporation an amount equal to (i) the excess of
$3,253,000 over the AAA Amount, multiplied by (ii) such Existing Stockholder's
Pro Rata Percentage. As soon as practicable after the Closing, the Corporation
shall determine the AAA Amount using the closing of the books method (it being
understood that if the AAA Amount is determined to be less than zero, it will be
deemed to be zero for purposes of this Section 1.7).
1.8. Shareholders Equity Adjustment. (a) As promptly as practicable,
but in no event more than 45 days after the Closing Date, the Corporation shall
cause its independent public accounting firm to prepare and deliver to the
Investors a statement (the "Post-Closing Statement") setting forth in reasonable
detail the accounting firm's calculation of the Shareholders Equity Amount. The
"Shareholders Equity Amount"
- 5 -
15
shall mean (i) Adjusted Shareholders Equity, minus (ii) $5,000,000. The
"Adjusted Shareholders Equity" shall mean an amount equal to the shareholders
equity of the TIS Entities on a consolidated basis as of the close of business
on August 31, 1998, calculated in conformity with generally accepted accounting
principles ("GAAP"), applied on a basis consistent with the accounting
principles used in the preparation of the PW Audited Financial Statements except
that such calculation shall (A) assume that the TIS Entities are taxed under
Subchapter C (and not Subchapter S) of the Code and that an election was filed
for TIS and SSN to use the accrual method of accounting for federal and all
applicable state and local Tax purposes effective as of January 1, 1998; (B)
exclude, in the aggregate, up to but no more than $1,600,000 of accruals and
reserves for income Tax liabilities; (C) include accruals and reserves for Tax
liabilities for any taxable period or portion thereof beginning on or after
September 1, 1998 and ending on or prior to the date hereof, other than accruals
and reserves for Tax liabilities arising by reason of the ordinary operations of
the TIS Entities; (D) include as an asset the tax benefit to the Corporation
resulting from the Corporation's deduction of the Option Cashout Amount for
income Tax purposes, which asset shall be deemed to be equal to 44% of the
Option Cashout Amount; (E) exclude as an asset, property and equipment, net; (F)
exclude as a liability current and long-term obligations under capitalized
leases; (G) calculate progress revenues receivables in the manner which is
consistent with the methodologies used in calculating such receivables in the
June 30, 1998 balance sheet contained in the PW Audited Financial Statements;
(H) exclude as a liability any accruals or reserves for fees and expenses
payable (including, without limitation, fees and expenses payable pursuant to
Section 8) by the Corporation in connection with the negotiation and preparation
of the Documents and the documentation relating thereto; and (I) exclude the
Dividend Notes to the extent otherwise includable as a liability.
(b) From and after delivery of the Post-Closing Statement, the
Investors and their independent accountants, if any, shall be permitted to
examine the work papers and all back-up materials and memoranda used or
generated in connection with the preparation of the Post-Closing Statement.
(c) The Investors agree that the Post-Closing Statement and the
computation of the Shareholders Equity Amount set forth therein shall be
conclusive and binding upon the parties unless the Investors, within 30 days
after the delivery to the Investors of such Post-Closing Statement, notify the
Corporation in writing that the Investors dispute any of the amounts set forth
therein, specifying the nature of the dispute and the basis therefor. The
parties shall in good faith attempt to resolve any dispute, in which event the
Post-Closing Statement and the computation of the Shareholders Equity Amount, as
amended to the extent necessary to reflect the resolution of the dispute, shall
be conclusive and binding upon the parties. If any such dispute cannot be
resolved by the parties within ten days after the date of the notice
- 6 -
16
of the dispute, it shall be referred to an arbitrator ("Arbitrator") who shall
be a mutually satisfactory independent public accounting firm of a national
stature, who shall consider only those amounts which the parties are unable to
resolve. If the parties cannot agree to a mutually satisfactory independent
public accounting firm of national stature, such accounting firm shall be
appointed as Arbitrator by the President of the American Arbitration
Association, upon the application of either party. The determination of the
Arbitrator shall be conclusive and binding on each party. The fees of any
arbitration (including the fees of the Arbitrator) pursuant to this clause shall
be borne by the Corporation.
(d) The Shareholders Equity Amount which is conclusive and binding
on each party as set forth in Section 1.8(c) above shall be the "Final
Shareholders Equity Amount," and the Post-Closing Statement, adjusted to reflect
the Final Shareholders Equity Amount shall be the "Final Post-Closing Statement"
which, subject to any re-computation pursuant to Section 10, shall be conclusive
for all purposes of this Agreement; provided, however, that this sentence shall
not limit the indemnification rights of the Investor Indemnities with respect to
breaches of representations or warranties contained in this Agreement.
(e) Promptly after (i) the Final Post-Closing Statement is
conclusive and binding on the parties pursuant to Section 1.8(c) above, and (ii)
the AAA Amount is determined, the Note Amount shall be calculated in accordance
with the terms of the Notes using the Final Shareholders Equity Amount.
(f) If the Note Amount, as calculated in accordance with Section
1.8(e), shall be zero or a negative number (the "Negative Amount"), (i) each
Note shall be canceled and each Existing Stockholder shall immediately pay to
the Corporation an amount equal to (A) the absolute value of the Negative
Amount, multiplied by (B) such Existing Stockholder's Pro Rata Percentage;
provided, however, that all the Existing Stockholders shall be jointly and
severally liable to the Corporation for the absolute value of the Negative
Amount, and (ii) the Aggregate Redemption Price shall be reduced by the Negative
Amount. If the Note Amount, as calculated in accordance with Section 1.8(e),
shall be positive, promptly after the final determination of the Note Amount and
the full payment by each Existing Stockholder to the Corporation of any amount
owing by such Existing Stockholder pursuant to Section 1.7, the Note Amount
shall be paid in accordance with the terms of the Notes.
1.9. Post-Closing Adjustment. (a) In the event that the Actual Income
for the Measurement Period differs from the Income Target for such Measurement
Period by more than the Hurdle Amount (as such terms are defined herein), then
as an adjustment to the purchase price paid by the Investors per share of Series
A Preferred Stock, the amount of shares of Series A Preferred Stock issued to
the Investors shall be adjusted as follows:
- 7 -
17
(i) To the extent that Actual Income is greater than the
Income Target by an amount in excess of the Hurdle Amount, the Investors shall
return shares of Series A Preferred Stock in the amount, assuming that such
adjustment has occurred simultaneously with the Purchase, such that the
percentage of shares of Common Stock the Investors shall own on a Fully Diluted
Basis following the Repurchase and Option Cashout, as adjusted hereto, will
equal the Initial Amount decreased by a percentage of the Initial Amount equal
to twice the Income Excess Percentage (the Initial Amount, as adjusted pursuant
to this clause (i) or clause (ii) below, the "Share Percentage").
Notwithstanding the foregoing, the Investors shall not be required to return any
such shares to the extent doing so would decrease their ownership on a Fully
Diluted Basis by an amount in excess of ten percent (10%) of the Initial Amount,
and in no event will the Share Percentage be less than 90% of the Initial
Amount.
(ii) To the extent that the Income Target is greater than
Actual Income by an amount in excess of the Hurdle Amount, the Investors shall
be issued additional shares of Series A Preferred Stock in the amount, assuming
that such adjustment has occurred simultaneously with the Purchase, such that
the percentage of shares of Common Stock the Investors shall own on a Fully
Diluted Basis following the Repurchase and Option Cashout, as adjusted hereto,
will equal the Initial Amount increased by a percentage of the Initial Amount
equal to twice the Income Shortfall Percentage. Notwithstanding the foregoing,
the Investors shall not receive any such shares to the extent doing so would
increase their ownership on a Fully Diluted Basis by an amount in excess of ten
percent (10%) of the Initial Amount, and in no event will the Share Percentage
be greater than 110% of the Initial Amount.
(b) As promptly as practicable, but in no event more than 60 days
after the end of the Measurement Period, the Corporation shall prepare and
deliver to the Investors (i) balance sheets as of the end of such Measurement
Period, together with statements of income, retained earnings and cash flows for
such Measurement Period (the "Post-Closing Financials") prepared in accordance
with GAAP, applied on a basis consistent with the accounting principles used in
preparation of the PW Audited Financial Statements, and (ii) the computation of
Actual Income for such Measurement Period.
(c) From and after delivery of the Post-Closing Financials and
the computation of Actual Income annexed thereto, the Investors and their
independent accountants, if any, shall be permitted during the succeeding 30 day
period to examine the work papers and all back-up materials and memoranda used
or generated in connection with the preparation of the Post-Closing Financials
and the computation of Actual Income.
- 8 -
18
(d) The Investors agree that the preparation of the Post-Closing
Financials and the computation of Actual Income annexed thereto shall be
conclusive and binding upon the parties unless the Investors, within 30 days
after the delivery to the Investors of such Post-Closing Financials, notify the
Corporation in writing that the Investors dispute any of the amounts set forth
therein, specifying the nature of the dispute and the basis therefor. The
parties shall in good faith attempt to resolve any dispute, in which event the
Post-Closing Financials and the computation of Actual Income, as amended to the
extent necessary to reflect the resolution of the dispute, shall be conclusive
and binding upon the parties. If any such dispute cannot be resolved by the
parties within ten days after the date of the notice of the dispute, it shall be
referred to an Arbitrator. If the parties cannot agree to a mutually
satisfactory independent public accounting firm of national stature, such
accounting firm shall be appointed as Arbitrator by the President of the
American Arbitration Association, upon the application of either party. The
determination of the Arbitrator shall be conclusive and binding on each party.
The fees of any arbitration (including the fees of the Arbitrator) pursuant to
this clause shall be borne by the Corporation.
(e) Promptly after the final computation of Actual Income is
binding on the parties pursuant to Section 1.9(d) above, the amount of shares of
Series A Preferred Stock issued to the Investors shall be adjusted in accordance
with Section 1.9(a) above.
(f) If at the time of any required purchase price adjustment
pursuant to Section 1.9(a) all shares of Series A Preferred Stock have been
converted into shares of Common Stock, the Corporation shall promptly issue to
the Investors, or the Investors shall promptly return to the Corporation, as the
case may be, as an adjustment to the purchase price paid by the Investors per
share of Series A Preferred Stock, an additional amount and kind of Common Stock
equal to the amount and kind of Common Stock issuable upon the conversion (based
on the conversion ratio in effect at the time the last shares of Series A
Preferred Stock were converted into shares of Common Stock) of the amount of
Series A Preferred Stock which would have been issued or returned, as the case
may be, with respect to such purchase price adjustment pursuant to Section
1.9(a) if such purchase price adjustment had been made immediately prior to the
time the last shares of Series A Preferred Stock were converted into shares of
Common Stock.
(g) Any adjustments to the Initial Amount and all additional
shares of Series A Preferred Stock and Common Stock issued to the Investors
pursuant to clause (i) of Section 1.9(a) shall be treated as if they were made
and issued on the date hereof and shall reflect any dividends or other
distributions which would have accrued or have been payable with respect to and
the application of any anti-dilution, ratable treatment or similar provisions
(as set forth in the Certificate of Incorporation,
- 9 -
19
applicable law or otherwise) which would have been applicable to such shares of
Series A Preferred Stock and Common Stock had they been issued on the date
hereof.
(h) Any shares of Series A Preferred Stock or Common Stock
returned to the Corporation pursuant to clause (ii) of Section 1.9(a) shall be
treated as if they were returned on the date hereof and the Investors shall
reimburse the Corporation for any dividends or other distributions that have
been made with respect to such returned shares of Series A Preferred Stock or
Common Stock, as the case may be.
(i) In connection with any issuance of Series A Preferred Stock
pursuant to clause (i) of Section 1.9(a), the Corporation shall reserve a
sufficient number of shares of Common Stock for issuance to the Investors upon
the conversion of the shares of Series A Preferred Stock so issued. Any shares
of Series A Preferred Stock or Common Stock issued to the Investors pursuant to
this Section 1.9 shall, when issued, be validly issued and fully paid and
nonassessable with no personal liability attaching to the ownership thereof and
free and clear of all Encumbrances.
For purposes of this Section 1.9:
"Actual Income" means the net income on the consolidated financial
statements of the TIS Entities for such Measurement Period calculated in
conformity with GAAP, applied on a basis consistent with the accounting
principles used in the preparation of the PW Audited Financial Statements except
that such calculation shall take into account that the TIS Entities are taxed
under Subchapter C of the Code, plus (i) the amount of income Taxes (whether
paid or deferred) of the TIS Entities which was deducted in determining net
income, (ii) the amount of fees and expenses payable (including, without
limitation, fees and expenses payable pursuant to Section 8) by the Corporation
in connection with the negotiation and preparation of the Documents and the
documentation relating thereto which was deducted in determining net income, and
(iii) the Option Cashout Amount and inputed interest, if any, on the Notes to
the extent that such amounts were deducted in determining net income.
"Income Excess Percentage" means the amount by which (a) the
result, expressed as a percentage, of (Actual Income minus the Income Target)
divided by (the Income Target) (b) exceeds five percent.
"Income Shortfall Percentage" means the amount by which (a) the
result, expressed as a percentage, of (Income Target minus Actual Income)
divided by Income Target exceeds (b) five percent.
"Income Target" means the targets for Actual Income for the
Corporation as agreed to by the Corporation, the Existing Stockholders and the
- 10 -
20
Investors. The parties have agreed that the Income Targets for each of the
Measurement Periods are as follows:
Measurement Period
Ended: Income Target
------------------ -------------
Fourth Quarter 1998 $ 3,300,000
First Quarter 1999 $ 6,700,000
Second Quarter 1999 $11,000,000
Third Quarter 1999 $16,000,000
Fiscal Year 1999 $19,000,000
"Hurdle Amount" means an amount equal to the product of .05 and
the Income Target.
"Measurement Period" means the applicable period (determined as
set forth below) for the measurement of Actual Income. If there is an IPO (as
such term is defined in the Stockholders' Agreement) or a Sales Transaction
prior to the end of fiscal year 1999, then the applicable period for the
Measurement Period shall mean the period beginning with the fourth quarter of
fiscal year 1998 and ending with the most recent fiscal quarter ended prior to
the IPO or the consummation of the Sales Transaction (as the case may be). If
there is no IPO or Sales Transaction prior to the end of fiscal year 1999, then
the applicable period for the Measurement Period shall mean fiscal year 1999.
"Sales Transaction" means a transaction (by way of merger, sale
of stock or otherwise) pursuant to which all of the shares of Common Stock and
securities convertible into, or exchangeable for, shares of Common Stock are
sold or exchanged for cash or other property.
1.10. Additional Issuances; Purchase Price Adjustment. (a) In addition
to and without limitation of all other indemnities in this Agreement, in the
event that at any time after the Closing the representation and warranty set
forth in the last sentence of Section 2.3 is determined not to have been true
when made, the Corporation shall issue to the Investors (on a pro rata basis),
at no cost to the Investors, and as an adjustment to the purchase price paid by
the Investors per share of Series A Preferred Stock, an additional amount of
Series A Preferred Stock such that, if such issuance of additional Series A
Preferred Stock were made at the Closing, such representation and warranty would
have been true and accurate in all respects when made.
(b) If at the time of any required purchase price adjustment
pursuant to Section 1.10(a) all shares of Series A Preferred Stock have been
converted into
- 11 -
21
shares of Common Stock, the Corporation shall promptly issue to the Investors
(on a pro rata basis), at no cost to the Investors and as an adjustment to the
purchase price paid by the Investors per share of Series A Preferred Stock, an
additional amount and kind of Common Stock equal to the amount and kind of
Common Stock issuable upon the conversion (based on the conversion ratio in
effect at the time the last shares of Series A Preferred Stock were converted
into shares of Common Stock) of the amount of Series A Preferred Stock which
would have been issued with respect to such purchase price adjustment pursuant
to Section 1.10(a) if such purchase price adjustment had been made immediately
prior to the time the last shares of Series A Preferred Stock were converted
into shares of Common Stock.
(c) Any additional shares of Series A Preferred Stock and Common
Stock issued to the Investors pursuant to this Section 1.10 shall be treated as
if they were issued on the date hereof and shall reflect any dividends or other
distributions which would have accrued or have been payable with respect to and
the application of any anti-dilution, ratable treatment or similar provisions
(as set forth in the Certificate of Incorporation, applicable law or otherwise)
which would have been applicable to such shares of Series A Preferred Stock and
Common Stock had they been issued on the date hereof.
(d) In connection with any issuance of Series A Preferred Stock
pursuant to this Section 1.10, the Corporation shall reserve a sufficient number
of shares of Common Stock for issuance to the Investors upon the conversion of
the shares of Series A Preferred Stock so issued. Any shares of Series A
Preferred Stock or Common Stock issued to the Investors pursuant to this Section
1.10 shall, when issued, be validly issued and fully paid and nonassessable with
no personal liability attaching to the ownership thereof and free and clear of
all encumbrances.
SECTION 2. Representations and Warranties of the Corporation. The
Corporation and each Existing Stockholder hereby jointly and severally represent
and warrant to the Investors as follows (each of the Corporation, TIS Equipment
and SSN, a "TIS Entity," each and collectively, the "TIS Entities"):
2.1. Organization and Good Standing; Power and Authority;
Qualifications. Each TIS Entity (i) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware with
respect to the Corporation and TIS Equipment and New York, with respect to SSN,
(ii) has all requisite corporate power and authority to own, lease and operate
its properties, to carry on its business as presently conducted and as proposed
to be conducted. The Corporation has all requisite corporate power and authority
to enter into and carry out the transactions contemplated by the Documents and
the Certificate of Designations. Except as set forth on Schedule 2.1, each TIS
Entity is qualified to transact business as a foreign corporation in, and is in
good standing under the laws of, those jurisdictions listed on
- 12 -
22
Schedule 2.1 under its name, which jurisdictions constitute all of the
jurisdictions wherein the character of the property owned or leased or the
nature of the activities conducted by it makes such qualification necessary.
2.2. Authorization of the Documents. The execution, delivery and
performance of each of the Documents has been duly authorized by all requisite
corporate action on the part of the Corporation, and each of the Documents
constitutes a legal, valid and binding obligation of the Corporation,
enforceable against the Corporation, in accordance with its terms except to the
extent that enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights generally.
2.3. Capitalization. (a) The capitalization of the Corporation consists
of, and immediately prior to the Closing, will consist of:
(i) Preferred Stock. 10,000,000 shares of Preferred Stock,
par value $.01 per share ("Preferred Stock") (of which 8,000,000 shares will be
designated Series A Preferred Stock prior to the Closing), none of which shares
of Preferred Stock are outstanding.
(ii) Common Stock. 35,000,000 shares of Common Stock, of
which (A) 20,000,000 shares of Common Stock are outstanding, and all such shares
have been validly issued and are fully paid and nonassessable, with no personal
liability attaching to the ownership thereof, (B) 1,898,000 shares of Common
Stock have been duly reserved for issuance upon the exercise of certain options
granted to persons as set forth in Schedule 2.3(a) which options have the
exercise price as set forth in Schedule 2.3(a) ("Existing Options") and (C)
165,000 shares of Common Stock have been duly reserved for issuance upon the
exercise of certain options to be granted to certain employees, which options
have not yet been granted. ("Management Options").
(b) Immediately after the Purchase and the Pro Rata Repurchase,
the capitalization of the Corporation will be as set forth in Section 2.3(a),
with (i) 6,549,788 shares of Series A Preferred Stock outstanding; (ii)
14,039,692 shares of Common Stock outstanding; (iii) 2,063,800 shares of Common
Stock reserved for issuance upon exercise of Existing Options and Management
Options as set forth in Section 2.3(a)(ii); and (iv) 6,549,788 shares of Common
Stock reserved for issuance upon the conversion of the Series A Preferred Stock
(the "Conversion Shares").
Except as set forth above, there will be no equity securities of
the Corporation outstanding immediately following the Closing. Schedule 2.3(a)
contains a list of (i) all holders of record of capital stock of the
Corporation, including the number of shares of capital stock held by each such
holder, and (ii) all outstanding
- 13 -
23
warrants, options, agreements, convertible securities or other commitments
pursuant to which the Corporation is or may become obligated to issue any shares
of the capital stock or other securities of the Corporation, which names all
persons entitled of record to receive such shares or other securities, the
shares of capital stock or other securities required to be issued thereunder as
of the date hereof and the price per share, if any, payable with respect to the
issuance of any share of capital stock issuable thereunder. The Existing
Stockholders constitute all of the holders of record of capital stock of the
Corporation. Except as set forth on Schedule 2.3(b), to the best knowledge of
the Corporation or any Existing Stockholder, there are no other beneficial
owners of shares of capital stock who are not otherwise holders of record.
Except as set forth on Schedule 2.3(b) or as contemplated by the Documents there
are, and immediately after the Closing, there will be, no rights, including
preemptive or similar rights, to purchase or otherwise acquire shares or sell or
otherwise transfer shares of the capital stock of the Corporation pursuant to
any provision of law, the Certificate of Incorporation, the By-Laws, any
agreement to which the Corporation is a party or otherwise; and, except as set
forth on Schedule 2.3(b) or as contemplated by the Documents, the Corporation is
not a party to, and to the best knowledge of the Corporation or any Existing
Stockholder, there are, and immediately after the Closing, there will be, no
agreement, restriction or encumbrance (such as a right of first refusal, right
of first offer, proxy, voting agreement, voting trust, registration rights
agreement, stockholders' agreement, etc., whether or not the Corporation is a
party thereto) with respect to the purchase, sale or voting of any shares of
capital stock of the Corporation (whether outstanding or issuable upon
conversion or exercise of outstanding securities). Except as set forth on
Schedule 2.3(b) or as contemplated by the Documents or except for the right to
vote its shares of Common Stock for the election of directors, no person has the
right to nominate or elect one or more directors of the Corporation. Subject to
any adjustment pursuant to Section 1.8, the shares of Common Stock issuable upon
conversion of the Series A Preferred Stock issued to each Investor under this
Agreement, will represent, in the aggregate, 29.2% of the outstanding Common
Stock on a Fully Diluted Basis, of the Corporation on the Closing Date (after
giving effect to the Pro Rata Repurchase and the Option Cashout) and the voting
power of such issued shares of Series A Preferred Stock will represent, in the
aggregate, no less than 29.2% of the total number of votes able to be cast on
any matter by any voting securities on a Fully Diluted Basis of the Corporation
on the Closing Date (after giving effect to the Pro Rata Repurchase and the
Option Cashout), and the Share Percentage shall equal the Initial Amount after
giving effect to any adjustment in accordance with Section 1.9.
2.4. Authorization and Issuance of Capital Stock. The authorization,
issuance, sale and delivery of the Series A Preferred Stock pursuant to this
Agreement and the authorization, reservation, issuance, sale and delivery of the
Conversion Shares have been duly authorized by all requisite corporate action on
the part of the
- 14 -
24
Corporation, and when issued, sold and delivered in accordance with this
Agreement, the Series A Preferred Stock will be, and when issued and delivered
in accordance with the Certificate of Designations, the Conversion Shares will
be, validly issued and outstanding, fully paid and nonassessable with no
personal liability attaching to the ownership thereof, free of any Encumbrances
and not subject to preemptive or similar rights of the stockholders of the
Corporation or others. The terms, designations, powers, preferences and
relative, participating, optional and other special rights, and the
qualifications, limitations and restrictions, of Series A Preferred Stock are as
stated in the Certificate of Incorporation.
2.5. Subsidiaries. The Corporation holds of record and owns all of the
shares of capital stock of SSN, and as of the Closing, will hold of record and
own all of the shares of capital stock of TIS Equipment, which shares are, or in
the case of TIS Equipment, will be as of the Closing Date, validly issued and
outstanding, fully paid and nonassessable with no personal liability attaching
to the ownership thereof, free of any Encumbrances. Except as set forth on
Schedule 2.5, as of the Closing there will be no outstanding warrants, options,
agreements, convertible securities, or other commitments pursuant to which SSN
or TIS Equipment is or may become obligated to issue any shares of the capital
stock or other securities of SSN or TIS Equipment. As of October 1, 1998, there
will be no equity securities of TIS Equipment outstanding except as owned by the
Corporation, and there will be no outstanding warrants, options, agreements,
convertible securities, or other commitments pursuant to which SSN or TIS
Equipment is or may become obligated to issue any shares of the capital stock or
other securities of SSN or TIS Equipment. No options of TIS Equipment are vested
as of the Closing Date, and no options of TIS Equipment will be vested as of
September 29, 1998. As of the date hereof, 51 of the 59 holders of TIS Equipment
options have consented to (i) the cancellation of such option and (ii) the
amendment of the Existing Options to increase the exercise price thereof by the
exercise price of the corresponding TIS Equipment option. Upon termination of
any Employee having a TIS Equipment option which is not vested, such Employee
will lose his or her option and have no rights thereunder or claims against any
TIS Entity relating thereto. In addition, there are no rights, including
preemptive or similar rights, to purchase or otherwise acquire shares or sell or
otherwise transfer shares of the capital stock of SSN and TIS Equipment pursuant
to any provision of law, the certificates of incorporation or by-laws of any of
the TIS Entities, any agreement to which any of the TIS Entities is a party or
otherwise; and, except as contemplated by the Documents, none of the TIS
Entities is a party to, and to the best knowledge of the Corporation or any
Existing Stockholder, there are not, and immediately after the Closing, there
will not be, any agreements, restrictions or Encumbrances (such as a right of
first refusal, right of first offer, proxy, voting agreement, voting trust,
registration rights agreement, stockholders' agreement, etc., whether or not any
of the TIS Entities is a party thereto) with respect to the purchase,
- 15 -
25
sale or voting of any shares of capital stock of SSN or TIS Equipment. Except
for SSN and TIS Equipment, the Corporation has never had, nor does it presently
have, any subsidiaries, nor has it owned, nor does it presently own, any capital
stock or other proprietary interest, directly or indirectly, in any corporation,
association, trust, partnership, joint venture or other entity.
2.6. Financial Statements. The Corporation has furnished to GSCP (a)
the audited combined balance sheets at December 31, 1997 and June 30, 1998, and
the related combined statements of income, retained earnings and cash flows for
the fiscal year ended December 31, 1997 and for the year to date ended June 30,
1998 of the Corporation, SSN and TIS Equipment (the "PW Audited Financial
Statements") and an opinion of PriceWaterhouseCoopers LLP (the "Accounting
Firm") to the Corporation to the effect that such combined financial statements
present fairly, in all material respects, the financial position of the
Corporation, SSN and TIS Equipment at December 31, 1997 and June 30, 1998, and
the results of their operations and cash flows for the years then ended in
conformity with GAAP, consistently applied, which opinion shall not contain any
qualification; and (b) the audited combined balance sheets as of December 31,
1995 and 1996 and the related combined statements of income, retained earnings
and cash flows of the Corporation and SSN (the "FGM Audited Financial
Statements"), together with the opinion of Feldman, Gutterman, Xxxxxxxx and
Company. The PW Audited Financial Statements and the FGM Audited Financial
Statements (i) are in accordance with the books and records of the TIS Entities;
(ii) have been prepared in accordance with GAAP consistently applied; and (iii)
fairly present the financial position of the Corporation and SSN, or the
Corporation, SSN and TIS Equipment at December 31, 1996, December 31, 1997 and
June 30, 1998, as the case may be, and the results of their operations and their
cash flows for the years then ended in conformity with GAAP, consistently
applied.
2.7. Absence of Undisclosed Liabilities. Except as disclosed on
Schedule 2.7, no TIS Entity has any liabilities or obligations (whether accrued,
absolute, contingent, unliquidated or otherwise, whether due or to become due)
other than (a) liabilities or obligations reserved against or otherwise
disclosed in the PW Audited Financial Statements and (b) liabilities or
obligations arising since June 30, 1998 which were incurred in the ordinary
course of business consistent (in amount and kind) with past practice (none of
which is a liability resulting from breach of contract, breach of warranty,
tort, infringement claim or lawsuit) and which do not, individually or in the
aggregate, exceed $100,000.
2.8. Absence of Changes. Except as set forth on Schedule 2.8 and except
for the execution and delivery of the Documents and the transactions
contemplated hereby and thereby, or referred to herein or therein, since
December 31, 1997, each TIS Entity has conducted its business in the ordinary
course, consistent with past
- 16 -
26
practice, and there has not been (a) any material adverse change having, or any
event or condition which has had, or is reasonably likely to have, a material
adverse effect on the business, operations, properties, assets, condition
(financial or other), prospects or results of operations of the TIS Entities
taken as a whole (a "Material Adverse Effect"), (b) any waiver of any valuable
right of any TIS Entity, the cancellation of any valuable right of any TIS
Entity, or the cancellation of any material debt or claim held by any TIS
Entity, (c) any payment or declaration of dividends on, or other distribution
with respect to, or any direct or indirect redemption or acquisition of, any
securities of any TIS Entity, (d) any issuance of any stock, bonds or other
securities of any TIS Entity other than pursuant to the exercise of the
previously outstanding options set forth on Schedule 2.8, (e) any sale,
assignment or transfer of any tangible or intangible assets of any TIS Entity,
except (i) in the ordinary course of business, and (ii) assets for which the
book value does not exceed $10,000 and which are not, individually or in the
aggregate, material, (f) any loan by any TIS Entity to any officer, director,
employee, consultant or shareholder of such TIS Entity (other than advances to
such persons in the ordinary course of business in connection with travel and
travel related expenses), (g) any damage, destruction or loss (whether or not
covered by insurance) materially and adversely affecting the assets, property,
financial condition or results of operations of any TIS Entity, (h) any
increase, direct or indirect, in the compensation paid or payable to any officer
or director of any TIS Entity, or, other than in the ordinary course of
business, to any other employee, consultant or agent of any TIS Entity, (i) any
change in the accounting or Tax methods, practices or policies or in any Tax
election of any TIS Entity (j) any indebtedness incurred for borrowed money
other than in the ordinary course of business or pursuant to an agreement set
forth on Schedule 2.8 to this Agreement, (k) any amendment to or termination of
any material agreement to which any TIS Entity is a party (other than amendments
to or terminations of agreements pursuant to or contemplated by this Agreement),
(l) any material adverse change with respect to the regulation of any TIS Entity
or its products by any administrative agency or governmental body, (m) any
material change in the manner of business or operations of any TIS Entity, (n)
any transaction except in the ordinary course of business or as otherwise
contemplated hereby, or (o) any agreement or commitment (contingent or
otherwise) to do any of the foregoing.
2.9. No Conflict. The execution, delivery and performance by the
Corporation and the Existing Stockholders of the Documents and the consummation
by the Corporation and the Existing Stockholders of the transactions
contemplated hereby and thereby; and the issuance, sale and delivery by the
Corporation of the Series A Preferred Stock, and the issuance and delivery of
the Conversion Shares in accordance with the Certificate of Designations, by the
Corporation will not (a) violate any provision of law, statute, rule or
regulation, or any ruling, writ, injunction, order, judgment or decree of any
court, administrative agency or other
- 17 -
27
governmental body ("Law") applicable to any of the TIS Entities, or any of their
properties or assets, (b) except as set forth in Schedule 2.23, conflict with or
result in any breach of any of the terms, conditions or provisions of, or
constitute (with due notice or lapse of time, or both) a default (or give rise
to any right of termination, cancellation or acceleration) under, or result in
the creation of any Encumbrance upon any of the properties or assets of any of
the TIS Entities under, any Contract required to be set forth on Schedule 2.10
hereto or (c) violate the Certificate of Incorporation or the by-laws of any of
the TIS Entities.
2.10. Agreements. (a) Except as set forth on Schedule 2.10 hereto, no
TIS Entity is a party to any indenture, mortgage, guaranty, lease, license or
other contract, agreement or understanding, written or oral, (a "Contract")
other than any Contract which (i) pursuant to its terms, has expired, been
terminated or fully performed by the parties, and in each case, under which no
TIS Entity has any liability, contingent or otherwise or (ii) involves annual
aggregate payments to or from such TIS Entity of $100,000 or less (as opposed to
an indemnity agreement or similar contract under which a TIS Entity has any
contingent liability), and in each case, is not material to the business or
financial condition of such TIS Entity.
(b) Complete copies (or, if oral, full written descriptions) of
all Contracts required to be listed on Schedule 2.10 hereto, including all
amendments thereto, have been delivered to GSCP. Each of the Contracts is, as of
the date hereof, and will continue to be after the Closing, a legal, valid and
binding obligation of, enforceable against, and in full force and effect
against, the TIS Entity party thereto and, to the best knowledge of the
Corporation or any Existing Stockholder, the other parties thereto. Except as
set forth on Schedule 2.10 hereto, (i) there is no breach, violation or default
by any TIS Entity and no event which, with notice or lapse of time or both,
would (A) constitute a material breach, violation or default by such TIS Entity
under any Contract required to be listed on Schedule 2.10 or (B) give rise to
any lien or right of termination, modification, cancellation, prepayment,
suspension, limitation, revocation or acceleration against such TIS Entity under
any such Contract, and (ii) no other party to any of such Contracts is in
arrears in any material matter in respect of the performance or satisfaction of
the terms and conditions on its part to be performed or satisfied under any of
such Contracts, no waiver or indulgence has been granted by any of the parties
thereto and no party to any of such Contracts has repudiated any provision
thereof.
2.11. Intellectual Property Matters. (a)(i) Each TIS Entity owns or has
the right to use, pursuant to license, sublicense, Contract or permission, all
of the Intellectual Property Rights used in the operation of the business of
such TIS Entity as currently conducted and as currently proposed to be
conducted, and all such Intellectual Property Rights will be owned or available
for use by such TIS Entity on
- 18 -
28
identical terms and conditions immediately subsequent to the Closing. Schedule
2.11(a) separately lists and identifies all of the Intellectual Property Rights
(other than trade secrets and trade secret rights, know-how and show-how) owned
by each TIS Entity with all registration numbers and dates of filing and
registration, if any or to the extent applicable, and the Corporation has
delivered to GSCP correct and complete copies of all written documentation
evidencing ownership and prosecution of each item identified in Schedule
2.11(a). The TIS Entities have taken all necessary and desirable action to
maintain and protect each of the Intellectual Property Rights. Except as
otherwise set forth on Schedule 2.11(a), none of the Intellectual Property
Rights are subject to any outstanding ruling, decree, rule, judgment, order or
injunction, nor are any of the Intellectual Property Rights owned by the
Corporation subject to any Encumbrances (other than Permitted Encumbrances). No
person has misappropriated any Intellectual Property Rights (including, without
limitation, any of the Software) or has or is violating or infringing any
Intellectual Property Rights owned by any TIS Entity. No TIS Entity has any
current agreement to indemnify any person for or against any interference,
infringement, misappropriation or other conflict with respect to any of the
Intellectual Property Rights.
(ii) Except as set forth on Schedule 2.11, no TIS Entity has
granted any license or rights to any other person with respect to any
Intellectual Property Rights owned by such TIS Entity.
(iii) Except as set forth on Schedule 2.11, there are no
contracts in effect with third parties for the conversions, modifications or
enhancement of Software. Except as set forth on Schedule 2.11, there are no
marketing agreements with third parties or other arrangements with third parties
relating to the direct or indirect marketing of Software.
(b) Schedule 2.11(b) separately lists and identifies all of the
Third Party Intellectual Property Rights licensed to any of the TIS Entities and
identifies the associated licenses. The Corporation has furnished to GSCP a
true, correct and complete copy of each license agreement identified on Schedule
2.11(b). All royalties due under said licenses have been paid and there exists
no default by any of the TIS Entities or by any other party under the terms of
said licenses, and no event has occurred which, upon the passage of time or the
giving of notice, or both, would result in any event of default by any of the
TIS Entities or by any other party to the license or prevent such TIS Entity
from exercising and obtaining the benefits of any options contained therein.
Except as set forth on Schedule 2.11(b), the relevant TIS Entity has all right,
title and interest of the licensee under the terms of said licenses, free of all
Encumbrances (other than Permitted Encumbrances), all such licenses are valid
and in full force and effect and enforceable against such TIS Entity and the
other
- 19 -
29
parties thereto and such TIS Entity is in compliance with the terms thereof.
There is no default or basis for acceleration under any of said licenses as a
result of the transactions contemplated by this Agreement.
(c) None of the TIS Entities are, or as a result of the
transactions contemplated by the Documents will be, infringing upon, interfering
with or violating, any proprietary rights or Intellectual Property Rights of any
other person and none of the TIS Entities have received any notice of any such
infringement, violation or interference.
"Software" means all software and computer programs other than
off-the-shelf commercially available software (the cost of which does not exceed
$1,000 per unit) including all such software and computer programs in machine
readable source code forms and in machine executable object code forms and all
related specifications (including, without limitation, all logic architectures,
algorithms and logic flows and all physical, functional, operating and design
parameters), work in progress relating to corrections, modifications or
enhancements, current and prior versions, operating systems and procedures
(including development methodology), designs, design revisions, related
applications software in any language, concepts, ideas, processes, techniques,
software design and test tools, third party software interfaces written by them
and all methods of implementation and packaging, together with all associated
know-how and show-how and all related documentation.
"Intellectual Property Rights" means, (a) all patent rights and
all right, title and interest in and to all letters patent and applications for
letters patent, industrial models, industrial designs, xxxxx patents, patents of
importation, utility models, certificates of invention and other government
issued or granted indicia of invention ownership including any reissue,
division, continuation or continuation-in-part applications throughout the
world; (b) all rights, title and interest in and to all trade secrets and trade
secret rights arising under any Law (including common law); (c) all copyright
rights, and all other author rights whether or not copyrightable; and all
rights, title and interest in and to all copyrights, copyright registrations,
certificates of copyright and copyrighted interests throughout the world; (d)
all rights, title and interest in and to all know-how and show-how whether or
not protectable by patent, copyright or trade secret law, or as a registered
mask work; (e) all trademarks, trade names and service marks, whether registered
or arising under the common law or any other Law, and all registrations thereof
and interests therein throughout the world; and (f) the Software.
"Third Party Intellectual Property Rights" means all Intellectual
Property Rights that are not owned by the Corporation or an affiliate of the
Corporation.
- 20 -
30
2.12. "Year 2000." The Corporation's computer systems and software
(including all software and applications developed for or sold to any customer
or client) of the TIS Entities are able to accurately process in all material
respects 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. To the
best knowledge of the Corporation or any Existing Stockholder, there is no
inability on the part of any service provider of any of the TIS Entities to
timely remedy such service provider's own deficiencies in respect of the year
2000 problem.
2.13. Corporate Minute Books. The corporate records of each TIS Entity
are true and complete and accurately reflect all meetings of and resolutions of,
or written consents by, the shareholders or board of directors (or committee
thereof) of such TIS Entity since the day of corporate organization. The
Corporation has previously furnished to GSCP true and correct copies of all
minutes of meetings or other actions by the directors, stockholders or
incorporators of each of the TIS Entities since their respective inceptions.
2.14. Personal Property; Real Property. (a) Except as set forth on
Schedule 2.14(a), the Corporation has good and marketable title to all of its
assets and properties, free and clear of any mortgages, judgments, claims,
liens, security interests, pledges, escrows, charges or other encumbrances of
any kind or character whatsoever ("Encumbrances") except (i) Encumbrances for
taxes not yet due and payable; (ii) Encumbrances for taxes and charges and other
claims, the validity of which the Corporation is contesting in good faith in
appropriate proceedings, all of which, in the case of such Encumbrances on the
assets and properties of the Corporation, are disclosed in Schedule 2.14(a); or
(iii) Encumbrances which arise in the ordinary course of business and do not
materially impair the Corporation's ownership, use of any such asset or property
or the Corporation's ability to obtain financing by using such assets or
property as collateral (Encumbrances referenced in clauses (i), (ii) and (iii),
collectively referred to as "Permitted Encumbrances") and (iv) Encumbrances
listed on Schedule 2.14(a). The assets and properties owned by, or leased to,
any TIS Entity are sufficient for the conduct of the business and operation of
such TIS Entity as presently conducted.
(b) None of the TIS Entities nor any predecessors of any TIS
Entity, directly or indirectly, owns or has ever owned any real property.
Schedule 2.14(b) hereto sets forth all of the real property presently leased by
any TIS Entity (the "Leased Real Property"). Such TIS Entity has good, clean
record and marketable title to enforceable leasehold interests in the Leased
Real Property, free and clear of all Encumbrances except for Permitted
Encumbrances. The Corporation has furnished to GSCP true and complete copies of
all of the leases of the Leased Real Property. Each
- 21 -
31
of said leases has been duly authorized and executed by the TIS Entity which is
a party to it, and is in full force and effect. None of the TIS Entities are in
default under any of said leases, nor has any event occurred which, with notice
or the passage of time, or both, could be reasonably expected to give rise to an
event of default. With respect to each lease of Leased Real Property to which
any TIS Entity is a party, so long as the applicable TIS Entity performs all of
its obligations under such lease for Leased Real Property within applicable
notice and grace periods, (i) the rights of such TIS Entity under such lease
shall not be terminated and (ii) such TIS Entity's possession of such Leased
Real Property and the use and enjoyment thereof shall not be disturbed by any
landlord, overlandlord, mortgagee or other superior party. Except as set forth
on the Schedule 2.14(b), no TIS Entity is obligated to purchase any Leased Real
Property and no Leased Real Property is required to be accounted for under GAAP
as a capitalized lease.
(c) The TIS Entities are conducting, and have conducted, their
business in compliance with all applicable Environmental Laws. No TIS Entity has
caused, arranged or allowed, or contracted with any party for, the
transportation, treatment, storage or disposal of any Hazardous Substance in
connection with the operation of its business or otherwise. No Hazardous
Substance has been released into the environment on or from the Leased Real
Property which is required under applicable Environmental Laws, to be abated or
remediated by the Corporation. There are no past or present conditions, events,
circumstances, facts, activities, practices, incidents, actions, omissions, or
plans that can reasonably be expected to form the basis of any claim, action,
suit, proceeding, hearing, investigation, or inquiry against or involving any
TIS Entity allegedly or actually based on or related to any violation of any
Environmental Law or that is reasonably likely to require such TIS Entity to
incur any Losses in connection therewith. For purposes of this Agreement, the
term "Environmental Laws" shall mean any federal, state or local law, ordinance,
rule or regulation, in effect and as amended as of the date of this Agreement,
relating to human health, employee safety or the protection of the environment,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et seq., the
Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Section
11001, et seq., the Resource Conversation and Recovery Act, 42 U.S.C. Section
6901 et seq., and the Occupational Health and Safety Act 29 U.S.C. Section 641
et seq. For purposes of this Agreement, the term "Hazardous Substances" shall
include all substances, products or materials (including, without limitation,
asbestos-containing materials, petroleum or any by-products thereof) classified
as hazardous or toxic under any Environmental Laws.
2.15. Employee Benefit Plans. (a) Schedule 2.15 hereto contains a true
and complete list of (i) each plan, program, policy, payroll practice, contract,
agreement or other arrangement providing for compensation, severance,
termination pay,
-22-
32
performance awards, stock or stock-related awards, fringe benefits or other
material employee benefits of any kind, whether formal or informal, funded or
unfunded, written or oral and whether or not legally binding, which is now or
previously has been sponsored, maintained, contributed to or required to be
contributed to by any TIS Entity or pursuant to which any TIS Entity has any
liability, contingent or otherwise, including, but not limited to, any "employee
benefit plan" within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") (each a "Benefit Plan"); (ii)
each management, bonus, option, equity (or equity related), severance,
non-compete, confidentiality or similar agreement or contract between the
Corporation and any current, former or retired employee, officer, consultant,
independent contractor, agent or director of any TIS Entity (an "Employee"); and
(iii) each employment or consulting agreement or contract between the
Corporation and an Employee; provided, however, that for scheduling purposes
only, the only Employee Agreements required to be listed pursuant to clause
(iii) shall be those Employee Agreements between the Corporation and an Employee
who earns annual compensation in excess of $50,000 (each agreement in clauses
(ii) and (iii), an "Employee Agreement"). None of the TIS Entities currently
sponsors, maintains, contributes to, nor is required to contribute to, nor has
any TIS Entity ever sponsored, maintained, contributed to or been required to
contribute to, or incurred any liability to, (i) any "defined benefit plan" (as
defined in ERISA Section 3(35)); (ii) any "multiemployer plan" (as defined in
ERISA Section 3(37)) or (iii) any Benefit Plan which provides, or has any
liability to provide, life insurance, medical, severance or other employee
welfare benefits to any Employee upon his or her retirement or termination of
employment, except as required by Section 4980B of the Code. Except as set forth
on Schedule 2.15(a), none of the TIS Entities has any plan or commitment,
whether legally binding or not, (i) to establish any new Benefit Plan, or to
modify or terminate any Benefit Plan or (ii) to enter into, modify or terminate
any Employee Agreement with any Employee who earns more than $50,000 annually.
(b) None of the TIS Entities is (i) a member of a "controlled
group of corporations," under "common control" or an "affiliated service group"
within the meaning of Sections 414(b), (c) or (m) of the Code, (ii) required to
be aggregated under Section 414(o) of the Code, or (iii) under "common control,"
within the meaning of Section 4001(a)(14) of ERISA, or any regulations
promulgated or proposed under any of the foregoing Sections, in each case with
any other entity other than the remaining TIS Entities.
(c) The Corporation has made available to GSCP current,
accurate and complete copies of all documents embodying or relating to each
Benefit Plan and each Employee Agreement, including all amendments thereto,
interpretations thereof, trust or funding agreements relating thereto (if any),
the two most recent annual
-23-
33
reports (Series 5500 and related schedules) required under ERISA (if any), the
most recent determination letter received from the IRS (if any), the most recent
summary plan description (with all material modifications) (if any), and all
material communications to any Employee or Employees relating to any Benefit
Plan or Employee Agreement required to be listed on Schedule 2.15.
(d) Each Benefit Plan has been established and maintained in
accordance with its terms and in compliance in all material respects with all
applicable, laws, statutes, orders, rules and regulations, including but not
limited to ERISA and the Code, and each Benefit Plan intended to qualify under
Section 401 of the Code is, and since its inception has been, so qualified.
(e) No "prohibited transaction," within the meaning of Section
4975 of the Code or Section 406 of ERISA, has occurred with respect to any
Benefit Plan. There are no actions, proceedings, suits or claims pending, or to
the best knowledge of the Corporation or any Existing Stockholder, threatened or
anticipated (other than routine claims for benefits) with respect to any Benefit
Plan or Employee Agreement. No Employee has been hired by any of the TIS
Entities in violation of any restrictive covenant or any non-compete agreement
with any other person. Each Benefit Plan can be amended, terminated or otherwise
discontinued without liability to any TIS Entity. No liability under any Benefit
Plan has been funded nor has any such obligation been satisfied with the
purchase of a contract from an insurance company as to which the Corporation has
received notice that such insurance company is insolvent or is in rehabilitation
or any similar proceeding. No Benefit Plan is under audit or investigation by
the IRS, the Department of Labor or the Pension Benefit Guarantee Corporation,
and, to the knowledge of the Corporation, no such audit or investigation is
pending or has been threatened. With respect to each Benefit Plan which is an
employee welfare benefit plan (within the meaning of Section 3(1) of ERISA), all
claims incurred by the Corporation are (i) insured pursuant to a contract of
insurance whereby the insurance company bears any risk of loss with respect to
such claims; (ii) covered under a contract with a health maintenance
organization (an "HMO" ) pursuant to which the HMO bears the liability for
claims, or (iii) reflected as a liability or accrued for on the PW Audited
Financial Statements.
(f) The execution of, and performance of the transactions
contemplated in this Agreement will not (either alone or upon the occurrence of
any additional or subsequent events) (i) constitute an event under any Benefit
Plan or Employee Agreement that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligations to fund benefits with respect
to any Employee or (ii) result in the triggering or imposition of any
restrictions or limitations on the right of any TIS Entity to amend or terminate
any Benefit Plan and receive the full amount
-24-
34
of any excess assets remaining or resulting from such amendment or termination.
No payment or benefit which will or may be made by any TIS Entity or any of
their respective affiliates with respect to any Employee may be characterized as
an "excess parachute payment," within the meaning of Section 280G(b)(1) of the
Code.
2.16. Labor Relations; Employees. Schedule 2.16 lists all employees of
the TIS Entities with annual compensation in excess of $50,000. Except as set
forth on Schedule 2.16, (a) the TIS Entities are not delinquent in payments to
any of their employees, for any wages, salaries, commissions, bonuses or other
direct compensation for any services performed by the date hereof or amounts
required to be reimbursed by them to the date hereof, (b) the TIS Entities are
in compliance in all material respects with all applicable federal, state and
local laws, rules and regulations respecting employment, employment practices,
labor, terms and conditions of employment and wages and hours, (c) the TIS
Entities are not bound by or subject to (and none of its assets or properties is
bound by or subject to) any written or oral, express or implied, commitment or
arrangement with any labor union, and no labor union has requested or, to the
best knowledge of the Corporation or any Existing Stockholder, has sought to
represent any of the employees, representatives or agents of the TIS Entities,
(d) there is no labor strike, dispute, slowdown or stoppage actually pending,
or, to the best knowledge of the Corporation or any Existing Stockholder,
threatened against or involving the TIS Entities, (e) to the best knowledge of
the Corporation or any Existing Stockholder, no salaried key employee has any
plans to terminate his or her employment with the TIS Entities. Each of the
Existing Stockholders has executed a confidentiality agreement substantially in
the form of Exhibit K (collectively, the "Employee Nondisclosure Agreements"),
and such agreements are in full force and effect. Each officer, key employee,
and each other employee and consultant of any of the TIS Entities who has access
to information has executed standard confidentiality agreements, which
agreements are now in full force and effect.
2.17. Litigation; Orders. Except as set forth on Schedule 2.17, there
is no civil, criminal or administrative action, suit, claim, notice, hearing,
examination, inquiry, proceeding or investigation at law or in equity or by or
before any court, arbitrator or similar panel, governmental instrumentality or
other agency ("Litigation") now in progress or pending or, to the best knowledge
of the Corporation or any Existing Stockholder, threatened against any TIS
Entity or the assets (including the Intellectual Property Rights) or the
business of any TIS Entity. No TIS Entity is subject to any order, writ,
injunction or decree of any court of any federal, state, municipal or other
domestic or foreign governmental department, commission, board, bureau, agency
or instrumentality.
-25-
35
2.18. Compliance with Laws; Permits. Except as provided on Schedule
2.18, each TIS Entity (a) has complied in all material respects with all
federal, state, local and foreign laws, rules, ordinances, codes, consents,
authorizations, registrations, regulations, decrees, directives, judgments and
orders applicable to it and its business and (b) has all federal, state, local
and foreign governmental licenses, permits and qualifications material to and
necessary in the conduct of its business as currently conducted, such licenses,
permits and qualifications are in full force and effect, and no violations have
been recorded in respect of any such licenses, permits and qualifications, and
no proceeding is pending or, to the best knowledge of the Corporation or any
Existing Stockholder, threatened to revoke or limit any such license, permit or
qualification. Schedule 2.18 sets forth a list of all material licenses, permits
and qualifications, and the expiration dates thereof.
2.19. Commissions, Etc. Except as set forth on Schedule 2.19, no TIS
Entity is a party to any Contract obligating such TIS Entity to pay commissions
or fees to any party in connection with the issuance or sale of any shares of
capital stock or other securities of such TIS Entity.
2.20. Offering Exemption. Assuming the accuracy of the representations
and warranties made by the Investors in Section 3, the offer and sale of the
Series A Preferred Stock as contemplated hereby, the issuance and delivery of
the Conversion Shares to the Investors upon the conversion of the Series A
Preferred Stock in accordance with the terms of the Certificate of Designations,
and all prior issuances of securities of the Corporation are each exempt from
registration under the Securities Act of 1933, as amended (the "Securities Act")
and under applicable state securities and "blue sky" laws, as currently in
effect. All shares of capital stock and other securities issued by the
Corporation prior to the Closing have been issued in transactions exempt from
registration under the Securities Act, and all applicable state securities or
"blue sky" laws. The Corporation has not violated the Securities Act or any
applicable state securities or "blue sky" laws in connection with the issuance
of any shares of capital stock or other securities prior to the Closing. The
Corporation has not offered any of its capital stock, or any other securities,
for sale to, or solicited any offers to buy any of the foregoing from the
Corporation, or otherwise approached or negotiated with any other person in
respect thereof, in such a manner as to require registration under the
Securities Act.
2.21. Related Transactions. (a)Except as set forth on Schedule 2.21(a),
no current or former stockholder, director, officer or employee of any TIS
Entity, or any current or former "affiliate" or "associate" (as such terms are
defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of any of the foregoing persons or any TIS Entity is presently,
or since the organization of such TIS Entity, has been, directly or indirectly
through such person's or entity's
-26-
36
affiliation with any other person or entity, a party to any agreement or
transaction with any TIS Entity, other than, in the case of such person, in
connection with any such person's duties as a director, officer or employee of
such TIS Entity.
(b) Each ongoing affiliate transaction set forth on Schedule
2.21(a) is on terms that are (i) consistent with past practice of the TIS Entity
party thereto and (ii) at least as favorable to such TIS Entity as would be
available with independent third parties dealing at arms' length.
2.22. Taxes. (a) Except as set forth on Schedule 2.22(a): (i) each TIS
Entity has timely filed in accordance with all applicable laws (taking into
account valid extensions) all material Tax Returns required to be filed by it,
and all such Tax Returns are true, correct and complete in all material
respects; (ii) each TIS Entity has timely paid all Taxes owed by it on or prior
to the date hereof, including, without limitation, any Taxes levied upon any of
its properties, assets, income or franchises; (iii) all amounts required to be
collected or withheld by each TIS Entity have been collected or withheld and any
such amounts that are required to be remitted to any taxing authority have been
duly and timely remitted by each TIS Entity; (iv) no examination, investigation,
audit, claim, assessment, deficiency or administrative or judicial proceeding is
in progress, pending, proposed or, to the best knowledge of the Corporation or
any Existing Stockholder, threatened, in each case with regard to any Taxes or
Tax Returns of any TIS Entity; (v) no taxing authority in a jurisdiction where a
TIS Entity or any shareholder of such TIS Entity does not file Tax Returns has
made a claim, assertion or threat that such non-filing entity or shareholder is
or may be subject to taxation by such jurisdiction; (vi) none of the TIS
Entities is a party to or bound by any Tax sharing or Tax allocation or similar
agreement or arrangement; and (vii) all Tax Returns of any TIS Entity with
respect to taxable periods through the year ended December 31, 1994 have been
examined and closed or are Tax Returns with respect to which the applicable
statute of limitations has expired without extension or waiver. Schedule 2.22(a)
contains a list of the states, territories and jurisdictions (whether domestic
or foreign) in which any TIS Entity has filed income, franchise, sales and use
Tax Returns for taxable periods ending on or after December 31, 1994.
(b) (i) For federal income tax purposes, each of the
Corporation, SSN and TIS Equipment has made a timely and valid election to be
treated as an "S corporation" under Section 1361(a) of the Code effective on
July 1, 1994, January 1, 1997 and January 1, 1994, respectively, and such TIS
Entity was so classified for state and local income tax purposes pursuant to
analogous state or local provisions in the jurisdictions and effective on the
dates set forth on Schedule 2.22(b)(i). Each of the Corporation, SSN and TIS
Equipment has maintained its status as a "small business corporation" within the
meaning of Section 1361(b) of the Code, and any analogous
-27-
37
provision of state or local law in any jurisdiction listed on Schedule
2.22(b)(i) until, in the case of the Corporation and TIS Equipment, the date
hereof, and until, in the case of SSN, the date on which SSN became a
wholly-owned subsidiary of the Corporation. None of the stockholders of the
Corporation or the stockholders of TIS Equipment or the Corporation or TIS
Equipment has taken or omitted to take any actions which would cause the
Corporation or TIS Equipment, respectively, to cease prior to the date hereof to
be treated as an "S corporation" within the meaning of Section 1361(a) of the
Code or any analogous provision of state or local law in any jurisdiction listed
in Schedule 2.22(b)(i).
(ii) For federal income tax purposes, the Corporation
has made a valid and timely election for SSN to be treated as a "qualified
subchapter S subsidiary" under Section 1361(a)(3) of the Code effective on the
date that SSN became a wholly-owned subsidiary of the Corporation, and SSN was
so classified for state and local income tax purposes pursuant to analogous
state or local provisions in the jurisdictions and effective on the dates set
forth in Schedule 2.22(b)(ii). SSN has properly qualified as a "qualified
subchapter S subsidiary" within the meaning of Section 1361(a)(3) of the Code
and any analogous provision of state or local law in any jurisdiction listed in
Schedule 2.22(b)(ii) since the effective date of such election through the date
hereof. None of the stockholders of SSN or SSN took or omitted to take any
actions which would have caused SSN to cease to be treated as an "S corporation"
within the meaning of Section 1361(a) of the Code or any analogous provision of
state or local law in any jurisdiction listed in Schedule 2.22(b)(ii) prior to
the date that SSN became a wholly-owned subsidiary of the Corporation. The
Corporation has not taken or omitted to take any action which would cause SSN to
cease prior to the date hereof to be treated as a "qualified subchapter S
subsidiary" within the meaning of Section 1361(a)(3) of the Code or any
analogous provision of state or local law in any jurisdiction listed in Schedule
2.22(b)(ii) since the date that SSN became a wholly-owned subsidiary of the
Corporation.
(c) The accruals and reserves for Taxes on the balance sheets
referenced in Section 2.6 are adequate to cover any liability of the TIS
Entities for Taxes for periods through the date of such balance sheets.
(d) Except as set forth on Schedule 2.22(d) or as contemplated
by Section 4.12 of this Agreement, there are no rulings, request for rulings,
closing agreements, adjustments pursuant to section 481(a) of the Code (or
analogous provisions of state or local law), or dispositions of property being
accounted for under the installment method pursuant to section 453 of the Code
(or analogous provisions of state or local law) related to any TIS Entity which
could affect any TIS Entity's liability for Taxes for any taxable period or
portion thereof beginning on or after the Closing Date.
-28-
38
(e) TIS Equipment has used the accrual method of accounting
for federal, state and local Tax purposes at all times since it was organized.
(f) For purposes of this Agreement, "Tax" or "Taxes" means any
taxes, assessment, duties, fees, levies, imposts, deductions, or withholdings
including, without limitation, income, gross receipts, ad valorem, value added,
excise, real or personal property, asset, sales, use, license, payroll,
transaction, capital, net worth and franchise taxes, estimated taxes,
withholding, employment, social security, workers compensation, utility,
severance, production, unemployment compensation, occupation, premium, windfall
profits, transfer and gains taxes, or other governmental charges of any nature
whatsoever, imposed by any taxing authority of any government or country or
political subdivision of any country, and any liabilities with respect thereto,
including any penalties, additions to tax, fines or interest thereon, and "Tax
Return" means any report, return, statement, estimate, declaration, notice, form
or other information required to be supplied to a taxing authority in connection
with Taxes. For purposes of this Section 2.22, the term TIS Entities shall
include any corporation or similar entity of which any of the TIS Entities is a
successor by merger, liquidation or otherwise.
2.23. Consents. Except as set forth on Schedule 2.23, no permit,
authorization, consent or approval of or by, or any notification of or filing
(including any filing under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended) with any person (governmental or private) is required in
connection with the execution, delivery and performance by the Corporation of
the Documents or any documentation relating thereto, the consummation by the
Corporation of the transactions contemplated hereby or thereby, or the issuance,
sale or delivery of the Series A Preferred Stock and the Conversion Shares.
2.24. Insurance. All of the assets of each TIS Entity that are of
insurable character are covered by insurance with reputable insurers against
risks of liability, casualty and fire and other losses and liabilities
customarily obtained to cover comparable businesses and assets in amounts, scope
and coverage which are consistent with prudent industry practice. Schedule 2.24
sets forth a list of all insurance coverage carried by the Corporation, the
carrier and the terms and amount of coverage.
2.25. Brokers. No TIS Entity nor any of their respective officers,
directors, employees or stockholders has employed any broker or finder in
connection with the transactions with the Investors contemplated by this
Agreement.
2.26. Suppliers and Customers. The Corporation has no knowledge of any
termination, cancellation or threatened termination or cancellation or
limitation of, or any material modification or change in, or expressed material
dissatisfaction with the
-29-
39
business relationship between any TIS Entity and any supplier, vendor, customer
or client of any TIS Entity of materials or services in an amount in excess of
$25,000 per year.
2.27. Investment Banking Services. Except as set forth on Schedule 2.27
hereto, no TIS Entity a party to any Contract which grants rights to any third
party with respect to the performance of investment banking services for any TIS
Entity, including, without limitation, with respect to the sale of the
corporation or a public offering, including an initial public offering, of
securities of any TIS Entity.
2.28. Suitability. None of the TIS Entities nor, to the best knowledge
of the Corporation, any of the Existing Stockholders or any of their respective
directors or officers (a) has ever been indicted for or convicted of any felony
or any crime involving fraud or misrepresentation; (b) is subject to any order,
judgment or decree of any court of competent jurisdiction or any governmental
authority barring, suspending, or otherwise limiting the right of such TIS
Entity or such person to engage in any activity conducted by such TIS Entity; or
(c) has been denied any license or permit affecting such TIS Entity's or such
person's ability to conduct any activity conducted by such TIS Entity nor is
there any basis upon which such liability to conduct any activity conducted by
such TIS Entity may be denied.
2.29. Use of Proceeds. Except as contemplated by this Agreement, no TIS
Entity is required pursuant to any Contract or otherwise to apply the proceeds
received from the Investors pursuant to the transactions contemplated hereby in
any specified manner including, without limitation, the repayment of any
obligations of any TIS Entity or any "affiliate" or "associate" (as such terms
are defined in Rule 12b-2 under the Exchange Act).
2.30. Disclosure. Neither this Agreement nor any certificate,
instrument or written statement furnished or made to any of the Investors by or
on behalf of any TIS Entity or an Existing Stockholder pursuant to this
Agreement contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein and
therein not misleading.
2.31. Contribution of TIS Equipment Stock. As of the date hereof, all
of the outstanding shares of capital stock of TIS Equipment are owned by the
Existing Stockholders. As of the Closing, the Existing Stockholders, all of whom
consented to the Contribution as a capital contribution to the Corporation,
shall have contributed all of the outstanding shares of capital stock of TIS
Equipment to the Corporation. As a result of the Contribution, the Corporation
will own all of the issued and outstanding shares of capital stock of TIS
Equipment.
-30-
40
2.32. Closing Actions. Subject to the execution and delivery of the
Documents, the Closing Actions have been completed.
SECTION 3. Representations and Warranties of Each Investor. Each
Investor represents and warrants to the Corporation as of the date hereof as
follows:
(a) Such Investor is acquiring the Series A Preferred Stock to be
purchased by it under this Agreement for its own account, for investment and not
with a view to the distribution thereof within the meaning of the Securities
Act.
(b) Such Investor understands that (i) the Series A Preferred
Stock have not been, and the Conversion Shares will not be, registered under the
Securities Act or any state securities laws, by reason of their issuance by the
Corporation in a transaction exempt from the registration requirements thereof
and (ii) the Series A Preferred Stock and the Conversion Shares may not be sold
unless such disposition is registered under the Securities Act and applicable
state securities laws or is exempt from regulation thereunder.
(c) Such Investor further understands that the exemption from
registration afforded by Rule 144 (the provisions of which are known to the
Investor) promulgated under the Securities Act depends on the satisfaction of
various conditions, and that, if applicable, Rule 144 may afford the basis for
sales only in limited amounts.
(d) Such Investor has not employed any broker or finder in
connection with the transactions contemplated by this Agreement.
(e) Such Investor is an "Accredited Investor" (as defined in Rule
501(a) under the Securities Act).
(f) Such Investor is duly organized and validly existing under the
laws of the state of its organization and has all power and authority to enter
into and perform the Documents. Each of the Documents has been duly authorized
by all necessary action on the part of such Investor. Each of the Documents
constitutes a valid and binding agreement of such Investor enforceable against
such Investor in accordance with its terms except to the extent that
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights generally.
(g) The execution, delivery and performance by such Investor of
each of the Documents and the consummation by such Investor of the transactions
contemplated thereby will not violate any provision of law, statute, rule or
regulation, or any ruling, writ, injunction, order, judgment or decree of any
court, administrative
-31-
41
agency or other governmental body applicable to the Investor, or any of its
properties or assets.
(h) No permit, authorization, consent or approval of or by, or any
notification of or filing (including any filing under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended) with, any person (governmental
or private) is required in connection with the execution, delivery and
performance by such Investor of the Documents to which it is a party or any
documents relating thereto, the consummation by such Investor of the
transactions contemplated hereby or thereby, or the issuance, sale or delivery
of the Series A Preferred Stock and the Conversion Shares.
SECTION 4. Certain Covenants.
4.1. Access to Records. From and after the Closing, the Corporation
shall afford to each Investor and its employees, counsel, accountants and other
authorized representatives full access, during normal business hours, upon
reasonable advance notice, with due regard to the Corporation's ongoing
operations, to all of the books, records, accounts and properties of or relating
to (including, without limitation, all work papers of the Corporation's
accountants) the Corporation and to all officers and employees of the
Corporation, for any reasonable purpose whatsoever.
4.2. Financial Reports. From and after the Closing, the Corporation
agrees to furnish to each Investor the following:
(a) (i) Within 30 days after the end of each fiscal month
commencing from August 1998 through December 1998, and (ii) within 15 days after
the end of each fiscal month, commencing with the first fiscal month ending
after January 1, 1999, (A) internal monthly financial and operating statements
for such month ("Monthly Financials") prepared by the Corporation for the Chief
Executive Officer of the Corporation and a letter or memorandum discussing the
summary financial information for such period and setting forth a comparison by
reasonable categories of such financial information to the applicable budget and
the comparable figures for the prior year and a reasonable explanation of any
differences (a "Management Letter"), plus (B) a statement certified by the Chief
Financial Officer of the Corporation, certifying that the financial position and
results of operations of the Corporation for such period as reflected in the
Monthly Financials are presented fairly and have been prepared in accordance
with GAAP (subject to normal year-end adjustments and the absence of footnotes)
consistently applied.
(b) Within 45 days after the end of each quarterly fiscal period,
commencing with the first quarterly fiscal period ending after the Closing,
-32-
42
(i) unaudited balance sheets and an income statement as of the end of such
period, together with statements of retained earnings and cash flow for such
period ("Quarterly Financials") and a Management Letter, plus (ii) a statement
certified by the Chief Financial Officer of the Corporation, certifying that the
financial position and results of operations of the Corporation for such period
as presented in the Quarterly Financials are presented fairly and have been
prepared in accordance with GAAP (subject to normal year-end adjustments and the
absence of footnotes) consistently applied.
(c) Within 90 days after the end of each fiscal year, commencing
with the first fiscal year ending after the Closing, (i) audited balance sheets
and an income statement as of the end of such fiscal year, together with
statements of retained earnings and cash flow for such fiscal year, all in
reasonable detail and certified by a recognized national firm of independent
accountants selected by the board of directors of the Corporation as presenting
fairly the financial position and results of operations of the Corporation and
as having been prepared in accordance with GAAP consistently applied, including
their opinion thereon, and (ii) the accounting firm's management letter.
(d) Promptly upon becoming available, (i) copies of all financial
statements, reports, press releases, notices, proxy statements and other
documents sent by the Corporation to its stockholders or released to the public
and copies of all regular and periodic reports, if any, filed by the Corporation
with the Securities and Exchange Commission ("SEC") or any securities exchange
and (ii) any other financial or other information available to management of the
Corporation as any of the Investors shall have reasonably requested on a timely
basis.
(e) If for any period the Corporation shall have any subsidiary or
subsidiaries whose accounts are consolidated with those of the Corporation,
then, in respect of such period, the financial statements and information
delivered pursuant to the foregoing paragraphs (a), (b) and (c) of this Section
4.2 shall be the consolidated and consolidating financial statements of the
Corporation and all such consolidated subsidiaries.
(f) In all cases, the Corporation shall provide to the Investors
all information which it provides or has an obligation to provide to any other
stockholder of the Corporation (in his capacity as such), pursuant to any
agreement with such stockholder or otherwise, and any other information that any
of the Investors may reasonably request.
(g) At least 30 days but not more than 90 days prior to the
beginning of each fiscal year, an annual budget prepared on a monthly basis for
the Corporation for such fiscal year (displaying anticipated statements of
income and cash flows and
-33-
43
balance sheets), and promptly upon preparation thereof any other significant
budgets prepared by the Corporation and any revisions of such annual or other
budgets, and, provided that the Investors make request therefor, within 30 days
after any monthly period in which there is a material adverse deviation from the
annual budget, a statement certified by the Chief Executive Officer of the
Corporation explaining the deviation and what actions the Corporation has taken
and proposes to take with respect thereto.
(h) Promptly (but in any event within seven business days) after
the discovery or receipt of notice of (a) any default under any material
agreement to which the Corporation and/or any of its subsidiaries is a party,
which default could have a material adverse effect on the Corporation or any of
its subsidiaries, (b) any other material adverse event or circumstance affecting
the Corporation or any of its subsidiaries (including, without limitation, the
filing of any material litigation against the Corporation or any of its
subsidiaries or the existence of any dispute with any person which involves a
reasonable likelihood of such litigation being commenced), a statement certified
by the Chief Executive Officer of the Corporation specifying the nature and
period of existence thereof and what actions the Corporation has taken and
proposes to take with respect thereto.
(i) With reasonable promptness, such other information and
financial data concerning the Company as any of the Investors may reasonably
request.
4.3. System of Accounting. The books of account and other financial and
corporate records of the Corporation and its subsidiaries shall be maintained in
accordance with good business and accounting practices and the financial
condition of the Corporation shall be accurately reflected in the financial
statements referred to in Section 4.2.
4.4. Maintenance of Corporate Existence, Etc. At all times the
Corporation shall maintain in full force and effect its corporate existence,
rights, governmental approvals and franchises and all licenses and other rights
to use patents, processes, licenses, trademarks, trade names or copyrights owned
or possessed by it and deemed by the Corporation to be material to the conduct
of its business.
4.5. Compliance with Laws. At all times the Corporation and its
subsidiaries shall comply with all applicable laws, rules, regulations and
orders, noncompliance with which could materially adversely affect its business
or condition, financial or otherwise.
4.6. Maintenance of Properties and Leases. At all times the Corporation
and its subsidiaries shall keep its properties in good repair, working order and
condition, reasonable wear and tear excepted, and from time to time make all
needful
-34-
44
and proper, or legally required, repairs, renewals, replacement, additions and
improvements thereto; and the Corporation and its subsidiaries shall at all
times comply with each provision of all leases to which any of them is a party
or under which any of them occupies, or has possession of, property if the
breach of such provision might have a material adverse effect on the condition,
financial or otherwise, or operations of the Corporation.
4.7. Insurance. At all times the Corporation shall keep its assets and
those of its subsidiaries which are of an insurable character, if any, insured
by financially sound and reputable insurers against loss or damage by fire,
extended coverage and other hazards and risks and liability to persons and
property to the extent and in the manner customary for companies in similar
businesses similarly situated.
4.8. Licenses and Permits. At all times the Corporation shall use its
best efforts to obtain all federal, state, local and foreign governmental
licenses, permits and qualifications material to and necessary in the conduct of
business as proposed to be conducted.
4.9. Employee Nondisclosure Agreements. The Corporation shall use its
best efforts to obtain, and shall cause its subsidiaries to use their best
efforts to obtain, an Employee Nondisclosure Agreement in substantially the form
of Exhibit K hereto, as applicable, from all future officers, key employees and
other employees who will have access to confidential information of the
Corporation or any of its subsidiaries, if any, upon their employment by the
Corporation or any of such subsidiaries.
4.10. Disclosure of Investment. From and after the date hereof, the
Existing Stockholders and the Corporation agree that they will not, (i) except
as may be necessary or desirable in connection with a request by a governmental
agency, regulatory or supervisory authority or court or as required by law and
other than to affiliates of the Investors, and employees of the Investors or
their affiliates, and potential investors in the Corporation, without the prior
written consent of the other party, disclose the transactions contemplated by
the Documents, or (ii) use in advertising or publicity the name of the other
party hereto, or any partner or employee of such party hereto or any of its
respective affiliates, or any trade name, trademark, trade device, service xxxx,
symbol or any abbreviation, contraction or simulation thereof owned by the other
party hereto or any of its respective affiliates, in either case without the
prior written consent of such party. From and after the date hereof, neither the
Corporation nor any of its subsidiaries will represent, directly or indirectly,
that any product or any service provided by, the Corporation or any of its
subsidiaries has been approved or endorsed by any Investor without the prior
written consent of the Investors.
-35-
45
4.11. Restrictive Covenant. In consideration of, and as an inducement
to, the Purchase by the Investors and the utilization of the proceeds of the
Purchase to fund the Pro Rata Redemption, each of the Existing Stockholders
covenants and agrees for the benefit of the Corporation and each of the
Investors that, while he is employed by the Corporation and for a period
commencing on the date of this Agreement and ending on the date that is two
years after the termination (whether voluntary or involuntary) or retirement of
an Existing Stockholder as an employee of the Corporation, such Existing
Stockholder will not, within a radius of 500 miles from a place of business of
the Corporation, directly or indirectly own, manage, operate, control, be
employed by, consult for, participate in, or otherwise be connected in any
manner with the ownership, management, operation, or control of any business
which is then competitive with the business conducted by the Corporation.
4.12. Change in Tax Accounting Method. The Corporation and, if
applicable, SSN shall, no later than 30 days after the Closing, prepare (or
cause to be prepared) and timely file an election to change its method of
accounting for federal income Tax purposes from the cash receipts and
disbursements method to the accrual method effective January 1, 1998 pursuant to
and in accordance with all the applicable provisions of Revenue Procedure 97-37,
1997-33 I.R.B. 18 (and shall file analogous elections for applicable state and
local Tax purposes in accordance with all applicable state and local laws). At
least 10 days prior to the proposed date for the filing of such election, the
Corporation and, if applicable, SSN shall provide to GSCP and its counsel and
accountants a copy of such elections for their review and comments.
4.13. TIS Equipment Options. The Corporation agrees that it will take,
and that it will cause TIS Equipment to take, all action necessary to eliminate
any TIS options that have not been canceled as of the date hereof. The
Corporation covenants that, as of September 30, 1998, there will be no TIS
Equipment options outstanding.
SECTION 5. Certain Taxes. The Corporation agrees that it will pay, and
will hold each Investor harmless from, any and all liability with respect to any
transfer, transfer gains, stamp or similar Taxes which may be determined to be
payable in connection with the execution and delivery and performance of this
Agreement or any modification, amendment or alteration of the terms or
provisions of this Agreement. The Corporation agrees that it will pay and hold
each Investor harmless from all Taxes arising as a result of the issuance (other
than any additional issuance pursuant to Section 1.9) of the Series A Preferred
Stock and the Conversion Shares to the Investors.
SECTION 6. Legends; Exchanges; Lost, Stolen or Mutilated Certificates.
(a) Each certificate representing shares of Series A Preferred Stock or Common
-36-
46
Stock issued to the Existing Stockholders or issuable to the Investors hereunder
shall bear a legend containing the following words:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH SUCH ACT."
"IN ADDITION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE RESTRICTIONS ON TRANSFER AND CERTAIN VOTING REQUIREMENTS
SET FORTH IN THE STOCKHOLDER AGREEMENT DATED AS OF SEPTEMBER 4, 1998,
BY AND AMONG TRANSACTION INFORMATION SYSTEMS, INC. AND THE PARTIES
THERETO, A COPY OF WHICH IS ON FILE IN THE OFFICE OF THE CORPORATION."
The requirement that the first paragraph of the foregoing
legend be placed upon certificates evidencing any such securities shall cease
and terminate upon the earliest of the following events: (i) when such shares
are transferred in a public offering under the Securities Act, (ii) when such
shares are transferred pursuant to Rule 144 under the Securities Act or (iii)
when such shares are transferred in any other transaction if the seller delivers
to the Corporation an opinion of its counsel, which counsel and opinion shall be
reasonably satisfactory to the Corporation, or a "no-action" letter from the
staff of the SEC, in either case to the effect that such legend is no longer
necessary in order to protect the Corporation against a violation by it of the
Securities Act upon any sale or other disposition of such shares without
registration thereunder. The requirement that the second paragraph of the
foregoing legend be placed upon certificates evidencing such securities shall
cease and terminate upon the earlier of (A) the transfer of such securities
pursuant to a registration statement filed under the Securities Act or (B) the
termination of the Stockholder Agreement. Upon the occurrence of any event
requiring the removal of a legend hereunder, the Corporation, upon the surrender
of certificates containing such legend, shall, at its own expense, deliver to
the holder of any such shares as to which the requirement for such legend shall
have terminated, one or more new certificates evidencing such shares not bearing
such legend.
(b) Upon surrender by any Investor to the Corporation of any
certificate representing Series A Preferred Stock or Common Stock purchased or
acquired hereunder, the Corporation at its expense will, within five business
days,
-37-
47
issue in exchange therefor, and deliver to the Investor, a new certificate or
certificates representing such shares, in such denominations as may be requested
by such Investor. Upon receipt of evidence satisfactory to the Corporation of
the loss, theft, destruction or mutilation of any certificate representing any
share of Series A Preferred Stock or Common Stock purchased or acquired by any
Investor hereunder, and in case of any such loss, theft or destruction, upon
delivery of any indemnity agreement satisfactory to the Corporation, or in any
case of any such mutilation, upon surrender and cancellation of such
certificate, the Corporation at its expense will, within five business days,
issue and deliver to the Investor a new certificate for such Series A Preferred
Stock or Common Stock of like tenor, in lieu of such lost, stolen or mutilated
certificate.
SECTION 7. Survival of Representations, Warranties, Agreements and
Covenants, Etc. All representations and warranties hereunder shall survive the
Closing for a period of two years and shall in no way be affected by any
knowledge possessed by, or investigation of the subject matter thereof made by
or on behalf of, the Investors, provided, however, that (i) the representations
and warranties set forth in Sections 2.1, 2.2, 2.3 and 2.4 shall survive
indefinitely and (ii) the representations made in Section 2.7, as they relate to
Taxes, and in Section 2.22, shall survive until 60 days after the expiration of
the applicable statute of limitations (including extensions thereof). All
statements contained in any Schedule to this Agreement or in any certificate or
other instrument delivered by the Corporation pursuant to Section 1.5 shall
constitute representations and warranties by the Corporation under this
Agreement. All agreements contained herein shall survive indefinitely until, by
their respective terms, they are no longer operative; provided, however, that
the rights of an Investor and the obligations of the Corporation to such
Investor under Section 4 of this Agreement shall, unless otherwise specified
therein, terminate at such time as such Investor and its Investor Affiliates do
not beneficially own any shares of the capital stock of the Corporation.
SECTION 8. Expenses. The Corporation shall pay and shall reimburse the
Investors, promptly after receipt of the xxxx therefor, the fees and
out-of-pocket expenses of counsel and accountants retained by the Investors in
connection with the negotiation and preparation of the Documents and the
documentation relating thereto (including, without limitation, (a) any fees,
out-of-pocket expenses or other amounts incurred or payable in connection with
the preparation of the PW Audited Financial Statements and (b) the costs and
expenses incurred in enforcing, defending or declaring (or determining whether
or how to enforce, defend or declare) any rights or remedies under any of the
Documents) and the consummation of the transactions contemplated hereunder and
in connection with any amendments, waivers or consents under or in respect of
any of the Documents.
-38-
48
SECTION 9. Indemnification.
9.1. General Indemnification. The Corporation and each Existing
Stockholder ("Indemnitors") shall jointly and severally indemnify, defend and
hold each Investor and each of their respective officers, directors, partners,
managing directors, affiliates, employees, agents, consultants, representatives,
successors and assigns (each an "Investor Indemnitee") harmless from and against
all Losses incurred or suffered by an Investor Indemnitee (whether incurred or
suffered directly or indirectly through ownership of Common Stock or Preferred
Stock) arising out of, relating to or resulting from (i) any breach of any of
the representations or warranties made by the Corporation or the Existing
Stockholders in this Agreement or in any certificate or other instrument
delivered pursuant hereto including, without limitation, the Documents, (ii) any
breach of any of the covenants or agreements made by the Corporation or the
Existing Stockholders in this Agreement or in any certificate or other
instrument delivered pursuant hereto including, without limitation, the
Documents, and (iii) that certain letter of arrangement, dated June 30, 1998,
between the Accounting Firm and GSCP. The Investors shall indemnify, defend and
hold the Corporation, its affiliates, and each of their respective officers,
directors, employees, agents, consultants, representatives, successors and
assigns and the Existing Stockholders harmless against all Losses arising from
the breach of any of the covenants or agreements of the Investors in this
Agreement or in any certificate or other instrument delivered pursuant hereto
including, without limitation, the Documents. Notwithstanding anything to the
contrary in this Agreement, (a) any and all payments by the Indemnitors pursuant
to this Section 9 with respect to breach of representations or warranties shall
be limited to, in the aggregate, an amount equal to the Purchase Price, and no
indemnification payment by the Indemnitors with respect to any such Losses
otherwise payable hereunder shall be payable until such time as all such Losses
(exclusive of attorneys' fees or other expenses of investigation or defense)
shall aggregate to more than $500,000, and then only to the extent that such
Losses, in the aggregate, exceed such amount; provided that neither of the
foregoing limitations on indemnity shall apply to or count Losses arising with
respect to the breaches of the representations and warranties in Section 2.22 or
in Section 2.7, as they relate to Taxes; (b) the Corporation and the Existing
Stockholders shall not be liable for any Losses incurred by the Investors as a
result of a breach of the representation and warranty set forth in the last
sentence of Section 2.3, to the extent that such Losses are eliminated as a
result of a purchase price adjustment pursuant to Section 1.10(a); and (c) the
Corporation and the Existing Stockholders shall not be liable for any Losses
incurred by the Investors as a result of a breach of the representations set
forth in Section 2.22 or in Section 2.7, as they relate to Taxes, to the extent
that such Losses are eliminated as a result of a payment to the Corporation by
the Existing Stockholders of an amount owing to the Corporation pursuant to
Section 10.
-39-
49
9.2. Indemnification Principles. For purposes of this Agreement,
"Losses" shall mean each and all of the following items: claims, losses
(including, without limitation, losses of earnings), liabilities, obligations,
payments, damages (actual, punitive or consequential), charges, judgments,
fines, penalties, amounts paid in settlement, costs and expenses (including,
without limitation, interest which may be imposed in connection therewith, costs
and expenses of investigation, actions, suits, proceedings, demands, assessments
and fees, expenses and disbursements of counsel, consultants and other experts);
provided, however, that for purposes of calculating Losses pursuant to this
Section 9, Losses shall be calculated net of any reduction to the Tax liability
of the Corporation actually realized as a result of any such item giving rise to
a Tax deduction to the Corporation. Any indemnification payment by the
Corporation to any Investor Indemnitee pursuant to this Section 9 shall include
an additional amount so that the Investor Indemnitee does not, directly or
indirectly, bear any portion of such payment made by the Corporation with
respect to such payment on account of the Investor Indemnitee's direct or
indirect investment in the Corporation. Any payment by the Corporation or the
Existing Stockholder to any Investor Indemnitee pursuant to this Section 9,
Section 8 or Section 10 shall be treated for all income Tax purposes as an
adjustment to the price paid by such Investor for the Series A Preferred Stock
pursuant to this Agreement.
9.3. Claim Notice. Any claim for indemnification pursuant to this
Section 9 must be made before the expiration of the survival periods set forth
in Section 7 of this Agreement. No party shall be entitled to indemnification
against a Loss arising from the breach of any representations or warranties of
any other party unless the party seeking indemnification shall have given to the
party from whom indemnification is being sought a claim notice relating to such
Loss (a "Claim Notice") prior to expiration of the representation or warranty
upon which the claim is based. The Claim Notice shall be given reasonably
promptly (but, in the case of a third party claim against the indemnified party,
within 15 days after the indemnified party has received written notification of
such claim) after the party seeking indemnity becomes aware of the facts
indicating that a claim for indemnification may be warranted. Each Claim Notice
shall specify in reasonable detail (to the extent known) the nature of the
claim, the applicable provision(s) of this Agreement or other instrument under
which the claim for indemnity arises, and, if possible, the amount or the
estimated amount thereof. The failure of any indemnified party to give a Claim
Notice shall not relieve the indemnifying party of its obligations under this
Section 9, except to the extent that the indemnified party is actually
materially prejudiced by failure to give such Claim Notice. The indemnifying
party may, through counsel of its own choosing and reasonably satisfactory to
the indemnified party, assume the defense thereof or other indemnification
obligation with respect thereto; provided, however, that (a) any indemnified
party shall be entitled to participate in any such claim with counsel of its own
choice but at its own expense and (b) any indemnified
-40-
50
party shall be entitled to participate in any such claim with counsel of its own
choice at the expense of the indemnifying party if representation of both
parties by the same counsel is otherwise inappropriate under applicable
standards of professional conduct. In any event, if the indemnifying party fails
to take reasonable steps necessary to defend diligently the action or proceeding
within twenty days after receiving notice from such indemnified party that the
indemnifying party believes it has failed to do so, the indemnified party may
assume such defense or other indemnification obligation and the fees and
expenses of its attorneys will be covered by the indemnity provided for in this
Section 9. Notwithstanding anything in this Section 9 to the contrary, the
indemnifying party shall not, without the written consent of the indemnified
party, settle or compromise any pending or threatened action or claim in respect
of which indemnification or contribution may be sought hereunder (whether or not
the indemnified party is an actual or potential party to such action or claim)
or consent to the entry of any judgment (i) which does not, to the extent that
an indemnified party may have any liability with respect to such action or
claim, include as an unconditional term thereof the delivery by the claimant or
plaintiff to the indemnified party of a written release from all liability in
respect of such action or claim, (ii) which includes any statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of any
indemnified party, or (iii) in any manner that involves any injunctive relief
against the indemnified party or may materially and adversely affect the
indemnified party. Notwithstanding anything in this Section 10 to the contrary,
the indemnified party may not compromise or settle any claim without the prior
written consent of the indemnifying party (which consent shall not be
unreasonably withheld or delayed), unless the sole relief granted is equitable
relief for which the indemnifying party would have no liability or to which the
indemnifying party would not be subject.
SECTION 10. Special Indemnification of the Corporation. In the event
that the sum of (i) Taxes imposed on or payable by the TIS Entities with respect
to any taxable period or portion thereof ending on or prior to Xxxxxx 00, 0000,
(xx) Taxes imposed on or payable by the TIS Entities with respect to any taxable
period or portion thereof beginning on or after September 1, 1998 and ending on
or prior to the date hereof other than such Taxes arising by reason of the
ordinary operations of the TIS Entities, and (iii) Taxes imposed on or payable
by any TIS Entity with respect to any taxable period or portion thereof
beginning on or after the date hereof resulting or arising from any adjustments
to such TIS Entity's taxable income under Section 481 of the Code (or any
analogous provisions of state or local laws) by reason of its change from the
cash basis method to the accrual method of accounting for federal, state or
local Tax purposes regardless of when such change is effective, exceeds the
accruals and reserves for Taxes which are reflected on the Final Post-Closing
Statement, then the Final Shareholders Equity Amount shall be re-computed to
take into account such
-41-
51
excess. For purposes of the preceding sentence, Taxes imposed on or payable by
any TIS Entity with respect to any taxable period or portion thereof which are
based upon or related to income, receipts, sales or disbursements shall be
computed using the closing of the books method. In the event that all or any
portion of the Option Cashout Amount is determined not to be deductible by the
Corporation for income Tax purposes, then the Final Shareholders Equity Amount
shall be re-computed to take into account the resulting reduction to the amount
of the asset referred to in clause (D) of Section 1.8(a), which reduction shall
be deemed to be equal to 44% of the non-deductible portion of the Option Cashout
Amount. As promptly as possible after the Corporation becomes aware that a
re-computation of the Final Shareholders Equity Amount is required to be made
pursuant to this Section 10, the Corporation shall cause its independent public
accountants to prepare and deliver to the Investors such re-computation. The
Investors shall have an opportunity to examine and dispute such re-computation
of the Final Shareholders Equity Amount in accordance with the procedures set
forth in paragraphs (b) and (c) of Section 1.8. Once such recomputation of the
Final Shareholders Equity Amount which is conclusive and binding on the parties
has been determined, each Existing Shareholder shall immediately make a payment
to the Corporation in an amount equal to (i) the excess of the Final Shareholder
Equity Amount as reflected on the Final Post-Closing Statement over such
re-computed Final Shareholder Equity Amount, multiplied by (ii) such Existing
Shareholder's Pro Rata Percentage; provided, however, that all the Existing
Shareholders shall be jointly and severally liable to the Corporation for the
aggregate amount of such payments owing by all of the Existing Shareholders.
Notwithstanding anything in this Section 10 to the contrary, in the event the
Note Amount has been calculated prior to any recomputation contemplated by this
Section 10, and the Note Amount is a positive number, any amounts owed by any of
the Existing Stockholders under this Section 10 shall first be offset against
any then unpaid principal amount of such Existing Stockholder's Note and the
principal amount of such Existing Stockholder's Note shall thereupon be reduced
by the amount of any such offset without any further action by Corporation or
any Existing Stockholder.
SECTION 11. Appointment of Agent for the Existing Stockholders. Each of
the Existing Stockholders irrevocably appoints and authorizes each of Xxxxxxx
Xxxxxxxx, Xxxxxx Xxxx and Xxxxxx Xxxx, with xxxxxx of substitution, to each
individually act as agent (each, an "Agent for the Existing Stockholders") to do
all such acts and things on such Existing Stockholder's behalf and exercise all
such rights, powers and privileges in relation to the Documents (including,
without limitation, in connection with any waiver of any terms or conditions
hereof and any Claims pursuant to Section 9.3) as fully and completely as such
Existing Stockholder could, together with all powers reasonably incidental
thereto. Each Existing
-42-
52
Stockholder agrees that the foregoing appointment and powers granted are coupled
with an interest and the Investors shall be entitled to rely on any action taken
or omitted by any of the Agents for the Existing Stockholders on such Existing
Stockholder's behalf.
SECTION 12. Remedies. In case any one or more of the covenants and/or
agreements set forth in this Agreement shall have been breached by the
Corporation or any Existing Stockholder, any Investor may proceed to protect and
enforce its rights either by suit in equity and/or by action at law, including,
but not limited to, an action for damages as a result of any such breach and/or
an action for specific performance of any such covenant or agreement contained
in this Agreement.
SECTION 13. Further Assurances. At any time or from time to time after
each Closing, the Corporation, on the one hand, and the Investors, on the other
hand, agree to cooperate with each other, and at the request of the other party,
to execute and deliver any further instruments or documents and to take all such
further action as the other party may reasonably request in order to evidence or
effectuate the consummation of the transactions contemplated hereby relating to
the Purchase and to otherwise carry out the intent of the parties hereunder.
SECTION 14. Successors and Assigns. This Agreement shall bind and inure
to the benefit of the Corporation and each of the Investors and the respective
successors, assigns, heirs and personal representatives of the Corporation and
each of the Investors. The Corporation acknowledges that, subject to compliance
with applicable securities laws, any of the Investors may transfer, all or part
of, the securities acquired by it hereunder and assign, all or part of, its
rights and obligations under this Agreement.
SECTION 15. Entire Agreement. This Agreement and the other writings
referred to herein or delivered pursuant hereto which form a part hereof contain
the entire agreement among the parties with respect to the subject matter hereof
and supersede all prior and contemporaneous arrangements or understandings with
respect thereto.
SECTION 16. Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy (with
a confirmatory copy sent by a different means within three business days of such
notice), nationally recognized overnight courier or first class registered or
certified mail, return receipt
-43-
53
requested, postage prepaid, addressed to such party at the address set forth
below or such other address as may hereafter be designated in writing by such
party to the other parties:
(i) if to the Corporation, to:
Transaction Information Systems, Inc.
000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx
with a copy to:
Esanu Katsky Xxxxxx & Siger, LLP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxx X. Xxxxxx, Esq.
and
(ii) if to the Existing Stockholders or the Agent for
the Existing Stockholders, to:
c/o Xxxxxxx Xxxxxxxx
Transaction Information Systems, Inc.
000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
with a copy to:
Esanu Katsky Xxxxxx & Siger, LLP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxx X. Xxxxxx, Esq.
(iii) if to the Investors, to:
GS Capital Partners III, L.P.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
-44-
54
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxxx
with copies to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
and
GS Capital Partners III, L.P.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxx Xxxxx, Esq.
All such notices, requests, consents and other communications
shall be deemed to have been given when received.
SECTION 17. Amendments; Enforcement.
(a) Amendments. The terms and provisions of this Agreement may
be modified or amended, or any of the provisions hereof waived, temporarily or
permanently, pursuant to the written consent of the Corporation, any Agent for
Existing Stockholders and the Investors (including the provisions regarding the
Notes and the Dividend Notes (including, without limitation, any prepayment
under either the Notes or the Dividend Notes), and the provisions of Section 1.8
and Section 10, under which provisions the parties agree the Investors are third
party beneficiaries, and which may not be waived or amended without the prior
written approval of the Investors); provided, however, that any change with
respect to the Aggregate Redemption Price shall also require the written consent
of all Existing Stockholders.
(b) Enforcement. The parties agree that the Investors are
third party beneficiaries with respect to the provisions benefiting the
Corporation pursuant to the Notes and the Dividend Notes, and provisions of this
Agreement contained in Section 1.8 and Section 10 hereof, and as such shall have
the right, on behalf of and in the name of the Corporation, to enforce such
provisions and the transactions contemplated thereunder (including, without
limitation, any payments which may be required to be made by the Existing
Stockholders to the Corporation). The Corporation agrees that, at the request of
the Investors, it shall enforce such provisions
-45-
55
or delegate the enforcement of such provisions to the Investors on the
Corporation's behalf.
SECTION 18. Counterparts. This Agreement may be executed in any number
of counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement.
SECTION 19. Headings. The headings of the sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be a part of this Agreement.
SECTION 20. Nouns and Pronouns. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of names and pronouns shall include the
plural and vice versa.
SECTION 21. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to the principles of conflicts of law. Each of the parties hereto hereby
irrevocably and unconditionally consents to submit to the exclusive jurisdiction
of the courts of the State of New York and of the United States of America, in
each case located in the County of New York, for any Litigation arising out of
or relating to this Agreement and the transactions contemplated hereby (and
agrees not to commence any Litigation relating thereto except in such courts),
and further agrees that service of any process, summons, notice or document by
U.S. registered mail to its respective address set forth in this Agreement, or
such other address as may be given by one or more parties to the other parties
in accordance with the notice provisions of Section 16, shall be effective
service of process for any Litigation brought against it in any such court. Each
of the parties hereto hereby irrevocably and unconditionally waives any
objection to the laying of venue of any Litigation arising out of this Agreement
or the transactions contemplated hereby in the courts of the State of New York
or the United States of America, in each case located in the County of New York,
and hereby further irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any such Litigation brought in any such
court has been brought in an inconvenient forum.
SECTION 22. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid, but
if any
-46-
56
provision of this Agreement is held to be invalid or unenforceable in any
respect, such invalidity or unenforceability shall not render invalid or
unenforceable any other provision of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-47-
57
IN WITNESS WHEREOF, the parties hereto have duly executed this
agreement as of the date first above written.
CORPORATION:
TRANSACTION INFORMATION SYSTEMS, INC.
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Chief Executive Officer
INVESTORS:
GS CAPITAL PARTNERS III, L.P.
By: GS Advisors III, L.P., its general partner
By: GS Advisors III, L.L.C., its general partner
By: /s/
-----------------------------------
Authorized Signatory
GS CAPITAL PARTNERS III OFFSHORE, L.P.
By: GS Advisors III (Cayman), L.P., its General Partner
By: GS Advisors III, L.L.C., its General Partner
By: /s/
-----------------------------------
Authorized Signatory
58
XXXXXXX, SACHS & CO. VERWALTUNGS GmbH
By: /s/
--------------------------------
Managing Director
and
By:
--------------------------------
Managing Director
or
Registered Agent
STONE STREET FUND 1998, L.P.
By: Stone Street Advantage Corp.
General Partner
By: /s/
-------------------------
XXXXXX XXXXXX XXXX 0000, X.X.
By: Stone Street Advantage Corp.
Managing General Partner
By: /s/
-------------------------
59
EXISTING STOCKHOLDERS:
/s/ Xxxx Xxxxxxxxxxx
------------------------------------
XXXX XXXXXXXXXXX
/s/ Xxxx Xxxxx
------------------------------------
XXXX XXXXX
/s/ Xxxxx Xxxxxxxxxx
------------------------------------
XXXXX XXXXXXXXXX
/s/ Xxxxxx Xxxxxx
------------------------------------
XXXXXX XXXXXX
/s/ Xxxxxxxx Xxxx
------------------------------------
XXXXXXXX XXXX
/s/ Xxxxxx Xxxx
------------------------------------
XXXXXX XXXX
/s/ Xxxxx Xxxxxx
------------------------------------
XXXXX XXXXXX
/s/ Xxxxxxx Xxxxxxxx
------------------------------------
XXXXXXX XXXXXXXX
/s/ Xxxxxx X. Xxxxxxx
------------------------------------
XXXXXX XXXXXXX
/s/ Xxxxxx Xxxx
------------------------------------
XXXXXX XXXX
/s/ Xxxxxxxx Xxxxx
------------------------------------
XXXXXXXX XXXXX
/s/ Xxxxxxx Xxxxxxxx
------------------------------------
By: Xxxxxxx Xxxxxxxx
Attorney In Fact
60
Exhibit A
SUBORDINATED PROMISSORY NOTE
September ____, 1998
FOR VALUE RECEIVED, TRANSACTION INFORMATION SYSTEMS, INC., a
corporation formed under the laws of the State of Delaware (the "Corporation"),
hereby unconditionally promises to pay to the order of_________________________
__________________________ ("Payee"), the principal sum of the Note Amount, as
defined in Section 2.1.
This Note is being issued on September , 1998 in payment of a dividend
declared by the Board of Directors of the Corporation on September , 1998 to the
holders of the outstanding shares of the Corporation's common stock $0.01 par
value per share (the "Common Stock") as of such date (the "Record Date").
ARTICLE I
DEFINITIONS
Section 1. I Definitions. The following terms shall have the meaning
set forth below:
"Closing" means the closing of the transactions contemplated by the
Preferred Stock Purchase Agreement (the "Agreement") to be entered into among
the Corporation, the stockholders of the Corporation, GS Capital Partners III,
L.P. and certain affiliates of The Xxxxxxx Sachs Group L.P.
"Note" means this Subordinated Promissory Note, as the same may be
amended from time to time.
"Obligations" means all of the Corporation's liabilities, obligations
and indebtedness to Payee under this Note (including, without limitation, the
Corporation's obligation to make payments of principal to Payee hereunder).
"Pro Rata Percentage" means a fraction the numerator of which is the
number of shares of Common Stock held by the Payee on the Record Date and the
denominator of which is equal to the total number of shares of Common Stock
outstanding on the Record Date.
"Senior Indebtedness" means the principal of, premium, if any, and
interest on and other amounts due on or in connection with (a) any indebtedness,
whether in existence on the date hereof or created in the future, of the
Corporation to any unrelated third party in respect of borrowed money (other
than this Note), or evidenced by bonds, notes, debentures or similar instruments
or letters of credit or representing the balance deferred and unpaid of the
purchase price of any property purchased, if and to the extent any of the
foregoing indebtedness would appear as a liability upon the balance sheet of the
Corporation, and whether outstanding on the date of this Note or hereafter
created, incurred, assumed or guaranteed in any manner by the Corporation or in
effect guaranteed
61
in any manner by the Corporation or in effect guaranteed by the Corporation
through an agreement to purchase or otherwise, and (b) deferrals, renewals,
extensions or refunding of, or amendments, modifications or supplements to,
Senior Indebtedness of the kind described in the preceding clause (a).
ARTICLE 2
CALCULATION OF PRINCIPAL AMOUNT; PAYMENTS
Section 2.1 Principal Amount. (a) The aggregate principal amount of
this Note (the "Principal Amount") shall be equal to the excess of the (i) the
product of (x) the lesser of (A) $4,500,000 or (B) the aggregate amount of the
Corporation's accumulated adjustments account (as defined in Section 1368(e)(1)
of the Internal Revenue Code of 1986, as amended,) as of the close of business
on the day immediately prior to the Closing computed as if the previous
distributions of $503,000 made in 1998 to certain holders of Common Stock had
not been made (such aggregate amount, the "AAA Amount"), times (y) the Pro Rata
Percentage, less (ii) the amount, if any, set forth opposite the name of the
Payee on annexed Exhibit A (the "Prepaid Amount"). For purposes of this Note,
(i) in no event shall the AAA Amount be less than zero and (ii) the Principal
Amount may be a negative number.
(b) At the Closing, the Corporation shall pay to the Payee an amount
("Initial Amount") equal to the excess of (i) the product of (x) $3,253,000
times (y) the Pro Rata Percentage over (ii) the Prepaid Amount.
(c) Promptly after the AAA Amount is determined, if the Principal
Amount is a positive number which exceeds the Initial Amount, an amount equal to
the Principal Amount minus the Initial Amount shall be payable immediately by
the Corporation to the Payee and thereafter this Note shall be canceled.
(d) By accepting this Note, the Payee agrees that, to the extent the
Payee has not already made the payment required pursuant to Section 1.7 of the
Agreement, if the sum of the Initial Amount plus the Prepaid Amount exceeds the
sum of the Principal Amount plus the Prepaid Amount, the excess shall be payable
immediately by the Payee to the Corporation and thereafter this Note shall be
canceled.
(e) In the event that the Closing does not occur on or before December
31, 1998, then on January 4, 1999 the Corporation shall pay to the Payee the
Initial Amount and thereafter this Note shall be canceled.
Section 2.2 Payments Generally. All payments of principal to be made by
the Corporation under this Note shall be made by check to an address specified
by Payee, or wire transfer of immediately available funds in United States
dollars to an account specified in writing by Payee. All payments of the
principal of this Note shall be paid in lawful money of the United States and in
2
62
immediately available funds. All payments of this Note shall be made without
interest and no payment of interest shall be due on this Note.
Section 2.3 Prepayment. After the AAA Amount is determined, the
Corporation may at any time and from time to time, at its option, prepay this
Note (in an amount up to but not exceeding the unpaid Principal Amount hereof)
in whole or in part.
ARTICLE 3
SUBORDINATION
Section 3.1 Agreement to Subordinate. (a) The Corporation and Payee,
for themselves and their successors and permitted assigns, and Payee, by its
acceptance of this Note, agree that this Note and payment of the Obligations is
and shall be subordinated, to the extent and in the manner provided in this
Article 3, to the prior payment in full of all Senior Indebtedness. This Article
3 shall constitute a continuing offer to all persons who, in reliance upon such
provisions, become holders of, or continue to hold, Senior Indebtedness, and
such provisions are made for the benefit of the holders of Senior Indebtedness,
and such holders are made obligees hereunder and they and/or each of them may
enforce such provisions.
(b) No payment shall be made by the Corporation, and no enforcement of
remedies shall be made by Payee, on account of the Obligations (i) upon the
maturity of any Senior Indebtedness by lapse of time, acceleration or otherwise,
unless and until all principal thereof and interest thereon and other amounts
due in connection therewith shall first be paid in full, or such payment duly
provided for in cash or in a manner satisfactory to the holders of such Senior
Indebtedness, or (ii) in the event that the Corporation shall default in the
payment of any principal of, premium, if any, or interest on any Senior
Indebtedness when the same becomes due and payable, whether at maturity or at a
date fixed for prepayment or by declaration or otherwise, unless and until such
default shall have been cured or waived or shall have ceased to exist.
(c) In the event that any event of default shall have occurred and be
continuing with respect to any Senior Indebtedness, as such event of default is
defined therein or in the instrument under which it is outstanding, permitting
the holders to accelerate the maturity thereof (other than a default in payment
of the principal of or interest on or other amounts due in connection with such
Senior Indebtedness) upon written notice thereof given to the Corporation by any
holders of such Senior Indebtedness or their representative ("Default Notice"),
then, unless and until the date on which such event of default shall have been
cured or waived by the holders of such Senior Indebtedness or shall have ceased
to exist, no direct or indirect payment shall be made by the Corporation, and no
enforcement of remedies shall be made by Payee, with respect to the Obligations.
(d) In furtherance of the provisions of Section 3.1(a) hereof in the
event that any payment on account of the Obligations shall be made by or on
behalf of the Corporation and received by Payee, at a time when such payment was
prohibited by the provisions of Sections 3.1(b) and (c)
3
63
hereof, then, unless and until such payment is no longer prohibited by this
Article 3, such payment shall be held in trust for the benefit of and shall be
immediately paid over to, the holders of Senior Indebtedness or their
representatives or the trustee or trustees under any indenture under which any
instruments evidencing any of the Senior Indebtedness may have been issued,
ratably according to the aggregate amount remaining unpaid on account of the
principal of and interest on the Senior Indebtedness held or represented by
each, for application to the payment of all Senior Indebtedness remaining
unpaid. The Corporation shall give prompt written notice to Payee of any default
under any Senior Indebtedness or under any agreement pursuant to which Senior
Indebtedness may have been issued. Failure to give such notice shall not affect
the subordination of this Note to the Senior Indebtedness provided in this
Article 3.
(e) By accepting this Note, Payee agrees to enter into any additional
subordination provisions to the extent reasonably requested by any holders of
Senior Indebtedness.
Section 3.2 Further Rights. No right of any present or future holders
of any Senior Indebtedness to enforce subordination as provided herein shall at
any time in any way be prejudiced or impaired by any act or failure to act on
the part of the Corporation or by any act or failure to act, in good faith, by
any such holder, or by any noncompliance by the Corporation with the terms of
this Note, regardless of any knowledge thereof which any such holder may have or
be otherwise charged with. The holders of Senior Indebtedness may extend, renew,
modify or amend the terms of the Senior Indebtedness or any security therefor
and release, sell, or exchange such security and otherwise deal freely with the
Corporation, all without affecting the liabilities and obligations of the
Corporation and Payee.
Section 3.3 Subrogation. After all Senior Indebtedness is paid in full
and until all amounts due in connection herewith are paid in full, Payee shall
be subrogated to the rights of the holders of Senior Indebtedness to receive
distributions applicable to the Senior Indebtedness to the extent that
distributions otherwise payable to Payee have been paid to the holders of the
Senior Indebtedness. For the purpose of such subrogation, a distribution made
under this Article 3 to holders of Senior Indebtedness that otherwise would have
been made to Payee is not, as between the Corporation and Payee, a payment by
the Corporation on the Senior Indebtedness.
Section 3.4 Obligations Not Impaired. The provisions of this Article 3
are, and are intended solely for, the purpose of defining the relative rights of
Payee, on the one hand, and the holders of Senior Indebtedness, on the other
hand. Nothing contained in this Article 3, or elsewhere in this Note, is
intended to or shall (i) impair, as among the Corporation, its creditors other
than the holders of Senior Indebtedness, and Payee, the obligation of the
Corporation, which, subject to the other terms of this Note, is absolute and
unconditional (and which, subject to the rights under this Article 3 of the
holders of Senior Indebtedness, is intended to rank equally with all other
general obligations of the Corporation), to pay to Payee the principal of this
Note as and when the same shall become due and payable in accordance with its
terms hereof, or (ii) affect the relative rights against the Corporation of
Payee and creditors of the Corporation other than the holders of Senior
Indebtedness.
4
64
ARTICLE 4
MISCELLANEOUS
Section 4.1. Loss, Theft, Destruction, etc. Upon receipt by the
Corporation of evidence reasonably satisfactory to the Corporation of the loss,
theft, destruction or mutilation of this Note, and, in the case of loss, theft
or destruction, of indemnity or security reasonably satisfactory to the
Corporation, and upon reimbursement to the Corporation of all reasonable
expenses incidental thereto, or, in the case of mutilation of this Note, upon
surrender and cancellation of this Note, the Corporation will make and deliver a
new Note of like tenor, in lieu of this Note.
Section 4.2 Governing Law; Submission to Jurisdiction. This Note shall
be deemed made and delivered and shall be construed in accordance with and
governed by the laws of the State of New York, without giving effect to the
conflicts of law principles thereof. Any legal action or proceeding arising out
of, or relating to, this Note shall be instituted in the courts of the State of
New York or of the United States of America located in the state of New York,
and all endorsers and guarantors submit to the jurisdiction of each such court
in any action or proceeding.
Section 4.3 Notices. All notices, requests, claims, demands and other
communications hereunder to any party shall be deemed sufficient if contained in
a written instrument delivered in person or sent by telecopy (with a
confirmatory copy sent by a different means within three business days of such
notice), nationally recognized overnight courier or first class registered or
certified mail, return receipt requested, postage prepaid, addressed to such
party at the address set forth below or such other address for a party as shall
be specified in a: notice given in accordance with this Section 4.3:
If to the Corporation: Transaction Information Systems, Inc.
000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx
With a copy to: Esanu Katsky Xxxxxx & Siger, LLP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxx X. Xxxxxx, Esq.
If to Payee: to the address set forth below his name
on annexed Exhibit A
5
65
Section 4.4 Severability. Whenever possible, each provision of this
Note shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Note shall be prohibited by, or
invalid under, applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remaining of such
provision or the remaining provisions of this Note.
Section 4.5 Surrender. Upon cancellation or full payment of this Note,
Payee agrees to surrender this Note to the Corporation for cancellation.
Section 4.6 Headings, etc. The headings of the Articles and Sections of
this Note have been inserted for convenience of reference only, are not to be
considered a part hereof, and shall in no way modify or restrict any of the
terms or provisions hereof
Section 4.7 WAIVER OF JURY TRIAL. EACH OF MAKER AND PAYEE, BY ITS
ACCEPTANCE OF THIS NOTE, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS NOTE AND FOR ANY
COUNTERCLAIM THEREIN.
[Balance of page intentionally left blank.]
6
66
IN WITNESS OF, the Corporation has caused this Note to be duly executed
and delivered by its proper and duly authorized officer as of the day and year
first above written.
TRANSACTION INFORMATION SYSTEMS, INC.
By:__________________________________
Name:________________________________
Title:_______________________________
67
Exhibit A
STOCKHOLDER NAMES, ADDRESSES AND AMOUNTS
Name and Address of Payee Amount
------------------------- ------
Xxxx Xxxxxxxxxxx - 0 -
00 Xxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Xxxx Xxxxx - 0 -
000 Xxxxxxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Xxxxx Xxxxxxxxxx $ 60,500
00 Xxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Xxxxxx Xxxxxx - 0 -
00 Xxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Xxxxxxxx Xxxx $195,000
00 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Xxxxxx Xxxx $150,000
00 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Xxxxx Xxxxxx $ 22,500
0000 Xxxxx Xxxxxx
Xxxxxxxxx Xxxxx, Xxx Xxxx 00000
Xxxxxxx Xxxxxxxx - 0 -
0 Xxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Xxxxxx Xxxxxxx - 0 -
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Xxxxxx Xxxx - 0 -
00 Xxxxxxx Xxxxx Xxxx
Xxxxxxxxx Xxxxx, Xxx Xxxx 00000
A-H
68
Name and Address of Payee Amount
------------------------- ------
Xxxxxxxx Xxxxx $ 75,000
00 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Total $503,000
========
A-I
69
Exhibit B
OPTION PURCHASE AGREEMENT
Option Purchase Agreement (this "Agreement"), dated as of the 1st day
of October, 1998, by and between Transaction Information Systems, Inc., a
Delaware corporation ("TIS"), and the individual named on the signature page of
this Agreement (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Optionee is the holder of certain outstanding options to
purchase shares of common stock, $0.01 par value, of TIS (the "TIS Options") set
forth on Exhibit A annexed hereto; and
WHEREAS, prior to or concurrently herewith certain stock options to
acquire shares of TIS Equipment Corp. have been combined into the TIS Options;
and
WHEREAS, the Optionee desires to sell, and TIS desires to purchase, the
number of TIS Options set forth on annexed Schedule A (the "Options") for the
aggregate purchase price set forth on such Schedule (the "Purchase Price");
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter contained, the parties to this Agreement hereby agree as follows:
1. (a) Subject to the terms and conditions of this
Agreement, the Optionee shall sell to TIS, and TIS shall purchase from the
Optionee, the TIS Options (which constitute all of the options in TIS which have
vested and become exercisable as of the date hereof) for the Purchase Price set
forth on annexed Schedule A.
(b) The sale and purchase described in Paragraph 1(a) of
this Agreement shall take place on October 1, 1998 at the offices of TIS, 000
Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Closing").
2. At the Closing, TIS shall deliver to the Optionee payment in
cash for the TIS Options in the amount of the Purchase Price set forth on
Schedule A annexed.
3. The Optionee hereby represents and warrants to TIS as follows:
(a) The Optionee owns the number of Options set forth on
Schedule A and the Optionee has the sole right, title and interest in and to
such Options, all of which will be transferred to TIS pursuant to the terms of
this Agreement free from any lien, pledge, security interest or other
incumbrance, including, without limitation, any encumbrance arising out of a
marital relationship.
(b) No consent, approval or agreement of any person,
party, court, governmental authority or entity is required to be obtained by
such Optionee in connection with the execution and performance by such Optionee
of this Agreement.
(c) The Optionee understands and acknowledges that the
Optionee is not relying upon any projections or any representations, warranties,
agreements or understandings not expressly set forth in this Agreement.
70
4. The obligation of TIS to purchase the TIS Options is subject
to the satisfaction and fulfilment prior thereto of each of the following
conditions:
(a) The TIS Options shall have vested on September 30,
1998.
(b) As of the date hereof, the Optionee's employment with
TIS shall not have been terminated by reason of (A)
voluntary resignation of such Optionee or (B)
termination by TIS "for cause".
5. (a) This Agreement, including the Exhibit, which
constitutes an integral part of this Agreement, constitutes the entire agreement
of the parties, superseding and terminating any and all prior or contemporaneous
oral and prior written agreements, understandings or letters of intent between
or among the parties with respect to the subject matter of this Agreement. No
part of this Agreement may be modified or amended, nor may any right be waived,
except by a written instrument which expressly refers to this Agreement.
(b) All notices, demands, solicitation of consent or
approval, and other communications hereunder shall be in writing and shall be
deemed to have been given when given by hand or overnight courier service or
when deposited in the United States mail, postage prepaid, by registered or
certified mail, return receipt requested, addressed, as the case may be, to TIS
at 000 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx XX 00000, Attention: Xx. Xxxxxxx
Xxxxxxxx, and to the Optionee at the address set forth on the corporate records,
which shall initially be the address set forth on the signature page of this
Agreement. Any party may, by like notice, change the address or person to whom
notice shall be given.
(c) This Agreement shall be governed and construed in
accordance with the laws of the State of New York applicable to agreements
executed and to be performed wholly within such State. Each party hereby (i)
irrevocably consents and agrees that any legal or equitable action or proceeding
arising under or in connection with this Agreement shall be brought exclusively
in any Federal or state court situated in New York County, New York, and (ii)
irrevocably submits to and accepts, with respect to its properties and assets,
generally and unconditionally, the jurisdiction of the aforesaid courts. In any
such litigation, each party waives personal service of any summons, complaint or
other process, and agrees that the service thereof may be made in the manner for
giving of notices provided in this Agreement.
(d) This Agreement may be executed simultaneously in
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
[Space intentionally left blank.]
71
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
TRANSACTION INFORMATION SYSTEMS, INC.
By:
-----------------------------------------
Xxxxxxx Xxxxxxxx, Chief Executive Officer
ACKNOWLEDGED AND CONFIRMED:
--------------------------------
Print name of Optionee
--------------------------------
Optionee's Signature
--------------------------------
Optionee's Address
72
Schedule A
Number of TIS Number of TIS Aggregate
Options Owned Options Being Purchased Consideration
------------- ----------------------- -------------
TIS: TIS:
Exercise Exercise
Price: Price:
73
EXHIBIT C
SUBORDINATED
NON-TRANSFERABLE PROMISSORY NOTE
September 4, 1998
FOR VALUE RECEIVED, TRANSACTION INFORMATION SYSTEMS, INC., a
corporation formed under the laws of the State of Delaware (the "Corporation"),
hereby unconditionally promises to pay to the order of _________________________
("Payee"), the principal sum of the Note Amount, as defined in Section 1.2.
This Note is being issued in connection with the redemption of
shares of Common Stock of Payee pursuant to Section 1.3 of the Preferred Stock
Purchase Agreement, dated as of September 4, 1998 (the "Stock Purchase
Agreement"), among the Corporation, GS Capital Partners III, L.P. ("GSCP"),
certain affiliates of GSCP and the stockholders of the Corporation (the
"Existing Stockholders"). Capitalized terms used but not otherwise defined
herein have the meaning set forth in the Stock Purchase Agreement.
This Note may not be transferred by either the Corporation or
Payee other than, in the case of Payee, to the heirs or testamentary legatees of
Payee upon the death of Payee.
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. The following terms shall have the
meaning set forth below:
"Note" means this Promissory Note, as the same may be amended
from time to time.
"Obligations" means all of the Corporation's liabilities,
obligations and indebtedness to Payee under this Note (including, without
limitation, the Corporation's obligation to make payments of principal to Payee
hereunder).
"Senior Indebtedness" means the principal of, premium, if any,
and interest on and other amounts due on or in connection with (a) any
indebtedness, whether in existence on the date hereof or created in the future,
of the Corporation to any unrelated third party in respect of borrowed money
(other than this Note), or evidenced by bonds, notes, debentures or similar
instruments or letters of credit or representing the balance deferred and unpaid
of the purchase price of any property purchased, if and to the extent any of the
foregoing indebtedness would appear as a liability upon the balance sheet of the
Corporation, and whether outstanding on the date of this Note or hereafter
created, incurred, assumed or guaranteed in any manner by the Corporation or in
effect guaranteed by the Corporation through an agreement to purchase or
otherwise, and (b) deferrals, renewals, extensions or refundings of, or
amendments, modifications or supplements to, Senior Indebtedness of the kind
described in the preceding clause (a).
74
ARTICLE 2
CALCULATION OF PRINCIPAL AMOUNT; PAYMENTS
Section 2.1 Adjustment to Principal Amount. Subject to Section
2.4, the aggregate principal amount of this Note (the "Note Amount") shall be
equal to the product of (x) an amount equal to (a) $2,250,000 plus (b) the Final
Shareholders Equity Amount (which Final Shareholders Equity Amount may be a
negative number), minus (c) the aggregate amount paid on the Dividend Notes
after the Closing Date, plus (d) if the AAA Amount is less than $3,253,000, the
excess of $3,253,000 over the AAA Amount, times (y) the Payee's Pro Rata
Percentage, as set forth on Schedule 1.3 to the Stock Purchase Agreement. After
(i) the determination of the Final Shareholders Equity Amount and the AAA
Amount, and (ii) the full payment by all Existing Stockholders to the
Corporation of all amounts owing by the Existing Stockholders pursuant to
Section 1.7 of the Stock Purchase Agreement (the "Determination Date"), subject
to Section 2.4, this Note shall be payable as follows:
(a) If the Final Shareholders Equity Amount is zero or a
positive number, that portion of the Note Amount equal to (x) the Note
Amount, minus (y) the product of (I) the Payee's Pro Rata Percentage,
times (II) the Final Shareholders Equity Amount, shall be payable
immediately following the Determination Date. The balance of the Note
Amount shall be payable in a lump sum upon the earlier of (i) an IPO
(as defined in the Stock Purchase Agreement), (ii) a Sale Transaction
(as defined in the Stock Purchase Agreement) and (iii) September 4,
2000 (the "Final Date"); provided that (x) if no IPO or Sale
Transaction has occurred prior to the Final Date and (y) the financial
condition of the Corporation has materially deteriorated from the
financial condition of the Corporation as of the date hereof, the
balance of the Note shall not be paid on the Final Date and instead
shall be paid in accordance with a schedule negotiated in good faith
between GSCP and the Agent for the Existing Stockholders (as defined in
the Stock Purchase Agreement).
(b) If the Final Shareholders Equity Amount is a negative
number and the Note Amount is a positive number, the Note Amount shall
be payable immediately, and thereafter this Note shall be canceled.
(c) If as a result of the calculation of the Note Amount, the
Note Amount is a negative number, this Note shall be canceled
immediately.
Section 2.2 Payments Generally. All payments of principal to
be made by the Corporation under this Note shall be made by check to an address
specified by Payee, or wire transfer of immediately available funds in United
States dollars to an account specified in writing by Payee. All payments of the
principal of this Note shall be paid in lawful money of the United States and in
immediately available funds. All payments of this Note shall be made without
interest and no payment of interest shall be due on this Note.
Section 2.3 Prepayment. After the Determination Date, the
Corporation may, but only with the consent of GSCP, at any time and from time to
time, at its option, prepay this Note (in an amount up to but not exceeding the
unpaid Note Amount hereof) in whole or in part.
-2-
75
Section 2.4 Set-Off. The outstanding principal balance of this
Note shall be reduced by an amount equal to all amounts for which
indemnification may properly be sought by the Corporation against Payee pursuant
to any of the terms, conditions and provisions of the Stock Purchase Agreement.
ARTICLE 3
SUBORDINATION
Section 3.1 Agreement to Subordinate. (a) The Corporation and
Payee, for themselves and their successors and permitted assigns, and Payee, by
its acceptance of this Note, agree that this Note and payment of the Obligations
is and shall be subordinated, to the extent and in the manner provided in this
Article 3, to the prior payment in full of all Senior Indebtedness. This Article
3 shall constitute a continuing offer to all persons who, in reliance upon such
provisions, become holders of, or continue to hold, Senior Indebtedness, and
such provisions are made for the benefit of the holders of Senior Indebtedness,
and such holders are made obligees hereunder and they and/or each of them may
enforce such provisions.
(b) No payment shall be made by the Corporation, and no
enforcement of remedies shall be made by Payee, on account of the Obligations
(i) upon the maturity of any Senior Indebtedness by lapse of time, acceleration
or otherwise, unless and until all principal thereof and interest thereon and
other amounts due in connection therewith shall first be paid in full, or such
payment duly provided for in cash or in a manner satisfactory to the holders of
such Senior Indebtedness, or (ii) in the event that the Corporation shall
default in the payment of any principal of, premium, if any, or interest on any
Senior Indebtedness when the same becomes due and payable, whether at maturity
or at a date fixed for prepayment or by declaration or otherwise, unless and
until such default shall have been cured or waived or shall have ceased to
exist.
(c) In the event that any event of default shall have occurred
and be continuing with respect to any Senior Indebtedness, as such event of
default is defined therein or in the instrument under which it is outstanding,
permitting the holders to accelerate the maturity thereof (other than a default
in payment of the principal of or interest on or other amounts due in connection
with such Senior Indebtedness) upon written notice thereof given to the
Corporation by any holders of such Senior Indebtedness or their representative
("Default Notice"), then, unless and until the date on which such event of
default shall have been cured or waived by the holders of such Senior
Indebtedness or shall have ceased to exist, no direct or indirect payment shall
be made by the Corporation, and no enforcement of remedies shall be made by
Payee, with respect to the Obligations.
(d) In furtherance of the provisions of Section 3.1(a) hereof
in the event that any payment on account of the Obligations shall be made by or
on behalf of the Corporation and received by Payee, at a time when such payment
was prohibited by the provisions of Sections 3.1(b) and (c) hereof, then, unless
and until such payment is no longer prohibited by this Article 3, such payment
shall be held in trust for the benefit of and shall be immediately paid over to,
the holders of Senior Indebtedness or their representatives or the trustee or
trustees under any indenture under which any instruments evidencing any of the
Senior Indebtedness may have been issued, ratably according to the aggregate
amount remaining unpaid on account of the
-3-
76
principal of and interest on the Senior Indebtedness held or represented by
each, for application to the payment of all Senior Indebtedness remaining
unpaid. The Corporation shall give prompt written notice to Payee of any default
under any Senior Indebtedness or under any agreement pursuant to which Senior
Indebtedness may have been issued. Failure to give such notice shall not affect
the subordination of this Note to the Senior Indebtedness provided in this
Article 3.
(e) By the acceptance of this Note, the Payee agrees to enter
into any additional subordination provisions to the extent reasonably requested
by any holders of Senior Indebtedness.
Section 3.2 Further Rights. No right of any present or future
holders of any Senior Indebtedness to enforce subordination as provided herein
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Corporation or by any act or failure to act, in good
faith, by any such holder, or by any noncompliance by the Corporation with the
terms of this Note, regardless of any knowledge thereof which any such holder
may have or be otherwise charged with. The holders of Senior Indebtedness may
extend, renew, modify or amend the terms of the Senior Indebtedness or any
security therefor and release, sell or exchange such security and otherwise deal
freely with the Corporation, all without affecting the liabilities and
obligations of the Corporation and Payee.
Section 3.3 Subrogation. After all Senior Indebtedness is paid
in full and until all amounts due in connection herewith are paid in full, Payee
shall be subrogated to the rights of the holders of Senior Indebtedness to
receive distributions applicable to the Senior Indebtedness to the extent that
distributions otherwise payable to Payee have been paid to the holders of the
Senior Indebtedness. For the purpose of such subrogation, a distribution made
under this Article 3 to holders of Senior Indebtedness that otherwise would have
been made to Payee is not, as between the Corporation and Payee, a payment by
the Corporation on the Senior Indebtedness.
Section 3.4 Obligations Not Impaired. The provisions of this
Article 3 are, and are intended solely for, the purpose of defining the relative
rights of Payee, on the one hand, and the holders of Senior Indebtedness, on the
other hand. Nothing contained in this Article 3, or elsewhere in this Note, is
intended to or shall (i) impair, as among the Corporation, its creditors other
than the holders of Senior Indebtedness, and Payee, the obligation of the
Corporation, which, subject to the other terms of this Note, is absolute and
unconditional (and which, subject to the rights under this Article 3 of the
holders of Senior Indebtedness, is intended to rank equally with all other
general obligations of the Corporation), to pay to Payee the principal of this
Note as and when the same shall become due and payable in accordance with its
terms hereof, or (ii) affect the relative rights against the Corporation of
Payee and creditors of the Corporation other than the holders of Senior
Indebtedness.
ARTICLE 4
MISCELLANEOUS
Section 4.1. Loss, Theft, Destruction, Etc. Upon receipt by
the Corporation of evidence reasonably satisfactory to the Corporation of the
loss, theft, destruction or mutilation of this Note, and, in the case of loss,
theft or destruction, of indemnity or security reasonably
-4-
77
satisfactory to the Corporation, and upon reimbursement to the Corporation of
all reasonable expenses incidental thereto, or, in the case of mutilation of
this Note, upon surrender and cancellation of this Note, the Corporation will
make and deliver a new Note of like tenor, in lieu of this Note.
Section 4.2 Governing Law; Submission to Jurisdiction. This
Note shall be deemed made and delivered and shall be construed in accordance
with and governed by the laws of the State of New York, without giving effect to
the conflicts of law principles thereof. Any legal action or proceeding arising
out of, or relating to, this Note shall be instituted in the courts of the State
of New York or of the United States of America located in the state of New York,
and all endorsers and guarantors submit to the jurisdiction of each such court
in any action or proceeding.
Section 4.3 Notices. All notices, requests, claims, demands
and other communications hereunder to any party shall be deemed sufficient if
contained in a written instrument delivered in person or sent by telecopy (with
a confirmatory copy sent by a different means within three business days of such
notice), nationally recognized overnight courier or first class registered or
certified mail, return receipt requested, postage prepaid, addressed to such
party at the address set forth below or such other address for a party as shall
be specified in a notice given in accordance with this Section 4.3:
If to the Corporation: Transaction Information Systems, Inc.
000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx
With a copy to: Esanu Katsky Xxxxxx & Siger, LLP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxx X. Xxxxxx, Esq.
If to Payee, to the address set forth on Schedule 1 hereto
With a copy to: Esanu Katsky Xxxxxx & Siger, LLP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
Telecopy No.:
-5-
78
Section 4.4 Severability. Whenever possible, each provision of
this Note shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Note shall be prohibited by, or
invalid under, applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remaining of such
provision or the remaining provisions of this Note.
Section 4.5 Assignment. Neither the Corporation nor Payee may
transfer or assign any of its rights or obligations hereunder other than, in the
case of Payee, to the heirs or testamentary legatees of Payee upon the death of
Payee.
Section 4.6 Surrender. Upon cancellation or full payment of
this Note, Payee agrees to surrender this Note to the Corporation for
cancellation.
Section 4.7 Headings, etc. The headings of the Articles and
Sections of this Note have been inserted for convenience of reference only, are
not to be considered a part hereof, and shall in no way modify or restrict any
of the terms or provisions hereof.
Section 4.8 WAIVER OF JURY TRIAL. EACH OF MAKER AND PAYEE, BY
ITS ACCEPTANCE OF THIS NOTE, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL
BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS NOTE AND FOR ANY
COUNTERCLAIM THEREIN.
-6-
79
IN WITNESS WHEREOF, the Corporation has caused this Note to be
duly executed and delivered by its proper and duly authorized officer as of the
day and year first above written.
TRANSACTION INFORMATION SYSTEMS, INC.
By:
-------------------------------------
Name:
--------------------------------
Title:-------------------------------
AGREED AND ACCEPTED
AS OF THE DATE HEREOF
BY PAYEE
--------------------------------
Name:
-7-
80
EXHIBIT D
STOCKHOLDERS' AGREEMENT (this "Agreement"), dated as of
September 4, 1998, among TRANSACTION INFORMATION SYSTEMS, INC., corporation
formed under the laws of the State of Delaware (the "Corporation"), GS CAPITAL
PARTNERS III, L.P., a Delaware limited partnership ("GSCP") GS Capital Partners
III Offshore, L.P. ("GSCP Offshore"), Xxxxxxx, Xxxxx & Co. Verwaltungs GmbH
("GSCP Germany"), Xxxxx Xxxxxx Xxxx 0000, X.X. ("Stone 0000"), Xxxxxx Xxxxxx
Fund 1998, L.P. ("Bridge 1998," collectively with GSCP, XXXX Xxxxxxxx, XXXX
Xxxxxxx, Xxxxx 0000 and Bridge 1998, the "Investors") and the stockholders of
the Corporation listed on Schedule I attached hereto (the "Existing
Stockholders").
W I T N E S S E T H:
WHEREAS, the parties hereto are parties to that certain
Preferred Stock Purchase Agreement, dated as of , 1998 (the "Purchase
Agreement"), pursuant to which the Investors are purchasing shares of Series A
Preferred Stock (as defined below) from the Corporation;
WHEREAS, the Corporation and the Existing Stockholders are
parties to that certain Stockholders Agreement, dated as of September 16, 1997
(the "1997 Agreement"), and desire to terminate the 1997 Agreement and replace
it in its entirety with this Agreement; and
WHEREAS, the Purchase Agreement contemplates that the parties
hereto will enter into this Stockholder Agreement and the parties hereto deem it
to be in their best interests to establish and set forth their agreement with
respect to certain rights and obligations associated with ownership of shares of
Stock (as defined below).
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and obligations hereinafter set forth, the parties hereto
hereby agree as follows:
SECTION 1. General.
1.1. Certain Definitions. As used herein, the following terms
shall have the following meanings (terms used herein and not defined herein
shall have the meaning assigned to each such term in the Purchase Agreement):
"Common Stock" shall mean any shares of Common Stock
of the Corporation and any stock into which such Common Stock may hereafter be
changed or for which such Common Stock may be exchanged after giving effect to
the terms of such change or exchange (by way of reorganization,
recapitalization, merger, consolidation or otherwise).
81
"Common Stock Equivalents" shall mean securities
convertible into, or exchangeable for, shares of Common Stock.
"Documents" shall mean the Purchase Agreement; the
Registration Rights Agreement, dated as of the date hereof, by and among the
Corporation, the Investors and the Existing Stockholders; and the Certificate of
Designations for the Series A Preferred Stock, together with this Stockholder
Agreement.
"GSCP Parties" shall mean the Investors together with
any GSCP Affiliate (as defined in Section 21).
"IPO" shall mean the closing of the sale of shares of
Common Stock in a bona fide, firm commitment, underwritten public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "Securities Act").
"Person" shall mean any individual, corporation,
limited liability company, limited or general partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivisions thereof.
"Sell," as to any Stock, shall mean to sell, or in
any other way directly or indirectly transfer, assign, distribute, encumber or
otherwise dispose of or pledge, either voluntarily or involuntarily; and the
terms Sale and Sold shall have meanings correlative to the foregoing.
"Series A Preferred Stock" shall mean any shares in
that series of Preferred Stock of the Corporation purchased by the Investors
pursuant to the Purchase Agreement.
"Stock" shall mean (i) any shares of Common Stock and
(ii) any Common Stock Equivalents, in either case, whether owned on the date
hereof or acquired hereafter (including, without limitation, the Series A
Preferred Stock purchased pursuant to the Purchase Agreement).
"Stockholders" shall mean the parties to this
Agreement (other than the Corporation) and any other Person who executes, and
agrees to be bound by the terms of, this Agreement.
"Transfer" shall mean any sale, assignment, mortgage,
hypothecation, transfer or pledge of, creation of a security interest in, or
lien on, or any encumbrance, gift, trust (voting or other), bequest or any
testamentary or other disposition of, whether voluntary or by operation of law,
the Stock or any interest therein.
-2-
82
1.2. Methodology for Calculations. For purposes of this
Agreement, the proposed Sale or Sale of a Common Stock Equivalent shall be
treated as the proposed Sale or Sale of the shares of Common Stock into which
such Common Stock Equivalent can be converted, exchanged or exercised. Unless
otherwise specifically provided, for purposes of all calculations under this
Agreement (including, without limitation, determining the amount of outstanding
Common Stock as of any date, the amount of Common Stock owned by any Person, and
the percentage of outstanding Common Stock owned by any Person), all Common
Stock into which any in the money Common Stock Equivalents are convertible,
exchangeable or exercisable shall be deemed to be outstanding, and the shares of
Common Stock into which the Series A Preferred Stock shall be converted from
time to time shall also be deemed to be outstanding.
SECTION 2. Termination of 1997 Agreement. The Existing
Stockholders agree that the 1997 Agreement is hereby terminated and is of no
further force and effect.
SECTION 3. Limitations on Sales of Stock by
Stockholders. (a) Each Stockholder shall not Sell any Stock, whether owned on
the date hereof or acquired hereafter, other than:
(i) by Sale in accordance with Sections 4, 5
and 6 hereof;
(ii) by Transfer to an affiliate (including,
without limitation, in the case of a GSCP Party, a Transfer to another GSCP
Party);
(iii) by Sale in accordance with Section 8
hereof; or
(iv) pursuant to a registration statement
filed under the Securities Act.
(v) in the case of an Existing Stockholder,
by Transfer of up to 50% of such Existing Stockholder's Stock as of the date
hereof to any of the following persons: such Existing Stockholder's spouse or
children, or any trust established solely for the benefit of any of the
foregoing as to which such Existing Stockholder and/or such Existing
Stockholder's spouse serves as a trustee (an "Eligible Trust"); provided,
however, that any subsequent Transfer by the Eligible Trust to such Existing
Stockholder's spouse or children shall be subject to this Agreement to the same
extent as if such Transfer were made by such Existing Stockholder.
(b) Anything contained herein to the
contrary notwithstanding, any transferee of Stock pursuant to a Sale under
clause (i), (ii), (iii) or (v) of Section 3(a) who is not a Stockholder shall
upon consummation of, and as a condition to, such Sale (A) execute, and agree to
be bound by the terms of, this Agreement and shall thereafter be deemed a
Stockholder, with the same rights and obligations of the Stockholder which is
-3-
83
the transferor of the Stock, for all purposes of this Agreement and (B) with
respect to any transferee of Stock of a Stockholder, execute and deliver a
certificate in a form reasonably satisfactory to the Stockholders in which such
person certifies that (I) it is purchasing the Stock for its own account, for
investment and not with a view to the distribution thereof and (II) that such
Sale is otherwise being made in compliance with all applicable federal and state
law (including, without limitation, federal and state securities laws and "blue
sky" laws).
(c) Anything contained herein to the contrary
notwithstanding, each Existing Stockholder agrees that he will not Sell any
Stock (other than pursuant to clause (v) of Section 3(a)) for a period of two
and one-half years from the date hereof without first obtaining the written
consent of the GSCP.
SECTION 4. Rights of First Offer. In addition to and not in
limitation of any other restrictions on Sales of Stock contained in this
Agreement, other than pursuant to clause (ii), (iii), (iv) or (v) of Section
3(a), each Stockholder shall not Sell any Stock except in accordance with the
following procedures:
(a) The Stockholder proposing to Sell Stock (for
purposes of this section the "Section 4 Offeror") shall first deliver to the
Corporation a written notice (a "Section 4 Offer Notice"), which shall (i) state
the Section 4 Offeror's intention to sell Stock to one or more Persons, the
amount and type of Stock to be sold, the purchase price therefor and a summary
of the other material terms of the proposed Sale and (ii) offer, in accordance
with this Section 4, to the Corporation and then to the other Stockholders the
option to acquire all or a portion of such Stock upon the terms and subject to
the conditions of the proposed Sale as set forth in the Section 4 Offer Notice
(the "Section 4 Offer"), provided that such Section 4 Offer may provide that it
must be accepted by the Corporation and the other Stockholders (in the
aggregate) on an all or nothing basis (an "All or Nothing Sale"). The Section 4
Offer shall remain open and irrevocable for the periods set forth below (and, to
the extent the Section 4 Offer is accepted during such periods, until the
consummation of the sale contemplated by the Section 4 Offer). The Corporation
shall have the right and option, for a period of twenty days after delivery of
the Section 4 Offer Notice (the "Section 4(a) Acceptance Period"), to accept all
or any part of the offered Stock at the purchase price and on the terms stated
in the Section 4 Offer Notice. Such acceptance shall be made by delivering a
written notice of such acceptance to the Section 4 Offeror and each of the other
Stockholders within the Section 4(a) Acceptance Period.
(b) If the Corporation shall fail to accept all of
the Stock offered for sale pursuant to, or shall reject in writing, the Section
4 Offer (the Corporation being required to notify in writing the Section 4
Offeror and each of the other Stockholders of its rejection or failure to accept
in the event of the same) then, upon the earlier of the expiration of the
Section 4(a) Acceptance Period or the receipt of such written notice of
-4-
84
rejection or failure to accept such offer by the Corporation, each other
Stockholder shall have the right and option, for a period of twenty days
thereafter (the "Section 4(b) Acceptance Period"), to accept all or any part of
the Stock so offered and not accepted by the Corporation (the "Refused Stock")
at the purchase price and on the terms stated in the Section 4 Offer Notice ;
provided, however, that, if the Section 4 Offer contemplated an All or Nothing
Sale, the Corporation and the other Stockholders, in the aggregate, may accept,
during the Section 4(a) Acceptance Period, all, but not less than all, of the
Refused Stock, at the purchase price and on the terms stated in the Section 4
Offer Notice. Such acceptance shall be made by delivering a written notice to
the Corporation and the Section 4 Offeror within the Section 4(b) Acceptance
Period specifying the maximum number of shares such other Stockholder will
purchase (the "First Offer Shares"). If, upon the expiration of the Section 4(b)
Acceptance Period, the aggregate amount of First Offer Shares exceeds the amount
of Refused Stock, the Refused Stock shall be allocated among the other
Stockholders as follows: (i) First, each Stockholder shall be entitled to
purchase no more than its Proportionate Percentage (as defined below) of Refused
Stock; (ii) Second, if any shares of Refused Stock have not been allocated for
purchase pursuant to (i) above (the "Remaining Shares"), each Stockholder (an
"Oversubscribed Stockholder") which had offered to purchase a number of shares
of Refused Stock in excess of the amount of Stock allocated for purchase to it
in accordance with previous allocations, shall be entitled to purchase an amount
of Remaining Shares equal to no more than its Proportionate Percentage (treating
only Oversubscribed Stockholders as Stockholders for these purposes) of the
Remaining Shares; and (iii) Third, the process set forth in (ii) above shall be
repeated with respect to any shares of Refused Stock not allocated for purchase
until all shares of Refused Stock are allocated for purchase.
(c) If effective acceptance shall not be received
pursuant to Sections 4(a) and 4(b) above with respect to all of the Stock
offered for sale pursuant to the Section 4 Offer Notice, then the Section 4
Offeror may Sell all or any portion (or, in the case of an All or Nothing Sale,
all but not less than all) of the Stock so offered for sale and not so accepted,
at a price not less than 95% of the price, and on terms not materially more
favorable to the purchaser thereof than the terms, stated in the Section 4 Offer
Notice at any time within 60 days after the expiration of the Section 4(b)
Acceptance Period (the "Sale Period"). To the extent the Section 4 Offeror Sells
all of the Stock so offered for Sale during the Sale Period, the Section 4
Offeror shall promptly notify the Corporation, and the Corporation shall
promptly notify the other Stockholders, as to (i) the number of shares of Stock,
if any, that the Section 4 Offeror then owns, (ii) the number of shares of Stock
that the Section 4 Offeror has sold, (iii) the terms of such Sale and (iv) the
name of the owner(s) of any shares of Stock sold. In the event that all of the
Stock is not sold by the Section 4 Offeror during the Sale Period, the right of
the Section 4 Offeror to Sell such Stock shall expire and the obligations of
this Section 4 shall be reinstated; provided, however, that, in the event that
the Section 4 Offeror determines, at any time during the Sale Period, that the
sale of all of the Stock on the
-5-
85
terms set forth in the Section 4 Offer Notice is impractical, the Section 4
Offeror may terminate the offer and reinstate the procedure provided in this
Section 4 without waiting for the expiration of the Sale Period.
(d) All Sales of Stock to the Corporation and/or the
other Stockholders that are subject to a Section 4 Offer Notice shall be
consummated contemporaneously at the offices of the Corporation on a mutually
satisfactory business day within 30 days after the expiration of the Section
4(b) Acceptance Period or, if later, the fifth business day following the
expiration or termination of all waiting periods under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act") applicable to
such Sales. The delivery of certificates or other instruments evidencing such
Stock duly endorsed for transfer shall be made on such date against payment of
the purchase price for such Stock.
(e) Anything contained herein to the contrary
notwithstanding, the Section 4 Offeror shall, in addition to complying with the
provisions of this Section 4 in the event of a proposed sale of Stock, comply
with the provisions of Section 5 hereof.
(f) For purposes of this Section, "Proportionate
Percentage" shall mean, as to each Stockholder, the quotient obtained by
dividing, in accordance with Section 1.2 hereof, (i) the number of shares of
Common Stock owned, as of the first day of the Section 4(b) Acceptance Period
(as defined in Section 4(b) above) by such Stockholder by (ii) the aggregate
number of shares of Common Stock owned by all Stockholders who exercise their
option to purchase Refused Stock (as defined in Section 4(b) above).
SECTION 5. Tag-Along Rights. Subject to the provisions of
Section 3(c), following compliance with the provisions of Section 4 and except
pursuant to clause (ii), (iii), (iv) or (v) of Section 3(a) hereof, any Sale of
Stock by a Stockholder shall be consummated only in accordance with the
following procedures:
(a) (i) Any Stockholder or Stockholders proposing to
Sell Stock (for purposes of this Section, the "Section 5 Offeror") shall first
deliver to each other Stockholder a written notice (the "Section 5 Notice"),
which shall specifically identify the identity of the proposed transferee (the
"Section 5 Offeree"), the amount and type of Stock proposed to be sold, the
purchase price therefor, and a summary of the other material terms and
conditions of the proposed sale, and shall contain an offer (the "Section 5
Offer") by the Section 5 Offeree to each other Stockholder, which shall be
irrevocable for a period of seven days after the later of delivery thereof and
the expiration of the Section 4(b) Acceptance Period, to the extent applicable
(the "Section 5 Acceptance Period") (and, to the extent the Section 5 Offer is
accepted during such seven day period, until the closing of the Sale
contemplated by the Section 5 Offer), to purchase the Section 5 Stock at the
Section 5 Purchase Price (as such terms are defined below), and
-6-
86
upon the other terms offered by the Section 5 Offeree to the Section 5 Offeror
as set forth in the Section 5 Notice. A copy of the Section 5 Notice shall
promptly be sent to the Corporation. Notice of another Stockholder's intention
to accept a Section 5 Offer, in whole or in part, shall be evidenced by a
writing signed by such other Stockholder and delivered to the Section 5 Offeree
and the Corporation prior to the end of the Section 5 Acceptance Period, setting
forth the number of shares and class of Stock that such other Stockholder elects
to sell. If effective acceptance by any other Stockholder has been received
pursuant to this paragraph (a), then the selling Stockholder shall not
consummate such Sale of Stock without participation of such other Stockholders.
(ii) For purposes of this Section, the
following terms shall have the meanings set forth below:
"Section 5 Stock" shall mean, with respect to each Stockholder
other than the Section 5 Offeror, an amount of Stock which, calculated in
accordance with Section 1.2, represents the number of shares of Common Stock
equal to the result of (i) the Section 5 Percentage multiplied by (ii) the
amount of shares of Common Stock owned, by such other Stockholder.
"Section 5 Purchase Price" shall mean (i) with respect to a
share of Common Stock, the Per Share Price and (ii) with respect to a Common
Stock Equivalent, an amount equal to (A) the Per Share Price minus the exercise
price, multiplied by (B) the number of shares of Common Stock issuable upon the
conversion, exchange or exercise of such Common Stock Equivalent.
"Section 5 Percentage" shall mean the quotient obtained by
dividing, in accordance with Section 1.2 hereof, (i) the number of shares of
Common Stock proposed to be sold by the Section 5 Offeror as set forth in the
Section 5 Notice by (ii) the number of shares of Common Stock owned by the
Section 5 Offeror as of the date of the Section 5 Offer.
"Per Share Price" means an amount equal to the quotient
obtained by dividing, in accordance with Section 1.2 hereof, (i) the aggregate
purchase price to be paid by the Section 5 Offeree in respect of such Stock by
(ii) the number of shares of Common Stock proposed to be sold by the Section 5
Offeror as set forth in the Section 5 Notice.
(b) All Sales of Stock to the Section 5 Offeree shall
be consummated contemporaneously at the offices of the Corporation on a mutually
satisfactory business day as soon as practicable, but in no event more than 30
days after the expiration of the Section 5 Acceptance Period, or, if later, the
fifth business day following the expiration or termination of all waiting
periods under the HSR Act applicable to such Sales. The delivery of certificates
or other instruments evidencing
-7-
87
such Stock duly endorsed for transfer shall be made on such date against payment
of the purchase price for such Stock.
SECTION 6. Bring-Along Rights. (a) Subject to the rights of
the Stockholders pursuant to Section 4 hereto, from and after the date hereof,
if the Investors, together with any other Stockholders, if necessary, propose to
Sell to any Person who is not affiliated with any of such Stockholder(s) (a
"Bring-Along Transferee"), in a bona fide arm's-length transaction or series of
transactions (including by way of a purchase agreement, tender offer, merger or
other business combination or otherwise) (any such transaction being referred to
herein as an "Exit Sale"), an amount of stock owned by such Stockholders equal
to at least 50% in the aggregate of the then outstanding Common Stock, then the
Investors may elect to require each (but not fewer then each) other Stockholder
to Sell such Stockholders(s) Stock as a part of the Exit Sale to such
Bring-Along Transferee at the purchase price and upon the other terms and
subject to the conditions of the Exit Sale.
(b) At any time after the fourth anniversary of the date
hereof, subject to the rights of the Stockholders pursuant to Section 4 hereto,
if the Investors, propose to Sell to any Person in an Exit Sale all of the
Series A Preferred Stock and Common Stock owned by them, then the Investors may
elect to require each (but not fewer than each) other Stockholder to Sell such
Stockholder(s) Stock as a part of the Exit Sale to such Bring-Along Transferee
at the purchase price and upon the other terms and subject to the conditions of
the Exit Sale.
(c) The rights set forth in Section 6(a) and 6(b) shall be
exercised by giving written notice (the "Bring-Along Notice") to each other
Stockholder setting forth in detail the terms of the proposed Exit Sale and the
proposed closing date of the Exit Sale.
(d) All Sales of Stock to the Bring-Along Transferee pursuant
to this Section 6 shall be consummated contemporaneously at the offices of the
Corporation on a mutually satisfactory business day within 60 days after the
Bring-Along Notice is delivered to the Stockholders, or the fifth business day
following the expiration or termination of all waiting periods under the HSR Act
applicable to such Sales, or at such other time and/or place as the parties to
such Sales may agree. The delivery of certificates or other instruments
evidencing such Stock duly endorsed for transfer shall be made on such date
against payment of the purchase price for such Stock.
(e) In the event of an Exit Sale by way of a merger,
consolidation or otherwise, (i) each other Stockholder agrees that he shall take
all necessary or desirable action to cause such merger, consolidation or other
transaction to occur, including, without limitation, voting his shares of Voting
Stock (as defined below) in favor of such merger, consolidation or other
transaction; and (ii) the Corporation shall take all
-8-
88
necessary or desirable action to cause such merger, consolidation or other
transaction to occur.
SECTION 7. Preemptive Rights. (a) Except for Excluded
Securities (as hereinafter defined), the Corporation shall not issue, sell or
exchange, or agree to issue, sell or exchange (collectively, "Issue," and any
issuance, sale or exchange resulting therefrom, an "Issuance") (i) any shares of
capital stock of the Corporation or any of its subsidiaries, (ii) any other
equity security of the Corporation, including, without limitation, any options,
warrants or other rights to subscribe for, purchase or otherwise acquire any
capital stock or other equity security of the Corporation or (iii) any other
security of the Corporation that is convertible into or exchangeable for any
equity security of the Corporation unless, in each case, the Corporation shall
have first given written notice (the "Section 7 Notice") to each Stockholder
(for purposes of this Section, each a "Section 7 Offeree") that shall (a) state
the Corporation's intention to sell any of the securities described in (i), (ii)
and (iii) above, the amount to be issued, sold or exchanged, the terms of such
securities, the purchase price therefor and a summary of the other material
terms of the proposed issuance, sale or exchange and (b) offer (a "Section 7
Offer") to Issue to each Section 7 Offeree and their affiliates such Section 7
Offeree's Proportionate Percentage (as defined below) of such securities (with
respect to each Section 7 Offeree, the "Offered Securities") upon the terms and
subject to the conditions set forth in the Section 7 Notice, which Section 7
Offer by its terms shall remain open and irrevocable for a period of 15-days
from the date it is delivered by the Corporation to the Stockholder, as the case
may be (and, to the extent the Section 7 Offer is accepted during such 15-day
period, until the closing of the Issuance contemplated by the Section 7 Offer).
"Proportionate Percentage" for the purposes of this Section shall mean the
quotient obtained by dividing: (i) the number of shares of Common Stock owned by
the Section 7 Offeree, by (ii) the total number of shares of Common Stock issued
and outstanding on the date of the Section 7 Offer.
(b) Notice of a Section 7 Offeree's intention to
accept a Section 7 Offer, in whole or in part, shall be evidenced by a writing
signed by such party and delivered to the Corporation prior to the end of the
15-day period of such Section 7 Offer (each, a "Notice of Acceptance"), setting
forth the portion of the Offered Securities that the Section 7 Offeree elects to
purchase.
(c) (i) In the event that a Notice of Acceptance is
not given by a Section 7 Offeree in respect of all the Offered Securities, the
Corporation shall have 60 days following the earlier of (A) delivery of the
Notice of Acceptance or (B) the 15-day period referred to in clause (b) above,
if no Notice of Acceptance is delivered, to Issue all or any part of such
remaining Offered Securities not covered by the Notice of Acceptance to any
other Person(s), but only at a price not less than the price, and on terms no
more favorable to the person than the terms, stated in the Section 7 Offer
Notice.
-9-
89
(ii) If the Corporation does not consummate
the Issuance of all or part of the remaining Offered Securities to such other
Person(s) within such period, the right provided hereunder shall be deemed to be
revived and such securities shall not be offered unless first re-offered to each
Section 7 Offeree in accordance with this Section 7.
(iii) Upon the closing, of the Issuance to
such other Person(s) (the "Other Buyers") of all or part of the remaining
Offered Securities, each Section 7 Offeree shall purchase from the Corporation,
and the Corporation shall Issue to each such Section 7 Offeree, the Offered
Securities covered by the Notice of Acceptance delivered to the Corporation by
the Section 7 Offeree, on the terms specified in the Section 7 Offer. The
purchase by a Section 7 Offeree of any Offered Securities is subject in all
cases to the execution and delivery by the Corporation and the Section 7 Offeree
of a purchase agreement relating to such Offered Securities in form and
substance similar in all material respects to the extent applicable to that
executed and delivered between the Corporation and the Other Buyers.
(d) For purposes of this Section, "Excluded
Securities" shall mean: (i) shares of Common Stock issued or issuable upon
conversion of the Series A Preferred Stock; (ii) shares of Common Stock issuable
or issued upon conversion or exercise of any securities outstanding on the date
hereof; (iii) any capital stock issued as a stock dividend or upon any stock
split or other subdivision or combination of shares of the Corporation's capital
stock; (iv) shares of Common Stock issued in any public offering of the
Corporation's securities; (v) any capital stock issued or issuable in connection
with a merger or consolidation or acquisition of any other entity, except for
such merger or consolidation after consummation of which the Stockholders prior
to such merger or consolidation will beneficially own less than 50% of the
capital stock of the surviving or resulting entity; or (vi) shares of Common
Stock issuable or issued to employees of the Corporation pursuant to an employee
benefit plan duly approved by the Corporation's Board of Directors (the "Board")
in accordance with Section 9.12 hereof.
SECTION 8. Mandatory Offer of Stock
8.1. Offer Event. The Stock of an Existing Stockholder shall
be deemed irrevocably offered for sale first to the Corporation and then, in
accordance with the procedures set forth in this Section 8, to the other
Stockholders (the "Remaining Stockholders"), upon the happening of any one or
more of the following events (each a "Section 8 Offer Event"):
(a) The filing by or against such Existing
Stockholder of a petition or an application for any relief under any provisions
of the Federal Bankruptcy Act (which, in the case of an involuntary petition
application, is not stayed or discharged within 60 days of the date of such
filing);
-10-
90
(b) Such Existing Stockholder makes an assignment for
the benefit of creditors;
(c) A receiver, legal custodian, administrator,
guardian or fiduciary (who is not the spouse of such Existing Stockholder or
been appointed for the benefit of such Existing Stockholder) has been appointed
to manage such Existing Stockholder's property;
(d) A writ or attachment or levy or lien has been
filed against the Stock of an Existing Stockholder and such attachment, levy or
lien has not been discharged, bonded or vacated within 30 days from the date it
became effective;
(e) Such Existing Stockholder attempts to Transfer
any Stock in violation of the provisions of this Agreement;
(f) Such Existing Stockholder's employment with the
Corporation is terminated for cause in accordance with Section 9.10; or
(g) Such Existing Stockholder's employment with the
Corporation is terminated by the Corporation without cause in accordance with
Section 9.10 or voluntarily by the Stockholder.
For the purposes of this Section 8, a Section 8 Offer Event
shall be deemed to be continuing until the procedures set forth in this Section
8 with respect to the Stock affected thereby have been exhausted.
8.2. Exercise of Option. (a) The Corporation shall have an
option (the "First Option") exercisable for a period of 180 days after it
receives notice of the occurrence of any Section 8 Offer Event within which to
give written notice to the applicable Existing Stockholder or the applicable
Existing Stockholder's representative, assigns or prohibited transferee, as the
case may be (collectively, for the purpose of this Section 8, the "Section 8
Seller"), of its election to exercise its option to purchase all or part of the
Section 8 Seller's Stock at a price (the "Offer Price") equal to the amount
determined by multiplying the aggregate number of the Section 8 Seller's Stock
being purchased by the following percentage of the Value per Share determined in
accordance with Section 8.5 of this Agreement: (i) 50% if the applicable Offer
Event is set forth in clauses (a) through (f) of Section 8.1 above; and (ii) 80%
if the applicable Offer Event is set forth in clause (g) of Section 8.1 above.
(b) To the extent the Corporation purchases less than
all of the Section 8 Seller's Stock pursuant to paragraph (a) above, each of the
Remaining Stockholders shall have an option (the "Second Option"), exercisable
for a period of fifteen days commencing upon the expiration of the First Option,
to purchase at the Offer Price, in the same proportion as the number of shares
of Stock owned by each Remaining Stockholder bears to the number of shares of
-11-
91
Stock owned by all Remaining Stockholders, all or any part of the Section 8
Seller's Stock that were subject to the First Option and which the Corporation
did not elect to purchase prior to the expiration of the First Option.
(c) To the extent that less than all of the Section 8
Seller's Stock is purchased pursuant to paragraphs (a) and (b) above, the
Remaining Stockholders who exercise their Second Options in accordance with
paragraph (b) above (the "Electing Stockholders") shall each have an option (the
"Third Option") exercisable for a period of ten days commencing upon the
expiration of the Second Options to purchase at the Offer Price, by agreement
among them, all or any part of the shares of Stock, if any, that were subject to
Second Options and were not purchased by any Remaining Stockholder.
(d) To the extent that less than all of the Section 8
Seller's Stock is purchased pursuant to paragraphs (a), (b) and (c) above, the
Board shall have the option (the "Fourth Option"), for a period of five days
commencing upon the expiration of the Third Options, to designate a person or
entity to whom the Section 8 Seller must sell at the Offer Price any of such
Section 8 Seller's Stock that were not purchased pursuant to paragraphs (a), (b)
and (c) above.
(e) The parties agree that at the request of GSCP,
the Corporation shall, upon the happening of any Section 8 Offer Event, exercise
the First Option or the Fourth Option with respect to the Stock affected
thereby.
8.3. Put Event. (a) An Existing Stockholder (or as the case
may be, the estate of Existing Stockholder) shall have the right to offer for
sale to the Corporation up to 50% of such Existing Stockholder's Stock (such
offered Stock, the "Put Stock"), and subject to the provisions of paragraph (b),
the Corporation shall purchase the Put Stock
-12-
92
within 90 days after the occurrence of any one or more of the following (each a
"Put Event"):
(i) The death of such Existing Stockholder;
or
(ii) Such Existing Stockholder's employment
with the Corporation is terminated as a result of such Existing Stockholder's
disability in accordance with Section 9.11.
(b) In the event that the Corporation shall become
obligated to purchase the Put Stock of an Existing Stockholder pursuant to the
provisions of paragraph (a) above, the Corporation may, at its sole option and
within 60 days after the occurrence of the Put Event, designate all or a portion
of the Put Stock as available for purchase from the selling Existing Stockholder
(or as the case may be, the estate of the selling Existing Stockholder) by the
Remaining Stockholders at the price and upon the terms available to the
Corporation and in the manner set forth in paragraphs (b), (c) and (d) of
Section 8.2. For these purposes, the Corporation's obligation to purchase the
Put Stock shall be treated as the First Option and the date that the Corporation
designates the Put Stock as available for purchase shall be treated as the
expiration date of the First Option. Nothing in this paragraph (b) shall be
deemed to relieve the Corporation of its obligation to purchase any Put Stock
not purchased by the Remaining Stockholders or to impose upon the Remaining
Stockholders any obligation to purchase the Put Stock designated as available
for purchase by the Corporation. Notwithstanding the foregoing, the Corporation
shall be obligated to purchase the Put Stock only to the extent permitted under
applicable law, and so long as such purchase will not result in a breach of any
loan, credit or other similar agreement to which the Corporation is a party.
(c) The purchase price payable by the Corporation for
Stock pursuant to paragraph (a) above shall be at 100% of the Value per Share as
determined pursuant to Section 8.4 hereof.
8.4. Value per Share. For purposes of this Agreement, the term
"Value per Share" as of any date shall mean the product of fifteen multiplied by
Average Net Profits (as defined below), multiplied by a fraction whose numerator
is one and whose denominator is the number of shares of Common Stock then issued
and outstanding.
For the purposes of this Section 8, the term "Average Net
Profits" shall mean fifty percent (50%) of the total Net Profits of the
Corporation for the two-year period ending on the last day of the most recently
ended calendar quarter for which financial statements were available prior to
the occurrence of the applicable Section 8 Offer Event, Sale Event or Put Event,
as the case may be, as determined by the Board in its reasonable discretion in
conjunction with the Corporation's independent accountants, within 45 days of
the occurrence of such Event; the term "Net Profits" shall mean the net
-13-
93
profits before income taxes of the Corporation for each of such calendar
quarters as determined by the Board on the accrual basis in accordance with
generally accepted accounting principles.
8.5. Procedures to Apply to Purchase by Corporation or
Remaining Stockholders. The provisions of this Section 8.5 shall apply whenever
the Stock of a Stockholder is being sold pursuant to the provisions of this
Section 8.
(a) Closing Procedures. The closing of the sale and purchase
of any Stock of a Section 8 Seller (the "Closing") shall take place at the
principal office of the Corporation at 10:00 A.M. on the fifteenth day after the
date that options with respect to all of the Seller's Stock have been exercised
or have expired, or at such other place, time and/or date as shall be agreed
upon by the purchaser or purchasers of such Stock and the Section 8 Seller;
provided, however, that the Closing of any sale and purchase of Stock of a
Section 8 Seller pursuant to clause (g) of Section 8.1 or Section 8.3 shall take
place on any day within the 90 day period set forth in clause (g) of Section 8.1
or Section 8.3, as the case may be, as the Corporation may designate on at least
five days notice to the Section 8 Seller and any purchasers other than the
Corporation.
(b) Closing Deliveries. At the Closing, the Section 8 Seller
shall deliver (i) to the Corporation resignations of the Section 8 Seller (and
if the Section 8 Seller is not a natural person, the Seller's nominees) as an
employee, officer and director of the Corporation to the extent he is serving
and (ii) to the applicable purchaser(s) stock certificates representing the
Stock being sold, in proper form for transfer together with duly executed stock
powers, with all requisite stock transfer stamps, and with any supporting
instruments that may be reasonably required to effect transfer of registration.
Unless the Corporation is the purchaser, new certificates for Stock being
purchased shall be issued by the Corporation in the name or names of the
purchaser or purchasers. In the event that the Stock are to be acquired by the
Corporation or the Remaining Stockholders, if any, such certificates, transfer
stamps and stock powers (collectively, the "Escrowed Certificates") shall be
delivered at the Closing to Esanu Katsky Xxxxxx & Siger, LLP, or such other firm
or person selected by agreement of the Section 8 Seller and the Corporation or
the applicable purchaser(s), as the case may be, to serve as escrow agent (the
"Escrow Agent"), and shall be held by the Escrow Agent as provided hereunder.
(c) Purchase Price Payments. The purchase price for Stock as
determined pursuant to this Section 8 hereof shall be paid as follows: (i)
twenty percent (20%) of the purchase price (the "First Installment") shall be
paid at the Closing and (ii) the remainder in four equal annual installments,
the first of which shall be due on the first anniversary of the Closing. The
installments of the purchase price shall be evidenced by the promissory note
substantially in the form of Exhibit A annexed hereto
-14-
94
(the "Note"), specifying, among other things, various events of default (the
"Events of Default"). Notwithstanding anything to the contrary contained herein,
if the Stock are being purchased because of the death of an Existing
Stockholder, the proceeds actually received by the Corporation of any insurance
on the life of the deceased Existing Stockholder shall be paid to the estate of
the deceased Existing Stockholder against delivery of the certificates
representing the applicable Stock, and the principal amount of the Note shall be
reduced accordingly. In the event such proceeds are less than the First
Installment, the Corporation or other purchaser shall pay the difference
(between the First Installment and Insurance Proceeds) to the estate of the
deceased Existing Stockholder at the Closing. If such proceeds exceed the amount
of the First Installment, such proceeds shall nevertheless be paid at the
Closing and the balance of the purchase price shall be paid in four equal
installments. If such proceeds exceed the aggregate amount payable for the
Stock, the excess amount shall be retained by the Corporation.
(d) Escrow Release. Immediately upon receipt by the Section 8
Seller or the Section 8 Seller's estate or representatives, as the case may be,
of any payment of all or part of the purchase price for the Stock by the
applicable purchaser(s), the applicable purchaser(s) shall notify the Escrow
Agent, in writing, with a copy to the Section 8 Seller that such payment has
been made for all or part of such Stock, and unless the Section 8 Seller shall
within the fifteen day period set forth in this paragraph (d) give notice in
writing to the Escrow Agent and the applicable purchaser(s), that the Section 8
Seller denies such payment, the Escrow Agent shall deliver to the applicable
purchaser(s) the Escrowed Certificates representing the proportionate number of
Stock paid for within fifteen days of receipt of such notice.
(e) Escrow Release after Default. In the event of an Event of
Default which is not duly cured, the Escrow Agent, upon the written request of
the Section 8 Seller, and upon five days written notice to the Corporation,
shall be authorized to deliver the Escrowed Certificates to the Section 8 Seller
who shall have all of the rights and obligations of a secured creditor specified
in the New York Uniform Commercial Code, as amended from time to time. The
remedies available to the Section 8 Seller under this subsection shall be in
addition to any remedies available to the Section 8 Seller at law or in equity.
(f) Escrow Agent's Duties. The Escrow Agent shall be entitled
to rely upon the representations made by the parties. The Escrow Agent shall be
protected in acting upon any document, certificate, request, consent, statement,
agreement or any other instrument whatsoever, not only as to its due execution
and the validity and effectiveness of its provisions, but also as to the truth
and acceptability of any information which it contains and which the Escrow
Agent, in good faith, believes to be valid and to have been signed and presented
by a proper person or persons. The Escrow Agent shall have no duties except
those expressly set forth in this Agreement. In the event that the Escrow Agent
is uncertain as to its duties or rights, or shall receive
-15-
95
instructions, claims or demands from any of the parties or from third persons
with respect to the Escrowed Certificates which, in the Escrow Agent's opinion,
are in conflict with the provisions of this Agreement, the Escrow Agent shall be
entitled to refrain from taking any action until the Escrow Agent is directed
otherwise in a writing executed by all of the interested parties or by the final
judgment or order of a court of competent jurisdiction if the time for appeal
from such judgment or order shall have expired. The Escrow Agent shall not be
bound by any waiver, modification, amendment, termination or rescission of this
Agreement unless in writing and signed by all of the parties, and, if its rights
and duties are to be affected, unless the Escrow Agent shall have given its
prior written consent thereto. The Escrow Agent shall not be liable for any
action taken or omitted in the performance of its duties hereunder except in the
case of its willful misconduct or gross negligence. At any time during the term
of the escrow, the parties may appoint another person or entity as escrow agent
by giving written notification to the Escrow Agent, such notification to contain
an appropriate instruction designating such third party and directing the Escrow
Agent to turn over and deliver the Escrowed Certificates to such third party and
after delivery of the Escrowed Certificates, the Escrow Agent shall have no
liability, duty or obligation under this Agreement or arising out of the escrow.
The Escrow Agent may, at any time, resign by giving written notice to the
parties at least twenty days prior to the date specified for such resignation to
take effect, and upon the effective date of such resignation, the Escrowed
Certificates held by the Escrow Agent shall be delivered by it to such person or
entity as may be designated in writing by the parties. If no such person or
entity shall have been designated by the date of the Escrow Agent's resignation,
or if such designee is unable to or refuses to perform the duties of escrow
agent, the Escrow Agent may deposit the Escrowed Certificates in a court of
competent jurisdiction and upon such resignation and deposit all of the Escrow
Agent's obligations hereunder shall cease and terminate.
SECTION 9. Corporate Governance.
9.1. Board of Directors. (a) Pre-IPO. (i) Except as otherwise
set forth in this Section 9.1(a), from and after the date hereof the Board shall
consist of seven directors and the Corporation shall cause two persons
designated by GSCP (each such person an "Investor Director") to be designated
for election at any meeting of stockholders for the election of directors. So
long as any shares of Series A Preferred Stock are outstanding, the person(s)
designated by GSCP under this Section 9.1(a) shall be the Series A Director(s)
(as defined in the Certificate of Designations of the Corporation (the
"Certificate of Designations")).
(ii) Each Stockholder agrees to vote all of
his Stock for the election of the following individuals to the Board of
Directors: (i) Xxxx Xxxxxxxxxxx, Xxxxxx Xxxx, Xxxxxxx Xxxxxxxx (Chairman of the
Board), Xxxxxx Xxxxxxx and Xxxxxx Xxxx, so long as each such person shall remain
a Stockholder, and (ii) Xxxxxx Xxxxxxxxx and Xxxxxxx Xxxxxxxxxx, to the extent
GSCP is entitled to designate two directors, or such
-16-
96
other designees of GSCP, so long as any Investors shall hold any shares of
Series A Preferred Stock or Common Stock.
(iii) Notwithstanding the foregoing, in the
event that the Investors together with their "affiliates" (as such term is
defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) cease to hold in the aggregate at least 50% of the number of
shares of Series A Preferred Stock (or shares of Common Stock issuable upon
conversion of the Series A Preferred Stock, as the case may be) owned by the
Investors on the date of issuance (subject to appropriate adjustment from time
to time for any subdivision (by any stock split, stock dividend,
recapitalization or otherwise) or combination (by reverse stock split or
otherwise) of the Series A Preferred Stock by the Corporation), the Board shall
consist of six directors and the Corporation shall cause one Investor Director
to be designated for election at any meeting of stockholders for the election of
directors.
(b) Post-IPO. From and after an IPO and for so long
as the Investors hold in the aggregate at least 5% or more of the outstanding
Common Stock, in connection with any election for members of the Board, the
Corporation shall, at the request of GSCP, include two representatives
designated by GSCP in the slate of directors recommended by the Board to
stockholders for election as directors (such representatives designated by GSCP
being referred to herein as the "Investor Designees"); provided, however, that
in the event that the Investors cease to hold in the aggregate at least 50% of
the number of shares of Common Stock issuable upon conversion of the Series A
Preferred Stock owned by the Investors as of the date hereof (subject to
appropriate adjustment from time to time for any subdivision (by any stock
split, stock dividend or otherwise) a combination (by reverse stock split or
otherwise) of the Common Stock by the Corporation), the Corporation shall, at
the request of GSCP, include one Investor Designee in the slate of directors
recommended by the Board to stockholders for election as directors. The
Corporation shall use its best efforts to cause each Investor Designee to be
elected to, and to be maintained as a member of, the Board (including
recommending to the stockholders of the Corporation the election of any Investor
Designee to the Board and opposing any proposal to remove any Investor Designee
at each meeting of the stockholders of the Corporation at which the election or
removal of members of the Board is on the agenda), and shall take no action
which would diminish the prospects of any Investor Designee being elected to the
Board or increase the prospects of any Investor Designee being removed from the
Board.
9.2. Committees; Subsidiaries. The Corporation shall, at the
request of GSCP, take all actions necessary to cause at least one Investor
Director (and, from and after an IPO, at least one Investor Designee) to be
appointed to each committee of the Board and to each of the boards of directors
or other similar managing bodies (and any committee thereof) of each of the
Subsidiaries of the Corporation.
-17-
97
9.3. Vacancies; Removal. (a) Subject to paragraph (b) of this
Section 9.3, each Investor Director and each Investor Designee shall hold his
office until his death or until his successor shall have been duly elected and
qualified. If any Investor Director or any Investor Designee shall cease to
serve as a director of the Corporation (and any committee thereof) or of any
board of directors or other similar managing body (and any committee thereof) of
any Subsidiary of the Corporation for any reason other than pursuant to Section
9.1, the vacancy resulting thereby shall be filled by another Person designated
by GSCP.
(b) Neither a Investor Director nor any Investor
Designee shall be removed from office without the consent of GSCP; provided,
however, that any Investor Designee may be removed by a vote of the stockholders
of the Corporation. Any Investor Director and any Investor Designee shall be
removed from office at any time, with or without cause, at the request of GSCP.
9.4. Expenses. The Corporation shall pay the reasonable
out-of-pocket expenses incurred by each director on the Board (any such
director, a "Director") in connection with performing his duties as a member of
the Board, including without limitation the reasonable out-of-pocket expenses
incurred by such person for attending meetings of the Board or any committee
thereof or meetings of any board of directors or other similar managing body
(and any committee thereof) of any Subsidiary of the Corporation.
9.5. Telephonic Board Meetings. The Corporation shall take all
necessary actions, including, without limitation, causing its by-laws to be duly
amended, to allow any Director to telephonically attend (a) any meeting of the
Board (and any committee thereof) and (b) any meeting of any board of directors
or any similar managing body (and any committee thereof) of any subsidiary of
the Corporation of which he is a member.
9.6. Directors' Indemnification. (a) The Corporation shall
obtain and cause to be maintained in effect, with financially sound insurers, a
policy of directors' and officers' liability insurance covering each of the
Directors in an amount upon such terms and in such amount as are reasonably
acceptable to the Investors.
(b) The Certificate of Incorporation, by-laws and
other organizational documents of the Corporation and each of its subsidiaries
shall at all times, to the fullest extent permitted by law, provide for
indemnification of, advancement of expenses to, and limitation of the personal
liability of, the members of the Board and the members of the boards of
directors or other similar managing bodies of each of the Corporation's
subsidiaries and such other persons, if any, who, pursuant to a provision of
such Certificate of Incorporation, By-laws or other organizational documents,
exercise or perform any of the powers or duties otherwise conferred or imposed
upon members of the
-18-
98
Board or the boards of directors or other similar managing bodies of each of the
Corporation's subsidiaries. Such provisions may not be amended, repealed or
otherwise modified in any manner adverse to any member of the Board or any
member of the boards of directors or other similar managing bodies of any of the
Corporation's subsidiaries, until at least six years following the date that the
Investors are no longer entitled to designate or nominate any Investor Director
or Investor Designee.
(c) Each Investor Director or Investor Designee is
intended to be a third-party beneficiary of the obligations of the Corporation
pursuant to this Section 9.6, and the obligations of the Corporation pursuant to
this Section 9.6 shall be enforceable by each Director.
9.7. Cooperation. Each Stockholder shall vote all of his
shares entitled to vote for members of the Board ("Voting Stock") and shall take
all other necessary or desirable actions within his or its control (including,
without limitation, attending all meetings in person or by proxy for purposes of
obtaining a quorum and executing all written consents in lieu of meetings, as
applicable), and the Corporation shall take all necessary and desirable actions
within its control (including, without limitation, calling special Board and
stockholder meetings), to effectuate the provisions of this Section 9.
9.8. Irrevocable Proxy. In order to secure each Stockholder's
obligation to vote his Voting Stock in accordance with the provisions of this
Section 9, each Stockholder hereby appoints GSCP as his true and lawful proxy
and attorney-in-fact, with full power of substitution, to vote all of his Voting
Stock of the Corporation for the election and/or removal of a member of the
Board under Sections 9.1(a) and 9.3(b) and to take all such other actions as are
necessary to enforce the rights of the Investors hereunder. GSCP may exercise
the irrevocable proxy granted to it hereunder at any time any Stockholder fails
to comply with any provision of Section 9 granting the Investors rights
thereunder. The proxies and powers granted by each Stockholder pursuant to this
Section 9.8 are coupled with an interest and are given to secure the performance
of the Stockholder's obligations to the Investors under Section 9. Such proxies
and powers will be effective until an IPO, at which time such proxies and powers
shall terminate, and such proxies and powers shall survive the death,
incompetency and disability of each Stockholder.
9.9. Non-Voting Observer. From and after the date hereof and
in addition to the rights of the Investors under this Agreement, GSCP shall be
entitled to have one observer (the "Investor Observer") selected by GSCP present
at all meetings of the Board and at all meetings of the compensation committee,
if any, of the Board, and each other committee of the Board, as well as the
boards of directors or other similar managing bodies (and any committee thereof)
of each of the subsidiaries of the Corporation, and such observer shall be
notified of any such meetings, including such
-19-
99
meetings' time and place, in the same manner as the directors or members
thereof. The Investor Observer shall have the same access to information
concerning the business and operations of the Corporation and at the same time
as the directors of the Corporation or and its subsidiaries and the members of
the various committees thereof, including compensation committee, if any, of the
Board, as applicable, and shall be entitled to participate in discussions and
consult with, and make proposals and furnish advice to, the Board, the board of
directors of the subsidiaries of the Corporation, and the various committees
thereof, including the compensation committee, if any, of the Board, but shall
not have the right to vote.
9.10. Employment. The consent of at least 75% of the members
of the Corporation's Board shall be required to terminate the employment of any
Existing Stockholder with the Corporation with or without cause. For purposes of
this Agreement, "cause" shall mean an Existing Stockholder's gross negligence or
willful misconduct in connection with the performance of his duties, or the
commission of any felony involving moral turpitude or the property or affairs of
the Corporation. Except for the initial Existing Stockholders executing this
Agreement who shall continue to be employed by the Corporation until their
resignation or termination, nothing contained in this Agreement shall be
construed as an agreement to employ or continue the employment of any Existing
Stockholder, any transferee thereof, or any other person.
9.11. Disability. An Existing Stockholder will be deemed
disabled hereunder when (a) such Existing Stockholder is physically or mentally
unable to perform his duties as a full-time employee of the Corporation, in
substantially the same manner as previously performed, for a period of six
months, or (b) a doctor selected by the Corporation, at the Corporation's
expense, certifies that, in his reasonable medical opinion, due to such
disability the Existing Stockholder will not be able to perform such duties as
an employee of the Corporation for a period of six months.
9.12. Major Transactions. In addition to any other action
required to be taken by the Board, the Corporation shall not, and shall cause
its subsidiaries (if any) not to, directly or indirectly, take any of the
following actions without the prior approval of GSCP (except as otherwise
expressly permitted in this Agreement):
(a) except for any transaction or series of
transactions involving only wholly-owned subsidiaries of the Corporation as of
the date hereof, (i) consolidate or merge into or with any other Person, (ii)
enter into any other similar business combination transaction or (iii) effect
any transaction or series of transactions in which more than fifty percent (50%)
of the Voting Stock are transferred to another Person;
(b) voluntarily liquidate, dissolve or wind up;
(c) purchase, acquire or obtain any capital stock or
other proprietary interest, directly or indirectly, in any other entity, except
for (i) any
-20-
100
transaction or series of transactions involving only wholly-owned subsidiaries
of the Corporation as of the date hereof, or (ii) the purchase of all or
substantially all of the capital stock or other proprietary interest of other
entities for an aggregate purchase price, including without limitation, any
liabilities of the acquired entities, of less than $2,000,000;
(d) purchase, acquire or obtain assets of any third
party in an aggregate amount (as to the Corporation and all of its subsidiaries)
, including without limitation, any liabilities of the acquired entities, in any
fiscal year in excess of $2,000,000;
(e) make or commit to make capital expenditures in
excess of the amount set forth in the annual budget;
(f) enter into or commit to enter into any joint
ventures or any partnerships, establish any non-wholly-owned subsidiaries or
form any joint venture;
(g) sell, lease, transfer or otherwise dispose of any
assets in an aggregate amount (as to the Corporation and all of its
subsidiaries) in any fiscal year in excess of $2,000,000;
(h) create, incur, assume or suffer to exist any
indebtedness for borrowed money (including any capital leases) in an aggregate
amount (as to the Corporation and all of its subsidiaries) in excess of
$2,000,000;
(i) appoint or remove any executive management, make
any change to the compensation or salary structure of any of the executive
management or purchase or let lapse any key man insurance policy;
(j) pay, or set aside any sums for the payment of,
any dividends, or make any distribution on, any shares of its capital stock or
redeem, repurchase or otherwise acquire any outstanding shares of its capital
stock or any other of its outstanding securities (other than indebtedness at
maturity in accordance with its terms);
(k) issue or sell any capital stock or other
securities except for (i) dividends or other distributions payable on the Common
Stock solely in the form of additional shares of Common Stock; (ii) in
connection with the issuance of Common Stock upon conversion of shares of Series
A Preferred Stock; and (iii) for the issuance of shares of Common Stock or the
issuance of options to purchase Common Stock approved by the Board to employees,
advisors, consultants or outside directors of the Corporation directly or
pursuant to an employee benefit plan of the Corporation; provided, however, the
total number of shares of Common Stock issued or issuable pursuant to employee
benefit plans (other than upon the exercise of employee stock options
outstanding as of the date hereof) shall not exceed 165,000 shares of Common
Stock.
-21-
101
(l) change the Corporation's independent public
accountants;
(m) make any material change in any accounting policy
or tax method policies, procedures or elections;
(n) register any securities under the Securities Act,
including, without limitation, pursuant to an IPO;
(o) grant any registration rights;
(p) amend, modify or waive the Certificate of
Incorporation or the by-laws in any manner which adversely affects the rights of
any of the Investors thereunder, including, without limitation, any change in
the number of directors comprising the Board, or become a party to any agreement
which is inconsistent with the rights of any of the Investors under the
Documents or otherwise conflicts with the Documents;
(q) enter into any transaction (other than a
transaction with a GSCP Affiliate and except as expressly permitted by this
Agreement) with any "affiliate" or "associate" (as such terms are defined under
Rule 12b-2 under the Securities Exchange Act of 1934, as amended) of any
Stockholder;
(r) adopt the capital spending or operating plan and
annual budget or any significant changes therein;
(s) any action to be taken by the Corporation in
connection with Section 8 hereof; or
(t) open or close new offices of the Corporation.
9.13. Contractual Management Rights. The Corporation and each
of the Stockholders acknowledge that the provisions of this Agreement, including
this Section 9, are intended, among other things, to provide GSCP with
"contractual management rights" within the meaning of the Employee Retirement
Income Security Act of 1974, as amended, and the regulations promulgated
thereunder.
SECTION 10. Certain Covenants.
10.1. Reservation of Common Stock. The Corporation shall at
all times reserve and keep available out of its authorized but unissued shares
of Common Stock, a sufficient number of shares of Common Stock to permit
conversion of all outstanding shares of Series A Preferred Stock. All shares of
Common Stock which are so issuable shall, when issued, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges.
The Corporation shall take all such actions as may be necessary to assure that
all such shares of Common Stock may be so issued
-22-
102
without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange upon which such shares may be
listed (except for official notice of issuance which shall be immediately
transmitted by the Corporation upon issuance).
10.2. Restrictive Covenant. In consideration of, and as an
inducement to, the Investors entering into this Agreement and the Purchase
Agreement and the benefits to be provided to the Existing Stockholders hereunder
and thereunder, each of the Existing Stockholders covenants and agrees for the
benefit of the Corporation and each of the Investors that, while he is employed
by the Corporation and for a period commencing on the date of this Agreement and
ending on the date that is two years after the termination (whether voluntary or
involuntary) or retirement of such Existing Stockholder as an employee of the
Corporation, such Existing Stockholder will not, within a radius of 500 miles
from a place of business of the Corporation, directly or indirectly own, manage,
operate, control, be employed by, consult for, participate in, or otherwise be
connected in any manner with the ownership, management, operation, or control of
any business which is then competitive with the business conducted by the
Corporation.
10.3 Required Sale of the Corporation. Following the fourth
anniversary of the date hereof, the Corporation shall, upon the request of the
Investors, if no IPO has occurred prior thereto, take such steps as are
reasonably requested by the Investors (including, without limitation, hiring an
investment banking firm, preparing offering material and making the
Corporation's officers available) to sell (a "Required Sale"), as expeditiously
as possible (whether by means of a sale of all of the outstanding stock of the
Corporation, merger or sale of substantially all of the assets of the
Corporation) the Corporation, including its subsidiaries, to a third party not
affiliated with the Investors, upon terms acceptable to the Investors. The
Existing Stockholders agree to vote all Voting Stock held by them, and to take
all other necessary action, to implement any Required Sale. Upon written notice
by the Investors of such election, the Existing Stockholders will include and
sell in the Required Sale the shares of Stock requested to be sold by the
Investors.
SECTION 11. Representations and Warranties Each party hereto
represents and warrants to the other parties hereto as follows:
(a) It has full power and authority to execute,
deliver and perform its obligations under this Agreement.
(b) This Agreement has been duly and validly
authorized, executed and delivered by it, and constitutes a valid and binding
obligation enforceable against it in accordance with its terms except to the
extent that enforceability may be
-23-
103
limited by bankruptcy, insolvency or other similar laws affecting creditors'
rights generally.
(c) The execution, delivery and performance of this
Agreement by it does not (i) violate, conflict with, or constitute a breach of
or default under its organizational documents, if any, or any material agreement
or arrangement applicable to it or to which it is a party or by which it is
bound or (ii) violate any law, regulation, order, writ, judgment, injunction or
decree applicable to it.
(d) No consent or approval of, or filing with, any
governmental or regulatory body is required to be obtained or made by it in
connection with the transactions contemplated hereby.
(e) Schedule 11(e) hereto sets forth a list of all
securities of the Corporation (including, without limitation, shares of capital
stock, convertible securities, debentures, options, etc.) held of record or
otherwise owned by it as of the date hereof.
SECTION 12. Indemnification. Each Stockholder acknowledges
that it understands the meaning and legal consequences of the representations
and warranties contained herein, and it hereby agrees to indemnify and hold
harmless the Corporation and the other Stockholders from and against any and all
loss, damage or liability, including, without limitation, all costs and expenses
(including reasonable attorneys fees), due to or arising out of a breach of any
such representations or warranties. All representations, warranties and
covenants contained in this Agreement including, without limitation, the
indemnification contained in this Section 12 shall survive the termination of
this Agreement.
SECTION 13. Specific Performance; Injunction; Payment of
Costs. (a) The parties agree that it is impossible to determine the monetary
damages which would accrue to the Corporation or any Stockholder or his personal
representative by reason of the failure of any other Stockholder or the
Corporation to perform any of his or its obligations under this Agreement
requiring the performance of an act other than the payment of money only.
Therefore, if any party to this Agreement or his legal representative shall
institute an action or proceeding to enforce the provisions of this Agreement
against any Stockholder or the Corporation not performing such obligations, any
tribunal hearing such cause shall have the power to render an award directing
one or more parties hereto to specifically perform his or her obligations
hereunder in accordance with the terms and conditions of this Agreement.
(b) In the event of a breach or threatened breach by
a Stockholder of any of the provisions of this Agreement, the Corporation, and
the remaining Stockholders shall be entitled to an injunction restraining such
Stockholder from any such breach. The availability of these remedies shall not
prohibit the Corporation from
-24-
104
pursuing any other remedies for such breach or threatened breach, including the
recovery of damages from the Stockholder.
SECTION 14. Failure to Deliver Stock. If any Stockholder or
his heirs, executors or personal representatives, as the case may be, who has
become obligated to sell Stock hereunder shall fail to deliver the certificates
representing such Stock in accordance with the terms of the Agreement, the
purchasers of such Stock may, at his or its option, in addition to all other
remedies he or it may have, cause the Corporation, upon notice to the Selling
Stockholder, (a) to cancel on its books the certificate or certificates
representing the Stock to be sold, (b) to issue, in lieu thereof, a new stock
certificate registered in the name of the purchaser(s) representing such Stock
and (c) to deliver such new certificate to the purchasers. Thereafter, the
Selling Stockholder shall not be entitled to receive any installment of the
purchase price, and the purchaser(s) shall not be required to make any such
payments, until the Selling Stockholder shall have delivered to the purchaser(s)
the original certificates representing all of the Stock being sold, together
with a stock power duly endorsed in blank relating to such Stock. If the Selling
Stockholder shall be unable to furnish any original certificate because it has
been lost, misplaced, destroyed or otherwise cannot be delivered, then the
Selling Stockholder shall promptly comply with the appropriate procedures
(including indemnification by the Selling Stockholder) reasonably specified by
the Corporation with respect to lost certificates in order to satisfy the
certificate delivery requirement hereunder.
SECTION 15. Non-Disclosure. Each Existing Stockholder
acknowledges that the Corporation's clients and customers are a valuable,
special and unique asset of the Corporation's business. No Stockholder will,
during or after the term of his employment with the Corporation, if applicable,
disclose the list of the Corporation's clients and customers or any part thereof
to any person, firm, corporation, association, or other entity for any reason or
purpose whatsoever except (a) as required in performance of such Stockholder's
duties on behalf of the Corporation, (b) as required by applicable law, or (c)
other than to affiliates of the Investors or potential investors in the
Corporation.
SECTION 16. No Inconsistent Agreements. No party hereunder
shall take any action or enter into any agreement which is inconsistent with the
rights of any party hereunder or otherwise conflicts with the provisions hereof.
SECTION 17. Further Assurances. (a) At any time or from time
to time after the date hereof, the parties agree to cooperate with each other,
and at the request of any other party, to execute and deliver any further
instruments or documents and to take all such further action as the other party
may reasonably request in order to evidence or effectuate the consummation of
the transactions contemplated hereby and to otherwise carry out the intent of
the parties hereunder.
-25-
105
(b) At any time or from time to time after the date
hereof, the parties agree to take all action including, without limitation,
voting to approve any amendment to the Certificate of Incorporation, required to
increase the authorized number of shares of Common Stock if necessary to permit
the conversion of all outstanding shares of Series A Preferred Stock.
SECTION 18. Duration of Agreement. The provisions of Section
3(a), 3(b), 4, 5, 6, 7, 9.1(a), 9.7, 9.8, 9.10, 9.11, 9.12, and 10.3 shall
terminate upon an IPO. In addition, this Agreement shall be effective as of the
date hereof and shall terminate upon the occurrence of any of the following
events (provided, however, that (a) the agreements contained in Sections 10.2
and 3(c) shall survive until by their terms they are no longer operative and (b)
the provisions of Section 8 shall terminate upon an IPO that raises gross
proceeds of not less than $10,000,000):
(i) as to any Stockholder, upon such time as
such Stockholder ceases to own any stock;
(ii) the merger or consolidation of the
Corporation into or with any other corporation or other entity except for such a
merger or consolidation after consummation of which the Stockholders prior to
such merger or consolidation will beneficially own more than 50% of capital
stock of the surviving or resulting entity; or
(iii) the written agreement of the
Corporation and the Stockholders to that effect.
SECTION 19. Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid,
but if any provision of this Agreement is held to be invalid or unenforceable in
any respect, such invalidity or unenforceability shall not render invalid or
unenforceable any other provision of this Agreement.
SECTION 20. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
giving effect to the principles of conflicts of law. Each of the parties hereto
hereby irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of New York and of the United States of
America, in each case located in the County of New York, for any action,
proceeding or investigation in any court or before any governmental authority
("Litigation") arising out of or relating to this Agreement and the transactions
contemplated hereby (and agrees not to commence any Litigation relating thereto
except in such courts), and further agrees that service of any process, summons,
notice or document by U.S. registered mail to its respective address set forth
in this Agreement, or such other address as may be given by one or more parties
to the other parties in accordance with the notice provisions of Section 22,
shall be effective service of process for any Litigation brought against it in
any such court. Each of the parties
-26-
106
hereto hereby irrevocably and unconditionally waives any objection to the laying
of venue of any Litigation arising out of this Agreement or the transactions
contemplated hereby in the courts of the State of New York or the United States
of America, in each case located in the County of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such Litigation brought in any such court has been brought
in an inconvenient forum.
SECTION 21. Successors and Assigns; Proxy. (a) This Agreement
shall inure to the benefit of and shall be binding upon the parties hereto and
their respective successors, assigns, heirs and personal representatives. Except
pursuant to a Sale of Stock permitted by Section 3 or required by Section 8, no
Stockholder shall have the right to assign its rights and obligations under this
Agreement without the consent of the other Stockholders. The parties acknowledge
that, subject to compliance with applicable securities laws, each of the
Investors may transfer and assign all or a part of its rights and obligations
under this Agreement to one or more other partnerships, corporations, trusts or
other organizations which are controlled by, control or are under common control
with such Investor or one or more of the then current, former or future partners
of such Investor (the "GSCP Affiliates"), without the consent of the Corporation
or any other Stockholder. Upon any such assignment, the assignee shall have and
be able to exercise all rights of the assigning Stockholder.
(b) The GSCP Parties hereby irrevocably appoint GSCP
to act as proxy to vote all shares of Series A Preferred Stock held by the GSCP
Parties with respect to any matter referenced in Section 10 of the Certificate
of Designations with respect to Section 9.12 of this Agreement.
SECTION 22. Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or by telecopy (with a
confirmatory copy sent by a different means within three business days of such
notice), nationally-recognized overnight courier or first class registered or
certified mail, return receipt requested, postage prepaid, addressed to such
party at the address set forth below or such other address as may hereafter be
designated in writing by such party to the other parties:
(i) if to the Corporation, to:
Transaction Information Systems, Inc.
000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx
-27-
107
with a copy to:
Esanu Katsky Xxxxxx & Siger, LLP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxx X. Xxxxxx, Esq.
(ii) if to the Existing Stockholders, to the
addresses listed in Schedule 1 hereto,
with a copy to:
Esanu Katsky Xxxxxx & Siger, LLP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxx X. Xxxxxx, Esq.
(iii) if to the Investors, to:
GS Capital Partners III, L.P.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxxx
with copies to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
and
-28-
108
GS Capital Partners III, L.P.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxx Xxxxx, Esq.
All such notices, requests, consents and other communications shall be deemed to
have been given when received.
SECTION 23. Amendments. The terms and provisions of this
Agreement may be modified or amended, or any of the provisions hereof waived,
temporarily or permanently, pursuant to the written consent of the Corporation,
GSCP and the Agent of the Existing Stockholders (as defined in the Purchase
Agreement).
SECTION 24. Headings. The headings of the Sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement.
SECTION 25. Nouns and Pronouns. Whenever the context requires,
any pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of names and pronouns shall include the
plural and vice-versa.
SECTION 26. Entire Agreement. This Agreement and the other
writings referred to herein or delivered pursuant hereto which form a part
hereof contain the entire agreement among the parties hereto with respect to the
subject matter hereof and supersede all prior and contemporaneous agreements and
understandings with respect thereto.
SECTION 27. Counterparts. This Agreement may be executed in
any number of counterparts, and each such counterpart shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement.
-29-
109
IN WITNESS WHEREOF, the parties hereto have duly executed this
agreement as of the date first above written.
CORPORATION:
TRANSACTION INFORMATION SYSTEMS, INC.
By:
------------------------------------------
Name:
Title:
INVESTORS:
GS CAPITAL PARTNERS III, L.P.
By: GS Advisors III, L.P., its general
partner
By: GS Advisors III, L.L.C., its
general partner
By:
----------------------------------
Authorized Signatory
GS CAPITAL PARTNERS III OFFSHORE, L.P.
By: GS Advisors III (Cayman), L.P., its
General Partner
By: GS Advisors III, L.L.C., its
General Partner
By:
------------------------------------
Authorized Signatory
110
XXXXXXX, XXXXX & CO. VERWALTUNGS GmbH
By:
------------------------------------------
Managing Director
and
By:
------------------------------------------
Managing Director
or
Registered Agent
STONE STREET FUND 1998, L.P.
By: Stone Street Advantage Corp.
General Partner
By:
--------------------------------------
BRIDGE STREET FUND 1998, L.P.
By: Stone Street Advantage Corp.
Managing General Partner
By:
--------------------------------------
111
EXISTING STOCKHOLDERS:
-----------------------------------
XXXX XXXXXXXXXXX
-----------------------------------
XXXX XXXXX
-----------------------------------
XXXXX XXXXXXXXXX
-----------------------------------
XXXXXX XXXXXX
-----------------------------------
XXXXXXXX XXXX
-----------------------------------
XXXXXX XXXX
-----------------------------------
XXXXX XXXXXX
-----------------------------------
XXXXXXX XXXXXXXX
-----------------------------------
XXXXXX XXXXXXX
-----------------------------------
XXXXXX XXXX
-----------------------------------
XXXXXXXX XXXXX
112
SCHEDULE I
EXISTING STOCKHOLDERS
Name and Address of Stockholders
Xxxx Xxxxxxxxxxx Xxxxx Xxxxxx
00 Xxxxxx Xxxxx 0000 Xxxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000 Xxxxxxxxx Xxxxx, Xxx Xxxx 00000
Facsimile: Facsimile:
Xxxx Xxxxx Xxxxxxx Xxxxxxxx
446 Stuyvesant 0 Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000 Xxxxxxx, Xxx Xxxxxx 00000
Facsimile: Facsimile:
Xxxxx Xxxxxxxxxx Xxxxxx Xxxxxxx
00 Xxxxxx Xxxxx 000 Xxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000 Xxxxxxxxxx, Xxx Xxxxxx 00000
Facsimile: Facsimile:
Xxxxxx Xxxxxx Xxxxxx Xxxx
00 Xxxxxx Xxxxx 00 Xxxxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000 Xxxxxxxxx Xxxxx, Xxx Xxxx 00000
Facsimile: Facsimile:
Xxxxxxxx Xxxx Xxxxxxxx Xxxxx
00 Xxxx Xxxxxx 00 Xxxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000 Xxxxxxxxx, Xxx Xxxx 00000
Facsimile: Facsimile:
Xxxxxx Xxxx
00 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Facsimile:
-1-
113
Exhibit E
REGISTRATION RIGHTS AGREEMENT
by and among
TRANSACTION INFORMATION SYSTEMS, INC.,
GS CAPITAL PARTNERS III, L.P.,
and
THE STOCKHOLDERS OF
TRANSACTION INFORMATION SYSTEMS, INC.
Dated as of September 4, 1998
114
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made as of
September 4, 1998, by and among TRANSACTION INFORMATION SYSTEMS, INC., a
corporation formed under the Laws of the State of Delaware (the "Company"), GS
CAPITAL PARTNERS III, L.P., a Delaware limited partnership ("GSCP"), GS CAPITAL
PARTNERS III OFFSHORE, L.P. ("GSCP Offshore"), XXXXXXX, XXXXX & CO. VERWALTUNGS
GMBH ("GS Germany"), XXXXX XXXXXX XXXX 0000, X.X. ("Stone 0000"), XXXXXX XXXXXX
FUND 1998, L.P. ("Bridge 1998," collectively with GSCP, XXXX Xxxxxxxx, XXXX
Xxxxxxx, Xxxxx 0000 and Bridge 1998, the "GSCP Parties") and each of the
stockholders of the Company executing one of the signature pages attached hereto
(the "Existing Stockholders").
WHEREAS, as of the date hereof, the Company, the GSCP Parties and the
Existing Stockholders are entering into a Preferred Stock Purchase Agreement
(the "Purchase Agreement"), pursuant to which, among other things, the GSCP
Parties are purchasing shares of Series A Convertible Preferred Stock, par value
$.01 per share ("Series A Preferred Stock"), of the Company, which Series A
Preferred Stock is convertible into shares of Common Stock (as defined below);
WHEREAS, as of the date hereof, the Company, the GSCP Parties, and each
of the Existing Stockholders are entering into a Stockholders' Agreement (the
"Stockholders' Agreement"), pursuant to which, among other things, upon the
occurrence of certain events, the GSCP Parties and the Existing Stockholders
will have the right to purchase shares of Common Stock and Common Stock
Equivalents (as defined below); and
WHEREAS, in connection with (i) the Company, the GSCP Parties and the
Existing Stockholders entering into the Purchase Agreement, and (ii) the
Company, the GSCP Parties and the Existing Stockholders entering into the
Stockholders' Agreement, the Company has agreed to provide the registration
rights set forth in this Agreement.
ACCORDINGLY, the parties hereto agree as follows:
1. Certain Definitions.
As used in this Agreement, the following terms shall have the meanings
ascribed to them below:
"Affiliate" means (i) with respect to any Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person or (ii) with respect to any
individual, shall also mean the spouse or
115
child of such individual; provided, that neither the Company nor any Person
controlled by the Company shall be deemed to be an Affiliate of any Holder.
"Certificate of Incorporation" means the Certificate of Incorporation
of the Company, as amended.
"Common Stock" means the Common Stock, par value $.01 per share, of the
Company and any equity securities issued or issuable with respect to the Common
Stock in connection with a reclassification, recapitalization, merger,
consolidation or other reorganization.
"Common Stock Equivalents" means any securities convertible into, or
exercisable or exchangeable for, shares of Common Stock.
"Holder" or "Holders" means any party who is a signatory to this
Agreement and any party who shall hereafter acquire and hold Registrable
Securities.
"IPO" means the initial underwritten offering pursuant to which the
Common Stock becomes registered under Section 12 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act").
"Major Holder" means with respect to any registration the Holder that,
together with its Affiliates, includes the largest number of Registrable
Securities in such registration.
"Person" means any individual, corporation, limited liability company,
limited or general partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivisions thereof.
"Registrable Securities" means any (a) shares of Common Stock held by
the Existing Stockholders after the expiration of two and one-half years from
the date hereof; it being agreed that the Existing Stockholders shall have no
Registrable Securities and no rights under this Agreement until the expiration
of such two and one-half year period; (b) shares of Common Stock held by the
GSCP Parties; and (c) any shares of Common Stock issued or issuable, directly or
indirectly, with respect to the Common Stock referenced in clause (a) or (b)
above by way of stock dividend, stock split or combination of shares. As to any
particular Registrable Securities, such securities shall cease to be Registrable
Securities when (A) a registration statement with respect to the sale of such
securities shall have been declared effective under the Securities Act and such
securities shall have been disposed of in accordance with such registration
statement, or (B) such securities shall have been sold (other than in a
privately negotiated sale) pursuant to Rule 144 (or any successor provision)
under the Securities Act and in compliance with the requirements of paragraphs
(f) and (g) of Rule 144 (notwithstanding the provisions of paragraph (k) of such
Rule).
-2-
116
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
2. Registration Rights.
2.1. Demand Registrations.
(a) (i) Subject to Sections 2.1(b) and 2.3 below, (x) at any
time and from time to time after the earlier of (A) the closing of an IPO and
(B) the expiration of four years from the date hereof, any GSCP Party shall
have, and (y) at any time and from time to time after the closing of an IPO, any
Existing Stockholder which is then the owner of Registrable Securities shall
have, the right to require the Company to file a registration statement under
the Securities Act covering all or any part of their respective Registrable
Securities, by delivering a written request therefor to the Company specifying
the number of Registrable Securities to be included in such registration by such
Holder(s) and the intended method of distribution thereof. All such requests by
any Holder pursuant to this Section 2.1(a)(i) are referred to herein as "Demand
Registration Requests," and the registrations so requested are referred to
herein as "Demand Registrations" (with respect to any Demand Registration, the
Holder(s) making such demand for registration being referred to as the
"Initiating Holder"). As promptly as practicable, but no later than ten days
after receipt of a Demand Registration Request, the Company shall give written
notice (the "Demand Exercise Notice") of such Demand Registration Request to all
Holders of record of Registrable Securities.
(ii) The Company, subject to Sections 2.3 and 2.6, shall
include in a Demand Registration (x) the Registrable Securities of the
Initiating Holder and (y) the Registrable Securities of any other Holder which
shall have made a written request to the Company for inclusion in such
registration (which request shall specify the maximum number of Registrable
Securities intended to be disposed of by such Holder) within 30 days after the
receipt of the Demand Exercise Notice (or, 15 days if, at the request of the
Initiating Holder or the Major Holder participating in such registration, the
Company states in such written notice or gives telephonic notice to all
Holders, with written confirmation to follow promptly thereafter, that such
registration will be on a Form S-3).
(iii) The Company shall, as expeditiously as possible,
use its best efforts to (x) effect such registration under the Securities Act
(including, without limitation, by means of a shelf registration pursuant to
Rule 415 under the Securities Act if so requested and if the Company is then
eligible to use such a registration) of the Registrable Securities which the
Company has been so requested to register, for distribution in accordance with
such intended method of distribution, and (y) if requested by the Initiating
Holder or the Major Holder participating in such registration, obtain
acceleration of the effective date of the registration statement relating to
such registration.
-3-
117
(b) The Demand Registration rights granted in Section 2.1(a)
to the Holders are subject to the following limitations: (i) with respect to any
registration in respect of a Demand Registration Request initiated by an
Existing Stockholder, such registration statement must include shares of Common
Stock held by the Existing Stockholders representing, in the aggregate (based on
the Common Stock included in such registration by all Existing Stockholders
participating in such registration), in excess of 40% of the sum of (x) the
amount of shares of Common Stock held, in the aggregate, by the Existing
Stockholders on the date hereof plus (y) the amount of shares of Common Stock
obtainable upon the conversion of Common Stock Equivalents held, in the
aggregate, by the Existing Stockholders on the date hereof; (ii) with respect to
any registration in respect of a Demand Registration Request initiated by a
transferee of any GSCP Party (other than another GSCP Party), such registration
statement must include shares of Common Stock representing, in the aggregate
(based on the Common Stock included in such registration by all GSCP Parties
participating in such registration), in excess of 20% of the sum of (x) the
amount of shares of Registrable Securities held, in the aggregate, by the GSCP
Parties and their transferees immediately prior to such registration plus (y)
the amount of shares of Common Stock obtainable upon the conversion of Common
Stock Equivalents held, in the aggregate, by the GSCP Parties and their
transferees immediately prior to such registration; (iii) the Company shall not
be required to cause a registration pursuant to Section 2.1(a)(i) to be declared
effective within a period of 180 days after the effective date of any
registration statement of the Company effected in connection with a Demand
Registration Request; and (iv) if the Board of Directors of the Company, in its
good faith judgment, determines that any registration of Registrable Securities
should not be made or continued because it would materially interfere with any
material financing, acquisition, corporate reorganization or merger or other
transaction involving the Company or any of its subsidiaries (a "Valid Business
Reason"), (x) the Company may postpone filing a registration statement relating
to a Demand Registration Request until such Valid Business Reason no longer
exists, but in no event for more than three months, and (y) in case a
registration statement has been filed relating to a Demand Registration Request,
if the Valid Business Reason has not resulted from actions taken by the Company,
the Company may cause such registration statement to be withdrawn and its
effectiveness terminated or may postpone amending or supplementing such
registration statement until such Valid Business Reason no longer exists, but in
no event for more than four months (such period of postponement or withdrawal
under subclauses (x) or (y) of this clause (iv), the "Postponement Period"); and
the Company shall give written notice of its determination to postpone or
withdraw a registration statement and of the fact that the Valid Business Reason
for such postponement or withdrawal no longer exists, in each case, promptly
after the occurrence thereof; provided, however, the Company shall not be
permitted to postpone or withdraw a registration statement after the expiration
of any Postponement Period until twelve months after the expiration of such
Postponement Period without the prior written approval of GSCP.
-4-
118
If the Company shall give any notice of postponement or
withdrawal of any registration statement, the Company shall not, during the
period of postponement or withdrawal, register any Common Stock, other than
pursuant to a registration statement on Form S-4 or S-8 (or an equivalent
registration form then in effect). Each Holder of Registrable Securities agrees
that, upon receipt of any notice from the Company that the Company has
determined to withdraw any registration statement pursuant to clause (iv) above,
such Holder will discontinue its disposition of Registrable Securities pursuant
to such registration statement and, if so directed by the Company, will deliver
to the Company (at the Company's expense) all copies, other than permanent file
copies, then in such Holder's possession of the prospectus covering such
Registrable Securities that was in effect at the time of receipt of such notice.
If the Company shall have withdrawn or prematurely terminated a registration
statement filed under Section 2.1(a)(i) (whether pursuant to clause (iv) above
or as a result of any stop order, injunction or other order or requirement of
the SEC or any other governmental agency or court), the Company shall not be
considered to have effected an effective registration for the purposes of this
Agreement until the Company shall have filed a new registration statement
covering the Registrable Securities covered by the withdrawn registration
statement and such registration statement shall have been declared effective and
shall not have been withdrawn. If the Company shall give any notice of
withdrawal or postponement of a registration statement, the Company shall, at
such time as the Valid Business Reason that caused such withdrawal or
postponement no longer exists (but in no event later than three months after the
date of the postponement or withdrawal), use its best efforts to effect the
registration under the Securities Act of the Registrable Securities covered by
the withdrawn or postponed registration statement in accordance with this
Section 2.1 (unless the Initiating Holder shall have withdrawn such request, in
which case the Company shall not be considered to have effected an effective
registration for the purposes of this Agreement).
(c) The Company, subject to Sections 2.3 and 2.6, may elect to
include in any registration statement and offering made pursuant to Section
2.1(a)(i), (i) authorized but unissued shares of Common Stock or shares of
Common Stock held by the Company as treasury shares and (ii) any other shares of
Common Stock which are requested to be included in such registration pursuant to
the exercise of piggyback rights granted by the Company after the date hereof in
accordance with the terms of the Stockholders' Agreement which are not
inconsistent with the rights granted in, or otherwise conflict with the terms
of, this Agreement ("Additional Piggyback Rights") provided, however, that such
inclusion shall be permitted only to the extent that it is pursuant to and
subject to the terms of the underwriting agreement or arrangements, if any,
entered into by the Initiating Holder.
(d) In connection with any Demand Registration, the Major
Holder participating in such registration shall have the right to designate, (i)
if Xxxxxxx, Xxxxx & Co. or one of its Affiliates (such Person, "GS & Co.") is
not retained by the Company to
-5-
119
serve as the lead managing underwriter in connection with such registration, the
lead managing underwriter for such registration and (ii) each other managing
underwriter for such registration, provided that each such other managing
underwriter is reasonably satisfactory to the Company.
2.2. Piggyback Registrations.
(a) If, at any time, the Company proposes or is required to
register any of its equity securities under the Securities Act (other than
pursuant to (i) registrations on such form or similar form(s) solely for
registration of securities in connection with an employee benefit plan or
dividend reinvestment plan or a merger or consolidation or (ii) a Demand
Registration under Section 2.1) on a registration statement on Form S-1, Form
S-2 or Form S-3 (or an equivalent general registration form then in effect),
whether or not for its own account, the Company shall give prompt written notice
of its intention to do so to each of the Holders of record of Registrable
Securities. Upon the written request of any such Holder, made within 20 days
following the receipt of any such written notice (which request shall specify
the maximum number of Registrable Securities intended to be disposed of by such
Holder and the intended method of distribution thereof), the Company shall,
subject to Sections 2.2(b), 2.3 and 2.6 hereof, use its best efforts to cause
all such Registrable Securities, the Holders of which have so requested the
registration thereof, to be registered under the Securities Act (with the
securities which the Company at the time proposes to register) to permit the
sale or other disposition by the Holders (in accordance with the intended method
of distribution thereof) of the Registrable Securities to be so registered.
There is no limitation on the number of such piggyback registrations pursuant to
the preceding sentence which the Company is obligated to effect. No registration
effected under this Section 2.2(a) shall relieve the Company of its obligations
to effect Demand Registrations.
(b) If, at any time after giving written notice of its
intention to register any equity securities and prior to the effective date of
the registration statement filed in connection with such registration, the
Company shall determine for any reason not to register or to delay registration
of such equity securities, the Company may, at its election, give written notice
of such determination to all Holders of record of Registrable Securities and (i)
in the case of a determination not to register, shall be relieved of its
obligation to register any Registrable Securities in connection with such
abandoned registration, without prejudice, however, to the rights of Holders
under Section 2.1, and (ii) in the case of a determination to delay such
registration of its equity securities, shall be permitted to delay the
registration of such Registrable Securities for the same period as the delay in
registering such other equity securities.
(c) Any Holder shall have the right to withdraw its request
for inclusion of its Registrable Securities in any registration statement
pursuant to this Section 2.2 by giving written notice to the Company of its
request to withdraw; provided, however, that
-6-
120
(i) such request must be made in writing prior to the earlier of the execution
of the underwriting agreement or the execution of the custody agreement with
respect to such registration and (ii) such withdrawal shall be irrevocable and,
after making such withdrawal, a Holder shall no longer have any right to include
Registrable Securities in the registration as to which such withdrawal was made.
2.3. Allocation of Securities Included in Registration Statement.
(a) If any requested registration pursuant to Section 2.1
involves an underwritten offering and the lead managing underwriter of such
offering (the "Manager") shall advise the Company that, in its view, the number
of securities requested to be included in such registration by the Holders or
any other persons (including those shares of Common Stock requested by the
Company to be included in such registration) exceeds the largest number (the
"Section 2.1 Sale Number") that can be sold in an orderly manner in such
offering within a price range acceptable to the Initiating Holder, the Company
shall include in such registration:
(i) all Registrable Securities requested to be included
in such registration by Holders of Registrable Securities; provided, however,
that, if the number of such Registrable Securities exceeds the Section 2.1 Sale
Number, the number of such Registrable Securities (not to exceed the Section
2.1 Sale Number) to be included in such registration shall be allocated as
follows: (x) in the event an IPO has not occurred prior to the fourth
anniversary of the date hereof, in the case of a requested registration
pursuant to Section 2.1 occurring after such fourth anniversary, (A) first to
the GSCP Parties up to that number (not to exceed the number of shares
requested to be included by the GSCP Parties in such requested registration) of
Registrable Securities (the "Priority Number") which, based upon the midpoint
of the filing range for the registration and the estimated underwriting
discount for the registration, is expected to yield an amount of net proceeds
to the GSCP Parties that, when added to the proceeds of any prior sale or
transfer by the GSCP Parties of any of the Series A Preferred Stock, or of any
Common Stock obtainable upon the conversion of the Series A Preferred Stock, to
any third party who is not an Affiliate of any of the GSCP Parties, if any,
will aggregate an amount equal to $50,000,000, and (B) thereafter on a pro rata
basis among all Holders (including the GSCP Parties) requesting that
Registrable Securities be included in such registration, based on the number of
Registrable Securities then owned by each Holder requesting inclusion in
relation to the number of Registrable Securities owned by all Holders
requesting inclusion; provided, however, that such ratio will be calculated
after giving effect to the sale of Registrable Securities by the GSCP Parties
pursuant to clause (A) of this Section 2.3(a)(i)(x); and (y) in all other
cases, on a pro rata basis among all Holders requesting that Registrable
Securities be included in such registration, based on the number of Registrable
Securities then owned by each Holder requesting inclusion in relation to the
number of Registrable Securities owned by all Holders requesting inclusion;
-7-
121
(ii) to the extent that the number of Registrable
Securities to be included by all Holders pursuant to clause (i) of this Section
2.3(a) is less than the Section 2.1 Sale Number, securities that the Company
proposes to register; and
(iii) to the extent that the number of Registrable
Securities to be included by all Holders and the number of securities to be
included by the Company is less than the Section 2.1 Sale Number, any other
securities that the holders thereof propose to register pursuant to the exercise
of Additional Piggyback Rights.
If, as a result of the proration provisions of this Section
2.3(a), any Holder shall not be entitled to include all Registrable Securities
in a registration that such Holder has requested be included, such Holder may
elect to withdraw his request to include Registrable Securities in such
registration or may reduce the number requested to be included; provided,
however, that (x) such request must be made in writing prior to the earlier of
the execution of the underwriting agreement or the execution of the custody
agreement with respect to such registration and (y) such withdrawal shall be
irrevocable and, after making such withdrawal, a Holder shall no longer have any
right to include Registrable Securities in the registration as to which such
withdrawal was made.
(b) If any registration pursuant to Section 2.2 involves an
underwritten offering and the Manager shall advise the Company that, in its
view, the number of securities requested to be included in such registration
exceeds the number (the "Section 2.2 Sale Number") that can be sold in an
orderly manner in such registration within a price range acceptable to the
Company, the Company shall include in such registration:
(i) all Common Stock or securities convertible into,
or exchangeable or exercisable for, Common Stock that the Company proposes to
register for its own account (the "Company Securities");
(ii) to the extent that the number of Company
Securities is less than the Section 2.2 Sale Number, the remaining shares to be
included in such registration shall be allocated as follows: (x) in the event an
IPO has not occurred prior to the fourth anniversary of the date hereof, in the
case of a requested registration pursuant to Section 2.2 occurring after such
fourth anniversary, (A) the Registrable Securities that the GSCP Parties propose
to register up to the lesser of (I) the Priority Number, or (II) the difference
between the Section 2.2 Sale Number and the number of Company Securities; and
(B) to the extent the Section 2.2 Sale Number exceeds the number of Company
Securities plus the Priority Number, all Registrable Securities requested to be
included by all Holders (including the GSCP Parties) on a pro rata basis among
all Holders requesting that Registrable Securities be included in such
registration, based on the number of Registrable Securities owned by each Holder
requesting inclusion in relation to the number of Registrable Securities then
owned by
-8-
122
all Holders requesting inclusion; provided, however, that such ratio will be
calculated after giving effect to the sale of Registrable Securities by the GSCP
Parties pursuant to clause (A) of this Section 2.3(b)(ii)(x); and (y) in all
other cases, on a pro rata basis among all Holders of Registrable Securities
requesting that Registrable Securities be included in such registration, based
on the number of Registrable Securities then owned by each Holder requesting
inclusion in relation to the number of Registrable Securities owned by all
Holders requesting inclusion; and
(iii) to the extent the number of Company Securities
plus the number of Registrable Securities requested to be included by all
Holders is less than the Section 2.2 Sale Number, any other securities that the
holders thereof propose to register pursuant to the exercise of Additional
Piggyback Rights.
2.4. Registration Procedures. If and whenever the Company is required
by the provisions of this Agreement to use its best efforts to effect or cause
the registration of any Registrable Securities under the Securities Act as
provided in this Agreement, the Company shall, as expeditiously as possible:
(a) prepare and file with the SEC a registration statement on
an appropriate registration form of the SEC for the disposition of such
Registrable Securities in accordance with the intended method of disposition
thereof, which form (i) shall be selected by the Company and (ii) shall, in the
case of a shelf registration, be available for the sale of the Registrable
Securities by the selling Holders thereof and such registration statement shall
comply as to form in all material respects with the requirements of the
applicable form and include all financial statements required by the SEC to be
filed therewith, and the Company shall use its best efforts to cause such
registration statement to become and remain effective (provided, however, that
before filing a registration statement or prospectus or any amendments or
supplements thereto, or comparable statements under securities or blue sky laws
of any jurisdiction, the Company will furnish to one counsel for the Holders
participating in the planned offering (selected by the Initiating Holder, in the
case of a registration pursuant to Section 2.1, and selected by the Major
Holder, in the case of a registration pursuant to Section 2.2) and the
underwriters, if any, copies of all such documents proposed to be filed
(including all exhibits thereto), which documents will be subject to the
reasonable review and reasonable comment of such counsel, and the Company shall
not file any registration statement or amendment thereto or any prospectus or
supplement thereto to which the Holders of a majority of the Registrable
Securities covered by such registration statement or the underwriters, if any,
shall reasonably object in writing);
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
such period (which shall not be required to exceed 180 days in the case of a
registration pursuant to Section 2.1 or 120
-9-
123
days in the case of a registration pursuant to Section 2.2) as any seller of
Registrable Securities pursuant to such registration statement shall request and
to comply with the provisions of the Securities Act with respect to the sale or
other disposition of all Registrable Securities covered by such registration
statement in accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such registration statement;
(c) furnish, without charge, to each seller of such
Registrable Securities and each underwriter, if any, of the securities covered
by such registration statement such number of copies of such registration
statement, each amendment and supplement thereto (in each case including all
exhibits), and the prospectus included in such registration statement (including
each preliminary prospectus) in conformity with the requirements of the
Securities Act, and other documents, as such seller and underwriter may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Securities owned by such seller (the Company hereby
consenting to the use in accordance with all applicable law of each such
registration statement (or amendment or post-effective amendment thereto) and
each such prospectus (or preliminary prospectus or supplement thereto) by each
such seller of Registrable Securities and the underwriters, if any, in
connection with the offering and sale of the Registrable Securities covered by
such registration statement or prospectus);
(d) use its best efforts to register or qualify the
Registrable Securities covered by such registration statement under such other
securities or "blue sky" laws of such jurisdictions as any sellers of
Registrable Securities or any managing underwriter, if any, shall reasonably
request, and do any and all other acts and things which may be reasonably
necessary or advisable to enable such sellers or underwriter, if any, to
consummate the disposition of the Registrable Securities in such jurisdictions,
except that in no event shall the Company be required to qualify to do business
as a foreign corporation in any jurisdiction where it would not, but for the
requirements of this paragraph (d), be required to be so qualified, to subject
itself to taxation in any such jurisdiction or to consent to general service of
process in any such jurisdiction;
(e) promptly notify each Holder selling Registrable Securities
covered by such registration statement and each managing underwriter, if any:
(i) when the registration statement, any pre-effective amendment, the prospectus
or any prospectus supplement related thereto or post-effective amendment to the
registration statement has been filed and, with respect to the registration
statement or any post-effective amendment, when the same has become effective;
(ii) of any request by the SEC or state securities authority for amendments or
supplements to the registration statement or the prospectus related thereto or
for additional information; (iii) of the issuance by the SEC of any stop order
suspending the effectiveness of the registration statement or the initiation of
any proceedings for that purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification of any
Registrable
-10-
124
Securities for sale under the securities or blue sky laws of any jurisdiction or
the initiation of any proceeding for such purpose; (v) of the existence of any
fact of which the Company becomes aware which results in the registration
statement, the prospectus related thereto or any document incorporated therein
by reference containing an untrue statement of a material fact or omitting to
state a material fact required to be stated therein or necessary to make any
statement therein not misleading; and (vi) if at any time the representations
and warranties contemplated by any underwriting agreement, securities sale
agreement, or other similar agreement, relating to the offering shall cease to
be true and correct in all material respects; and, if the notification relates
to an event described in clause (v), the Company shall promptly prepare and
furnish to each such seller and each underwriter, if any, a reasonable number of
copies of a prospectus supplemented or amended so that, as thereafter delivered
to the purchasers of such Registrable Securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein in the
light of the circumstances under which they were made not misleading;
(f) comply with all applicable rules and regulations of the
SEC, and make generally available to its security holders, as soon as reasonably
practicable after the effective date of the registration statement (and in any
event within 17 months thereafter), an earnings statement (which need not be
audited) covering the period of at least twelve consecutive months beginning
with the first day of the Company's first calendar quarter after the effective
date of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(g) (i) cause all such Registrable Securities covered by such
registration statement to be listed on the principal securities exchange on
which similar securities issued by the Company are then listed (if any), if the
listing of such Registrable Securities is then permitted under the rules of such
exchange, or (ii) if no similar securities are then so listed, to either cause
all such Registrable Securities to be listed on a national securities exchange
or to secure designation of all such Registrable Securities as a Nasdaq National
Market "national market system security" within the meaning of Rule 11Aa2-1 of
the Exchange Act or, failing that, secure Nasdaq National Market authorization
for such shares and, without limiting the generality of the foregoing, take all
actions that may be required by the Company as the issuer of such Registrable
Securities in order to facilitate the managing underwriter's arranging for the
registration of at least two market makers as such with respect to such shares
with the National Association of Securities Dealers, Inc. (the "NASD");
(h) provide and cause to be maintained a transfer agent and
registrar for all such Registrable Securities covered by such registration
statement not later than the effective date of such registration statement;
-11-
125
(i) enter into such customary agreements (including, if
applicable, an underwriting agreement) and take such other actions as the
Holders of a majority of the Registrable Securities or the Major Holder
participating in such offering shall reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities. The Holders of the
Registrable Securities which are to be distributed by such underwriters shall be
parties to such underwriting agreement and may, at their option, require that
the Company make to and for the benefit of such Holders the representations,
warranties and covenants of the Company which are being made to and for the
benefit of such underwriters and which are of the type customarily provided to
institutional investors in secondary offerings;
(j) use its best efforts to obtain an opinion from the
Company's counsel and a "cold comfort" letter from the Company's independent
public accountants in customary form and covering such matters as are
customarily covered by such opinions and "cold comfort" letters delivered to
underwriters in underwritten public offerings, which opinion and letter shall be
reasonably satisfactory to the underwriter, if any, and to the Major Holder
participating in such offering, and furnish to each Holder participating in the
offering and to each underwriter, if any, a copy of such opinion and letter
addressed to such Holder or underwriter;
(k) deliver promptly to each Holder participating in the
offering and each underwriter, if any, copies of all correspondence between the
SEC and the Company, its counsel or auditors and all memoranda relating to
discussions with the SEC or its staff with respect to the registration
statement, other than those portions of any such memoranda which contain
information subject to attorney-client privilege with respect to the Company,
and, upon receipt of such confidentiality agreements as the Company may
reasonably request, make reasonably available for inspection by any seller of
such Registrable Securities covered by such registration statement, by any
underwriter, if any, participating in any disposition to be effected pursuant to
such registration statement and by any attorney, accountant or other agent
retained by any such seller or any such underwriter, all pertinent financial and
other records, pertinent corporate documents and properties of the Company, and
cause all of the Company's officers, directors and employees to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(l) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of the registration statement;
(m) provide a CUSIP number for all Registrable Securities, not
later than the effective date of the registration statement;
(n) make reasonably available its employees and personnel and
otherwise provide reasonable assistance to the underwriters (taking into account
the needs
-12-
126
of the Company's businesses and the requirements of the marketing process) in
the marketing of Registrable Securities in any underwritten offering;
(o) promptly prior to the filing of any document which is to
be incorporated by reference into the registration statement or the prospectus
(after the initial filing of such registration statement) provide copies of such
document to counsel for the selling holders of Registrable Securities and to
each managing underwriter, if any, and make the Company's representatives
reasonably available for discussion of such document and make such changes in
such document concerning the selling holders prior to the filing thereof as
counsel for such selling holders or underwriters may reasonably request;
(p) furnish to the Major Holder participating in the offering
and the managing underwriter, without charge, at least one signed copy, and to
each other Holder participating in the offering, without charge, at least one
photocopy of a signed copy, of the registration statement and any post-effective
amendments thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those incorporated
by reference);
(q) cooperate with the selling Holders of Registrable
Securities and the managing underwriter, if any, to facilitate the timely
preparation and delivery of certificates not bearing any restrictive legends
representing the Registrable Securities to be sold, and cause such Registrable
Securities to be issued in such denominations and registered in such names in
accordance with the underwriting agreement prior to any sale of Registrable
Securities to the underwriters or, if not an underwritten offering, in
accordance with the instructions of the selling Holders of Registrable
Securities at least three business days prior to any sale of Registrable
Securities and instruct any transfer agent and registrar of Registrable
Securities to release any stop transfer orders in respect thereof; and
(r) take all such other commercially reasonable actions as are
necessary or advisable in order to expedite or facilitate the disposition of
such Registrable Securities.
(s) take no direct or indirect action prohibited by Regulation
M under the Exchange Act; provided, however, that to the extent that any
prohibition is applicable to the Company, the Company will take such action as
is necessary to make any such prohibition inapplicable.
The Company may require as a condition precedent to the
Company's obligations under this Section 2.4 that each seller of Registrable
Securities as to which any registration is being effected furnish the Company
such information regarding such seller and the distribution of such securities
as the Company may from time to time
-13-
127
reasonably request provided that such information is necessary for the Company
to consummate such registration and shall be used only in connection with such
registration.
Each Holder of Registrable Securities agrees that upon receipt
of any notice from the Company of the happening of any event of the kind
described in clause (v) of paragraph (e) of this Section 2.4, such Holder will
discontinue such Holder's disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until such Holder's
receipt of the copies of the supplemented or amended prospectus contemplated by
paragraph (e) of this Section 2.4 and, if so directed by the Company, will
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such Holder's possession of the prospectus
covering such Registrable Securities that was in effect at the time of receipt
of such notice. In the event the Company shall give any such notice, the
applicable period mentioned in paragraph (b) of this Section 2.4 shall be
extended by the number of days during such period from and including the date of
the giving of such notice to and including the date when each seller of any
Registrable Securities covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
paragraph (e) of this Section 2.4.
If any such registration statement or comparable statement
under "blue sky" laws refers to any Holder by name or otherwise as the Holder of
any securities of the Company, then such Holder shall have the right to require
(i) the insertion therein of language, in form and substance reasonably
satisfactory to such Holder and the Company, to the effect that the holding by
such Holder of such securities is not to be construed as a recommendation by
such Holder of the investment quality of the Company's securities covered
thereby and that such holding does not imply that such Holder will assist in
meeting any future financial requirements of the Company, or (ii) in the event
that such reference to such Holder by name or otherwise is not in the judgment
of the Company, as advised by counsel, required by the Securities Act or any
similar federal statute or any state "blue sky" or securities law then in force,
the deletion of the reference to such Holder.
2.5. Registration Expenses.
(a) "Expenses" shall mean any and all fees and expenses
incident to the Company's performance of or compliance with this Article 2,
including, without limitation: (i) SEC, stock exchange or NASD registration and
filing fees and all listing fees and fees with respect to the inclusion of
securities in Nasdaq National Market, (ii) fees and expenses of compliance with
state securities or "blue sky" laws and in connection with the preparation of a
"blue sky" survey, including without limitation, reasonable fees and expenses of
blue sky counsel, (iii) printing and copying expenses, (iv) messenger and
delivery expenses, (v) expenses incurred in connection with any road show, (vi)
fees and disbursements of counsel for the Company, (vii) with respect to each
registration, the fees
-14-
128
and disbursements of one counsel for the selling Holder(s) (selected by the
Initiating Holder, in the case of a registration pursuant to Section 2.1, and
selected by the Major Holder, in the case of a registration pursuant to Section
2.2), (viii) fees and disbursements of all independent public accountants
(including the expenses of any audit and/or "cold comfort" letter) and fees and
expenses of other persons, including special experts, retained by the Company,
(ix) fees and expenses payable to a Qualified Independent Underwriter (as such
term is defined in Schedule E to the By-Laws of the NASD) and (x) any other fees
and disbursements of underwriters, if any, customarily paid by issuers or
sellers of securities (collectively, "Expenses").
(b) The Company shall pay all Expenses with respect to any
Demand Registration.
(c) Notwithstanding the foregoing, (x) the provisions of this
Section 2.5 shall be deemed amended to the extent necessary to cause these
expense provisions to comply with "blue sky" laws of each state in which the
offering is made and (y) in connection with any registration hereunder, each
Holder of Registrable Securities being registered shall pay all underwriting
discounts and commissions and any transfer taxes, if any, attributable to the
sale of such Registrable Securities, pro rata with respect to payments of
discounts and commissions in accordance with the number of shares sold in the
offering by such Holder, and (z) the Company shall, in the case of all
registrations under this Article 2, be responsible for all its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties).
2.6. Certain Limitations on Registration Rights. In the case of any
registration under Section 2.1 pursuant to an underwritten offering, or in the
case of a registration under Section 2.2 if the Company has determined to enter
into an underwriting agreement in connection therewith, all securities to be
included in such registration shall be subject to an underwriting agreement and
no person may participate in such registration unless such person agrees to sell
such person's securities on the basis provided therein and completes and
executes all reasonable questionnaires, and other documents (including custody
agreements and powers of attorney) which must be executed in connection
therewith, and provides such other information to the Company or the underwriter
as may be necessary to register such Person's securities.
2.7. Limitations on Sale or Distribution of Other Securities. (a) Each
Holder of Registrable Securities agrees that, (i) to the extent requested in
writing by a managing underwriter, if any, of an IPO or any registration
effected pursuant to Section 2.1, not to sell, transfer or otherwise dispose of,
including any sale pursuant to Rule 144 under the Securities Act, any Common
Stock, or any other equity security of the Company or any security convertible
into or exchangeable or exercisable for any equity security of the Company
(other than as part of such underwritten public offering) during the time period
-15-
129
reasonably requested by the managing underwriter, not to exceed 180 days (and
the Company hereby also so agrees (except that the Company may effect any sale
or distribution of any such securities pursuant to a registration on Form S-4
(if reasonably acceptable to such managing underwriter) or Form S-8, or any
successor or similar form which is then in effect or upon the conversion,
exchange or exercise of any then outstanding Common Stock Equivalent) to use its
reasonable best efforts to cause each holder of any equity security or any
security convertible into or exchangeable or exercisable for any equity security
of the Company purchased from the Company at any time other than in a public
offering so to agree), and (ii) to the extent requested in writing by a managing
of any underwritten public offering effected by the Company for its own account
(other than the IPO) it will not sell any Common Stock (other than as part of
such underwritten public offering) during the time period reasonably requested
by the managing underwriter, which period shall not exceed 90 days.
(b) The Company hereby agrees that, if it shall previously
have received a request for registration pursuant to Section 2.1 or 2.2, and if
such previous registration shall not have been withdrawn or abandoned, the
Company shall not sell, transfer, or otherwise dispose of, any Common Stock, or
any other equity security of the Company or any security convertible into or
exchangeable or exercisable for any equity security of the Company (other than
as part of such underwritten public offering, a registration on Form S-4 or Form
S-8 or any successor or similar form which is then in effect or upon the
conversion, exchange or exercise of any then outstanding Common Stock
Equivalent), until a period of 180 days shall have elapsed from the effective
date of such previous registration; and the Company shall so provide in any
registration rights agreements hereafter entered into with respect to any of its
securities.
2.8. No Required Sale. Nothing in this Agreement shall be deemed to
create an independent obligation on the part of any Holder to sell any
Registrable Securities pursuant to any effective registration statement.
2.9. Indemnification. (a) In the event of any registration of any
securities of the Company under the Securities Act pursuant to this Article 2,
the Company will, and hereby does, indemnify and hold harmless, to the fullest
extent permitted by law, each Holder of Registrable Securities, its directors,
officers, fiduciaries, employees and stockholders or general and limited
partners (and the directors, officers, employees and stockholders thereof), each
other Person who participates as an underwriter or a Qualified Independent
Underwriter, if any, in the offering or sale of such securities, each officer,
director, employee, stockholder, fiduciary, managing director, agent,
affiliates, consultants, representatives, successors, assigns or partner of such
underwriter or Qualified Independent Underwriter, and each other Person, if any,
who controls such seller or any such underwriter within the meaning of the
Securities Act, against any and all losses, claims, damages or liabilities,
joint or several, actions or proceedings (whether commenced or threatened) and
expenses (including reasonable fees of counsel and any
-16-
130
amounts paid in any settlement effected with the Company's consent, which
consent shall not be unreasonably withheld or delayed) to which each such
indemnified party may become subject under the Securities Act or otherwise in
respect thereof (collectively, "Claims"), insofar as such Claims arise out of or
are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in any registration statement under which such
securities were registered under the Securities Act or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary, final or summary prospectus or any amendment or supplement thereto,
together with the documents incorporated by reference therein, or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or (iii) any
violation by the Company of any federal, state or common law rule or regulation
applicable to the Company and relating to action required of or inaction by the
Company in connection with any such registration, and the Company will reimburse
any such indemnified party for any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
Claim as such expenses are incurred; provided, however, that the Company shall
not be liable to any such indemnified party in any such case to the extent such
Claim arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact or omission or alleged omission of a material fact
made in such registration statement or amendment thereof or supplement thereto
or in any such prospectus or any preliminary, final or summary prospectus in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such indemnified party specifically for use therein.
Such indemnity and reimbursement of expenses shall remain in full force and
effect regardless of any investigation made by as on behalf of such indemnified
party and shall survive the transfer of such securities by such seller.
(b) Each Holder of Registrable Securities that are included in
the securities as to which any registration under Section 2.1 or 2.2 is being
effected (and, if the Company requires as a condition to including any
Registrable Securities in any registration statement filed in accordance with
Section 2.1 or 2.2, any underwriter and Qualified Independent Underwriter, if
any) shall, severally and not jointly, indemnify and hold harmless (in the same
manner and to the same extent as set forth in paragraph (a) of this Section 2.9)
to the extent permitted by law the Company, its officers and directors, each
Person controlling the Company within the meaning of the Securities Act and all
other prospective sellers and their respective directors, officers, fiduciaries,
managing directors, employees, agents, affiliates, consultants, representatives,
successors, assigns, general and limited partners, stockholders and respective
controlling Persons with respect to any untrue statement or alleged untrue
statement of any material fact in, or omission or alleged omission of any
material fact from, such registration statement, any preliminary, final or
summary prospectus contained therein, or any amendment or supplement thereto,
-17-
131
if such statement or alleged statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company or its representatives by or on behalf of such Holder or underwriter or
Qualified Independent Underwriter, if any, specifically for use therein and
reimburse such indemnified party for any legal or other expenses reasonably
incurred in connection with investigating or defending any such Claim as such
expenses are incurred; provided, however, that the aggregate amount which any
such Holder shall be required to pay pursuant to this Section 2.9(b) and
Sections 2.9(c) and (e) shall in no case be greater than the amount of the net
proceeds received by such person upon the sale of the Registrable Securities
pursuant to the registration statement giving rise to such claim. Such indemnity
and reimbursement of expenses shall remain in full force and effect regardless
of any investigation made by or on behalf of such indemnified party and shall
survive the transfer of such securities by such Holder.
(c) Indemnification similar to that specified in the preceding
paragraphs (a) and (b) of this Section 2.9 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities with
respect to any required registration or other qualification of securities under
any state securities and "blue sky" laws.
(d) Any person entitled to indemnification under this
Agreement shall notify promptly the indemnifying party in writing of the
commencement of any action or proceeding with respect to which a claim for
indemnification may be made pursuant to this Section 2.9, but the failure of any
indemnified party to provide such notice shall not relieve the indemnifying
party of its obligations under the preceding paragraphs of this Section 2.9,
except to the extent the indemnifying party is materially prejudiced thereby and
shall not relieve the indemnifying party from any liability which it may have to
any indemnified party otherwise than under this Article 2. In case any action or
proceeding is brought against an indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, unless in the reasonable opinion of outside
counsel to the indemnified party a conflict of interest between such indemnified
and indemnifying parties may exist in respect of such claim, to assume the
defense thereof jointly with any other indemnifying party similarly notified, to
the extent that it chooses, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party that it so chooses, the indemnifying party shall not be liable
to such indemnified party for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that (i) if the
indemnifying party fails to take reasonable steps necessary to defend diligently
the action or proceeding within 20 days after receiving notice from such
indemnified party that the indemnified party believes it has failed to do so; or
(ii) if such indemnified party who is a defendant in any action or proceeding
which is also brought against the indemnifying party reasonably shall have
-18-
132
concluded that there may be one or more legal defenses available to such
indemnified party which are not available to the indemnifying party; or (iii) if
representation of both parties by the same counsel is otherwise inappropriate
under applicable standards of professional conduct, then, in any such case, the
indemnified party shall have the right to assume or continue its own defense as
set forth above (but with no more than one firm of counsel for all indemnified
parties in each jurisdiction, except to the extent any indemnified party or
parties reasonably shall have concluded that there may be legal defenses
available to such party or parties which are not available to the other
indemnified parties or to the extent representation of all indemnified parties
by the same counsel is otherwise inappropriate under applicable standards of
professional conduct) and the indemnifying party shall be liable for any
expenses therefor. No indemnifying party shall, without the written consent of
the indemnified party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or claim
in respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to such
action or claim) unless such settlement, compromise or judgment (A) includes an
unconditional release of the indemnified party from all liability arising out of
such action or claim and (B) does not include a statement as to or an admission
of fault, culpability or a failure to act, by or on behalf of any indemnified
party.
(e) If for any reason the foregoing indemnity is unavailable
or is insufficient to hold harmless an indemnified party under Sections 2.9(a),
(b) or (c), then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of any Claim in such proportion as
is appropriate to reflect the relative fault of the indemnifying party, on the
one hand, and the indemnified party, on the other hand, with respect to such
offering of securities. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party or the indemnified party and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. If, however, the
allocation provided in the second preceding sentence is not permitted by
applicable law, then each indemnifying party shall contribute to the amount paid
or payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative faults but also the relative benefits of the
indemnifying party and the indemnified party as well as any other relevant
equitable considerations. The parties hereto agree that it would not be just and
equitable if contributions pursuant to this Section 2.9(e) were to be determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the preceding sentences
of this Section 2.9(e). The amount paid or payable in respect of any Claim shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such Claim.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be
-19-
133
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. Notwithstanding anything in this section 2.9(e) to the
contrary, no indemnifying party (other than the Company) shall be required
pursuant to this section 2.9(e) to contribute any amount in excess of the net
proceeds received by such indemnifying party from the sale of Registrable
Securities in the offering to which the losses, claims, damages or liabilities
of the indemnified parties relate, less the amount of any indemnification
payment made by such indemnifying party pursuant to Sections 2.9(b) and (c).
(f) The indemnity agreements contained herein shall be in
addition to any other rights to indemnification or contribution which any
indemnified party may have pursuant to law or contract and shall remain
operative and in full force and effect regardless of any investigation made or
omitted by or on behalf of any indemnified party and shall survive the transfer
of the Registrable Securities by any such party.
(g) The indemnification and contribution required by this
Section 2.9 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
3. Underwritten Offerings.
3.1. Requested Underwritten Offerings. If requested by the underwriters
for any underwritten offering by the Holders pursuant to a registration
requested under Section 2.1, the Company shall enter into a customary
underwriting agreement with the underwriters. Such underwriting agreement shall
be satisfactory in form and substance to the Initiating Holder and shall contain
such representations and warranties by, and such other agreements on the part
of, the Company and such other terms as are generally prevailing in agreements
of that type, including, without limitation, indemnities and contribution
agreements on substantially the same terms as those contained herein. Any Holder
participating in the offering shall be a party to such underwriting agreement
and may, at its option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made to and for the benefit of
such Holder and that any or all of the conditions precedent to the obligations
of such underwriters under such underwriting agreement be conditions precedent
to the obligations of such Holder; provided, however, that the Company shall not
be required to make any representations or warranties with respect to written
information specifically provided by a selling Holder for inclusion in the
registration statement. Such underwriting agreement shall also contain such
representations and warranties by the participating Holders with respect to
title and ownership of shares as are customary in agreements of that type.
-20-
134
3.2. Piggyback Underwritten Offerings. In the case of a registration
pursuant to Section 2.2 hereof, if the Company shall have determined to enter
into an underwriting agreement in connection therewith, all of the Holders'
Registrable Securities to be included in such registration shall be subject to
such underwriting agreement. Any Holder participating in such registration may,
at its option, require that any or all of the representations and warranties by,
and the other agreements on the part of, the Company to and for the benefit of
such underwriters shall also be made to and for the benefit of such Holder and
that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to the
obligations of such Holder. Such underwriting agreement shall also contain such
representations and warranties by the participating Holders as are customary in
agreements of that type, on substantially the same terms as those contained
herein.
3.3. Underwriting Services. Notwithstanding anything contained herein
to the contrary, GS & Co. shall have the right to act as the lead managing
underwriter in any registration including Registrable Securities. If GS & Co.
acts as a managing underwriter in any such registered offering, to the extent
required by applicable law, a Qualified Independent Underwriter shall be
retained by the Company and shall be acceptable to GS & Co. (which consent shall
not be unreasonably withheld), and the Company shall pay all fees and expenses
(other than underwriting discounts and commissions) of such Qualified
Independent Underwriter.
4. General.
4.1. Adjustments Affecting Registrable Securities. The Company agrees
that it shall not effect or permit to occur any combination or subdivision of
shares which would adversely affect the ability of the Holder of any Registrable
Securities to include such Registrable Securities in any registration
contemplated by this Agreement or the marketability of such Registrable
Securities in any such registration. The Company agrees that it will take all
reasonable steps necessary to effect a subdivision of shares if in the
reasonable judgment of (a) the Initiating Holder of a Demand Registration
Request or (b) the managing underwriter for the offering in respect of such
Demand Registration Request, such subdivision would enhance the marketability of
the Registrable Securities. Each Holder agrees to vote all of its shares of
capital stock in a manner, and to take all other actions necessary, to permit
the Company to carry out the intent of the preceding sentence including, without
limitation, voting in favor of an amendment to the Company's Certificate of
Incorporation in order to increase the number of authorized shares of capital
stock of the Company; provided, however, that each Existing Stockholder agrees
that the Agent for the Existing Stockholder (as defined in the Purchase
Agreement) is authorized to act on his behalf with respect to all such necessary
actions.
4.2. Rule 144. If the Company shall have filed a registration statement
pursuant to the requirements of Section 12 of the Exchange Act or a registration
statement
-21-
135
pursuant to the requirements of the Securities Act in respect of the Common
Stock or securities of the Company convertible into or exchangeable or
exercisable for Common Stock, the Company covenants that (i) so long as it
remains subject to the reporting provisions of the Exchange Act, it will timely
file the reports required to be filed by it under the Securities Act or the
Exchange Act (including, but not limited to, the reports under Sections 13 and
15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144 under
the Securities Act), and (ii) will take such further action as any Holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (A) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (B) any similar rule or regulation hereafter adopted by
the SEC. Upon the request of any Holder of Registrable Securities, the Company
will deliver to such Holder a written statement as to whether it has complied
with such requirements.
4.3. Nominees for Beneficial Owners. If Registrable Securities are held
by a nominee for the beneficial owner thereof, the beneficial owner thereof may,
at its option, be treated as the Holder of such Registrable Securities for
purposes of any request or other action by any Holder or Holders of Registrable
Securities pursuant to this Agreement (or any determination of any number or
percentage of shares constituting Registrable Securities held by any Holder or
Holders of Registrable Securities contemplated by this Agreement), provided that
the Company shall have received assurances reasonably satisfactory to it of such
beneficial ownership.
4.4 Amendments and Waivers. The terms and provisions of this Agreement
may be modified or amended, or any of the provisions hereof waived, temporarily
or permanently, pursuant to the written consent of the Company, GSCP and the
Agent of the Existing Stockholders (as defined in the Purchase Agreement).
4.5. Notices. Except as otherwise provided in this Agreement, all
notices, requests, consents and other communications hereunder to any party
shall be deemed to be sufficient if contained in a written instrument delivered
in person or by telecopy (with a confirmatory copy sent by a different means
within three business days of such notice), nationally recognized overnight
courier or first class registered or certified mail, return receipt requested,
postage prepaid, addressed to such party at the address set forth below or such
other address as may hereafter be designated in writing by such party to the
other parties:
(i) if to the Company, to:
Transaction Information Systems, Inc.
000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
-22-
136
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx
with a copy to:
Esanu Katsky Xxxxxx & Siger, LLP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxx X. Xxxxxx, Esq.
(ii) if to the Existing Stockholders, to the
addresses listed in Schedule 1 hereto,
with a copy to:
Esanu Katsky Xxxxxx & Siger, LLP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxx X. Xxxxxx, Esq.
(iii) if to the Investors, to:
GS Capital Partners III, L.P.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxxx
with copies to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
and
-23-
137
GS Capital Partners III, L.P.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxx Xxxxx, Esq.
All such notices, requests, consents and other communications shall be deemed to
have been given when received.
4.6. Miscellaneous.
(a) This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and the respective
successors, personal representatives and assigns of the parties hereto, whether
so expressed or not. If any Person shall acquire Registrable Securities from any
Holder, in any manner, whether by operation of law or otherwise, such transferee
shall promptly notify the Company and such Registrable Securities acquired from
such Holder shall be held subject to all of the terms of this Agreement, and by
taking and holding such Registrable Securities such Person shall be entitled to
receive the benefits of and be conclusively deemed to have agreed to be bound by
and to perform all of the terms and provisions of this Agreement. If the Company
shall so request, any such successor or assign shall agree in writing to acquire
and hold the Registrable Securities acquired from such Holder subject to all of
the terms hereof. If any Holder shall acquire additional Registrable Securities,
such Registrable Securities shall be subject to all of the terms, and entitled
to all the benefits, of this Agreement.
(b) This Agreement (with the documents referred to herein or
delivered pursuant hereto) embodies the entire agreement and understanding
between the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof.
(c) This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of New York without giving
effect to the conflicts of law principles thereof.
(d) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof. All
section references are to this Agreement unless otherwise expressly provided.
(e) This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
-24-
138
(f) Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
(g) The parties hereto acknowledge that there would be no
adequate remedy at law if any party fails to perform any of its obligations
hereunder, and accordingly agree that each party, in addition to any other
remedy to which it may be entitled at law or in equity, shall be entitled to
injunctive relief, including specific performance, to enforce such obligations
without the posting of any bond, and, if any action should be brought in equity
to enforce any of the provisions of this Agreement, none of the parties hereto
shall raise the defense that there is an adequate remedy at law.
(h) Each party hereto shall do and perform or cause to be done
and performed all such further acts and things and shall execute and deliver all
such other agreements, certificates, instruments, and documents as any other
party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
4.7. Prior Agreements. Each of the Holders and the Company hereby
agrees that any agreement previously entered into by it pursuant to which the
Company granted to it any registration rights shall be superseded by this
Agreement and each such agreement (and any rights such Holder has pursuant to
such agreement) shall be terminated, null and void and no longer in effect.
4.8. No Inconsistent Agreements. The rights granted to the holders of
Registrable Securities hereunder do not in any way conflict with and are not
inconsistent with any other agreements to which the Company is a party or by
which it is bound. Without the prior written consent of GSCP, neither the
Company nor any Holder will, on or after the date of this Agreement, enter into
any agreement with respect to its securities which is inconsistent with the
rights granted in this Agreement or otherwise conflicts with the provisions
hereof, other than any lock-up agreement with the underwriters in connection
with any registered offering effected hereunder, pursuant to which the Company
shall agree not to register for sale, and the Company shall agree not to sell or
otherwise dispose of, Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, for a specified period following
the registered offering. The Company further agrees that if any other
registration rights agreement entered into after the date of this Agreement with
respect to any of its securities contains terms which are more favorable to, or
less restrictive on, the other party thereto than the terms and conditions
contained in this Agreement are (insofar as they are applicable) to the GSCP
Parties, then the terms and conditions of this Agreement shall immediately be
deemed to
-25-
139
have been amended without further action by the Company or any of the holders of
Registrable Securities so that the GSCP Parties shall be entitled to the benefit
of any such more favorable or less restrictive terms or conditions.
-26-
140
IN WITNESS WHEREOF, the parties hereto have duly executed this
agreement as of the date first above written.
CORPORATION:
TRANSACTION INFORMATION SYSTEMS, INC.
By:
-------------------------
Name:
Title:
INVESTORS:
GS CAPITAL PARTNERS III, L.P.
By: GS Advisors III, L.P., its general partner
By: GS Advisors III, L.L.C., its general partner
By:
-------------------------
Authorized Signatory
GS CAPITAL PARTNERS III OFFSHORE, L.P.
By: GS Advisors III (Cayman), L.P., its General Partner
By: GS Advisors III, L.L.C., its General Partner
By:
-------------------------
Authorized Signatory
141
XXXXXXX, SACHS & CO. VERWALTUNGS GmbH
By:
-------------------------
Managing Director
and
By:
-------------------------
Managing Director
Registered Agent
STONE STREET FUND 1998, L.P.
By: Stone Street Advantage Corp.
General Partner
By:
-------------------------
BRIDGE STREET FUND 1998, L.P.
By: Stone Street Advantage Corp.
Managing General Partner
By:
--------------------------
142
EXISTING
STOCKHOLDERS:
------------------------------------
XXXX XXXXXXXXXXX
------------------------------------
XXXX XXXXX
------------------------------------
XXXXX XXXXXXXXXX
------------------------------------
XXXXXX XXXXXX
------------------------------------
XXXXXXXX XXXX
------------------------------------
XXXXXX XXXX
------------------------------------
XXXXX XXXXXX
------------------------------------
XXXXXXX XXXXXXXX
------------------------------------
XXXXXX XXXXXXX
------------------------------------
XXXXXX XXXX
------------------------------------
XXXXXXXX XXXXX
143
Exhibit F
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
TRANSACTION INFORMATION SYSTEMS, INC.
TRANSACTION INFORMATION SYSTEMS, INC., a corporation organized
and existing under the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify:
1. The Certificate of Incorporation of the Corporation was
filed with the Secretary of State on May 9, 1997.
2. The Certificate of Incorporation is hereby amended by
deleting Articles FOURTH, SEVENTH and EIGHTH thereof and replacing such
Articles FOURTH, SEVENTH AND EIGHTH with the following:
"ARTICLE FOURTH:
(a) The total number of shares of capital stock which
this Corporation is authorized to issue is forty-five million
(45,000,000) shares, of which:
(i) 35,000,000 shares shall be designated as
Common Stock, and shall have a par value of $.01 per share;
and
(ii) 10,000,000 shares shall be designated
as Preferred Stock, and shall have a par value of $.01 per
share.
(b) The Board of Directors is expressly authorized at
any time, and from time to time, to provide for the issuance
of shares of Preferred Stock in one or more series, with such
voting powers, full or limited, or without voting powers and
with such designations, preferences and relative,
participating, optional or other special rights,
qualifications, limitations or restrictions thereof, as shall
be stated and expressed in the resolution or resolutions
providing for the issue thereof adopted by the Board of
Directors and as are not stated and expressed in this
Certificate of Incorporation, or any amendment thereto,
including (but without limiting the generality of the
foregoing) the following:
(i) the designation of such series;
(ii) the dividend rate of such series, the
conditions and dates upon which such dividends shall be
payable, the preference or relation which such dividends shall
bear to the dividends payable on any other class or classes or
of any other series or capital stock, whether such dividends
shall be cumulative or noncumulative, and whether such
144
dividends may be paid in shares of any class or series of
capital stock or other securities of the Corporation;
(iii) whether the shares of such series shall
be subject to redemption by the Corporation, and, if made
subject to such redemption, the times, prices and other
terms and conditions of such redemption;
(iv) the terms and amount of any sinking fund
provided for the purchase or redemption of the shares of
such series;
(v) whether or not the shares of such series
shall be convertible into or exchangeable for shares of any
other class or classes or series of capital stock or other
securities of the Corporation, and, if provision be made for
conversion or exchange, the times, prices, rates, adjustment
and other terms and conditions of such conversion or exchange;
(vi) the extent, if any, to which the holders of
the shares of such series shall be entitled to vote, as
a class or otherwise, with respect to the election of the
directors or otherwise, and the number of votes to which the
holder of each share of such series shall be entitled;
(vii) the restrictions, if any, on the issue
or reissue of any additional shares or series of Preferred
Stock; and
(viii) the rights of the holders of the shares
of such series upon the dissolution of, or upon the
distribution of assets of, the Corporation.
(c) No holder of any shares of stock of the
Corporation of any class or series or any security now or
hereafter authorized, shall, as such holder, be entitled as of
right to purchase or subscribe for any shares of stock of the
Corporation of any class or any series now or hereafter
authorized, or any securities convertible into or exchangeable
for any such shares, or any warrants, options, rights or other
instruments evidencing rights to subscribe for, or purchase,
any such shares, whether such shares, securities, warrants,
options, rights or other instruments be unissued or issued and
thereafter acquired by the Corporation.
ARTICLE SEVENTH: A director of the Corporation shall
not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty
as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the
director derived an improper personal benefit. For purposes of
the prior sentence, the term "damages" shall to the extent
permitted by law, include without limitation, any judgment,
fine, amount paid in settlement, penalty, punitive damages,
excise or other tax assessed with respect to an
-2-
145
employee benefit plan, or expense of any nature (including,
without limitation, counsel fees and disbursements). Each
person who serves as a director of the Corporation while this
Article SEVENTH is in effect shall be deemed to be doing so in
reliance on the provisions of this Article SEVENTH, and
neither the amendment or repeal of this Article SEVENTH nor
the adoption of any provision of this Restated Certificate of
Incorporation inconsistent with this Article SEVENTH, shall
apply to or have any effect on the liability or alleged
liability of any director of the Corporation for, arising out
of, based upon, or in connection with any acts or omissions of
such director occurring prior to such amendment, repeal, or
adoption of an inconsistent provision. The provisions of this
Article SEVENTH are cumulative and shall be in addition to and
independent of any and all other limitations on or
eliminations of the liabilities of directors of the
Corporation, as such, whether such limitations or eliminations
arise under or are created by any law, rule, regulation,
by-law, agreement, vote of stockholders or disinterested
directors, or otherwise. If the Delaware General Corporation
Law is hereafter amended to permit elimination or rotation of
the personal liability of directors, then the liability of a
director of the Corporation still be eliminated or limited to
the fullest extent permitted by the Delaware General
Corporation Law as so amended. Any repeal or modification of
this Article SEVENTH by the stockholders of the Corporation
shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such
repeal or modification with respect to acts or omissions
occurring prior to such repeal or modification. For purposes
of this Article SEVENTH, all references to a director shall
also be deemed to refer to any person or persons, if any, who,
pursuant to a provision of this Certificate of Incorporation,
exercise or perform any of the powers or duties otherwise
conferred or imposed upon the board of directors of the
Corporation.
ARTICLE EIGHTH: (a) The Corporation shall indemnify
any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
Corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a
director, officer, employee or agent of another, corporation,
partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding if he
acted in good faith and in manner he reasonably believed to be
in or not opposed to the best interests of the Corporation,
and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to
any criminal action or proceeding had reasonable cause to
believe that his conduct was unlawful. For
-3-
146
purposes of this Article EIGHTH, any person who pursuant to a
provision in this Restated Certificate of Incorporation,
exercises or performs any the powers or duties conferred or
imposed upon the board of directors of the Corporation shall
be entitled to all the benefits conferred upon directors and
officers of the Corporation (including, without limitation,
the right to indemnification and advancement of expenses) set
forth in this Article EIGHTH.
(b) The Corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the
right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer,
employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including
attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
Corporation, provided that no indemnification shall be made in
respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of
the State of Delaware or the court in which such action or
suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee
or agent of the Corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding
referred to in Paragraphs (a) and (b) of this ARTICLE EIGHTH,
or in defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection
therewith.
(d) Any indemnification under Paragraphs (a) and (b)
of this ARTICLE EIGHTH (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the
director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of
conduct set forth in such Paragraphs (a) and (b). Such
determination shall be made (i) by the Board of a majority
vote of a quorum consisting of directors who were not parties
to such action, suit or proceeding, or (ii) if such a quorum
is not obtainable, or, even if obtainable and a quorum of
disinterested directors so directs, by independent legal
counsel in a written opinion, or (iii) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by
a director or officer in defending a civil, criminal,
administrative or investigative action,
-4-
147
suit or proceeding shall be paid by the Corporation in advance
of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of the
director, officer, employee or agent to repay such amount if
it shall be ultimately determined that he is not entitled to
be indemnified by the Corporation as authorized in this
ARTICLE EIGHTH.
(f) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of
this ARTICLE EIGHTH shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement
of expenses may be entitled under any law, by-law, agreement,
vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in
another capacity while holding such office.
(g) The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether
or not the Corporation would have the power to indemnify him
against such liability under the provisions of this ARTICLE
EIGHTH.
(h) For the purposes of this ARTICLE EIGHTH,
references to "the Corporation" include all constituent
corporations absorbed in a consolidation or merger as well as
the resulting or surviving corporation so that any person who
is or was a director, officer, employee or agent of such a
constituent corporation or is or was serving at the request of
such constituent corporation as a director, officer, employee
or agent of another corporation. partnership, joint venture,
trust or other enterprise shall stand in the same position
under the provisions of this ARTICLE EIGHTH with respect to
the resulting or surviving corporation as he would if he had
served the resulting or surviving corporation in the same
capacity.
(i) The indemnification and advancement of expenses
provided by, or granted pursuant to, this ARTICLE EIGHTH shall
continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such a person. No
subsequent amendment to this Article EIGHTH shall diminish the
rights hereunder of any director or officer with respect to
any action taken or claim made prior to such amendment."
3. This Amendment to the Certificate of Incorporation has been
duly adopted in accordance with the provisions of Sections 242 of the
General Corporation Law of Delaware.
4. The capital of the Corporation will not be reduced under or
by reason of any amendment herein certified.
-5-
148
IN WITNESS WHEREOF, the undersigned have caused this
Certificate to be signed by its president and attested by its assistant
secretary this 2nd day of September, 1998.
_____________________________________
Xxxxxxx Xxxxxxxx
Chairman and Chief Executive Officer
ATTEST
_____________________________________
Xxxxxx Xxxxxxx
Assistant Secretary
-6-
149
Exhibit G
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF
SERIES A PREFERRED STOCK
($.01 PAR VALUE PER SHARE)
of
Transaction Information Systems, Inc.
-------------
Pursuant to Section 151(g) of the
General Corporation Law of the State of Delaware
-------------
Transaction Information Systems, Inc. (hereinafter called the
"Corporation"), a corporation organized and existing under and by virtue of the
provisions of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: The Certificate of Incorporation (the "Certificate of
Incorporation") of the Corporation authorizes the issuance of 10,000,000 shares
of Preferred Stock, $.01 par value per share (the "Preferred Stock"), in one or
more series, and further authorizes the Board of Directors of the Corporation to
provide by resolution for the issuance of shares of Preferred Stock in one or
more series not exceeding the aggregate number of shares of Preferred Stock
authorized by the Certificate of Incorporation and to determine with respect to
each such series, the voting powers, if any (which voting powers if granted may
be full or limited), and such designations, preferences, and relative,
participating, optional and other rights, and the qualifications, limitations
and restrictions appertaining thereto.
SECOND: A resolution providing for and in connection with the issuance
of the Preferred Stock was duly adopted by the Board of Directors of the
Corporation pursuant to authority conferred on the Board of Directors of the
Corporation by the provisions of the Certificate of Incorporation as aforesaid,
which resolution provides as follows:
-1-
150
RESOLVED: that the Board of Directors of the Corporation (the "Board"),
pursuant to authority vested in it by the provisions of the certificate of
incorporation (the "Certificate of Incorporation"), of Transaction Information
Systems, Inc. (the "Corporation"), hereby authorizes the issuance of a series of
preferred stock (the "Preferred Stock") of the Corporation and hereby
establishes the powers, designations, preferences and relative, participating,
optional and other rights, and the qualifications, limitations and restrictions
appertaining thereto in addition to those set forth in such Certificate of
Incorporation (or otherwise provided by law) as follows (the following, referred
to hereinafter as "this resolution" or "this Certificate of Designations," is to
be filed as part of a Certificate of Designations under Section 151(g) of the
General Corporation Law of the State of Delaware):
[Remainder of Page Intentionally Left Blank]
-2-
151
1. Designation and Number. The designation of Preferred Stock created
by this resolution shall be a series of Preferred Stock to be known as "Series A
Preferred Stock." The number of shares constituting Series A Preferred Stock
which the Corporation shall be authorized to issue shall be 8,000,000.
2. Dividends. The holder of each share of Series A Preferred Stock
shall be entitled to receive the dividends declared by the Board; provided,
however, that the holder of each share of Series A Preferred Stock shall be
entitled to receive dividends per share of Series A Preferred Stock equal to the
dividends per share a holder of shares of Common Stock (as defined below) into
which Series A Preferred Stock is convertible pursuant to the provisions of
Section 6 is entitled to, at the record date for the determination of
stockholders entitled to such dividends, or, if no such record date is
established, at the date such dividend is declared.
3. Voting Rights. (a) In addition to any voting rights provided by law,
the holder of each share of Series A Preferred Stock shall be entitled to vote
on all matters and shall be entitled to the number of votes per share of Series
A Preferred Stock equal to the number of votes per share a holder of the shares
of Common Stock into which Series A Preferred Stock is convertible is entitled
to, at the record date for the determination of the stockholders entitled to
vote on all matters, or, if no such record date is established, at the date such
vote is taken or any written consent of stockholders is solicited. Except as
required by law, or as otherwise provided below, the holders of shares of Series
A Preferred Stock and Common Stock shall vote together as a single class and not
as separate classes.
(b) Series A Directors.
(i) Except as otherwise set forth in this Section
3(b), the holders of Series A Preferred Stock shall be entitled to vote as a
class to elect two persons to the Board. Each person elected to be a director by
the holders of Series A Preferred Stock pursuant to this Section 3(b)(i) or
Section 3(b)(iii) below shall be referred to as a "Series A Director."
(ii) At any meeting (or in a written consent in lieu
thereof) held for the purpose of electing directors, the presence in person or
by proxy (or the written consent) of the holders of a majority of the shares of
Series A Preferred Stock then outstanding shall constitute a quorum for the
election of each Series A Director. Any Series A Director may be removed only
with the prior approval (by vote or written consent, as provided by law) of the
holders of the Series A Preferred Stock.
(iii) Notwithstanding the foregoing, so long as that
the holders of the Series A Preferred Stock as of the date of issuance, together
with their affiliates (as defined under Rule 12b-2 under the Securities Exchange
Act of 1934, as amended) hold in the aggregate less than 50% of the number of
shares of Series A Preferred Stock (subject to appropriate adjustment from time
to time for any subdivision (by any stock split, stock dividend,
recapitalization or otherwise) or combination (by reverse stock split or
otherwise)
-3-
152
of the Series A Preferred Stock by the Corporation), the holders of the Series A
Preferred Stock shall be entitled to vote as a class to elect one person to the
Board.
4. Reacquired Shares. Any shares of Series A Preferred Stock converted,
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. None of
such shares of Series A Preferred Stock shall be reissued by the Corporation.
5. Liquidation, Dissolution or Winding Up. (a) Upon the voluntary or
involuntary dissolution, liquidation or winding up (each, a "Liquidation") of
the Corporation, the holders of Series A Preferred Stock shall be entitled to
receive and to be paid out of the assets of the Corporation available for
distribution to its stockholders, before any payment or distribution shall be
made on any Junior Stock (as defined below), the Preferred Amount Per Share (as
defined below) with respect to each outstanding share of Series A Preferred
Stock; provided, however, that, if the amount which would have been paid in such
Liquidation in respect of the number of shares of Common Stock into which the
Preferred Stock is then convertible, divided by the number of outstanding shares
of Series A Preferred Stock issued by the Corporation, is greater than the
Preferred Amount Per Share, then the holders of Series A Preferred Stock shall
be entitled to receive in such Liquidation such greater amount for each share of
Series A Preferred Stock then issued and outstanding. For purposes of this
Section 5, "Liquidation" shall include any merger or consolidation, except for
any such merger or consolidation involving the Corporation after the
consummation of which the holders of the capital stock of the Corporation
immediately prior to such merger or consolidation will beneficially own voting
securities in excess of fifty percent (50%) of the voting power of the surviving
or resulting entity.
(b) If, upon any such Liquidation, whether voluntary or
involuntary, the assets to be distributed to the holders of Series A Preferred
Stock shall be insufficient to permit payment of the full amount of each share
of Series A Preferred Stock, then the entire assets of the Corporation to be
distributed among the holders of Series A Preferred Stock shall be distributed
ratably among such holders.
(c) "Preferred Amount Per Share" shall mean, with respect to
each share of Series A Preferred Stock, $7.6339 (as adjusted in accordance with
the Purchase Agreement).
6. Conversion of Preferred Stock.
(a) Optional Conversion. Subject to the provision for
adjustment set forth below, each share of Series A Preferred Stock shall be
convertible, at the option of the holder thereof at any time and from the time
to time after the date hereof, into a number of shares of Common Stock equal to
the then effective Conversion Ratio (as defined below).
-4-
153
(b) Mandatory Conversion. Subject to the provision for
adjustment set forth below, each share of Series A Preferred Stock shall be
automatically converted into a number of shares of Common Stock at the
Conversion Ratio in the event that the Corporation completes an IPO (as defined
below).
(c) Conversion Procedure.
(i) Conversion of Series A Preferred Stock may be
effected by any holder thereof upon the surrender to the Corporation at the
offices of the Corporation, or at the office of any agent or agents of the
Corporation, as may be designated by the Board (the "Transfer Agent"), of the
certificates representing Series A Preferred Stock to be converted, accompanied
by a written notice stating that such holder elects to convert all or, except in
the case of a conversion pursuant to paragraph (b) of this Section 6, a
specified portion of such Series A Preferred Stock in accordance with the
provisions of this Section 6 and specifying the name or names in which such
holder wishes the certificate or certificates for shares of Common Stock to be
issued. The Corporation shall pay any issue and transfer taxes that may be
payable in respect of any issue or delivery of shares of Common Stock on
conversion of Series A Preferred Stock pursuant hereto. As promptly as
practicable, and in any event within five business days after the surrender of
such certificates representing Series A Preferred Stock and the receipt of such
notice relating thereto, the Corporation shall deliver or cause to be delivered
(i) certificates representing the number of validly issued, fully paid and
nonassessable shares of Common Stock to which the holder of Series A Preferred
Stock being converted shall be entitled and (ii) if less than all of the shares
represented by the surrendered certificates are being converted, a new
certificate representing the number of shares of Series A Preferred Stock which
remains outstanding upon such partial conversion. Such conversion shall be
deemed to have been made at the close of business on the date of giving such
notice so that the rights of the holder thereof as to Series A Preferred Stock
being converted shall cease except for the right to receive shares of Common
Stock in accordance herewith, and the person entitled to receive the shares of
Common Stock shall be treated for all purposes as having become the record
holder of such shares of Common Stock at such time.
(ii) The Corporation shall at all times reserve and
keep available for issuance upon the conversion of Series A Preferred Stock,
free from any preemptive rights, such number of its authorized but unissued
shares of Common Stock as will from time to time be necessary to permit the
conversion of all outstanding shares of Series A Preferred Stock into shares of
Common Stock, and shall take all action required to increase the authorized
number of shares of Common Stock if necessary to permit the conversion of all
outstanding shares of Series A Preferred Stock. The Corporation shall take all
actions as may be necessary to assure that all such shares of Common Stock may
be so issued without violation of any applicable law (including, without
limitation, applicable federal and state securities laws) or governmental
regulation or any requirements of any domestic securities exchange upon which
shares of Common Stock may be listed (except for official notice of issuance
which shall be immediately delivered by the Corporation upon each such
issuance).
-5-
154
(iii) The Corporation shall not close its books
against the transfer of Series A Preferred Stock or of Common Stock issued or
issuable upon conversion of Series A Preferred Stock in any manner which
interferes with the timely conversion of Series A Preferred Stock. The
Corporation shall assist and cooperate with any holder of shares of Series A
Preferred Stock required to make any governmental filings or obtain any
governmental approval prior to or in connection with any conversion of such
shares hereunder (including, without limitation, making any filings required to
be made by the Corporation).
(iv) If the shares of Common Stock issuable by reason
of such conversion of Series A Preferred Stock are convertible into or
exchangeable for any other stock or securities of the Corporation, the
Corporation shall, at the converting holder's option, upon surrender of shares
of Series A Preferred Stock to be converted by such holder as provided above
together with any notice, statement or payment required to effect such
conversion or exchange of Common Stock, deliver to such holder or as otherwise
specified by such holder a certificate or certificates representing the stock or
securities into which the shares of Common Stock issuable by reason of such
conversion are so convertible or exchangeable, registered in such name or names
and in such denomination or denominations as such holder has specified.
(d) Adjustments Upon Changes in Capitalization.
(i) Except with respect to Excluded Securities (as
defined below), in case the Corporation shall issue any shares of Common Stock
or Common Stock Equivalents (as defined below) after the date the first share of
Series A Preferred Stock is issued (the "Issue Date") at a price per share (or
having a conversion or exercise price per share) of less than the Preferred
Amount Per Share, in each such case the Conversion Ratio shall be appropriately
adjusted by multiplying (A) the Conversion Ratio in effect on the day
immediately prior to the date of issuance of such shares (or Common Stock
Equivalents) by (B) a fraction, the numerator of which shall be the sum of (1)
the number of shares of Common Stock outstanding on such date prior to such
issuance and (2) the number of additional shares of Common Stock issued (or
issuable upon conversion, exchange or exercise of such Common Stock
Equivalents), and the denominator of which shall be the sum of (x) the number of
shares of Common Stock outstanding on such date prior to such issuance and (y)
the number of shares of Common Stock purchasable at the then Preferred Amount
Per Share with the aggregate consideration receivable by the Corporation for the
total number of shares of Common Stock so issued (or, in the case of issuances
of Common Stock Equivalents, issuable upon conversion, exchange or exercise of
such Common Stock Equivalents). An adjustment made pursuant to this clause (ii)
shall be made on the next business day following the date on which any such
issuance is made and shall be effective retroactively to the close of business
on the date of such issuance. For purposes of this clause (ii), the
consideration receivable by the Corporation in connection with the issuance of
additional shares of Common Stock or of Common Stock Equivalents since the Issue
Date shall be deemed to be equal to (X) in the case the consideration received
by the Corporation is cash, the sum of the aggregate offering price (before
deduction of
-6-
155
underwriting discounts or commissions and expenses payable to third parties, if
any) of all such Common Stock and/or Common Stock Equivalents plus the minimum
aggregate amount, if any, payable upon conversion, exchange or exercise of any
such Common Stock Equivalents, and (Y) in the case the consideration received by
the Corporation is other than cash, the fair market value of the consideration
received by the Corporation as determined by the good faith judgment of the
Board, which determination shall require the affirmative vote of at least one of
the directors designated by a majority of the holders of Series A Preferred
Stock. The issuance or reissuance of any shares of Common Stock (whether
treasury shares or newly issued shares) pursuant to a dividend or distribution
on, or subdivision, combination or reclassification of, the outstanding shares
of Common Stock requiring an adjustment in the Conversion Ratio pursuant to
clause (i) of this paragraph 6(d) of this Section 6, shall not be deemed to
constitute an issuance of Common Stock or Common Stock Equivalents by the
Corporation to which this clause (ii) applies. Upon the expiration or
termination of any unconverted, unexchanged or unexercised Common Stock
Equivalents for which an adjustment has been made pursuant to this clause (ii),
the adjustments shall forthwith be reversed to effect such Conversion Ratio as
would have been in effect at the time of such expiration or termination had such
Common Stock Equivalents, to the extent outstanding immediately prior to such
expiration or termination, never been issued.
(ii) If the purchase price provided for in any Common
Stock Equivalents, the additional consideration, if any, payable upon the
conversion or exchange of any Common Stock Equivalents, or the rate at which any
Common Stock Equivalents are convertible into or exchangeable for Common Stock,
shall change at any time, the Conversion Ratio in effect at the time of such
change shall be readjusted to the Conversion Ratio which would have been in
effect at such time had such Common Stock Equivalents still outstanding provided
for such changed purchase price, additional consideration or changed conversion
rate, as the case may be, at the time initially granted, issued or sold.
(iii) "Excluded Securities" shall mean: (A) shares of
Common Stock issued or issuable upon stock conversion of the Series A Preferred
Stock; (B) shares of Common Stock issuable or issued upon conversion or exercise
of any securities outstanding on the Issue Date; (C) any capital stock issued as
a stock dividend or upon any stock split or other subdivision or combination of
shares of the Corporation's capital stock; (D) shares of Common Stock issued in
any public offering of the Corporation's securities; (E) shares of Common Stock
issuable or issued to employees of the Corporation pursuant to an employee
benefit plan duly approved by the Board in accordance with Section 9.12.; or (F)
shares of Common Stock issued upon the conversion or exercise of Common Stock
Equivalents issued after the Issue Date as to which an adjustment to the
Conversion Ratio has been made pursuant to this paragraph (d) of this Section 6
upon the issuance of such Common Stock Equivalents.
(iv) If the Corporation shall set a record date for
the holders of its Common Stock for the purpose of entitling them to receive a
dividend or other distribution
-7-
156
and shall thereafter, and before such dividend or distribution is paid or
delivered to stockholders entitled thereto, legally abandon its plan to pay or
deliver such dividend or distribution, then no adjustment in the Conversion
Ratio then in effect shall be made by reason of the taking of such record, and
any such adjustment previously made as a result of the taking of such record
shall be reversed.
(e) As used in this Section 6, the term "Common Stock" shall
mean and include the Corporation's authorized Common Stock, par value $.01 per
share, as existing on the date of filing this Certificate of Designations, and
shall also include any capital stock of any class of the Corporation thereafter
authorized which shall neither be limited to a fixed sum or percentage in
respect of the rights of the holders thereof to participate in dividends nor be
entitled to a preference in the distribution of assets upon the Liquidation of
the Corporation, provided that the shares of Common Stock receivable upon
conversion of shares of Series A Preferred Stock shall include only shares
designated as Common Stock of the Corporation on the date of filing of this
instrument, or in case of any reorganization or reclassification of the
outstanding shares thereof, the stock, securities or assets to be issued in
exchange for such Common Stock pursuant thereto.
(f) The Corporation will at no time close its transfer books
against the transfer of any Series A Preferred Stock, or of any shares of Common
Stock issued or issuable upon the conversion of any shares of such Series A
Preferred Stock, except as may otherwise be required to comply with applicable
securities laws.
(g) The Corporation will not, by amendment of its Certificate
of Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Corporation, but
will at all times in good faith assist in the carrying out of all the provisions
of this Section 6 and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the holders of Series A
Preferred Stock against impairment.
(h) If the Corporation at any time (i) pays any dividend, or
makes any distribution, on the outstanding shares of Common Stock in shares of
Common Stock without payment of any consideration by the holders of Common
Stock, (ii) subdivides (by any stock split, stock divided, recapitalization or
otherwise) the outstanding shares of Common Stock, or (iii) combines (by reverse
stock split or otherwise) the outstanding shares of Common Stock into a smaller
number of shares, then, and in each such case, the Conversion Ratio in effect
immediately prior to such event or the record date therefor, whichever is
earlier, shall be adjusted so that the holder of any shares of Series A
Preferred Stock thereafter convertible into Common Stock pursuant to this
Section 6 shall be entitled to receive the number of shares of Common Stock
which such holder would have owned or have been entitled to receive after the
happening of any of the events described above, had such shares of Series A
Preferred
-8-
157
Stock been converted into Common Stock immediately prior to the happening of
such event or the record date therefor, whichever is earlier.
(i) Prior to the consummation of any Organic Change (as
defined below), the Corporation shall make appropriate provisions (in form and
substance satisfactory to the holders of a majority of the Series A Preferred
Stock then outstanding) to insure that each of the holders of Series A Preferred
Stock shall thereafter have the right to acquire and receive, in lieu of or in
addition to (as the case may be) the shares of Common Stock immediately
theretofore acquirable and receivable upon the conversion of such holder's
Series A Preferred Stock, such shares of stock, securities or assets as such
holder would have received in connection with such Organic Change if such holder
had converted its Series A Preferred Stock immediately prior to such Organic
Change. In each such case, the Corporation shall also make appropriate
provisions (in form and substance satisfactory to the holders of a majority of
the Series A Preferred Stock then outstanding) to insure that the provisions of
this Section 6 shall thereafter be applicable to the Series A Preferred Stock.
The Corporation shall not effect any such consolidation, merger or sale, unless
prior to the consummation thereof, the successor corporation (if other than the
Corporation) resulting from such consolidation or merger or the corporation
purchasing such assets provides in its charter documents (in form reasonably
satisfactory to the holders of a majority of the Series A Preferred Stock then
outstanding), the obligation to deliver to each such holder such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to acquire.
(j) If any recapitalization, conversion or exchange of shares
or any other change in the Corporation's capitalization structure, or any other
event occurs of the type contemplated by the provisions of this Section 6 but in
any such case, which is not expressly provided for by the provisions of this
Section 6 (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Board shall make an appropriate adjustment in the Conversion Ratio so as to
protect the rights of the holders of Series A Preferred Stock; provided that no
such adjustment shall increase the Conversion Ratio as otherwise determined
pursuant to this Section 6 or decrease the number of shares of Common Stock
issuable upon conversion of any share of Series A Preferred Stock.
7. Reports as to Adjustment. (a) Upon any adjustment of the Conversion
Ratio then in effect pursuant to the provisions of Section 6, then, and in each
such case, the Corporation shall promptly deliver to the Transfer Agent of
Series A Preferred Stock and the Common Stock and to each of the holders of
Series A Preferred Stock and the Common Stock, a certificate signed by the
President or a Vice President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary of the Corporation setting forth in
reasonable detail the event requiring the adjustment, the method by which such
adjustment was calculated and the Conversion Ratio then in effect following such
adjustment. Where appropriate, such notice to holders of Series A Preferred
Stock may be given in advance.
-9-
158
(b) The Corporation shall also give written notice to the
holders of Series A Preferred Stock at least twenty days prior to the date on
which any Organic Change takes place.
8. Protection of Rights. Any registered holder of Series A
Preferred Stock may proceed to protect and enforce its rights with any and all
remedies available at law or in equity.
9. Protective Provisions. So long as shares of Series A
Preferred Stock are outstanding, the Corporation shall not without first
obtaining the approval (by vote or written consent, as provided by law) of the
holders of at least a majority of the then outstanding shares of Series A
Preferred Stock:
(a) alter or change the rights, preference or privileges of
the shares of Series A Preferred Stock or otherwise amend the Certificate of
Incorporation, including, in either case, whether by merger, consolidation or
otherwise, so as to affect adversely the shares of Series A Preferred Stock;
(b) increase the authorized number of shares of Series A
Preferred Stock; or
(c) create or designate, or authorize the issuance of, any
new class or series of stock (i) ranking senior or having a preference over, or
being on a parity with, Series A Preferred Stock with respect to dividends or
upon Liquidation, (ii) having rights similar to any rights of Series A
Preferred Stock under Section 3 or Section 6 or (iii) convertible into any such
class or series of stock.
10. Major Transactions. Prior to an IPO, the Corporation shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly,
take any of the actions set forth in Section 9.12 of the Stockholders'
Agreement (as defined below) without first obtaining approval (by vote or
written consent, as provided by law) of the holders of a majority of the then
outstanding shares of Series A Preferred Stock.
11. Definitions. In addition to any other terms defined herein,
for purposes of this Certificate of Designations, the following terms shall
have the meanings indicated: "Common Stock" shall mean shares of Common Stock,
par value $.01 per share, of the Corporation.
"Common Stock Equivalent" shall mean securities convertible into, or
exchangeable or exercisable for, shares of common stock of the Corporation.
"Conversion Ratio," determined as of any date, shall equal the number
of shares of Common Stock into which one share of Series A Preferred Stock is
convertible pursuant to
-10-
159
Section 6. The Conversion Ratio shall initially equal one and shall be subject
to adjustment as provided in paragraph (d) of Section 6.
"GSCP" shall mean GS Capital Partners III, L.P., a Delaware limited
partnership.
"IPO" shall mean the closing of the sale of shares of Common Stock in a
bona fide, firm commitment, underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(the "Securities Act").
"Junior Stock" shall mean any capital stock of the Corporation ranking
junior (either as to dividends or upon Liquidation) to the Preferred Stock.
"Organic Change" means any recapitalization, reorganization,
reclassification, consolidation, merger, sale of all or substantially all of the
Corporation's assets to another Person or other transaction which is effected in
such a manner that holders of Common Stock are entitled to receive (either
directly or upon subsequent liquidation) stock, securities or assets with
respect to or in exchange for Common Stock.
"Person" shall mean any individual, firm, corporation, partnership or
other entity, and shall include any successor (by merger or otherwise) of such
entity.
"Purchase Agreement" shall mean the Preferred Stock Purchase Agreement
to be entered into in connection with the issuance of the Series A Preferred
Stock, among the Corporation, GSCP, certain affiliates of GSCP and the
stockholders of the Corporation.
"Stockholders' Agreement" shall mean the Stockholders Agreement to be
entered into in connection with the issuance of the Series A Preferred Stock,
among the Corporation, GSCP, certain affiliates of GSCP, and the stockholders of
the Corporation.
12. Notices. Unless otherwise expressly specified or permitted by the
terms hereof, all notices, requests, demands, consents and other communications
hereunder shall be in writing and shall be delivered by hand or shall be sent by
telex or telecopy (with a confirmatory copy sent by a different means within
three business days of such notice), to the following addresses:
(i) if to the holder of a share of Series A Preferred Stock,
at the holder's address as set forth in the stock register of the Corporation,
or at such other address as may have been furnished to the Corporation by the
holder in writing; or
-11-
160
(ii) if to the Corporation, at
Transaction Information Systems, Inc.
000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx
or at such other address as may have been furnished in writing by the
Corporation to the holders of the shares of Series A Preferred Stock.
Whenever any notice is required to be given hereunder, such notice shall be
deemed given and such requirement satisfied only when such notice is delivered
or, if sent by telex or telecopier, when received, unless otherwise expressly
specified or permitted by the terms hereof.
[Remainder of Page Intentionally Left Blank]
-12-
161
IN WITNESS WHEREOF, Transaction Information Systems, Inc. has caused
this Certificate of Designations to be signed by its Chief Executive Officer
this 2nd day of September, 1998.
TRANSACTION INFORMATION SYSTEMS, INC.
By:
-------------------------------------
Xxxxxxx Xxxxxxxx
Chief Executive Officer
-13-
162
EXHIBIT H
BY-LAWS
OF
TRANSACTION INFORMATION SYSTEMS, INC.
ARTICLE I
Offices
SECTION 1. Registered Office. The registered office of Transaction
Information Systems, Inc. (the "Corporation") in the State of Delaware, shall be
in the city of Wilmington, county of New Castle, Delaware.
SECTION 2. Other Offices. The Corporation may also have offices at
other places either within or without the State of Delaware.
ARTICLE II
Meetings of Stockholders
SECTION 1. Annual Meetings. The annual meeting of the stockholders of
the Corporation for the election of directors and for the transaction of such
other business as may properly come before the meeting shall be held on such
date and at such place and hour as shall be designated by the Board of Directors
(the "Board") in the notice thereof.
SECTION 2. Special Meetings. A special meeting of the stockholders for
any purpose or purposes may be called at any time by the Board, the Chief
Executive Officer, the Chairman of the Board, the President, a majority of the
Directors then in office or by holders of 10% or more of all shares of stock
entitled to vote at such meeting, and such meeting shall be held on such date
and at such place and hour as shall be designated in the notice thereof. Special
meetings of the holders of any class of any stock may be called by the holders
of 50% or more of all shares of such class of stock.
SECTION 3. Notice of Meetings. Except as otherwise expressly required
by these By-laws or by law, notice of each meeting of the stockholders shall be
given not less than 10 nor more than 60 days before the date of the meeting to
each stockholder of record entitled to notice of, or to vote at, such meeting by
delivering a typewritten or printed notice thereof to such stockholder
personally or by depositing such notice in the United States mail, postage
prepaid, directed to such stockholder at his address as it appears on the stock
records of the Corporation or by transmitting notice thereof to him at such
address by telegraph, cable or other form of recorded communication. Every such
notice shall state the place, date and hour of the meeting and, in the case of a
special meeting, the purpose or purposes for which the meeting is called. Except
as otherwise expressly required by law, no publication of any notice of a
meeting of the stockholders shall be required. Notice of any adjourned meeting
of the stockholders shall not be required to be given if the time and place
thereof are announced at the meeting at which the adjournment is taken, the
adjourned meeting is held within 30 days thereafter and a new record date for
the adjourned meeting is not thereafter fixed.
- 1 -
163
SECTION 4. Quorum and Manner of Acting. Except as otherwise expressly
required by law, if stockholders holding of record a majority of the shares of
stock of the Corporation, or in the case of a class vote, any class thereof
entitled to be voted shall be present in person or by proxy, a quorum for the
transaction of business at any meeting of the stockholders of the Corporation,
or in the case of a class vote, of such class, shall exist. In the absence of a
quorum at any such meeting or any adjournment or adjournments thereof, a
majority in voting interest of those present in person or by proxy and entitled
to vote thereat, or, in the absence therefrom of all the stockholders, or in the
case of a class vote of such class, any officer entitled to preside at, or to
act as secretary of, such meeting, may adjourn such meeting from time to time
until stockholders of the Corporation, or in the case of a class vote, of such
class, holding the amount of stock requisite for a quorum shall be present in
person or by proxy. At any such adjourned meeting at which a quorum is present,
any business may be transacted which might have been transacted at the meeting
as originally called. The absence from any meeting in person or by proxy of
stockholders holding the number of shares of stock of the Corporation, or in the
case of a class vote, of such class, required by law, by the Certificate of
Incorporation or by these By-laws for action upon any given matter shall not
prevent action at such meeting upon any other matter or matters which may
properly come before the meeting if there shall be present thereat in person or
by proxy stockholders holding the number of shares of stock of the Corporation,
or in the case of a class vote, of such class, required in respect of such other
matter or matters.
SECTION 5. Organization of Meetings. At each meeting of the
stockholders, one of the following shall act as chairman of the meeting and
preside thereat, in the following order of precedence:
the Chairman of the Board;
the President;
any other officer of the Corporation designated by the Board
to so act and preside;
any other officer of the Corporation designated by a majority
in voting interest of the stockholders present in person or by
proxy and entitled to vote thereat; or
a stockholder of record of the Corporation designated by a
majority in voting interest of the stockholders present in
person or by proxy and entitled to vote thereat.
The Secretary of the Corporation or, if he shall be absent from or
presiding over the meeting in accordance with the provisions of this Section,
the person (who shall be an Assistant Secretary of the Corporation, if an
Assistant Secretary shall be present thereat) whom the chairman of the meeting
shall appoint, shall act as secretary of the meeting and keep the minutes
thereof.
SECTION 6. Order of Business. The order of business at each meeting of
the stockholders shall be determined by the chairman of the meeting, but such
order of business may be changed by the vote of a majority in voting interest of
those present in person or by proxy at such meeting and entitled to vote
thereat.
- 2 -
164
SECTION 7. Voting.
(a) Except as otherwise provided in the Certificate of
Incorporation, including any certificate of designation setting forth the
rights, preferences and privileges of the holders of any series of Preferred
Stock of the Corporation, each stockholder shall, at each meeting of the
stockholders, be entitled to one vote in person or by proxy for each share of
Common Stock of the Corporation on the matter in question held by him and
registered in his name on the stock record of the Corporation on the date fixed
pursuant to these By-laws as the record date for the determination of
stockholders who shall be entitled to receive notice of and to vote at such
meeting; or, if no record date shall have been so fixed, then at the close of
business on the day next preceding the day on which notice of the meeting shall
be given or, if notice of the meeting shall be waived, at the close of business
on the day next preceding the day on which the meeting shall be held.
(b) Shares of its own stock belonging to the Corporation or to
another corporation, if a majority of the shares entitled to vote in the
election of directors of such other corporation is held, directly or indirectly,
by the Corporation, shall neither be entitled to vote nor be counted for quorum
purposes. Any vote of stock of the Corporation may be held at any meeting of the
stockholders by the person entitled to vote the same in person or by proxy
appointed by an instrument in writing delivered to the Secretary or an Assistant
Secretary of the Corporation or the secretary of the meeting; provided, however,
that no proxy shall be voted or acted upon after three years from its date
unless such proxy provides for a longer period. The attendance at any meeting of
a stockholder who may theretofore have given a proxy shall not have the effect
of revoking the same unless he shall in writing so notify the secretary of the
meeting prior to the voting of the proxy. At all meetings of the stockholders,
all matters, except as otherwise provided in the Certificate of Incorporation,
in these By-laws or by law, shall be decided by the vote of a majority in voting
interest of the stockholders present in person or by proxy and entitled to vote
thereat, a quorum being present. Unless required by law or so directed by the
chairman of the meeting, the vote at any meeting of the stockholders on any
question need not be by ballot. On a vote by ballot, each ballot shall be signed
by the stockholder voting, or by his proxy if there be such proxy, and shall
state the number of shares voted.
SECTION 8. Consent in Lieu of Meeting. Any action required to be taken
at any annual or special meeting of stockholders of the Corporation or of any
class of Preferred Stock of the Corporation, or any action which may be taken at
any annual or special meeting of such stockholders, may be taken without a
meeting, without prior notice and without a vote if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted.
SECTION 9. List of Stockholders. It shall be the duty of the Secretary
or other officer of the Corporation who shall have charge of the stock record,
either directly or through another officer of the Corporation or through a
transfer agent or transfer clerk appointed by the Board, to prepare and make, at
least 10 days before every meeting of the stockholders, a complete list of the
stockholders entitled to vote thereat, arranged in alphabetical order, and
showing the address of each stockholder and the number of shares registered in
the name of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours for a period of at least 10 days prior to the meeting, either at the place
where the meeting is to be held or at such other place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting. Such
- 3 -
165
list shall also be produced and kept at the time and place of the meeting during
the whole time thereof and may be inspected by any stockholder who is present.
The stock record shall be the only evidence as to who are the stockholders
entitled to examine the stock record, such list or the books of the Corporation
or to vote in person or by proxy at any meeting of the stockholders.
SECTION 10. Inspectors. Either the Board or, in the absence of a
designation of inspectors by the Board, the chairman of the meeting may, in its
or his discretion, appoint two or more inspectors, who need not be stockholders,
who shall receive and take charge of ballots and proxies and decide all
questions relating to the qualification of those asserting the right to vote and
the validity of ballots and proxies. In the event of the failure or refusal to
serve of any inspector designated by the Board, the chairman of the meeting
shall appoint an inspector to act in place of each such inspector designated by
the Board. In the absence of a designation of inspectors by the Board and the
chairman of the meeting, the secretary of the meeting shall perform the duties
which would otherwise have been performed by the inspectors.
ARTICLE III
Board of Directors
SECTION 1. General Powers. The property, business, affairs and policies
of the Corporation shall be managed by or under the direction of the Board.
SECTION 2. Number and Term of Office. The number of directors
constituting the Board shall be seven (7) and shall include two Series A
Directors (as defined in the Certificate of Designations of the Corporation).
Notwithstanding the foregoing, upon the occurrence of the event specified in
Section 9.1(a)(iii) of the Stockholders' Agreement, dated as of September 4,
1998, among the Corporation, GS Capital Partners III, L.P. ("GSCP"), certain
affiliates of GSCP and certain stockholders of the Corporation, the number of
directors constituting the Board shall consist of six (6) directors and shall
include one Series A Director. Each of the directors of the Corporation shall
hold office until the annual meeting after his election and until his successor
shall be elected and shall qualify or until his earlier death or resignation or
removal in the manner hereinafter provided.
SECTION 3. Election. At each annual meeting of the stockholders for the
election of directors at which a quorum is present, subject to the rights of the
holders of Series A Preferred Stock to elect the Series A Directors, the persons
receiving the greatest number of votes, up to the number of directors to be
elected, shall be the directors. Directors need not be stockholders of the
Corporation or residents of the State of Delaware.
SECTION 4. Meetings.
(a) Annual Meetings. As soon as practicable after each annual
election of directors, the Board shall meet for the purpose of organization, the
election of officers and the transaction of other business.
(b) Regular Meetings. Regular meetings of the Board or any
committee thereof shall be held as the Board or such committee shall from time
to time determine.
- 4 -
166
(c) Special Meetings. Special meetings of the Board, at which
any and all business may be transacted, shall be held whenever called by the
President or by a written call signed by any two or more directors and filed
with the Secretary.
(d) Notice of Meetings. No notice of regular meetings of the
Board or of any committee thereof or of any adjourned meeting thereof need be
given. The Secretary shall give notice to each director of each special meeting
of the Board or adjournment thereof, including the time and place thereof. Such
notice shall be given not less than two (2) days before the date of the meeting
to each director by delivering a typewritten notice thereof to such director
personally or by depositing such notice in the United States mail, postage
prepaid by Express Mail or first class mail, or by messenger service or
overnight delivery service which guarantees next day delivery, directed to such
director at his residence or usual business address or by transmitting notice
thereof to him by telecopier or other form of recorded communication, including
recorded telephonic notice, provided, however, that if notice of the meeting
shall be given by first class mail, such notice shall be given not less than
five (5) days prior to the date of the meeting. Notice of any meeting of the
Board or any committee thereof shall not be required to be given to any director
who shall attend such meeting. Any meeting of the Board or any committee thereof
shall be a legal meeting without any notice thereof having been given if all the
directors then in office shall be present thereat. The purposes of a meeting of
the Board or any committee thereof need not be specified in the notice thereof.
(e) Time and Place of Meetings. Regular meetings of the Board
or any committee thereof shall be held at such time or times and place or places
as the Board or the committee may from time to time determine. Each special
meeting of the Board or any committee thereof shall be held at such time and
place as the caller or callers thereof may determine. In the absence of such a
determination, each meeting of the Board or any committee thereof shall be held
at such time and place as shall be designated in the notices or waiver of
notices thereof.
(f) Quorum and Manner of Acting. Except as otherwise expressly
required by these By-laws or by law, a majority of the directors then in office
and a majority of the members of any committee shall be present in person at any
meeting thereof in order to constitute a quorum for the transaction of business
at such meeting, and the vote of a majority of the directors present at any such
meeting at which a quorum is present shall be necessary for the passage of any
resolution or for an act to be the act of the Board or such committee; provided,
however, that prior to the closing of the sale of shares of the Corporation's
Common Stock in a bona fide, firm commitment, underwritten public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended, at least one Series A Director shall be present (in person or
by telephone) at any meeting of the Board or such committee to constitute a
quorum. In the absence of a quorum, a majority of the directors present thereat
may adjourn such meeting from time to time until a quorum shall be present
thereat. Notice of any adjourned meeting need not be given.
(g) Organization of Meetings. At each meeting of the Board,
one of the following shall act as chairman of the meeting and preside thereat,
in the following order of precedence:
(i) the Chairman of the Board;
(ii) the President, if a director; or
- 5 -
167
(iii) any director chosen by a majority of the
directors present thereat.
(h) Minutes. The Secretary or such other person present whom
the chairman of the meeting shall appoint, shall act as secretary of such
meeting and keep the minutes thereof. The order of business at each meeting of
the Board shall be determined by the chairman of such meeting.
(i) Consent in Lieu of Meeting. Any action required or
permitted to be taken at any meeting of the Board or any committee thereof may
be taken without a meeting if all members of the Board or committee, as the case
may be, consent thereto in a writing or writings, and such writing or writings
are filed with the minutes of the proceedings of the Board or committee.
(j) Action by Communications Equipment. The directors may
participate in a meeting of the Board or any committee thereof by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such participation
shall constitute presence in person at such meeting.
SECTION 5. Compensation. Each director, in consideration of his serving
as such, shall be entitled to receive from the Corporation such amount per annum
and such fees for attendance at meetings of the Board or of any committee, or
both, as the Board shall from time to time determine. The Board may likewise
provide that the Corporation shall reimburse each director or member of a
committee for any expenses incurred by him on account of his attendance at any
such meeting. Nothing contained in this Section 5 shall be construed to preclude
any director from serving the Corporation in any other capacity and receiving
compensation therefor or to require the Board to provide for compensation to
directors.
SECTION 6. Resignation, Removal and Vacancies.
(a) Any director may resign at any time by giving written
notice of his resignation to the Board or the President of the Corporation. Any
such resignation shall take effect at the time specified therein or when
delivered to the Board or the President, as the Board shall determine. Except as
aforesaid, the acceptance of such resignation shall not be necessary to make it
effective.
(b) Any director may be removed at any time for cause or
without cause by vote of the holders of record of a majority in voting interest
of shares then entitled to vote at an election of directors at a duly
constituted meeting of stockholders; provided, however, that Series A Directors
may be removed only with the prior approval (by vote or written consent) of the
holders of Series A Preferred Stock. The vacancy in the Board caused by any such
removal may be filled by the stockholders at such meeting or, if not so filled,
then by the Board as provided in the next paragraph of these By-laws. Any
director may also be removed at any time for cause by vote of a majority of the
whole Board.
(c) In case of any vacancy on the Board or in case of any
newly created directorship, a majority of the directors of the Corporation then
in office, though less than a quorum, or the sole remaining director may elect a
director to fill the vacancy or the newly created directorship for the unexpired
portion of the term being filled; provided, however, that any vacancy on the
Board with respect to any Series A Director may be filled only by another Person
(as defined in the Stockholders' Agreement) designated by GSCP. The director
elected to fill such vacancy shall hold office for the unexpired term in respect
of which such vacancy occurred.
- 6 -
168
SECTION 7. Committees. The Board from time to time may appoint from
among its members an executive committee and one or more other committees, each
of which shall have one or more members as the Board shall determine. At least
one Series A Director shall be entitled to be a member of all committees of the
Board. Each committee shall have and may exercise such powers as the Board may
delegate, to the extent permitted by law. The Board shall have power to change
the members of any committee at any time, to fill vacancies and to discharge any
such committee, either with or without cause, at any time.
ARTICLE IV
Officers
SECTION 1. Election and Appointment and Term of Office.
(a) The officers of the Corporation may be a Chairman of the
Board or Co-Chairmen, a President, such number, if any, of Vice Presidents
(including Executive or Senior Vice Presidents) as the Board may from time to
time determine, a Secretary and a Treasurer and such officers as the Board may
from time to time determine. The Chairman of the Executive Committee may, if the
Board of Directors so determines, be an officer of the Corporation. Each such
officer shall be elected by the Board at its annual meeting or such other time
as the Board shall determine, and shall serve at the discretion of the Board.
Two or more offices may be held by the same person except that the same person
shall not be both President and Secretary. The Board may elect or appoint (and
may authorize the President to appoint) such other officers (including one or
more Assistant Secretaries and Assistant Treasurers) as it deems necessary who
shall have such authority and shall perform such duties as the Board or the
President may from time to time prescribe. The Board of Directors may, but shall
not be required to, designate one or more officers who shall hold the
position(s) of, and perform the duties of, the Chief Executive Officer, the
Chief Operating Officer, the Chief Financial Officer and the Chief Accounting
Officer.
(b) If additional officers are elected or appointed during the
year, each shall hold office until the next annual meeting of the Board at which
officers are regularly elected or appointed and until his successor is elected
or appointed and qualified or until his earlier death or resignation or removal
in the manner hereinafter provided.
SECTION 2. Duties and Functions.
(a) Chairman. The Chairman, if any, shall preside at all
meetings of the Board and of the stockholders at which he is present. The Board
may, but need not, designate the Chairman as the Chief Executive Officer of the
Corporation, in which event he shall exercise all of those general supervisory
provisions described in Section 2(b) of Article IV of the By-Laws, and the
President will there upon act as Chief Operating Officer of the Corporation,
subject to the direction of the Chairman.
(b) President. Unless the Board shall have designated the
Chairman, if any, as the Chief Executive Officer of the Corporation, the
President shall be the chief executive officer of the Corporation. The President
shall be responsible for implementing the policies adopted by the Board and
shall report to the Board. The President shall also have the powers and duties
delegated to him by these By-laws and such other powers and duties as the Board
may from time to time determine.
- 7 -
169
(c) Vice Presidents. Each Vice President shall have such
powers and duties as shall be prescribed by the Board.
(d) Secretary. The Secretary shall keep the records of all
meetings of the stockholders, the Board and all other committees, if any, in one
or more books kept for that purpose. He shall give or cause to be given due
notice of all meetings in accordance with these By-laws and as required by law.
He shall be custodian of the seal of the Corporation and of all contracts,
deeds, documents and other corporate papers, records (except accounting records)
and indicia of title to properties owned by the Corporation as shall not be
committed to the custody of another officer by the Board, or by the President.
He shall affix or cause to be affixed the seal of the Corporation to instruments
requiring the same when the same have been signed on behalf of the Corporation
by a duly authorized officer. He shall perform all duties and have all powers
incident to the office of Secretary and shall perform such other duties as shall
be assigned to him by the Board or the President. The Secretary may be assisted
by one or more Assistant Secretaries.
(e) Treasurer. The Treasurer shall have charge and custody of
all moneys, stocks, bonds, notes and other securities owned or held by the
Corporation, except those held elsewhere at the direction of the Chief Executive
Officer or the Board. He shall perform all duties and have all powers incident
to the office of Treasurer and shall perform such other duties as shall be
assigned to him by the Board, the Chief Executive Officer and the Chief
Financial Officer, if any. The Treasurer may be assisted by one or more
Assistant Treasurers, and the Treasurer shall report to the Chief Executive
Officer and the Chief Financial Officer, if any, or to such other officer as may
be designated by the Board or to the Board of Directors, as the Board of
Directors shall determine.
SECTION 3. Resignation, Removal and Vacancies.
(a) Any officer may resign at any time by giving written
notice of his resignation to the Board or the President. Any such resignation
shall take effect at the time specified therein or when delivered to the Board,
as the Board shall determine. Except as aforesaid, the acceptance of such
resignation shall not be necessary to make it effective.
(b) Any officer, agent or employee elected or appointed by the
Board may be removed, with or without cause, at any time by the Board. Any
officer, agent or employee appointed by an officer may be removed, with or
without cause, at any time by the Board or such officer. Any removal pursuant to
Section 2 or 3 of this Article IV shall not affect any rights which a terminated
employee shall have under any employment agreement between such person and the
Corporation which has been approved by the Board of Directors and has been
executed by an officer authorized by the Board to execute such agreement.
(c) A vacancy in any office may be filled for the unexpired
portion of the term in the same manner as provided in these By-laws for election
or appointment to such office.
ARTICLE V
Waiver of Notices; Place of Meetings
SECTION 1. Waiver of Notices. Whenever notice is required to be given
by the Certificate of Incorporation, by these By-laws or by law, a waiver
thereof in writing, signed by the person entitled to such
- 8 -
170
notice or by an attorney thereunto authorized, shall be deemed equivalent to
notice, whether given before or after the time specified therein and, in the
case of a waiver of notice of a meeting, whether or not such waiver specifies
the purpose of or business to be transacted at such meeting. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
where the person attends the meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
SECTION 2. Place of Meetings. Any meeting of the stockholders, the
Board or any committee of the Board may be held within or outside the State of
Delaware.
ARTICLE VI
Execution and Delivery of Documents; Deposits; Proxies;
Books and Records
SECTION 1. Execution and Delivery of Documents; Delegation. The Board
shall designate the officers, employees and agents of the Corporation who shall
have power to execute and deliver deeds, contracts, mortgages, bonds,
debentures, checks, drafts and other orders for the payment of money and other
documents for and in the name of the Corporation and may authorize such
officers, employees and agents to delegate such power (including authority to
redelegate) by written instrument to other officers, employees or agents of the
Corporation. Such delegation may be by resolution or otherwise, and the
authority granted shall be general or confined to specific matters, all as the
Board may determine.
SECTION 2. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
or otherwise as the Board, the President, or any other officer of the
Corporation to whom power in that respect shall have been delegated by the Board
or these By-laws shall select.
SECTION 3. Proxies in Respect of Stock or Other Securities of Other
Corporations. The Chief Executive Officer, the Chairman of the Board, the
President or any other officer of the Corporation designated by the Board shall
have the authority from time to time to appoint an agent or agents of the
Corporation to exercise in the name and on behalf of the Corporation the powers
and rights which the Corporation may have as the holder of stock or other
securities in any other corporation, to vote or consent in respect of such stock
or securities and to execute or cause to be executed in the name and on behalf
of the Corporation and under its corporate seal or otherwise, such written
proxies, powers of attorney or other instruments as he may deem necessary or
proper in order that the Corporation may exercise such powers and rights. Any
such officer may instruct any person or persons appointed as aforesaid as to the
manner of exercising such powers and rights.
SECTION 4. Books and Records. The books and records of the Corporation
may be kept at such places within or without the State of Delaware as the Board
may from time to time determine.
- 9 -
171
ARTICLE VII
Certificates; Stock Record; Transfer and Registration;
New Certificates; Record Date; etc.
SECTION 1. Certificates for Stock.
(a) Every owner of stock of the Corporation shall be entitled
to have a certificate certifying the number of shares owned by him in the
Corporation and designating the class of stock to which such shares belong,
which shall otherwise be in such form as the Board shall prescribe. Each such
certificate shall be signed by, or in the name of the Corporation by, the Chief
Executive Officer, the Chairman of the Board, the President or a Vice President
and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Corporation. Any or all of such signatures may be facsimiles.
(b) In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may nevertheless be issued by the Corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of issue. Every certificate surrendered to the Corporation for exchange or
transfer shall be cancelled and a new certificate or certificates shall not be
issued in exchange for any existing certificate until such existing certificate
shall have been so cancelled, except in cases provided for in Section 4 of this
Article.
SECTION 2. Stock Record. A stock record in one or more counterparts
shall be kept of the name of the person, firm or corporation owning the stock
represented by each certificate for stock of the Corporation issued, the number
of shares represented by each such certificate, the date thereof and, in the
case of cancellation, the date of cancellation. Except as otherwise expressly
required by law, the person in whose name shares of stock stand on the stock
record of the Corporation shall be deemed the owner thereof for all purposes as
regards the Corporation.
SECTION 3. Transfer and Registration of Stock.
(a) Transfer. The transfer of stock and certificates of stock
which represent the stock of the Corporation shall be governed by the Uniform
Commercial Code, as in effect in Delaware and as amended from time to time.
(b) Registration. Registration of transfers of shares of the
Corporation shall be made only on the books of the Corporation by the registered
holder thereof, or by his attorney thereunto authorized by power of attorney
duly executed and filed with the Secretary of the Corporation, on the surrender
of the certificate or certificates for such shares properly endorsed or
accompanied by a stock power duly executed.
SECTION 4. New Certificates.
(a) Lost, Stolen or Destroyed Certificates. Where a stock
certificate has been lost, apparently destroyed or wrongfully taken, the
issuance of a new stock certificate or the claims based on such certificate
shall be governed by the Uniform Commercial Code, as in effect in Delaware and
amended from time to time.
- 10 -
172
(b) Mutilated Certificates. Where the holder of any
certificate for stock of the Corporation notifies the Corporation of the
mutilation of such certificate within a reasonable time after he has notice of
it, the Corporation will issue a new certificate for stock in exchange for such
mutilated certificate theretofore issued by it.
(c) Bond. The Board may, in its discretion, require the owner
of the lost, stolen, destroyed or mutilated certificate to give the Corporation
a bond in such sum, limited or unlimited, in such form and with such surety or
sureties sufficient to indemnify the Corporation against any claim that may be
made against it on account of the loss, theft, destruction or mutilation of any
such certificate or the issuance of any such new certificate.
SECTION 5. Regulations. The Board may make such rules and regulations
as it may deem expedient, not inconsistent with these By-laws, concerning the
issue, transfer and registration of certificates for stock of the Corporation.
The Board may appoint or authorize any officer or officers to appoint one or
more transfer clerks or one or more transfer agents and one or more registrars
and may require all certificates for stock to bear the signature or signatures
of any of them.
SECTION 6. Fixing Date for Determination of Stockholders of Record. In
order that the Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board
may fix, in advance, a record date, which shall not be more than 60 nor less
than 10 days before the date of such meeting, nor more than 60 days prior to any
other action. A determination of stockholders entitled to notice of or to vote
at a meeting of the stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board may fix a new record date for the adjourned
meeting.
ARTICLE VIII
Seal
The Board shall provide a corporate seal which shall bear the full name
of the Corporation and the year and state of its incorporation.
ARTICLE IX
Fiscal Year
The fiscal year of the Corporation shall end on December 31 of
each year, or such other date as shall be determined by resolution of the Board
of Directors.
- 11 -
173
ARTICLE X
Amendments
Sections 2, 3, 4(f), 6 and 7 of Article III of these By-Laws and this
Article X of these By-Laws may not be altered or repealed without the prior
approval of the holders of a majority of the outstanding shares of Series A
Preferred Stock. Otherwise, these By-laws may be amended, altered or repealed by
the vote of a majority of the whole Board; provided, however, that the holders
of a majority of the outstanding stock of the Corporation entitled to vote in
respect thereof, may, by their vote given at an annual meeting or at any special
meeting, amend or repeal any By-law made by the Board.
174
Exhibit I
TRANSACTION INFORMATION SYSTEMS, INC.
Secretary's Certificate
I, the undersigned, being the Secretary of Transaction Information
Systems, Inc., a corporation organized and existing under the laws of the State
of Delaware (the "Company"), DO HEREBY CERTIFY on behalf of the Company that:
1. This Certificate is being delivered at the Closing today pursuant to
Section 1.5(i) of the Stock Purchase Agreement, dated as of September 4, 1998
(the "Agreement"), among the Company, GS Capital Partners III, L.P. ("GSCP"),
certain affiliates of GSCP, and certain stockholders of the Company. Unless
otherwise defined herein, capitalized terms used in this Certificate have the
meanings given to them in the Agreement.
2. Attached hereto as Exhibit A is a correct and complete copy of the
resolutions adopted by the Company by written consent on September 3, 1998,
which resolutions are now in full force and effect and have not been altered,
amended or rescinded in any way.
3. The persons named below have been duly elected (or appointed),
qualified and acting officers of the Company at all times since September 3,
1998 (to and including the date hereof), each holding the respective offices set
forth opposite their names, and the signatures set forth below opposite their
names are the genuine signatures of such officers executing the Agreement and
any other agreements or documents on behalf of the Company in connection with
the Closing under the Agreement:
Name Office Signature
Chairman of the Board
Xxxxxxx Xxxxxxxx and Chief Executive Officer
Xxxxxx Xxxx President
Senior Vice President
Xxxxxx Xxxx and Secretary
Senior Vice President
Xxxx Xxxxxxxxxxx and Treasurer
Senior Vice President
Xxxxxx Xxxxxxx and Assistant Secretary
Xxxx Xxxxx Senior Vice President
Xxxxx Xxxxxxxxxx Senior Vice President
Xxxxxx Xxxxxx Senior Vice President
Senior Vice President
Xxxxxxxx Xxxx and Assistant Secretary
175
Name Office Signature
Xxxxx Xxxxxx Senior Vice President 1
Xxxxxxxx Xxxxx Senior Vice President 1
4. Attached hereto as Exhibit B is a certificate, certifying as to the
good standing of the Company, issued by the Secretary of State of the State of
Delaware.
5. Attached hereto as Exhibit C is a copy of the Certificate of
Incorporation of the Company and all amendments thereto; no action has been
taken to amend such Certificate since the date of the last amendment; and there
are no proceedings pending or, to the best of my knowledge, threatened for the
liquidation or dissolution of the Company or threatening its existence.
6. Attached hereto as Exhibit D is a true and complete copy of the
By-Laws of the Company and all amendments thereto, as in full force and effect
on the date hereof.
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
on behalf of the Company as of September ___, 1998.
TRANSACTION INFORMATION SYSTEMS, INC.
By: ________________________________
Xxxxxx Xxxx
Secretary
I, Xxxxxxx Xxxxxxxx, Chairman of the Board and Chief Executive Officer
of the Company, DO HEREBY CERTIFY on behalf of the Company that Xxxxxx Xxxx, is,
and at all times since September 3, 1998 has been, duly elected and qualified as
the Secretary of the Company, and that his signature set forth above is his
genuine signature.
TRANSACTION INFORMATION SYSTEMS, INC.
By: _______________________________
Xxxxxxx Xxxxxxxx
Chairman of the Board and
Chief Executive Officer
-----------------------
1 Not Available.
176
EXHIBIT A
---------
RESOLUTIONS
177
Exhibit B
---------
Good Standing Certificate
178
Exhibit C
---------
Certificate of Incorporation and Amendments
179
Exhibit D
---------
By-Laws
180
Exhibit J
September 4, 1998
GS Capital Partners III, L.P.
GS Capital Partners III Offshore, X.X.
Xxxxxxx, Sachs & Co. Verwaltungs GmbH
Stone Street Fund 0000, X.X.
Xxxxxx Xxxxxx Fund 1998, L.P
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
We have acted as counsel to Transaction Information Systems, Inc., a
corporation formed under the laws of the State of Delaware (the "Corporation"),
in connection with that certain Preferred Stock Purchase Agreement, dated as of
September 4, 1998 (the "Stock Purchase Agreement"), by and among the
Corporation, GS Capital Partners III, L.P., GS Capital Partners III Offshore,
L.P., Xxxxxxx, Xxxxx & Co. Xxxxxxxxxxx XxxX, Xxxxx Xxxxxx Xxxx 0000, L.P., and
Bridge Street Fund 1998, L.P (collectively, the "Investors," and each
individually an "Investor") and the existing stockholders of the Corporation
(the "Existing Stockholders"). All capitalized terms used but not otherwise
defined herein shall have the respective meanings ascribed to them in the Stock
Purchase Agreement.
In connection with rendering this opinion, we have examined the
Documents, as hereafter defined, and have examined and relied upon such matters
of law and such certificates of public officials as we have deemed relevant to
the rendering of our opinion.
Based upon the foregoing and subject to the qualifications hereinafter
set forth, we are of the opinion that:
181
GS Capital Partners III, L.P.
September 4, 1998
Page 2
1. The Corporation (i) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and (ii)
has all requisite corporate power to own, lease and operate its properties, to
carry on the business of the Corporation as presently conducted and to enter
into and carry out the transactions contemplated by the Stock Purchase
Agreement, the Stockholders' Agreement and the Registration Rights Agreement
(collectively, the "Documents").
2. The execution, delivery and performance by the Corporation of each
of the Documents has been duly authorized by all requisite corporate action on
the part of the Corporation, and each of the Documents constitutes a legal,
valid and binding obligation of the Corporation, enforceable against the
Corporation in accordance with its terms.
3. (a) The authorized capitalization of the Corporation consists of (i)
10,000,000 shares of Preferred Stock, par value $.01 per share, of which
8,000,000 shares have been designated Series A Preferred Stock, none of which
shares of Preferred Stock are outstanding, and (ii) 35,000,000 shares of Common
Stock, par value $.01 per share (the "Common Stock"), of which (A) 20,000,000
shares of Common Stock are outstanding, and all such shares have been validly
issued and are fully paid and nonassessable, with no personal liability
attaching to the ownership thereof, (B) 1,898,800 shares of Common Stock have
been duly reserved for issuance upon the exercise of certain options granted to
persons as set forth in Schedule 2.3(a) of the Stock Purchase Agreement (the
"Existing Options") and (C) 165,000 shares of Common Stock have been duly
reserved for issuance upon the exercise of certain options, to be granted to
certain employees, which options have not yet been granted (the "Management
Options").
(b) The authorized capitalization of TIS Equipment Corp.
("TEC") consists of (i) 5,000,000 shares of Preferred Stock, par value $.01 per
share, none of which shares of Preferred Stock are outstanding, and (ii)
25,000,000 shares of Common Stock, par value $.01 per share (the "TEC Common
Stock"), of which 10,000,000 shares of TEC Common Stock are outstanding, and
which, immediately prior to the Closing and before giving effect to the capital
contribution of such shares to TIS, are owned by the same Existing Stockholders
and in the same respective amounts as is set forth in Schedule 2.3(a) with
respect to the Corporation.
(c) The authorized capitalization of Xxxxxxx-Xxxx-Xxxxxxxx
Associates, Ltd. ("SSN") consists of (i) 200 shares of Common Stock, no par
value per share (the "SSN Common Stock"), of which 200 shares of SSN Common
Stock are outstanding, and all such shares are owned by the Corporation.
4. To our knowledge, (a) Schedule 2.3(a) of the Stock Purchase
Agreement contains a list of all outstanding warrants, options, agreements,
convertible securities or other commitments pursuant to which the Corporation is
or may become obligated to issue any shares of the capital stock or other
securities of the Corporation (except as otherwise contemplated by the
Documents), and which names all persons entitled of record to receive such
shares or other
182
GS Capital Partners III, L.P.
September 4, 1998
Page 3
securities, the shares of capital stock or other securities required to be
issued thereunder as of the date hereof and the price per share, if any, payable
with respect to the issuance of any share of capital stock issuable thereunder;
(b) except as set forth on Schedule 2.3(b) of the Stock Purchase Agreement or as
otherwise contemplated by the Documents, there are no rights, including
preemptive or similar rights, to purchase or otherwise acquire shares or sell or
otherwise transfer shares of the capital stock of the Corporation pursuant to
any provision of law, the Certificate of Incorporation, the By-Laws, or any
agreement known to us to which the Corporation is a party, except for the
Stockholders Agreement among the Corporation and its stockholders being
terminated immediately before the Closing (the "Old Stockholders Agreement");
and (c) except as set forth on Schedule 2.3(b) of the Stock Purchase Agreement
or as otherwise contemplated by the Documents, or in the Old Stockholders
Agreement, the Corporation is not a party to any agreements, restrictions or
encumbrances (such as a right of first refusal, right of first offer, proxy,
voting agreement, voting trust, registration rights agreement, stockholders'
agreement, or similar arrangement whether or not the Corporation is a party
thereto) with respect to the purchase, sale or voting of any shares of capital
stock of the Corporation (whether outstanding or issuable upon conversion or
exercise of outstanding securities).
5. The authorization, issuance, sale and delivery of Series A Preferred
Stock pursuant to the Stock Purchase Agreement and the authorization,
reservation, issuance, sale and delivery of the Conversion Shares have been duly
authorized by all requisite corporate action on the part of the Corporation, and
when issued and delivered in accordance with the Stock Purchase Agreement and
the Certificate of Designations, the Series A Preferred Stock and the Conversion
Shares will be validly issued and outstanding, fully paid and nonassessable with
no personal liability attached to the ownership thereof, free of any
Encumbrances and not subject to preemptive or similar rights of the stockholders
of the Corporation or others, except as provided in the Documents or under
applicable securities laws.
6. The execution, delivery and performance by the Corporation of each
of the Documents and the consummation by the Corporation and the Existing
Stockholders of the transactions contemplated hereby and thereby will not (a)
violate any provision of law, statute, rule or regulation that, in our
experience, is normally applicable to transactions of the type contemplated by
the Documents, or any ruling, writ, injunction, order, judgment or decree of any
court, administrative agency or other governmental body known to us applicable
to any of the TIS Entities, or any of their properties or assets, except with
respect to the contribution of the TEC Common Stock to TIS under the agreements
with Xxxxxxx Xxxxx Business Financial Services Inc. ("Xxxxxxx Xxxxx") set forth
on Schedule 2.23 to the Stock Purchase Agreement and related agreements
supporting the lines of credit with Xxxxxxx Xxxxx (collectively, the "Merrill
Documents"), (b) conflict with or result in any breach of any of the term,
conditions or
183
GS Capital Partners III, L.P.
September 4, 1998
Page 4
provisions of, or constitute (with due notice or lapse of time, or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, or result in the creation of any Encumbrance upon any of the properties
or assets of any of the TIS Entities under, any Contract known to us, except
under the Merrill Documents, or (c) violate the Certificate of Incorporation or
the By-Laws of any of the TIS Entities.
7. The offer and sale of the Series A Preferred Stock, the issuance and
delivery of the Conversion Shares to the Investors upon the conversion of the
Series A Preferred Stock in accordance with the terms of the Stock Purchase
Agreement and the Certificate of Designations, and all prior issuances of
securities of the Corporation are each exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"), as currently in
effect.
8. No consent or approval of or by, or any notification of or filing
with, any person (governmental or, to our knowledge, private) which has not
heretofore been made is required in connection with the execution, delivery and
performance by the Corporation of the Documents or any documentation relating
thereto, the consummation by the Corporation of the transactions contemplated
hereby or thereby, the issuance, sale or delivery of the Series A Preferred
Stock and the Conversion Shares in accordance with the terms of the Stock
Purchase Agreement and the Certificate of Designations.
The foregoing opinion is limited as follows:
(a) The opinion expressed herein with respect to the
enforceability of the Agreements is subject to the effects of bankruptcy,
insolvency, avoidance and other laws affecting the enforcement of creditors'
rights generally, general principles of equity, including, without limitation,
doctrines of reasonableness, materiality, good faith and fair dealing and
limitations on the rights to recover attorneys' fees (regardless of whether such
enforceability is considered in a proceeding in equity or at law). In addition,
we express no opinion as to the enforceability of: (i) self-help and other
non-judicial remedies; (ii) provisions which purport to create powers of
attorney (or similar powers to act on behalf of the Corporation without the
Corporation's express consent as to each specific action taken pursuant to such
power at the time such action is taken or proposed to be taken); (iii)
provisions related to waiver of rights or remedies (or the delay or omission of
enforcement thereof), disclaimers, liability limitations with respect to third
parties, releases of legal rights or equitable discharge of defenses; (iv)
indemnifications for environmental matters or for violation of securities laws
and similar provisions; (v) default interest rates, late payment charges,
liquidated damages provisions and other similar items to the extent that they
are deemed to be penalties or forfeitures or are found to be usurious; and (vi)
the availability of injunctive relief or specific performance in any particular
184
GS Capital Partners III, L.P.
September 4, 1998
Page 5
case.
(b) The opinion expressed herein is further premised on the
assumption that: (i) all records, agreements and documents examined by us in
connection with the preparation of this opinion are complete, authentic and
accurate; (ii) all signatures contained in such records, agreements and
documents are genuine signatures of the parties purporting to have signed the
same; (iii) all parties signing such records, agreements and documents had, at
the time of such signing, full legal capacity to sign and deliver such records
and documents and that the facts recited in the affidavits concerning certain
powers of attorney are accurate; (iv) the Documents have been duly authorized,
executed and delivered by, constitute legal, valid and binding obligations of,
and are enforceable against, the Investors; (v) all documents submitted to us as
copies or by telecopier conform in all respects to the respective originals; and
(vi) all of the representations and warranties of the Corporation and the
Investors in the Stock Purchase Agreement are accurate.
(c) The opinion set forth in paragraphs 3 and 4 above are
based solely on our review of the Certificate of Incorporation, as amended to
date, of the Corporation, TEC and SSN (collectively, the "TIS Group"), the
Corporation's Certificate of Designations, the minutes and stock ledgers of the
TIS Group, and certificates of such officers of the TIS Group as we have deemed
necessary. The opinions set forth in paragraphs 7 and 8 above are based in part
on the accuracy of the Investors' representations contained in the Stock
Purchase Agreement including, without limitation, those contained in Section
3(h) thereof, that there is no requirement for the Investors to file under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 1976, as amended. The opinion set
forth in paragraph 7 above also assumes that the parties acquiring Conversion
Shares do so for investment and not as part of a distribution.
(d) All statements made herein "to our knowledge", "to our
actual knowledge", "as to which we have actual knowledge", "to the best of our
knowledge" "known to us" and the like refers to our actual knowledge.
We are admitted to practice law in the State of New York and
we express no opinion as to the laws of any other jurisdiction except for the
corporate law of the State of Delaware and the laws of the United States to the
extent referred to herein. The opinions expressed herein are based on applicable
laws, rules and regulations in effect and factual circumstances as of the date
hereof and we assume no obligation to advise you of any changes concerning the
matters discussed herein. This opinion is intended solely for the use of the
Investors and may not be reproduced or filed publicly
185
GS Capital Partners III, L.P.
September 4, 1998
Page 6
or relied upon by any other person without our written consent, except nothing
herein shall prevent disclosure of this opinion if specifically required by law
or court order or in connection with any litigation involving the transactions
contemplated by the Documents.
Very truly yours,
ESANU KATSKY XXXXXX & SIGER, LLP
186
EXHIBIT K
NONDISCLOSURE AGREEMENT
This NONDISCLOSURE AGREEMENT (this "Agreement"), is made as of
September 3, 1998, by and among TRANSACTION INFORMATION SYSTEMS, INC., a
corporation formed under the Laws of the State of Delaware (the "Company") and
the stockholder set forth on the signature page hereto (the "Stockholder").
WHEREAS, as of the date hereof, the Company, each of the existing
stockholders of the Company, including the Stockholder (the "Existing
Stockholders"), GS Capital Partners III, L.P., a Delaware limited partnership
("GSCP"), GS Capital Partners III Offshore, L.P. ("GSCP Offshore"), Xxxxxxx,
Xxxxx & Co. Verwaltungs GmbH ("GS Germany"), Xxxxx Xxxxxx Xxxx 0000, X.X.
("Stone 0000"), Xxxxxx Xxxxxx Fund 1998, L.P. ("Bridge 1998," collectively with
GSCP, XXXX Xxxxxxxx, XXXX Xxxxxxx, Xxxxx 0000 and Bridge 1998, the "GSCP
Parties") are entering into a Preferred Stock Purchase Agreement (the "Purchase
Agreement") and certain other agreements; and
WHEREAS, as an inducement to GSCP and the GSCP Parties to enter into
the Purchase Agreement, each of the Existing Stockholders have agreed to enter
into this Agreement with the Company.
ACCORDINGLY, the parties hereto agree as follows:
1. Nondisclosure. The Stockholder acknowledges that (i) the Stockholder
has access to and knowledge of Confidential Information (as defined below); (ii)
the disclosure of any such Confidential Information to existing or potential
competitors of the Company would place the Company at a competitive disadvantage
and would cause damage, monetarily or otherwise, to the Company's business and
(iii) the engaging by the Stockholder in any of the activities prohibited by
this Agreement may constitute improper appropriation and/or use of Confidential
Information. The Stockholder expressly acknowledges the trade secret status of
the Confidential Information and that the Confidential Information constitutes a
protectable business interest of the Company. The Stockholder will not, during
or at any time after the term of his employment with the Company, disclose any
Confidential Information to any person, firm, corporation, association, or other
entity for any reason or purpose whatsoever except (a) as required in the
performance of the Stockholder's duties on behalf of the Company, (b) as
required by applicable law or (c) to affiliates of the GSCP Parties or potential
investors in the Company. For purposes of this Agreement, "Confidential
Information" means any confidential or proprietary information relating to the
Company and its affiliates
187
including, without limitation, the identity of the Company's customers, the
identity of representatives of customers with whom the Company has dealt, the
kinds of services provided by the Company to customers, the manner in which such
services are performed or offered to be performed, the service need of actual or
prospective customers, pricing information, financial information, information
concerning the creation, acquisition or disposition of products and services,
customer maintenance listings, computer software applications, research and
development data, know-how, personnel information and other trade secrets.
2. Remedies. The Stockholder agrees that any breach of this Agreement
would result in irreparable injury and damage to the Company for which the
Company would have no adequate remedy at law. The Stockholder therefore also
agrees that in the event of said breach or any threat of breach, the Company (or
GSCP or any GSCP Party) shall be entitled to an immediate injunction and
restraining order to prevent such breach and/or threatened breach and/or
continued breach by the Stockholder and/or any and all entities acting for
and/or with the Stockholder, without having to prove damages, in addition to any
other remedies to which the Company (or GSCP or any GSCP Party) may be entitled
at law or in equity. The terms of this paragraph shall not prevent the Company
(or GSCP or any GSCP Party) from pursuing any other available remedies for any
breach or threatened breach hereof, including but not limited to the recovery of
damages from the Stockholder. The Stockholder acknowledges that GSCP and the
GSCP Parties would not have entered into the Purchase Agreement had the
Stockholder not entered into this Agreement.
3. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to the
principles of conflicts of law. Each of the parties hereto hereby irrevocably
and unconditionally consents to submit to the exclusive jurisdiction of the
courts of the State of New York and of the United States of America, in each
case located in the County of New York, for any action, proceeding or
investigation in any court or before any governmental authority arising out of
or relating to this Agreement.
4. Third Party Rights. The Stockholder hereby expressly agrees and
acknowledges that GSCP and each of the GSCP Parties are intended beneficiaries
of this Agreement and shall have any and all rights, individually or
collectively, to enforce the terms of this Agreement, including pursuant to
Section 2 hereof.
-2-
188
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
COMPANY:
TRANSACTION INFORMATION SYSTEMS, INC.
By:_________________________________
Name:Xxxxxxx Xxxxxxxx
Title: Chief Executive Officer
STOCKHOLDER:
___________________________________
189
Exhibit L
INVESTOR PURCHASE OPTION AGREEMENT
----------------------------------
AGREEMENT made and entered into as of September 4, 1998 by and among
the stockholders of Transaction Information Systems, Inc., a Delaware
corporation (the "Corporation") set forth on Schedule I hereto (the "Selling
Stockholders") and, GS CAPITAL PARTNERS III, L.P., a Delaware limited
partnership ("GSCP") GS CAPITAL PARTNERS III OFFSHORE, L.P., XXXXXXX, SACHS &
CO. XXXXXXXXXXX XXXX, XXXXX XXXXXX XXXX 0000, L.P. and BRIDGE STREET FUND 1998,
L.P., each of which is an affiliate of The Xxxxxxx Xxxxx Group, L.P. (together
with GSCP, the "Investors," each individually referred to as an "Investor").
W I T N E S S E T H
-------------------
WHEREAS, simultaneously herewith, the Investors are purchasing from the
Corporation, and the Corporation is issuing to the Investors, Series A Preferred
Stock ("Series A Preferred Stock"), pursuant to a Preferred Stock Purchase
Agreement of even date herewith (the "Purchase Agreement"), by and among the
Corporation, the Investors and the Selling Stockholders.
Whereas, in order to induce the Investors to enter into the Purchase
Agreement, the Selling Stockholders have agreed to grant to the Investors
options to purchase from the Selling Stockholders, in the aggregate, up to the
Maximum Number of Shares (as defined herein) (the shares of Common Stock subject
to the Options are referred to as the "Option Shares").
ACCORDINGLY, the parties hereto agree as follows:
SECTION 1. Definitions. (a) As used herein, the following terms shall
have the following meanings:
"Anniversary Date" shall mean the second anniversary of the date
hereof.
"Closing Price" shall have the meaning set forth in Section 2(f).
"Common Stock" shall mean any shares of Common Stock of the Corporation
and any stock into which such Common Stock may hereafter be changed or for which
such Common Stock may be exchanged (other than any such change or exchange in a
Sale Transaction) after giving effect to the terms of such
190
change or exchange (by way of reorganization, recapitalization, merger,
consolidation or otherwise).
"Common Stock Equivalents" shall mean securities convertible into, or
exchangeable for, shares of Common Stock.
"Defaulting Selling Stockholder" shall have the meaning set forth in
Section 3(c).
"IPO" shall mean the closing of the sale of shares of Common Stock in a
bona fide, firm commitment, underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended.
"Market Price" shall have the meaning set forth in Section 2(e).
"Maximum Number of Shares" shall mean the number of shares of Common
Stock equal to the product of (i) 3.65% and (ii) the total number of shares of
Common Stock outstanding on a Fully Diluted Basis (as defined in the Purchase
Agreement) immediately following the Closing (i.e., 818,723 shares of Common
Stock assuming no adjustment pursuant to Section 1.9 of the Purchase Agreement),
as adjusted in accordance with Section 1.9 of the Purchase Agreement.
"Original Price" shall mean $7.63.
"Purchase Options" shall have the meaning set forth in Section 2.
"Sale Number" shall have the meaning set forth in Section 2(b).
"Sale Transaction" shall mean a transaction (by way of merger, sale of
stock or otherwise) pursuant to which all of the shares of Common Stock and
Common Stock Equivalents are sold or exchanged for cash or other property. In
the event that any such sale or exchange involves property (including
securities) other than cash, then the value of such property, for purposes of
determining the consideration received in such Sale Transaction, shall equal (a)
if such property consists of equity securities admitted or listed for trading on
a national securities exchange or reported on the Automated Quotation System of
NASDAQ or a similar service, the average Closing Price of such securities for
the 10 trading days ending on the 10th day prior to consummation of the Sale
Transaction and (b) in all other cases, as agreed in good faith by the Board of
Directors of the Corporation and GSCP.
"Valuation Multiple" shall have the meaning set forth in Section
- 2 -
191
2(g).
"Value Per Share" shall have the meaning set forth in Section 2(d).
(b) Capitalized terms used but not otherwise defined herein shall have
the meaning assigned to such terms in the Purchase Agreement.
SECTION 2. Purchase by the Investors. Upon a determination of the Value
Per Share (as defined herein) of a share of Common Stock, the options
contemplated by, and granted under, this Agreement (the "Purchase Options")
shall be exercisable as follows:
(a) To the extent that the Valuation Multiple is equal to or less than
1.5, the Investors shall have the right, upon the terms and subject to the
conditions set forth in this Agreement, to purchase from all of the Selling
Stockholders the Maximum Number of Shares, and each of the Selling Stockholders,
upon any such exercise, shall sell to the Investors a number of shares of Common
Stock equal to the product of such Selling Stockholder's Pro Rata Percentage (as
defined in Section 1.3 of the Purchase Agreement) times the Maximum Number of
Shares, at a purchase price of $.01 per share.
(b) To the extent that the Valuation Multiple is greater than 1.5 but
less than 2, the Investors shall have the right, upon the terms and subject to
the conditions set forth in this Agreement, to purchase from all of the Selling
Stockholders the number of shares of Common Stock equal to the product (the
"Sale Number") of (x) the difference of (i) 1 minus (ii) the quotient of (A) the
Valuation Multiple minus 1.5, divided by (B) .5 (which difference, if a negative
number, shall be deemed to be zero for purposes hereof), times (y) the Maximum
Number of Shares, and each of the Selling Stockholders, upon any such exercise,
shall sell to the Investors the product of such Selling Stockholder's Pro Rata
Percentage times the Sale Number, at a purchase price of $.01 per share.
(c) To the extent that the Valuation Multiple is equal to or greater
than 2, the Purchase Options shall be canceled and shall not be exercisable.
(d) For purposes of this Agreement, "Value Per Share" shall mean (i) in
the event of a Sale Transaction which is consummated prior to the Anniversary
Date, the consideration received for each share of Common Stock in the Sale
Transaction, (ii) in the event of an IPO which is consummated prior to the
Anniversary Date, the Market Price of each share of Common Stock, and (iii) in
the event that no Sale Transaction or IPO is consummated prior to the
Anniversary Date, zero.
- 3 -
192
(e) For purposes of this Agreement, "Market Price" shall mean, with
respect to shares of Common Stock on any date, the highest arithmetic average of
the Closing Prices per share of Common Stock for any 30 consecutive trading day
period commencing at any time after the 30th trading day following an IPO, with
the last of any such 30 day period ending on the Anniversary Date.
(f) For purposes of this Agreement, "Closing Price" shall mean, with
respect to an equity security for any day, (i) the last reported sale price
regular way or, in case no such sale takes place on such day, the average of the
closing bid and asked prices regular way, in either case as reported on the
principal national securities exchange on which such security is listed or
admitted for trading or (ii) if such security is not listed or admitted for
trading on any national securities exchange, the last reported sale price or, in
case no such sale takes place on such day, the average of the last reported bid
and the last reported asked quotation for such security, in either case as
reported on the Automated Quotation System of NASDAQ or a similar service if
NASDAQ is no longer reporting such information.
(g) For purposes of this Agreement, "Valuation Multiple" shall mean the
quotient of the Value Per Share divided by the Original Price.
SECTION 3. Notice of Exercise; Closing; Violation of Agreement by
Selling Stockholder.
(a) Notice of Exercise. The Investors shall exercise the Purchase
Options by written notice from GSCP to the Agent for the Existing Stockholders
(as defined in the Purchase Agreement) or to each of the Selling Stockholders,
(i) if the Value Per Share is being determined as a result of a Sale
Transaction, at any time within the 30 day period prior to the consummation of
the Sale Transaction or (ii) if the Value Per Share is being determined as a
result of an IPO or if no Sale Transaction or IPO is consummated prior to the
Anniversary Date, at any time within 30 days after the Anniversary Date. If
notice of exercise is given with respect to a Sale Transaction and such Sale
Transaction is not consummated, such exercise shall be of no force and effect
and the Purchase Options shall thereupon continue in accordance with the terms
hereof.
(b) Closing. (i) The closing of the purchase and sale of the Option
Shares under the Purchase Options (the "Closing") shall take place on a date
determined by the Investors not later than 15 business days after the applicable
notice of exercise is rendered or the fifth business day after the expiration or
termination of all waiting periods under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvement Act of 1976, as amended, as applicable to such transaction.
- 4 -
193
The Closing shall take place at 10:00 a.m. New York City time at the offices of
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000 or at such other place and date as the parties thereto may agree in
writing.
(ii) The purchase price payable for the Option Shares
hereunder shall be paid in full at the Closing by check or wire transfer of
immediately available funds at a bank account designated in writing by the
Selling Stockholders. At the Closing, each of the Selling Stockholders selling
Option Shares shall deliver to the Investors (i) duly executed certificates
representing the Option Shares purchased by the Investors hereunder duly
endorsed in blank and (ii) an affidavit, in form reasonably satisfactory to the
Investors, as described in Treasury Regulation Section1.1445-2(b)(2). The Option
Shares purchased by the InvestorS hereunder shall be free and clear of any and
all liens, claims and encumbrances of any kind, nature and description.
(c) Violation of Agreement by Selling Stockholder. To the extent that
any Selling Stockholder (a "Defaulting Selling Stockholder"), in violation of
this Agreement, fails to deliver the number of shares required to be sold by him
pursuant to any exercise of the Purchase Options, the Investors shall have the
right, in addition to all other remedies available to the Investors, to require
any other Selling Stockholder or Selling Stockholders to deliver to the
Investors, upon any such exercise, the number of shares of Common Stock which
the Defaulting Selling Stockholder so failed to deliver, and each Selling
Stockholder agrees to deliver such number of shares upon any such request.
SECTION 4. Adjustments. The total number of shares of Common Stock
purchasable upon the exercise of the Purchase Options and the Original Price
shall be subject to adjustment from time to time as follows:
In the event of any change in, or distributions in respect of, the
outstanding shares of Common Stock by reason of stock dividends, split-ups,
mergers, recapitalizations, combinations, subdivisions, conversions, exchanges
of shares or the like, the type and number of shares of Common Stock purchasable
upon exercise of the Purchase Options and the Original Price shall be
appropriately adjusted in such manner as shall fully preserve the economic
benefits provided hereunder and proper provision shall be made in any agreement
governing any such transaction to provide for such proper adjustment and the
full satisfaction of the Selling Stockholders' obligations hereunder.
SECTION 5. Representations and Warranties. (a) Each party hereto
represents and warrants to the other parties hereto as follows:
- 5 -
194
(i) It has full power and authority to execute, deliver and
perform its obligations under this Agreement.
(ii) This Agreement has been duly and validly authorized,
executed and delivered by it, and constitutes a valid and binding obligation of
it, enforceable against it in accordance with its terms except to the extent
that enforceability may be limited by bankruptcy, insolvency or other similar
laws affecting creditors' rights generally.
(iii) The execution, delivery and performance of this
Agreement by it does not (x) violate, conflict with, or constitute a breach of
or default under its organizational documents, if any, or any material agreement
to which it is a party or by which it is bound or (y) violate any law,
regulation, order, writ, judgment, injunction or decree applicable to it.
(b) The Selling Stockholders represent, warrant and covenant to the
Investors that:
(i) at all times prior to termination of the Purchase Options,
they will beneficially own a number of shares of Common Stock at
least equal to the Maximum Number of Shares, and
(ii) the Option Shares, when sold and delivered pursuant to
this Agreement, will be (x) validly issued and outstanding, fully
paid and nonassessable, (y) free and clear of any restriction or
Encumbrance (as defined in the Purchase Agreement) and (z) free
and clear of any rights, including preemptive or similar rights,
to purchase or sell or otherwise transfer the Option Shares, or
any agreement relating to any of the foregoing, except as
otherwise provided by the Stockholders' Agreement.
SECTION 6. Transfer Taxes. The Selling Stockholders agree that they
will pay, and will hold the Investors harmless from any and all liability with
respect to any stamp, transfer or other Taxes which may be determined to be
payable in connection with the execution and delivery and performance of this
Agreement or any modification, amendment or alteration of the terms or
provisions of this Agreement, and that they will similarly pay and hold the
Investors harmless from all such Taxes in respect of the sale of the Option
Shares to the Investors.
SECTION 7. Notices. All notices hereunder shall be in writing and shall
be sufficiently given when sent by facsimile (subject to telephonic confirmation
of receipt and mailing of a confirmation copy), personally delivered
- 6 -
195
or when sent by a nationally recognized overnight or local courier service or
mailed by registered or certified mail, return receipt requested, postage
prepaid, to the parties hereto at the following addresses and facsimile numbers:
If to the Selling Stockholders: to the addresses listed in Schedule 1 hereto
with a copy to:
Esanu Katsky Xxxxxx & Siger, LLP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxx X. Xxxxxx, Esq.
If to the Investors: GS Capital Partners III, L.P.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxxx
with a copy to: GS Capital Partners III, L.P.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxx Xxxxx, Esq.
and a copy to: Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
or at such other address or facsimile number as any party may designate to any
other party by written notice. Notices shall be deemed to have been given when
received.
SECTION 8. Miscellaneous. (a) This Agreement may be executed in any
number of counterparts which, when executed and delivered by all parties hereto,
shall be binding on all parties hereto and shall constitute one agreement,
notwithstanding that all parties have not signed the same counterpart.
(b) This Agreement shall bind and inure to the benefit of each party
- 7 -
196
hereto and its respective successors and assigns. The Corporation and each of
the Selling Stockholders acknowledge that the Investors shall have the right to
assign all or part of its rights and obligations under this Agreement to any
party without the consent of the Corporation or any of the Selling Stockholders.
Upon any such assignment, such assignee shall have the obligations and be able
to exercise all rights of the Investors hereunder and shall agree to be bound by
the terms of this Agreement.
(c) The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with its specific terms or was otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any New York court, this being in addition to any other
remedy to which they may be entitled at law or in equity.
(d) The headings in this Agreement are for purposes of reference only
and shall not be considered in construing this Agreement. As used herein, the
neuter gender shall also denote the masculine and feminine where the context so
permits.
(e) This Agreement shall be governed by and construed in accordance
with the laws of the state of New York without giving effect to the principles
of conflicts of law thereof. Each of the parties hereto hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the courts
of the state of New York and of the United States of America, in each case
located in the county of New York, for any action, proceeding or investigation
in any court or before any governmental authority ("Litigation") arising out of
or relating to this Agreement and the transactions contemplated hereby (and
agrees not to commence any Litigation relating thereto except in such courts),
and further agrees that service of any process, summons, notice or document by
U.S. registered mail to its respective address set forth in this Agreement shall
be effective service of process for any Litigation brought against it in any
such court. Each of the parties hereto hereby irrevocably and unconditionally
waives any objection to the laying of venue of any Litigation arising out of
this Agreement or the transactions contemplated hereby in the courts of the
state of New York or the United States of America, in each case located in the
county of New York, and hereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such Litigation
brought in any such court has been brought in an inconvenient forum.
(f) If any term or provision of this Agreement, or the application
- 8 -
197
thereof to any person or circumstance, shall to any extent be invalid or
unenforceable, the remainder thereof, and the application thereof to any other
persons and circumstances, shall not be affected thereby, and each term and
provision hereof shall be enforced to the fullest extent permitted by applicable
law.
(g) This Agreement may be amended only by a written instrument signed
by the parties hereto. No provision of this Agreement may be waived except by an
instrument in writing signed by the party sought to be bound. No failure or
delay by any party in exercising any right or remedy hereunder shall operate as
a waiver thereof, and a waiver of a particular right or remedy on one occasion
shall not be deemed a waiver of any other right or remedy or a waiver of the
same right or remedy on any subsequent occasion.
- 9 -
198
IN WITNESS WHEREOF, the parties hereto have duly executed this
agreement as of the date first above written.
CORPORATION:
TRANSACTION INFORMATION SYSTEMS, INC.
By:
-------------------------------------------
Name:
Title:
INVESTORS:
GS CAPITAL PARTNERS III, L.P.
By: GS Advisors III, L.P., its general partner
By: GS Advisors III, L.L.C., its general partner
By:
------------------------------------
Authorized Signatory
GS CAPITAL PARTNERS III OFFSHORE, L.P.
By: GS Advisors III (Cayman), L.P., its General Partner
By: GS Advisors III, L.L.C., its General Partner
By:
------------------------------------
Authorized Signatory
199
XXXXXXX, XXXXX & CO. VERWALTUNGS GmbH
By:
---------------------------------
Managing Director
and
By:
---------------------------------
Managing Director
or
Registered Agent
STONE STREET FUND 1998, L.P.
By: Stone Street Advantage Corp.
General Partner
By:
------------------------------
BRIDGE STREET FUND 1998, L.P.
By: Stone Street Advantage Corp.
Managing General Partner
By:
------------------------------
200
EXISTING STOCKHOLDERS:
--------------------------------------
XXXX XXXXXXXXXXX
--------------------------------------
XXXX XXXXX
--------------------------------------
XXXXX XXXXXXXXXX
--------------------------------------
XXXXXX XXXXXX
--------------------------------------
XXXXXXXX XXXX
--------------------------------------
XXXXXX XXXX
--------------------------------------
XXXXX XXXXXX
--------------------------------------
XXXXXXX XXXXXXXX
--------------------------------------
XXXXXX XXXXXXX
--------------------------------------
XXXXXX XXXX
--------------------------------------
XXXXXXXX XXXXX
201
SCHEDULE 1
----------
SELLING STOCKHOLDER NAMES AND ADDRESSES
---------------------------------------
Name and Address of Stockholder
-------------------------------
Xxxx Xxxxxxxxxxx
00 Xxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Facsimile:
Xxxx Xxxxx
000 Xxxxxxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Facsimile:
Xxxxx Xxxxxxxxxx
00 Xxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Facsimile:
Xxxxxx Xxxxxx
00 Xxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Facsimile:
Xxxxxxxx Xxxx
00 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Facsimile:
Xxxxxx Xxxx
00 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Facsimile:
202
Name and Address of Stockholder
-------------------------------
Xxxxx Xxxxxx
0000 Xxxxx Xxxxxx
Xxxxxxxxx Xxxxx, Xxx Xxxx 00000
Facsimile:
Xxxxxxx Xxxxxxxx
0 Xxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Facsimile:
Xxxxxx Xxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Facsimile:
Xxxxxx Xxxx
00 Xxxxxxx Xxxxx Xxxx
Xxxxxxxxx Xxxxx, Xxx Xxxx 00000
Facsimile:
Xxxxxxxx Xxxxx
00 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Facsimile:
14
203
Exhibit M
EXISTING STOCKHOLDER PURCHASE OPTION AGREEMENT
----------------------------------------------
AGREEMENT made and entered into as of September 4, 1998 by and among GS
CAPITAL PARTNERS III, L.P., a Delaware limited partnership ("GSCP"), GS CAPITAL
PARTNERS III OFFSHORE, L.P., XXXXXXX, SACHS & CO. XXXXXXXXXXX XXXX, XXXXX XXXXXX
XXXX 0000, L.P. and BRIDGE STREET FUND 1998, L.P., each of which is an affiliate
of The Xxxxxxx Xxxxx Group, L.P., (together with GSCP, the "Investors," each
individually referred to as an "Investor") and the stockholders (the "Existing
Stockholders") of Transaction Information Systems, Inc., a Delaware corporation
(the "Corporation") set forth on Schedule I hereto.
W I T N E S S E T H
-------------------
WHEREAS, simultaneously herewith, the Investors are purchasing from the
Corporation, and the Corporation is issuing to the Investors, Series A Preferred
Stock ("Series A Preferred Stock"), pursuant to a Preferred Stock Purchase
Agreement of even date herewith (the "Purchase Agreement"), by and among the
Corporation, the Investors and the Existing Stockholders.
Whereas, the Investors have agreed to grant to the Existing
Stockholders options to purchase from the Investors in the aggregate, a number
of Shares of Common Stock equal to (i) the number of Subject Shares (as defined
herein), and (ii) the Previously Purchased Shares (as defined herein), if any,
(the Subject Shares and the Previously Purchased Shares collectively referred to
herein as the "Option Shares").
ACCORDINGLY, the parties hereto agree as follows:
SECTION 1. Definitions. (a) As used herein, the following terms shall
have the following meanings:
"Anniversary Date" shall mean March 2, 2001.
"Closing Price" shall have the meaning set forth in Section 2(f).
"Common Stock" shall mean any shares of Common Stock of the Corporation
and any stock into which such Common Stock may hereafter be changed or for which
such Common Stock may be exchanged (other than any such change or exchange in a
Sale Transaction) after giving effect to the terms of such change or exchange
(by way of reorganization, recapitalization, merger, consolidation or
otherwise).
"Common Stock Equivalents" shall mean securities convertible into, or
exchangeable for, shares of Common Stock.
204
"Defaulting Investor" shall have the meaning set forth in Section 3(c).
"Investor Percentage" shall mean a fraction, the numerator of which is
the number of shares of Series A Preferred Stock held by an Investor on the date
(the "Initial Issuance Date") of initial issuance of such shares and the
denominator of which is equal to the total number of shares of outstanding
Series A Preferred Stock as of the Initial Issuance Date.
"IPO" shall mean the closing of the sale of shares of Common Stock in a
bona fide, firm commitment, underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended.
"Market Price" shall have the meaning set forth in Section 2(e).
"Previously Purchased Shares" shall mean any shares of Common Stock
purchased by the Investors under that certain Investor Purchase Option
Agreement, dated as of September __, 1998, by and among the Corporation, the
Investors and the Existing Stockholders.
"Original Price" shall mean $7.63.
"Purchase Option" shall have the meaning set forth in Section 2.
"Sale Number" shall have the meaning set forth in Section 2(b).
"Sale Transaction" shall mean a transaction (by way of merger, sale of
stock or otherwise) pursuant to which all of the shares of Common Stock and
Common Stock Equivalents are sold or exchanged for cash or other property. In
the event that any such sale or exchange involves property (including
Securities) other than cash, then the value of such property for purposes of
determining the consideration received in such Sale Transaction, shall equal (a)
if such property consists of equity securities admitted or listed for trading on
a national securities exchange or reported on the Automated Quotation System of
NASDAQ or a similar service, the average Closing Price of such securities for
the 10 trading days ending on the 10th day prior to consummation of the Sale
Transaction and (b) in all other cases, as agreed in good faith by the Board of
Directors of the Corporation and GSCP.
"Subject Shares" shall mean number of shares of Common Stock equal to
the product of (i) 1.825% and (ii) the total number of shares of Common Stock
outstanding on a Fully Diluted Basis (as defined in the Purchase Agreement)
immediately following the Closing (i.e., 409,361 shares of Common Stock assuming
no adjustment pursuant to Section 1.9 of the Purchase Agreement), as adjusted in
accordance with Section 1.9 of the Purchase Agreement.
"Valuation Multiple" shall have the meaning set forth in Section 2(g).
- 2 -
205
"Value Per Share" shall have the meaning set forth in Section 2(d).
(b) Capitalized terms used but not otherwise defined herein shall have
the meaning assigned to such terms in the Purchase Agreement.
SECTION 2. Purchase by the Existing Stockholders. Upon a determination
of the Value Per Share (as defined herein) of a share of Common Stock, the
options contemplated by, and granted under, this Agreement (the "Purchase
Option") shall be exercisable as follows:
(a) To the extent that the Valuation Multiple is 2.75 or greater, the
Agent for the Existing Stockholders, (as defined in the Purchase Agreement)
acting for the Existing Stockholders, shall have the right, upon the terms and
subject to the conditions set forth in this Agreement, to purchase from each of
the Investors, and each of the Investors, upon any such exercise, shall sell to
the Existing Stockholders, the number of shares of Common Stock equal to the
product of (x) such Investor's Investor Percentage times (y) the number of
Subject Shares, at a purchase price of $.01 per share.
(b) In addition, to the extent that the Valuation Multiple is greater
than 2.75, the Agent for the Existing Stockholders, acting for the Existing
Stockholders, shall have the right, upon the terms and subject to the conditions
set forth in this Agreement, to purchase from each of the Investors, and each of
the Investors, upon any such exercise, shall sell to the Existing Stockholders,
the number of shares of Common Stock owned by such Investor equal to the number
of Previously Purchased Shares purchased by such Investor, at a purchase price
of $.01 per share.
(c) To the extent that the Valuation Multiple is 2.75 or less, this
Purchase Option shall not be exercisable and all rights of the Existing
Stockholders hereunder shall terminate on the Anniversary Date.
(d) For purposes of this Agreement, "Value Per Share" shall mean (i) in
the event of a Sale Transaction which is consummated prior to the Anniversary
Date, the consideration received for each share of Common Stock in the Sale
Transaction, (ii) in the event of an IPO which is consummated prior to the
Anniversary Date, the Market Price of each share of Common Stock, and (iii) in
the event that no Sale Transaction or IPO is consummated prior to the
Anniversary Date, zero.
(e) For purposes of this Agreement, "Market Price" shall mean, with
respect to shares of Common Stock on any date, the highest arithmetic average of
the Closing Prices per share of Common Stock for any 30 consecutive trading day
period commencing at any time after the 30th trading day following an IPO, with
the last of any such 30 day period ending on the Anniversary Date.
- 3 -
206
(f) For purposes of this Agreement, "Closing Price" shall mean, with
respect to an equity security for any day, (i) the last reported sale price
regular way or, in case no such sale takes place on such day, the average of the
closing bid and asked prices regular way, in either case as reported on the
principal national securities exchange on which such security is listed or
admitted for trading or (ii) if such security is not listed or admitted for
trading on any national securities exchange, the last reported sale price or, in
case no such sale takes place on such day, the average of the last reported bid
and the last reported asked quotation for such security, in either case as
reported on the Automated Quotation System of NASDAQ or a similar service if
NASDAQ is no longer reporting such information.
(g) For purposes of this Agreement, "Valuation Multiple" shall mean the
quotient of the Value Per Share divided by the Original Price.
SECTION 3. Notice of Exercise; Closing; Violation of Agreement by
Investor.
(a) Notice of Exercise. The Existing Stockholders shall exercise the
Purchase Option by written notice given by the Agent for the Existing
Stockholders to each of the Investors, (i) if the Value Per Share is being
determined as a result of a Sale Transaction, at any time within the 30 day
period prior to the consummation of the Sale Transaction or (ii) if the Value
Per Share is being determined as a result of an IPO or if no Sale Transaction or
IPO is consummated prior to the Anniversary Date, at any time within 30 days
after the Anniversary Date. If notice of exercise is given with respect to a
Sale Transaction and such Sale Transaction is not consummated, such exercise
shall be of no force and effect and the Purchase Option shall thereupon continue
in accordance with the terms hereof.
(b) Closing. (i) The closing of the purchase and sale of the Option
Shares under the Purchase Option (the "Closing") shall take place on a date
determined by the Existing Stockholders not later than 15 business days after
the applicable notice of exercise is rendered or the fifth business day after
the expiration or termination of all waiting periods under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvement Act of 1976, as amended, as applicable to such
transaction. The Closing shall take place at 10:00 a.m. New York City time at
the offices of Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, Xxx Xxx Xxxx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000 or at such other place and date as the parties thereto may
agree in writing.
(ii) The purchase price payable for the Option Shares hereunder
shall be paid in full at the Closing by check or wire transfer of immediately
available funds at a bank account designated in writing by the Investors. At the
Closing, each of the Investors selling Option Shares shall deliver to the
Existing Stockholders (i) duly executed certificates representing the Option
Shares purchased by the Existing Stockholders hereunder duly endorsed in blank
and (ii) an affidavit, in form reasonably
- 4 -
207
satisfactory to the Existing Stockholders, as described in Treasury Regulation
Section 1.1445-2(b)(2). The Option Shares purchased by the Existing Stockholders
hereunder shall be free and clear of any and all liens, claims and encumbrances
of any kind, nature and description.
SECTION 4. Adjustments. The total number of shares of Common Stock
purchasable upon the exercise of the Purchase Option and the Original Price
shall be subject to adjustment from time to time as follows:
In the event of any change in, or distributions in respect of, the
outstanding shares of Common Stock by reason of stock dividends, split-ups,
mergers, recapitalizations, combinations, subdivisions, conversions, exchanges
of shares or the like, the type and number of shares of Common Stock purchasable
upon exercise of the Purchase Option and the Original Price shall be
appropriately adjusted in such manner as shall fully preserve the economic
benefits provided hereunder and proper provision shall be made in any agreement
governing any such transaction to provide for such proper adjustment and the
full satisfaction of the Investors' obligations hereunder.
SECTION 5. Representations and Warranties. (a) Each party hereto
represents and warrants to the other parties hereto as follows:
(i) It has full power and authority to execute, deliver and
perform its obligations under this Agreement.
(ii) This Agreement has been duly and validly authorized,
executed and delivered by it, and constitutes a valid and binding obligation of
it, enforceable against it in accordance with its terms except to the extent
that enforceability may be limited by bankruptcy, insolvency or other similar
laws affecting creditors' rights generally.
(iii) The execution, delivery and performance of this Agreement
by it does not (x) violate, conflict with, or constitute a breach of or default
under its organizational documents, if any, or any material agreement to which
it is a party or by which it is bound or (y) violate any law, regulation, order,
writ, judgment, injunction or decree applicable to it.
(b) The Investors represent, warrant and covenant to the Existing
Stockholders:
(i) at all times prior to termination of the Purchase Options,
they will beneficially own a number of shares of Common Stock at least equal to
the number of Subject Shares and the number of Previously Purchased Shares, if
any, and
(ii) the Option Shares, when sold and delivered pursuant to this
Agreement, will be (x) validly issued and outstanding, fully paid and
nonassessable,
- 5 -
208
(y) free and clear of any restriction or Encumbrance (as defined in the Purchase
Agreement) and (z) free and clear of any rights, including preemptive or similar
rights, to purchase or sell or otherwise transfer the Option Shares, or any
agreement relating to any of the foregoing, except as otherwise provided by the
Stockholders' Agreement.
SECTION 6. Transfer Taxes. The Investors agree that they will pay, and
will hold the Existing Stockholders harmless from any and all liability with
respect to any stamp, transfer or other Taxes which may be determined to be
payable in connection with the execution and delivery and performance of this
Agreement or any modification, amendment or alteration of the terms or
provisions of this Agreement, and that they will similarly pay and hold the
Existing Stockholders harmless from all such Taxes in respect of the sale of the
Option Shares to the Existing Stockholders.
SECTION 7. Notices. All notices hereunder shall be in writing and shall
be sufficiently given when sent by facsimile (subject to telephonic confirmation
of receipt and mailing of a confirmation copy), personally delivered or when
sent by a nationally recognized overnight or local courier service or mailed by
registered or certified mail, return receipt requested, postage prepaid, to the
parties hereto at the following addresses and facsimile numbers:
If to the Corporation: Transaction Information Systems, Inc.
000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx
with a copy to: Esanu Katsky Xxxxxx & Siger, LLP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxx X. Xxxxxx, Esq.
If to the Existing Stockholders: to the addresses listed in Schedule 1 hereto
with a copy to:
Esanu Katsky Xxxxxx & Siger, LLP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxx X. Xxxxxx, Esq.
- 6 -
209
If to the Investors: GS Capital Partners III, L.P.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxxx
with a copy to: GS Capital Partners III, L.P.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxx Xxxxx, Esq.
and a copy to: Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
or at such other address or facsimile number as any party may designate to any
other party by written notice. Notices shall be deemed to have been given when
received.
SECTION 8. Miscellaneous. (a) This Agreement may be executed in any
number of counterparts which, when executed and delivered by all parties hereto,
shall be binding on all parties hereto and shall constitute one agreement,
notwithstanding that all parties have not signed the same counterpart.
(b) No Existing Stockholder may transfer or assign any of his rights or
obligations hereunder other than, upon the death of an Existing Stockholder, to
the heirs or testamentary legatees of such Existing Stockholder.
(c) The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with its specific terms or was otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any New York court, this being in addition to any other
remedy to which they may be entitled at law or in equity.
(d) The headings in this Agreement are for purposes of reference only
and shall not be considered in construing this Agreement. As used herein, the
neuter gender shall also denote the masculine and feminine where the context so
permits.
(e) This Agreement shall be governed by and construed in accordance
with the laws of the state of New York without giving effect to the principles
of conflicts of law thereof. Each of the parties hereto hereby irrevocably and
unconditionally
- 7 -
210
consents to submit to the exclusive jurisdiction of the courts of the state of
New York and of the United States of America, in each case located in the county
of New York, for any action, proceeding or investigation in any court or before
any governmental authority ("Litigation") arising out of or relating to this
Agreement and the transactions contemplated hereby (and agrees not to commence
any Litigation relating thereto except in such courts), and further agrees that
service of any process, summons, notice or document by U.S. registered mail to
its respective address set forth in this Agreement shall be effective service of
process for any Litigation brought against it in any such court. Each of the
parties hereto hereby irrevocably and unconditionally waives any objection to
the laying of venue of any Litigation arising out of this Agreement or the
transactions contemplated hereby in the courts of the state of New York or the
United States of America, in each case located in the county of New York, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such Litigation brought in any such court has
been brought in an inconvenient forum.
(f) If any term or provision of this Agreement, or the application
thereof to any person or circumstance, shall to any extent be invalid or
unenforceable, the remainder thereof, and the application thereof to any other
persons and circumstances, shall not be affected thereby, and each term and
provision hereof shall be enforced to the fullest extent permitted by applicable
law.
(g) This Agreement may be amended only by a written instrument signed
by the parties hereto. No provision of this Agreement may be waived except by an
instrument in writing signed by the party sought to be bound. No failure or
delay by any party in exercising any right or remedy hereunder shall operate as
a waiver thereof, and a waiver of a particular right or remedy on one occasion
shall not be deemed a waiver of any other right or remedy or a waiver of the
same right or remedy on any subsequent occasion.
- 8 -
211
IN WITNESS WHEREOF, the parties hereto have duly executed this
agreement as of the date first above written.
CORPORATION:
TRANSACTION INFORMATION SYSTEMS, INC.
By:
-------------------------------------
Name:
Title:
INVESTORS:
GS CAPITAL PARTNERS III, L.P.
By: GS Advisors III, L.P., its general partner
By: GS Advisors III, L.L.C., its general partner
By:
----------------------------------
Authorized Signatory
GS CAPITAL PARTNERS III OFFSHORE, L.P.
By: GS Advisors III (Cayman), L.P., its General Partner
By: GS Advisors III, L.L.C., its General Partner
By:
-----------------------------------
Authorized Signatory
212
XXXXXXX, XXXXX & CO. VERWALTUNGS GmbH
By:
---------------------------------
Managing Director
and
By:
---------------------------------
Managing Director
or
Registered Agent
STONE STREET FUND 1998, L.P.
By: Stone Street Advantage Corp.
General Partner
By:
---------------------------------
BRIDGE STREET FUND 1998, L.P.
By: Stone Street Advantage Corp.
Managing General Partner
By:
---------------------------------
213
EXISTING STOCKHOLDERS:
--------------------------------------
XXXX XXXXXXXXXXX
--------------------------------------
XXXX XXXXX
--------------------------------------
XXXXX XXXXXXXXXX
--------------------------------------
XXXXXX XXXXXX
--------------------------------------
XXXXXXXX XXXX
--------------------------------------
XXXXXX XXXX
--------------------------------------
XXXXX XXXXXX
--------------------------------------
XXXXXXX XXXXXXXX
--------------------------------------
XXXXXX XXXXXXX
--------------------------------------
XXXXXX XXXX
--------------------------------------
XXXXXXXX XXXXX
214
SCHEDULE 1
----------
EXISTING STOCKHOLDER NAMES AND ADDRESSES
----------------------------------------
Name and Address of Stockholder
-------------------------------
Xxxx Xxxxxxxxxxx
00 Xxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Facsimile:
Xxxx Xxxxx
000 Xxxxxxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Facsimile:
Xxxxx Xxxxxxxxxx
00 Xxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Facsimile:
Xxxxxx Xxxxxx
00 Xxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Facsimile:
Xxxxxxxx Xxxx
00 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Facsimile:
Xxxxxx Xxxx
00 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Facsimile:
215
Name and Address of Stockholder
-------------------------------
Xxxxx Xxxxxx
0000 Xxxxx Xxxxxx
Xxxxxxxxx Xxxxx, Xxx Xxxx 00000
Facsimile:
Xxxxxxx Xxxxxxxx
0 Xxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Facsimile:
Xxxxxx Xxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Facsimile:
Xxxxxx Xxxx
00 Xxxxxxx Xxxxx Xxxx
Xxxxxxxxx Xxxxx, Xxx Xxxx 00000
Facsimile:
Xxxxxxxx Xxxxx
00 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Facsimile:
216
ANNEX I
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
LIST OF EXISTING STOCKHOLDERS
NAME OF STOCKHOLDER
Xxxx Xxxxxxxxxxx
Xxxx Xxxxx
Xxxxx Xxxxxxxxxx
Xxxxxx Xxxxxx
Xxxxxxxx Xxxx
Xxxxxx Xxxx
Xxxxx Xxxxxx
Xxxxxxx Xxxxxxxx
Xxxxxx Xxxxxxx
Xxxxxx Xxxx
Xxxxxxxx Xxxxx
217
Annex II
To the Preferred Stock Purchase Agreement
by and among
Transaction Information Systems, Inc.
The Shareholders of Transaction Infromation Systems, Inc.
and GS CAPITAL PARTNERS III, L.P.
Investors
GS Capital Partners III, L.P. 68.126% 34,063,120.89
GS Capital Partners III Offshore, L.P. 18.729% 9,364,351.65
GS Capital Partners III (Germany) C.L.P. 3.145% 1,572,527.46
Stone Xxxxxx Xxxx 0000, X.X. 7.682% 3,840,830.00
Xxxxxx Xxxxxx Xxxx 0000, X.X. 2.318% 1,159,170.00
-------------
50,000,000.00
=============
218
ANNEX III
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
LIST OF SHARES BEING PURCHASED
NUMBER OF
NAME OF STOCKHOLDER SHARES REPURCHASED(1)
------------------- ---------------------
Xxxx Xxxxxxxxxxx 780,800
Xxxx Xxxxx 59,603
Xxxxx Xxxxxxxxxx 178,809
Xxxxxx Xxxxxx 119,206
Xxxxxxxx Xxxx 387,420
Xxxxxx Xxxx 900,006
Xxxxx Xxxxxx 89,405
Xxxxxxx Xxxxxxxx 1,019,213
Xxxxxx Xxxxxxx 1,019,213
Xxxxxx Xxxx 1,019,213
Xxxxxxxx Xxxxx 387,420
Total: 5,960,308
(1) After giving effect to the stock dividend.
219
SCHEDULE 1.2
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
USE OF PROCEEDS
THE NUMBERS IN SCHEDULE 1.2 AND 2.3(A) DO NOT REFLECT THE STOCK DIVIDEND.
Name Number of Options
Xxx Xxxxx 6,250
Xxxxx Xxxxx 6,250
Xxxxx Xxxxxx 12,500
Xxx Xxxx 5,000
Xxxxx Xxxxxx 5,000
Xxxxx Xxx Xxxxxxx 6,250
Xxx Xxxx 5,000
Xxxx Xxxxxxxx 12,500
Xxxx Xxxxxxx 12,500
Xxx Xxxxxxx 5,000
Xxx Xxxxxxx 12,500
Xxxx Xxxxxxxxx 5,000
Xxxxx Xxxxx 5,000
Xxxx Xxxxxx 12,500
TOTAL 111,250
220
SCHEDULE 1.3
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
PRO RATA PERCENTAGE
Number of Percentage
Name of Stockholder Shares Owned(1) Ownership
------------------- --------------- ----------
Xxxx Xxxxxxxxxxx 1,310,000 13.100%
Xxxx Xxxxx 100,000 1.000
Xxxxx Xxxxxxxxxx 300,000 3.000
Xxxxxx Xxxxxx 200,000 2.000
Xxxxxxxx Xxxx 650,000 6.500
Xxxxxx Xxxx 1,510,000 15.100
Xxxxx Xxxxxx 150,000 1.500
Xxxxxxx Xxxxxxxx 1,710,000 17.100
Xxxxxx Xxxxxxx 1,710,000 17.100
Xxxxxx Xxxx 1,710,000 17.100
Xxxxxxxx Xxxxx 650,000 6.500
Total: 10,000,000 100.000%
1 Before giving effect to the stock dividend.
-2-
221
SCHEDULE 1.7
SHAREHOLDER ALLOCATION
Xxxx Xxxxxxxxxxx $426,143
Xxxx Xxxxx $32,530
Xxxxx Xxxxxxxxxx $37,090
Xxxxxx Xxxxxx $65,060
Xxxxxxxx Xxxx $16,445
Xxxxxx Xxxx $341,203
Xxxxx Xxxxxx $26,295
Xxxxxxx Xxxxxxxx $556,263
Xxxxxx Xxxxxxx $556,263
Xxxxxx Xxxx $556,263
Xxxxxxxx Xxxxx $136,445
Total $2,750,000
222
SCHEDULE 2.1
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
QUALIFICATIONS IN CERTAIN JURISDICTIONS
Transaction Information Systems, Inc. (Delaware)
In Good Standing in the State of Delaware
Currently qualified in New York and California and in Good Standing
Pending qualifications in the states of New Jersey, Massachusetts, Texas, North
Carolina and Pennsylvania
TIS Equipment Corp. (Delaware)
In Good Standing in the State of Delaware
Pending qualification in the State of New York
Xxxxxxx-Xxxx-Xxxxxxxx Associates Ltd. (New York)
In Good Standing in the State of New York
Currently qualified in Massachusetts and in Good Standing
Pending qualifications in the states of New Jersey, Texas, North Carolina and
Pennsylvania
-4-
223
SCHEDULE 2.3(A)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
CAPITALIZATION
THE NUMBERS IN SCHEDULE 1.2 AND 2.3(A) DO NOT REFLECT THE STOCK DIVIDEND.
Transaction Information Systems, Inc. Stock Option List
Option
Exercise Number
Name Price of Shares
---- -------- ---------
Xxxx Xxxxxx $12.00 2,500
Xxxx Xxxxxxxxx 4.00 6,600
12.00 5,000
Xxxxx Xxxxxxxxxxx 12.00 5,000
Xxxx Xxxxxxxx 4.00 5,000
12.00 5,000
Xxx Xxxxxxx 12.00 5,000
Xxx Xxxxx 4.00 25,000(1)
Xxxx Xxxxx 4.00 6,600
16.00 10,000
Xxxxxx Xxxxxxxxx 12.00 30,000
Xxxxx Xxxxxxx 12.00 1,000
Xxx Xxxxxxx 4.00 5,000
Xxxxxxxxx Xxxx 16.00 10,000
Xxxxx Xxxxx 4.00 25,000(1)
Xxx Xxxxxxxx 12.00 10,000(2)
Xxxx Xxxxxxx 12.00 10,000
Xxx Xxxxx 4.00 6,600
12.00 10,000
Xxxx Xxxxx 4.00 6,600
12.00 5,000
1 25% of such options to be purchased and retired.
2 Options issued, but none vested because employment ceased.
-5-
224
SCHEDULE 2.3(A) (CONTINUED)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
CAPITALIZATION
Option
Exercise Number
Name Price of Shares
---- -------- ---------
Xxxxxx Xxxxxxxxxxx 12.00 20,000
Xxxxx Xxxxxxxx 4.00 6,600
12.00 5,000
Xxxxx Xxxxxx 4.00 50,000(1)
Xxxx Xxxxxxxxx 4.00 10,000
16.00 10,000
Xxxxx Xxxxxxxxx 12.00 10,000
Xxxxxx Xxxx 4.00 6,600
Xxxxxx Xxxxx 12.00 7,500
Xxxx Xxxxxxxxxx 4.00 10,000
12.00 5,000
Xxx Xxxxxxxxxx 12.00 26,500
Xxxxx Xxxxxxxx 12.00 5,000
Xxx Xxxxxxx 12.00 5,000
Xxxxx Xxxxxxxxxxx 12.00 10,000
Xxx Xxxx 4.00 20,000(1)
12.00 5,000
Xxxxx Xxxxxx 4.00 20,000(1)
Xxxxx Xxxxxxxx 4.00 6,600
12.00 5,000
Xxxx Xxxxxxx 12.00 10,000
Xxxxxx Xxxx 12.00 10,000
1 25% of such options to be purchased and retired.
2 Options issued, but none vested because employment ceased.
-6-
225
SCHEDULE 2.3(a) (CONTINUED)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
CAPITALIZATION
Option
Exercise Number
Name Price of Shares
---- -------- ---------
Xxxxx Xxxxxxx 16.00 1,000
Xxxxx Xxx Xxxxxxx 4.00 25,000(1)
Xxxxx Xxxxxx 16.00 5,000
Xxx XxXxxxxx 16.00 10,000
Xxx XxXxxxxx 12.00 5,000(2)
Xxxx XxXxxx 12.00 5,000(2)
Xxxxx Xxxxxxxx 16.00 10,000
Xxx Xxxx 4.00 20,000(1)
Xxxxxxx Xxxxxx 12.00 10,000
Xxx Xxxxx 12.00 5,000
Xxxxx Xxxxxxxxxxx 4.00 6,600
12.00 5,000
Xxxx Xxxxxxxx 4.00 50,000(1)
Xxxxxxxx Xxxxx 12.00 10,000
Xxxx Xxxxxxx 12.00 5,000
Xxxxxx Xxxxx 12.00 26,500
Xxxx Xxxxxxx 4.00 50,000(1)
Xxx Xxxxxxx 4.00 20,000(1)
Xxx Xxxxxxx 4.00 50,000(1)
Xxxx Xxxxxxxxx 4.00 20,000(1)
16.00 10,000
Xxxx Xxxxxxx 16.00 10,000
1 25% of such options to be purchased and retired.
2 Options issued, but none vested because employment ceased.
-7-
226
SCHEDULE 2.3(a) (CONTINUED)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
CAPITALIZATION
Option
Exercise Number
Name Price of Shares
---- -------- ---------
Xxxx Xxxxxxxxx 12.00 20,000
Xxx Xxxxxxx 12.00 10,000
Xxxx Xxxxxx 12.00 5,000
Xxxxx Xxxxx 4.00 20,000(1)
Xxxx Xxxx 4.00 10,000
12.00 5,000
Xxx Xxxxxxxx 4.00 10,000
12.00 5,000
Xxxx Xxxxxx 4.00 50,000(1)
Xxxxx Xxxxx 16.00 10,000
Xxx Xxxxxx 4.00 6,600
Management anticipates granting the following additional stock
options, calculated on a pre-dividend basis, after the Closing:
[Xxxxx Xxxxxxxxx] 7,500
[Chief financial officer] 50,000
[Systems architect] 10,000
[Sales manager] 10,000
[In-house lawyer] 5,000
------
82,500 (165,000 post dividend)
-8-
227
SCHEDULE 2.3(a) (CONTINUED)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
CAPITALIZATION
Transaction Information Systems, Inc. Stockholders (Common Stock Issuance Only)
Shareholder Name Certificate Number Number of Shares
---------------- ------------------ ----------------
Xxxxxxxxxxx, Xxxx C-1 1,310,000
Xxxxx, Xxxx C-2 100,000
Xxxxxxxxxx, Xxxxx C-3 300,000
Xxxxxx, Xxxxxx C-4 200,000
Xxxx, Xxxxxxxx C-5 650,000
Xxxx, Xxxxxx C-6 1,510,000
Xxxxxx, Xxxxx C-7 150,000
Xxxxxxxx, Xxxxxxx C-8 1,710,000
Xxxxxxx, Xxxxxx C-9 1,710,000
Xxxx, Xxxxxx C-10 1,710,000
Xxxxx, Xxxxxxxx C-11 650,000
-9-
228
SCHEDULE 2.3(b)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
CAPITALIZATION
See Schedule 2.3(a) regarding options.
-10-
229
SCHEDULE 2.5
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
OUTSTANDING TIS EQUIPMENT CORP. STOCK OPTIONS
Number of
Shares subject
Name to Option(1)
---- --------------
Xxxxxx Xxxxxxxxxxx 20,000
Xxx Xxxxxxxxxx 26,500
Xxxxx Xxxxxx 20,000
Xxx XxXxxxxx 5,000
Xxxxx Xxxxxxxx 10,000
Xxxxxxxx Xxxxx 10,000
Xxxx Xxxxxxx 5,000
Xxxxxx Xxxxx 26,500
--------
123,000
1 Before giving effect to stock dividend.
-11-
230
SCHEDULE 2.7
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
LIABILITIES
NONE
-12-
231
SCHEDULE 2.8
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
ABSENCE OF CHANGES
NONE
-13-
232
SCHEDULE 2.9
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
NO CONFLICT
NONE
-14-
233
SCHEDULE 2.10
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
AGREEMENTS
Atlantic Mutual Insurance Company, Worker's Compensation, Policy Number
401520007, Premium Payment $103,798.26. Atlantic Mutual Insurance Company, Fire,
General Liability, Crime and Umbrella, Policy Number 486304219, Premium Payment
$81,550.00.
Lease, between Transaction Information Systems, Inc. and 00/000 Xxxxxxxx Limited
Partnership for certain space located at 000/000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Annual Base Rent $518,060.04.
BancBoston Leasing Master Lease Agreement, approximately $576,000 in annual
payments.
AT&T Capital Corporation Lease Agreements, approximately $90,000 in annual
payments.
Sanwa Leasing Corporation Lease Agreements, approximately $100,000 in annual
payments.
Xxxxxxx Xxxxx Business Financial Services Inc. WCMA Line of Credit, in the
principal amount of $2,000,000 to Xxxxxxx-Xxxx-Xxxxxxxx Associates, Ltd., and
related loan, security and guaranty agreements.
Xxxxxxx Xxxxx Business Financial Services Inc. WCMA Line of Credit, in the
principal amount of $5,000,000, to Transaction Information Systems, Inc, and
related loan, security and guaranty agreements.
-15-
234
SCHEDULE 2.10 (CONTINUED)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
AGREEMENTS
Transaction Information Systems, Inc., TIS Equipment Corp. and
Xxxxxxx-Xxxx-Xxxxxxxx Associates, Ltd. Employee Salaries
Annual Base
Employee Name Salary Amount
------------- -------------
Xxxxxxxx, Xxxx $241,707.56
Xxxxxxxxxxx, Xxxx 229,707.56
Xxxx, Xxxxxx 229,707.56
Xxxxx, Xxxx 179,707.56
Xxxxxxxxxx, Xxxxx 179,707.56
Xxxxxx, Xxxxxx 179,707.56
Xxxx, Xxxxxxxx 179,707.56
Xxxxx, Xxxxxxxx 179,707.56
Xxxxxxxxx, Xxxxxxx 175,000.00
Xxxxxxxxx, Xxxx 175,000.00
Xxxxxxx, Xxxxxxxx 175,000.00
Xxxxx, Xxxxx 150,000.00
Xxxx, Xxxxx 150,000.00
Xxxxxxx, Xxxx 140,000.00
Xxxxxx, Xxxxx 140,000.00
Xxxxx, Xxxx 135,000.00
Xxxxxxx, Xxxxxxxx 132,000.00
Xxxxxxxx, Xxxxxxx 130,000.00
-16-
235
SCHEDULE 2.10 (CONTINUED)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
AGREEMENTS
Annual Base
Employee Name Salary Amount
------------- -------------
Xxxxxxxxx, Xxxx $130,000.00
Xxxxxxx, Xxxxx 130,000.00
Xxxxxx, Xxxxx 130,000.00
Xxxxxxx, Xxxxxxx 130,000.00
Xxxxxxx, Xxxxx 130,000.00
Xxxxxxx, Xxx 130,000.00
Xxxxxxx, Xxx 125,000.00
Xxxxxxxx, Xxxxx 125,000.00
Xxxxxxxx, Xxxxxxx 125,000.00
Xxxxx, Xxxx 120,000.00
Reddy, Koti 120,000.00
Xxxxxxx, Xxxxxxx 120,000.00
Xxxxxxx, Xxxxxxx 120,000.00
Xxxxxx, Xxxxxxx 115,000.00
Xxxxxx, Xxxxxxxx 115,000.00
Xxxxxxx, Xxxx 115,000.00
Harper Sr., Xxxxxxxx 115,000.00
Xxxxxx, Xxxxx 115,000.00
Xxxxx, Xxxxxx 110,000.00
Xxxxxxxxx, Xxxxxxxxx 110,000.00
-17-
236
SCHEDULE 2.10 (CONTINUED)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
AGREEMENTS
Annual Base
Employee Name Salary Amount
------------- -------------
Xxxxxxxxxxx, Xxxxx $110,000.00
Xxxxx, Xxxxxxx 110,000.00
Trinidad, Oscar 110,000.00
Xxxxx, Xxxxxxx 110,000.00
Xxxxx, Xxxxxxx 107,500.00
Xxxx, Xxxxxxxxx 105,000.00
Xxxxxx, Xxxxxx 105,000.00
Xxxxx, Xxxxxx 102,000.00
Xxxxx, Xxxxxx 100,000.00
Xxx, Xxxxxx 100,000.00
Xxxxxx, Xxxxxx 100,000.00
Xxxxxx, Xxxxx 100,000.00
Xxxxxxxxxx, Xxxx 100,000.00
Xxxxxx, Xxxx 100,000.00
Xxx Xxxx, Xxxxx 100,000.00
Xxxxxx, Xxx 100,000.00
Xxx, Xxx Wing 100,000.00
Xxxxxxx, Xxx 100,000.00
Xxxxxxxx, Xxxxx 100,000.00
Xxxxxx, Xxxxxxx 100,000.00
-18-
237
SCHEDULE 2.10 (CONTINUED)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
AGREEMENTS
Annual Base
Employee Name Salary Amount
------------- -------------
Xxxx, Xxxxxx $100,000.00
Xxxxxxx, Xxx 100,000.00
Xxxxxx, Xxxxxx 100,000.00
Xxxxxxx, Xxxxxxxx 100,000.00
Xxxxxxxxx, Xxxx 100,000.00
Xxxx, Xxxx 100,000.00
Xxxxxxxx, Xxxxxxx 100,000.00
Xxxxxxxxx, Xxxxx 100,000.00
Outside Contractors
Amounts Billed for the
Company Name months 1/1/98-6/30/98
------------ ----------------------
A&Z Software Group $141,776.00
Advanced Software Services 102,169.20
Alpha-Omega Tech 152,847.50
Amerisource 137,720.00
Xxxxxxxxx Benefits Group 256,592.50
Computech 131,851.25
Delta International 128,193.00
Forward Tech Inc. 175,970.00
Holland Technology Group 135,443.75
-19-
238
SCHEDULE 2.10 (CONTINUED)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
AGREEMENTS
Amounts Billed for the
Company Name months 1/1/98-6/30/98
------------ ----------------------
IKRON Inc. $122,640.00
Intelligroup 168,758.00
International Comp. Tech. 103,870.00
International Software Group 829,426.13
NSA Inc. 162,000.00
Software Research Group 190,237.15
Stellar Tech Inc. 194,895.00
Syntel 174,340.00
Systems Task Inc. 247,529.50
Technosoft 141,000.00
The Boston Group 120,217.00
-20-
239
SCHEDULE 2.10 (CONTINUED)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
AGREEMENTS
Top Clients
Client Name Amount Billed for
----------- the months 1/1/98-6/30/98
-------------------------
Chase Manhattan Bank $4,979,101.00
Citibank 4,610,884.00
Ernst & Young 1,600,067.00
Xxxxx Xxxxxx Inc 1,281,723.00
MAS, Inc. 1,097,650.00
CS First Boston 810,691.00
Dow Xxxxx & Company Inc. 787,280.00
Xxxxxx Investments 698,708.00
Bear Xxxxxxx 652,539.00
Xxxxxxx Xxxxx 624,569.00
Xxxxxxxxx Automation 553,050.00
First Data Merchant Services 487,353.00
Prudential 467,271.00
Hoffmanlaroche 453,186.00
Olde Discount 437,942.00
Mckinsey & Co 420,520.31
Automatic Data Processing 397,285.00
State Street Bank 396,444.00
American International Group 340,332.00
-21-
240
SCHEDULE 2.10 (CONTINUED)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
AGREEMENTS
Amount Billed for
Client Name the months 1/1/98-6/30/98
----------- -------------------------
Fuji Capital Markets $304,084.00
Xxxxxx Xxxxxx CPA 303,170.00
ABB Turbocharger, Inc. 292,039.00
XX Xxxxxx 291,027.00
Stop & Shop 273,347.00
Hoechst Xxxxxx Xxxxxxxx, 272,752.00
Inc.
Deloitte & Touche 258,858.00
-22-
241
SCHEDULE 2.11
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
INTELLECTUAL PROPERTY MATTERS
NONE
-23-
242
SCHEDULE 2.11(a)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
INTELLECTUAL PROPERTY RIGHTS
Transaction Information Systems, Inc. Intellectual Property Rights
Intellectual Property Rights Registration Number Date of Filings
---------------------------- ------------------- ---------------
FLITE 78/075,334 01/12/98
AppTech 74/231,656 07/24/98
HumanActive 75/231,657 07/31/98
-24-
243
SCHEDULE 2.11(b)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
THIRD PARTY INTELLECTUAL PROPERTY RIGHTS
Logo Names Payments
---------- ----------
Digital Equipment Corporation Software & Application Partner (ASAP) $ 0
IBM BESTeam Partner 0
Lotus Premium Partner 0
Microsoft Solutions Partner 0
Netscape Alliance Plus and Gold DevEdge Partner 1,395.00
Oracle Development Partner 595.00
PeopleSoft Global Alliance Partner 2,000.00
SAP Partner: TeamSAP, Accelerated ASAP Partner 20,000.00
Sun Development Partner 15,000.00
Sun Authorized Java Center 0
Sybase Development Partner 1,500.00
-25-
244
SCHEDULE 2.14(a)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
PERSONAL PROPERTY, REAL PROPERTY
SEE ATTACHED ITEMS
-26-
245
SCHEDULE 2.14(b)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
PERSONAL PROPERTY, REAL PROPERTY
Office Leases for Certain Premises Located at:
(A) Trevose, PA - Suite 301, Three Neshaminy Interplex, Xxxxxxx#00, #00,
#00, Xxxxxxx, XX 00000
(B) Iselin, NJ - 000 Xxxx Xxxxxx Xxxxx, Xxxxxx, Xxx Xxxxxx 00000 (Metro
Center One)
(C) New York, NY - 000 Xxxxxxxx, 00xx xxx 00xx xxxxxx, Xxx Xxxx, XX
(D) Charlotte, NC - 0000 Xxxxxxxx Xxxx; Xxxxxxxxx, XX 00000
(E) San Francisco, CA - 00 Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx, XX
(F) Dallas, TX - 0000 XXX Xxxxxxx, Xxxxx 0000, Xxxxxx, XX 00000
(G) Boston, MA - 00 Xxxx Xxxxxx, Xxxxx 000, Xxxxxx, XX 00000
The leased property in connection with the BancBoston Master Lease Agreement and
the above-mentioned Office Leases are accounted for under GAAP as capitalized
leases.
-27-
246
SCHEDULE 2.15
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
EMPLOYEE BENEFITS MATTERS
Dental Insurance
Short/long Term Disability Insurance
Long/term Disability Insurance
Major Medical Insurance
Life Insurance
401(k) Plan
Transaction Information Systems, Inc. Employment Agreements with the following
persons:
Ahmad, Xxxxxx
Xxxx, Xxxxx
Xxxxxxxxx, Xxxxxxx
Xxxxxxx, Xxxxxxx
Xxxxx, Xxxxx
Xxxxxxx, Xxxx
Xxxxxx, Xxxxx
Xxxxxx, Xxxxx
Xxxxxxx, Xxxxxxx
Xxxxx, Xxxx
Xxxxxxxxx, Xxxx
Xxxxxxxx, Xxxxxxx
Xxxxxxx, Xxxxxxxx
Xxxxxxx, Xxxxx
Xxxxxxx, Xxxxxxx
Xxxxx, Xxxxxxx
Xxxxx, Xxxxxx
Xxxx, Xxxxxxxxx
Xxxxx, Xxxxxx
Xxxxx, Xxxxxxx
Xxxxx, Xxxx
-28-
247
SCHEDULE 2.15 (CONTINUED)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
EMPLOYEE BENEFITS MATTERS
Transaction Information Systems, Inc. Employment Agreements
Bauigadda, Xxxxxxxxxxxx Xxx
Xxx, Xxxxxx
Faktor, Xxxxx
Xxxxxxx, Xxx
Xxxxxx, Xxxxx
Xxxxxx Xx., Xxxxxxxx
Xxxxxxxxxx, Xxxx
Xxxxxx, Xxxx
Xxxxxx, Xxxxxx
Xxxxxxxx, Xxxxx
Xxxxxxxxxxx, Xxxxx
Xxxxxx, Xxxxxxxx
Xxxxxxxxx, Xxxxxxxxx
XxXxxxxx, Xxxxxx
Xxxxxxxx, Xxxxx
Xxxxx, Xxxxxxx
Xxxxxx, Xxxxxx
Xxxxx, Xxxxxx
Xxxxx, Koti
Rodzevik, Xxxxxxx
Xxxxxxx, Xxxxxxx
Xxxxxxx, Xxxx
Xxxxxx, Xxxxxxx
Xxxxxxx, Xxx
Xxxxxxxx, Xxxxx
Xxx Xxxx, Xxxxx
Xxxxxxxx, Xxxx
Xxxxxx, Xxx
Xxxxxxxxxxxxxx, Xxxx
Xx Xxxxx, Xxxxx
Xxxxxxxx, Xxxxxxx
Xxxxxx, Xxxxxxx
Xxxxxxxxxxx, Xxxxxx
-29-
248
SCHEDULE 2.15 (CONTINUED)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
EMPLOYEE BENEFITS MATTERS
Transaction Information Systems, Inc. Employment Agreements
Bentacur, Xxxxxxxxx
Xxxxxx, Xxxxxxx
Xxxxxxx, Xxxxxxx
Xxxxxxxxx, Xxx
Xxxx, Xxxxx
Xxxxxxxxx, Xxxxx
Xxxxxxx, Xxx
Xxx, Xxx Xxxx
Xxxxxxxx, Xxxxxxx
Xxxxxxxx, Xxxxx
Xxxxxx, Xxxxxx
Xxxxx, Xxxxxxx
Mule, Xxxxxx
Xxxxxx, Xxxxxx
Xxxxxxxx, Xxxxxxxx
Xxxxx, Xxxxxxxx
Xxxxx, Xxxxxx
Xxxxxxx, Xxx
Xxxxxxxxx, Xxxx
Xxxx, Xxxxx
Xxxxxx, Xxxxxx
Xxxx, Xxxx
Xx, Xxxx
Xxxxxx, Xxxx
Xxxxxx, Xxxx
Xxxxxxx, Xxxxxxxx
Xxxxx, Xxx
Xxxxxxx, Xxxx
Xxxxx, Xxx
Xxxxxxxx, Jayadratha
Xxxxxx, Xxxxxxxxx
-30-
249
SCHEDULE 2.15 (CONTINUED)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
EMPLOYEE BENEFITS MATTERS
Transaction Information Systems, Inc. Employment Agreements
Xxxxx, Xxxxxxx
Xxxxx, Xxxxxxx
Chaykov, Xxxx
Xxxxx, Xxxxxx
Xxxxxxx, Xxxx
XxXxxxxxx, Xxxxxx
Eframi, Xxxxx
Xxxxx, Xxxxxx
Xxxxxxxxx, Xxxxx
Xxxxx, Xxxxx
Xxxxxxxxxx, Xxxxx
Xxxxxxxxxx, Xxxx
Xxxxxx, Will
Xxxxx, Xxxxxxx
Xxxxxxxxxxx, Xxxxx
Xxxxxxx, Xxxxx Xxx
Xxxx, Xxxxxxx
Xx, Xxxx Xxxx
Panjabi, Xxx
Xxxxxxx, Xxxx
Xxxxxxxxxx, Xxx
Xxxxxxx, Xxxx
Xxxxx, Xxxxx
Xxxxxxx Xxx
Xxxxx, Xxxx
Xxxx, Xxxxxx
Xxxxxxx, Xxxxx
Xxxxxxxx, Xxxxx
Xxxxxxxxx, Xxxx
Xxxxxxxx, Xxxx
Xxxxxx, a
Xxxxx, Xxxxxx
-31-
250
SCHEDULE 2.15 (CONTINUED)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
EMPLOYEE BENEFITS MATTERS
Transaction Information Systems, Inc. Employment Agreements
Xxxx, Xxx
Drew, Xxxxx
Xxxxxxxx, Xxxxx
Xxxxxxxx, Xxxx
Xxxxxxxxx, Xxxxxx
Xxxxxxxxxx, Jhansi
Koronides, Xxxxxxxx
Xxxxxx, Xxxxx
Xxxxxx, Xxx
Xx, Xxxxxxx
Xxxxx, Xxxxx
Xxxxxxxx, Xxxxxx
Xxxxxxx, Xxxxx
Xxxxxx, Xxxxx
Xxxxxxxx, Xxx
Xxxxxxxx, Xxxxxx
Xxxxxxx, Xxxxxxxx
Xxxxxxxxxxx, Xxxxx
Xxxxxxx, Xxxxxxx
Xxxx, Xxxxxxxxx
Xxxxx, Xxxxxx
Sfer, Xxxxxx
Xxxxxxxxxxxx, Xxxxxx
Xxxxxxx, Xxxxxx
Xxxx, Xxxx
Xxxxxxx, Kedar
Bissooridial, Xxxxxxxx
Xxxxx, Xxxx
Xxxxxxx, Xxxxxx
Xxxxxxxxxx, Xxxx
Xxxxxxxx, Xxx
-32-
251
SCHEDULE 2.15 (CONTINUED)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
EMPLOYEE BENEFITS MATTERS
Transaction Information Systems, Inc. Employment Agreements
Xxxxxx, Xxxxxxx
Edelshain, Nigel
Xxxxxxx, Xxxx
Xxxxx, Xxxxx
Fevrier, McCous
Xxxxxxxxx, Xxxx
Fore, Xxxxxxxx
Xxxxxxxxx, Xxxxx
Xxxxxxxx, Xxxx
Xxxxxx, Xxxx
Xxxxxxxxxx, Xxxx
Xxxx, Xxxx
Xxxx, Xxxxxx
Xxxx, Xxxx
Xxxxx, Xxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxx
Xxxxx, Xxxxxxx
Xxxx, Xxxxxx
Xxxxx, Xxxxx
Xxxxxxxxx, Xxxxxxx
Xxxx, Xxxxx
Xxxxxxx, Xxxxxx
Xxxxxxxxxxxxx, Xxxxx
Xxxxx, Xxxxxxxxx
Xxxxxx, Xxxxx
Xxxxxxxx, Xxxxxx
Xxxxxxx, Xxxxxxx
Xxxxxxxxxxxxx, Xx
Xxxxxx, Xxxxxx
Xxxx, Xxxxxx
Xxxxx, Roman
-33-
252
SCHEDULE 2.15 (CONTINUED)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
EMPLOYEE BENEFITS MATTERS
Transaction Information Systems, Inc. Employment Agreements
Catalfumo, Xxxx
Xxxxxxx, Xxxx
Xxxxx, Xxxxxx
Xxxxxxxx, Xxxxx
Xxxxxxxx, Xxxx
Xxxxxx , Xxx
Xxxxxx-Xxxxxx, Xxxxxx
Xxxxxxxxxxx, Xxxxxxx
Xxxxxxxx, Xxxxxxx
Xxxxxx, Xxxx
Xxxxxxxxx, Xxxxx
Xxxxxx, Xxx
Xxxxxx, Xxxxx
Xxxxx, Xxxxxx
Xxxxxxx, Xxxx
Xxxxxxx, Xxxx
Xxxxxxxx, Xxxx
XxXxxxxxx, Xxxxxxx
Xxxxx-Xxxxxxx, Xxxxxxx
X'Xxxxx, Xxxxx
Xxxx Ram, Xxxxx
Xxxxx, Xxxxxx
Xxxxx, Xxxx
Xxxxxxxxxxx, Xxxxxx
Xxxx, Xxxxx
Xx, Xxxx
Xxxx, Xxxx
Xxxxxxxxx, Xxxxxxx
Xxxxxxx, Xxxxx
Xxxxxxxxx, Xxxxxxx
-34-
253
SCHEDULE 2.15 (CONTINUED)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
EMPLOYEE BENEFITS MATTERS
TIS Equipment Corp. Employment Agreements
Zhandaker, Xxxxx
Xxxxxx, Xxx
Xxxxxxxxx, Xxxxx
Xxxxxxx, Xxxx
Xxxxx, Xxxxxx
Xxxxx, Xxxxxx
Xxxxxxxxxx, Xxxxxx
Xxxxxx, Xxx
Xxxxxx, Xxxx
Xxx, Xxxx
Xxxxxx, Xxxxxxx
Xxxxxxxxxxx, Xxxxx
Xxxxxxxx, Xxxxxxxxxxx
Xxxxxxxxx, Xxxxx
Xxxxxx, Xxxx
Xxxxxxx-Xxxx-Xxxxxxxx Associates, Ltd. Employment Agreements
Xxxxxxxxxxx, Xxxxx
Xxxxxxx, Xxxxxx
Xxxxxxxx, Xxxxxxx
Xxxx, Xxxxxx
Xxxxxxx, Xxxxxx
Xxxx, Xxxxxx
Xxxxxxx, Xxxxxxx
Xxxxxxxxx, Xxxxx
Xxxxx, Xxxxxxx
Xxxxxx, Xxxxxx
-35-
254
SCHEDULE 2.15(a)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
EMPLOYEE BENEFITS MATTERS
NONE
-36-
255
SCHEDULE 2.16
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
LABOR
Transaction Information Systems, Inc. Employees
Employee Name Annual Base Compensation
------------- ------------------------
Xxxxxxxxxxx, Xxxx $229,707.56
Xxxxx, Xxxx $179,707.56
Xxxxxxxxxx, Xxxxx $179,707.56
Xxxx, Xxxxx $150,000.00
Xxxxxxxxx, Xxxxxxx $175,000.00
Xxxxxxxxx, Xxxx $130,000.00
Xxxxxxx, Xxxxxxx $132,000.00
Xxxxx, Xxxxx $150,000.00
Xxxxxx, Xxxxxx $179,707.56
Xxxx, Xxxxxxxx $179,707.56
Xxxxxxx, Xxx $130,000.00
Xxxxxxx, Xxxxx $130,000.00
Xxxxxxx, Xxxx $140,000.00
Xxxxxx, Xxxxx $130,000.00
Xxxxxx, Xxxxx $140,000.00
Xxxxxxx, Xxxxxxx $130,000.00
Xxxxx, Xxxx $135,000.00
Xxxxxxxx, Xxxx $241,707.56
Xxxxxxxxx, Xxxx $175,000.00
Xxxx, Xxxxxx $229,707.56
Xxxxxxxx, Xxxxxxx $130,000.00
Xxxxxxx, Xxxxxxxx $175,000.00
Xxxxxxx, Xxxxx $130,000.00
Xxxxx, Xxxxxxxx $179,707.56
-37-
256
SCHEDULE 2.16 (CONTINUED)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
LABOR
Transaction Information Systems, Inc. Employees
Employee Name Annual Base Compensation
------------- ------------------------
Xxxxxxx, Xxxxxxx $120,000.00
Xxxxx, Xxxxxxx $107,500.00
Xxxxx, Xxxxxx $110,000.00
Xxxx, Xxxxxxxxx $105,000.00
Xxxxx, Xxxxxx $100,000.00
Xxxxx, Xxxxxxx $110,000.00
Xxxxx, Xxxx $120,000.00
Xxxxxx, Xxxxx $115,000.00
Harper Sr., Xxxxxxxx $115,000.00
Xxxxxxxx, Xxxxx $125,000.00
Xxxxxxxxxxx, Xxxxx $110,000.00
Xxxxxx, Xxxxxxxx $115,000.00
Xxxxxxxxx, Xxxxxxxxx $110,000.00
XxXxxxxx, Xxxxxx $125,000.00
Xxxxxxxx, Xxxxx $125,000.00
Xxxxx, Xxxxxxx $110,000.00
Xxxxxx, Xxxxxx $105,000.00
Xxxxx, Xxxxxx $102,000.00
Reddy, Koti $120,000.00
Xxxxxxxx, Xxxxxxx $125,000.00
Xxxxxxx, Xxxxxxx $120,000.00
Xxxxxxx, Xxxx $115,000.00
Xxxxxx, Xxxxxxx $115,000.00
Xxxxxxx, Xxx $125,000.00
Trinidad, Oscar $110,000.00
-38-
257
SCHEDULE 2.16 (CONTINUED)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
LABOR
Transaction Information Systems, Inc. Employees
Employee Name Annual Base Compensation
------------- ------------------------
Xxxxxxxx, Xxxx $ 95,000.00
Xxx, Xxxxxx $100,000.00
Xxxxxx, Xxxxx $100,000.00
Xxxxxx, Xxxxxxx $100,000.00
Xxxxxx, Xxx $100,000.00
Xxxxxxxxxx, Xxxx $100,000.00
Xxxxxx, Xxxx $100,000.00
Xxxxxx, Xxxxxx $100,000.00
Xxxxxxxxx, Xxxxx $100,000.00
Xxxxxxx, Xxx $100,000.00
Xxx, Xxx Wing $100,000.00
Listhaus, Steve $100,000.00
Martin, Eladio $ 98,000.00
Mule, Joseph $100,000.00
Parise, Robert $100,000.00
Quinn, Meghan $ 99,000.00
Robatto, Ana $100,000.00
Roughan, Patricia $100,000.00
Schneider, Mark $100,000.00
Shah, Keten $ 97,160.00
Spyros, Spyros $ 96,000.00
Tusa, Lynn $100,000.00
Van Camp, Jason $100,000.00
Viggiano, Raymond $100,000.00
Viscovich, Robert $ 96,000.00
-39-
258
SCHEDULE 2.16 (CONTINUED)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
LABOR
Transaction Information Systems, Inc. Employees
Employee Name Annual Base Compensation
------------- ------------------------
Bhowmick, Jayadratha $85,000.00
Bianco, Franchesca $85,000.00
Bierig, Stu $92,500.00
Chandrasekaran, B $95,000.00
Chaykov, Alex $85,000.00
Da Ponte, Diana $91,000.00
Dahlberg, Michael $95,000.00
Denney, Kirsten $90,000.00
Engelbrecht, George $95,000.00
Franklin, Jim $90,000.00
Gadayev, Gregory $90,000.00
Grabowski, Jon $95,000.00
Hult, Chris $90,000.00
Karnowski, David $85,000.00
Lindeman, William $95,000.00
Mills, Holland $90,000.00
Ng, Judy $86,500.00
Pasquale, Nicholas $90,000.00
Pinco, Jennifer $90,000.00
Pursley, Sara $90,000.00
Pydishetty, Raj $90,000.00
Raymond, Gary $90,000.00
Riley, James $88,000.00
Wong, Edward $90,000.00
Wu, Kang $93,500.00
-40-
259
SCHEDULE 2.16 (CONTINUED)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
LABOR
Transaction Information Systems, Inc. Employees
Employee Name Annual Base Compensation
------------- ------------------------
Abrams, Josh $82,500.00
Chong, George $82,000.00
Dimartini, Krista $85,000.00
Kasny, Steve $84,000.00
Kirichenko, Vadim $83,000.00
Kramer, Will $83,000.00
Maduramuthu, Vijay $85,000.00
Panjabi, Raj $85,000.00
TIS Equipment Corp. Employees
Employee Name Annual Base Compensation
------------- ------------------------
Bavigadda, Madhu $ 75,000.00
Donovan, Greg $ 75,000.00
Doyon, Daniel $145,000.00
Gogri, Sachin $ 93,500.00
Gold, Robert $229,707.56
Jeronowitz, Robert $ 99,000.00
Krolak, Amy $ 79,500.00
Melomo, Peter $179,707.56
Nelson, Anthony $ 93,500.00
Outerbridge, Peter $ 72,000.00
Spille, Michael $106,000.00
Topolosky, Jason $ 68,000.00
Wanuga, Paul $134,000.00
-41-
260
SCHEDULE 2.16 (CONTINUED)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
LABOR
TIS Equipment Corp. Employees
Employee Name Annual Base Compensation
------------- ------------------------
Aleles, Joe $60,000.00
Levine, Josh $55,000.00
Lin, Jack $51,000.00
Raikanti, Vivekananda $60,000.00
Setford-Shaw-Najarian Associates Ltd. Employees
Employee Name Annual Base Compensation
------------- ------------------------
Arzoomanian, Audra $ 60,000.00
Enright, Thomas $ 60,000.00
Epifanio, Michael $ 52,000.00
Gnip, Kirina $ 78,000.00
Kalikas, George $ 50,000.00
Laux, Thomas $ 62,000.00
Malvese, Matthew $ 70,000.00
Schreiber, James $ 50,000.00
Setford, George $229,707.56
Tracy, Stephen $ 78,000.00
Weiner, Robert $156,000.00
-42-
261
SCHEDULE 2.17
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
LITIGATION
PMG Securities Corporation v. Transaction Information Systems, and Robert Gold
d/a/a Transaction Information Systems, Index No. 97/602608
Claude Nadaf and Nadcomp Systems, Inc. v. Transaction Information Systems, Inc.,
Index No.15122/98
-43-
262
SCHEDULE 2.18
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
COMPLIANCE WITH LAWS, PERMITS
Transaction Information Systems, Inc. (Delaware)
Pending qualifications in the states of New Jersey, Massachusetts, Texas, North
Carolina and Pennsylvania
TIS Equipment Corp. (Delaware)
Pending qualification in the State of New York
Setford-Shaw-Najarian Associates Ltd. (New York)
Pending qualifications in the states of New Jersey, Texas, North Carolina and
Pennsylvania
-44-
263
SCHEDULE 2.19
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
COMMISSIONS, ETC.
NONE.
-45-
264
SCHEDULE 2.21(a)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
RELATED TRANSACTIONS
NONE
-46-
265
SCHEDULE 2.22(a)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
TAXES
Income Tax Returns are Filed in the Following Jurisdictions:
Massachusetts
New Jersey
New York
New York City
Pennsylvania
-47-
266
SCHEDULE 2.22(b)(ii)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
TAXES
S-Corporation Election (Transaction Information Systems, Inc.)
Jurisdiction Date
------------ ----
Federal July 1, 1994
Delaware September 1, 1997
Massachusetts January 1, 1996
New York July 1, 1994
New Jersey December 1, 1996
Pennsylvania September 29, 1997
S-Corporation Election (TIS Equipment Corp.)
Jurisdiction Date
------------ ----
Federal January 1, 1997
New York January 1, 1997
S-Corporation Election (Setford-Shaw-Najarian Associates, Ltd.)
Jurisdiction Date
------------ ----
Federal January 1, 1994
New York January 1, 1994
Federal Subchapter S Subsidiary Election (Setford-Shaw-Najarian Associates,
Ltd.)
Jurisdiction Date
------------ ----
Federal December 31, 1997
-48-
267
SCHEDULE 2.22(d)
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
TAXES
NONE.
-49-
268
SCHEDULE 2.24
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
INSURANCE
Policy Type Company Policy Number Effective Expiration Premium
----------- ------- ------------- Date Date -------
--------- ----------
Bond Reliance Insurance TBD 07/20/98 07/20/99 $ 13,845.00
Employee Dishonesty Company
Bond U.S.F.G. & Co. 59006059209954 07/26/98 07/26/01 $ 675.00
Employee Dishonesty Blanket Insurance Co.
Fire Atlantic Mutual 486304219 08/03/98 08/03/99 $ 81,550.00
General Liability Insurance Co.
Crime
Umbrella Commercial
Errors & Omissions Lloyds of London MPL0111400 12/22/97 12/22/98 $ 47,970.00
Worker's Compensation Atlantic Mutual
Insurance Company 401520007 11/25/97 11/25/98 $103,798.26
Employment Practices London Special
Risks, Ltd 047/276 04/25/98 04/25/99 $ 24,084.00
-51-
269
SCHEDULE 2.27
TO THE PREFERRED STOCK PURCHASE AGREEMENT
BY AND AMONG
TRANSACTION INFORMATION SYSTEMS, INC.
THE SHAREHOLDERS OF TRANSACTION INFORMATION SYSTEMS, INC.
AND GS CAPITAL PARTNERS III, L.P.
INVESTMENT BANKING SERVICES
NONE
-52-
