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Exhibit 10.7
CONVERSION AGREEMENT AND
AMENDMENT OF PURCHASE AGREEMENT
THIS CONVERSION AGREEMENT AND AMENDMENT OF PURCHASE AGREEMENT (the
"Agreement"), dated as of December 31, 1998, is made by and among CAMINUS ENERGY
VENTURES LLC, a Delaware limited liability company ("CEV"), ZAK ASSOCIATES,
INC., a Delaware corporation ("ZN Corp"), ZAI*NET SOFTWARE, L.P., a Delaware
limited partnership ("ZN LP"), ▇▇▇▇▇ ▇▇▇▇▇▇▇, an individual ("▇▇▇▇▇▇▇"), and
ROONEY SOFTWARE, L.L.C., a Delaware limited liability company ("Rooney")
(collectively, ZN Corp, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ are referred to as the "▇▇▇▇▇▇▇
Parties").
R E C I T A L S
WHEREAS, the parties (other than Rooney) are parties to a Purchase
Agreement (the "Purchase Agreement") dated as of May 12, 1998 pursuant to which,
among other things, CEV purchased the one percent (1%) general partnership
interest and seventy percent (70%) of the limited partnership interests in ZN LP
from ZN Corp, with ZN Corp retaining the remaining twenty-nine percent (29%)
limited partnership interest therein;
WHEREAS, ZN Corp subsequently transferred its entire remaining limited
partnership interest in ZN LP to Rooney, and Rooney currently holds all right,
title and interest therein;
WHEREAS, the ▇▇▇▇▇▇▇ Parties and CEV desire that Rooney exchange such
remaining limited partnership interest in ZN LP for a newly issued Series A
Membership Interest in CEV, for consideration and on the terms set forth in
Section 1(a) below and as reflected on Appendix A attached hereto (which
appendix reflects all of the Membership Interests in CEV issued and outstanding
and subject to outstanding options as of the date hereof, after giving effect to
the exchange contemplated by this Agreement);
WHEREAS, the parties also wish to amend, and confirm their agreement with
respect to, certain provisions of the Purchase Agreement;
NOW, THEREFORE, in order to implement the foregoing and in consideration
of the mutual representations, warranties, covenants and agreements contained
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:
1. Exchange of Securities.
(a) Securities Held by Rooney. Upon the terms and subject to
the conditions of this Agreement, the parties agree that Rooney shall surrender
and exchange its entire remaining partnership interest in ZN LP, free and clear
of any and all liens, claims and
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encumbrances (other than those created by the Amended and Restated Limited
Partnership Agreement of ZN LP dated as of May 12, 1998, as further amended to
the date hereof (the "ZN LP Partnership Agreement")), to CEV in consideration of
the issuance by CEV to Rooney of 21,579,728 notional shares of the Series A
Membership Interests in CEV, as indicated on the attached Appendix A. The
parties agree that the foregoing exchange shall be deemed to occur for all
purposes on the date of this Agreement, and that the capital contribution that
Rooney shall be deemed to have made to CEV in respect of such exchange is equal
to $10,339,350 (i.e., 21% times $49,235,000). For purposes of determining the
exercise price of the GFI Option to purchase 10% of CEV, pursuant to Section 5.3
of Appendix B to the Limited Liability Company Agreement of CEV, the parties
agree that the exercise price with respect to the GFI Option shall be increased
by an amount equal to $1,033,935 (i.e., 10% of $10,339,350). CEV acknowledges
that Rooney intends to divide the foregoing Series A Membership Interest among
Rooney's existing equity holders (including option holders, as applicable) as
set forth on the attached Appendix B; CEV agrees to issue notional shares of its
Series A Membership Interest to such persons (in an aggregate amount equal to
21,579,728 notional shares of Series A Membership Interest) in exchange for the
Series A Membership Interest being issued to Rooney pursuant to this Agreement,
subject to such persons executing a copy of the LLC Agreement or a joinder
thereto. At such time, such persons shall be admitted as Members of CEV. The
parties also acknowledge that subsequent to the issuance to Rooney of the Series
A Membership Interest contemplated by this Agreement, CEV expects to purchase
from SS&C Technologies, Inc. ("SS&C") SS&C's ownership interest in CEV.
(b) Conversion of ZN LP Options. The parties acknowledge that
ZN LP previously adopted a 1998 Stock Incentive Plan (the "ZN Option Plan"),
which provides for the issuance of options to acquire partnership interests in
ZN LP (the "Options"). Pursuant to Section 4.3 of the ZN Option Plan, as a
result of the exchange described in paragraph (a) above, all previously issued
Options automatically convert into options to acquire Membership Interests of
CEV. Consequently, the parties acknowledge that, as a result of the transactions
contemplated by this Agreement, (i) the ZN Option Plan shall become a plan to
acquire up to 4,960,857 notional shares of the Series B Membership Interests of
CEV and that (ii) all previously issued Options shall be deemed converted into
options to acquire notional shares of the Series B Membership Interests of CEV,
on the same basis that the Rooney interest in ZN LP is being converted into a
Series A Membership Interest in CEV. Except for such conversion, the parties
agree that the terms governing the ZN Option Plan and the option agreements
evidencing option grants thereunder shall remain in full force and effect in
accordance with their terms. Further, the parties agree to cause the ZN Option
Plan, promptly following the date hereof, to be expanded by increasing the
aggregate equity available thereunder to a total of 7,342,068 notional shares of
the Series B Membership Interests of CEV subject to issuance upon exercise of
options granted pursuant to the terms and conditions set forth in the ZN Option
Plan.
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2. Representations and Warranties of the Company. CEV hereby
represents and warrants to the ▇▇▇▇▇▇▇ Parties as follows:
(a) Organization. CEV is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware, having full power and authority to own its properties and to carry on
its business as conducted.
(b) Authority. CEV has the requisite power and authority to
deliver this Agreement, perform its obligations herein, and consummate the
transactions contemplated hereby. CEV has duly executed and delivered this
Agreement and has obtained the necessary authorization to execute and deliver
this Agreement and to perform its obligations herein and consummate the
transactions contemplated hereby. This Agreement is a valid, legal and binding
obligation of CEV enforceable against CEV in accordance with its terms, except
to the extent that enforceability may be limited by applicable bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and subject to general principles of equity (regardless of whether
such enforcement is considered in a proceeding at law or in equity).
(c) Membership Interests Duly Authorized. The Series A
Membership Interest to be issued to Rooney pursuant to this Agreement, when
issued and delivered in accordance with the terms of this Agreement, will be
duly authorized, validly issued, fully paid and non-assessable. The Series B
Membership Interests to be issued upon exercise of options granted under the ZN
Option Plan (converted as provided in Section 1(b) above), when issued and
delivered in accordance with the terms of such plan and the applicable option
agreements, will be duly authorized, validly issued, fully paid and
non-assessable.
(d) Capitalization. Immediately after the consummation of the
transactions contemplated by this Agreement, the Membership Interests of CEV
will be owned as set forth on Appendix A hereto.
3. Representations and Warranties of The ▇▇▇▇▇▇▇ Parties. The ▇▇▇▇▇▇▇
Parties, jointly and severally, hereby represent and warrant to CEV as follows:
(a) Ownership of ZN LP Interest; Due Authority. Rooney owns all
of the right, title and interest in and to the remaining twenty-nine percent
(29%) limited partnership interest in ZN LP referred to in the recitals to this
Agreement, free and clear of any and all liens, claims and encumbrances
whatsoever (other than those created by the ZN LP Partnership Agreement). Except
for that interest, none of the ▇▇▇▇▇▇▇ Parties has any interest in the equity or
capital of ZN LP. None of the ▇▇▇▇▇▇▇ Parties has granted any option or other
right or interest in the limited partnership interest in ZN LP held by Rooney.
ZN Corp is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, having full power and authority to own
its properties and to carry on its business as conducted. Rooney is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware, having full power and authority to own its
properties and to carry on its business as conducted. The ▇▇▇▇▇▇▇ Parties have
the requisite power and authority to deliver this Agreement, perform their
obligations herein, and consummate the transactions contemplated hereby. The
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▇▇▇▇▇▇▇ Parties have duly executed and delivered this Agreement and have
obtained the necessary authorization to execute and deliver this Agreement and
to perform their obligations herein and consummate the transactions contemplated
hereby. This Agreement is a valid, legal and binding obligation of the ▇▇▇▇▇▇▇
Parties enforceable against them in accordance with its terms, except to the
extent that enforceability may be limited by applicable bankruptcy, insolvency
or similar laws affecting the enforcement of creditors' rights generally and
subject to general principles of equity (regardless of whether such enforcement
is considered in a proceeding at law or in equity).
(b) No Registration. The ▇▇▇▇▇▇▇ Parties understand that the
Membership Interest being acquired by Rooney has not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), in reliance on an
exemption therefrom for transactions not involving any public offering, that
such Membership Interest has not been approved or disapproved by the Securities
and Exchange Commission ("SEC") or by any other federal or state agency, and
that no such agency has passed on the accuracy or adequacy of disclosures made
to the ▇▇▇▇▇▇▇ Parties by CEV.
(c) Other Information. The ▇▇▇▇▇▇▇ Parties have had an
opportunity to ask questions of and receive answers from CEV, or a person or
persons acting on its behalf, concerning the terms and conditions of the
investment in CEV, which questions have been answered to the full satisfaction
of the ▇▇▇▇▇▇▇ Parties, and have also had an opportunity to obtain any
additional information which CEV possesses or can reasonably acquire without
undue expense that is necessary to verify the accuracy of the information
furnished to the ▇▇▇▇▇▇▇ Parties.
(d) Limitations on Disposition and Resale. The ▇▇▇▇▇▇▇ Parties
understand that the Membership Interest being acquired by Rooney hereunder
cannot be (i) disposed of unless such disposition is in accordance with the
Limited Liability Company Agreement of CEV dated as of May 12, 1998 (including
Appendix B attached thereto), as amended to the date hereof (the "LLC
Agreement"), or (ii) resold unless registered by the Company pursuant to the
Securities Act and any applicable state securities laws, unless an exemption
therefrom is available, and, accordingly, it may not be possible for the ▇▇▇▇▇▇▇
Parties to liquidate their investment in CEV; and the ▇▇▇▇▇▇▇ Parties agree not
to dispose of such Membership Interest unless such disposition is in accordance
with the LLC Agreement and the Membership Interest has been so registered or an
exemption from the requirement of registration is available under the Securities
Act. Further, by their execution and delivery of this Agreement, the ▇▇▇▇▇▇▇
Parties agree that Rooney shall be deemed a Member and to have executed and
delivered the LLC Agreement, and shall thereby be a party thereto and subject
thereto for all purposes.
4. Amendments/Confirmations Relating to Purchase Agreement.
(a) Earn-Out Payments. The parties agree that the minimum First
Audit Cycle Revenues and the minimum Second Audit Cycle Revenues specified in
Section 2.5 of the Purchase Agreement are each deemed satisfied, so that the
full amount of the additional payments referred to in Section 2.5 shall be
payable. The obligation to make those payments is irrevocable and not subject to
further audit or review. The additional payments
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called for by Sections 2.5.1 and 2.5.2 shall be payable on April 15, 1999 and
April 15, 2000, respectively. Further, the parties hereby waive the application
of the offset provision included in Section 6.5 of the Purchase Agreement to the
additional payments due under Section 2.5; however, the balance of Section 6.5
(arbitration of disputes with respect to indemnification claims) shall remain in
full force and effect.
(b) Working Capital Adjustment. The parties agree that, in full
settlement of the Working Capital adjustment contemplated by Section 2.4.2 of
the Purchase Agreement, the ▇▇▇▇▇▇▇ Parties shall pay to CEV the amount of
$121,492 (representing 29% of the $400,000 note issued to CEV by ZN LP plus
interest thereon to the date hereof, such note having been issued in order to
fund a portion of the estimated Working Capital adjustment as of the closing of
the Purchase Agreement). Such payment shall be made promptly following the date
of this Agreement (but in no event later than February 12, 1999). The foregoing
note shall be cancelled at the time that the exchange contemplated by Section
1(a) is completed.
(c) Attorney's Fees. In the event of any litigation or other
legal proceeding involving the interpretation of this Agreement or enforcement
of the rights or obligations of the parties hereto, the prevailing party or
parties shall be entitled to recover reasonable attorney's fees and costs as
determined by the court or other adjudicator.
5. Additional Documents. Each party agrees to execute and deliver any
and all further documents and writings, and to perform such other actions, as
may be or become reasonably necessary or expedient to effect and carry out the
terms of this Agreement.
6. Governing Law. This Agreement is governed by and shall be
construed in accordance with the law of the State of New York, excluding any
conflict-of-laws rule or principle that might refer the governance or
construction of this Agreement to the law of another jurisdiction. If any
provision of this Agreement or the application thereof to any person or
circumstance is held invalid or unenforceable to any extent, the remainder of
this Agreement and the application of that provision to other persons or
circumstances is not affected thereby, and that provision shall be enforced to
the greater extent permitted by law.
7. Number, Gender and Connection of Persons. Throughout this
Agreement, as the context may require, the masculine gender includes the
feminine and the neuter gender includes the masculine and the feminine; the
singular tense and number includes the plural, and the plural tense and number
includes the singular; the past tense includes the present, and the present
tense includes the past; references to parties, sections, paragraphs and
exhibits mean the parties, sections, paragraphs and exhibits of and to this
Agreement; and periods of days, weeks or month mean calendar days, weeks or
months.
8. Assignment. The ▇▇▇▇▇▇▇ Parties shall not have either the right or
the power to assign or delegate any provision of this Agreement except with the
prior written consent of the Management Committee of CEV. Except as provided in
the preceding sentence, this Agreement shall be binding upon and shall inure to
the benefit of the parties' respective successors, assigns, executors and
administrators.
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9. Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original and both of which shall
constitute one and the same document.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the date first set above.
CEV
CAMINUS ENERGY VENTURES LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Its: Chair
THE ▇▇▇▇▇▇▇ PARTIES
ZAK ASSOCIATES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: President
ROONEY SOFTWARE, L.L.C.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: President
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇
▇▇ LP
ZAI*NET SOFTWARE, L.P.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Its: Chair
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APPENDIX A
Ownership of CEV
Series A Percentage Series B Percentage
"Shares" Of Series A "Shares" Of Series B
GFI Energy Ventures 1,682,198 1.64%
Rooney Software, LLC 21,579,728 21.00%
OCM Caminus Investment 37,176,571 36.18%
RIT Capital Partners PLC 6,728,791 6.55%
Durham Cam Inc. 1,682,198 1.64%
▇▇▇▇▇ ▇▇▇▇▇ 6,055,912 5.89% 3,030,000 20.44%
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 4,037,275 3.93% 2,020,000 13.63%
SS&C Technologies, Inc. 18,504,176 18.01% 8,410,000 56.74%
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ 672,879 0.65%
▇▇▇▇ ▇▇▇▇▇ 672,879 0.65% 1,363,156 9.20%
▇▇▇▇ ▇▇▇▇▇▇ 3,364,396 3.27%
▇▇▇▇▇▇ ▇▇▇ 525,629 0.51%
▇▇▇▇ ▇▇▇▇▇ 60,650 0.06%
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 17,328 0.02%
Total 102,760,610 100.00% 14,823,156 100.00%
Series C Percentage Fully Diluted Fully Diluted
"Shares" Of Series C "Shares" Percentage
GFI Energy Ventures 13,064,863 100.00% 14,747,061 11.29%
Rooney Software, LLC 21,579,728 16.52%
OCM Caminus Investment 37,176,571 28.46%
RIT Capital Partners PLC 6,728,791 5.15%
Durham Cam Inc. 1,682,198 1.29%
▇▇▇▇▇ ▇▇▇▇▇ 9,085,912 6.95%
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 6,057,275 4.64%
SS&C Technologies, Inc. 26,914,176 20.60%
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ 672,879 0.52%
▇▇▇▇ ▇▇▇▇▇ 2,036,035 1.56%
▇▇▇▇ ▇▇▇▇▇▇ 3,364,396 2.58%
▇▇▇▇▇▇ ▇▇▇ 525,629 0.40%
▇▇▇▇ ▇▇▇▇▇ 60,650 0.05%
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 17,328 0.01%
Total 13,064,863 100.00% 130,648,629 100.00%
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APPENDIX B
Allocation of Rooney Shares
Name Number of Shares Percentage of Shares
---- ---------------- --------------------
ZAK Associates, Inc. 12,555,478 58.1818%
▇▇▇▇▇ ▇▇▇▇▇ 6,277,739 29.0909%
Pai-▇▇ ▇▇▇▇▇ 1,046,290 4.8485%
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 313,887 1.4545%
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 313,887 1.4545%
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 313,887 1.4545%
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 78,472 0.3636%
▇▇▇▇▇▇ Kong 209,258 0.9697%
▇▇▇▇▇▇▇ ▇▇▇▇ 130,786 0.6061%
Minex ▇▇▇▇▇ 130,786 0.6061%
▇▇▇▇▇▇ ▇▇▇▇ 78,472 0.3636%
▇▇▇▇▇▇ ▇▇▇▇ 130,786 0.6061%
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TOTAL 21,579,728 100.0000%