1
EXHIBIT 10.23
FORM OF
PREFERRED STOCK PURCHASE AGREEMENT
BY AND BETWEEN
APPLIEDTHEORY CORPORATION
AND
▇▇▇▇▇▇▇▇.▇▇▇, INC.
DATED AS OF ______________, 1999
2
PREFERRED STOCK PURCHASE AGREEMENT
THIS PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is made and
entered into as of ________________, 1999, by and between AppliedTheory
Corporation, a Delaware corporation (the "Company"), and ▇▇▇▇▇▇▇▇.▇▇▇, Inc., a
New York corporation (the "Seller").
RECITALS
WHEREAS, the Seller owns 15,000 shares of preferred stock, par value
$0.01 per share, of the Company (the "Preferred Shares"); and
WHEREAS, the Company has filed a registration statement on Form S-1
(the "Registration Statement") with respect to the sale of approximately
____________ shares of the Company's common stock, par value $0.01 per share, in
an underwritten initial public offering (the "Offering");
WHEREAS, the Company desires to purchase for cancellation (the "Company
Purchase") from the Seller the Preferred Shares, and the Seller desires to sell
the Preferred Shares to the Company at a price of $100 per Preferred Share, plus
accrued and unpaid dividends of $______, which amount is the total of accrued
and unpaid dividends to (but not including) the Closing Date (as hereinafter
defined) (the "Purchase Price per Share"), upon the terms and subject to the
conditions set forth in this Agreement;
WHEREAS, the Company Purchase is conditioned upon, among other things,
the consummation of the proposed Offering.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. In addition to the terms defined elsewhere
herein, the following terms shall have the meanings specified below when used
herein:
"Business Day" means a day, other than a Saturday or a Sunday, on which
commercial banks are not required or authorized to close in the City of New
York.
"Closing Date" means the closing date with respect to the proposed
Offering.
"Governmental Agency" means (a) any domestic or foreign, federal,
state, county, local or municipal government or administrative agency or
political subdivision thereof,
3
(b) any governmental agency, authority, board, bureau, commission, department or
instrumentality, (c) any court or administrative tribunal, (d) any
non-governmental agency, tribunal or entity that is vested by a governmental
agency with applicable jurisdiction or (e) any arbitration tribunal or other
non-governmental authority with applicable jurisdiction.
"Lien" means any lien, mortgage, pledge or other security interest.
"Permit" means any permit, approval, consent, authorization, license,
variance or permission required by a Governmental Agency under any applicable
laws.
"Person" means any individual, partnership, corporation, trust,
association, limited liability company, Governmental Agency or any other entity.
ARTICLE II
SALE AND PURCHASE
Section 2.1. Agreement to Sell and to Purchase for Cancellation. On the
terms set forth herein and subject to Section 2.3 below, on the Closing Date,
the Company shall purchase for cancellation from the Seller, and Seller shall
sell, transfer, assign, convey and deliver to the Company, the Preferred Shares.
Section 2.2. Purchase for Cancellation and Sale of Preferred Shares. On
the terms and subject to the conditions set forth in this Agreement, on the
Closing Date:
(a) The Seller shall deliver to the Company certificates
representing the Preferred Shares, duly endorsed in blank for transfer
or accompanied by appropriate powers duly executed in blank.
(b) The Company shall deliver to the Seller, by wire transfer
of immediately available funds, the Purchase Price per Share for each
Preferred Share purchased pursuant to this Agreement.
Section 2.3. The Company Purchase is conditioned only upon the
consummation of the proposed Offering and such other conditions as set forth in
Article V.
2
4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Company as follows:
Section 3.1. Authority of Seller.
(a) The Seller is duly organized, validly existing and in good
standing under the laws of the State of New York, with full corporate
power and authority to execute and deliver this Agreement.
(b) The execution and delivery by the Seller of this Agreement
and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the
part of the Seller, and this Agreement constitutes the legal, valid and
binding obligation of the Seller enforceable against the Seller in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, moratorium or similar laws from time
to time in effect which affect creditors' rights generally, and by
legal and equitable limitations on the enforceability of specific
remedies.
Section 3.2. Title to the Preferred Shares. The Seller has valid and
marketable title to the Preferred Shares, free and clear of any Liens.
Section 3.3. No Conflict or Violation. Neither the execution and
delivery of this Agreement by the Seller, nor the consummation of the
transactions contemplated hereby, nor the fulfillment of the terms hereof will
conflict with or result in a breach of or a default (or in an occurrence which
with the lapse of time or action by a third party, or both, could result in a
default) with respect to any of the terms, conditions or provisions of any
applicable order, writ or decree of any court or of any Governmental Agency
applicable to the Seller, or of the organizational documents of the Seller, as
they may be amended as of the date hereof, or of any indenture, contract,
agreement, lease or other instrument to which the Seller is a party or subject
or by which the Seller or any of its properties or assets are bound, or of any
applicable statute, rule or regulation to which the Seller or its businesses is
subject, except for those conflicts, breaches or defaults which could not
reasonably be expected to have a material adverse effect on the Seller or
materially impair the ability of the Seller to consummate the transactions
contemplated by this Agreement.
Section 3.4. Brokers. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried on by the Seller without
the intervention of any other Person acting on its behalf in such manner as to
give rise to any valid claim by any such Person against the Company for a
finder's fee, brokerage commission or other similar payment based on an
arrangement with the Seller.
3
5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Seller as follows:
Section 4.1. Authority of the Company.
(a) The Company is duly organized, validly existing and in
good standing under the laws of the State of Delaware, with full
corporate power and authority to execute and deliver this Agreement.
(b) The execution and delivery by the Company of this
Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action
on the part of the Company, and this Agreement constitutes the legal,
valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, moratorium or similar
laws from time to time in effect which affect creditors' rights
generally, and by legal and equitable limitations on the enforceability
of specific remedies.
Section 4.2. No Conflict or Violation. Neither the execution and
delivery of this Agreement by the Company, nor the consummation of the
transactions contemplated hereby, nor the fulfillment of the terms hereof will
conflict with or result in a breach of or a default (or in an occurrence which
with the lapse of time or action by a third party, or both, could result in a
default) with respect to any of the terms, conditions or provisions of any
applicable order, writ or decree of any court or of any Governmental Agency
applicable to the Company, or of the Certificate of Incorporation or Bylaws of
the Company, as they may each be amended as of the date hereof, or of any
indenture, contract, agreement, lease or other instrument to which the Company
is a party or subject or by which the Company or any of its properties or assets
are bound, or of any applicable statute, rule or regulation to which the Company
or its businesses is subject, except for those conflicts, breaches or defaults
which could not reasonably be expected to have a material adverse effect on the
Company or materially impair the ability of the Company to consummate the
transactions contemplated by this Agreement.
Section 4.3. Brokers. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried on by the Company without
the intervention of any other Person acting on its behalf in such manner as to
give rise to any valid claim by any such Person against the Seller for a
finder's fee, brokerage commission or other similar payment based on an
arrangement with the Company.
4
6
ARTICLE V
CERTAIN COVENANTS AND AGREEMENTS
Section 5.1. Transfer Taxes. Any sales, recording, transfer, stamp,
documentary or other similar taxes (but in any event not to include any income
taxes, taxes on capital gains or any taxes on unrelated business income
recognized or earned by the Seller) imposed as a result of the purchase for
cancellation of the Preferred Shares by the Company pursuant to this Agreement
shall be borne by the Company.
Section 5.2. Efforts. Upon the terms and subject to the conditions of
this Agreement, each of the parties hereto shall use commercially reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable consistent with applicable law
to consummate and make effective the transactions contemplated hereby.
Section 5.3. Accuracy of Representations and Warranties of Seller on
Closing Date. It shall be a condition to the obligations of the Company to
purchase the Preferred Shares on the Closing Date that all the representations
and warranties of the Seller contained herein be true and correct on and as of
the Closing Date, as if made on and as of the Closing Date, and the Company
shall have received a certificate to that effect from an authorized
representative of the Seller.
Section 5.4. Accuracy of Representations and Warranties of Company on
Closing Date. It shall be a condition to the obligations of the Seller to sell
the Preferred Shares on the Closing Date that all the representations and
warranties of the Company contained herein be true and correct on and as of the
Closing Date, as if made on and as of the Closing Date, and the Seller shall
have received a certificate to that effect from an authorized representative of
the Company.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1. Notices. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given (a) when delivered
personally to the recipient, (b) when sent to the recipient by telecopy (receipt
electronically confirmed by sender's telecopy machine) if during normal business
hours of the recipient, otherwise on the next Business Day, (c) one (1) Business
Day after the date when sent to the recipient by reputable express courier
service (charges prepaid) or (d) seven (7) Business Days after the date when
mailed to the recipient by certified or registered mail, return receipt
requested and postage prepaid. Such notices, demands and other communications
will be sent to the Company and to the Seller at the addresses indicated below:
(A) if to the Company, at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President and
Chief
5
7
Financial Officer, or at such other address as the Company may have
furnished to the Seller in writing, with a copy to: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇
▇. ▇▇▇▇▇▇ ▇▇, Esq.; and
(B) if to the Seller, at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Chairman, or at such other
address as the Seller may have furnished to the Company in writing,
with a copy to: ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Section 6.2. Amendments. The terms, provisions and conditions of this
Agreement may not be changed, modified or amended in any manner except by an
instrument in writing duly executed by each party hereto.
Section 6.3. Assignment and Parties in Interest.
(a) Neither this Agreement nor any of the rights, duties, or
obligations of any party hereunder may be assigned or delegated (by
operation of law or otherwise) by any party hereto except with the
prior written consent of the other parties hereto.
(b) This Agreement shall not confer any rights or remedies
upon any person or entity other than the parties hereto and their
respective permitted successors and assigns.
Section 6.4. Expenses. Except as expressly set forth in this Agreement,
each party to this Agreement shall bear all of its legal, accounting, investment
banking and other expenses incurred by it or on its behalf in connection with
the transactions contemplated by this Agreement, whether or not such
transactions are consummated.
Section 6.5. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof,
supersedes and is in full substitution for any and all prior agreements and
understandings among them relating to such subject matter, and no party shall be
liable or bound to the other party hereto in any manner with respect to such
subject matter by any warranties, representations, indemnities, covenants, or
agreements except as specifically set forth herein.
Section 6.6. Descriptive Headings. The descriptive headings of the
several sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
Section 6.7. Counterparts. For the convenience of the parties, any
number of counterparts of this Agreement may be executed by any one or more
parties hereto, and each such executed counterpart shall be, and shall be deemed
to be, an original, but all of which shall constitute, and shall be deemed to
constitute, in the aggregate but one and the same instrument.
6
8
Section 6.8. Governing Law. This Agreement and the legal relations
between the parties hereto shall be governed by and construed in accordance with
the laws of New York, applicable to contracts made and performed therein without
regard to principles of conflicts of law.
Section 6.9. Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction will be applied against any party. Any
references to any federal, state, local or foreign statute or law will also
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. Unless the context otherwise requires: (a) a term has the
meaning assigned to it by this Agreement; (b) "or" is disjunctive but not
exclusive; (c) words in the singular include the plural, and in the plural
include the singular; and (d) provisions apply to successive events and
transactions.
Section 6.10. Severability. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument. Furthermore, in lieu of any such invalid
or unenforceable term or provision, the parties hereto intend that there shall
be added as a part of this Agreement a provision as similar in terms to such
invalid or unenforceable provision as may be possible and be valid and
enforceable.
Section 6.11. Specific Performance. Without limiting or waiving in any
respect any rights or remedies of the Company under this Agreement now or
hereinafter existing at law or in equity or by statute, each of the parties
hereto shall be entitled to seek specific performance of the obligations to be
performed by the other in accordance with the provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first written above.
APPLIEDTHEORY CORPORATION
By: _________________________________
Name:
Title:
▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: _________________________________
Name:
Title:
7
