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EXHIBIT 10.23
INVESTOR'S AGREEMENT
THIS INVESTOR'S AGREEMENT (this "Agreement"), is entered into as of
June 16, 1997, among XXXX XXXXXX, an individual resident of the State of
Virginia ("Xxxxxx"), SYNQUEST, INC., a Georgia corporation ("SynQuest"), and
WARBURG, XXXXXX INVESTORS, L.P., a Delaware limited partnership ("Warburg").
In consideration of the mutual promises, representations, warranties
and conditions set forth in this Agreement, Xxxxxx and SynQuest mutually agree
as follows:
ARTICLE I. DEFINITIONS.
Capitalized terms used in this Agreement and not otherwise defined have
the respective meanings specified in the Agreement and Plan of Merger (the
"Merger Agreement"), dated as of June 16, 1997, among Xxxxxx, XxxXxxxx, Xxxxxx
Consulting, Inc., a Georgia corporation, and Xxxxxx Management Consultants Inc.,
a Delaware corporation.
ARTICLE II. INVESTMENT REPRESENTATIONS.
(a) Xxxxxx represents and warrants to SynQuest that he is a
resident of the State of Virginia and is not acquiring the SynQuest Shares for
the account or benefit of any other person.
(b) Xxxxxx represents and warrants to SynQuest that he is
acquiring the SynQuest Shares for investment purposes only and for his own
account (i.e., with the intent of holding the SynQuest Shares for investment and
without the intent of participating directly or indirectly in a distribution of
the SynQuest Shares) and without the participation of any other person
respecting Xxxxxx'x acquisition of the SynQuest Shares. By execution of this
Agreement, Xxxxxx represents and warrants to SynQuest that he has no agreement,
contract or understanding with any person or entity to sell, transfer, or grant
rights in any of the SynQuest Shares.
(c) Xxxxxx acknowledges and agrees that the SynQuest Shares to be
acquired by him may not be offered for sale, hypothecated, sold, transferred or
otherwise disposed of, unless the SynQuest Shares are transferred (i) in
accordance with Regulation S of the Securities Act of 1933 (the "Securities
Act"), (ii) pursuant to registration under the Securities Act, or (iii) pursuant
to an available exemption from registration.
(d) Xxxxxx represents and warrants to SynQuest that he (i) has the
knowledge, skill and experience in business and financial matters, based on
actual participation, so that he is capable of evaluating the merits and risks
of this investment in SynQuest and the suitability thereof as an investment for
himself, (ii) has sufficient net worth to sustain a loss of all of his interest
in the SynQuest Shares, without economic hardship if such a loss should occur
and can
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bear the economic risk of his investment in SynQuest Shares, (iii) understands
that an investment in the SynQuest Shares is speculative and involves a high
degree of risk of loss, and (iv) has received such documents and information as
he has requested and has had an opportunity to ask questions of and receive
satisfactory answers from SynQuest concerning the terms and conditions of the
investment in the SynQuest Shares contemplated under the Merger Agreement, and
based thereon believes that he can make an informed investment decision.
(e) Xxxxxx represents and warrants that he understands that he
must bear the economic risk of his investment in the SynQuest Shares for an
indefinite period of time because the SynQuest Shares are not registered under
the Securities Act or any state securities laws and may not be resold unless
subsequently registered under the Securities Act and any applicable state
securities laws or unless an exemption from such registration is available.
Xxxxxx agrees that he will not attempt to pledge, transfer, convey or otherwise
dispose of his SynQuest Shares, except in a transaction that is the subject of
either (i) an effective registration statement under the Securities Act and any
applicable state securities laws, or (ii) an opinion of counsel, which opinion
and counsel must be satisfactory SynQuest, to the effect that such registration
is not required. SynQuest may rely on such an opinion of counsel in making such
determination. Xxxxxx understands that no public market now exists, or may ever
exist, for the SynQuest Shares.
(f) Xxxxxx acknowledges that he has had the opportunity to ask
questions of SynQuest's officers with respect to the terms and conditions of the
offering of the SynQuest Shares and the business and financial condition of
SynQuest.
ARTICLE III. RESTRICTIVE LEGEND AND NOTICE OF PROPOSED
TRANSFER.
(a) Restrictive Legend. Each certificate representing the SynQuest
Shares and each certificate issued upon exchange or transfer of the SynQuest
Shares must be stamped or otherwise imprinted with a legend substantially in the
following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER ANY
STATE SECURITIES LAW OR THE SECURITIES ACT OF 1933, AS AMENDED (THE "FEDERAL
ACT"). THESE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR
SALE, HYPOTHECATED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF, NOR WILL ANY
ASSIGNEE OR TRANSFEREE THEREOF BE RECOGNIZED BY THE CORPORATION AS HAVING ANY
INTEREST IN SUCH SHARES, UNLESS SUCH SHARES ARE TRANSFERRED IN ACCORDANCE WITH
REGULATION S OF THE FEDERAL ACT OR ARE THE SUBJECT OF (I) AN EFFECTIVE
REGISTRATION STATEMENT WITH RESPECT TO THE SHARES UNDER THE FEDERAL ACT AND
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ANY APPLICABLE STATE SECURITIES LAWS OR (II) AN OPINION OF COUNSEL, WHICH
OPINION AND COUNSEL MUST BE SATISFACTORY TO THE CORPORATION, TO THE EFFECT THAT
THE TRANSACTION BY WHICH SUCH SHARES WILL BE OFFERED FOR SALE, HYPOTHECATED,
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACTS OR IS OTHERWISE IN COMPLIANCE WITH THE REGISTRATION
REQUIREMENTS OF SUCH ACTS."
(b) Notice of Proposed Transfer. Prior to any proposed transfer of
any SynQuest Shares by Xxxxxx, Xxxxxx must give written notice to SynQuest of
his intention to effect such transfer. Each such notice must describe the manner
of the proposed transfer and, if requested by SynQuest, must be accompanied by
an opinion of counsel reasonably satisfactory to SynQuest to the effect that the
proposed transfer of the SynQuest Shares may be effected without registration
under the Securities Act or under any applicable blue sky or state securities
laws, whereupon Xxxxxx will be entitled to transfer such SynQuest Shares in
accordance with the terms of his notice. Each certificate for SynQuest Shares
transferred as above provided must bear the legend set forth in Article III,
except that such certificate will not bear the legend if (i) the transfer is in
accordance with the provisions of Rule 144 (or any other rule permitting public
sale without registration under the Securities Act) or (ii) the opinion of
counsel referred to above is to the further effect that the transferee and any
subsequent transferee (other than an affiliate of SynQuest) would be entitled to
transfer such securities in a public sale without registration under the
Securities Act.
ARTICLE IV. RIGHT OF FIRST REFUSAL.
Xxxxxx agrees that he will not, directly or indirectly, transfer any of
the SynQuest Shares owned by him unless in each such instance Xxxxxx has first
made the offers to sell to SynQuest and Warburg contemplated by this Article IV,
and such offers have been accepted. Notwithstanding the foregoing, the
provisions of this Article IV will not apply to a transfer of SynQuest Shares by
Xxxxxx to any member of Xxxxxx'x immediate family, provided that the transferee
agrees, in writing, to be bound by the provisions of this Agreement as if he or
she were Xxxxxx.
(a) Offer of Transfer. Copies of Xxxxxx'x offer to transfer must
be given to SynQuest and to Warburg and must consist of an offer to sell to
SynQuest or, failing its election to purchase, then an offer to sell to Warburg,
all of the shares then proposed to be transferred by Xxxxxx (the "Subject
Shares") pursuant to a bona fide offer of a third party, to which copies must be
attached a statement of intention to transfer to such third party, the name and
address of the prospective third party transferee, the number of shares involved
in the proposed transfer, and terms of such transfer. If SynQuest does not elect
to purchase the
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Subject Shares or is legally unable to do so, SynQuest will promptly notify
Warburg, at which point Warburg will have the right to purchase such Subject
Shares.
(b) Acceptance of Offer. Within 10 business days after the receipt
of the offer described in subsection (a) above, SynQuest may, at its option,
elect to purchase all, but not less than all, of the Subject Shares. SynQuest
may exercise such option by giving notice thereof to Xxxxxx and to Warburg
within such 10 business day period. In the event that SynQuest does not exercise
its option to purchase, Warburg may exercise its option to purchase by giving
notice thereof to Xxxxxx and to SynQuest within 10 business days after receipt
of notice from SynQuest in accordance with subsection (a) above to the effect
that SynQuest did not exercise its option to purchase. In either event, the
notice required to be given by the purchasing party must specify a date for the
closing of the purchase which may not be more than 20 business days after the
date of the giving of such notice or within 20 business days after the
conclusion of an appraisal procedure conducted pursuant to subsection (e) below.
(c) Purchase Price. The purchase price per share for the Subject
Shares must be the price per share offered to be paid by the prospective
transferee described in the offer, which price must be paid in cash or, if so
provided in the offer of the prospective transferee, cash plus deferred payments
of cash, in the same proportions, and with the same terms of deferred payment,
as therein set forth.
(d) Consideration Other Than Cash. If the offer of Subject Shares
under this Article IV is for consideration other than cash or cash plus deferred
payments of cash, Warburg or SynQuest must pay the cash equivalent of such other
consideration. If Xxxxxx and Warburg or SynQuest cannot agree on the amount of
such cash equivalent within 10 business days after the beginning of the 20
business day period under subsection (b), any of such parties may, by 3 business
days' written notice to the other, initiate appraisal proceedings under
subsection (e) for determination of the cash equivalent. SynQuest or Warburg may
give notice to Xxxxxx revoking an election to purchase the Subject Shares within
10 days after determination of the appraised value, if it chooses not to
purchase the Subject Shares. The other purchasing party will then have 10
business days in which to elect to purchase the Subject Shares not purchased
because of such revocation.
(e) Appraisal Procedure. If any party initiates an appraisal
procedure to determine the amount of the cash equivalent of any consideration
for Subject Shares under subsection (d), then Xxxxxx, on the one hand, and
SynQuest or Warburg, on the other hand, will each promptly appoint as an
appraiser an individual who must be a member of a nationally recognized
investment banking firm. Each appraiser must, within 20 business days of
appointment, separately investigate the value of the consideration for the
Subject Shares as
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of the proposed transfer date and must submit a notice of an appraisal of that
value to each party. Each appraiser will be instructed to determine such value
by taking into account reasonably quantifiable tax benefits, if any, to Xxxxxx
associated with Xxxxxx receiving other consideration rather than cash. If the
appraised values of such consideration (the "Earlier Appraisals") vary by less
than 10%, the average of the two appraisals on a per share basis will be
controlling as the amount of the cash equivalent. If the appraised values vary
by more than 10%, the appraisers, within 10 business days of the submission of
the last appraisal, must appoint a third appraiser who will be member of a
nationally recognized investment banking firm. The third appraiser must, within
20 business days of his appointment, appraise the value of the consideration for
the Subject Shares as of the proposed transfer date and submit notice of his
appraisal to each party. The value determined by the third appraiser will be
controlling as the amount of the cash equivalent unless that value is greater
than the two Earlier Appraisals, in which case the higher of the two Earlier
Appraisals will control. If the value determined by the third appraiser is less
than the two Earlier Appraisals, the lower of the two Earlier Appraisals will
control. If any party fails to appoint an appraiser or if one of the two initial
appraisers fails after appointment to submit his appraisal within the required
period, the appraisal submitted by the remaining appraiser will be controlling.
The cost of the first appraisal initiated under subsection (d) with respect to
Xxxxxx will be paid by SynQuest. Thereafter, the cost of any such appraisals
will be shared one-half by Xxxxxx and one-half by Warburg or SynQuest depending
on who initiated the appraisal procedure.
(f) Closing of Purchase. The closing of the purchase will take
place on the closing date stated in the purchase notice pursuant to subsection
(b) hereof, at the office of SynQuest or such other mutually agreeable location
or date and the purchase price, to the extent comprised of cash, will be paid at
the closing, and cash equivalents and documents evidencing any deferred payments
of cash permitted pursuant to subsection (c) above will be delivered at the
closing. At the closing, Xxxxxx will deliver to the purchaser of the Subject
Shares the certificates evidencing the Subject Shares to be conveyed, duly
endorsed or accompanied by a duly executed separate stock power.
(g) Release from Restriction; Termination of Rights. If the offer
to sell is neither accepted by SynQuest nor by Warburg, or if the closing fails
to take place in accordance with subsection (f) above by the closing date stated
in the purchase notice, unless otherwise agreed to by Xxxxxx and the party that
gave notice of its intention to purchase the Subject Shares, Xxxxxx may make a
bona fide transfer to the prospective transferee named in the statement attached
to the offer in accordance with the agreed-upon terms of such transfer,
provided, that (i) such transfer will be made only in strict accordance with the
terms therein stated and (ii) the transferee agrees, in writing, to be bound by
the provisions of this Agreement as if he or it were Xxxxxx. However, if Xxxxxx
fails to make such transfer within 45 business days following the expiration of
the time provided in this Agreement for the election to purchase,
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such shares will again become subject to all the restrictions of this Article
IV. The right of first refusal granted under this Article IV will terminate if
SynQuest breaches any material payment obligation to Xxxxxx under Article V (Put
Right) or under Sections 3.1 (Salary) and 3.2 (Bonus) of the Employment
Agreement, dated June 16, 1997, between SynQuest and Xxxxxx, and SynQuest fails
to cure such breach within thirty (30) days following receipt by SynQuest of
written notice of default by Xxxxxx.
ARTICLE V. PUT RIGHT. On the third anniversary of the Merger
Agreement, and on each of the subsequent four (4) anniversaries of the Merger
Agreement, Xxxxxx may elect to put up to twenty percent (20%) of the SynQuest
Shares (that is, up to 150,000 of the SynQuest Shares) at a price equal to $8.00
per share (no dividends or accrued interest will be payable with respect to the
shares). In order to exercise his put rights under this Article, Xxxxxx must
deliver a written notice of his election to SynQuest specifying the number of
SynQuest Shares Xxxxxx elects to sell to SynQuest ("Put Election Notice"). Each
Put Election Notice will constitute an irrevocable election to sell the shares
identified in the Put Election Notice and must be delivered by Xxxxxx to
SynQuest no later than sixty (60) days prior to the anniversary date specified
above. Within thirty (30) days of delivery by Xxxxxx to SynQuest of any Put
Election Notice, SynQuest will pay Xxxxxx an amount equal to $8.00 per share for
the number of shares specified in the Put Election Notice, and Xxxxxx will
deliver to SynQuest good title, free and clear of any liens, of such shares. The
put rights granted under this Article automatically expire and will be null and
void and have no other force and effect upon the closing of an underwritten
public offering pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), covering the offer
and sale of Common Stock for the account of SynQuest to the public generally.
ARTICLE VI. OPTION TO PURCHASE ADDITIONAL SHARES. Prior to the
consummation of an offering of any of the capital stock of SynQuest to Warburg
or its Affiliates (as defined below), Xxxxxx will have a right of first refusal
to purchase that number of shares of SynQuest's capital stock, at the same price
to be paid by Warburg or its Affiliates, up to and equal to that number of
shares necessary, based on the proposed offering to Warburg or its Affiliates,
to maintain Xxxxxx'x then-current fully-diluted equity interest percentage in
SynQuest; provided, however, that the right of first refusal granted under the
preceding clause will only apply to Xxxxxx'x equity interest in SynQuest up to
five percent (5%) (for example, if Xxxxxx owns three percent (3%) of the
fully-diluted equity of SynQuest prior to a proposed offering of additional
shares to Warburg, then Xxxxxx will have the right to purchase enough shares to
maintain his fully-diluted interest at three percent (3%); and if Xxxxxx owns
seven percent (7%) of the fully-diluted equity of SynQuest prior to a proposed
offering of additional shares to Warburg, then Xxxxxx will have the right to
purchase enough shares to maintain his interest at five percent (5%)). In order
to exercise this right, Xxxxxx (i) must notify SynQuest within thirty (30) days
of Xxxxxx'x receipt of notice from SynQuest of the proposed investment
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by Warburg or its Affiliates as to whether or not Xxxxxx desires to purchase any
capital stock of SynQuest, and (ii) must make a capital contribution in cash, or
in such other form acceptable to the Board of Directors of SynQuest, within ten
(10) days of notifying SynQuest of his intent to exercise his right to make such
capital contribution. "Affiliates" means any Entity that directly or indirectly
controls or is controlled by or under direct or indirect common control with
Warburg. For purposes of this Agreement, (i) "control" means ownership of fifty
percent (50%) or more of the voting capital stock or other voting securities of
Warburg or such other Entity, as applicable, (ii) "controlling" and "controlled"
have meanings correlative to the foregoing, and (iii) "Entity" means any
individual, corporation, partnership, limited liability company, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof. The option to purchase additional shares granted under this
Article automatically expire and will be null and void and have no other force
and effect upon the closing of an underwritten public offering pursuant to an
effective registration statement under the Securities Act covering the offer and
sale of Common Stock for the account of SynQuest to the public generally.
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The parties have caused this Agreement to be duly executed as of June
16, 1997.
SynQuest:
SYNQUEST, INC.
By: /s/
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Title:
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Xxxxxx:
/s/ Xxxx Xxxxxx
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Warburg:
WARBURG, XXXXXX INVESTORS, L.P.
BY: WARBURG, XXXXXX & CO., GENERAL PARTNER
By: /s/ Xxxxxx Xxxxx
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Title: Partner
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