STOCK PURCHASE AGREEMENT
By and Among
▇▇▇▇▇ ▇. ▇▇▇▇▇,
Datatec Systems, Inc.
and
Computer-Aided Software Integration, Inc.
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Dated as of March 9, 1998
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of March
9, 1998, by and between ▇▇▇▇▇ ▇. ▇▇▇▇▇ (the "Seller"), Datatec Systems, Inc., a
Delaware corporation (the "Buyer") and Computer-Aided Software Integration,
Inc., a Delaware corporation ("CASI").
W I T N E S S E T H:
WHEREAS, the Seller owns 200 shares (the "Shares") of common
stock ("Common Stock"), par value $.01 per share, of CASI; and
WHEREAS, the Buyer desires to purchase, and the Seller desires
to sell the Shares; and
WHEREAS, for accounting purposes it is intended that the
transactions contemplated hereby shall be accounted for as a purchase
transaction under United States generally accepted accounting principles ("U.S.
GAAP");
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, and mutual covenants and agreements herein
contained, the parties hereby agree as follows:
ARTICLE I
SALE OF SHARES
Section 1.1 DELIVERY OF SHARES. On the terms and subject to
the conditions of this Agreement, on the Closing Date (as defined below), the
Buyer shall purchase the Shares from the Seller for an amount equal to the
Purchase Price (as defined below) and the Seller shall sell the Shares to the
Buyer. On the Closing Date, the Seller will transfer, assign, convey and deliver
to the Buyer a certificate or certificates representing all of the Shares. Each
of the certificates shall be duly endorsed for transfer or accompanied by
appropriate stock powers duly executed, in either case in favor of the Buyer,
and each certificate shall have any and all necessary stock transfer tax stamps
affixed thereto at the Seller's expense.
Section 1.2 PURCHASE CONSIDERATION. The aggregate purchase
price for the Shares (the "Purchase Price") shall be $2,255,247. At the Closing
(as defined below), Buyer shall deliver to Seller (i) $422,500 by wire transfer
of immediately available funds to an account designated by the Seller; and (ii)
a convertible promissory note, substantially in the form attached hereto as
Exhibit A (the "Note"), in the aggregate principal amount of $1,832,747 bearing
interest at a rate of 10% per annum,
interest payable monthly and maturing on the earlier to occur of (i) the
realization by the Buyer of net proceeds of $3 million or more from the sale of
equity securities, or (ii) June 15, 1998.
ARTICLE II
CLOSING
The closing (the "Closing") of the transactions contemplated
by this Agreement shall take place as soon as practicable after satisfaction or
waiver of all conditions set forth herein at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Frome & ▇▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such
other time and place as the Buyer and the Seller shall agree (the date on which
such closing occurs being herein referred to as the "Closing Date").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Buyer as
follows:
Section 3.1 CAPITALIZATION. The Seller owns the Shares, free
and clear of all liens, claims or encumbrances, other than the Stockholders'
Agreement (as such term is defined in Section 10.3). The Seller has full right,
power, legal capacity and authority to transfer and deliver the Shares pursuant
to this Agreement. The Seller has not committed CASI or attempted to commit CASI
to issue any shares of capital stock of CASI or rights to acquire any shares of
capital stock of CASI, other than options to purchase 50,000 shares of Common
Stock of CASI granted to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
Section 3.2 TRADEMARKS, PATENTS AND COPYRIGHTS. (a) For
purposes of this Agreement, the term "CASI Rights" shall mean all worldwide
industrial and intellectual property rights, including, without limitation, each
patent, patent right, license, patent application, trade name, trademark, trade
name and trademark registration, copyright, copyright registration, copyright
application, service ▇▇▇▇, brand ▇▇▇▇ and brand name, trade secrets relating to
or arising from any proprietary process, formula, source or object code, owned
or possessed by CASI.
(b) Seller does not claim an ownership interest in any
CASI Rights.
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Section 3.3 NO CONFLICTS; ABSENCE OF DEFAULTS. The execution,
delivery and performance of this Agreement by the Seller does not and will not
conflict with or violate any agreement governing the affairs of the Seller or,
in any material respect, any agreement or instrument to which the Seller may be
a party or by which the Seller is bound, or any material law, administrative
regulation or rule or court order, judgment or decree applicable to the Seller;
nor will the execution and delivery of this Agreement or the consummation of the
transaction contemplated hereby constitute a material breach of, or any event of
default under, any material contract or agreement to which the Seller is bound,
or by which the Seller may be bound or affected, other than the Stockholders'
Agreement (as such term is defined in Section 10.3).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Seller as
follows:
Section 4.1 CORPORATE ORGANIZATION; REQUISITE AUTHORITY TO
CONDUCT BUSINESS. The Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has full
corporate power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby and
this Agreement has been duly authorized and approved by all required corporate
action of the Buyer.
Section 4.2 EXECUTION AND DELIVERY. This Agreement has been
duly executed and delivered by the Buyer and constitutes a legal, valid and
binding obligation of the Buyer, enforceable against the Buyer in accordance
with its terms, except (i) as such enforceability may be limited by or subject
to any bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, (ii) as such obligations are subject to
general principles of equity and (iii) as rights to indemnity may be limited by
federal or state securities laws or by public policy.
Section 4.3 NO CONFLICTS; ABSENCE OF DEFAULTS. The execution,
delivery and performance of this Agreement by the Buyer does not and will not
conflict with or violate any agreement governing the organization, management,
business or affairs of the Buyer or, in any material respect, any agreement or
instrument to which the Buyer may be a party or by which the Buyer is bound, or
any material law, administrative regulation or rule or court order, judgment or
decree applicable to the Buyer; nor will the execution and delivery of this
Agreement or the consummation of the transaction contemplated hereby constitute
a
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material breach of, or any event of default under, any material contract or
agreement to which the Buyer is bound, or by which the Buyer may be bound or
affected, other than the Stockholders' Agreement (as such term is defined in
Section 10.3).
Section 4.4 INVESTMENT; SECURITIES LAWS. The Buyer is
acquiring the Shares solely for its own account as an investment and not with a
view to any distribution or resale thereof within the meanings of such terms
under the Securities Act of 1933, as amended. The Buyer will not effect any
disposition of the Shares in violation of any Federal or state securities or
similar laws or in a manner which subjects it or any of its affiliates to any
liability or sanction under any such securities or similar laws.
Section 4.5 RESERVATION OF SHARES. The Buyer has reserved for
issuance 700,000 shares of its common stock, par value $.001 per share, for
issuance upon conversion of the Note. When issued in accordance with the terms
of the Note, such shares of common stock will be duly authorized, validly
issued, fully paid and non-assessable.
ARTICLE V
COVENANTS OF THE SELLER AND THE BUYER
Section 5.1 BEST EFFORTS. Seller and Buyer each covenant and
agree to proceed diligently and use its best efforts to take or cause to be
taken all actions and to do or cause to be done all things necessary, proper and
advisable to consummate the transactions contemplated by this Agreement.
Section 5.2 COMPLIANCE. Seller and Buyer each covenant and
agree to comply in all material respects with all applicable rules and
regulations of any Governmental Authority in connection with the execution,
delivery and performance of this Agreement and the transactions contemplated
hereby; to use all reasonable efforts to obtain in a timely manner all necessary
waivers, consents and approvals and to take, or cause to be taken, all other
actions and to do, or cause to be done, all other things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement.
Section 5.3 NOTICE. Seller and Buyer each covenant and agree
to give prompt notice to the other party of (i) the occurrence, or failure to
occur, of any event whose occurrence or failure to occur, would be likely to
cause any representation or warranty contained in this Agreement to be untrue or
incorrect in any material respect at any time from the date hereof to the
Closing Date and (ii) any material failure on its part, or on the part of any of
its officers, directors, employees or agents, to
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comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any such
notice shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
Section 5.4 CONFIDENTIALITY. Seller and Buyer each covenant
and agree to hold in strict confidence all data and information obtained from
the other party hereto or any subsidiary, division, associate, representative,
agent or affiliate of any such party (unless such information (i) is lawfully
obtained from a third party that is not under an obligation not to disclose such
information, (ii) is independently developed by such party, (iii) is or becomes
publicly available without the fault of any representative of such party, or
(iv) public disclosure of such information is required by law in the opinion of
counsel to such party) and shall not disclose such information to others without
the prior written consent of the other party hereto, and in the event of the
termination of this Agreement, to cause its representatives to return promptly
every document furnished by the other party hereto or any subsidiary, division,
associate, representative, agent or affiliate of any such party in connection
with the transactions contemplated hereby and any copies thereof which may have
been made, other than documents which are publicly available.
Section 5.5 CONTINUING OBLIGATION. CASI and Buyer, jointly and
severally, shall indemnify the Seller, to the fullest extent permitted by the
Delaware General Corporation Law, from and against any loss, claim, liability
and/or expense incurred for, or by reason of, or arising out of, acts of the
Seller as an officer and/or director of Buyer, CASI or any affiliates of Buyer
or CASI. Any costs, fees or expenses incurred by Seller relating to such
indemnification shall be paid by CASI or Buyer in advance as soon as practicable
but not later than three business days after receipt of the written request of
Seller; provided that the Seller shall (i) affirm in such written request that
he acted in good faith and in a manner which he reasonably believed to be (in
the case of conduct in his official capacity) in the best interests of the
company or (in all other cases) not opposed to the best interests of the company
and (ii) undertake to repay such amount to the extent that is ultimately
determined by a court of competent jurisdiction that Seller is not entitled to
indemnification. The Seller's right to indemnification or advances from CASI or
Buyer shall be enforceable by Seller in any court of competent jurisdiction. The
burden of providing that indemnification or advances are not appropriate shall
be on CASI and Buyer.
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Section 5.6 CONVEYANCE OF LAPTOP COMPUTER. Subject to Sections
3.2(b) and 5.4 hereof, at the Closing, Buyer shall cause CASI to convey to
Seller all of CASI's right, title and interest in and to the laptop computer,
all software loaded thereon, to the extent permitted, and the printer used by
Seller during his employment with CASI.
Section 5.7 RELEASES. Other than for obligations which may
exist or arise by reason of this Agreement, the Note, the Non-Competition
Agreement referred to in Section 7.8 hereof, the Pledge Agreement referred to in
the Note, or the Registration Rights Agreement referred to in Section 6.8
hereof, Seller, for himself and his heirs, executors, administrators,
successors, and assigns hereby irrevocably and unconditionally releases,
acquits, and forever discharges Buyer, CASI, and all of their present and former
stockholders, partners, officers, directors, employees, agents, representatives,
attorneys, successors and assigns ("Buyer Releasees"), from any and all charges,
complaints, claims, liabilities, obligations, promises, agreements,
controversies, damages, actions, causes of action, suits, rights, demands,
costs, losses, debts and expenses (including attorney's fees and costs actually
incurred), of any nature whatsoever, whether asserted, known or unknown which
Seller may have, own, hold, or claim to have, or hold, or which Seller at any
time heretofore had, owned, held, or claimed to have, own, or hold against any
of the Buyer Releasees.
Other than for obligations which may exist or arise by reason
of this Agreement, the Note, the Non-Competition Agreement referred to in
Section 7.8 hereof, the Pledge Agreement referred to in the Note, or the
Registration Rights Agreement referred to in Section 6.8 hereof, Buyer and CASI
hereby irrevocably and unconditionally release, acquit, and forever discharge
Seller from any and all charges, complaints, claims, liabilities, obligations,
promises, agreements, controversies, damages, actions, causes of action, suits,
rights, demands, costs, losses, debts and expenses (including attorney's fees
and costs actually incurred), of any nature whatsoever, whether asserted, known
or unknown which Buyer or CASI may have, own, hold, or claim to have, or hold,
or which Buyer or CASI at any time heretofore had owned, held, or claimed to
have, own, or hold against Seller.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER
The obligations of the Seller under this Agreement are subject
to the satisfaction, on or prior to the Closing Date, unless waived in writing,
of each of the following conditions:
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Section 6.1 REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties of the Buyer contained in this Agreement shall be
true and correct in all material respects as of the date when made and at and as
of the Closing Date, except as and to the extent that the facts and conditions
upon which such representations and warranties are based are expressly required
or permitted to be changed by the terms hereof, with the same force and effect
as if made on and as of the Closing Date, and CASI shall have received a
certificate to that effect and as to the matters set forth in Section 6.2
hereof, dated the Closing Date, from the President or Chief Executive Officer of
the Buyer.
Section 6.2 PERFORMANCE OF COVENANTS. The Buyer shall have
performed or complied in all material respects with all agreements, conditions
and covenants required by this Agreement to be performed or complied with by it
on or before the Closing Date.
Section 6.3 NO PROCEEDINGS. No preliminary or permanent
injunction or other order (including a temporary restraining order) of any
state, federal or local court or other governmental agency or of any foreign
jurisdiction which prohibits the consummation of the transactions which are the
subject of this Agreement or prohibits the Buyer's ownership of the Shares shall
have been issued or entered and remain in effect.
Section 6.4 CONSENTS AND APPROVALS. All filings and
registrations with, and notifications to, all federal, state, local and foreign
authorities required by the Buyer for consummation of the transactions
contemplated by this Agreement shall have been made by the Buyer, and all
consents, approvals and authorizations of all federal, state, local and foreign
authorities and parties to material contracts, licenses, agreements or
instruments with the Buyer required for consummation of the transactions
contemplated by this Agreement shall have been received and shall be in full
force and effect other than those instances in which failure to obtain such
consents, approvals or authorizations would not, either individually or in the
aggregate, have a material adverse effect on the business, operations or
condition (financial or otherwise) of the Buyer.
Section 6.5 NOTE AND PLEDGE AGREEMENT. The Note and the Pledge
Agreement shall have been executed and delivered.
Section 6.6 AGREEMENT NOT TO COMPETE. The Seller shall have
received $77,500 by wire transfer of immediately available funds to an account
designated by the Seller as consideration for the Non-Competition Agreement
referred to in Section 7.8.
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Section 6.7 FEES AND EXPENSES. The Buyer shall have reimbursed
the Seller for his fees and expenses as provided in Section 10.1. Further, the
Buyer shall have caused CASI to reimburse the Seller for all amounts due under
the Employment Agreement (as such term is defined in Section 10.4), including,
without limitation, all accrued and unpaid salary and outstanding expense
reimbursements.
Section 6.8 REGISTRATION RIGHTS AGREEMENT. The Registration
Rights Agreement between Buyer and Seller, in the form of Exhibit B hereto,
shall have been executed and delivered.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER
The obligations of the Buyer under this Agreement are subject
to the satisfaction, on or prior to the Closing Date, unless waived in writing,
of each of the following conditions:
Section 7.1 REPRESENTATION AND WARRANTIES TRUE. The
representations and warranties of the Seller contained in this Agreement shall
be true and correct in all material respects as of the date when made and at and
as of the Closing Date, except as and to the extent that the facts and
conditions upon which such representations and warranties are based are
expressly required or permitted to be changed by the terms hereof with the same
force and effect as if made on and as of the Closing Date, and the Buyer shall
have received a certificate to that effect and as to the matters set forth in
Section 7.2 hereof, dated the Closing Date, from the Seller.
Section 7.2 PERFORMANCE OF COVENANTS. The Seller shall have
performed or complied in all material respects with all agreements, conditions
and covenants required by this Agreement to be performed or complied with by him
on or before the Closing Date.
Section 7.3 NO PROCEEDINGS. No preliminary or permanent
injunction or other order (including a temporary restraining order) of any
state, federal or local court or other governmental agency or of any foreign
jurisdiction which prohibits the consummation of the transactions which are the
subject of this Agreement or prohibits the Buyer's ownership of the Shares or
operation of CASI's business shall have been issued or entered and remain in
effect.
Section 7.4 TERMINATION OF ▇▇▇▇▇▇▇▇ OPTION. All options to
purchase Common Stock granted by CASI to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and CASI shall have been
terminated.
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Section 7.6 BANK WAIVER. Buyer shall have received the consent
of Finova Capital Corporation ("Finova") to the transactions contemplated by
this Agreement.
Section 7.8 AGREEMENT NOT TO COMPETE. The Non- Competition
Agreement between CASI and the Seller, substantially in the form of Exhibit C
hereto, shall have been executed and delivered.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 INDEMNIFICATION BY THE SELLER. Subject to the
limits set forth in this Article VIII, the Seller agrees to indemnify, defend
and hold the Buyer harmless from and against any and all loss, liability,
damage, costs and expenses (including interest, penalties and attorneys' fees)
that the Buyer or any of its affiliates may incur or become subject to arising
out of or due to any inaccuracy of any representation or the breach of any
warranty, covenant, undertaking or other agreement of the Seller contained in
this Agreement.
Section 8.2 INDEMNIFICATION BY THE BUYER. Subject to the
limits set forth in this Article VIII, the Buyer agrees to indemnify, defend and
hold the Seller harmless from and against any and all loss, liability, damage,
costs and expenses (including interest, penalties and reasonable attorneys'
fees) that the Seller or its affiliates may incur or become subject to arising
out of or due to any inaccuracy of any representation or the breach of any
warranty, covenant, undertaking or other agreement of the Buyer contained in
this Agreement.
Section 8.3 SURVIVAL. The representations and warranties
contained in this Agreement shall survive the Closing Date and remain in full
force and effect for one year. The agreements contained in this Agreement shall
survive the Closing Date pursuant to their terms.
Section 8.4 LIMITATIONS. Except as otherwise specifically
provided in this Agreement, no party shall assert any claim against the other
for indemnification hereunder with respect to any inaccuracy or breach of such
warranties, representations, covenants or agreements unless and until the amount
of all such claims shall exceed $50,000. In no event shall Seller be liable for
claims exceeding $2,255,247 in the aggregate.
Section 8.5 THIRD PARTY CLAIMS. In order for a party (the
"indemnified party") to be entitled to any indemnification provided for under
this Agreement in respect of, arising out of,
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or involving a claim or demand or written notice made by any third party against
the indemnified party (a "Third Party Claim") after the Closing Date, such
indemnified party must notify the indemnifying party (the "indemnifying party")
in writing of the Third Party Claim within 30 business days after receipt by
such indemnified party of written notice of the Third Party Claim; provided that
the failure of any indemnified party to give timely notice shall not affect his
right of indemnification hereunder except to the extent the indemnifying party
has actually been prejudiced or damaged thereby. If a Third Party Claim is made
against an indemnified party, the indemnifying party shall be entitled, if it so
chooses, to assume the defense thereof with counsel selected by the indemnifying
party (which counsel shall be reasonably satisfactory to the indemnified party).
If the indemnifying party assumes the defense of a Third Party Claim, the
indemnified party will cooperate in all reasonable respects with the
indemnifying party in connection with such defense, and shall have the right to
participate in such defense with counsel selected by it. The fees and
disbursements of such counsel, however, shall be at the expense of the
indemnified party; provided, however, that, in the case of any Third Party Claim
of which the indemnifying party has not employed counsel to assume the defense,
the fees and disbursements of such counsel shall be at the expense of the
indemnifying person.
Section 8.6 REDUCTION FOR INSURANCE. The gross amount which an
indemnifying party is liable to, for, or on behalf of the Indemnitee pursuant to
this Article VIII (the "Indemnifiable Loss") shall be reduced (including,
without limitation, retroactively) by any insurance proceeds actually recovered
by or on behalf of such indemnified party related to the Indemnifiable Loss. If
an indemnified party shall have received or shall have had paid on its behalf an
indemnity payment in respect of an Indemnifiable Loss and shall subsequently
receive directly or indirectly insurance proceeds in respect of such
Indemnifiable Loss, then such Indemnitee shall pay to such Indemnifying Party
the net amount of such insurance proceeds or, if less, the amount of such
indemnity payment. Notwithstanding the foregoing, an indemnified party shall
have no obligation to seek insurance proceeds.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 TERMINATION. This Agreement may be terminated and
the transactions contemplated by this Agreement abandoned at any time prior to
the Closing:
(a) By mutual written consent of the Buyer and the Seller;
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(b) By either the Buyer or the Seller if the transactions
contemplated by this Agreement shall not have been consummated on or before
March 10, 1998;
(c) By the Seller if any condition specified in Article VI
hereto has not been met or waived by the Seller at such time as such condition
can no longer be satisfied; or
(d) By the Buyer if any condition specified in Article VII
hereto has not been met or waived by the Buyer at such time as such condition
can no longer be satisfied; or
(e) By either the Buyer or the Seller if a court of competent
jurisdiction or Governmental Authority shall have issued a final, non-appealable
order, decree or ruling or taken any other action (which order, decree or ruling
the parties hereto shall use their best efforts to lift), in each case
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement.
Section 9.2 EFFECT OF TERMINATION. Except as may be expressly
provided herein, in the event of any termination of this Agreement in accordance
with Section 9.1 hereof, this Agreement shall forthwith become void and there
shall be no liability under this Agreement on the part of any party hereto or
their respective affiliates, officers, directors, employees or agents by virtue
of such termination.
Section 9.3 AMENDMENT. This Agreement may be amended by the
written agreement of the Buyer and the Seller.
ARTICLE X
MISCELLANEOUS
Section 10.1 EXPENSES. All parties agree to save each other
harmless against claims for brokerage fees and commissions (of which there are
none). All costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses regardless of the termination of this Agreement or the failure to
consummate the transactions contemplated hereby, provided, however, that Buyer
agrees to reimburse Seller for up to $25,000 of Seller's reasonable legal fees
in connection with the transactions contemplated hereby, regardless of the
termination of this Agreement.
Section 10.2 NOTICES. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given when delivered personally
or by facsimile transmission, in either case with receipt acknowledged, or three
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days after being sent by registered or certified mail, return receipt requested,
postage prepaid:
(a) If to the Buyer to:
Datatec Systems, Inc.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome & ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
(b) If to the Seller to:
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇, Flyer & ▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
or to such other address as any party shall have specified by notice in writing
to the other in compliance with this Section 10.2.
Section 10.3 SUSPENSION AND TERMINATION OF STOCKHOLDERS'
AGREEMENT. Except with respect to Sections 2.2(a) and (b), 2.3, and 5.3 thereof,
the obligations of Buyer and CASI under the Stockholders' Agreement (the
"Stockholders' Agreement") dated as of April 24, 1996 by and among CASI, Buyer
and Seller shall, pursuant to this Section 10.3, be suspended concurrent with
the Closing until such time as the Seller exercises his rights in the Shares in
accordance with the Note and the Pledge Agreement. Notwithstanding Section 2.5
of the Stockholders' Agreement and Seller's sale of the Shares pursuant to this
Agreement, for purposes of the non-suspended sections of the Stockholders'
Agreement, Seller shall be deemed to be a Stockholder. Notwithstanding Section
2.3 of the Stockholders' Agreement, and subject to Seller's first priority
security interest in the Shares pursuant to the terms of the Pledge Agreement,
Buyer may pledge to Finova (i) the shares of Common
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Stock owned by Buyer and (ii) assets of CASI. After the earlier to occur of (i)
repayment in full of the Note, and (ii) any conversion of the Note into shares
of common stock of Buyer pursuant to the terms of the Note, the entire
Stockholders' Agreement shall immediately terminate and shall be of no further
effect.
Section 10.4 SUSPENSION AND TERMINATION OF EMPLOYMENT
AGREEMENT. The obligations of Buyer and CASI under the Employment Agreement (the
"Employment Agreement") dated as of April 24, 1996 by and between CASI, Seller
and Buyer shall, pursuant to this Section 10.4, be suspended concurrent with the
Closing until such time as the Seller exercises his rights in the Shares in
accordance with the Note and the Pledge Agreement. Upon the resumption of the
obligations under the Employment Agreement, (i) the base compensation set forth
in Section 4(a) of the Employment Agreement and other benefits to be provided to
Seller thereunder shall be reinstated for the duration of the term of the
Employment Agreement, and (ii) the incentive compensation set forth in Section
4(b) of the Employment Agreement shall be reinstated as if the Buyer's
obligation thereunder was never suspended. After the earlier to occur of (i)
repayment in full of the Note, and (ii) any conversion of the Note into shares
of common stock of Buyer pursuant to the terms of the Note, the Employment
Agreement shall immediately terminate without any further obligation on the part
of CASI or Buyer.
Section 10.5 ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof and thereof and supersedes all prior agreements, representations and
understandings among the parties hereto.
Section 10.6 BINDING EFFECT, BENEFITS, ASSIGNMENTS. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and assigns; nothing in this Agreement,
expressed or implied, is intended to confer on any other person, other than the
parties hereto or their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement. This Agreement
may not be assigned without the prior written consent of the other parties
hereto.
Section 10.7 APPLICABLE LAW. This Agreement and the legal
relations between the parties hereto shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflicts of law.
Section 10.8 JURISDICTION. The parties hereto agree to submit
to the jurisdiction of any Federal or state court located in the State of New
York for the purpose of resolving any action or claim arising out of the
performance of the provisions of this Agreement.
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Section 10.9 HEADINGS. The headings and captions in this
Agreement are included for purposes of convenience only and shall not affect the
construction or interpretation of any of its provisions.
Section 10.10 COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year hereinabove first set forth.
DATATEC SYSTEMS, INC.
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: CFO
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
COMPUTER-AIDED SOFTWARE
INTEGRATION, INC.
(as to Sections 5.5, 10.3 and 10.4
only)
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: CFO
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EXHIBIT A
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO U.S. PERSONS (AS SUCH TERMS ARE DEFINED IN REGULATION S UNDER SAID
ACT) EXCEPT IN TRANSACTIONS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF SAID
ACT.
CONVERTIBLE PROMISSORY NOTE
$1,832,747 March 9, 1998
WHEREAS, ▇▇▇▇▇ ▇. ▇▇▇▇▇ ("Seller"), Datatec Systems, Inc., a
Delaware corporation ("Buyer") and Computer-Aided Software Integration, Inc., a
Delaware corporation ("CASI") have entered into an agreement dated as of March
9, 1998 (the "Stock Purchase Agreement") pursuant to which Buyer has agreed to
purchase from Seller 200 shares (the "CASI Shares") of common stock, par value
$.01 per share, of CASI;
WHEREAS, a portion of the purchase price for the CASI Shares
is the obligation by Buyer to pay to Seller certain amounts subsequent to the
closing date of the transaction.
NOW, THEREFORE, for good and valuable consideration, the
receipt of which is hereby acknowledged, Buyer hereby promises to pay to the
order of Seller the principal amount of $1,832,747 dollars on the earlier to
occur of (i) June 15, 1998 or (ii) the realization by the Buyer of $3 million or
more from the sale of equity securities, plus accrued and unpaid interest and
all other charges provided for herein on such date and as specified below. The
interest payable under this Note shall begin to accrue on the date of this Note.
Buyer also promises to pay interest on the unpaid principal
amount of this Note beginning on April 3, 1998 and on each one month anniversary
of such date (or on the next succeeding business day if such anniversary is not
a business day) until the Note has been paid in full, at a rate equal to 10% per
annum (on the basis of a 365-day year and actual number of days elapsed) from
and including March 1, 1998 until such principal sum shall be paid in full, and
to pay interest in the event of Default (as defined below), on any unpaid
principal, interest or other charges provided for herein, at a rate equal to 15%
per annum.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in immediately
available funds by wire transfer to Seller, at Chase
Manhattan Bank, New York, New York, ABA #▇▇▇▇▇▇▇▇▇, A/C National Financial
Services Corp., A/C # 066196-221, F/C ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇ JTWROS,
Brok #: X25125202, or at such other place as shall be designated in writing by
Seller for such purpose.
Buyer hereby waives diligence, presentment, dishonor, demand,
notice and protest and, to the full extent permitted by law, the right to plead
any statute of limitations as a defense to any demand hereunder. Buyer promises
to pay all costs and expenses, including reasonable attorneys' fees, incurred in
the collection and enforcement of this Note. From time to time, without in any
way affecting the obligation of Buyer to pay the outstanding principal balance
of this Note and any interest accrued thereon and fully to observe and perform
the covenants and obligations of Buyer under this Note, without giving notice
to, or obtaining the consent of, Buyer, and without any liability whatsoever on
the part of Seller, Seller may, at its option, extend the time for payment of
interest hereon and/or principal of this Note, reduce the payments hereunder,
release anyone liable on this Note or accept a renewal of this Note, join in any
extension or subordination, or exercise any right or election hereunder. No one
or more of such actions shall constitute a novation or operate to release any
party liable for or under this Note, either as Buyer or otherwise. Neither any
course of dealing by Seller nor any failure or delay on its part to exercise any
right, power or privilege hereunder shall operate as a waiver of any right or
remedy of Seller hereunder unless said waiver is in writing and signed by
Seller, and then only to the extent specifically set forth in said writing. A
waiver as to one event shall not be construed as a continuing waiver by Seller
or as a bar to or waiver of any right or remedy by Seller as to any subsequent
event.
Each of the following shall constitute a "Default" hereunder:
(i) Buyer's failure to make any required payment of principal and/or interest
under this Note, or any other amount due and payable under this Note on or
before the date on which such payment is due under this Note; (ii) Buyer's
failure to perform any other obligation (other than one that can be satisfied
with the payment of money) required under this Note or the Pledge Agreement, and
the continuation of such failure for a period of five days after Seller gives
Buyer written notice of such failure to perform; and (iii) Buyer's insolvency,
general assignment for the benefit of creditors, or the commencement by or
against Buyer of any case, proceeding, or other action seeking reorganization,
arrangement, adjustment, liquidation, dissolution, or composition of Buyer's
debts under any law relating to bankruptcy, insolvency, or reorganization, or
relief of debtors, or seeking appointment of a receiver, trustee, custodian, or
other similar official for Buyer or for all or any substantial part of Buyer's
assets.
Upon the occurrence and continuance of a Default and the
delivery of written notice by either Buyer or Seller specifying the nature and
status of the Default (the "Default Notice"), Seller's sole remedies shall be
(i) to cause all of the Note Obligations to
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be converted into Datatec Shares at the applicable Conversion Price, or (ii) if
the Liquidity Condition is not satisfied and no prior conversion of any Note
Obligations has occurred, to exercise its rights under the Stock Pledge
Agreement of even date herewith between Buyer and Seller (the "Pledge
Agreement"). Not later than three (3) business days after delivery of the
Conversion Notice (as defined below), the Buyer shall irrevocably instruct its
transfer agent to issue and shall use its best efforts to cause its transfer
agent to send as soon as reasonably practicable by reputable overnight courier
to Seller or to Seller's designee, at the address designated in the Conversion
Notice, a certificate or certificates for the number of Datatec Shares to which
Seller or Seller's designee, as the case may be, shall be entitled upon
conversion. On and after the issuance date, the Buyer shall be treated for all
purposes as the record holder of such Datatec Shares.
If, upon any conversion of this Note, the Liquidity Condition
is satisfied, the Seller shall be obligated to effectuate the conversion of all
Note Obligations at the applicable Conversion Price within ten (10) business
days after the date of the Default Notice (in denominations of at least
$500,000, or such lesser amount as is then outstanding) by delivering written
notice(s) of conversion, substantially in the form of Exhibit I attached hereto
(the "Conversion Notice") to the Buyer. In the event that the Seller fails to
convert all Note Obligations following the expiration of such ten (10) business
day period, all remaining Note Obligations shall automatically be deemed to be
converted effective as of such date without any action on the part of Seller
(except that Seller shall have an obligation to provide Buyer with a Conversion
Notice prior to receipt of the Datatec Shares). Notwithstanding anything herein
to the contrary, if the Liquidity Condition was satisfied upon any conversion of
this Note but prior to the conversion of all Note Obligations the Liquidity
Condition becomes unsatisfied, the Seller shall have ninety (90) days following
the date of the Default Notice to convert all remaining Note Obligations at the
then applicable Conversion Price.
If the Liquidity Condition is not satisfied with respect to
the FIRST conversion of any Note Obligations, the Seller shall be obligated to
either (i) effectuate the conversion of all Note Obligations at the applicable
Conversion Price by delivering one or more Conversion Notices in the manner
described above (in denominations of at least $500,000, or such lesser amount as
is then outstanding), or (ii) exercise his rights in the CASI Shares owned by
Buyer in accordance with the terms of the Pledge Agreement (the "Pledge Rights")
by delivering the Conversion Notice to the Buyer indicating such election, in
either case prior to the expiration of ninety (90) days following the date of
the Default Notice. If Seller neither converts this Note nor exercises Pledge
Rights prior to the expiration of such 90 day period, the Seller shall be deemed
to have elected to convert this Note and all remaining Note Obligations shall be
converted effective as of such date without any action on the part of Seller
(except that Seller
-3-
shall have an obligation to provide Buyer with a Conversion Notice prior to
receipt of the Datatec Shares).
For the purposes of the preceding three paragraphs, the
following terms shall have the meanings indicated:
1. "Conversion Price" means (i) if the Liquidity
Condition is satisfied with respect to any conversion, the
Conversion Price for such conversion shall equal the average
closing bid price of the Common Stock on the NASDAQ SmallCap
Market as reported in the WALL STREET JOURNAL for the five
trading days ending one trading day prior to the date of the
Conversion Notice, multiplied by 0.75; (ii) if the Liquidity
Condition is not satisfied with respect to any conversion, the
Conversion Price for such conversion shall equal the average
closing bid price of the Common Stock on the NASDAQ SmallCap
Market as reported in the WALL STREET JOURNAL for the five
trading days ending one trading day prior to the date of the
Conversion Notice, multiplied by 0.50.
2. "Datatec Shares" means the shares of Datatec
Common Stock, par value $0.001 per share (the "Common Stock"),
issuable upon the conversion of this Note.
3. "Liquidity Condition" means the condition that
shall be satisfied with respect to any conversion of this Note
or exercise of the Pledge Rights if (i) the average daily
volume of trading of the Common Stock as reported in the WALL
STREET JOURNAL for the ten trading days ending one trading day
prior to date of the Conversion Notice is greater than 125,000
shares, (ii) the closing bid price of the Common Stock on the
trading day prior to the date of the Conversion Notice is not
less than $2.50 and (iii) in the event of any conversion, on
the date that the Datatec Shares are issued to Seller, there
is an effective registration statement registering the resale
of the Datatec Shares by the Seller.
4. "Note Obligations" means the sum of all unpaid
principal, accrued but unpaid interest and all other charges
and expenses payable by Buyer in connection with this Note
through the date on which the Conversion Notice is delivered
or deemed to be delivered to Buyer.
If any payment on this Note becomes due and payable on a day
which is not a business day, the maturity thereof shall be extended to the next
business day and interest shall be payable at the applicable rate during such
extension period.
The terms of this Note are not subject to amendment except by
written agreement of Seller and Buyer. Unless agreed in writing by the Buyer,
neither this Note nor any rights evidenced by this Note may be transferred or
assigned by the Seller, provided,
-4-
however, that Seller may assign this Note and the rights evidenced by this Note
to any parent, spouse, brother or sister, natural or adopted lineal descendent
of Seller or to any trustee of a trust of which Seller or any parent, spouse,
brother or sister, natural or adopted lineal descendent of Seller are the sole
beneficiaries. Buyer may not assign its obligations hereunder without the prior
written consent of the Seller.
Payment of the indebtedness evidenced by this Note is secured
by a first-priority security interest in certain assets of Buyer pledged to
Seller pursuant to the Pledge Agreement.
This Note may be prepaid at any time by Buyer either in whole
or in part. In addition, Buyer may pay the outstanding principal balance of this
Note, any interest accrued thereon and all other charges provided herein at any
time prior to conversion of this Note or Buyer's exercise of Rights pursuant to
the Pledge Agreement.
This Note shall be governed by and construed and enforced in
accordance with the laws of State of New York, without regard to principles of
conflicts of laws.
Any notice or other communication or delivery required or
permitted hereunder shall be in writing and shall be delivered personally or
sent by certified mail, postage prepaid, or by a nationally recognized overnight
courier service, or by facsimile, and shall be deemed given when so delivered
personally, by overnight courier service, or by facsimile, or, if mailed, three
(3) days after the date of deposit in the United States mails, to the addresses
set forth in Section 10.2 of the Stock Purchase Agreement or to such other
address as the Buyer or Seller shall have specified by notice in writing to the
other in the manner set forth above.
In the event that any one or more of the provisions of this
Note shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Note, and this Note shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein. It
is expressly agreed that time is of the essence in the performance of the
obligations set forth in this Note.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Buyer has duly executed this Note, the day
and year first above written.
DATATEC SYSTEMS, INC.
By:________________________________
Name:
Title:
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EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
March 9, 1998, between Datatec Systems. Inc., a Delaware corporation (the
"Company") and ▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇").
1. Introduction. The Company and ▇▇▇▇▇ are each a party
to the Stock Purchase Agreement (the "Stock Purchase Agreement") dated March 9,
1998 pursuant to which ▇▇▇▇▇ agreed, among other things, to sell 200 shares of
the common stock, par value $.01 per share, of Computer-Aided Software
Integration, Inc., a Delaware corporation, to the Company. As partial payment
for such sale, the Company issued a Convertible Promissory Note dated March 9,
1998 payable to ▇▇▇▇▇ or permitted assigns thereunder (the "Promissory Note").
The Promissory Note contains certain conversion provisions which permit ▇▇▇▇▇ to
elect to receive from time to time, shares of the Common Stock of the Company.
par value $.001 per share (the "Common Stock"), in lieu of all or part of the
cash payments thereunder. Certain capitalized terms used in this Agreement are
defined in section 3 hereof; references to sections shall be to sections of this
Agreement.
2. Registration Under Securities Act, Etc.
2.1 Registration. As soon as reasonably practicable
after the date hereof, the Company shall (subject to the terms of this
Agreement) effect the registration of the resale of all of the Registrable
Securities under the Securities Act. The registration statement filed pursuant
to this Section 2.1 shall register such number of shares of Common Stock based
on a hypothetical conversion of the Promissory Note on the date that the
registration statement filed pursuant to this Section 2.1 is filed and, as
permitted by the Commission, shall include an indeterminate number of shares of
Common Stock issuable upon conversion of the Promissory Note and resulting from
fluctuating market prices of the Common Stock (and a fluctuating conversion
ratio pursuant to the Promissory Note). Registrations under this Section 2.1
shall be on Form S-3 or another appropriate registration form permitting
registration of Registrable Securities for resale by ▇▇▇▇▇ in a manner
designated by him, including public or private sales. The Company will pay all
Registration Expenses in connection with any registration requested pursuant to
this Section 2.1.
2.2 Registration Procedures. In order to effect the
registration of any Registrable Securities under the Securities Act as provided
in section 2.1, the Company shall:
(i) prepare and file (in no event later than 15
business days after the date hereof) with the
Commission the requisite registration statement to
effect such registration and thereafter shall use its
best efforts to cause such registration statement to
be declared effective; PROVIDED, that before filing
such registration statement or any amendments
thereto, the Company will furnish to the counsel
selected by ▇▇▇▇▇ copies of all such documents
proposed to be filed, which documents will be subject
to the review of such counsel;
(ii) prepare and file with the Commission such
amendments and supplements to such registration
statement and the prospectus used in connection
therewith as may be necessary to keep such
registration statement effective and to comply with
the provisions of the Securities Act with respect to
the disposition of all securities covered by such
registration statement until all of such securities
have been disposed of in accordance with the intended
methods of disposition by the seller or sellers
thereof set forth in such registration statement or
such earlier date as all Registrable Securities have
been sold pursuant to Rule 144;
(iii) furnish to ▇▇▇▇▇ such number of conformed
copies of such registration statement and of each
such amendment and supplement thereto (in each case
including all exhibits), such number of copies of the
prospectus contained in such registration statement
(including each preliminary prospectus and any
summary prospectus) and a ny other prospectus filed
under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities
Act, and such other documents, as ▇▇▇▇▇ may
reasonably request;
(iv) register or qualify all Registrable Securities
and other securities covered by such registration
statement under such other securities laws or blue
sky laws of such jurisdictions as any seller thereof
and any underwriter of the securities being sold by
▇▇▇▇▇ shall reasonably request, to keep such
registrations or qualifications in effect for so long
as such registration statement remains in effect, and
take any other action which may be reasonably
necessary or advisable to enable such seller and
underwriter to consummate the disposition in such
jurisdictions of the securities owned by ▇▇▇▇▇;
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(v) furnish to the Company's transfer agent,
immediately upon the effectiveness of the
registration statement, an opinion of counsel for the
Company, dated the effective date of such
registration statement, stating that the resale of
the Registrable Securities by ▇▇▇▇▇ pursuant to the
registration statement will not violate the
Securities Act, provided that the assumptions
contained therein remain true, complete and accurate;
(vi) notify ▇▇▇▇▇ promptly and confirm such notice in
writing promptly thereafter:
(a) when the registration statement, the
prospectus or any prospectus supplement related
thereto or post-effective amendment to the
registration statement has been filed, and, with
respect to the registration statement or any
post-effective amendment thereto, when the same
has become effective;
(b) of any request by the Commission for
amendments or supplements to the registration
statement or the prospectus or for additional
information;
(c) of the issuance by the Commission of any
stop order suspending the effectiveness of the
registration statement or the initiation of
proceedings by any Person for that purpose;
(d) of the receipt by the Company of any
notification with respect to the suspension of
the qualification of any Registrable Securities
for sale under the securities or blue sky laws
of any jurisdiction or the initiation or threat
of any proceeding for such purpose;
(vii) notify ▇▇▇▇▇ (at any time when a prospectus
relating thereto is required to be delivered under
the Securities Act) upon discovery that, or upon the
happening of any event as a result of which, the
prospectus included in such registration statement,
as then in effect, includes an untrue statement of a
material fact or omits to state any material fact
required to be stated therein or necessary to make
the statements therein not misleading in the light of
the circumstances under which they were made, and at
the request of any
-3-
such seller promptly prepare and furnish to such
seller and each underwriter, if any, a reasonable
number of copies of a supplement to or an amendment
of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such
securities, such prospectus shall not include an
untrue statement of a material fact or omit to state
a material fact required to be stated therein or
necessary to make the statements therein not
misleading in the light of the circumstances under
which they were made;
(viii) use its best efforts to obtain the withdrawal
of any order suspending the effectiveness of the
registration statement at the earliest possible
moment;
(ix) otherwise use its best efforts to comply with
all applicable rules and regulations of the
Commission, and make available to its security
holders, as soon as reasonably practicable, an
earnings statement covering the period of at least
twelve months, but not more than eighteen months,
beginning with the first day of the Company's first
full calendar month after the effective date of such
registration statement which earnings statement shall
satisfy the provisions of Section 11 (a) of the
Securities Act and Rule 158 thereunder, and will
furnish to each such seller at least two business
days prior to the filing thereof a copy of any
amendment or supplement to such registration
statement or prospectus and shall not file any
thereof to which any such seller shall have
reasonably objected on the grounds that such
amendment or supplement does not comply in all
material respects with the requirements of the
Securities Act or of the rules or regulations
thereunder;
(x) provide and cause to be maintained a transfer
agent and registrar for all Registrable Securities
covered by such registration statement from and after
a date not later than the effective date of such
registration statement;
(xi) use its best efforts to list all Registrable
Securities covered by such registration statement on
any securities exchange on which any of the
securities of the same class as the Registrable
Securities are the listed.
-4-
The Company may require ▇▇▇▇▇ to furnish to the Company such information
regarding the distribution of the Registrable Securities as is required by law
to be disclosed in the registration statement. The Company shall not file any
registration statement or amendment thereto or any prospectus or any supplement
thereto (including such documents incorporated by reference and proposed to be
filed after the initial filing of the registration statement) to which ▇▇▇▇▇
shall reasonably object on a timely basis.
▇▇▇▇▇ covenants and agrees that (i) he will not offer or sell any Registrable
Securities under the registration statement until he has received copies of the
Prospectus as then amended or supplemented and notice from the Company that such
registration statement and any post amendments thereto have become effective as
contemplated by Section 2.2(vi) (a), (ii) ▇▇▇▇▇ will comply with the prospectus
delivery requirements of the Securities Act as applicable to him in connection
with sales of Registrable Securities pursuant to the registration statement,
(iii) upon receipt of a notice from the Company of the occurrence of any event
of the kind described in Section 2.2(vi) (c) or Section 2.2(vii), ▇▇▇▇▇ will
forthwith discontinue disposition of such Registrable Securities until ▇▇▇▇▇'▇
receipt of the copies of the supplemented Prospectus and/or amended registration
statement, or until he is advised in writing by the Company that the use of the
applicable Prospectus may be resumed and in either case has received copies of
any additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or registration statement.
2.3 Preparation; Reasonable Investigation. In
connection with the preparation and filing of the registration statement under
the Securities Act pursuant to this Agreement the Company will give ▇▇▇▇▇ his
underwriters, if any, and his counsel and accountants the opportunity to review
such registration statement each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto. and will give each
of them such access to its books and records and such opportunities to discuss
the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be necessary,
in the opinion of such holders' and such underwriters' respective counsel, to
conduct a reasonable investigation within the meaning of the Securities Act.
2.4 Indemnification.
(a) Indemnification By The Company. In the event
of any registration of any Registrable Securities of the Company under the
Securities Act, the Company, shall and hereby does agree to, indemnify and hold
harmless. ▇▇▇▇▇, each other Person who participates as an underwriter in the
offering or
-5-
sale of such securities and each other Person, if any, who controls such holder
or any such underwriter within the meaning of the Securities Act, against any
losses, claims, damages or liabilities (joint or several) to which ▇▇▇▇▇ or such
underwriter or controlling person may become subject under the Securities Act or
otherwise insofar as such losses, claims, damages or liabilities (or actions or
proceedings whether commenced or threatened, in respect thereof) arose out of or
are based upon any untrue statement or alleged untrue statement of any material
act contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statement
therein not misleading, and the Company will reimburse such holder and each such
director, officer, underwriter and controlling person for any legal or any other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceeding, PROVIDED that
the Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
any such preliminary prospectus, final prospectus, summary prospectus, amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company specifically stating that it is for use in the
preparation thereof and, provided further that the Company shall not be liable
to any Person who participates as an underwriter in the offering or sale of
Registrable Securities or to any other Person, if any, who controls such
underwriter within the meaning of the Securities Act, in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of such Person's failure to send or give
a copy of the final prospectus, as the same may be then supplemented or amended,
to the Person asserting the existence of an untrue statement or alleged untrue
statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person, if such
statement or omission was corrected in such final prospectus. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such holder or any such director, officer, underwriter or
controlling person and shall survive the transfer of such securities by such
holder.
(b) Indemnification By The Sellers. ▇▇▇▇▇ shall
indemnify and hold harmless (in the same manner and to the same extent as set
forth in section 2.4(a)) the Company, each director of the Company, each officer
of the Company and each
-6-
other person, if any, who controls the Company within the meaning of the
Securities Act, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus final, prospectus or summary prospectus contained therein, or any
amendment or supplement thereto if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company specifically stating that it is
for use in the preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement. Any
such indemnity shall remain in full force and effect, regardless of any
investigation made by or on behalf of the Company or any such director, of
officer or controlling person and shall survive the transfer of such securities
by such seller.
(c) Notices Of Claims, etc. Promptly after
receipt by an indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in this Section 2.4, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the indemnifying party of the commencement of such
action, provided that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
under section 2.4, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim, the indemnifying party shall be
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified, to the extent that the indemnifying
party may wish, with counsel reasonably satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
consent of the indemnified party, consent to entry of any judgment or enter into
any settlement of any such action which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation. No
indemnified party shall consent to entry of any judgment or enter into any
settlement of any such action the defense of which has been assumed by an
indemnifying party without the consent of such indemnifying party.
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(d) Other Indemnification. Indemnification
similar to that specified in the preceding subdivisions of this Section 2.4
(with appropriate modifications) shall be given by the Company and ▇▇▇▇▇ with
respect to any required registration or other qualification of securities trader
any Federal or state law or regulation of any governmental authority, other than
the Securities Act.
(c) Indemnification Payments. The indemnification
required by this Section 2.4 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred.
(f) Contribution. If the indemnification provided
for in this Section 2.4 is unavailable to an indemnified party in respect of any
expenses loss, claim, damage or liability referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such expense, loss, claim, damage or liability (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, on the one
hand and the holder or underwriter, as the case may be, on the other from the
distribution of the Registrable Securities or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
holder or underwriter, as the case may be, on the other in connection with the
statements or omissions which resulted in such expense, loss, damage or
liability, as well as any other relevant equitable considerations. The relative
fault of the Company on the one hand and of the holder or underwriter, as the
case may be, or the other shall be determined by reference to, among other thing
whether the untrue or alleged untrue statement of a material Pact or omission to
state a material fact relates to information supplied by the Company, by the
holder or by the underwriter and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission,
PROVIDED that the foregoing contribution agreement shall not inure to the
benefit of any indemnified party if indemnification would be unavailable to such
indemnified party by reason of the provisions contained in the first sentence of
section 2.4(a) and in no event shall the obligation of any indemnifying party to
contribute under this Section 2.4(f) exceed the amount that such indemnifying
party would have been obligated to pay by way of indemnification if the
indemnification provided for under section 2.4(a) or section 2.4(b) had been
available under the circumstances.
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The Company and ▇▇▇▇▇ agree that it would not be
just and equitable if contribution pursuant to this subdivision (f) were
determined by PRO RATA allocation (even if the holders and any underwriters were
heated as one entity for such purpose) or by any other method of allocation that
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, dam ages and liabilities referred to in
the immediately preceding paragraph shall be deemed to in eludes subject to the
limitations set forth in the preceding sentence and subdivision (c) of this
Section 2.4, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section
2.4(f), no holder of Registerable Securities or underwriter shall be required to
contribute any amount in excess of the amount by which (i) in the case of any
such holder, the net proceeds received by such holder From the sale of
Registrable Securities or (ii) in the case of all underwriter, the total price
at which the Registrable Securities purchased by it and distributed to the
public were offered to the public exceeds, in any such case, the amount of any
damages that such holder or underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission. No Person guilty
of fraudulent misrepresentation (within the meaning of Section 11 (f) of the
Securities Act) shall be entitled to contribution frown any person who was not
guilty of such fraudulent misrepresentation.
3. Definitions. As used herein, unless the context
otherwise requires, the following terms have the following respective meanings:
Commission: The Securities and Exchange Commission.
Common Stock: As defined in section 1.
Company: As defined in the introductory paragraph of this
Agreement.
Exchange Act: The Securities Exchange Act of 1934, or any
similar Federal statute, and the rules and regulations of the
Commissions thereunder, all as the saline shall be in effect
at the time. Reference to a particular section of the
Securities Exchange Act of 1934 shall include a reference to
the comparable section, if any, of any such similar Federal
statute.
Person: A corporation, an association, a partnership, an
organization, business, an individual, a
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governmental or political subdivision thereof or a
governmental agency.
Promissory Note: As defined in section 1.
Registrable Securities: All shares of Common Stock issuable
pursuant to the Promissory Note and any shares of Common Stock
and any securities issued or issuable with respect to any
Common Stock referred to above by way of stock dividend or
stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other
reorganization or otherwise. As to any particular Registrable
Securities, such securities shall cease to be Registerable
Securities when (a) a registration statement with respect to
the sale of such securities shall have become effective under
the Securities Act and such securities shall have been
disposed of in accordance with such registration statement,
(b) they shall have been distributed to the public pursuant to
Rule 144 (or any successor provision) under the Securities
Act, (c) they shall have been otherwise transferred, or (d)
they shall have ceased to be outstanding.
Registration Expenses: All expenses incident to the Company's
performance of or compliance with section 2, including,
without limitation. all registration, filing and NASD fees,
all stock exchange listing fees, all fees and expenses of
complying with securities or blue sky laws, all word
processing, duplicating and printing expenses, messenger and
delivery expenses, the fees and disbursements of counsel for
the Company and of its independent public accountants,
including the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and
compliance, premiums and other costs of policies of insurance
against liabilities of the Company, its officers and directors
arising out of the public offering of the Registrable
Securities being registered and any fees and disbursements of
underwriters customarily paid by issuers or sellers of
securities, but excluding underwriting discounts and
commissions and transfer taxes, if any. In addition, the
Company shall pay up to $5,000 for the fees and disbursements
of one counsel retained by ▇▇▇▇▇ in connection with the filing
of the registration statement hereunder.
Securities Act: the Securities Act of 1933, or any similar
Federal statute, and the rules and regulations of the
Commission thereunder, all as of the same shall be in effect
at the time. References to a particular section of the
Securities Act of 1933 shall include a
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reference to the comparable section, if any, of any such
similar Federal stature.
Stock Purchase Agreement: As defined in section 1.
4. Rule 144. If the Company shall have filed a registration
statement pursuant to the requirements of section 12 of the Exchange Act or a
registration statement pursuant to the requirements of the Securities Act, the
Company shall file the reports required to be filed by it under the Securities
Act and the Exchange Act and the rules and regulations adopted by the Commission
thereunder (or, if the Company is not required to file such reports, will, upon
the request of ▇▇▇▇▇, make publicly available other information) and shall take
such furler action as ▇▇▇▇▇ may reasonably request, all to the extent required
from time to time to enable ▇▇▇▇▇ to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted by
the Commission. Upon the request of ▇▇▇▇▇, the Company shall deliver to such
holder a written statement as to whether it has complied with the requirements
of this Section 4.
5. Amendments And Waivers. This Agreement may be amended and
the Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only by the written consent of each of
the Company and ▇▇▇▇▇.
6. Notices. Except as otherwise provided in this Agreement,
all notices, requests and other communications to any Person provided for
hereunder shall be in writing and shall be given to such Person (as in the case
of ▇▇▇▇▇, at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such
other address that such holder shall have furnished to the Company in writing,
or (b) in the case of the Company, at ▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ to the
attention of its Chief Financial Officer, or at such other address. or to the
attention of such other officer, as the Company shall be furnished to ▇▇▇▇▇ in
writing. Each such notice, request or other communication shall be effective (i)
if given by mail 72 hours after such communication is deposited in the mails
with first class postage prepaid, addressed as aforesaid or (ii) if given by any
other means (including, without limitation, by air courier), when delivered at
the address specified above.
7. Assignment. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and their respective
successors and assigns, including, in the case of ▇▇▇▇▇, the permitted assigns
under the Promissory Note.
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8. Descriptive Headings. The descriptive headings of the
several sections and paragraphs of this Agreement are inserted for reference
only and shall not limit or otherwise affect the meaning hereof.
9. Governing Law THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE PRINCIPLES OF
CONFLICTS OF LAWS.
10. Counterparts. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed an
original but all such counterparts shall together constitute one and the same
instrument. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of the
party executing the same with the same force and effect as if such facsimile
signature were the original thereof.
11. Entire Agreement. This Agreement embodies the entire
agreement and understanding between the Company and each other party hereto
relating to the subject matter hereof and supersedes all prior agreements and
understandings relating to such subject matter.
12. Severability. If any provision of this Agreement, or the
application of such provisions to any Person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to Persons or circumstances other than those to which it is held invalid, shall
not be affected thereby.
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IN WITNESS. the patties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
DATATEC SYSTEMS, INC.
By:____________________________
Title:
_______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇
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NONCOMPETITION AGREEMENT
THIS AGREEMENT dated March 9, 1998, is by and between DATATEC SYSTEMS,
INC., a Delaware corporation ("Purchaser") and ▇▇▇▇▇ ▇. ▇▇▇▇▇ ("Seller").
W I T N E S S E T H:
WHEREAS, Purchaser, Seller and Computer-Aided Software Integration,
Inc., a Delaware corporation ("CASI"), have entered into that certain Stock
Purchase Agreement dated March 9, 1998 (the "Purchase Agreement"), pursuant to
which Purchaser is purchasing all of the stock of CASI owned by Seller; and
WHEREAS, as a condition to the closing of the transactions contemplated
by the Purchase Agreement, Seller has agreed to enter into a Noncompetition
Agreement with Purchaser;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and promises made herein, the parties hereto agree as follows:
1. CONSIDERATION. As consideration for the covenants herein, Purchaser
shall pay, simultaneously with the execution hereof, $77,500 by wire transfer of
immediately available funds to an account designated by the Seller.
2. TERM. This Agreement shall commence on the date hereof and continue
for a period of two (2) consecutive years (the "Term").
3. NONCOMPETITION AND RELATED MATTERS. During the Term Seller shall
not:
(i) directly or indirectly own, manage, operate, join,
control, participate in, invest in, lend money to, guarantee the debts or
obligations of or otherwise be connected with, in any manner, whether as an
officer, director, employee, partner, investor or otherwise, any business entity
that is engaged in the business of designing, developing and marketing software
that assists in the configuration and integration process (the "CASI Business");
(ii) for himself or on behalf of any other person,
partnership, corporation or entity, call on any customer of CASI or any
successor to the CASI Business for the purpose of soliciting CASI Business,
diverting CASI Business or taking away any customer of the CASI Business from
the CASI Business or any successor to the CASI Business;
(iii) induce, influence, or seek to induce or influence, ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ Check, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (except for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ with
respect to Cumetrix Data Systems Corporation), or ▇▇▇ ▇▇▇▇▇▇ or any future
employee, representative, agent, consultant or independent contractor engaged in
the CASI Business as a developer, programmer, technical writer, or in a
technical support position, to terminate his or her relationship with CASI or
any successor to the CASI Business; or
(iv) at any time utilize for any commercial purpose a name
incorporating the words "Computer-Aided Software Integration", or "Integrator's
Workbench" or words or expressions likely to be
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confused therewith, or which shall be likely to lead to confusion with the
business conducted by CASI or any successor to the CASI Business.
Nothing herein contained shall be deemed to prohibit Seller
from investing his funds in securities of an issuer if the securities of such
issuer are listed for trading on a national securities exchange or are traded in
the over-the-counter market and the Executive's holdings therein represent less
than 5% of the total number of shares or principal amount of the securities of
such issuer outstanding. Nothing contained in Section 3(i) or 3(ii) shall apply
to Seller activities in relation to Cumetrix Data Systems Corporation
("Cumetrix") to the extent that Cumetrix does not design or develop software
that functions substantially the same as the software developed by CASI prior to
the date hereof, provided, however, that nothing herein shall be deemed to
prohibit Seller from engaging in any activities which would otherwise be
permitted under the terms of the Amended and Restated License Agreement between
CASI and Cumetrix (formerly known as DataNet International, Inc.) dated as of
July 1, 1997.
4. ENFORCEABILITY; INJUNCTION. By reason the fact that irreparable harm
would be sustained by Purchaser if there is any breach by Seller of its
covenants and agreements under this Agreement, so long as Purchaser is not in
breach of its obligations under this Agreement, it is agreed that in addition to
any other rights which Purchaser may have under this Agreement or at law or in
equity, Purchaser shall be entitled to apply to any court of
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competent jurisdiction for, and obtain, injunctive relief against Seller in
order to prevent any breach or threatened breach of the provisions of this
Agreement.
5. BINDING EFFECT; WAIVER. This Agreement shall be binding upon and
shall inure to the benefit of Seller and shall be binding on and inure to the
benefit of Purchaser and its successors. Neither this Agreement nor the interest
of either party herein shall be assigned by such party without the prior written
consent of the other party being first obtained. The waiver by either of the
parties of any breach of any provision hereof shall not constitute a waiver by
such party of any other or succeeding breach of any provision hereof.
6. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of New York, without regard to its principles of conflict of laws.
7. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes any
prior or contemporaneous agreement or understanding with respect thereto. No
amendment hereof shall be deemed valid unless in writing and signed by the
parties hereto.
8. REMEDIES. No remedy conferred by any of the specific provisions of
this Agreement is intended to be exclusive of any other remedy which is
otherwise available at law, in equity, by statute or otherwise, and each and
every other remedy shall be cumulative and shall be in addition to every other
remedy given hereunder.
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[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, Purchaser and Seller have executed this Agreement
on the date first above written.
DATATEC SYSTEMS, INC.
By:
---------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: CFO
By:__________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇
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