Exhibit 10.23
SENIOR MANAGEMENT AGREEMENT
THIS SENIOR MANAGEMENT AGREEMENT (this "AGREEMENT") is made as
of June 29, 1998 between AppNet Systems, Inc., a Delaware corporation (the
"COMPANY"), and Xxx X. Xxxxx ("EXECUTIVE").
As of the date of this Agreement, after giving effect to a
capital contribution to the Company of 100,000 shares of Common Stock
contemporaneously herewith, Executive owns 6,900,000 shares of the Company's
Common Stock, par value $.0005 per share (the "CARRIED STOCK").
The Company and Executive desire to enter into an agreement
pursuant to which Executive will purchase, and the Company will sell, 3,566,000
shares of the Company's Common Stock, par value $.0005 per share, (the "RESERVED
STOCK"). The Carried Stock and the Reserved Stock are collectively referred to
as "EXECUTIVE STOCK." Certain definitions are set forth in Section 10 of this
Agreement.
The execution and delivery of this Agreement by the Company and
Executive is a condition to the purchase of shares of Common Stock and shares of
the Company's Class A Preferred Stock, par value $.01 per share (the "CLASS A
PREFERRED") by GTCR Xxxxxx Xxxxxx, L.L.C., a Delaware limited liability company
("GTCR"), and Smart Technology, L.L.C. ("SMART TECHNOLOGY" and together with
GTCR, the "INVESTORS" and each an "INVESTOR") pursuant to a purchase agreement
between the Company and the Investors dated as of the date hereof (the "PURCHASE
AGREEMENT"). Certain provisions of this Agreement are intended for the benefit
of, and will be enforceable by, the Investors.
The parties hereto agree as follows:
PROVISIONS RELATING TO EXECUTIVE STOCK
1. OWNERSHIP. Executive acknowledges that as of the date of this
Agreement he owns beneficially and of record the Carried Stock free and clear of
all liens and encumbrances, except as set forth in the Subscription Agreement
between the Company and the Executive dated February 10, 1998.
2. PURCHASE AND SALE OF RESERVED STOCK.
(a) Upon execution of this Agreement, Executive will purchase,
and the Company will sell, 3,566,000 shares of the Reserved Stock at a price of
$0.1055 per share. The Company will deliver to Executive the certificates
representing such shares, and Executive will deliver to the Company a cashier's
or certified check or wire transfer of funds in the aggregate amount of
$1,783.00 and a promissory note in the form of ANNEX A attached hereto in an
aggregate principal amount of $374,430.00 (the "EXECUTIVE NOTE"). Executive's
obligations under the Executive Note shall be secured by a pledge of all of the
shares of Reserved Stock
purchased hereunder to the Company and in connection therewith, Executive shall
enter into a pledge agreement in the form of ANNEX B attached hereto.
(b) Within 30 days after the date hereof, Executive will make
an effective election with the Internal Revenue Service under Section 83(b) of
the Internal Revenue Code and the regulations promulgated thereunder in the form
of ANNEX C attached hereto.
(c) Executive represents and warrants to the Company that:
(i) The Reserved Stock to be acquired by Executive
pursuant to this Agreement will be acquired for Executive's own account
and not with a view to, or intention of, distribution thereof in
violation of the Securities Act, or any applicable state securities
laws, and the Reserved Stock will not be disposed of in contravention
of the Securities Act or any applicable state securities laws.
(ii) Executive is an executive officer of the
Company, is sophisticated in financial matters and is able to evaluate
the risks and benefits of the investment in the Reserved Stock.
(iii) Executive is able to bear the economic risk of
his investment in the Reserved Stock for an indefinite period of time
because the Reserved Stock has not been registered under the Securities
Act and, therefore, cannot be sold unless subsequently registered under
the Securities Act or an exemption from such registration is available.
(iv) Executive has had an opportunity to ask
questions and receive answers concerning the terms and conditions of
the offering of Reserved Stock and has had full access to such other
information concerning the Company as he has requested.
(v) This Agreement constitutes the legal, valid and
binding obligation of Executive, enforceable in accordance with its
terms, and the execution, delivery and performance of this Agreement by
Executive does not and will not conflict with, violate or cause a
breach of any agreement, contract or instrument to which Executive is a
party or any judgment, order or decree to which Executive is subject.
(vi) Executive is a resident of the State of
Maryland.
(d) As an inducement to the Company to issue the Reserved
Stock to Executive, as a condition thereto, Executive acknowledges and agrees
that neither the issuance of the Reserved Stock to Executive nor any provision
contained herein shall entitle Executive to remain in the employment of the
Company and its Subsidiaries or affect the right of the Company to terminate
Executive's employment at any time for any reason.
3. REPURCHASE OF RESERVED STOCK
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(a) From time to time, the Company may issue or sell Common
Stock (or rights to acquire Common Stock) to its employees ( an "EMPLOYEE
ISSUANCE"). If the Company elects to make an Employee Issuance, the Company
shall have the right to purchase from Executive, and Executive shall sell to the
Company, the number of shares of Reserved Stock (whether held by Executive or
one or more of Executive's transferees, other than the Company) to be issued in
connection with such Employee Issuance pursuant to this Section 3. In addition,
in the event Executive ceases to be employed by the Company or its Subsidiaries
for any reason (the "SEPARATION"), the Company shall have the right to purchase
from Executive, and Executive shall sell to the Company, all of the Executive's
shares of Reserved Stock (whether held by Executive or one or more of
Executive's transferees, other than the Company) pursuant to this Section 3.
(b) In order to purchase Reserved Stock, the Company shall
provide written notice to Executive (the "Reserved Stock Notice") either (i)
providing notice of the Employee Issuance and the number of shares of Reserved
Stock to be repurchased in connection therewith or (ii) providing notice that
all of the shares of Reserved Stock held by the Executive will be repurchased
due to a Separation. The number of shares to be repurchased by the Company shall
first be satisfied to the extent possible from the shares of Reserved Stock held
by Executive at the time of delivery of the Reserved Stock Notice. If the number
of shares of Reserved Stock then held by Executive is less than the total number
of shares of Reserved Stock which the Company has elected to purchase, the
Company shall purchase the remaining shares elected to be purchased from the
other holder(s) of Reserved Stock under this Agreement, pro rata according to
the number of shares of Reserved Stock held by such other holder(s) at the time
of delivery of such Reserved Stock Notice (determined as nearly as practicable
to the nearest share). The sale of the Reserved Stock shall occur five days
after the Company sends the Reserved Stock Notice or, if later, immediately
prior to the consummation of the Employee Issuance. At the closing of the sale
and purchase of the Reserved Stock, the Company shall, first, pay by check or
wire transfer the par value of such shares and, second, offset the aggregate
repurchase price for the Reserved Stock being repurchased against amounts due
under the Executive Note, and Executive shall deliver to the Company
certificates evidencing the Reserved Stock to be sold to the Company. In
connection with any repurchase hereunder, the Company will be entitled to
receive customary representations and warranties regarding such repurchase and
to require that all sellers' signatures be guaranteed.
(c) The repurchase price for all shares of Reserved Stock
shall be the Original Cost thereof plus any interest, fees and expenses paid or
payable pursuant to the Executive Note, pro rata to the percentage of the
Reserved Shares, which are held at such time by the Executive and the Executive
transferees, repurchased by the Company at any time and from time to time
pursuant to this Section 3. The Company's right to repurchase Reserved Stock
shall expire upon the first to occur of (i) a Liquidity Event and (ii) a Public
Offering.
4. REPURCHASE OPTION.
(a) In the event of a Separation, a percentage of the Carried
Stock (whether held by Executive or one or more of Executive's transferees,
other than the Company) will be
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subject to repurchase, in each case at the option of the Company and the
Investors pursuant to the terms and conditions set forth in this Section 4(a)
(the "REPURCHASE OPTION"). The percentage of the Carried Stock that will be
subject to repurchase at the Executive's Original Cost for such shares shall be
calculated in accordance with the following schedule (the "SUBJECT SHARES"):
Percentage of Carried Stock
Date to be Repurchased At Original Cost
---- ----------------------------------
Date of this Agreement until 1st 65.2174%
Anniversary of this Agreement
Date immediately following 1st 43.4740%
Anniversary of this Agreement until
2nd Anniversary of this Agreement
Date immediately following 2nd 21.7434%
Anniversary of this Agreement until
3rd Anniversary of this Agreement
Date immediately following 3rd 0%
Anniversary of this Agreement and
thereafter
(b) The Company may elect to purchase all or any portion of
the Subject Shares by delivering written notice (the "REPURCHASE NOTICE") to the
holder or holders of the Subject Shares within 90 days after the Separation. The
Repurchase Notice will set forth the number of Subject Shares to be acquired
from each holder, the aggregate consideration to be paid for such shares and the
time and place for the closing of the transaction. The number of shares to be
repurchased by the Company shall first be satisfied to the extent possible from
the Subject Shares held by Executive at the time of delivery of the Repurchase
Notice. If the number of Subject Shares then held by Executive is less than the
total number of Subject Shares which the Company has elected to purchase, the
Company shall purchase the remaining shares elected to be purchased from the
other holder(s) of Subject Shares under this Agreement, pro rata according to
the number of Subject Shares held by such other holder(s) at the time of
delivery of such Repurchase Notice (determined as nearly as practicable to the
nearest share).
(c) If for any reason the Company does not elect to purchase
all of the Subject Shares pursuant to the Repurchase Option, the Investors shall
be entitled to exercise the Repurchase Option for the Subject Shares the Company
has not elected to purchase (the "AVAILABLE SHARES"). As soon as practicable
after the Company has determined that there will be Available Shares, but in any
event within 60 days after the Separation, the Company shall give written notice
(the "OPTION NOTICE") to the Investors setting forth the number of Available
Shares and the purchase price for the Available Shares. The Investors may elect
to purchase any or all of the Available Shares by giving written notice to the
Company within one month after the Option Notice has been given by the Company.
If the Investors elect to purchase an aggregate number of shares greater than
the number of Available Shares, the Available Shares shall be
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allocated among the Investors based upon the number of shares of Common Stock
owned by each Investor on a fully diluted basis. As soon as practicable, and in
any event within ten days, after the expiration of the one-month period set
forth above, the Company shall notify each holder of Subject Shares as to the
number of shares being purchased from such holder by the Investors (the
"SUPPLEMENTAL REPURCHASE NOTICE"). At the time the Company delivers the
Supplemental Repurchase Notice to the holder(s) of Subject Shares, the Company
shall also deliver written notice to the Investors setting forth the number of
shares the Investors are entitled to purchase, the aggregate purchase price and
the time and place of the closing of the transaction. Notwithstanding the
foregoing, the Investors shall not exercise their Repurchase Option pursuant to
this Section 4(c) if the Company has sufficient assets to fully exercise its
Repurchase Option but has not exercised such right. Furthermore, if the
Investors repurchase any Subject Shares, they shall contribute such Subject
Shares to the Company in exchange for a promissory note from the Company with an
aggregate principal amount equal to the purchase price paid for such shares,
bearing interest (payable quarterly) at a rate per annum equal to the prime
rate as published in the WALL STREET JOURNAL from time to time, and having a
term of no longer than five years.
(d) The closing of the purchase of the Subject Shares pursuant
to a Repurchase Option shall take place on the date designated by the Company in
the Repurchase Notice or Supplemental Repurchase Notice, which date shall not be
more than one month nor less than five days after the delivery of the later of
either such notice to be delivered. The Company will pay for the Subject Shares
to be purchased by it pursuant to the Repurchase Option by first offsetting
amounts outstanding under any bona fide debts owed by Executive to the Company
and will pay the remainder of the purchase price by a check or wire transfer of
funds in the aggregate amount of the purchase price for such shares. The
Investors will pay for the Subject Shares to be purchased by them by a check or
wire transfer of funds. The Company and the Investors will be entitled to
receive customary representations and warranties from the sellers regarding such
sale and to require all sellers' signatures be guaranteed.
(e) Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Subject Shares by the Company shall be subject to
applicable restrictions contained in the Delaware General Corporation Law and in
the Company's and its Subsidiaries' debt and equity financing agreements. If any
such restrictions prohibit the repurchase of Subject Shares hereunder which the
Company is otherwise entitled or required to make, the Company may make such
repurchases as soon as it is permitted to do so under such restrictions.
(f) The provisions of this Section 4 shall terminate upon a
Liquidity Event.
5. RESTRICTIONS ON TRANSFER OF EXECUTIVE STOCK
(a) RETENTION OF EXECUTIVE STOCK. Until the fifth anniversary
of the date of this Agreement, Executive shall not sell, transfer, assign,
pledge or otherwise dispose of any interest in any shares of Executive Stock,
except pursuant to: (i) a Sale of the Company, (ii) Sections 3 and 4 of this
Agreement (iii) Section 4 of the Stockholders Agreement, (iv) a sale described
in clause (i) of the definition of "PUBLIC SALE" or (v) after a Public Offering,
upon any sale by the
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Investors or an Affiliate of the type described in clause (ii) of the definition
of "PUBLIC SALE" (a "RULE 144 SALE"), to the extent of the lesser of (a) the
number of shares of Carried Stock held by Executive that are not subject to
repurchase and (b) the number of shares of Carried Stock held by Executive
multiplied by a fraction, the numerator of which is the number of shares of
Common Stock sold by the Investors and their Affiliates in the Rule 144 Sale and
the denominator of which is the total number of shares of Common Stock held by
the Investors and their Affiliates immediately prior to such sale.
(b) CERTAIN PERMITTED TRANSFERS. The restrictions in this
Section 5 will not apply with respect to (i) transfers of shares of Executive
Stock pursuant to applicable laws of descent and distribution or (ii) transfer
of shares of Executive Stock among Executive's Family Group; provided that such
restrictions will continue to be applicable to the Executive Stock after any
such transfer and the transferees of such Executive Stock have agreed in writing
to be bound by the provisions of this Agreement.
(c) TERMINATION OF RESTRICTIONS. The restrictions on the
Transfer of shares of Executive Stock set forth in this Section 5 will continue
with respect to each share of Executive Stock until the date on which such
Executive Stock has been transferred in a transaction permitted by this Section
5 (except in a transaction contemplated by Section 5(b)); provided that in any
event such restrictions will terminate upon a Liquidity Event.
6. ADDITIONAL RESTRICTIONS ON TRANSFER OF EXECUTIVE STOCK.
(a) LEGEND. The certificates representing the Executive Stock
will bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION
THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO
SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE
OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN A SENIOR MANAGEMENT
AGREEMENT BETWEEN THE COMPANY AND AN EXECUTIVE OF THE COMPANY DATED AS
OF JUNE 29, 1998. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE
HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT
CHARGE."
(b) OPINION OF COUNSEL. No holder of Executive Stock may sell,
transfer or dispose of any Executive Stock (except pursuant to an effective
registration statement under the Securities Act or pursuant to Section 5(b)
hereof) without first delivering to the Company an opinion of counsel
(reasonably acceptable in form and substance to the Company) that neither
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registration nor qualification under the Securities Act and applicable state
securities laws is required in connection with such transfer.
PROVISIONS RELATING TO EMPLOYMENT
7. EMPLOYMENT. The Company agrees to employ Executive and Executive
accepts such employment for the period beginning as of the date hereof and
ending upon his separation pursuant to Section 7(c) hereof (the "EMPLOYMENT
PERIOD").
(a) POSITION AND DUTIES. During the Employment Period,
Executive shall serve as the President and Chief Executive Officer of the
Company and shall have the normal duties, responsibilities and authority of the
President and Chief Executive Officer, including, without limitation, the
responsibilities associated with all aspects of the daily operations of the
Company and the completion and integration of any acquisitions made by the
Company, subject to the power of the Board to expand or limit such duties,
responsibilities and authority and to override actions of the President and
Chief Executive Officer. Executive shall report to the Board and Executive shall
devote his best efforts and of his full business time and attention to the
business and affairs of the Company and its subsidiaries.
(b) SALARY, BONUS AND BENEFITS. Commencing on October 1, 1998,
the Company will pay Executive a salary (the "ANNUAL SALARY") of $300,000 per
annum, subject to any increase as determined by the Board based upon the
Company's achievements of budgetary and other objectives set by the Board.
Executive shall be eligible to receive a bonus of up to fifty (50%) of the
Annual Salary based upon the Company's achievement of budgetary and other
objectives set forth by the Board. Executive's Annual Salary for any partial
year will be prorated based upon the number of days elapsed in such year. In
addition, during the Employment Period, Executive will be entitled to such other
benefits approved by the Board and made available to the Company's senior
management.
(c) SEPARATION. Executive's employment by the Company will
continue until Executive's resignation, disability (as determined by the Board
in its good faith judgment) or death or until the Board terminates Executive's
employment for any reason or without any reason.
8. CONFIDENTIAL INFORMATION.
(a) Executive acknowledges that the Company and its
Subsidiaries are engaged in the business of acquiring businesses that provide
electronic commerce services and operating those businesses after their
acquisition (the "BUSINESS"). Executive further acknowledges that the Business
and its continued success depend upon the use and protection of a large body of
confidential and proprietary information, and that he holds a position of trust
and confidence by virtue of which he necessarily possesses, has access to and,
as a consequence of his signing this Agreement, will continue to possess and
have access to, highly valuable, confidential and proprietary information of the
Company and its Subsidiaries not known to the public in general, and that it
would be improper for him to make use of this information for the
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benefit of himself and others. All of such confidential and proprietary
information now existing or to be developed in the future will be referred to in
this Agreement as "CONFIDENTIAL INFORMATION." This includes, without specific
limitation, information relating to the nature and operation of the Business,
the persons, firms and corporations which are customers or active prospects of
the Company during Executive's employment by the Company, the Company's
development transition and transformation plans, methodology and methods of
doing business, strategic, acquisition, marketing and expansion plans, including
plans regarding planned and potential acquisitions and sales, financial and
business plans, employee lists, numbers and location of sales representatives,
new and existing programs and services (and those under development), prices and
terms, customer service, integration processes requirements, costs of providing
service, support and equipment and equipment maintenance costs. Confidential
Information shall not include any information that has become generally known to
and available for use by the public other than as a result of Executive's acts
or omissions.
(b) Disclosure of any Confidential Information of the Company
shall not be prohibited if such disclosure is directly pursuant to a valid and
existing order of a court or other governmental body or agency within the United
States; provided, however, that (i) Executive shall first have given prompt
notice to the Company of any such possible or prospective order (or proceeding
pursuant to which any such order may result) and (ii) Executive shall afford the
Company a reasonable opportunity to prevent or limit any such disclosure.
(c) During the Employment Period and at all times thereafter,
Executive will preserve and protect as confidential all of the Confidential
Information known to Executive or at any time in Executive's possession or
control. In addition during the Employment Period and at all times thereafter,
Executive will not disclose to any unauthorized person or use for his own
account any of such Confidential Information without the Board's consent.
Executive agrees to deliver to the Company at a Separation, or at any other time
the Company may request in writing, all memoranda, notes, plans, records,
reports and other documents (and copies thereof) containing or otherwise
relating to any of the Confidential Information (including, without limitation,
all acquisition prospects, lists and contact information) which he may then
possess or have under his control. Executive acknowledges that all such
memoranda, notes, plans, records, reports and other documents are and at all
times will be and remain the property of the Company.
(d) Executive will fully comply with any agreement reasonably
required by any of the Company's affiliates, business partners, suppliers or
contractors with respect to the protection of the confidential and proprietary
information of such entities.
9. NONCOMPETITION AND NONSOLICITATION. Executive acknowledges that in
the course of his employment with the Company he will become familiar with
Confidential Information and that his services will be of special, unique and
extraordinary value to the Company. Executive agrees that the Company has a
protectable interest in the Confidential Information, goodwill and specialized
knowledge acquired by Executive during the course of his employment with the
Company. Therefore, Executive agrees that:
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(a) NONCOMPETITION. During the Employment Period and for a
period of eighteen months thereafter (the "NONCOMPETE PERIOD"), he shall not,
anywhere in the United States, directly or indirectly own, manage, control,
participate in, consult with, render services for, or in any manner engage in
the Business or any other business engaged in by the Company at the time of
Separation.
(b) NONSOLICITATION. During the Noncompete Period, Executive
shall not directly or indirectly through another entity (i) induce or attempt to
induce any employee of the Company or any of its Subsidiaries to leave the
employ of the Company or such Subsidiary, or in any way interfere with the
relationship between the Company or any of its Subsidiaries and any employee
thereof, (ii) hire any person who was an employee of the Company or any of its
Subsidiaries within 180 days prior to the time such employee was hired by the
Executive, (iii) induce or attempt to induce any owner of a site location,
customer, supplier, licensee or other business relation of the Company or any of
its Subsidiaries to cease doing business with the Company or such Subsidiary or
in any way interfere with the relationship between any such customer, supplier,
licensee or business relation and the Company or any of its Subsidiaries or (iv)
directly or indirectly acquire or attempt to acquire an interest in any business
relating to the business of the Company or any of its Subsidiaries and with
which the Company or any of its Subsidiaries has entertained discussions or has
requested and received information relating to the acquisition of such business
by the Company or any of its Subsidiaries in the two-year period immediately
preceding a Separation.
(c) ENFORCEMENT. If, at the time of enforcement of Section 8
or 9 of this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum duration, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area and that
the court shall be allowed to revise the restrictions contained herein to cover
the maximum duration, scope and area permitted by law. Because Executive's
services are unique and because Executive has access to Confidential
Information, the parties hereto agree that money damages would be an inadequate
remedy for any breach of this Agreement. Therefore, in the event of a breach or
threatened breach of Section 8 or Section 9 of this Agreement, the Company or
any of its successors or assigns shall, in addition to other rights and remedies
existing in its favor, be entitled to specific performance and/or injunctive or
other relief in order to enforce, or prevent any violations of, the provisions
of Section 8 or Section 9 from any court of competent jurisdiction.
(d) ADDITIONAL ACKNOWLEDGMENTS. Executive acknowledges that
the provisions of this Section are in consideration of: (i) employment with the
Company and (ii) additional good and valuable consideration as set forth in this
Agreement. Executive expressly agrees and acknowledges that the restrictions
contained in Sections 8 and 9 do not preclude Executive from earning a
livelihood, nor do they unreasonably impose limitations on Executive's ability
to earn a living. In addition, Executive agrees and acknowledges that the
potential harm to the Company of the non-enforcement of Sections 8 or 9
outweighs any harm to the Executive of their enforcement by injunction or
otherwise. Executive acknowledges that he has carefully read this Agreement and
has given careful consideration to the restraints imposed upon the Executive
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by this Agreement, and is in full accord as to their necessity for the
reasonable and proper protection of Confidential Information. Executive
expressly acknowledges and agrees that each and every restraint imposed by this
Agreement is reasonable with respect to subject matter, time period and
geographical area.
GENERAL PROVISIONS
10. DEFINITIONS
"AFFILIATE" or "AFFILIATES" of an Investor means any direct or indirect
general or limited partner of such Investor, or any employee or owner thereof,
or any other person, entity or investment fund controlling, controlled by or
under common control with such Investor.
"COMMON STOCK" means the Company's Common Stock, value $.0005 per
share.
"EXECUTIVE'S FAMILY GROUP" means Executive's spouse and descendants
(whether natural or adopted), any trust solely for the benefit of Executive
and/or Executive's spouse and/or descendants and any retirement plan for the
Executive.
"EXECUTIVE STOCK" will continue to be Executive Stock in the hands of
any holder other than Executive (except for the Company and the Investors and
except for transferees in a Public Sale), and except as otherwise provided
herein, each such other holder of Executive Stock will succeed to all rights and
obligations attributable to Executive as a holder of Executive Stock hereunder.
Executive Stock will also include shares of the Company's capital stock issued
with respect to Executive Stock by way of a stock split, stock dividend or other
recapitalization.
"LIQUIDITY EVENT" means (i) a Sale of the Company or (ii) the failure
of GTCR and its Affiliates to collectively own more than 50% of the original
number of shares of Common Stock purchased by GTCR pursuant to the Purchase
Agreement (as adjusted for any Common Stock issued with respect to such stock by
way of a stock split, stock dividend or other recapitalization).
"ORIGINAL COST" means, with respect to each share of Reserved Stock
purchased hereunder, $0.1055, and, with respect to each share of Carried Stock,
$0.001, (both as proportionately adjusted for all subsequent stock splits, stock
dividends and other recapitalizations).
"PERSON" means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"PUBLIC OFFERING" means the sale in an underwritten public offering
registered under the Securities Act of shares of the Company's Common Stock
approved by the Board.
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"PUBLIC SALE" means (i) any sale pursuant to a registered public
offering under the Securities Act or (ii) any sale to the public pursuant to
Rule 144 promulgated under the Securities Act effected through a broker, dealer
or market maker (other than pursuant to Rule 144(k)).
"SALE OF THE COMPANY" means any transaction or series of transactions
pursuant to which any person(s) or entity(ies) other than the Investors and its
Affiliates in the aggregate acquire(s) (i) capital stock of the Company
possessing the voting power (other than voting rights accruing only in the event
of a default, breach or event of noncompliance) to elect a majority of the
Company's board of directors (whether by merger, consolidation, reorganization,
combination, sale or transfer of the Company's capital stock, shareholder or
voting agreement, proxy, power of attorney or otherwise) or (ii) all or
substantially all of the Company's assets determined on a consolidated basis;
provided that the term "Sale of the Company" shall not include a Public
Offering.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement of even date
herewith among the Company and certain of its stockholders.
"SUBSIDIARY" means any corporation of which fifty percent (50%) or more
of the securities having ordinary voting power in electing the board of
directors are, at the time as of which any determination is being made, owned by
the Company either directly or through one or more Subsidiaries. The term
Subsidiary shall also include any joint venture arrangement between the Company
and any other entity, including, without limitation, the Company's joint venture
arrangement with Commerce Direct International, Inc., a Delaware corporation.
"TRANSFER" means to sell, transfer, assign, pledge or otherwise dispose
of (whether with or without consideration and whether voluntarily or
involuntarily or by operation of law).
11. NOTICES. Any notice provided for in this Agreement must be in
writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to the recipient at the address below
indicated:
IF TO THE COMPANY:
AppNet Systems, Inc.
0000X Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attention: President
With a Copy To:
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GTCR Xxxxxx Xxxxxx, L.L.C.
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxx
AND
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
AND
Xxxxxx, Flyer & Xxxxx
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx
IF TO THE EXECUTIVE:
Xxx X. Xxxxx
00000 Xxxxxx Xxxx
Xxxxxxx, XX 00000
WITH A COPY TO:
Xxxxxx, Flyer & Xxxxx
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx
IF TO THE INVESTORS:
GTCR Xxxxxx Xxxxxx, L.L.C.
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxx
AND
Smart Technology, L.L.C.
00000 Xxxxxx Xxxx
-00-
Xxxxxxx, XX 00000
WITH A COPY TO:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Xxxxxx, Flyer & Xxxxx
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx.
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
12. GENERAL PROVISIONS
(a) EXPENSES. The Company shall pay all legal, accounting and
other expenses incurred in connection with the negotiation and execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement.
(b) TRANSFERS IN VIOLATION OF AGREEMENT. Any Transfer or
attempted Transfer of any Executive Stock in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Executive Stock as the owner of
such stock for any purpose.
(c) AMENDMENT OF SUBSCRIPTION AGREEMENT. The Subscription
Agreement between the Executive and the company dated as of February 10, 1998
(the "SUBSCRIPTION AGREEMENT") is hereby amended by deleting the provisions of
each of Section 1(c), 2(d), 3(m), 3(n), 4, 6, 7(b), 7(c) in their entirety
and replacing such provisions with "Intentionally Omitted."
(d) SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(e) INTENDED THIRD-PARTY BENEFICIARIES. The Investors are
intended to be third-party beneficiaries to this entire Agreement and the rights
and obligations of the parties
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hereto. It is understood and agreed by the parties hereto that this Agreement
shall be enforceable by GTCR and, provided GTCR is seeking to enforce
substantially the same rights, the other Investor(s) in accordance with its
terms as though each of the Investors were a party to every provision hereof.
Except as expressly provided herein, no other third parties are intended by the
parties hereto to be beneficiaries hereof.
(f) COMPLETE AGREEMENT. This Agreement, those documents
expressly referred to herein and other documents of even date herewith embody
the complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
(g) COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(h) SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by Executive, the Company, the Investors and their respective successors and
assigns (including subsequent holders of Executive Stock); provided that the
rights and obligations of Executive under this Agreement shall not be assignable
except in connection with a permitted transfer of Executive Stock hereunder. The
rights and obligations of GTCR under this Agreement may be assigned at any time,
in whole or in part, to any investment fund managed by GTCR, or any successor
thereto; provided that such assignment occurs in the manner provided in the
Purchase Agreement.
(i) CHOICE OF LAW. The corporate law of the State of Delaware
will govern all questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement and the exhibits hereto will be governed by and
construed in accordance with the internal laws of the State of Maryland, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Maryland or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Maryland.
(j) REMEDIES. Each of the parties to this Agreement (including
the Investors) will be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including attorney's fees) caused by
any breach of any provision of this Agreement and to exercise all other rights
existing in its favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any party may in its sole discretion apply to any court of
law or equity of competent jurisdiction (without posting any bond or deposit)
for specific performance and/or other injunctive relief in order to enforce or
prevent any violations of the provisions of this Agreement.
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(k) AMENDMENT AND WAIVER. The provisions of this Agreement may
be amended and waived only with the prior written consent of the Company,
Executive and the holders of a majority of the Common Stock held by the
Investors.
(l) BUSINESS DAYS. If any time period for giving notice or
taking action hereunder expires on a day which is a Saturday, Sunday or holiday
in the state in which the Company's chief executive office is located, the time
period shall be automatically extended to the business day immediately following
such Saturday, Sunday or holiday.
(m) TERMINATION. This Agreement (except for the provisions of
Section 7) shall survive a Separation and shall remain in full force and effect
after such Separation.
(n) ADJUSTMENTS OF NUMBERS. All numbers set forth herein which
refer to share prices or amounts will be appropriately adjusted to reflect stock
splits, stock dividends, combinations of shares and other recapitalizations
affecting the subject class of stock.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this
Senior Management Agreement on the date first written above.
APPNET SYSTEMS, INC.
By: /s/ Xxx X. Xxxxx
----------------------------------
Name: Xxx X. Xxxxx
--------------------------------
Its: President
---------------------------------
/s/ Xxx X. Xxxxx
----------------------------------
Xxx X. Xxxxx
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