EXHIBIT 10.17
SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
by and among
PRIMIS, INC.,
J. ▇▇▇▇▇ ▇▇▇▇▇▇▇,
WINDCREST PARTNERS,
CASSELBERRY PARTNERS, L.P.,
JG FUNDING, LLC,
RICHLAND VENTURES II, L.P.,
SOUTH ATLANTIC PRIVATE EQUITY FUND IV, LIMITED PARTNERSHIP,
SOUTH ATLANTIC PRIVATE EQUITY FUND IV (Q.P.), LIMITED PARTNERSHIP,
▇▇▇▇▇ GLOBAL INVESTMENTS, LTD.,
REMINGTON INVESTMENTS STRATEGIES, L.P.,
▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, III,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.,
and
▇▇▇▇▇▇▇ ▇. BRITAIN
October 7, 1999
TABLE OF CONTENTS
PAGE
1. Sale and Issuance of Common Stock........................................................................1
2. Closing..................................................................................................2
3. Closing Items............................................................................................2
4. Further Assurances.......................................................................................2
5. Representations and Warranties of Company................................................................2
A. Corporate Standing..............................................................................2
B. Authorization...................................................................................3
C. Capitalization..................................................................................3
D. Validly Issued Shares...........................................................................4
E. No Conflict.....................................................................................4
F. Contracts and Other Commitments; Compliance.....................................................4
G. Subsidiaries....................................................................................4
H. Consents........................................................................................5
I. Financial Statements............................................................................5
J. Indebtedness for Borrowed Money; No Undisclosed Liabilities.....................................5
K. Title to Property and Assets; Leases............................................................5
L. Legal Proceedings...............................................................................5
M. Environmental Matters...........................................................................6
N. Licenses and Permits; Compliance with Laws......................................................6
O. Employee Benefit Plans..........................................................................6
P. Labor Relations.................................................................................6
Q. Insurance.......................................................................................7
R. Tax Matters.....................................................................................7
S. Patents and Trademarks..........................................................................7
T. Related-Party Transactions......................................................................8
U. Software Products...............................................................................8
V. Brokers' and Finders' Fees......................................................................9
W. Material Facts..................................................................................9
6. Representations and Warranties of Investors..............................................................9
A. Binding Agreement...............................................................................9
B. Investment Representations......................................................................9
i
C. Accredited Investor; Residence..................................................................9
D. Receipt of Information; Restricted Securities...................................................9
E. Investment Experience...........................................................................9
F. Legends........................................................................................10
7. Survival of Representations and Warranties..............................................................10
8. Indemnification.........................................................................................10
A. Indemnification by Company.....................................................................10
B. Indemnification by Investors...................................................................11
9. Company Covenants.......................................................................................11
A. Use of Proceeds................................................................................11
B. Financial Reporting............................................................................11
C. Termination of Covenants.......................................................................12
D. Reservation of Shares..........................................................................12
10. Public Statements.......................................................................................12
11. Notices.................................................................................................12
12. Parties in Interest; Assignment.........................................................................14
13. Construction; Governing Law.............................................................................14
14. Entire Agreement; Amendment and Waiver..................................................................15
15. Severability............................................................................................15
16. Counterparts............................................................................................15
17. Attorneys' Fees.........................................................................................15
18. Rights of Investors.....................................................................................15
19. Exculpation Among Investors.............................................................................15
ii
Exhibits and Schedules
Schedule 1 Investors' Investment at Closing
Exhibit A Articles of Amendment
Exhibit B Subscription Agreement
iii
SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE
AGREEMENT ("Agreement") is made and entered into as of the 7th day of October,
1999, by and among [i] PRIMIS, INC., a Georgia corporation ("Company"), and [ii]
CASSELBERRY PARTNERS, L.P., a Kentucky limited partnership, JG FUNDING, LLC, a
Kentucky limited liability company, WINDCREST PARTNERS, a New York limited
partnership, J. ▇▇▇▇▇ ▇▇▇▇▇▇▇, an individual, RICHLAND VENTURES II, L.P., a
Delaware limited partnership, REMINGTON INVESTMENTS STRATEGIES, L.P., a _______
limited partnership, ▇▇▇▇▇ GLOBAL INVESTMENTS, LTD., a __________ limited
partnership, SOUTH ATLANTIC PRIVATE EQUITY FUND IV, LIMITED PARTNERSHIP, a
Delaware limited partnership, and SOUTH ATLANTIC PRIVATE EQUITY FUND IV (Q.P.),
LIMITED PARTNERSHIP, a Delaware limited partnership, ▇▇▇▇ ▇▇▇▇▇▇▇, individually,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, individually, W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, III, individually, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, ▇▇., individually, and ▇▇▇▇▇▇▇ ▇. BRITAIN, individually (each an
"Investor" and collectively the "Investors").
WITNESSETH:
Company desires to sell and issue, and each Investor desires
to purchase and acquire, the number of shares of Company's authorized but
unissued Series B Convertible Preferred stock ("Series B Preferred Stock") set
forth opposite his, her or its name on SCHEDULE 1 hereto, upon the terms and
subject to the conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants,
representations and warranties herein contained, and intending to be legally
bound, Company and Investors agree as follows:
1. SALE AND ISSUANCE OF COMMON STOCK.
A. Company shall adopt and file with the Georgia Secretary of
State on or before the Closing (as defined below) Articles of Amendment to the
Company's Articles of Incorporation in the form attached hereto as EXHIBIT A
(the "Articles of Amendment").
B. Subject to the terms and conditions of this Agreement, each
Investor agrees, severally and not jointly, to purchase from Company, and
Company agrees to sell, issue and deliver to each Investor, severally and not
jointly, the number of shares of Series B Preferred Stock set forth opposite
each Investor's name on SCHEDULE 1 attached hereto at a price of Six Dollars
($6.00) per share resulting in a total purchase price of approximately Four
Million Three Hundred Fifty Thousand Seven Hundred Eighty Dollars ($4,350,780).
Investors will pay the purchase price in immediately available funds in
accordance with the Subscription Agreement previously executed by him, her or it
and delivered to the Company. Certificates representing the shares of the Series
B Preferred Stock will be issued against receipt by the Company of payments of
the Purchase Price as contemplated by such Subscription Agreements.
2. CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at 10:00 a.m. on or about October
___, 1999, at the offices of ▇▇▇▇▇, Tarrant & ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, or at such other time, date, or place as shall be mutually
agreed upon by the parties hereto in writing (the "Closing Date").
3. CLOSING ITEMS.
A. At the Closing, Company shall deliver, or cause to be
delivered, the following items:
[1] resolutions of the Board of Directors of Company
authorizing the execution, delivery and consummation of this Agreement,
the issuance of the shares of Series B Preferred Stock, and the other
matters contemplated hereby, certified as to their due adoption and
continued validity by the Secretary of Company;
[2] resolutions of the shareholders of Company
authorizing the Articles of Amendment certified as to their due
adoption and continued validity by the Secretary of the Company;
[3] a certificate executed by the President of
Company to the effect that each of Company's representations and
warranties in this Agreement was accurate in all respects as of the
date of this Agreement and is accurate in all respects as of the
Closing Date as if made on the Closing Date; and
[4] Executed counterpart of each Investor's
Subscription Agreement substantially in the form attached hereto as
EXHIBIT B.
4. FURTHER ASSURANCES. Each party shall execute such additional
documents and take such other actions as the other party or parties may
reasonably request to consummate the transactions contemplated hereby and
otherwise as may be necessary to effectively carry out the terms and provisions
of this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF COMPANY. Except as set forth in
the disclosure letter dated the date hereof delivered to each Investor (the
"Disclosure Letter"), Company hereby represents and warrants to each Investor as
follows:
A. CORPORATE STANDING. Company is a corporation duly
organized, validly existing, and in good standing under the laws of Georgia.
Company has all requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted and as presently
proposed to be conducted, to execute, deliver and perform this Agreement and any
other agreement to which Company is a party, the execution and delivery of which
is contemplated hereby (the "Ancillary Agreements"). Company is duly qualified
and is authorized to transact business and is in good standing as
2
a foreign corporation in each jurisdiction in which the failure so to qualify
would have a material adverse effect on its business, properties, prospects, or
financial condition. True and accurate copies of the articles of incorporation
and bylaws of Company (and all amendments thereto) and minute book (containing
the records of meetings and written consents of the stockholders, the board of
directors and any committees of the board of directors) of Company have
previously been made available to Investors.
B. AUTHORIZATION. The execution and delivery of this Agreement
and any Ancillary Agreement and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary
corporate action on the part of Company. Each of this Agreement and any
Ancillary Agreement have been duly executed and delivered by Company and
constitutes the legal, valid and binding obligation of Company enforceable
against it in accordance with its terms.
C. CAPITALIZATION. As of the Closing Date, the authorized
capital stock of Company shall consist of 14,920,000 shares, divided into: (i)
10,000,000 shares of Common Stock, par value $0.01 per share; (ii) 2,500,000
shares of preferred stock ("Preferred Stock") with such preferences, limitations
and relative rights as may be determined by the Board of Directors pursuant to
Article IV(B) of the Articles; (iii) 420,000 shares of Class A Convertible
Preferred Stock ("Class A Preferred"); and (iv) 2,000,000 shares of Series B
Convertible Preferred Stock. Immediately prior to the Closing, 100% of the
outstanding shares of Common Stock of the Company and 100% of the outstanding
shares of Series A Convertible Preferred Stock are owned by the stockholders and
in the amounts specified in Section 5.C of the Disclosure Letter and no shares
of Series B Convertible Preferred Stock , Class A Preferred Stock or other
Preferred Stock are outstanding.
Except as set forth in Section 5.C of the Disclosure Letter,
there are outstanding no subscriptions, options, warrants, calls, commitments or
rights (including conversion or preemptive rights and rights of first refusal),
proxy or stockholder agreements or agreements of any character relating to
shares of Company's capital stock or the Series B Preferred Stock to be issued
hereunder or any instruments that can be converted into shares of Company's
capital stock or the Series B Preferred Stock to be issued hereunder. None of
the shares of Company's capital stock have been issued in violation of any
preemptive right. All issuances, transfers or purchases of the capital stock of
Company have been in compliance with all applicable agreements and all
applicable laws, including federal and state securities laws, and all taxes
thereon, if any, have been paid. No former or present holder of any of the
shares of capital stock of Company has any legally cognizable claim against
Company based on any issuance, sale, purchase, redemption or involvement in any
transfer of any shares of capital stock by Company. There are no contractual
obligations of Company to repurchase, redeem or otherwise acquire any shares of
capital stock of Company. No bonds, debentures, notes or other indebtedness
having the right to vote (or convertible into or exercisable for securities
having the right to vote) on any matters on which shareholders of Company may
vote are issued or outstanding. Company is not a party to or subject to any
agreement or understanding, and, to Company's best knowledge, there is no
agreement or understanding between any persons that affects or relates to the
voting or giving of written consents with respect to any security or the voting
by any director of Company.
3
D. VALIDLY ISSUED SHARES. The shares of Series B Convertible
Preferred Stock to be issued, sold and delivered in accordance with the terms of
this Agreement for the consideration set out herein, will, upon issuance in
accordance with the terms hereof, be duly and validly issued, fully paid and
nonassessable, free of restrictions on transfer other than restrictions on
transfer under applicable federal and state securities laws and the existing
Amended and Restated Shareholders' Agreement dated June 16, 1998, by and among
the Company and its Shareholders. The issuance of the Series B Convertible
Preferred Stock to Investors pursuant to this Agreement will comply with all
applicable laws, including federal and state securities laws, and will not
violate the preemptive rights of any person. The shares of Common Stock issuable
upon conversion of the Series B Preferred Stock being purchased under this
Agreement will be, upon issuance and delivery in accordance with the terms of
the Articles of Incorporation, duly and validly issued, fully paid and
nonassessable and free of restrictions on transfer other than restrictions on
transfer under this Agreement, the Shareholders' Agreement and under applicable
federal and state securities laws (other than those created by investors). The
issuance of the shares of Common Stock upon conversion of the Series A Preferred
Stock will comply with all applicable laws, including federal and state
securities laws (assuming the accuracy of the representations set forth in
Section 6.B through 6.E of this Agreement as of the date of issuance of such
shares of Common Stock), and will not violate the preemptive rights of any
person.
The outstanding shares of Company's Common Stock and Series A
Preferred Stock have been duly authorized and validly issued, are fully paid and
nonassessable, and were issued in accordance with the registration or
qualification provisions of the applicable federal and state securities laws or
pursuant to valid exemptions therefrom.
E. NO CONFLICT. The execution and delivery of this Agreement
and any Ancillary Agreement do not, and the consummation of the transactions
contemplated hereby and thereby will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or the loss of a material benefit under, or the creation of a
lien, pledge, security interest, charge or other encumbrance on assets (any such
conflict, violation, default, right of termination, cancellation or
acceleration, loss or creation, a "Violation") pursuant to, any provision of the
Company's Articles of Incorporation or Bylaws, or result in any Violation of any
material lease, agreement, obligation, instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Company, or Company's properties or assets.
F. CONTRACTS AND OTHER COMMITMENTS; COMPLIANCE. Company is not
in violation or default of any provision of its Articles of Incorporation or
Bylaws or in any respect of any provision of any material contract or other
items listed on the Disclosure Letter.
G. SUBSIDIARIES. Except as set forth in Section 5.G of the
Disclosure Letter, Company does not own or control, directly or indirectly, any
interest in any other corporation, partnership, limited
4
liability company, association or other business entity. Except as set forth in
Section 5.G of the Disclosure Letter, Company is not a participant in any joint
venture, partnership or similar arrangement.
H. CONSENTS. No consent, approval, qualification, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, or other third party is required by or
with respect to Company in connection with the execution and delivery of this
Agreement, or the consummation by Company of the transactions contemplated
hereby, which has not already been obtained, except for notices of sale required
to be filed with the Securities and Exchange Commission, or such post closing
filings as may be required under applicable state securities laws which will be
timely filed within the applicable periods therefor.
I. FINANCIAL STATEMENTS. Company has delivered to Investors
prior to the date hereof its audited financial statements for the years ended
December 31, 1997 and December 31, 1998, and its unaudited financial statements
(balance sheet and profit and loss statement) for the six (6) month period ended
June 30, 1999 (the "Financial Statements"). The Financial Statements, including
any footnotes thereto, were prepared in accordance with generally accepted
accounting principles and fairly present the financial position and operating
results of Company as of the dates and for the periods indicated therein. Since
June 30, 1999, there has not been any material adverse change in the assets,
liabilities, financial condition, results of operation or prospects of Company.
J. INDEBTEDNESS FOR BORROWED MONEY; NO UNDISCLOSED
LIABILITIES. Except as and to the extent reflected and adequately reserved
against in the Financial Statements, and except as set forth in Section 5.J of
the Disclosure Letter, as of the Closing Date, Company has no direct or indirect
indebtedness for borrowed money, indebtedness by way of lease-purchase
arrangements, guarantees, undertakings, chattel mortgages or other security
arrangements with any bank, financial institution or other third party and
Company will not have any liability or obligation whatsoever, whether accrued,
absolute, contingent or otherwise.
K. TITLE TO PROPERTY AND ASSETS; LEASES. Except as set forth
in Section 5.K of the Disclosure Letter, Company owns no real property in fee
simple. Company has good, valid and marketable title to all the personal and
mixed, tangible and intangible properties and assets which it purports to own,
free and clear of all liens, restrictions, claims, charges, security interests,
easements or other encumbrances of any nature whatsoever, except for liens for
current taxes not yet due and payable. With respect to the property and assets
that it leases, Company is in compliance with such leases and, to Company's
knowledge, holds a valid leasehold interest free and clear of any liens, claims
and encumbrances. All properties and assets of Company are in the possession or
control of Company, and no other person is entitled to possession of any such
properties and assets. Company is not bound or committed to make any capital
improvement or expenditure with respect to its owned or leased real or personal
property.
5
L. LEGAL PROCEEDINGS. Except as set forth in the Disclosure
Letter or which are not material to Company, there are no claims of any kind or
any actions, suits, proceedings, arbitrations or investigations pending or, to
Company's knowledge, threatened against or affecting Company or against any
asset, interest or right of Company or which questions the validity of the
transactions contemplated by this Agreement and Company knows of no facts which
may constitute a basis therefor.
M. ENVIRONMENTAL MATTERS. Company is not in violation of any
applicable statute, law or regulation relating to the environment or
occupational health and safety (the "Environmental Laws"), and, to Company's
knowledge, as of the date hereof no material expenditures are required to be
made by Company in order to comply with any of the Environmental Laws.
N. LICENSES AND PERMITS; COMPLIANCE WITH LAWS. Except as set
forth in Section 5.N of the Disclosure Letter, Company holds all franchises,
permits, licenses, variances, exemptions, orders and approvals of all
governmental entities which are material to the operation of Company's business
and is in compliance with the terms thereof. Company has complied with and is
not in any default under (and has not been charged with or received notice with
respect to, nor is threatened with or under investigation with respect to, any
charge concerning any violation of any provision of) any federal, state or local
law, regulation, ordinance, rule or order (whether executive, judicial,
legislative or administrative) or any order, writ, injunction or decree of any
court, agency or instrumentality and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failures to comply.
O. EMPLOYEE BENEFIT PLANS. Except as set forth in Section 5.O
of the Disclosure Letter, Company has no employee benefit plans including any
profit sharing, deferred compensation, incentive compensation, stock ownership,
stock purchase, phantom stock, retirement, vacation, severance, disability,
death benefit, hospitalization, medical or other plan, arrangement or
understanding (whether or not legally binding) providing benefits to any current
or former employee, officer or director of Company (collectively "Benefit
Plans"), or any employment, consulting, severance, termination or
indemnification agreement, arrangement or understanding between Company and any
officer, director or employee of Company. Each Benefit Plan has been adminis
tered in all material respects in accordance with its terms and all applicable
laws.
P. LABOR RELATIONS.
[1] Company is in compliance in all material respects
with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours and
occupational safety and health;
[2] There is no unfair labor practice charge or
complaint or any other matter against or involving Company pending or,
to Company's knowledge, threatened before the National Labor Relations
Board or any court of law;
6
[3] There is no labor strike, dispute, slowdown or
stoppage actually pending or, to Company's knowledge, threatened
against Company;
[4] Company is not a party to or bound by any
collective bargaining agreement or any similar labor union arrangement;
[5] There are no charges, investigations,
administrative proceedings or formal complaints of discrimination
(including discrimination based upon sex, age, marital status, race,
color, religion, national origin, sexual preference, disability,
handicap or veteran status) pending or, to Company's knowledge,
threatened, before the Equal Employment Opportunity Commission or any
federal, state or local agency or court against Company. There have
been no governmental audits of the equal employment opportunity
practices of Company and, to Company's knowledge, no basis for any such
claim exists; and
[6] To Company's knowledge, Company is in compliance
in all material respects with the requirements of the Americans With
Disabilities Act.
Q. INSURANCE. Section 5.Q of the Disclosure Letter sets forth
a list of all insurance policies, including property, casualty, liability and
other insurance maintained with respect to the assets and business of Company
("Company Insurance"). Company is not liable for any material retroactive
premium adjustments with respect to any of its insurance policies or bonds. All
such policies and bonds are legal, valid and enforceable and in full force and
effect and Company is not in breach or default (including with respect to the
payment of premiums or the giving of notices) and no event has occurred which,
with notice or the lapse of time, would constitute such a breach or default, or
permit termination, modification or acceleration under the policy. Nor has the
Company received any notice of premium increases or cancellations with respect
to any of such policies and bonds. Company believes the amount and type of
Company Insurance coverage is adequate for Company's business and is consistent
with good business practice.
R. TAX MATTERS. Company has timely filed or caused to be filed
all federal, state, foreign and local income, franchise, gross receipts,
payroll, sales, use, withholding, occupancy, excise, real and personal property,
employment and other tax returns, tax information returns and reports ("Tax
Returns") required to be filed and all such Tax Returns were correct and
complete in all respects. Company has paid, or made adequate provisions for the
payment of, all taxes, duties or assessments of any nature whatsoever, interest
payments, penalties and additions (whether or not reflected in the returns as
filed) due and payable (and/or properly accruable for all periods ending on or
before the date of this Agreement) to any city, county, state, foreign country,
the United States or any other taxing authority. There are no security interests
on any of the assets of Company that arise in connection with any failure (or
alleged failure) to pay any tax. Company has withheld and paid all taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder or other third
party. No deficiencies for any taxes have been proposed, asserted or assessed
against Company that are not adequately reserved for.
7
S. PATENTS AND TRADEMARKS. Company owns or possesses
sufficient legal rights to all patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, and proprietary rights and
processes necessary for its business as now conducted and as proposed to be
conducted without any conflict with, or infringement of the rights of, others.
Except for agreements with its own employees or consultants and standard
end-user license agreements, if any, there are no outstanding options, licenses,
or agreements of any kind relating to the foregoing, nor is the Company bound by
or a party to any options, licenses, or agreements of any kind with respect to
the patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information, and proprietary rights and processes of any other person
or entity. Company has not received any communications alleging that Company has
violated or, by conducting its business as proposed, would violate any of the
patents, trademarks, service marks, trade names, copyrights, trade secrets, or
other proprietary rights or processes of any other person or entity. Company is
not aware that any of its employees is obligated under any contract (including
licenses, covenants, or commitments of any nature) or other agreement, or
subject to any judgment, decree, or order of any court or administrative agency,
that would interfere with the use of such employee's best efforts to promote the
interests of Company or that would conflict with Company's business as proposed
to be conducted. Neither the execution nor delivery of this Agreement, nor the
carrying on of Company's business by the employees of Company, nor the conduct
of Company's business as proposed, will, to Company's knowledge, conflict with
or result in a breach of the terms, conditions, or provisions of, or constitute
a default under, any contract, covenant, or instrument under which any of such
employees is now obligated. Company does not believe it is or will be necessary
to use any inventions of any of its employees (or persons it currently intends
to hire) made prior to their employment by Company. Each independent contractor,
employee and/or officer of Company who or which has contributed to the
development of the Computer Software (as defined below) has executed proprietary
information/confidentiality agreements.
T. RELATED-PARTY TRANSACTIONS. Except as set forth in Section
5.T of the Disclosure Letter, no employee, officer, or director of Company, or
member of his or her immediate family is indebted to Company, nor is Company
indebted (or committed to make loans or extend or guarantee credit) to any of
them. To Company's knowledge, none of such persons has any direct or indirect
ownership interest in any firm or corporation with which Company is affiliated
or with which Company has a business relationship, or any firm or corporation
that competes with Company, except that employees, officers, or directors of
Company, and members of their immediate families may own stock in publicly
traded companies that may compete with Company. Except as set forth in Section
5.T of the Disclosure Letter, no employee, officer or director of Company, or,
to Company's knowledge, any member of their immediate families is, directly or
indirectly, interested in any material contract with Company. For purposes of
this Agreement, Company shall be deemed to have knowledge of a fact, event,
condition, matter or situation if any of Company's officers or directors are
consciously aware of such fact, event, condition, matter or situation, as
appropriate.
U. SOFTWARE PRODUCTS. Company has received no customer
complaints concerning alleged defects in its computer appraisal software
products, including, without limitation, Value Express
8
(collectively, the "Computer Software") that, if true, would materially
adversely affect the operations or financial condition of Company.
V. BROKERS' AND FINDERS' FEES. Company has not employed any
broker, finder or financial advisor or incurred any liability for fees or
commissions payable to any broker, finder or financial advisor in connection
with the negotiations relating to or the transactions contemplated by this
Agreement.
W. MATERIAL FACTS. Company has provided each Investor with all
the information reasonably available to it that such Investor has requested for
deciding whether to purchase the Series B Preferred Stock. This Agreement and
the documents or written statements furnished by Company to Investors in
connection with the transactions contemplated hereby do not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements contained herein or therein, in light of the circumstances
in which they are made, not misleading.
6. REPRESENTATIONS AND WARRANTIES OF INVESTORS. Each Investor hereby
represents and warrants to Company, severally and not jointly, as of the date
hereof, as follows:
A. BINDING AGREEMENT. This Agreement and any Ancillary
Agreement, as applicable, have been duly executed and delivered by such Investor
and each constitutes the legal, valid and binding obligation of such Investor
enforceable against him in accordance with its terms.
B. INVESTMENT REPRESENTATIONS. Such Investor is acquiring the
Series B Preferred Stock solely for its or his own account as principal, for
investment purposes only and not with a view to resale or distribution thereof
in whole or in part, and such Investor has no present intention of selling,
granting any participation in, or otherwise distributing the Securities.
C. ACCREDITED INVESTOR; RESIDENCE. Such Investor is a resident
of the state set forth under its or his name on SCHEDULE 1 attached hereto.
D. RECEIPT OF INFORMATION; RESTRICTED SECURITIES. Such
Investor acknowledges that the Series B Preferred Stock is not being and will
not be registered under the Securities Act of 1933, as amended (the "Securities
Act") or the securities laws of any other jurisdiction in reliance on exemptions
thereunder. The Series B Preferred Stock has not been and will not be approved
or disapproved by the Securities and Exchange Commission or any other
governmental authority or agency of any jurisdiction. Such Investor represents
that such Investor has had an opportunity to ask questions and receive answers
from Company regarding the terms and conditions of the offering of the Series B
Preferred Stock and the business, properties, prospects, and financial condition
of Company and to obtain additional information (to the extent Company possessed
such information or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of any information furnished to such Investor
or to which such Investor had access. Investors' representations under this
Section 6, however, shall not limit or modify the
9
representations and warranties of Company in Section 5 of this Agreement or the
right of Investors to rely thereon.
E. INVESTMENT EXPERIENCE. Such Investor is experienced in
evaluating and investing in private placement transactions of securities of
companies in a similar stage or development and acknowledges that such Investor
is able to fend for itself, can bear the economic risk of such Investor's
investment, and has such knowledge and experience in financial and business
matters that such Investor is capable of evaluating the merits and risks of the
investment in the Series B Preferred Stock.
F. LEGENDS. Each certificate or other document evidencing any
of the Common Stock issued pursuant to this Agreement shall be endorsed with the
legend set forth below:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS
AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY TO THE
COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
AN AMENDED AND RESTATED AGREEMENT DATED AS OF JULY 16, 1998 HAS BEEN
ENTERED INTO BY CERTAIN SHAREHOLDERS OF THE CORPORATION AND HAS BEEN
DELIVERED TO THE SECRETARY TO BE KEPT ON FILE AT THE CORPORATION'S
REGISTERED OFFICE. THAT AGREEMENT IMPOSES VARIOUS RESTRICTIONS UPON THE
TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE AND CREATES
VARIOUS OPTIONS, RIGHTS AND INTERESTS WITH RESPECT TO THOSE SHARES.
7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained in this Agreement by any party to this Agreement and any
certificate or other instrument delivered by or on behalf of any party pursuant
to this Agreement shall be continuous and shall survive the Closing and the
issuance of all shares of Company's capital stock. Each party shall have the
right to rely on each other party's representations and warranties made herein,
notwithstanding any investigation conducted by such party.
8. INDEMNIFICATION.
A. INDEMNIFICATION BY COMPANY. Company shall indemnify and
reimburse each Investor for any and all claims, losses, liabilities, damages
(including, without limitation, fines, penalties, and criminal or civil
judgments and settlements), costs (including, without limitation, court costs)
and expenses
10
(including, without limitation, attorneys' and accountants' fees) (hereinafter
"Loss" or "Losses") suffered or incurred by such Investor, any successors or
assigns thereto (the "Protected Parties") as a result of, or with respect to:
[1] Any breach or inaccuracy of any representation or
warranty of Company set forth in Section 5;
[2] Any breach of or noncompliance by Company with
any covenant or agreement of Company contained in this Agreement; and
[3] any and all actions, suits, proceedings, claims,
demands, assessments and judgments incident to any of the foregoing.
B. INDEMNIFICATION BY INVESTORS. Each Investor shall,
severally and not jointly, indemnify and reimburse Company for any and all
claims, losses, liabilities, damages (including, without limitation, fines,
penalties, and criminal or civil judgments and settlements), costs (including,
without limitation, court costs) and expenses (including, without limitation,
attorneys' and accountants' fees) (hereinafter "Loss" or "Losses") suffered or
incurred by Company or any successors or assigns thereto as a result of, or with
respect to:
[1] Any breach or inaccuracy of any representation or
warranty of such Investor set forth in Section 6;
[2] Any breach of or noncompliance by such Investors
with any covenant or agreement of Investor contained in this Agreement;
and
[3] any and all actions, suits, proceedings, claims,
demands, assessments and judgments incident to any of the foregoing.
9. COMPANY COVENANTS. Company hereby covenants and agrees as follows:
A. USE OF PROCEEDS. The proceeds from the sale of the Series B
Preferred Stock pursuant to this Agreement shall be used by Company for working
capital, to make acquisitions and for other corporate purposes.
B. FINANCIAL REPORTING. Subject to Section 9.c, Company shall
furnish to the Investors:
[1] an audited balance sheet and statements of income
and cash flow within ninety (90) days after the end of each fiscal
year, together with comparative figures for the last preceding fiscal
year prepared by a firm of certified public accountants acceptable from
time to
11
time to a majority in interest of the outstanding Series A Preferred
Stock, Series B Preferred Stock and Common Stock of Company voting
together as a single class on an as if converted basis;
[2] as soon as available, and in any event within
thirty (30) days after the close of each calendar month, an unaudited
balance sheet and statement of income and cash flows for such month,
together with comparative figures for both the month just ended and the
portion of the fiscal year then ended, and a written one or two page
monthly summary of Company's operations. Such financial statements
shall be prepared in accordance with generally accepted accounting
principles consistently applied (subject to audit and year-end
adjustments) by the principal financial or accounting officer of the
Company;
[3] as soon as available, and in any event within
thirty (30) days before the close of each fiscal year, a business plan
and projections for Company's next fiscal year; and
[4] such additional information with respect to
Company's financial condition as may be reasonably requested by the
Investors.
C. TERMINATION OF COVENANTS. The covenants set forth in
Section 9.b shall terminate and be of no further force or effect at such time as
Company is required to file reports pursuant to Sections 13 or 15(d) of the
Securities Exchange Act of 1934.
D. RESERVATION OF SHARES. On and after the Closing Date,
Company will reserve and keep reserved at all times sufficient Shares of Common
Stock for issuance upon conversion of the Series B Preferred Stock. Immediately
prior to the occurrence of any event that would cause the number of Shares of
Common Stock or type of securities into which the Series B Preferred Stock would
be convertible, to be adjusted, Company shall take any and all actions necessary
to permit such conversion or exercise. Upon conversion of any s hares of Series
B Preferred Stock, Company will promptly issue and deliver the Shares of Common
Stock required to be delivered.
10. PUBLIC STATEMENTS. Neither Company nor Investors shall, without the
prior written approval of the other parties hereto, make any press release or
other public announcement concerning the transactions contemplated by this
Agreement. Investors and Company may disclose information with respect to the
transaction contemplated hereby to their respective employees, agents,
consultants and third parties only to the extent such persons have a need to
know such information.
11. NOTICES. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be mailed by first class,
registered, or certified mail, postage prepaid, or sent via overnight courier
service, or delivered personally:
12
If to Investors, to: J. ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Casselberry Partners, L.P.
c/o ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
JG Funding, LLC
1850 National City Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Windcrest Partners
49th Floor
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Richland Ventures II, L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
South Atlantic Private Equity Fund IV
Limited Partnership
and
South Atlantic Private Equity Fund IV
(Q.P.), Limited Partnership
c/o ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ Global Investments, Ltd.
and
Remington Investments Strategies, L.P.
c/o Moore Capital Management, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
13
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇/▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇, ▇.▇.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, III
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
c/o Primis, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. Britain
c/o Primis, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Company to: Primis, Inc.
Suite 320
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
President and CEO
or to such other address of which the addressee shall have notified the sender
in writing. Notices mailed in accordance with this section shall be deemed given
when mailed, and notices sent by overnight courier service shall be deemed given
when placed in the hands of a representative of such service.
12. PARTIES IN INTEREST; ASSIGNMENT. Except as otherwise provided
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties to this Agreement shall bind
14
and inure to the benefit of their respective heirs, executors, successors, and
assigns, whether so expressed or not. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto and
their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement. This Agreement is not
assignable and any purported assignment shall be null and void.
13. CONSTRUCTION; GOVERNING LAW. The section headings contained in this
Agreement are inserted as a matter of convenience and shall not affect in any
way the construction of the terms of this Agreement. This Agreement shall be
governed by and interpreted in accordance with the laws of the Commonwealth of
Kentucky.
14. ENTIRE AGREEMENT; AMENDMENT AND WAIVER. This Agreement, including
the Disclosure Letter and Exhibits hereto, constitutes and contains the entire
agreement between the parties hereto with respect to the transactions
contemplated hereby and supersedes any prior writing by the parties. Any term of
this Agreement may be amended and the observance of any term of this Agreement
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of Company and
Investors (or its or his permitted assigns) holding at the time a majority in
interest of the outstanding Series B Preferred Stock. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder of
any securities purchased under this Agreement at the time outstanding (including
securities into which such securities have been converted), each future holder
of all such securities, and Company.
15. SEVERABILITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of the
remaining provisions.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same Agreement.
17. ATTORNEYS' FEES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement or any Ancillary Agreement, the
prevailing party shall be entitled to reasonable attorneys' fees, costs, and
disbursements in addition to any other relief to which such party may be
entitled.
18. RIGHTS OF INVESTORS. Each holder of Series B Preferred Stock shall
have the absolute right to exercise or refrain from exercising any right or
rights that such holder may have by reason of this Agreement or any Series B
Preferred Stock, including without limitation the right to consent to the waiver
of any obligation of Company under this Agreement and to enter into an agreement
with Company for the purpose of modifying this Agreement or any agreement
effecting any such modification, and such holder shall not incur any liability
to any other holder or holders of Common Stock with respect to exercising or
refraining from exercising any such right or rights.
15
19. EXCULPATION AMONG INVESTORS. Each Investor acknowledges that he is
not relying upon any person, firm, or corporation, other than Company and its
current officers and directors, in making its investment or decision to invest
in Company. Each Investor agrees that no other Investor nor the respective
agents of any other Investor shall be liable for any action heretofore or
hereafter taken or omitted to be taken by any of them in connection with the
Common Stock.
16
IN WITNESS WHEREOF, Company and Investors have caused this
Agreement to be executed as of the day and year first written above.
"COMPANY"
PRIMIS, INC.
By:___________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President and
Chief Executive Officer
"INVESTORS"
CASSELBERRY PARTNERS, L.P.
By:___________________________________
Title:________________________________
JG FUNDING, LLC
By:___________________________________
Title:________________________________
______________________________________
J. ▇▇▇▇▇ ▇▇▇▇▇▇▇
WINDCREST PARTNERS
By:___________________________________
A General Partner
17
RICHLAND VENTURES II, L.P.
By:___________________________________
Its:__________________________________
SOUTH ATLANTIC PRIVATE EQUITY FUND
IV, LIMITED PARTNERSHIP
By: South Atlantic Private Equity Partners,
Limited Partnership, Its General Partner
By:___________________________________
Its: General Partner
SOUTH ATLANTIC PRIVATE EQUITY FUND
IV (Q.P.), LIMITED PARTNERSHIP
By: South Atlantic Private Equity Partners,
Limited Partnership, Its General Partner
By:___________________________________
Its: General Partner
▇▇▇▇▇ GLOBAL INVESTMENTS, LTD.
By:___________________________________
_________________ of ▇▇▇▇▇ Capital
Management
Its: Trading Advisor
18
REMINGTON INVESTMENTS STRATEGIES,
L.P.
By:_______________________________________
_____________ of ▇▇▇▇▇ Capital
Advisors, LLC
Its: General Partner
__________________________________________
▇▇▇▇ ▇▇▇▇▇▇▇
__________________________________________
W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, III
__________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
__________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
__________________________________________
▇▇▇▇▇▇▇ ▇. BRITAIN
19
SCHEDULE 1
Investors' Investment
Number of Shares
of Series B Purchase
Investor Preferred Stock Price
-------- --------------- -----
J. ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 164,268 985,608*
Windcrest Partners
49th Floor
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ 87,813 526,878
Richland Ventures II, L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ 77,542 465,252
South Atlantic Private Equity Fund IV,
Limited Partnership
▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 32,568 195,408
South Atlantic Private Equity Fund IV
(Q.P.), Limited Partnership
▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 44,974 269,844
▇▇▇▇▇ Global Investments, Ltd.
c/o Citco Fund Services (Bahamas), Ltd.
Bahamas Financial Center
Charlotte & ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, Bahamas 63,585 381,510
Remington Investments Strategies, L.P.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ 13,958 83,748
Casselberry Partners, L.P.
c/o ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 52,650 315,900
JG Funding, LLC
1850 National City Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 166,667 1,000,002
▇▇▇▇ ▇▇▇▇▇▇▇ 7,599 45,594
W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, III 3,799 22,794
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 5,968 35,808
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. 2,000 12,000
▇▇▇▇▇▇▇ ▇. Britain 1,739 10,484
* Purchase Price to be paid by cancellation of a promissory note from the
Company to ▇▇. ▇▇▇▇▇▇▇ in a like amount.