EXHIBIT 16
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EXCHANGE AGREEMENT
by and among
INFOCROSSING, INC.,
MIDOCEAN CAPITAL INVESTORS, L.P.,
SANDLER CAPITAL PARTNERS V, L.P.,
SANDLER CAPITAL PARTNERS V FTE, L.P.,
SANDLER CAPITAL PARTNERS V GERMANY, L.P.,
SANDLER TECHNOLOGY PARTNERS SUBSIDIARY, LLC,
SANDLER CO-INVESTMENT PARTNERS, L.P.
and
THE OTHER PARTY NAMED HEREIN
_________________________________
Dated as of October 16, 2003
_________________________________
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TABLE OF CONTENTS
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PAGE #
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ARTICLE I DEFINITIONS......................................................2
1.1 DEFINITIONS...............................................2
ARTICLE II EXCHANGE ........................................................5
2.1 AGREEMENT TO EXCHANGE.....................................5
2.2 CLOSING...................................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................8
3.1 ORGANIZATION AND STANDING.................................8
3.2 AUTHORIZATION; ENFORCEABILITY.............................8
3.3 NO VIOLATION; CONSENTS....................................9
3.4 COMMISSION FILINGS.......................................10
3.5 ABSENCE OF CERTAIN CHANGES...............................10
3.6 PRIVATE OFFERING.........................................10
3.7 LITIGATION...............................................11
3.8 PERMITS AND LICENSES.....................................11
3.9 INVESTMENT COMPANY.......................................11
3.10 BROKERS AND FINDERS......................................11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF EACH INVESTOR.................12
4.1 ORGANIZATION; AUTHORIZATION; ENFORCEABILITY..............12
4.2 NO VIOLATION; CONSENTS...................................12
4.3 TITLE TO SECURITIES......................................13
ARTICLE V COVENANTS OF THE COMPANY........................................13
5.1 OPERATION OF BUSINESS....................................13
5.2 AGREEMENT TO TAKE NECESSARY AND DESIRABLE ACTIONS........15
5.3 COMPLIANCE WITH CONDITIONS...............................15
5.4 CONSENTS AND APPROVALS...................................15
5.5 PRIVATE PLACEMENT........................................16
5.6 WAIVER OF PREEMPTIVE RIGHTS..............................16
ARTICLE VI COVENANTS OF EACH INVESTOR......................................16
6.1 AGREEMENT TO TAKE NECESSARY AND DESIRABLE ACTIONS........16
6.2 COMPLIANCE WITH CONDITIONS; BEST EFFORTS.................16
6.3 CONSENTS AND APPROVALS...................................16
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ARTICLE VII CONDITIONS PRECEDENT TO CLOSING.................................17
7.1 CONDITIONS TO THE COMPANY'S OBLIGATIONS..................17
7.2 CONDITIONS TO EACH INVESTOR'S OBLIGATIONS................18
ARTICLE VIII MISCELLANEOUS...................................................20
8.1 SURVIVAL; INDEMNIFICATION................................20
8.2 NOTICES..................................................22
8.3 GOVERNING LAW............................................23
8.4 TERMINATION..............................................23
8.5 ENTIRE AGREEMENT.........................................24
8.6 MODIFICATIONS AND AMENDMENTS.............................24
8.7 WAIVERS AND EXTENSIONS...................................24
8.8 TITLES AND HEADINGS......................................25
8.9 EXHIBITS AND SCHEDULES...................................25
8.10 EXPENSES.................................................25
8.11 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS..................25
8.12 ASSIGNMENT; NO THIRD PARTY BENEFICIARIES.................25
8.13 SEVERABILITY.............................................26
8.14 COUNTERPARTS.............................................26
8.15 FURTHER ASSURANCES.......................................26
8.16 REMEDIES CUMULATIVE......................................26
8.17 SPECIFIC PERFORMANCE.....................................26
8.18 NO INVESTOR AFFILIATE LIABILITY..........................27
8.19 CONFIDENTIALITY..........................................27
8.20 LEGAL REPRESENTATION.....................................28
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SCHEDULES
Schedule A Exchange
Schedule 3.3 Violations; Consents
Schedule 3.5 Absence of Certain Changes
Schedule 3.7 Litigation
EXHIBITS
Exhibit A Form of Amended Registration Rights Agreement
Exhibit B Form of Termination of Stockholders' Agreement
Exhibit C Form of Term Loan Agreement
Exhibit D Form of Opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
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EXCHANGE AGREEMENT
EXCHANGE AGREEMENT dated as of October 16, 2003 (this "AGREEMENT"), by
and among Infocrossing, Inc. (f/k/a Computer Outsourcing Services, Inc.), a
Delaware corporation (the "COMPANY"), MidOcean Capital Investors, L.P., a
Delaware limited partnership (the "MIDOCEAN INVESTOR"), Sandler Capital Partners
V, L.P., a Delaware limited partnership ("SANDLER V"), Sandler Capital Partners
V FTE, L.P., a Delaware limited partnership ("SANDLER V FTE"), Sandler Capital
Partners V Germany, L.P., a Delaware limited partnership, ("SANDLER V Germany"),
Sandler Technology Partners Subsidiary, LLC, a Delaware limited liability
company ("SANDLER Technology"), and Sandler Co-Investment Partners, a Delaware
limited partnership ("SANDLER CO-INVESTMENT" and, together with Sandler V,
Sandler V FTE, Sandler V Germany and Sandler Technology, the "SANDLER
INVESTORS"), and Price Family Limited Partners (the "PRICE INVESTOR"). Each of
the MidOcean Investor, the Sandler Investors and the Price Investor are
hereinafter referred to individually as an "INVESTOR" and collectively as the
"INVESTORS."
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to that certain Securities Purchase Agreement, dated
as of April 7, 2000, by and among the Company and the other parties thereto, the
Company issued and sold 157,377 shares of its 8% Series A Cumulative Convertible
Participating Preferred Stock due 2007, par value $0.01 per share (the "ORIGINAL
PREFERRED STOCK"), together with Series A Common Stock Warrants (the "ORIGINAL
WARRANTS") to purchase initially an aggregate of 2,531,926 shares of common
stock, par value $0.01 per share, of the Company (the "COMMON STOCK"), to be
issued upon exercise of the Original Warrants;
WHEREAS, the Investors own, in the aggregate, all outstanding shares of
the Original Preferred Stock and all the outstanding Original Warrants; and
WHEREAS, upon the terms and subject to the conditions of this
Agreement, the Investors and the Company have agreed to an exchange, pursuant to
which, among other things, the Original Preferred Stock and the Original
Warrants will be exchanged by the Investors for an aggregate consideration of
(i) $25,000,000 in aggregate principal amount of loans represented by the notes
in substantially the form attached as Exhibit A to the Term Loan Agreement (as
defined herein) (the "NOTES") and (ii) $55,000,000 in cash (the "CASH
PROCEEDS").
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows.
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ARTICLE I
DEFINITIONS
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1.1 DEFINITIONS.
(a) As used in this Agreement, the following terms shall
have the following meanings:
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For the purposes of this definition, "CONTROL"
when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"CONTROLLING" and "CONTROLLED" have meanings correlative to the foregoing.
"AMENDED REGISTRATION RIGHTS AGREEMENT" means the Second Amended and
Restated Registration Rights Agreement, to be dated as of the Closing Date, to
be entered into by and among the Company, the Investors and the other parties
thereto, in substantially the form attached hereto as EXHIBIT A.
"APPLICABLE LAW" means (a) any United States federal, state, local or
foreign law, statute, rule, regulation, order, writ, injunction, judgment,
decree or permit of any Governmental Authority and (b) any rule or listing
requirement of any applicable national stock exchange or listing requirement of
any national stock exchange or Commission recognized trading market on which
securities issued by the Company or any of the Subsidiaries are listed or
quoted.
"BUSINESS DAY" means any day other than a Saturday, a Sunday, or a day
when banks in The City of New York are authorized by Applicable Law to be
closed.
"CAPITAL STOCK" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock and (ii) with respect to any
other Person, any and all partnership or other equity interests of such Person.
"COMMISSION" means the United States Securities and Exchange
Commission.
"COMMISSION FILINGS" means all reports, registration statements and
other filings filed by the Company with the Commission (and all notes, exhibits
and schedules thereto and all documents incorporated by reference therein).
"COMPANY DISCLOSURE SCHEDULE" shall mean the Company Disclosure
Schedule delivered by the Company to the Investors concurrently with the date
hereof.
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"CONFIDENTIAL INFORMATION" shall mean any and all secret, confidential
or proprietary technical and non-technical information, knowledge or data
regarding the business, affairs, products and accounts of the Company and the
Subsidiaries; PROVIDED, HOWEVER, that any information disclosed by a disclosing
party will be considered "CONFIDENTIAL INFORMATION" of such party by the
receiving party only if such information (a) if provided as information fixed in
a tangible medium of expression, is conspicuously designated as "Confidential",
"Proprietary" or some similar designation, or (b) if provided orally, is
identified as confidential at the time of disclosure and confirmed in writing
within thirty (30) days of disclosure. Notwithstanding anything to the contrary
contained herein, "CONFIDENTIAL INFORMATION" shall not include any information,
knowledge or data which (a) was in the public domain at or subsequent to the
time such portion was communicated to the receiving party by the disclosing
party through no fault of the receiving party, (b) was rightfully in the
receiving party's possession free of any obligation of confidence at or
subsequent to the time such portion was communicated to the receiving party by
the disclosing party, (c) was developed by employees or agents of the receiving
party independently of and without reference to any information communicated to
the receiving party by the disclosing party, or (d) was communicated by the
disclosing party to an unaffiliated third party free of any obligation of
confidence.
"CONTRACT" means any contract, lease, loan agreement, mortgage,
security agreement, trust indenture, note, bond, instrument, or other agreement
or arrangement (whether written or oral).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, and the rules
and regulations of the Commission promulgated thereunder.
"GOVERNMENTAL AUTHORITY" means (i) any foreign, federal, state or local
court or governmental or regulatory agency or authority, (ii) any arbitration
board, tribunal or mediator and (iii) any national stock exchange or Commission
recognized trading market on which securities issued by the Company or any of
the Subsidiaries are listed or quoted.
"INVESTOR AFFILIATE" means (a) any direct or indirect holder of any
equity interests or securities in any Investor (whether limited or general
partners, members, stockholders or otherwise), (b) any Affiliate of any
Investor, (c) any director, officer, employee, representative or agent of (i)
any Investor, (ii) any Affiliate of any Investor or (iii) any holder of equity
interests or securities referred to in clause (a) above or (d) any person who is
a "control person" of any Investor, as defined under Section 15 of the
Securities Act or Section 20 of the Exchange Act.
"LIEN" means any mortgage, pledge, lien, security interest, claim,
restriction, charge or encumbrance of any kind.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
condition (financial or otherwise), business, properties, assets, liabilities,
operations or results of operations of the Company and the Subsidiaries, taken
as a whole.
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"PERMITTED TRANSFEREE" means, with respect to any Investor, or any
Permitted Transferee of any Investor, any Investor Affiliate or an Affiliate of
such holder or any successor in interest of any of them, whether by merger,
consolidation, dissolution, liquidation, or otherwise.
"PERSON" means any individual, partnership, corporation, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof, or other entity.
"PRIVATE PLACEMENT" means the private placement of Common Stock and
warrants for proceeds in an amount not less than $75,000,000 on or before
November 1, 2003 on terms and conditions (including, without limitation, the
issuance price of the Common Stock) satisfactory to the MidOcean Investor, the
Sandler Investors and the Company.
"SECURITIES ACT" means the Securities Act of 1933, and the rules and
regulations of the Commission promulgated thereunder.
"SUBSIDIARY" means, with respect to any Person (i) a corporation a
majority of whose capital stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such Person,
by a subsidiary of such Person, or by such Person and one or more subsidiaries
of such Person, (ii) a partnership in which such Person or a subsidiary of such
Person is, at the date of determination, a general partner of such partnership
and has the power to direct the policies and management of such partnership or
(iii) any other Person (other than a corporation) in which such Person, a
subsidiary of such Person or such Person and one or more subsidiaries of such
Person, directly or indirectly, at the date of determination thereof, has (a) at
least a majority ownership interest or (b) the power to elect or direct the
election of a majority of the directors or other governing body of such Person.
"SUBSIDIARY" means a subsidiary of the Company.
"TERMINATION OF STOCKHOLDERS' AGREEMENT" means the Termination of
Stockholders' Agreement, to be dated as of the Closing Date, to be entered into
by and among the Company, the Investors and the other parties thereto, in
substantially the form attached hereto as EXHIBIT B.
"TERM LOAN AGREEMENT" means the Term Loan Agreement, to be dated as of
the Closing Date, to be entered into by and among the Company, the Lenders (as
defined therein) and Infocrossing Agent, Inc., as agent for the Lenders, in the
form attached hereto as EXHIBIT C.
"TRANSACTION DOCUMENTS" means this Agreement, the Termination of
Stockholders' Agreement, the Amended Registration Rights Agreement and the Term
Loan Agreement.
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"TRANSACTIONS" means the transactions contemplated by this Agreement,
including, without limitation, the Exchange and the Private Placement.
(b) As used in this Agreement, the following terms shall
have the meanings given thereto in the Sections set forth opposite such terms:
TERM SECTION
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Agreement Preamble
Cash Proceeds Recitals
Closing 2.2
Closing Date 2.2
Common Stock Recitals
Company Preamble
DGCL 2.2
Exchange 2.1
Governmental Licenses 3.8
Indemnified Party 8.1(c)
indemnified person 8.1(b)
Indemnifying Party 8.1(c)
Investor or Investors Preamble
Losses 8.1(b)
MidOcean Investor Preamble
Notes Recitals
Notices 8.2
Opinion 2.2(b)(v)
Original Preferred Stock Recitals
Original Warrants Recitals
Price Investor Preamble
Sandler Co-Investment Preamble
Sandler Investors Preamble
Sandler Technology Preamble
Sandler V Preamble
Sandler V FTE Preamble
Sandler V Germany Preamble
ARTICLE II
EXCHANGE
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2.1 AGREEMENT TO EXCHANGE.
On the Closing Date, and upon the terms and subject to the conditions
set forth in this Agreement, the Company agrees with each Investor, and each
Investor, severally and not jointly, agrees with the Company, as follows:
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(a) Each Investor, severally and not jointly, shall
exchange with, and deliver to, the Company (i) the aggregate number of shares of
Original Preferred Stock set forth opposite such Investor's name on Schedule A
hereto and (ii) the aggregate number of Original Warrants set forth opposite
such Investor's name on Schedule A hereto; and
(b) The Company shall exchange with, and deliver to each
Investor (i) Notes in an aggregate principal amount set forth opposite such
Investor's name on Schedule A hereto and (ii) the pro rata portion of the Cash
Proceeds set forth opposite such Investor's name on Schedule A hereto. The
Company shall use $55,000,000 of the net proceeds from the Private Placement to
pay the Cash Proceeds to the Investors.
The transactions contemplated by this Section 2.1 are herein referred
to collectively as the "EXCHANGE."
2.2 CLOSING.
Subject to the satisfaction or waiver of the conditions set forth in
this Agreement, the closing of the Exchange (the "CLOSING") shall take place at
10:00 a.m. at the offices of ▇▇▇▇▇ ▇▇▇▇ LLP at 1290 Avenue of the Americas, New
York, New York, on the date upon which the conditions set forth in Article VII
have been satisfied or on such other date as the parties shall mutually agree
upon (the "CLOSING DATE").
At the Closing:
(a) each Investor shall deliver to the Company:
(i) against delivery by the Company to such Investor
of the Notes in an aggregate principal amount and the pro rata portion of the
Cash Proceeds set forth opposite such Investor's name on Schedule A hereto, (A)
a certificate or certificates representing the aggregate number of shares of
Original Preferred Stock set forth opposite such Investor's name on Schedule A
hereto, which shall be in definitive form and registered in the name of such
Investor, in proper form for transfer, and (B) a certificate or certificates
representing the aggregate number of Original Warrants set forth opposite such
Investor's name on Schedule A hereto, which shall be in definitive form and
registered in the name of such Investor, in proper form for transfer;
(ii) a copy of the Term Loan Agreement executed by
such Investor;
(iii) a copy of the Amended Registration Rights
Agreement executed by such Investor;
(iv) a copy of the Termination of Stockholders'
Agreement executed by such Investor; and
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(v) letters of resignation of each of the two
directors designated by the Sandler Investors as holders of Original Preferred
Stock and each of the two directors designated by the MidOcean Investor as a
holder of Original Preferred Stock.
(b) The Company shall deliver to each Investor:
(i) against delivery by such Investor to the Company
of certificates representing the aggregate number of shares of Original
Preferred Stock and the aggregate number of Original Warrants set forth opposite
such Investor's name on Schedule A hereto, (A) a Note or Notes in the aggregate
principal amount set forth opposite such Investor's name on Schedule A hereto,
which shall be in definitive form and registered in the name of such Investor or
its nominee or designee and in a single Note or several Notes as such Investor
shall request not later than two Business Days prior to the Closing Date, and
(B) the pro rata portion of the Cash Proceeds set forth opposite such Investor's
name on Schedule A hereto via wire transfer of immediately available funds to
such bank account as such Investor shall designate not later than two Business
Days prior to the Closing Date;
(ii) a copy of the Term Loan Agreement executed by
the Company;
(iii) a copy of the Amended Registration Rights
Agreement executed by the Company and the parties thereto other than the
Investors;
(iv) a copy of the Termination of Stockholders'
Agreement executed by the Company and the parties thereto other than the
Investors];
(v) an opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP (the
"OPINION"), in connection with the transactions contemplated by this Agreement,
dated the Closing Date, covering such matters as are customarily covered by such
opinions, substantially in the form attached hereto as EXHIBIT D;
(vi) an officer's certificate of the Company as
contemplated by Section 7.2(d);
(vii) a certificate of the Secretary of the Company
setting forth (a) copies of all resolutions of the Company authorizing the
Transactions, and (b) an incumbency certificate setting forth the name, title
and authorized signature of each officer of the Company who will execute
documents in connection with the transactions contemplated hereby;
(viii) a long-form good standing certificate of the
Company and each Subsidiary issued by the Secretary of State of the State of
Delaware; and
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(ix) evidence of the payment by the Company of all
costs and expenses of the Investors required to be reimbursed by the Company
pursuant to Section 8.10.
(c) The Company shall have received the written opinion
of Evercore Partners, Inc. to the effect that the consideration to be paid by
the Company in the recapitalization of the Original Preferred Stock is fair to
the holders of the Common Stock from a financial point of view.
After the Closing, the Company shall file a Certificate of Elimination
with the State of Delaware pursuant to Section 151(g) of the Delaware General
Corporation Law ("DGCL") to eliminate all shares of the Original Preferred
Stock.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
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The Company hereby represents and warrants to each Investor on the date
hereof and on and as of the Closing Date as follows:
3.1 ORGANIZATION AND STANDING.
Each of the Company and the Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and assets and to carry on its business as it is now
being conducted and as proposed to be conducted. Each of the Company and the
Subsidiaries is duly qualified to transact business as a foreign corporation and
is in good standing in each jurisdiction in which the character of the
properties owned or leased by it or the nature of its business makes such
qualification necessary, except for any such failures to so qualify or be in
good standing that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The Company has delivered to the
Investors true and complete copies of the Company's Certificate of
Incorporation, as amended to date, and by-laws, as in effect on the date hereof
and the certificates of incorporation, by-laws or other similar organizational
documents of the Subsidiaries, in each case, as amended through the date hereof.
3.2 AUTHORIZATION; ENFORCEABILITY.
The Company has all necessary power and authority to execute, deliver
and perform its obligations under each of the Transaction Documents and the
transactions contemplated thereby, and has taken all action necessary to
authorize the execution, delivery and performance by it of each of such
Transaction Documents and to consummate the Exchange and the other transactions
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contemplated by the Transaction Documents to occur on the Closing Date. No
corporate or stockholder proceeding on the part of the Company is necessary for
such authorization, execution, delivery, performance and consummation. The
Company has duly executed and delivered this Agreement and, at the Closing, the
Company will have duly executed and delivered each of the other Transaction
Documents to be executed and delivered at or prior to Closing. This Agreement
constitutes, and each of the other Transaction Documents when executed and
delivered by the Company, will constitute, a legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application and as any rights to indemnity
or contribution thereunder may be limited by public policy considerations.
3.3 NO VIOLATION; CONSENTS.
(a) The execution, delivery and performance by the Company
of each of the Transaction Documents and the consummation by the Company of the
Exchange and the other transactions contemplated by the Transaction Documents to
occur on the Closing Date do not and will not contravene any Applicable Law,
including, without limitation, Section 160 of the DGCL. Except as set forth on
Schedule 3.3 of the Company Disclosure Schedule, the execution, delivery and
performance by the Company of each of the Transaction Documents and the
consummation of the Exchange and the other transactions contemplated by the
Transaction Documents to occur on the Closing Date (i) will not (a) violate,
result in a breach of or constitute (with or without due notice or lapse of time
or both) a default (or give rise to any right of termination, cancellation or
acceleration) under any Contract to which the Company or any Subsidiary is a
party or by which the Company or any Subsidiary is bound or to which any of
their respective assets are subject, or (b) result in the creation or imposition
of any Lien upon any of the assets of the Company or any Subsidiary, except for
any such violations, breaches, defaults or Liens that would not, individually or
in the aggregate, reasonably be expected to have a material adverse effect on
the ability of the Company to perform its obligations under the Transaction
Documents and (ii) will not conflict with or violate any provision of the
certificate of incorporation or by-laws or other governing documents of the
Company or the Subsidiaries.
(b) Except for filings by the Company, if any, required by
applicable federal and state securities laws, which shall be made (to the extent
required) on or prior to the Closing Date, no consent, authorization or order
of, or filing or registration with, any Governmental Authority or other Person
is required to be obtained or made by the Company for the execution, delivery
and performance of this Agreement or the consummation by the Company of the
Exchange or other transactions contemplated by the Transaction Documents, or for
the execution, delivery and performance by the Company of the other Transaction
Documents, except (A) where the failure to obtain such consents, authorizations
or orders, or make such filings or registrations, would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect or a
material adverse effect on the ability of the Company to
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perform its obligations under the Transaction Documents or (B) for consents that
have been obtained or will be obtained as of the Closing Date. Notwithstanding
the foregoing, (i) no vote of any class or series of the Company's Capital Stock
is necessary to adopt this Agreement and approve the Transactions, and (ii) the
execution, delivery and performance by the Company of this Agreement and the
transactions contemplated hereby, including, without limitation, the
authorization and issuance of the shares of Common Stock and warrants to
purchase Common Stock in connection with the Private Placement, shall not
require the approval of The Nasdaq National Market, or violate the listing or
maintenance requirements of the rules or regulations of The Nasdaq National
Market.
3.4 COMMISSION FILINGS.
The Company has timely filed all reports, registration statements and
other filings, together with any amendments or supplements required to be made
with respect thereto, that it has been required to file with the Commission
under the Securities Act and the Exchange Act. As of the respective dates of
their filing with the Commission, the Commission Filings complied in all
material respects with the applicable provisions of the Securities Act and the
Exchange Act and did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
3.5 ABSENCE OF CERTAIN CHANGES.
Except as disclosed in the Commission Filings filed prior to the date
hereof or on Schedule 3.5 of the Company Disclosure Schedule, since June 30,
2003, (i) there has not been any event, occurrence or development of a state of
circumstances or facts (or the failure of any of the foregoing to occur) that
has had, or would reasonably be expected to have a material adverse effect on
the ability of the Company to perform its obligations under this Agreement or
the other Transaction Documents.
3.6 PRIVATE OFFERING.
The offer and sale of the securities issued in connection with the
Private Placement is exempt from the registration and prospectus delivery
requirements of the Securities Act. Neither the Company, nor anyone acting on
behalf of it, has offered or sold or will offer or sell any securities, or has
taken or will take any other action (including, without limitation, any offering
of any securities of the Company under circumstances that would require, under
the Securities Act, the integration of such offering with the offering and sale
of the securities issued in connection with the Private Placement), which would
subject the issuance of securities in connection with the Private Placement to
the registration provisions of the Securities Act.
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3.7 LITIGATION.
Except as disclosed in the Commission Filings or as set forth in
Schedule 3.7 of the Company Disclosure Schedule, there is no action, suit,
proceeding at law or in equity, or any arbitration or any administrative or
other proceeding by or before (or to the knowledge of the Company any
investigation by) any Governmental Authority, pending, or, to the best knowledge
of the Company, threatened, against or affecting the Company or any of the
Subsidiaries, or any of their properties or rights which would be reasonably
likely to prevent or materially delay consummation of the Transactions. There
are no such suits, actions, claims, proceedings or investigations pending or, to
the knowledge of the Company, threatened, seeking to prevent or challenging the
transactions contemplated by this Agreement.
3.8 PERMITS AND LICENSES.
The Company and the Subsidiaries have obtained all governmental
permits, licenses, franchises and authorizations required for the Company and
the Subsidiaries to conduct their respective businesses as currently conducted
(collectively, "GOVERNMENTAL LICENSES"), except for those of which the failure
to obtain would not be reasonably expected to prevent or materially delay the
consummation of the Transactions; the Company and the Subsidiaries, except where
the failure to so comply would not, singly or in the aggregate, reasonably be
expected to prevent or materially delay the consummation of the Transactions,
are in compliance with the terms and conditions of all such Governmental
Licenses; all of the Governmental Licenses are valid and in full force and
effect, except when the invalidity of such Governmental Licenses or the failure
of such Governmental Licenses to be in full force and effect would not
reasonably be expected to prevent or materially delay the consummation of the
Transactions; and neither the Company nor any of the Subsidiaries has received
any notice of proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would reasonably be expected to prevent
or materially delay the consummation of the Transactions.
3.9 INVESTMENT COMPANY.
Neither the Company nor any Subsidiaries will be an "investment
company" or "promoter" or "principal underwriter" for an "investment company,"
as such terms are defined in the Investment Company Act of 1940, as amended, and
the rules and regulations thereunder.
3.10 BROKERS AND FINDERS.
Except as disclosed to the Investors, no agent, broker, Person or firm
acting on behalf of the Company is, or will be, entitled to any fee, commission
or broker's or finder's fees from any of the parties hereto, or from any Person
controlling, controlled by, or under common control with any of the parties
hereto, in connection with this Agreement or any of the transactions
contemplated hereby.
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ARTICLE IV
REPRESENTATIONS AND
WARRANTIES OF EACH INVESTOR
---------------------------
Each Investor hereby severally, and not jointly, represents and
warrants to the Company, as to itself and as to no other person, as of the date
hereof and as of the Closing Date as follows:
4.1 ORGANIZATION; AUTHORIZATION; ENFORCEABILITY.
Such Investor is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has all requisite
power and authority to own its properties and assets and to carry on its
business as it is now being conducted and as currently proposed to be conducted.
Such Investor has the power to execute, deliver and perform its obligations
under each of the Transaction Documents to which it is a party and has taken all
action necessary to authorize the execution, delivery and performance by it of
such Transaction Documents and to consummate the transactions contemplated
hereby and thereby. No other proceedings on the part of such Investor are
necessary for such authorization, execution, delivery and consummation. Such
Investor has duly executed and delivered this Agreement and, at the Closing,
such Investor will have duly executed and delivered each of the other
Transaction Documents to be executed and delivered at or prior to Closing. This
Agreement constitutes, and each of the other Transaction Documents to which such
Investor is a party, when executed and delivered by such Investor, will
constitute, a legal, valid and binding obligation of such Investor, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application and as any rights to indemnity
or contribution thereunder may be limited by public policy considerations.
4.2 NO VIOLATION; CONSENTS.
(a) The execution, delivery and performance by such
Investor of each of the Transaction Documents to which it is a party and the
consummation of the Transactions to occur on the Closing Date do not and will
not contravene any Applicable Law. The execution, delivery and performance by
such Investor of each of the Transaction Documents to which it is a party and
the consummation of the Transactions contemplated therein to occur on the
Closing Date (i) will not violate, result in a breach of or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under any Contract to which
such Investor is party or by which such Investor is bound or to which any of its
assets is subject, except for any such violations, breaches or defaults that
would not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the ability of such Investor to perform its
obligations under this Agreement, and (ii) will not conflict with or violate any
provision of the certificate of incorporation or by-laws or other governing
documents of such Investor.
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(b) Except for filings by such Investor, if any, required
by the Commission pursuant to the Exchange Act, which shall be made (to the
extent required) on or prior to the Closing Date, no consent, authorization or
order of, or filing or registration with, any Governmental Authority or other
Person is required to be obtained or made by such Investor for the execution,
delivery and performance of any of the Transaction Documents to which it is a
party or the consummation of any of the transactions contemplated therein,
except where the failure to obtain such consents, authorizations or orders, or
make such filings or registrations, would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the ability of such
Investor to perform its obligations under this Agreement.
4.3 TITLE TO SECURITIES.
Such Investor owns beneficially and of record the shares of Original
Preferred Stock and the aggregate number of Original Warrants set forth opposite
such Investor's name on Schedule A hereto and has good and valid title to such
shares of Original Preferred Stock and such Original Warrants, free and clear of
all Liens (other than those Liens under the Second Amended and Restated
Stockholders' Agreement, dated as of February 1, 2002, by and among the Company
and the other parties thereto, and under applicable securities laws). Such
Investor has the unrestricted power and authority to transfer such shares of
Original Preferred Stock and such Original Warrants to the Company, free and
clear of any and all Liens (other than those Liens under the Second Amended and
Restated Stockholders' Agreement, dated as of February 1, 2002, by and among the
Company and the other parties thereto, and under applicable securities laws).
ARTICLE V
COVENANTS OF THE COMPANY
5.1 OPERATION OF BUSINESS.
The Company covenants and agrees that, except as permitted, required or
specifically contemplated by, or otherwise described in, this Agreement or the
other Transaction Documents or otherwise consented to or approved in writing by
the MidOcean Investor and the Sandler Investors during the period commencing on
the date hereof and ending on the Closing Date:
(a) The Company and each of the Subsidiaries will conduct
their respective operations only according to their ordinary and usual course of
business consistent with past practice and will use their reasonable best
efforts to preserve intact their respective business organization, keep
available the services of their officers and employees and maintain satisfactory
relationships with licensors, suppliers, distributors, clients, joint venture
partners, and others having significant business relationships with them;
(b) Each of the Company and the Subsidiaries shall:
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(i) operate its business in all material respects in
the ordinary course and in material compliance with Applicable Laws;
(ii) not adopt any amendment to its Certificate of
Incorporation or by-laws or comparable organizational documents;
(iii) not split, combine or reclassify any shares of
the Company's Capital Stock;
(iv) not declare or pay any dividend or distribution
(whether in cash, stock or property) in respect of its Capital Stock or increase
the number of shares subject to any stock incentive or option plan with respect
to the Capital Stock of the Company or any Subsidiary;
(v) not take any action, or knowingly omit to take
any action, that would, or that would reasonably be expected to, result in (a)
any of the representations and warranties of the Company set forth in Article
III becoming untrue or (b) any of the conditions to the obligations of the
Investors set forth in Section 7.2 not being satisfied or (c) the triggering of
any of the anti-dilution adjustments under the Certificate of the Powers,
Designations, Preferences and Rights relating to the Original Preferred Stock;
(vi) not issue or sell any shares of its Capital
Stock (other than (a) in connection with the exercise of options or warrants
outstanding on the date hereof or (b) in connection with the Private Placement)
or any of its other securities, or issue any securities convertible into, or
options, warrants or rights to purchase or subscribe to, or enter into any
arrangement or contract with respect to the issuance or sale of, any shares of
its Capital Stock or any of its other securities, or make any other changes in
its capital structure;
(vii) not acquire (by merger, consolidation, or
acquisition of stock or assets) any corporation, partnership or other business
or division thereof;
(viii) not, except to the extent required under
existing employee and director benefit plans, agreements or arrangements as in
effect on the date of this Agreement, increase the compensation or fringe
benefits of any of its directors, officers or employees, except for increases in
salary or wages of employees of the Company or any Subsidiaries who are not
officers of the Company in the ordinary course of business in accordance with
past practice, or grant any severance or termination pay not currently required
to be paid under existing severance plans or enter into any employment,
consulting or severance agreement or arrangement with any present or former
director, officer or other employee of the Company or any of the Subsidiaries,
or establish, adopt, enter into or amend or terminate any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the benefit of
any directors, officers or employees;
15
(ix) not adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring, recapitalization
or other reorganization of the Company or any of the Subsidiaries;
(x) incur any material liability for taxes other
than in the ordinary course of business; or enter into any settlement or closing
agreement with a taxing authority that materially affects or may materially
affect the tax liability of the Company or any of the Subsidiaries; or
(xi) not enter into any agreement or commitment to
do any of the foregoing.
5.2 AGREEMENT TO TAKE NECESSARY AND DESIRABLE ACTIONS.
The Company shall (a) subject to the satisfaction of the conditions set
forth in Section 7.1, execute and deliver the Transaction Documents and such
other documents, certificates, agreements and other writings and (b) take such
other actions, in each case, as may be necessary or reasonably requested by any
Investor in order to consummate or implement the Exchange in accordance with the
terms of this Agreement.
5.3 COMPLIANCE WITH CONDITIONS.
The Company shall use its reasonable best efforts to cause all of the
obligations imposed upon it by this Agreement to be duly complied with, and to
cause all conditions precedent to the obligations of the Company and the
Investors to be satisfied. Upon the terms and subject to the conditions of this
Agreement, the Company will use its reasonable best efforts to take, or cause to
be taken, all action, and do, or cause to be done, all things necessary, proper
or advisable consistent with Applicable Law to consummate and make effective in
the most expeditious manner practicable the Exchange in accordance with the
terms of this Agreement.
5.4 CONSENTS AND APPROVALS.
The Company (a) shall use its reasonable best efforts to obtain all
necessary consents, waivers, authorizations and approvals of all Governmental
Authorities and of all other Persons required in connection with the execution,
delivery and performance of the Transaction Documents or the consummation of the
Exchange and (b) shall diligently assist and cooperate with the Investors in
preparing and filing all documents required to be submitted by the Investors to
any Governmental Authority in connection with the Exchange (which assistance and
cooperation shall include, without limitation, timely furnishing to the
Investors all information concerning the Company and the Subsidiaries that
counsel to any of the Investors determines is required to be included in such
documents or would be helpful in obtaining any such required consent, waiver,
authorization or approval).
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5.5 PRIVATE PLACEMENT.
The Company shall use its reasonable best efforts to consummate the
Private Placement on or before November 1, 2003 on terms and conditions
(including, without limitation, the issuance price of the Common Stock)
satisfactory to the MidOcean Investor, the Sandler Investors and the Company.
The Company shall use $55,000,000 of the net proceeds from the Private Placement
to pay the Cash Proceeds to the Investors in connection with the Exchange.
5.6 WAIVER OF PREEMPTIVE RIGHTS.
Effective immediately prior to the consummation of the transactions
contemplated by this Agreement, each of the Investors, in its capacity as a
holder of shares of Original Preferred Stock, hereby waives any preemptive
rights (and any notice requirement relating thereto) to which it is entitled
under the Certificate of the Powers, Designations, Preferences and Rights
relating to the Original Preferred Stock, in connection with the transactions
contemplated by this Agreement, including, without limitation, the Private
Placement.
ARTICLE VI
COVENANTS OF EACH INVESTOR
6.1 AGREEMENT TO TAKE NECESSARY AND DESIRABLE ACTIONS.
Each Investor shall (a) subject to the satisfaction of the conditions
set forth in Section 7.2, execute and deliver each of the Transaction Documents
to which it is a party and such other documents, certificates, agreements and
other writings and (b) take such other actions as may be reasonably necessary,
desirable or requested by the Company in order to consummate or implement the
Exchange with respect to such Investor in accordance with the terms of this
Agreement.
6.2 COMPLIANCE WITH CONDITIONS; BEST EFFORTS.
Each Investor will use its reasonable best efforts to cause all of the
obligations imposed upon it in this Agreement to be duly complied with, and to
cause all conditions precedent to the obligations of the Company and such
Investor to be satisfied. Upon the terms and subject to the conditions of this
Agreement, each Investor will use its reasonable best 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 in the most expeditious manner practicable the Exchange with respect
to such Investor in accordance with the terms of this Agreement.
6.3 CONSENTS AND APPROVALS.
Each Investor (a) shall use its reasonable best efforts to obtain all
necessary consents, waivers, authorizations and approvals of all Governmental
17
Authorities, and of all other Persons required in connection with the execution,
delivery and performance of this Agreement or the consummation of the Exchange
with respect to such Investor and (b) shall assist and cooperate with the
Company in preparing and filing all documents required to be submitted by the
Company to any Governmental Authority in connection with such Transactions
(which assistance and cooperation shall include, without limitation, timely
furnishing to the Company all information concerning such Investor that counsel
to the Company reasonably determines is required to be included in such
documents or would be helpful in obtaining any such required consent, waiver,
authorization or approval).
ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING
-------------------------------
7.1 CONDITIONS TO THE COMPANY'S OBLIGATIONS.
The obligations of the Company with respect to the Investors required
to be performed on the Closing Date shall be subject to the satisfaction or
waiver in writing, at or prior to the Closing, of the following conditions:
(a) The representations and warranties of each Investor
contained in this Agreement which are qualified by any "materiality", "material
adverse effect" or any similar qualifier shall be true and correct in all
respects and the representations and warranties of such Investor which are not
so qualified shall be true and correct in all material respects, in each case on
and as of the date hereof and on and as of the Closing Date, as if made on and
as of the Closing Date.
(b) Each Investor shall have performed in all material
respects all obligations and agreements, and complied in all material respects
with all covenants contained in this Agreement to be performed and complied with
by such Investor at or prior to the Closing Date.
(c) No provision of any Applicable Law, injunction, order
or decree of any Governmental Authority shall be in effect which has the effect
of making the Transactions illegal or shall otherwise restrain or prohibit the
consummation of the Transactions.
(d) The Company shall have received from each Investor
certificates representing the aggregate number of shares of Original Preferred
Stock and the aggregate number of Original Warrants set forth opposite such
Investor's name on Schedule A hereto concurrently with each Investor's receipt
from the Company of the Notes in an aggregate principal amount and the pro rata
portion of the Cash Proceeds set forth opposite such Investor's name on Schedule
A hereto.
(e) Each Investor shall have executed and delivered the
Term Loan Agreement.
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(f) Each Investor shall have executed and delivered the
Amended Registration Rights Agreement.
(g) Each Investor shall have executed and delivered the
Termination of Stockholders' Agreement.
(h) The Company shall have received the written opinion of
Evercore Partners, Inc., as contemplated by Section 2.2(c).
(i) The Company shall have received letters of resignation
of each of the two directors designated by the Sandler Investors as holders of
Original Preferred Stock and each of the two directors designated by the
MidOcean Investor as a holder of Original Preferred Stock.
7.2 CONDITIONS TO EACH INVESTOR'S OBLIGATIONS. The obligations of
each Investor required to be performed on the Closing Date shall be subject to
the satisfaction or waiver in writing, at or prior to the Closing, of the
following conditions:
(a) The representations and warranties of the Company
contained in this Agreement which are qualified by any "materiality", "material
adverse effect" or any similar qualifier shall be true and correct in all
respects and the representations and warranties of the Company which are not so
qualified shall be true and correct in all material respects, in each case on
and as of the date hereof and on and as of the Closing Date, as if made on and
as of the Closing Date.
(b) The Company shall have performed in all material
respects all of its obligations and agreements, and complied with covenants
contained in this Agreement to be performed and complied with at or prior to the
Closing Date.
(c) No provision of any Applicable Law, injunction, order
or decree of any Governmental Authority shall be in effect which has the effect
of making the Transactions illegal or shall otherwise restrain or prohibit the
consummation of the Transactions.
(d) The Company shall have delivered to such Investor a
certificate executed by it or on its behalf by a duly authorized representative,
dated the Closing Date, to the effect that each of the conditions specified in
paragraph (a) through (c) and (l) of this Section 7.2 has been satisfied.
(e) The Company shall have delivered to such Investor the
certificate executed by the Secretary of the Company, dated the Closing Date, as
contemplated by Section 2.2(b)(vii).
(f) The Company and each of the other parties thereto
(other than the Investors) shall have executed and delivered the Term Loan
Agreement, and such Investor shall have received evidence satisfactory to it in
its sole discretion that the closing conditions under the Term Loan Agreement
have been satisfied and the
19
transactions contemplated thereby shall be consummated simultaneously with the
Exchange.
(g) The Company and each of the parties thereto (other than
the Investors) shall have executed and delivered the Amended Registration Rights
Agreement.
(h) The Company and the each of the parties thereto (other
than the Investors) shall have executed and delivered the Termination of
Stockholders Agreement.
(i) Such Investor shall have received the Opinion, dated as
of the Closing Date, and addressed to such Investor in form and substance
reasonably acceptable to the MidOcean Investor and the Sandler Investors.
(j) Such Investor shall have received a long-form good
standing certificate of the Company and each Subsidiary, dated as of a date as
close as practicable to the Closing Date, issued by the Secretary of State of
the State of Delaware, as contemplated by Section 2.2(b)(viii).
(k) Such Investor shall have received the Notes in an
aggregate principal amount and the pro rata portion of the Cash Proceeds set
forth opposite such Investor's name on Schedule A hereto concurrently with the
Company's receipt of the certificates representing the aggregate number of
shares of Original Preferred Stock and the aggregate number of Original Warrants
set forth opposite such Investor's name on Schedule A hereto.
(l) There shall not have occurred any event, circumstance,
condition, fact, effect or other matter which has had or would reasonably be
expected to have a material adverse effect (x) on the condition (financial or
otherwise), business, properties, assets, liabilities, operations or results of
operations of the Company and the Subsidiaries, taken as a whole or (y) on the
ability of the Company and the Subsidiaries to perform on a timely basis any
material obligation under this Agreement or to consummate the Exchange
contemplated hereby.
(m) The Private Placement shall have been successfully
consummated by the Company on terms and conditions (including, without
limitation, the issuance price of the Common Stock) satisfactory to the MidOcean
Investor and the Sandler Investors.
(n) The Company shall have received the written opinion of
Evercore Partners, Inc., as contemplated by Section 2.2(c).
(o) All other Investors shall have elected to consummate
simultaneously the transactions contemplated by this Agreement and the other
Transaction Documents.
20
(p) The Company's outstanding Senior Subordinated
Debentures due 2005 shall have been repaid in full, and satisfactory evidence
thereof shall have been delivered to the Investors.
(q) The Company shall have delivered to such Investor
evidence of the payment of all costs and expenses of such Investor required to
be reimbursed by the Company pursuant to Section 8.10.
ARTICLE VIII
MISCELLANEOUS
-------------
8.1 SURVIVAL; INDEMNIFICATION.
(a) All representations, warranties and covenants contained
in this Agreement or in any certificate delivered in connection with the Closing
shall survive the Closing for 12 months (except covenants that are required to
be performed after the Closing Date and the representations contained in
Sections 3.1, 3.2 and 3.3, which shall survive indefinitely). Notwithstanding
the foregoing, with respect to claims asserted pursuant to this Section 8.1
before the expiration of the applicable representation or warranty, such claims
shall survive until the date they are finally adjudicated or otherwise resolved.
(b) The Company agrees to indemnify and hold harmless each
Investor, each Investor Affiliate and each of their respective officers,
directors, agents, employees, partners, members, representatives, heirs,
successors and assigns (each an "INDEMNIFIED PERSON") net of tax benefits, from
and against (and to reimburse each indemnified person as the same are incurred)
any and all losses (including, but not limited to, impairment of the value of
the Notes as of the date such loss first becomes known) claims, damages,
liabilities, costs and expenses (collectively, "LOSSES") to which any
indemnified person may become subject or which any indemnified person may incur
based upon, arising out of, or in connection with (i) a breach of any
representation or warranty of this Agreement by the Company, (ii) any breach of
any covenant or agreement contained herein by the Company or (iii) any claim,
litigation, investigation or proceeding brought by or on behalf of any Person
other than the Company relating to the Transactions, and to reimburse each
indemnified person upon demand for any reasonable legal or other reasonable out
of pocket expenses incurred in connection with investigating or defending any of
the foregoing, PROVIDED (a) the Company shall have no obligation to indemnify
any indemnified person for any Loss resulting from any breach of any
representation or warranty hereunder (other than representations and warranties
contained in Sections 3.1, 3.2 or 3.3, which shall be indemnified from the first
dollar of Loss) unless and until the aggregate amount of all such Losses exceeds
$1,000,000 (and then only to the extent of such excess) and (b) the maximum
amount indemnifiable to indemnified persons for breaches of the representations
or warranties contained in this Agreement shall not exceed $25,000,000.
21
(c) If a Person entitled to indemnity hereunder (an
"INDEMNIFIED PARTY") asserts that the Company (the "INDEMNIFYING PARTY") has
become obligated to the Indemnified Party pursuant to Section 8.1(b), or if any
suit, action, investigation, claim or proceeding is begun, made or instituted as
a result of which the Indemnifying Party may become obligated to the Indemnified
Party hereunder, the Indemnified Party shall notify the Indemnifying Party
promptly and shall cooperate with the Indemnifying Party, at the Indemnifying
Party's expense, to the extent reasonably necessary for the resolution of such
claim or in the defense of such suit, action or proceedings, including making
available any information, documents and things in the possession of the
Indemnified Party. Notwithstanding the foregoing notice requirement, the right
to indemnification hereunder shall not be affected by any failure to give, or
delay in giving, notice unless, and only to the extent that, the rights and
remedies of the Indemnifying Party shall have been actually and materially
prejudiced as a result of such failure or delay.
(d) In fulfilling its obligations under this Section 8.1,
after the Indemnifying Party has provided each Indemnified Party with a written
notice of its acceptance of liability under this Section 8.1, as between such
Indemnified Party and the Indemnifying Party, the Indemnifying Party shall have
the right to investigate, defend, settle or otherwise handle, with the aforesaid
cooperation, any claim, suit, action or proceeding brought by a third party in
such manner as the Indemnifying Party may in its sole discretion reasonably deem
appropriate; PROVIDED, that (i) counsel retained by the Indemnifying Party is
reasonably satisfactory to the Indemnified Party and (ii) the Indemnifying Party
will not consent to any settlement or entry of judgment imposing any obligations
on any other party hereto other than financial obligations for which such party
will be indemnified hereunder, unless such party has consented in writing to
such settlement or judgment (which consent may be given or withheld in its sole
discretion) and (iii) the Indemnifying Party will not consent to any settlement
or entry of judgment unless, in connection therewith, the Indemnifying Party
obtains a full and unconditional release of the Indemnified Party from all
liability with respect to such suit, action, investigation claim or proceeding.
Notwithstanding the Indemnifying Party's election to assume the defense or
investigation of such claim, action or proceeding, the Indemnified Party shall
have the right to employ separate counsel and to participate in the defense or
investigation of such claim, action or proceeding, which participation shall be
at the expense of the Indemnifying Party, if (i) on the advice of counsel to the
Indemnified Party use of counsel of the Indemnifying Party's choice could be
expected to give rise to a material conflict of interest, (ii) the Indemnifying
Party shall not have employed counsel reasonably satisfactory to the Indemnified
Party to represent the Indemnified Party within a reasonable time after notice
of the assertion of any such claim or institution of any such action or
proceeding, (iii) if the Indemnifying Party shall authorize the Indemnified
Party to employ separate counsel at the Indemnifying Party's expense or (iv)
such action shall seek relief other than monetary damages against the
Indemnified Party.
(e) The Company and the Investors agree that any payment of
Losses made hereunder will be treated by the parties on their tax returns as an
adjustment to the purchase price of and the Notes. If, notwithstanding such
treatment by the parties,
22
a final determination with respect to the Indemnified Party or any of its
Affiliates causes any such payment not to be treated as an adjustment to
purchase price of and the Notes, then the Indemnifying Party shall indemnify the
Indemnified Party for any taxes payable by the Indemnified Party or any
subsidiary by reason of the receipt of such payment (including any payments
under this 8.1(e)), determined at an assumed marginal tax rate equal to the
highest marginal tax rate then in effect for corporate taxpayers in the relevant
jurisdiction.
(f) The obligations of the Indemnifying Party under this
Section 8.1 shall survive the transfer or redemption of the Notes, or the
closing or termination of any Transaction Document. The agreements contained in
this Section 8.1 shall be in addition to any other rights of the Indemnified
Party against the Indemnifying Party or others. The Indemnifying Party consents
to personal jurisdiction, service and venue in any court in the State of New
York.
(g) All obligations of the Investors hereunder shall be
several and not joint. If any Investor fails to exchange shares of Original
Preferred Stock or Original Warrants for the Notes and its pro rata portion of
the Cash Proceeds or otherwise defaults on any liability or obligation under
this Agreement, no other Investor will have any obligation to purchase any such
Notes or take or refrain from taking any action on account of such defaulting
Investor.
8.2 NOTICES.
All notices, demands, requests, consents, approvals or other
communications (collectively, "NOTICES") required or permitted to be given
hereunder or which are given with respect to this Agreement shall be in writing
and shall be personally served, delivered by reputable air courier service with
charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
addressed as set forth below, or to such other address as such party shall have
specified most recently by written notice. Notice shall be deemed given on the
date of service or transmission if personally served or transmitted by telegram,
telex or facsimile. Notice otherwise sent as provided herein shall be deemed
given on the next Business Day following delivery of such notice to a reputable
air courier service. Notices shall be delivered as follows:
(a) If to the Company:
Infocrossing, Inc.
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇,
Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
23
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to any Investor, to such Investor at its address as
set forth on Schedule A:
with a copy to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. Director, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
8.3 GOVERNING LAW.
This Agreement shall be governed by, interpreted under, and construed
in accordance with the laws of the State of New York, regardless of the laws
that might otherwise govern under applicable principles of conflicts of law
thereof.
8.4 TERMINATION.
(a) This Agreement may be terminated as between the Company
and any Investor (i) at any time prior to the Closing Date by mutual written
agreement of the Company and such Investor, (ii) if the Closing shall not have
occurred on or prior to November 1, 2003, by either the Company or such
Investor, at any time after November 1, 2003, provided that the right to
terminate this Agreement under this Section 8.4(a)(ii) shall not be available to
any party whose failure to fulfill any obligation under this Agreement was the
cause of or resulted in the failure of the Closing to occur on or before such
date, (iii) if any Governmental Authority shall have issued a nonappealable
final order, decree or ruling or taken any other action having the effect of
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated
24
by this Agreement, by either the Company or such Investor, (iv) if either the
Company or such Investor shall have breached any of its material obligations
under this Agreement, by the non-breaching party, or (v) if an event described
in Section 7.2(l) shall have occurred, by such Investor. Any party desiring to
terminate this Agreement pursuant to clauses 8.4(a)(ii), (iii), (iv) or (v)
shall promptly give notice of such termination to the other parties.
(b) If this Agreement is terminated as between the Company
and any Investor, as permitted by Section 8.4(a), such termination shall be
without liability of any party (or any stockholder, director, officer, partner,
employee, agent, consultant or representative of such party) to any other party
to this Agreement; PROVIDED, that if such termination shall result from the
willful (a) failure of any party to fulfill a condition to the performance of
the obligations of the other parties, (b) failure to perform a covenant of this
Agreement or (c) breach by any party hereto of any representation or warranty
contained herein, such failing or breaching party shall be fully liable for any
and all losses incurred or suffered by the other parties as a result of such
failure or breach. The provisions of Sections 1.1, 8.2, 8.3, this Section 8.4,
Sections 8.5, 8.8, 8.10, 8.11, 8.12, 8.13, 8.14, 8.16, 8.18 and 8.19 and shall
survive any termination hereof pursuant to Section 8.4(a).
8.5 ENTIRE AGREEMENT.
As between the Company and the Investors, this Agreement and the
Transaction Documents (including all agreements entered into pursuant hereto and
thereto and all certificates and instruments delivered pursuant hereto and
thereto) constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede all prior and contemporaneous agreements,
representations, understandings, negotiations and discussions between the
parties, whether oral or written, with respect to the subject matter hereof.
8.6 MODIFICATIONS AND AMENDMENTS.
No amendment, modification or termination of this Agreement as between
the Company and the Investors shall be binding on the Company and all Investors
unless executed in writing by the Company, the MidOcean Investor and the Sandler
Investors, PROVIDED that no such action which adversely affects the rights of
any Investor in a manner that does not adversely affect all other Investors
equally may be made without such Investor's written consent.
8.7 WAIVERS AND EXTENSIONS.
Any party to this Agreement may waive any condition, right, breach or
default that such party has the right to waive, provided that such waiver will
not be effective against the waiving party unless it is in writing, is signed by
such party, and specifically refers to this Agreement; PROVIDED, HOWEVER, that
the MidOcean Investor and the Sandler Investors may waive any condition, right,
breach or default on behalf of all Investors unless such waiver adversely affect
the rights of any Investor in a manner that
25
does not adversely affect all other Investors equally in which case such
Investor must consent to such waiver. Waivers may be made in advance or after
the right waived has arisen or the breach or default waived has occurred. Any
waiver may be conditional. No waiver of any breach of any agreement or provision
herein contained shall be deemed a waiver of any preceding or succeeding breach
thereof nor of any other agreement or provision herein contained. No waiver or
extension of time for performance of any obligations or acts shall be deemed a
waiver or extension of the time for performance of any other obligations or
acts.
8.8 TITLES AND HEADINGS.
Titles and headings of sections of this Agreement are for convenience
only and shall not affect the construction of any provision of this Agreement.
8.9 EXHIBITS AND SCHEDULES.
Each of the Exhibits and schedules referred to herein and attached
hereto is an integral part of this Agreement and is incorporated herein by
reference.
8.10 EXPENSES.
All costs and expenses incurred in connection with this Agreement shall
be paid by the party incurring such cost or expense; PROVIDED, HOWEVER, that
upon the Closing, the Company shall reimburse the Investors and their Affiliates
or pay, upon presentation of reasonably satisfactory documentation, the
reasonable out-of-pockets costs, fees and expenses incurred by the Investors and
their Affiliates (including, without limitation, the fees and expenses of no
more than one law firm for each of the MidOcean Investor and its Affiliates, on
the one hand, and the Sandler Investors and their Affiliates, on the other hand,
and the fees and expenses of tax and accounting consultants and advisors) in
connection with the due diligence, examination, review, documentation, and/or
the closing of the Exchange and the transactions contemplated by this Agreement.
8.11 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS.
All public announcements or disclosures relating to the Exchange or
this Agreement shall be made only if mutually agreed upon by the Company and the
Investors, except to the extent the Company or any Investor determines, in good
faith, after consulting with counsel, that such disclosure is necessary or
appropriate under Applicable Law, PROVIDED that (a) any such required disclosure
shall only be made, to the extent consistent with Applicable Law and (b) no such
announcement or disclosure (except as required by Applicable Law) shall identify
any Investor without such Investor's prior consent.
8.12 ASSIGNMENT; NO THIRD PARTY BENEFICIARIES.
This Agreement and the rights, duties and obligations hereunder may not
be assigned or delegated by the Company without the prior written consent of the
26
MidOcean Investor and the Sandler Investors, and may not be assigned or
delegated by any Investor without the Company's prior written consent (not to be
unreasonably withheld) except that any Investor may assign any or all of its
rights and obligations under this Agreement to any one or more of its Permitted
Transferees that expressly assumes the obligations of such Investor hereunder in
a writing in form and substance reasonably satisfactory to the Company. Any
assignment or delegation of rights, duties or obligations hereunder made by the
Company without the prior written consent of the Investor, shall be void and of
no effect. This Agreement and the provisions hereof shall be binding upon and
shall inure to the benefit of each of the parties and their respective
successors and permitted assigns. This Agreement is not intended to confer any
rights or benefits on any Persons other than the parties hereto, except as
expressly set forth in Section 8.1, this Section 8.12 or Section 8.18.
8.13 SEVERABILITY.
This Agreement shall be deemed severable, and the invalidity or
unenforceability of any term or provision hereof shall not affect the validity
or enforceability of this Agreement or of any other term or provision hereof.
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.
8.14 COUNTERPARTS.
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and the
same instrument.
8.15 FURTHER ASSURANCES.
As between the Company and the Investors, each party hereto, upon the
request of any other party hereto, shall do all such further acts and execute,
acknowledge and deliver all such further instruments and documents as may be
necessary or desirable to carry out the transactions contemplated by this
Agreement, including, in the case of the Company, such acts, instruments and
documents as may be necessary or desirable to convey and transfer to the
Investors to be purchased by them hereunder.
8.16 REMEDIES CUMULATIVE.
The remedies provided herein shall be cumulative and shall not preclude
the assertion by any party hereto of any other rights or the seeking of any
remedies against the other party hereto.
8.17 SPECIFIC PERFORMANCE.
The parties hereto agree that the remedy at law for any breach of this
Agreement may be inadequate, and that as between the Company and the Investors,
any
27
party by whom this Agreement is enforceable shall be entitled to specific
performance in addition to any other appropriate relief or remedy. Such party
may, in its sole discretion, apply to a court of competent jurisdiction for
specific performance or injunctive or such other relief as such court may deem
just and proper in order to enforce this Agreement as between the Company and
the Investors, or prevent any violation hereof, and, to the extent permitted by
Applicable Law as between the Company and the Investors, each party waives any
objection to the imposition of such relief.
8.18 NO INVESTOR AFFILIATE LIABILITY.
No Investor Affiliate shall have any liability or obligation of any
nature whatsoever in connection with or under this Agreement or the transactions
contemplated hereby, and the Company hereby waives and releases all claims of
any such liability and obligation, it being understood that no such Person or
entity (other than the Investors) shall be liable for or in respect of this
Agreement with the transactions contemplated hereby.
8.19 CONFIDENTIALITY.
(a) Each of the parties hereto agrees that it will not
(i) use, disseminate, or in any way disclose any Confidential Information
disclosed to it by the other party hereto, to any person, firm or business,
except to the extent necessary (x) in the case of any Investor, to manage its
investment (including any sale of all or any portion thereof), to discharge its
fiduciary or regulatory obligations or for any other purpose which the Company
may hereafter authorize in writing and (y) in the case of the Company, in order
to discharge any fiduciary or regulatory obligation or for any other purpose
which the MidOcean Investor and the Sandler Investors may hereafter authorize in
writing, or (ii) use any Confidential Information of the other party for its own
benefit or the benefit of any third party. Each of the parties, agrees that such
it shall treat all Confidential Information received from the other party, with
the same degree of care as the receiving party accords to its own Confidential
Information, but in no case less than reasonable care.
(b) Notwithstanding anything to the contrary contained in
the immediately preceding paragraph (a) the disclosure by any party hereto of
any Confidential Information of the other party (i) to any Affiliate of such
party, or to any officer, director, employee, agent, representative, attorney or
other advisor of such party or any Affiliate of such party, who agrees to be
bound by the provisions of this Section 8.19, (ii) to any foreign or domestic
governmental or quasi-governmental regulatory authority, including, without
limitation, the Federal Reserve Bank of New York or any stock exchange or other
self-regulatory organization having jurisdiction over such party, (iii) in
response to an order by a court or other Governmental Authority, (iv) which is
otherwise required by Applicable Law or regulation (including any rule or
regulation of any stock exchange or automated quotation system on which such
party is listed or traded) or (v) which is necessary or advisable to establish
the rights of either party under this Agreement, shall not be considered to be a
breach of this Agreement by the party making such disclosure; PROVIDED, HOWEVER,
that the party required to make
28
such disclosure pursuant to clause (iii), (iv) or (v) hereof shall provide
written notice thereof to the party which owns such Confidential Information to
enable such party to seek a protective order or otherwise prevent such
disclosure of its Confidential Information.
(c) Notwithstanding anything to the contrary in this
Section 8.19, any party to this Agreement (and each employee, representative, or
other agent of any party to this Agreement) may disclose to any and all Persons,
without limitation of any kind, the tax treatment and tax structure of the
transactions contemplated by this Agreement, and all materials of any kind
(including opinions or other tax analyses) related to such tax treatment and tax
structure; PROVIDED that this sentence shall not permit any Person to disclose
the name of, or other information that would identify, any party to such
transactions or to disclose confidential commercial information regarding such
transactions.
8.20 LEGAL REPRESENTATION.
It is acknowledged by each of the Investors that the Sandler Investors
have retained ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP to act as their
counsel in connection with the transactions contemplated by the Transaction
Documents and that ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP has not acted as
counsel for any of the other Investors in connection with the transaction
contemplated by the Transaction Documents and that none of such other Investors
has the status of a client of ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ for
conflict of interest or any other purposes as a result thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
INFOCROSSING, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chairman and Chief Executive
Officer
MIDOCEAN CAPITAL INVESTORS, L.P.
By: MidOcean Capital Partners, L.P.,
its General Partner
By: Existing Fund GP, Ltd.,
its General Partner
By: /s/ ▇▇▇▇▇▇ Spring
------------------------------
Name:
Title:
SANDLER CAPITAL PARTNERS V, L.P.
By: Sandler Investment Partners, L.P.,
General Partner
By: Sandler Capital Management,
General Partner
By: MJDM Corp., a General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
30
SANDLER CAPITAL PARTNERS V FTE, L.P.
By: Sandler Investment Partners, L.P.,
General Partner
By: Sandler Capital Management,
General Partner
By: MJDM Corp., a General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
SANDLER CAPITAL PARTNERS V GERMANY, L.P.
By: Sandler Investment Partners, L.P.,
General Partner
By: Sandler Capital Management,
General Partner
By: MJDM Corp., a General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
31
SANDLER TECHNOLOGY PARTNERS SUBSIDIARY, LLC
By: Sandler Technology Partners, L.P.,
Manager
By: Sandler Investment Partners, L.P.,
General Partner
By: Sandler Capital Management,
General Partner
By: MJDM Corp., a General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
SANDLER CO-INVESTMENT PARTNERS, L.P.
By: Sandler Capital Management,
General Partner
By: MJDM Corp., a General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
PRICE FAMILY LIMITED PARTNERS
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: General Partner
SCHEDULE A
----------
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NAME ADDRESS ORIGINAL PREFERRED AGGREGATE PRINCIPAL CASH
STOCK ORIGINAL WARRANTS AMOUNT OF NOTES PROCEEDS
------------------------------------------------------------------------------------------------------------------------------------
MidOcean Capital ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 78,688.5 1,265,963.0 $12,520,875.00 $27,545,925.00
Investors, L.P. ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax:
Attn:
------------------------------------------------------------------------------------------------------------------------------------
Sandler Capital Partners ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 50,892.0 818,763.0 $8,097,892.00 $17,815,362.00
V, L.P. ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn:
------------------------------------------------------------------------------------------------------------------------------------
Sandler Capital Partners V ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 18,821.0 302,799.0 $2,994,801.00 $6,588,563.00
FTE, L.P. ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn:
------------------------------------------------------------------------------------------------------------------------------------
Sandler Capital Partners V ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 1,893.5 30,464.3 $301,308.00 $662,879.00
Germany, L.P. ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn:
------------------------------------------------------------------------------------------------------------------------------------
Sandler Technology ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 5,245.9 84,397.5 $834,724.00 $1,836,392.00
Partners Subsidiary, LLC ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn:
------------------------------------------------------------------------------------------------------------------------------------
Sandler Co- Investment ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ 1,311.5 21,099.4 $208,675.00 $459,084.00
Partners L.P. ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn:
------------------------------------------------------------------------------------------------------------------------------------
Price Family Limited 262.3 4,219.9 $41,725.00 $91,795.00
Partners
------------------------------------------------------------------------------------------------------------------------------------
Total: 157,114.7 2,527,706.1 $25,000,000.00 $55,000,000.00
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