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EXHIBIT 99.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of this 22nd day of June 1999 (the "Effective Date"), by and among
Grumman Hill Investments III, L.P., a Delaware limited partnership ("GHI"),
AppliedTheory Corporation, a Delaware corporation ("ATC" and together with GHI,
the "Purchasers," and each a "Purchaser"), Planning Technologies, Inc., a
Georgia corporation ("PTI" or the "Company") and the shareholders of the Company
listed on Exhibit A hereto (the "Shareholders").
R E C I T A L S
1. Purchasers desire to purchase, and the Shareholders and the Company
desire to sell, for the purchase price and upon the terms and subject to the
conditions of this Agreement, certain shares of Series A Convertible Preferred
Stock, no par value per share ("Convertible Preferred Stock") as listed on
Exhibit A. The Convertible Preferred Stock listed on Exhibit A, together with
the Additional Preferred Shares defined in Section 1.3, are referred to as the
Preferred Shares.
2. In connection with this Agreement, the parties are entering into a
Registration Rights Agreement, amendments to the Articles of Incorporation and
Bylaws of PTI and a Shareholders Agreement (collectively, the "Transaction
Documents").
3. Prior to the Closing, the Shareholders will exchange 1,190,476
shares of Common Stock, no par value per share (the "Common Stock") for
1,190,476 shares of Convertible Preferred Stock (the "Pre-Closing Stock
Exchange").
A G R E E M E N T
In consideration of the foregoing recitals and the respective
representations, warranties, covenants, agreements and conditions contained
herein, the sufficiency of which is hereby acknowledged, the parties, intending
to be legally bound, agree as follows:
ARTICLE 1
AGREEMENTS
1.1. Purchase and Sale of Stock. At the Closing, (as defined below), on
the terms and subject to the conditions of this Agreement, the Shareholders and
the Company shall sell, assign, transfer and deliver, and the Purchasers shall
at such time purchase and acquire the Preferred Shares (excluding the Additional
Preferred Shares) from the Shareholders and the Company in the amounts set forth
on Exhibit A free and clear of all liens or other encumbrances.
1.2. Purchase Price. The aggregate purchase price for the sale,
assignment, transfer and delivery of the Preferred Shares to Purchasers (the
"Purchase Price") is $10,000,000 and at the
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Closing, the Purchase Price per share shall be $1.68. The Purchase Price shall
be payable by Purchasers to the Shareholders and the Company in cash by wire
transfer to each of their respective accounts in the amounts set forth opposite
each of their respective names on Exhibit A hereto, which amounts, in the
aggregate, shall be equal to the aggregate Purchase Price.
1.3. Adjustment to Preferred Shares. At the Closing, the Preferred
Shares shall represent 20% of the outstanding shares of Common Stock of the
Company on a "Fully Diluted" basis. "Fully Diluted" means the number of shares
of Common Stock of the Company including (i) all issued and outstanding common
shares at the Closing, (ii) all outstanding Common Stock Equivalents (whether or
not vested), and (iii) 1,702,400 shares of Common Stock which are reserved for
the Company's Stock Incentive Plan (the "Stock Plan") and the Option Agreement
between the Company and ▇▇▇▇▇ ▇▇▇▇▇▇ (together with the Stock Plan, the "Option
Plans"). "Common Stock Equivalents" shall include all stock options which have
been granted and other securities entitling the holder to receive common stock
or its financial equivalent. The per-share purchase price of the Preferred
Shares and consequently the number of Purchased Shares shall be adjusted as
follows:
(a) In the event the Company's Service Revenues are less than
$15,000,000 and greater than $11,000,000 for the year ending December 31, 1999,
the per share purchase price of the Preferred Shares shall be $1.28 and
therefore, the Company shall deliver 1,488,095 additional shares of Convertible
Preferred Stock and the Shareholders shall deliver 372,024 additional shares of
Convertible Preferred Stock, as set forth on Exhibit A. These additional shares
are referred to as the "Additional Preferred Shares." The Additional Preferred
Shares, together with the Preferred Shares delivered at the Closing shall
represent 25% of the outstanding shares of Common Stock of the Company on a
Fully Diluted basis.
(b) In the event the Company's Service Revenues are less than
$11,000,000 for the year ending December 31, 1999, the per share purchase price
of the Preferred Shares shall be $1.00 and therefore, the Company shall deliver
3,238,095 additional shares of Convertible Preferred Stock and the Shareholders
shall deliver 809,524 additional shares of Convertible Preferred Stock as set
forth on Exhibit A, which together with the Preferred Shares delivered at the
Closing shall represent 30% of the outstanding shares of Common Stock of the
Company on a Fully Diluted basis.
(c) The term "Service Revenues" shall be as defined on Exhibit
B attached hereto and incorporated herein by reference. As soon as reasonably
practicable following December 31, 1999, but in no event later than April 30,
2000, the Company's certified public accountants shall prepare and deliver
audited financial statements and the notes thereto for the year ended December
31, 1999 (the "Year 1999 Financial Statements") to the Purchasers. The date the
Year 1999 Financial Statements are delivered shall be the "Delivery Date".
Service Revenues shall be determined from the Year 1999 Financial Statements.
1.4. Escrow of Additional Shares. The Company and the Shareholders
shall deposit into an escrow account 3,238,095 additional shares of Convertible
Preferred Stock and 809,524 shares of Common Stock, respectively (collectively,
the "Escrow Shares"). The Escrow Shares contributed by the Shareholders will be
converted into Convertible Preferred Stock on a one-for-
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one basis by the Company in the event Convertible Preferred Stock is required to
be delivered pursuant to Section 1.3 hereof. At the Closing, the certificates
representing the Escrow Shares shall be deposited in escrow with a mutually
agreed upon escrow agent (the "Escrow Agent") to be held in accordance with the
provisions of this Article 1. Each deposited certificate shall be accompanied by
a duly executed assignment separate from such certificate. The deposited
certificates shall remain in escrow until such time or times as the certificates
are to be released or otherwise surrendered for cancellation in accordance with
this Article 1. Upon delivery of the certificates to the Escrow Agent, the
holder shall be issued a deposit receipt acknowledging the number of Shares
delivered in escrow to the Company. Any cash dividends on the Shares (or other
securities at the time held in escrow) shall be paid directly to the holder and
shall not be held in escrow. However, in the event of any stock dividend, stock
split, recapitalization or other change affecting the Company's outstanding
Common Stock as a class or Convertible Preferred Stock as a class effected
without consideration, or any new, substituted or additional securities
distributed with respect to the Escrow Shares, such securities shall be
immediately delivered to the Escrow Agent to be held in escrow under this
Section 1.4, but only to the extent the Escrow Shares are at the time subject to
the escrow requirements of this Section 1.4. The Additional Preferred Shares
required under Section 1.3 (if any) shall be delivered to the Purchasers by the
Escrow Agent within five business days of the Delivery Date. If after the
Delivery Date, no Additional Preferred Shares are required to be delivered to
the Purchasers, or if only a portion of the Escrow Shares is required to be
delivered to the Purchasers, the Escrow Shares or remaining portion thereof, as
the case may be, shall be returned to the respective Shareholders within five
business days of the Delivery Date, at which point the escrow shall terminate.
The parties agree to enter into a mutually satisfactory Escrow Agreement with a
mutually satisfactory Escrow Agent and with terms and conditions customary for
transactions of this type as soon as reasonably practicable after the Closing.
The fees and other charges of the Escrow Agent shall be paid equally by the
Purchasers, the Company and the Shareholders.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF
COMPANY AND THE SHAREHOLDERS
Except as disclosed on the schedules (the "Disclosure Schedules")
attached hereto, the Company and the Shareholders jointly and severally
represent and warrant as of the date hereof and as of the Closing, to Purchasers
as follows, provided, however, that each Shareholder other than ▇▇▇▇▇▇ (Jake)
▇▇▇▇▇▇▇, makes the representations and warranties below only to the best of such
Shareholder's knowledge all except as otherwise noted herein:
2.1 Organization and Existence. PTI is a corporation, duly organized,
validly existing and in good standing under the laws of the state of Georgia.
PTI has the requisite power and authority to own and operate its business as
currently conducted (the "Business") and to carry on the Business as presently
conducted. PTI is not qualified to do business as a foreign corporation in any
jurisdiction and is not required to be so qualified under the applicable laws of
any jurisdiction, other than the jurisdictions of Ohio, Louisiana and
Washington, D.C. in which jurisdictions the Company is in the process of
qualifying to do business.
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2.2 Authorization of PTI and Shareholders. PTI and the Shareholders
have the requisite power and authority to enter into this Agreement and the
Transaction Documents to perform their respective obligations hereunder and
thereunder, and to consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance of this Agreement and each of the
Transaction Documents by PTI, including, but not limited to the authorization,
issuance, sale and delivery of the Preferred Shares, and the shares of Common
Stock into which the Preferred Shares are convertible, have been duly authorized
by all necessary corporate action on the part of PTI.
2.3 Due Execution and Delivery; Binding Obligations. This Agreement has
been, and (to the extent PTI or a Shareholder is a party thereto) each of the
Transaction Documents will be, duly executed and delivered by PTI and the
Shareholders. This Agreement constitutes, and each of the Transaction Documents
will constitute, legal, valid and binding agreements of PTI and the
Shareholders, as the case may be, enforceable against PTI and the Shareholders
in accordance with their respective terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, arrangement, moratorium or
similar laws relating to or limiting creditors' rights generally or by equitable
principles relating to enforceability.
2.4 No Conflict or Violation. Neither the execution and delivery of
this Agreement or (to the extent PTI or a Shareholder is a party thereto) the
Transaction Documents by PTI or the Shareholders nor the consummation of the
transactions contemplated hereby or thereby will result in (a) a material
violation of, or a conflict with, the charter documents of PTI or any
subscription, shareholders' or similar agreements or understandings to which PTI
or a Shareholder is a party; (b) a material breach of, or a material default (or
an event which, with notice or lapse of time or both would constitute a material
default under, or result in the termination of, or accelerate the performance
required by, or create a right of termination or acceleration under), any
agreement or Permit (as defined in Section 2.25) to which PTI or a Shareholder
is a party or by which PTI or a Shareholder or the Business is bound or
affected; (c) the payment by, or the creation of any obligation (absolute or
contingent) to pay on behalf of, PTI or a Shareholder of any severance,
termination, "golden parachute," or other similar payment pursuant to any
employment agreement or other contract; (d) a material violation by PTI or a
Shareholder of any applicable law; (e) a material violation by PTI or a
Shareholder of any order, judgment, writ, injunction, decree or award to which
PTI or a Shareholder is a party or by which PTI or a Shareholder or the Business
is bound or affected; or (f) an imposition of any material lien or encumbrance
on any property or asset of PTI.
2.5 Consents and Approvals. Except as set forth on Schedule 2.5 hereto,
no consent, Permit, approval or authorization of, or declaration, filing,
application, transfer or registration with, any governmental or regulatory
authority, or any other person or entity is required to be made or obtained by
PTI or a Shareholder by virtue of the execution, delivery or performance of this
Agreement or any of the Transaction Documents to enable Purchasers to own the
Preferred Stock and for Company to continue the lawful operation of the Business
following the Closing Date (as defined in Section 5.2) as presently conducted or
to avoid (a) the loss of any license or permit, (b) the violation or breach of
any law or regulation, (c) the termination of or default under any agreement to
which PTI is a party or by which any of its property or assets are bound or
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affected, or (d) the creation of any lien or encumbrance on any of the property
or assets of PTI.
2.6 Pending Litigation. Except as disclosed on Schedule 2.6 hereto,
there is no pending or, to PTI's and the Shareholders' (including ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇) knowledge, threatened action, claim, litigation or arbitration
("Action"), whether private or public, affecting PTI, a Shareholder or the
Business which could affect the enforceability of this Agreement or which could
materially and adversely affect any assets or properties of PTI, or the ability
of PTI or a Shareholder to consummate the sale of the Preferred Shares,
contemplated by, or perform their obligations under, this Agreement.
2.7 Capitalization of PTI. The authorized capital stock of PTI consists
of 100,000,000 shares of common stock, no par value (the "Common Stock") and, at
the Closing Date, and upon consummation of the transactions contemplated hereby,
will also include 10,000,000 shares of Convertible Preferred Stock, no par
value. Prior to the Pre-Closing Stock Exchange, the issued and outstanding
shares of capital stock of PTI consist solely of 20,081,100 shares of Common
Stock. After the Pre-Closing Stock Exchange the issued and outstanding shares of
capital stock of PTI consisted solely of 18,890,624 shares of Common Stock and
1,190,476 shares of Convertible Preferred Stock. After the Closing the issued
and outstanding shares of capital stock will consist solely of 9,190,476 shares
of Convertible Preferred Stock (which includes 3,238,095 shares of Convertible
Preferred Stock that are part of the Escrow Shares), and 18,890,624 shares of
Common Stock. Except as set forth on Schedule 2.7 hereto, and other than this
Agreement and the Shareholders Agreement, there is not outstanding any
subscription, option, warrant, call, right or other agreement or commitment
obligating PTI or a Shareholder to issue, sell, deliver or transfer (including
any right of conversion or exchange under any outstanding security or other
instrument) any shares of Common Stock or any other shares of the capital stock
of PTI. The Option Plans each authorized 2,500,000 shares of Common Stock
(5,000,000 collectively) as available for stock option grants. Of the 5,000,000
stock options available for grant, 81,100 stock options have been granted and
exercised, leaving 4,918,900 shares of Common Stock available for options
previously granted and reserved for options to be granted in the future. As of
the Closing Date, there are stock options outstanding under the Option Plans
covering 3,217,000 shares of Common Stock. All of the outstanding shares of
Common Stock are duly and validly authorized, issued and outstanding, fully paid
and non-assessable. PTI does not own, directly or indirectly, any interest or
investment (whether equity or debt) in any corporation, partnership, business,
trust or other entity. Upon issuance of the Preferred Shares hereunder, the
capitalization of the Company and the pro-forma effect of conversion of the
Preferred Shares will be such that, upon conversion, the Purchasers will own 20%
of the Common Stock outstanding on a Fully Diluted basis (or 25%, or 30%, if the
Services Revenues specified in Section 1.3 for 1999 are not achieved). All
outstanding securities of the Company have been issued, and the Preferred Shares
and the Common Stock issuable upon conversion of the Preferred Shares will be
issued, in compliance with all federal and state securities laws.
2.8. Issuance of Stock. The Preferred Shares and the Common Stock
issuable upon conversion of the Preferred Shares: (i) shall, upon issuance, be
validly issued, fully paid and non-assessable; (ii) shall be transferred free
and clear of all liens, claims, security interests,
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restrictions, prior assignments, charges or encumbrances of any kind, except the
limitations and restrictions set forth in the Registration Rights Agreement and
the Shareholders Agreement executed simultaneously herewith; and (iii) shall not
be subject to any pre-emptive rights of any kind whatsoever.
2.9 Financial Statements. PTI has furnished to Purchasers copies of
PTI's (a) audited balance sheets at December 31, 1996, 1997 and 1998 and the
related statements of income and cash flows for the periods then ended, and (b)
an unaudited balance sheet (the "Balance Sheet") at April 30, 1999 (the "Balance
Sheet Date") and the related statements of income and cash flows for the
four-month period then ended (collectively, items in (a) and (b), the "Financial
Statements"). The Financial Statements are complete and correct, have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the respective periods, and fairly present in all
material respects the financial condition of PTI at the respective dates thereof
and the results of operations of PTI for the respective periods covered thereby.
Without limiting the generality of the foregoing, the reserves reflected in the
Balance Sheet are appropriate and adequate for all known or anticipated
liabilities.
2.10 Undisclosed Liabilities. Except as set forth on Schedule 2.10
hereto, PTI does not have any liabilities, guarantees, obligations or
commitments (absolute, accrued, contingent or otherwise) related to the Business
or its properties except for liabilities, obligations and commitments that are
(a) reflected on the Balance Sheet, (b) under and pursuant to any agreement
(other than by breach thereof by PTI or a predecessor-in-interest), or (c)
incurred after the Balance Sheet Date in the ordinary course of business
consistent with prior practice.
2.11 Absence of Certain Changes or Events. Except as set forth on
Schedule 2.11 hereto, since the Balance Sheet Date:
(a) The Business has been conducted only in the ordinary
course of business;
(b) Other than annual increases in the ordinary course of
business and consistent with past practice, none of
which are material, PTI has not increased the wages,
salary, bonus, employee benefits or other
compensation payable or to become payable to any of
its officers, directors, partners or employees or
obligated itself to pay any bonus or other additional
salary or compensation to any such person;
(c) PTI has not amended, rescinded or terminated any
existing contract involving the payment or receipt of
more than $5,000 in any 12-month period and no such
contract has expired or terminated by its terms;
(d) PTI has not sold, transferred, disposed of, or agreed
to sell, transfer or dispose of, any of its assets,
properties, intellectual property or rights other
than in the ordinary course of business;
(e) PTI has not issued or agreed to issue any
subscription, option, warrant,
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call, right or other agreement or commitment
obligating it to deliver or transfer any Common Stock
or other securities of PTI, other than the grant of
options pursuant to the Stock Plan and other than
pursuant to this Agreement and the Shareholders
Agreement;
(f) PTI has not paid any dividend or made or effected any
distribution of any kind;
(g) PTI has not engaged in any transaction with a
Shareholder or any affiliate or relative of a
Shareholder outside the ordinary course of Business;
(h) PTI has not created or incurred any material lien or
encumbrance of any kind upon any of its properties;
(i) Except as agreed pursuant to this Agreement, PTI has
not changed its outside accounting firm or its method
of accounting or accounting practices or policies;
(j) PTI has not received, paid or accrued any amounts in
connection with the sale or proposed sale of PTI or
its assets;
(k) No material asset or property of PTI used in the
Business has been destroyed, damaged or otherwise
lost (whether or not covered by insurance), other
than normal wear and tear;
(l) PTI has not entered into an agreement to acquire the
stock or assets of any other entity; and
(m) There has been no material adverse change in the
earnings, properties, condition, financial position
or otherwise, or prospects of PTI (a "Material
Adverse Change").
2.12. Properties. Schedule 2.12 hereto sets forth a complete and
correct list of all assets owned by PTI at the Balance Sheet Date which have
been treated as capital assets. PTI does not own any real property. PTI has
good, indefeasible and marketable title to, or a valid leasehold interest in, or
a valid license to use, all of the personal and real property used in and
material to the Business, in each case free and clear of all material liens or
encumbrances. The assets set forth on Schedule 2.12 hereto constitute all of the
material tangible personal property necessary for the conduct of the Business as
now conducted. All personal property owned or leased by PTI (including, without
limitation, all machinery, equipment, furniture, furnishings, vehicles, tools
and other similar property) is in good order and operating condition, ordinary
wear and tear excepted, and free from any material defects.
2.13. Inventory. All of the Company's inventory is either reflected on
the Balance Sheet or was acquired by PTI after the Balance Sheet Date. The
Company's inventory consists only of
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items of a quality and quantity useable and saleable in the normal course of the
Business and meets all applicable governmental quality control standards. The
value of all obsolete items has been written down to zero and the value of
materials of below-standard quality included in the inventory has been written
down to realizable market value or adequate reserves were provided therefor
prior to the Balance Sheet Date and all such write downs and/or reserves are
accurately reflected in the Financial Statements. The value at which such
inventory is carried on the Financial Statements reflects the inventory
valuation policy of PTI of stating inventory at the lower of cost or market on a
first-in-first-out basis, all in accordance with generally accepted accounting
principles consistently applied.
2.14. Receivables. Attached hereto as Schedule 2.14 is true and
complete accounts receivable aging (the "Receivables") for PTI at the Balance
Sheet Date. All Receivables as of the date hereof and as of the Closing Date,
other than as indicated in Schedule 2.14 are and will be (a) valid, bona fide
claims against debtors for sales or other charges, (b) collectible in accordance
with their terms, and (c) to the knowledge of PTI and the Shareholders including
▇▇▇▇▇▇ (▇▇▇▇) ▇▇▇▇▇▇▇ are not, and will not be, subject to valid defenses,
set-offs or counterclaims. No additional loss reserves are required with respect
to such Receivables other than the reserves which are currently provided for in
the Financial Statements.
2.15. Payables. All accounts payable of the Company are legal, valid
and binding obligations of the Company, and were incurred in the ordinary course
of business. Schedule 2.15 includes an accurate list of all accounts payable of
the Company as of May 31, 1999 which are more than 60 days overdue and all
arrangements or agreements regarding the payment of these accounts payable.
2.16. Contracts. Schedule 2.16 hereto sets forth a complete list of all
material agreements and contracts, whether written or oral, to which PTI is a
party or by which it is bound, or by which any of the assets, properties or the
Business is bound or subject. As used herein, the following agreements and
contracts will be deemed to be material: (a) security agreements and other
agreements relating to the borrowing of money by, or any extension or credit to,
PTI; (b) agreements to make capital expenditures; (c) agreements to sell, lease
or otherwise dispose of any assets or properties of PTI other than in the
ordinary course of business; (d) agreements limiting the freedom of PTI to
compete in any line of business or in any geographic area or with any person;
(e) sales agency or marketing agreements not terminable by either party on 30
days' notice or less; (f) all leases; (g) other agreements, contracts and
commitments which are not terminable by either party on 60 days' notice or less
or involve payments or receipts of more than $50,000 per annum; and (h) any
transactions, agreement or other arrangements with affiliates. PTI has provided
Purchasers with complete and accurate copies of all such material agreements or
contracts. All of the agreements or contracts are valid and in full force and
effect and PTI has duly performed all of its material obligations under each
agreement or contract to the extent those obligations have accrued and no
default, material violation or breach by PTI under any agreement or contract has
occurred which affects the enforceability of such agreement or contract, any
parties' rights thereunder, or which might give rise to any Damages.
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2.17. Major Customers. Schedule 2.17 hereto sets forth a correct and
complete list of all customers accounting for at least 5% of PTI's net revenues
during the 1998 calendar year and for the four months ended on the Balance Sheet
Date (the "Major Customers"), indicating the sales to each Major Customer within
such periods and the existing contracts, if any, with each Major Customer. There
are no outstanding disputes with any Major Customer, and no Major Customer has
indicated to PTI that it will not do business with PTI in the future. Other than
pursuant to expiration of existing contracts pursuant to their terms, and except
as indicated on Schedule 2.17, neither PTI nor the Shareholders has any reason
to believe that any customer will refuse to do business with Purchasers or
reduce its purchases from historical levels following the consummation of the
transactions contemplated hereby. No customer of PTI is on probation, in bad
standing or in jeopardy of being put on probation or losing its good standing
with PTI.
2.18. Suppliers. Schedule 2.18 hereto sets forth a complete and
accurate list of (a) suppliers and vendors who account for at least 5% of the
dollar value of all purchases by PTI during calendar year 1998 or during the
four months ended on the Balance Sheet Date (the "Major Suppliers"), indicating
the existing contracts, if any, with each such Major Supplier, and (b) the names
of any sole-source suppliers of significant materials to PTI with respect to
which practical alternative sources of supply are not available on comparable
terms and conditions (the "Sole Source Suppliers"). There are no outstanding
disputes with any Major Supplier or Sole Source Supplier, and no Major Supplier
or Sole Source Supplier has indicated that it will not do business with PTI in
the future. Neither PTI nor any of the Shareholders has any reason to believe
that any supplier will refuse to do business with or reduce its sales to PTI
upon consummation of the transactions contemplated hereby. No supplier or vendor
of PTI is on probation, in bad standing or in jeopardy of being put on probation
or losing its good standing with PTI or, to PTI's and the Shareholders'
knowledge, any third party. Except as set forth on Schedule 2.17 hereto, all
contracts with Major Suppliers or Sole Source Suppliers are terminable on 30
days' (or less) prior written notice.
2.19. Intellectual Property. Schedule 2.19 hereto is a complete and
correct list of all of the intellectual property used in the Business (the
"Intellectual Property"). The Intellectual Property is owned by PTI free and
clear of all encumbrances or PTI has a valid license to use the same, and (b)
PTI has not received any notice or claim disputing PTI's right to own or use any
Intellectual Property. The Intellectual Property constitutes all of the
proprietary rights necessary and sufficient for the lawful and efficient
operation of the Business as presently conducted. To the Company's and the
Shareholders' (including ▇▇▇▇▇▇ (Jake) ▇▇▇▇▇▇▇) knowledge, PTI is not infringing
upon or otherwise acting adversely to any intellectual property owned by any
other person. PTI is not in default and, to PTI's and the Shareholders'
(including ▇▇▇▇▇▇ (Jake) ▇▇▇▇▇▇▇) knowledge, no third party is in default, under
any license, sublicense or agreement by which PTI holds or has given to others
the right to use any Intellectual Property.
2.20. Books and Records. PTI has made and kept all its books and
records which, in reasonable detail, accurately and fairly reflect the
activities and transactions of PTI, including, without limitation, the existence
of any and all material liabilities, whether actual or contingent. PTI has
delivered to Purchasers true and complete copies of PTI's charter documents,
corporate minutes and stock ledger, as currently in effect.
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2.21. Employees. Schedule 2.21 hereto sets forth a complete and
accurate list of all the names and current annual rates of salary (as of June
10, 1999) of all present employees of PTI indicating each employee's current
employment status (e.g., full time, part-time, medical leave of absence,
military leave of absence, etc.). Schedule 2.21 hereto also sets forth a list of
all existing employment and consulting contracts or severance arrangements which
constitute contractual obligations of PTI with respect to employees of PTI.
There are no collective bargaining agreements with any union or other bargaining
group for any employees of PTI. No key employee has left the Business since the
Balance Sheet Date and no current key employee has indicated any present or
future intention to terminate his or her employment with PTI. PTI is in
compliance with all provisions of law pertaining to the employment and
terminating of employees, including, without limitation, all laws relating to
labor relations, equal employment practices, fair employment practices,
entitlements, prohibited discrimination, terms and conditions of employment,
wages and hours, independent contractor classification, and withholding
requirements such that any non-compliance would not have a material adverse
effect on the Business.
2.22. Employee Benefits. Schedule 2.22 hereto sets forth a complete and
accurate list of all employee benefit plans, including all bonus, incentive
compensation, deferred compensation, profit sharing, stock option, stock bonus,
stock purchase, savings, severance, salary continuation, consulting, retirement
(including health and life insurance benefits provided after retirement) or
pension plans or arrangements with or for the benefit of any employee of or
consultant to PTI. PTI has furnished or made available to Purchasers a true and
complete copy of each employee benefit plan. Each employee benefit plan complies
with the provisions of and has been administered in compliance with the
provisions of ERISA and all other applicable laws such that any non-compliance
would not have a material adverse effect on the Business. Without limiting the
generality of the foregoing, no "prohibited transaction" (as such term is
defined in Section 4975 of the Code, or in Part 4 of Subtitle B of Title I of
ERISA) has occurred with respect to any employee benefit plan that could result
in the imposition of taxes or penalties, and PTI has not failed to make any
contribution to, or to make any payment under, any employee benefit plan that it
was required to make pursuant to the terms of such employee benefit plan or
pursuant to applicable law. There is no pending or, to PTI's and the
Shareholders' knowledge, threatened legal action, proceeding or investigation
against or involving any employee benefit plan.
2.23. Taxes. All federal, state and other tax returns of PTI required
by law to be filed have been duly filed on a timely basis and all amounts set
forth thereon have been paid in full. All tax returns filed by PTI were true,
correct and complete in all material respects and no taxes (other than those
already paid or reserved for with respect to such tax returns) are past due.
True and correct copies of all tax returns for the past five years have been
provided to Purchasers. All taxes which are due and payable by PTI have been
paid in full and all deposits required by law to be made by PTI with respect to
any such taxes have been duly made.
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2.24. Compliance with Law. PTI is in compliance with all laws
applicable to it, the violation of which could reasonably be expected to give
rise to a Material Adverse Change. PTI has not received any notice from, or
otherwise been advised that, any governmental authority or other person is
claiming any violation or potential violation of any law by PTI. Neither PTI nor
any Shareholder has received any communication from any governmental authority
or agency (federal, state or local) or any private entity or individual
(including, but not limited to, any prior owners of any facility used by PTI)
relating in any way to (a) the presence, release, threat of release, placement
of any hazardous material on, under or about any facility used by PTI, (b) the
use, manufacture, handling, generation, storage, treatment, discharge, burial or
disposal of any hazardous material on, under or about any such facility, or (c)
the transportation to or from any such facility of any hazardous material. To
PTI's and the Shareholders' (including ▇▇▇▇▇▇ (▇▇▇▇) ▇▇▇▇▇▇▇) knowledge, (i) no
facility currently used by PTI contains, or did contain at any time, any
underground or other storage tanks containing hazardous materials, and (ii)
there are no facts or circumstances which could form the basis for the assertion
of any claim against PTI or a Shareholder relating to environmental matters
including, but not limited to, any claim arising from past or present
environmental practices asserted under any environmental law. PTI has delivered
to Purchasers copies of all environmental audits or other studies or reports
prepared by third parties to assess hazardous material risks at any facility
currently used by PTI.
2.25. Permits. Schedule 2.25 hereto sets forth a list of all
franchises, permits, licenses, qualifications, municipal and other approvals,
authorizations, orders, consents and other rights from, and filings with, any
governmental authority of any jurisdiction worldwide required to conduct the
Business (the "Permits"). True and complete copies of the Permits have been
furnished to Purchasers. PTI holds all Permits needed to lawfully conduct the
Business as presently conducted, and all such Permits are in full force and
effect.
2.26. Insurance. Schedule 2.26 hereto contains an accurate list of all
insurance policies maintained by PTI. PTI has provided Purchasers with true and
correct copies of all such insurance policies. PTI has not agreed to modify or
cancel any of such insurance, nor has PTI received notice of any actual or
threatened modification or cancellation of such insurance. No person has filed
or brought a claim against PTI within the past three years which was or is
covered by any such insurance policies, in excess of $5,000.
2.27. Certain Payments. Neither PTI nor to PTI's and the Shareholders'
knowledge, any other person or entity has, directly or indirectly, on behalf of
or with respect to PTI or the Business: (a) made or received any payment which
was not legal to make or receive, including without limitation, payments
prohibited under applicable federal and state "fraud and abuse" or anti-kickback
statutes; (b) made an illegal political contribution; (c) engaged in any
transaction or made or received any payment which was not properly recorded in
PTI's books and records; (d) created or used any "off-book" bank account, "slush
fund" or cash account; or (e) engaged in any conduct constituting a violation of
the Foreign Corrupt Practices Act of 1977.
12
2.28. Brokers and Finders. All negotiations relating to this Agreement
and the transactions contemplated hereby have been carried on without the
intervention of any person acting on behalf of PTI or the Shareholders in such
manner as to give rise to any claim against Purchasers, PTI or a Shareholder for
any brokerage or finders' commission, fee or similar compensation.
2.29. Full Disclosure. No representation, warranty or other statement
of PTI or a Shareholder contained in this Agreement or any other document,
certificate or written statement furnished to Purchasers in connection with the
transactions contemplated by 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 or therein not misleading. There is no fact known to
PTI or a Shareholder which could materially and adversely affect the earnings,
properties, condition (financial or otherwise) or prospects of the Business that
has not been disclosed herein or in such other documents, certificates and
statements furnished to Purchaser for use in connection with the transactions
contemplated hereby.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
Each Purchaser represents and warrants to the Company and the
Shareholders as follows:
3.1 Corporate Organization. Such Purchaser (if not a natural person) is
existing and in good standing under the laws of its state of formation, with all
requisite power and authority to own, operate and lease its properties and to
carry on its business as it is now being conducted.
3.2 Authority Relative to Agreement. Such Purchaser has the requisite
power and authority to enter into this Agreement and each of the Transaction
Documents, to perform its respective obligations hereunder and thereunder, and
to consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and the Transaction Documents by such
Purchaser have been duly authorized by all necessary action on the part of such
Purchaser.
3.3 Due Execution and Delivery; Binding Obligations. This Agreement has
been, and (to the extent such Purchaser is a party thereto) each of the
Transaction Documents will be, duly executed and delivered by such Purchaser.
This Agreement constitutes, and each of the Transaction Documents will
constitute, legal, valid and binding agreements of such Purchaser, enforceable
against such Purchaser in accordance with their respective terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
arrangement, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.
3.4 Securities Act Representation. Such Purchaser hereby represents,
acknowledges, covenants and agrees as follows: (a) the shares acquired hereunder
are being acquired for such Purchaser's own account for investment purposes only
and not with a view to any resale in violation of the Securities Act of 1933, as
amended (the "Securities Act") or any state securities or "blue
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sky" law; (b) such shares have not been registered under the Securities Act or
any state securities or "blue sky" law and (c) such Purchaser has been afforded
an opportunity to examine all documents and to ask questions of, and to receive
answers from, the Company and its representatives concerning the terms of this
Agreement, and the transactions contemplated hereby and thereby and Purchaser's
purchase of the Preferred Shares. The foregoing representations do not limit or
otherwise modify the representations and warranties of the Company in Article 2
of this Agreement, or the right of Purchasers to rely thereon or to seek
indemnification for any breach thereof.
3.5. No Conflict or Violation. Neither the execution and delivery of
this Agreement or (to the extent either Purchaser is a party thereto) the
Transaction Documents by such Purchaser nor the consummation of the transactions
contemplated hereby or thereby will result in (a) a material violation of, or a
conflict with, the charter documents of such Purchaser or any subscription,
shareholders' or similar agreements or understandings to which such Purchaser is
a party; (b) a material breach of, or a material default (or an event which,
with notice or lapse of time or both would constitute a default under, or result
in the termination of, or accelerate the performance required by, or create a
right of termination or acceleration under), any material agreement to which
such Purchaser is a party or by which such Purchaser is bound or affected; (c) a
material violation by such Purchaser of any applicable law; (d) a material
violation by such Purchaser of any order, judgment, writ, injunction, decree or
award to which such Purchaser is a party or by which such Purchaser is bound or
affected; or (e) an imposition of any material lien or encumbrance on any
property or asset of such Purchaser.
3.6 Consents and Approvals. Except as set forth on Schedule 3.6 hereto,
no consent permit, approval or authorization of, or declaration, filing,
application, transfer or registration with, any governmental or regulatory
authority, or any other person or entity is required to be made or obtained by
such Purchaser by virtue of the execution, delivery or performance of this
Agreement or any of the Transaction Documents to enable such Purchaser to pay
the consideration for and own the Preferred Stock, or to avoid: (a) the
violation or breach of any law or regulation, (b) the termination of or default
under any agreement to which such Purchaser is a party or by which any of its
property or assets are bound or affected, or (c) the creation of any lien or
encumbrance on any of the property or assets of such Purchaser.
3.7. Brokers and Finders. All negotiations relating to this Agreement
and the transactions contemplated hereby have been carried on without the
intervention of any person acting on behalf of such Purchaser in such manner as
to give rise to any claim against Purchasers, PTI or a Shareholder for any
brokerage or finders' commission fee or similar compensation.
ARTICLE 4
INDEMNITY
4.1 Indemnification by the Company and the Shareholders.
4.1.1. The Company agrees to jointly and severally and the
Shareholders agree to severally indemnify each Purchaser against and hold each
Purchaser harmless from any and all Damages (as defined below) of such Purchaser
arising out of (i) the Pre-Closing Stock Exchange and (ii) the breach of any
representation, warranty, covenant or agreement of the Shareholders or the
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Company herein which the Purchasers assert within two years from the Closing
Date. Notwithstanding the foregoing, (i) the Shareholders shall not be liable to
Purchasers under this Section 4.1.1 for any Damages arising out of the breach of
any representation, warranty, covenant or agreement of the Shareholders or the
Company ("Warranty Claims") until the aggregate amount of all such Damages of
Purchasers exceeds $50,000 (the "Shareholder's Threshold Amount"), in which case
the Shareholders shall be required to indemnify Purchasers for the full amount
of such Damages, (ii) the aggregate liability of any Shareholder under this
Section 4.1.1 shall not exceed 100% of the total amount of the Purchase Price
received by such Shareholder pursuant to this Agreement and (iii) a
Shareholder's contribution to any indemnification payment shall be pro rata
based on his respective ownership interest in the Company.
4.1.2 "Damages" shall mean any loss, liability, damage or
expense, including without limitation interest, penalties and reasonable
attorneys', accountants' and experts' fees and costs of investigation incurred
as a result thereof. The term "Damages" shall not be limited to matters asserted
by third parties against the indemnified party, but shall also include Damages
sustained or incurred by the indemnified party in the absence of third party
claims. The term Damages shall mean, as it relates to the breach of any
representation, warranty, covenant or agreement or the existence or occurrence
of a fact or event which is not disclosed on the Disclosure Schedules, the
product of: (a) the Detriment (as defined below) to the Company with respect to
such breach, and (b) such Purchaser's Ownership Percentage (as defined below).
"Detriment" shall mean the dollar value of the loss, the loss of value,
liability, damage or expense caused by the breach, non-disclosure or claim of
third parties on the existence or occurrence of the fact or event constituting
the breach, (e.g., in the event an undisclosed obligation for $100,000 exists
that the Company must pay, the Detriment is $100,000); provided, however, that
the Detriment relating to a contingent or contested liability (such as a lawsuit
by a third party) will not be determined until the amount of such liability is
reasonably determined (e.g., in the case of a lawsuit, a settlement is reached
or a final judgment is made) and will then be equal to the amount of such actual
liability plus the costs of effectuating the determination. "Ownership
Percentage" shall mean the percentage of the outstanding shares of the Company's
Convertible Preferred Stock purchased hereunder by such Purchaser.
4.1.3. Purchasers agree to give the Shareholders and the Company, as
applicable, prompt written notice of any action by or in respect of a third
party of which it has knowledge concerning any Damages as to which it may
request indemnification hereunder. The Shareholders and the Company shall have
the right to direct, through counsel of their own choosing, the defense or
settlement of any such Action (provided that the Shareholders shall have first
acknowledged their indemnification obligations hereunder specifically in respect
of such Action) at their own expense, which counsel shall be reasonably
satisfactory to Purchasers. If the Shareholders and the Company elect to assume
the defense of any such Action, Purchasers may participate in such defense, but
in such case the expenses of Purchasers incurred in connection with such
participation shall be paid by the Purchasers. Purchasers shall cooperate with
the Shareholders and the Company in the defense or settlement of any such
Action. If the Shareholders elect to direct the defense of any such Action,
Purchasers shall not pay, or permit to be paid, any part of any claim or demand
arising from such asserted Damages, unless the Shareholders consent in writing
to such payment or unless the Shareholders withdraw from the defense of such
asserted Damages, or unless a final judgment from
15
which no appeal may be taken by or on behalf of the Shareholders is entered
against Purchasers for such Damages. If the Shareholders shall fail to defend,
or if, after commencing or undertaking any such defense, the Shareholders fail
to prosecute or withdraw from such defense, Purchasers shall have the right to
undertake the defense or settlement thereof at the Shareholders' expense.
4.2 Indemnification by Purchasers.
4.2.1 Purchasers agree to severally indemnify the Shareholders
against, and hold each Shareholder harmless from, any and all Damages (as
defined above) arising out of the breach of any representation, warranty,
covenant or agreement of Purchasers herein which the Company or a Shareholder
asserts within two years from the Closing Date. Notwithstanding the foregoing,
(i) Purchasers shall not be liable to the Shareholders under this Section 4.2.1
for any Damages arising out of the breach of any representation, warranty,
covenant or agreement of Purchasers herein until the aggregate amount of all
such Damages exceeds $50,000 ("Purchaser's Threshold Amount") in which case
Purchasers shall be required to indemnify the Shareholders for the full amount
of such Damages, and (ii) the aggregate liability of each Purchaser under this
Section 4.2.1 shall not exceed the amount of the Purchase Price to be paid by
such Purchaser pursuant to this Agreement.
4.2.2 The Shareholders agree to give Purchasers prompt written
notice of any Action by or in respect of a third party of which they have
knowledge concerning any Damages as to which they may request indemnification
hereunder. Purchasers shall have the right to direct, through counsel of their
choosing, the defense or settlement of any such Action (provided that Purchasers
shall have first acknowledged their indemnification obligations hereunder
specifically in respect of such Action) at their own expense, which counsel
shall be reasonably satisfactory to the indemnified party or parties. If
Purchasers elect to assume the defense of any such Action, the indemnified party
or parties may participate in such defense, but in such case the expenses of the
indemnified party or parties incurred in connection with such participation
shall be paid by the indemnified party or parties. The indemnified party or
parties shall cooperate with Purchasers in the defense or settlement of any such
Action. If Purchasers elect to direct the defense of any such Action the
indemnified party or parties shall not pay, or permit to be paid, any part of
any claim or demand arising from such asserted liability, unless Purchasers
consent in writing to such payment or unless Purchasers withdraw from the
defense of such asserted liability, or unless a final judgment from which no
appeal may be taken by or on behalf of Purchasers is entered against such
indemnified party for such liability. If Purchasers shall fail to defend, or if,
after commencing or undertaking any such defense, Purchasers fails to prosecute
or withdraws from such defense, the indemnified party or parties shall have the
right to undertake the defense or settlement thereof at Purchaser's expense.
4.3 General Indemnification Provisions. If the indemnifying party is
controlling the defense of an Action, the indemnifying party will not, without
the prior written consent of the indemnified party or parties, enter into any
settlement of such Action which could reasonably be expected to lead to
liability or create any financial or other obligation on the part of the
indemnified party or parties. If the indemnified party or parties are
controlling the defense of an Action, the indemnified party or parties will not
enter into any settlement of such Action without the consent of the indemnifying
party, which consent shall not be unreasonably withheld. The controlling party
shall deliver, or cause to be delivered, to the other party or parties copies of
all correspondence,
16
pleadings, motions, briefs, appeals or other written statements relating to or
submitted in connection with the defense of any such Action and timely notices
of, and the right to participate in (as observer), any hearing or other court
proceeding relating to such Action.
4.4. Exclusive Remedy. In the event the transactions contemplated by
this Agreement are consummated, the provisions of this Article 4 shall be the
sole remedy for any party hereto with respect to any claims (other than those
involving fraud) related to a breach of any representation, warranty, covenant
or agreement of any party hereto. In the event the transactions contemplated by
this Agreement are not consummated or in the event of fraud, the parties hereto
shall be able to seek any remedy available at law or in equity.
ARTICLE 5
THE CLOSING
5.1 Pre-Closing.
5.1.1 Conduct Prior to the Closing. From and after the date of
this Agreement until the Closing, except as expressly contemplated by this
Agreement or as consented to by the Purchasers:
(a) neither the Company nor any Shareholder
shall take any action inconsistent with the
terms of this Agreement or which would cause
any representation or warranty hereunder not
to be true as of the Closing, including,
without limitation, Section 2.11; and
(b) the Company, its officers, directors and
employees, and the Shareholders shall use
their reasonable best efforts to preserve
intact PTI's business relationships, keep
available the service of its employees and
to maintain satisfactory business
relationships with its suppliers and
customers.
5.1.2 Access to Information and Documents; Confidentiality.
From and after the date of this Agreement, the Company shall give each Purchaser
and such Purchaser's attorneys, accountants and other representatives full
reasonable access to its properties, documents, books and records and shall
furnish each Purchaser with such information concerning the Company as such
Purchaser may reasonably request. Each Purchaser acknowledges and agrees that
(a) the information it has obtained and will obtain concerning the Company's
business is confidential and belongs to the Company, and (b) such Purchaser will
hold all such confidential information in confidence and will use such
information solely in connection with such Purchaser's investment in the
Company.
5.1.3 Best Efforts to Satisfy Closing Conditions. The Company,
the Shareholders and each Purchaser shall use their respective best reasonable
efforts to cause the closing conditions set forth below to be satisfied as soon
as practicable following the execution hereof but in no event later than June
30, 1999 (which date may be extended by up to 15 days upon the written request
of any party hereto).
17
5.1.4 Third-Party Consents. PTI and the Shareholders shall
take, as promptly as practicable, all action to obtain any consents, approvals
or authorizations of third parties to the consummation of the transactions
contemplated hereby, which they or the Purchasers reasonably deem necessary or
advisable.
5.1.5 Exclusivity. Until after the Closing, the Shareholders
and PTI shall not, directly or indirectly, and shall not permit any officer,
director, employee, shareholder, advisor, agent or other representative to, (a)
except in the ordinary course of PTI's business, offer for sale, or enter into
any agreement of any kind (whether or not intended to be binding) concerning the
sale of, any interest in, or any material assets of, PTI, whether by means of a
stock sale, merger, consolidation, asset sale or other transaction
(collectively, a "Sale Transaction"), (b) initiate or participate in any
discussions or negotiations, or furnish any information to any other person or
entity in connection with, any proposed Sale Transaction, or (c) solicit,
initiate or encourage the submission of inquiries, proposals or offers from any
potential third party concerning any proposed Sale Transaction. In the event
either the Shareholders or PTI receives any unsolicited proposal for any Sale
Transaction prior to and including the Closing, the Shareholders or PTI, as the
case may be, shall promptly inform the Purchasers of such proposal and the terms
thereof and shall provide the Purchasers with a copy of any such proposal
received in writing.
5.1.6. Preferred Stock. The Company and the Shareholders shall
take all necessary action for the creation, authorization and issuance of the
Convertible Preferred Stock, including, but not limited to the filing of the
Articles of Amendment as set forth in Exhibit A to the Shareholders Agreement.
5.1.7. Shareholders Agreement. Except for the persons listed
on Schedule 5.1.7, the Company shall obtain signatures of each holder of any
outstanding securities of the Company (including, without limitation, option
holders) to the Shareholders Agreement.
5.1.8. Bylaws. The Company and the Shareholders shall take all
necessary action to amend the bylaws of the Company to comply with Article 3 and
Article 4 of the Shareholders Agreement.
5.2 Closing. The Closing (the "Closing") shall be held on Friday, June
18, 1999 (the "Closing Date") at the offices of Planning Technologies, Inc. or
at such other time and place mutually agreeable to the parties hereto.
5.3 Conditions of the Obligations of the Purchasers. The obligation of
each Purchaser to purchase Preferred Shares is subject to the fulfillment or
waiver of each of the following conditions on or before the Closing Date:
(a) Representations and Warranties. The representations and
warranties of the Company and the Shareholders herein shall be true on and as of
the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing
18
Date.
(b) Performance. The Company and the Shareholders shall have
performed and complied with all agreements, obligations and conditions contained
in this Agreement that are required to be performed or complied with by them on
or before the Closing Date.
(c) Proceedings and Documents. The Pre-Closing Stock Exchange
shall have taken place. All corporate and other proceedings in connection with
the transactions contemplated at the Closing and all documents incident thereto
shall be reasonably satisfactory in form and substance to the Purchasers, and
they shall have received all such counterpart original and certified or other
copies of such documents as they may reasonably request.
(d) No Material Adverse Change. There shall have been no
Material Adverse Change between the Effective Date and the Closing Date.
(e) Officer's and Shareholders' Certificate. Purchaser shall
have received a certificate, dated the Closing Date, signed by an authorized
executive officer of PTI and by the Shareholders, certifying that the conditions
specified in this Section 5.3, have been fulfilled.
(f) Consents and Regulatory Approvals. All licenses, permits,
authorizations, consents and approvals of and filings with any governmental or
regulatory agency or any other third party required to be obtained or made in
connection with the consummation of the transactions contemplated by this
Agreement shall have been duly obtained or made by or on behalf of PTI.
(g) Opinion of Counsel. Purchasers shall have received from
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, counsel for PTI, an opinion, dated the Closing Date, as
to such matters as Purchasers may reasonably request.
(h) Approval of Documents. The form and substance of all
certificates, instruments, opinions and other documents delivered to Purchasers
under this Agreement shall be reasonably satisfactory in all material respects
to Purchasers and its counsel.
(i) Insurance. The Company shall obtain and pay for key-person
life insurance on ▇▇▇▇▇▇ (Jake) ▇▇▇▇▇▇▇ in the amount of $5,000,000 listing the
Purchasers as the beneficiaries and providing for notice to the Purchasers 30
days prior to any cancellation or material change in coverage. The Company shall
continue to provide such insurance listing the Purchasers as the beneficiaries
until December 31, 2000.
5.4 Conditions of Obligations of the Company and Shareholders. The
obligation of the Company and the Shareholders to sell the Preferred Shares to
each Purchaser is subject to the fulfillment or waiver of each of the following
conditions on or before the Closing Date:
(a) Representations and Warranties. The representations and warranties
of such Purchaser hereunder shall be true on and as of the Closing Date with the
same effect as though
19
such representations and warranties had been made on and as of the Closing Date.
(b) Performance. Such Purchaser shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with on or before the Closing Date.
(c) Purchaser's Certificate. The Company and the Shareholders shall
have received from each Purchaser a certificate, dated the Closing Date, signed
by an authorized executive officer of each Purchaser, as applicable, certifying
that the conditions specified in this Section 5.4 have been fulfilled as to such
Purchaser.
(d) Opinion of Legal Counsel. The Company and the Shareholders shall
have received from ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for GHI and from ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
LLP, counsel for ATC separate opinions dated the Closing Date, as to such
matters as the Company and the Shareholders may reasonably request.
(e) Approval of Documents. The form and substance of all certificates,
instruments, opinions and other documents delivered to the Company and the
Shareholders under this Agreement shall be satisfactory in all material respects
to the Company and its Shareholders and its counsel.
5.5 Deliveries by the Company and the Shareholders. At the Closing, the
Company and the Shareholders shall deliver the following:
(a) certificates representing all of the Preferred Shares either registered in
the name of the Purchasers, or registered in the name of the Shareholders, duly
endorsed by the Shareholders for transfer to Purchasers or accompanied by an
assignment duly executed by the Shareholders, and any other documents that are
necessary to transfer to Purchasers good and marketable title to all of the
Preferred Shares all in the names and amounts set forth in Exhibit A hereto;
(b) evidence of the Company and the Shareholders having obtained all of
the licenses, permits, authorizations, consents and approvals set forth on
Schedule 2.5 hereto other than any consents required from the Small Business
Administration;
(c) the Transaction Documents, duly executed by the Company and, where
indicated by the Shareholders;
(d) a legal opinion from legal counsel for the Company and the
Shareholders, dated the Closing Date in a form reasonably satisfactory to the
Purchasers;
(e) an Officer's Certificate of the Company certifying that the
following items which shall be attached are true and correct copies of the
Company's: (a) certified Articles of Incorporation, (b) by-laws and (c)
certificate of good standing from the Secretary of State in the Company's State
of incorporation dated within seven business days of the Closing Date; and
20
21
(f) evidence of the key-person life insurance described in Section 5.3
(j).
5.6 Deliveries by Purchasers. At the Closing, Purchasers shall deliver
the following:
(a) cash by wire transfer to each of the persons' accounts set forth on
Exhibit A hereto, in the amount set forth opposite each of such persons' names;
and
(b) the Transaction Documents, duly executed by Purchasers.
ARTICLE 6
TERMINATION PRIOR TO CLOSING
6.1 Termination. This Agreement and the transactions contemplated
herein may be terminated at any time prior to Closing:
(a) By the mutual written consent of Purchasers, PTI and Shareholders;
or
(b) By either Purchasers, PTI or the Shareholders, by written notice to
the other party if the other party shall (1) fail to perform in any material
respect its agreements contained herein required to be performed prior to the
Closing Date and such failure cannot reasonably be anticipated to be cured prior
to Closing, or (2) materially breach any of its representations or warranties
contained herein and such breach cannot reasonably be anticipated to be cured
prior to Closing.
6.2 Effect of Obligations. Termination of this Agreement pursuant to
Section 6.1, above, shall terminate all obligations of the parties hereunder and
this Agreement shall become void and have no effect without any liability of any
kind on the part of any party; provided, however, that termination pursuant to
Section 6.1, above, by the nondefaulting or nonbreaching party shall not relieve
the defaulting or breaching party from any liability to the nondefaulting or
nonbreaching party which accrued prior to such termination.
ARTICLE 7
MISCELLANEOUS
7.1. Expenses. Whether or not the Closing occurs, each of the parties
hereto shall bear his or her own expenses relating hereto, including, without
limitation, all out-of-pocket expenses, incident to the negotiation and
execution of this Agreement and the Transaction Documents, the preparation for
carrying it into effect and the consummation of the transactions contemplated
hereby, all legal fees, expenses incurred in the process of due diligence, and
investment banking fees; provided; however, that upon the furnishing of
appropriate invoices to the Company: (a) GHI shall be reimbursed by the Company
for legal fees and expenses in the amount of $25,000 if the Closing occurs, (b)
ATC shall be reimbursed for legal fees and expenses of up to $10,000 if the
Closing
22
occurs, and (c) the Shareholders selling stock under the Stock Purchase
Agreement shall be reimbursed by the Company for legal fees and expenses up to
$7,500 in the aggregate.
7.2. Confidential Information.
7.2.1. "Confidential Information" shall mean (a) the terms of
this Agreement, (b) all business and technical information relating to the
Company's business that is proprietary to the Company or otherwise not available
to the general public, and (c) all trade secrets, technologies and know-how of
the company in the areas of its expertise or business; provided, however, that
such Confidential Information shall not include, with respect to any party
hereto desiring to disclose or utilize any information, any information that (x)
is or has become generally available to the public other than as a result of a
disclosure by such party, its affiliates or Agents, (y) has been independently
developed by such party or an affiliate of such party without violating any
obligations owed to any other party hereto, or (z) is, or becomes available to
such party or an affiliate of such party on a nonconfidential basis from a third
party having no obligation of confidentiality to a party hereto or the Company
and which has not itself received such information directly or indirectly in
breach of any such obligation of confidentiality.
7.2.2. Except as provided below, each party hereto and its or
his affiliates shall, and shall use its or his reasonable best efforts to cause
its respective officers, directors, employees, attorneys, accountants and agents
(collectively, "Agents") to keep secret and retain in strictest confidence any
and all Confidential Information, and shall not disclose such Confidential
Information, and shall use its or his reasonable best efforts to cause its or
his Agents not to disclose such Confidential Information, to any person other
than such party, its or his affiliates, the Company or their respective Agents.
Confidential Information may be disclosed (i) as required by law or legal
process, (ii) to such counsel or (iii) pursuant to any listing agreement with,
or the rules or regulations of, any securities exchange on which securities of
such party or any such affiliate are listed or traded (in which event the party
making such disclosure or whose affiliates or Agents are making such disclosure
shall so notify the other party as promptly as practicable (and , if possible,
prior to making such disclosure) and shall seek confidential treatment of such
Confidential Information). This Section 7.2 shall survive the termination of
this Agreement, any party's withdrawal therefrom and any person ceasing to be an
affiliate of a party hereto.
7.3. Survival. All of the representations and warranties set forth in
this Agreement shall terminate and be extinguished on the second anniversary of
the Closing after which period no action for breach of such representations and
warranties may be brought by any party hereto; provided, however, that the
representations and warranties of the Company and the Shareholders relating to
taxes shall survive until the expiration of any applicable statutes of
limitation.
23
7.4. Notices. All notices, requests, demands and other communications
made under this Agreement shall be in writing, correctly addressed to the
recipient at the addresses set forth under such recipient's signature on the
signature page hereto and shall be deemed to have been duly given; (a) upon
delivery, if served personally on the party to whom notice is to be given; (b)
on the date of receipt, refusal or non-delivery indicated on the receipt if
mailed to the party to whom notice is to be given by first class mail,
registered or certified, postage prepaid, or by air courier; or (c) on
confirmation of receipt if delivered by facsimile transmission, provided the
original thereof is sent by mail, in the manner set forth above, within the next
business day after the facsimile transmission is sent. Any party may give
written notice of a change of address in accordance with the provisions of this
section and after such notice of change has been received, any subsequent notice
shall be given to such party in the manner described at such new address.
7.5. Headings; Agreement. The headings contained in this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
The term "Agreement" for purposes of representations and warranties hereunder
shall be deemed to include the Schedules and Exhibits hereto to be executed and
delivered by a party.
7.6. Publicity. So long as this Agreement is in effect, unless
otherwise required by applicable law, the parties hereto shall not, and shall
cause their affiliates not to, issue or cause the publication of any press
release or other announcement with respect to the transactions contemplated by
this Agreement or this Agreement without the consent of the other parties, which
consent shall not be unreasonably withheld or delayed.
7.7. Entire Agreement. This Agreement (including all the Disclosure
Schedules and Exhibits hereto) constitutes the entire agreement among the
parties and supersedes all other prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
7.8. Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefits of the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any of
the rights, interests or obligations shall be assigned by any of the parties
hereto without the prior written consent of the other parties, provided that
Purchasers shall be permitted to assign this Agreement to any affiliate thereof
without the consent of the Company or the Shareholders.
7.9. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
7.10. Governing Law. The validity, construction and performance of this
Agreement, and any Action arising out of or relating to this Agreement or any of
the Transaction Documents, shall be governed by the laws, without regard to the
laws as to choice or conflict of laws, of the State of Georgia.
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7.11. Cumulative Remedies. No remedy made available hereunder by any of
the provisions of this Agreement is intended to be exclusive of any other
remedy, and each and every remedy shall be cumulative and shall be in addition
to every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise. Notwithstanding the foregoing, the parties
have agreed that the indemnification provisions contained in Article 4 above,
shall be the sole and exclusive remedies of the parties with respect to the
breach by the other parties of any representation and warranty.
7.12. Third-Party Beneficiaries. This Agreement is not intended to
confer upon any other person any rights or remedies hereunder.
7.13 Further Assurances. The Shareholders and the Company, at any time
on or after the Closing, will execute, acknowledge and deliver any further
assignments and other assurances, documents and instruments of transfer, that
may be reasonably requested by Purchasers, and will take any other action that
may be requested by Purchasers, for the purpose of assigning, transferring and
confirming to Purchasers, or reducing to possession, any or all of the Preferred
Shares purchased hereunder.
7.14 Company and the Shareholders' Representations. Neither Purchasers'
review of the books and records of the Company nor any other due diligence by
Purchasers shall be deemed to constitute actual knowledge so as to reduce each
Purchaser's right to rely on the Company's and the Shareholders' representations
and warranties contained herein.
7.15 Schedules. Any information provided by any party on any schedule
attached hereto shall also be deemed to be disclosed by such party with respect
to any and all other applicable schedules attached hereto.
Remainder of this page intentionally left blank.
Signature pages follow.
25
IN WITNESS WHEREOF, the undersigned individuals and the respective duly
authorized officer or partner, as the case may be, of each of the parties hereto
have executed this Stock Purchase Agreement as of the Effective Date.
PLANNING TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ (Jake) ▇▇▇▇▇▇▇,
President and Chief Executive Officer
Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
SHAREHOLDERS
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ (▇▇▇▇) ▇▇▇▇▇▇▇
Address:
With a copy to:
26
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Address:
With a copy to:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
Address:
With a copy to:
27
GRUMMAN HILL INVESTMENTS III, L.P.
By: Grumman Hill Group, LLC
Its: General Partner
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Manager
Address:
With a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
APPLIEDTHEORY CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President & Chief Operating Officer
Address:
▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
Great Neck, New York 11021
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇