EXHIBIT 10.6
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STOCK PURCHASE AGREEMENT
relating to 2,000,000 shares of
Common Stock of
Diamond Technology Partners, Inc.
Dated: March 22, 1994
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Diamond Technology Partners, Inc.
STOCK PURCHASE AGREEMENT
Table of Contents
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1. Purchase and Sale of Stock..................................... 1
1.1 Sale and Issuance of Common Stock........................ 1
1.2 Closing.................................................. 2
2. Representations and Warranties of the Company.................. 3
2.1 Organization, Good Standing and Qualification............ 3
2.2 Capitalization and Reservation of Shares................. 3
2.3 Subsidiaries............................................. 4
2.4 Authorization............................................ 4
2.5 Valid Issuance of Warrant and Common Stock............... 4
2.6 Financial Information.................................... 5
2.7 Assumptions or Guarantees of Indebtedness of Other
Persons.................................................. 5
2.8 Investments in Other Persons............................. 5
2.9 Governmental Consents.................................... 5
2.10 Litigation.............................................. 5
2.11 Proprietary Information and Noncompete Agreements....... 6
2.12 Intellectual Property................................... 6
2.13 Compliance with Other Instruments....................... 7
2.14 Agreements.............................................. 7
2.15 Business Plan........................................... 7
2.16 Registration Rights..................................... 7
2.17 Title to Property and Assets............................ 8
2.18 Changes................................................. 8
2.19 Environmental and Safety Laws........................... 9
2.20 Employee Benefit Plans.................................. 9
2.21 Tax Returns, Payments and Elections..................... 9
2.22 Insurance............................................... 9
2.23 Minute Books............................................ 9
2.24 Labor Agreements and Actions............................ 9
2.25 Disclosure.............................................. 10
2.26 Real Property Holding Corporation....................... 10
3. Representations, Warranties and Obligations of the Investors... 10
3.1 Representations and Warranties........................... 10
3.2 Further Limitations on Disposition....................... 12
3.3 Legends.................................................. 12
3.4 Board of Directors....................................... 13
4. Conditions of Each Investor's Obligations at the Initial
Closing....................................................... 13
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4.1 Representations and Warranties........................... 13
4.2 Performance.............................................. 13
4.3 Compliance Certificate................................... 13
4.4 Proceedings and Documents................................ 13
4.5 Board of Directors....................................... 13
4.6 Management Group......................................... 13
4.7 Certain Ancillary Agreements............................. 13
4.8 Key-Man Insurance........................................ 14
4.9 Opinion of Company Counsel............................... 14
4.10 Securities Law Compliance............................... 14
5. Conditions of the Company's Obligations at Closing............. 14
5.1 Representations and Warranties........................... 14
5.2 Payment of the Purchase Price............................ 14
5.3 Ancillary Agreement...................................... 14
6. Registration Rights Generally.................................. 14
6.1 Definitions.............................................. 14
6.2 Request for Registration................................. 15
6.3 Company Registration..................................... 16
6.4 Obligations of the Company............................... 17
6.5 Furnish Information...................................... 18
6.6 Expenses of Demand Registration.......................... 18
6.7 Expenses of Company Registration......................... 18
6.8 Underwriting Requirements................................ 19
6.9 Delay of Registration.................................... 19
6.10 Indemnification......................................... 19
6.11 Reports Under Securities Exchange Act of 1934........... 22
6.12 Form S-3 Registration................................... 23
6.13 Assignment of Registration Rights....................... 24
6.14 Limitations on Subsequent Registration Rights........... 24
6.15 "Lock-up" Agreement..................................... 25
6.16 Mergers, Etc............................................ 26
6.17 Amendment of Registration Rights........................ 26
7. Special Registration in Connection with Rights Offering........ 27
7.1 Rights Offering.......................................... 27
7.2 Stock Split.............................................. 27
7.3 Rights Registration Statement............................ 28
7.4 Registration Services.................................... 28
7.5 Indemnification.......................................... 28
8 . Covenants of the Company...................................... 31
8.1 Delivery of Financial Statements........................ 31
8.2 Inspection; Observer Rights............................. 32
8.3 Employee Stock Issuances................................ 32
8.4 Right of First Offer.................................... 33
8.5 Insurance............................................... 34
8.6 Board of Directors...................................... 34
8.7 Other Affirmative Covenants............................. 34
8.8 Certain Negative Covenants.............................. 37
8.9 Indemnification......................................... 38
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8.10 Employees 39
8.11 Termination of Certain Covenants 39
9. Miscellaneous 39
9.1 Survival of Warranties 39
9.2 Successors and Assigns 39
9.3 Governing Law 39
9.4 Counterparts 39
9.5 Titles and Subtitles 39
9.6 Notices 40
9.7 Finder's Fee 40
9.8 Expenses 40
9.9 Amendments and Waivers 40
9.10 Severability 41
9.11 Aggregation of Stock 41
INDEX Index of Defined Terms
SCHEDULE I Schedule of Purchase and Sale by Investors
SCHEDULE II Schedule of Purchase and Sale by Management Group
SCHEDULE III Schedule of Exceptions
EXHIBIT A Articles of Incorporation, as Amended
EXHIBIT B Form of Warrant
EXHIBIT C Form of Guarantee Undertaking
EXHIBIT D Capitalization
EXHIBIT E-1 Form of Partners Employment Agreement
EXHIBIT E-2 Form of Executive Employees Employment Agreement
EXHIBIT E-3 Form of Nondisclosure Agreement
EXHIBIT F Form of Voting and Stock Restriction Agreement
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Diamond Technology Partners, Inc.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of March 22, 1994, by and between
Diamond Technology Partners, Inc., an Illinois corporation (the "Company"),
Xxxxxx X. Xxxxxxxxx ("Xxxxxxxxx") Xxxxxxxxxxx X. Xxxxxxx ("Xxxxxxx"), Safeguard
Scientifics, Inc., a Pennsylvania corporation ("Safeguard"), and the investors
listed on Schedule I hereto (each, an "Investor," and, together with Safeguard,
collectively, the "Investors").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
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1.1 Sale and Issuance of Common Stock.
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(a) The Company shall adopt and file with the Secretary of State of
the State of Illinois on or before the Closing (as defined below) the Articles
of Incorporation of the Company, as heretofore amended (the "Amended Articles")
in the form attached hereto as Exhibit A.
(b) Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties and covenants contained herein,
at the Initial Closing, the Second Closing and the Third Closing (as such terms
are defined in Section 1.2), each Investor agrees, severally but not jointly, to
purchase, and the Company agrees to sell and issue to each Investor, the number
of shares of the Company's Common Stock, no par value per share (the "Common
Stock"), to be purchased by such Investor on such date, and at the Initial
Closing Safeguard agrees to purchase, and the Company agrees to sell to
Safeguard, the warrant to purchase 500,000 of shares of Common Stock in the form
attached hereto as Exhibit B (the "Warrant"), in each case as set forth on
Schedule I hereto, in exchange for the purchase price to be paid therefor, as
set forth on Schedule I and Exhibit C hereto. Safeguard guarantees the
performance, to the extent required by the terms and conditions hereof, by each
of the other Investors of its obligations hereunder to purchase that number of
shares of Common Stock at each of the First Closing, the Second Closing and the
Third Closing as is set forth opposite such Investor's name on Schedule I
hereto; such guaranty is unconditional, irrevocable, unlimited and continuing.
(c) *
* This paragraph was amended and restated in its entirety pursuant to the First
Amendment to Diamond Technology Partners, Inc. Stock Purchase Purchase
Agreement.
1.2 Closing.
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(a) The purchase and sale of the Common Stock and the Warrant to the
Investors shall be consummated in a series of three closings (collectively, the
"Closing"), the first of which (the "Initial Closing") shall take place at the
offices of Safeguard, 800 The Safeguard Building, 000 Xxxxx Xxxx Xxxxx, Xxxxx,
Xxxxxxxxxxxx, at 10:00 a.m., on March 22, 1994, or at such other time and place
as the Company and Investors agree upon orally or in writing. At the Initial
Closing the Company shall deliver to each Investor a certificate representing
the Common Stock that such Investor is purchasing at the Initial Closing,
against delivery to the Company by such Investor of the full purchase price
therefor as set forth on Schedule I hereto, by cashier's or certified check
payable to the Company's order or by wire transfer to such account as the
Company shall designate or by conversion of notes issued by the Company to
certain Investors, at the option of such Investor, and the Company shall deliver
to Safeguard the executed Warrant against delivery to the Company of an executed
guarantee undertaking, in the form attached hereto as Exhibit C. No Investor
shall be obligated to purchase any shares of Common Stock or the Warrant at the
Initial Closing unless an aggregate of at least the minimum number of shares of
Common Stock to be sold to the Management Group on such date pursuant to
Schedule II hereto shall have been purchased or are concurrently purchased in
accordance with Schedule II, or arrangements, satisfactory in all respects to
the Investor, shall have been made for the purchase of such shares within 30
days after the Initial Closing.
(b) Subject to the provisions set forth herein, the purchase and sale
of the Common Stock remaining to be purchased by and sold to the Investors
hereunder shall be consummated on each of the date that is 60 days after the
Initial Closing (the "Second Closing") and the date that is 120 days after the
Initial Closing (the "Third Closing"), in each case at the same time and place
as the Initial Closing or at such time and place as the Company and the
Investors shall agree upon orally or in writing. At each of the Second Closing
and the Third Closing, the Company shall deliver to each Investor a certificate
representing the Common Stock that such Investor is purchasing at the Closing
against delivery to the Company by such Investor of the full purchase price
therefor as set forth on Schedule I hereto, by cashier's or certified check
payable to the Company's order or by wire transfer to such account as the
Company shall designate or by conversion of notes issued by the Company to
certain
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Investors, at the option of such Investor. No Investor shall be obligated to
purchase any shares of Common Stock at the Second Closing or the Third Closing
unless the Management Group (i) shall have purchased the minimum number of
shares of Common Stock to be sold to it prior thereto in accordance with
Schedule II hereto and (ii) concurrently purchases an aggregate of at least the
minimum number of shares of Common Stock to be sold to the Management Group on
such date pursuant to Schedule II, or arrangements, satisfactory in all respects
to the Investor, shall have been made for the purchase of such shares within 30
days after the Second Closing or the Third Closing, as the case may be.
(c) The term "Closing" as hereinafter used in this Agreement shall
refer only to the Initial Closing unless otherwise specified or required by the
context.
2. Representations and Warranties of the Company. The Company hereby
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represents and warrants to each Investor that, except as set forth on a Schedule
of Exceptions attached as Schedule III hereto, each of which exceptions shall
specifically identify the relevant subparagraph hereof to which it relates and
shall be deemed to be representations and warranties as if made hereunder:
2.1 Organization, Good Standing and Qualification. The Company is a
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corporation duly organized, validly existing and in good standing under the laws
of State of Illinois and has all requisite corporate power and authority to
carry on its business as now conducted and as proposed to be conducted in the
business plan dated November 1993 (the "Business Plan") heretofore furnished to
the Investors. The Company is not qualified to do business in any state other
than the State of Illinois but, when legally required to do so, shall become
duly qualified to transact business in each jurisdiction in which the failure so
to qualify would have a material adverse effect on its business or properties.
2.2 Capitalization and Reservation of Shares. The authorized capital of
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the Company consists, or will consist at or prior to the Initial Closing, of
7,000,000 shares of Common Stock, of which 100 shares are issued and outstanding
and are owned by the persons and in the amounts specified in Exhibit D hereto.
Except for the shares of Common Stock to be issued pursuant to this Agreement or
upon exercise of the Warrant, the shares of Common Stock that may be issued
pursuant to Section 8.3 hereof and the rights of the Investors and the
Management Group under Section 8.4 hereof, there are not outstanding any
options, warrants, rights (including conversion or preemptive rights) or
agreements for the purchase or acquisition from the Company of any shares of its
capital stock. The Company has reserved out of the authorized but unissued
capital stock 2,000,000 shares of
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Common Stock exclusively for issuance to the Investors hereunder, 500,000 shares
of Common Stock exclusively for issuance upon exercise of the Warrant, 1,500,000
shares of Common Stock exclusively for issuance to the Management Group in
accordance with Section 1.1 hereof and Schedule II hereto, and 1,500,000 shares
of Common Stock exclusively for issuance to employees pursuant to Section 8.3
hereof.
2.3 Subsidiaries. The Company does not presently own or control,
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directly or indirectly, any interest in any other corporation, association or
other business entity.
2.4 Authorization. All corporate action on the part of the Company, its
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officers, directors and shareholders necessary for the authorization, execution
and delivery of this Agreement and the agreements attached hereto as exhibits or
as part of Schedule III (such agreements being herein referred to as the
"Ancillary Agreements"), the performance of all obligations of the Company under
each of the Agreement and the Ancillary Agreements, and the authorization,
issuance (or reservation for issuance) and delivery of the Common Stock being
sold hereunder and the Common Stock issuable upon exercise of the Warrant has
been taken or will be taken prior to the Initial Closing, and this Agreement and
the Ancillary Agreements constitute (or will constitute upon the execution
thereof) the valid and legally binding obligations of the Company and each of
the other parties thereto (other than the Investors), enforceable in accordance
with their respective terms.
2.5 Valid Issuance of Warrant and Common Stock.
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(a) The Warrant and the Common Stock that are being purchased by the
Investors hereunder, when issued, sold and delivered in accordance with the
terms hereof or thereof, will be duly and validly issued, fully paid and
nonassessable and, assuming the accuracy of the representations of the Investors
in this Agreement, will be issued in compliance with all applicable federal and
state securities laws. The Common Stock issuable upon exercise of the Warrant
purchased under this Agreement has been duly and validly reserved for issuance
and, upon issuance in accordance with the terms of the Amended Articles, shall
be duly and validly issued, fully paid and nonassessable, and issued in
compliance with all applicable securities laws, as presently in effect, of the
United States and each of the states whose securities laws govern the issuance
of any of the Common Stock or the Warrant hereunder.
(b) The outstanding shares of Common Stock are all duly and validly
authorized and issued, fully paid and nonassessable, and were issued in
compliance with all applicable federal and state securities laws.
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2.6 Financial Information. The unaudited balance sheet of the Company as
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at March 1, 1994 (the "Opening Balance Sheet"), which is attached to the
Schedule of Exceptions, presents fairly the position of the Company as at the
date thereof in accordance with generally accepted accounting principles
("GAAP"). Except as set forth on the Schedule of Exceptions, the Company does
not have any liability, contingent or otherwise, that is not adequately
reflected in or reserved against in the Opening Balance Sheet.
2.7 Assumptions or Guarantees of Indebtedness of Other Persons. The
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Company has not assumed, guaranteed, endorsed or otherwise become directly or
contingently liable on (including without limitation liability by way of
agreement, contingent or otherwise, to purchase, to provide funds for payment,
to supply funds to or otherwise invest in a debtor, or otherwise to assure a
creditor against loss), any indebtedness of any other person.
2.8 Investments in Other Persons. The Company has not made any advances
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or loans to any person, nor is it committed or obligated to make any such loan
or advance, nor does the Company own any capital stock, assets comprising the
business of, obligations of, or any interest in, any person.
2.9 Governmental Consents. No consent, approval, order or authorization
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of, or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of the Company is
required in connection with the execution of this Agreement, the Ancillary
Agreements and the consummation of the transactions contemplated hereby or
thereby.
2.10 Litigation. Except as set forth on the Schedule of Exceptions,
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there is no action, suit, proceeding or investigation pending or currently
threatened against the Company of any nature whatsoever, including without
limitation any action, suit, proceeding or investigation which questions the
validity of this Agreement or any of the Ancillary Agreements, or the right of
the Company to enter into this Agreement or any of the Ancillary Agreements, or
to consummate the transactions contemplated hereby or thereby, nor is the
Company aware that there is any basis for the foregoing. The foregoing also
includes without limitation actions pending or threatened (or any basis therefor
known to the Company) against the Company or any of its key employees, in each
case involving the prior employment of any of the Company's employees, their use
in connection with the Company's business of any information or techniques
allegedly proprietary to any of their former employers, or their obligations
under any agreements with prior employers. The Company is not a party or
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality. There is
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no action, suit, proceeding or investigation by the Company currently pending or
which the Company intends to initiate.
2.11 Proprietary Information and Noncompete Agreements. The employees of
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the Company identified on the Schedule of Exceptions constitute all of the
officers and key employees of the Company as of the date hereof, and each such
employee who is a partner has executed an employment agreement in the form
attached hereto as Exhibit E-1, each such employee who is an executive employee
has executed an employment agreement in the form attached hereto as Exhibit E-2,
and each other employee has executed a non-disclosure agreement in the form
attached hereto as Exhibit E-3. The Company, after reasonable investigation, is
not aware that any of its employees is in violation thereof, and the Company
will use its best efforts to prevent any such violation.
2.12 Intellectual Property. The Company has sufficient title and
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ownership of all patents, trademarks, service marks, trade names, copyrights,
trade secrets, information, proprietary rights and processes (the foregoing,
"Intellectual Property") used in its business as now conducted and as proposed
to be conducted as described in the Business Plan without any conflict with or
infringement of the rights of others. A list of all patents, patent
applications, trademarks, service marks, tradenames, and copyrights owned by the
Company is set forth in the Schedule of Exceptions. There are no outstanding
options, licenses, or agreements of any kind to which the Company is a party or
by which it is bound relating to any Intellectual Property, whether owned by the
Company or another person or entity. The Company has not received any
communications alleging that the Company has violated or, by conducting its
business as proposed, would violate any of the Intellectual Property or other
proprietary rights of any other person or entity. The Company is not aware that
any of its employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with the use of such employee's best efforts to promote the interests
of the Company or that would conflict with the Company's business as proposed to
be conducted. Neither the execution nor delivery of this Agreement, nor the
carrying on of the Company's business by the employees of the Company, nor the
conduct of the Company's business as proposed, will conflict with or result in a
breach of the terms, conditions or provisions of, or constitute a default under,
any contract, covenant or instrument under which any of such employees is now
obligated. The Company does not believe it is or will be necessary to utilize
any inventions of any of its employees (or people it currently intends to hire)
made prior to their employment by the Company.
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2.13 Compliance with Other Instruments. The Company is in compliance
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with each provision of its charter documents and bylaws, and with each judgment,
order, writ or decree, and with each material contract, agreement, instrument
and commitment to which it is a party or by which it is bound (collectively, the
"Material Contracts"), and each statute, rule or regulation applicable to the
Company, its assets or its business, and is not in violation or default of any
of the foregoing. A list of all of the Material Contracts is set forth on the
Schedule of Exceptions. There is no term or provision in any of the Material
Contracts which materially adversely affects the business (as now conducted or
as proposed to be conducted in the Business Plan), assets or financial condition
of the Company. The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not result in any
such violation or be in conflict with or constitute, with or without the passage
of time or giving of notice, either a default under any such provision,
instrument, judgment, order, writ, decree or contract or an event which results
in the creation of any lien, charge or encumbrance upon any assets of the
Company.
2.14 Agreements.
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(a) Except for agreements explicitly contemplated hereby, there are
no agreements between the Company and any of its officers, directors,
affiliates, employees or shareholders.
(b) Except as set forth on the Schedule of Exceptions, there are no
agreements to which the Company is a party or by which it is bound that involve
obligations of, or payments to, the Company in excess of $10,000.
2.15 Business Plan. The Business Plan has been prepared in good faith by
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the senior management of the Company and does not contain any untrue statement
of a material fact nor does it omit to state a material fact necessary to make
the statements made therein not misleading in light of the circumstances in
which they are made, except that with respect to projections contained in the
Business Plan (and the revisions, with respect to the first two years thereof,
provided by letter dated January 4, 1994 to Xx. Xxx Xxxxxxxx from Xxxxxxx) (the
"Letter Revisions"), the Company represents only that such projections were
prepared in good faith and that the Company reasonably believes the assumptions
upon which such projections are based are reasonably likely to occur.
2.16 Registration Rights. Except as provided in Section 6 of this
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Agreement, the Company has not granted or agreed to grant any registration
rights, including without limitation piggyback rights, to any person or entity.
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2.17 Title to Property and Assets. The Company has good and marketable
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title to its property and assets free and clear of all mortgages, liens, claims
and encumbrances, except such encumbrances and liens which arise in the ordinary
course of business and do not materially impair the Company's ownership or use
or the value of such property or assets. With respect to the property and
assets it leases, the Company is in compliance with such leases, enjoys peaceful
and undisturbed possession thereunder, and, holds a valid leasehold interest
free of any liens, claims or encumbrances.
2.18 Changes. Except as set forth on the Schedule of Exceptions, since
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November 1993, there has not been:
(a) any change in the projections contained in the Business Plan
except for the Letter Revisions;
(b) any declaration or payment of any dividend, or any
authorization or payment of any distribution, on any of the capital stock of the
Company, or any redemption or repurchase of any capital stock of the Company;
(c) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties, financial
condition, operating results, prospects or business of the Company (as such
business is presently conducted and as it is proposed to be conducted);
(d) any waiver by the Company of a valuable right or of a material
debt owed to it;
(e) any satisfaction or discharge of any lien, claim or encumbrance
or payment of any obligation by the Company, except in the ordinary course of
business and which is not material to the assets, properties, financial
condition, operating results or business of the Company (as such business is
presently conducted and as it is proposed to be conducted);
(f) any change or amendment to a material contract or arrangement
by which the Company or any of its assets or properties is bound or subject;
(g) any material change in any compensation arrangement or
agreement with any employee; or
(h) to the Company's knowledge, any other event or condition of any
character that might materially and adversely affect the assets, properties,
financial condition, operating results or business of the Company (as such
business is presently conducted and as it is proposed to be conducted).
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2.19 Environmental and Safety Laws. The Company is not in violation of
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any applicable statute, law or regulation relating to the environment or
occupational safety and health, and no material expenditures will be required in
order to comply with any such statute, law or regulation except in the ordinary
course of doing business.
2.20 Employee Benefit Plans. The Company does not have any employee
----------------------
benefit plan as defined in the Employee Retirement Income Security Act of 1974,
as amended ("ERISA").
2.21 Tax Returns, Payments and Elections. The Company has timely filed
-----------------------------------
all tax returns and reports as required by law. These returns and reports are
true and correct in all material respects. The Company has paid all taxes and
other assessments due.
2.22 Insurance. The Company has in full force and effect (i) fire and
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casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its properties
that might be damaged or destroyed, and (ii) such other insurance policies as
are listed in the Schedule of Exceptions.
2.23 Minute Books. The minute books of the Company provided to the
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Investors contain a complete summary of all meetings of directors and
stockholders or partners since the time of incorporation or creation and reflect
all transactions referred to in such minutes or records accurately in all
material respects.
2.24 Labor Agreements and Actions. The Company is not bound by or
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subject to (and none of its assets or properties is bound by or subject to) any
written or oral, express or implied, contract, commitment or arrangement with
any labor union, and no labor union has requested or, to the knowledge of the
Company, has sought to represent any of the employees, representatives or agents
of the Company. There is no strike or other labor dispute involving the Company
pending, or to the knowledge of the Company threatened, that could have a
material adverse effect on the assets, properties, financial condition,
operating results, or business of the Company (as such business is presently
conducted and as it is proposed to be conducted), nor is the Company aware of
any labor organization activity involving its employees. The Company is not
aware that any officer or key employee, or that any group of key employees,
intends to terminate his, her or its employment with the Company, nor does the
Company have a present intention to terminate the employment of any of the
foregoing. The employment of each employee of the Company is terminable at the
will of the Company (subject, in certain cases, to 30 days' notice of
termination) without further liability of the Company
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to such employee except for the payment of such employee's normal salary accrued
but not paid through the date of such termination.
2.25 Disclosure. The Company has fully provided each Investor with all
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the information which such Investor has requested in writing from the Company or
the Management Group for deciding whether to purchase the Common Stock and, in
the case of Safeguard, the Warrant. None of this Agreement, any exhibit or
schedule hereto, any certificate furnished in connection herewith or the
Business Plan contains any untrue statement of a material fact or omits to state
a material fact necessary in order to make the statements contained herein or
therein not misleading. There is no fact within the knowledge of the Company or
any of its officers which has not been disclosed herein or in writing by them to
the Investors, and that materially adversely affects, or in the future in the
opinion of the Company or its officers may, insofar as they can now foresee,
materially adversely affect the business, properties, assets or condition,
financial or otherwise, of the Company, except for any facts generally available
to the public relating to the future of the consulting industry in general.
2.26 Real Property Holding Corporation. The Company is not and has never
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been a "United States real property holding corporation," (as that term is
defined in Section 897(c)(2) of the Internal Revenue Code of 1986, as amended
(the "Code") and Treasury Regulation Section 1.897-2(b), and shall timely made
all filings required by Treasury Regulation Section 1.897-2(h)(l). If at any
time in the future the Company shall become a "United States real property
holding corporation," the Company shall, as promptly as practicable, so notify
each foreign investor.
3. Representations, Warranties and Obligations of the Investors.
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3.1 Representations and Warranties. Each Investor, severally with
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respect to such Investor but not jointly nor with respect to any other Investor,
hereby represents and warrants that:
(a) Purchase Entirely for Own Account. This Agreement is made with each
---------------------------------
Investor in reliance upon such Investor's representation to the Company, which
by such Investor's execution of this Agreement such Investor hereby confirms,
that the Common Stock to be received by such Investor, or the Warrant to be
received by such Investor and, in the case of Safeguard, the Common Stock
issuable upon exercise of the Warrant, as the case may be (collectively, the
"Securities") will be acquired for investment for such Investor's own account,
not as a nominee or agent, and not with a view to the resale or distribution of
any part thereof, and that such Investor has no present intention of selling,
granting any participation in, or otherwise distributing
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the same, but subject to the ability of such of the Investors as may be
partnerships to distribute its assets to its partners. By executing this
Agreement, each Investor further represents that such Investor does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant any participation to such person or to any third person, with
respect to any of the Securities. Each Investor represents that it has full
power and authority to enter into this Agreement.
(b) Investment Experience. Each Investor is an investor in securities or
---------------------
companies in the development stage and acknowledges that it is able to fend for
itself, can bear the economic risk of its investment and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Common Stock and the Warrant. Each
Investor also represents that it is an "accredited investor" as that term is
defined in Rule 501 of Regulation D promulgated under the Securities Act of
1933, as amended (the "Act") and that it has not been organized for the purpose
of acquiring the Common Stock or the Warrant.
(c) Restricted Securities. It understands that the shares of Common Stock
---------------------
it is purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may not be resold without registration
under the Act, except in certain limited circumstances. In this connection,
each Investor represents that it is familiar with Rules 144 and 144A under the
Act, as presently in effect, and understands the resale limitations imposed
thereby and by the Act.
(d) Access. Each Investor represents and warrants that it has requested
------
in writing from the Company all of the information that it has deemed necessary
in order to decide whether to purchase the Common Stock and, in the case of
Safeguard, the Warrant, and that it has received from the Company all of such
information.
(e) Authorization. All actions on the part of such Investor, and of its
-------------
officers, directors and shareholders or its partners, as the case may be, that
are necessary for the authorization, execution, delivery and performance of this
Agreement have been taken, and this Agreement constitutes the valid and legally
binding obligation of such Investor, enforceable in accordance with its terms.
(f) No Conflicts. The execution, delivery and performance of this
------------
Agreement by such Investor and the consummation of the transactions contemplated
hereby will not (and would not, with the passage of time or the giving of
notice) constitute or result
-11-
in any violation, breach, or default under, or conflict with, any provision of
such Investor's charter documents or bylaws or governing partnership agreement,
or of any judgment, order, writ or decree, or of any material contract,
agreement, instrument or commitment to which it is a party or by which it is
bound, or of any statute, rule or regulation applicable to such Investor.
3.2 Further Limitations on Disposition. Without in any way limiting the
----------------------------------
representations set forth above, each Investor further agrees not to make any
disposition of all or any portion of the Securities unless and until:
(a) there is then in effect a Registration Statement under the Act
covering such proposed disposition and such disposition is made in accordance
with such Registration Statement; or
(b) (i) such Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a statement of
the circumstances surrounding the proposed disposition, and (ii) if reasonably
requested by the Company, such Investor shall have furnished the Company with an
opinion reasonably satisfactory to the Company of counsel, reasonably
satisfactory to the Company, that such disposition will not require registration
of such shares under the Act. It is agreed that the Company will not require an
opinion of counsel for any transactions made by an Investor pursuant to Rule 144
or 144A.
Notwithstanding the provisions of paragraphs (a) and (b) above, no such
registration statement or opinion of counsel shall be necessary for a transfer
by an Investor which is a partnership to a partner of such partnership or a
retired partner of such partnership who retires after the date hereof, or to the
estate of any such partner or retired partner or the transfer by gift, will or
intestate succession of any partner to his spouse or lineal descendants or
ancestors, if the transferee agrees in writing to be subject to the terms hereof
to the same extent as if he were an original Investor hereunder.
3.3 Legends. It is understood that the certificates evidencing the
-------
Common Stock (and the Common Stock issuable upon conversion thereof) shall bear
the following legend:
These securities have not been registered under the Securities Act of
1933. They may not be sold, offered for sale, pledged or hypothecated in
the absence of a registration statement in effect with respect to the
securities under such Act or an opinion of counsel, satisfactory to the
Company, that such registration is not required, or unless sold pursuant
to Rule 144 or 144A under such Act.
-12-
3.4 Board of Directors. The Investors shall vote their Common Stock in
------------------
accordance with the provisions of the form of Voting and Stock Restriction
Agreement attached hereto as Exhibit F.
4. Conditions of Each Investor's Obligations at the Initial Closing.
The obligations of each Investor under Section 1 of this Agreement are subject
to the fulfillment on or before the Initial Closing of each of the following
conditions, the waiver of which shall not be effective against any Investor that
does not consent in writing thereto:
4.1 Representations and Warranties. The representations and warranties
------------------------------
of the Company contained in Section 2 shall be true on and as of the Initial
Closing with the same effect as though such representations and warranties had
been made on and as of the date of the Initial Closing.
4.2 Performance. The Company shall have performed and complied with all
-----------
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Initial
Closing.
4.3 Compliance Certificate. The President of the Company shall deliver
----------------------
to each Investor at the Initial Closing an accurate certificate certifying that
the conditions specified in Sections 4.1 and 4.2 have been fulfilled and stating
that there shall has been no adverse change in the business, affairs, prospects,
operations, properties, assets or condition of the Company since November 1993.
4.4 Proceedings and Documents. All corporate and other proceedings in
-------------------------
connection with the transactions contemplated at the Initial Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to each Investor and Xxxxxx, Xxxxx & Xxxxxxx, and the Investors shall
have received all such counterpart original and certified or other copies of
such documents as they may reasonably request.
4.5 Board of Directors. The directors of the Company shall consist of
------------------
the persons designated in accordance with the provisions of Section 3.4 hereof.
4.6 Management Group. The Management Group shall have purchased, and
----------------
shall purchase concurrently, the minimum number of shares of Common Stock
required to be purchased by it in accordance with Section 1.1 hereof and
Schedule II hereto.
4.7 Certain Ancillary Agreements. A Voting and Stock Restriction
----------------------------
Agreement in the form attached as Exhibit F shall have been executed and
delivered by each member of the Management Group.
-13-
4.8 Key-Man Insurance. The Company shall have obtained, and shall have
-----------------
furnished to the Investors copies of, term insurance (or binders with respect
thereto) on the lives of each of Xxxxxxxxx and Xxxxxxx, in each case in the
amount of $1.5 million and with the proceeds payable solely to the Company.
4.9 Opinion of Company Counsel. The Investors shall have received from
--------------------------
Xxxxxx & Xxxxxxxx, P.C., counsel for the Company, an opinion, dated as of the
Closing, in form and substance reasonably acceptable to the Investors.
4.10 Securities Law Compliance. The Company shall have complied with all
-------------------------
requirements of federal and state securities or "blue sky" laws with respect to
the issuance of the Common Stock to the Investors hereunder.
5. Conditions of the Company's Obligations at Closing. The obligations
--------------------------------------------------
of the Company under Section 1 of this Agreement are subject to the fulfillment
on or before the Initial Closing of each of the following conditions:
5.1 Representations and Warranties. The representations and warranties
------------------------------
of the Investors contained in Section 3 shall be true on and as of the Initial
Closing with the same effect as though such representations and warranties had
been made on and as of the date of the Initial Closing.
5.2 Payment of the Purchase Price. The Investors shall have delivered
-----------------------------
the purchase price to be paid at the Initial Closing in accordance with Section
1.2 hereof and Schedule I hereto.
5.3 Ancillary Agreement. A Voting and Stock Restriction Agreement in the
-------------------
form attached as Exhibit F shall have been executed and delivered on behalf of
each of the Investors.
6. Registration Rights Generally. The Company covenants and agrees as
-----------------------------
follows:
6.1 Definitions. For purposes of this Section 6:
-----------
(a) The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document.
(b) The term "Registrable Securities" means (i) the Common Stock
issued to Investors hereunder, (ii) the Common Stock issued to an Investor upon
exercise of the Warrant, (iii) the Common Stock issued to the Management Group
in accordance with Section 1.1 hereof and Schedule II hereto, and (iv) any
Common
-14-
Stock of the Company issued as (or issuable upon the conversion or exercise of
any warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, such
Common Stock, excluding in all cases, however, any Registrable Securities sold
by a person in a transaction in which the person's rights under this Section 6
are not assigned.
(c) The number of shares of "Registrable Securities then outstanding"
shall be determined based upon the number of (i) outstanding shares of Common
Stock which are Registrable Securities, (ii) Warrant Shares issuable upon
exercise of the Warrant and (iii) shares of Common Stock issuable pursuant to
then exercisable or convertible securities which are Registrable Securities.
(d) The term "Holder" means any person owning or having the right to
acquire Registrable Securities hereunder or any assignee thereof in accordance
with Section 6.13 hereof.
(e) The term "Form S-3" means such form under the Act as in effect on
the date hereof or any registration form under the Act subsequently adopted by
the Securities and Exchange Commission ("SEC") which permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the SEC.
6.2 Request for Registration.
------------------------
(a) If the Company shall receive at any time after the earlier of (i)
the fourth anniversary of date of this Agreement or (ii) six months after the
effective date of the first registration statement for a public offering of
securities of the Company, a written request from the Holders of a majority of
the Registrable Securities then outstanding that the Company file a registration
statement under the Act covering the registration of at least 20 percent of the
Registrable Securities then outstanding (or a lesser percent if the anticipated
aggregate offering price, net of underwriting discounts and commissions, would
exceed $2 million), then the Company shall, within ten days after the receipt
thereof, give written notice of such request to all Holders, and shall, subject
to the limitations of subsection 6.2(b), effect as soon as practicable, and in
any event within 90 days of the receipt of such request, the registration under
the Act of all Registrable Securities which the Holders request to be registered
within 20 days after the mailing of such notice by the Company in accordance
with Section 9.6. Neither the Company nor any person other than the Holders
shall be entitled to include shares in the registrations made under this Section
6.2.
(b) If the Holders initiating the registration request hereunder
("Initiating Holders") intend to distribute the
-15-
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 6.2 and the Company shall include such information in the written
notice referred to in Section 6.2(a). In such event, the right of any Holder to
include his Registrable Securities in such registration shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such Holder) to
the extent provided herein. All Holders proposing to distribute their
securities through such underwriting shall enter into an underwriting agreement
(together with the Company as provided in Section 6.4(e)) in customary form with
the underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders. Notwithstanding any other provision of this
Section 6.2, if the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Company shall so advise all Holders of Registrable
Securities which would otherwise be underwritten pursuant hereto, and the number
of shares of Registrable Securities that may be included in the underwriting
shall be allocated among all Holders thereof, including the Initiating Holders,
in proportion (as nearly as practicable) to the amount of Registrable Securities
of the Company owned by each Holder.
(c) The Company is obligated to effect only one registration pursuant
to this Section 6.2.
(d) Notwithstanding the foregoing, if the Company shall furnish to
Holders requesting a registration statement pursuant to this Section 6.2, a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would have a
materially adverse effect upon the Company and its shareholders for such
registration statement to be filed and it is therefore essential to defer the
filing of such registration statement, the Company shall have the right to defer
such filing for a period of not more than 120 days after receipt of the request
of the Initiating Holders; provided, however, that the Company may not utilize
this right more than once in any 12-month period.
6.3 Company Registration. If (but without any obligation to do so) the
--------------------
Company proposes to register (including for this purpose a registration effected
by the Company for shareholders other than the Holders) any of its capital stock
or other securities under the Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in a Company stock plan, or a registration on
any form which does not include substantially the same information, other than
-16-
information related to the selling shareholders or their plan of distribution,
as would be required to be included in a registration statement covering the
sale of the Registrable Securities), the Company shall, at such time, promptly
give each Holder written notice of such registration. Upon the written request
of each Holder given within 20 days after mailing of such notice by the Company
in accordance with Section 9.6, the Company shall, subject to the provisions of
Section 6.8, cause to be registered under the Act all of the Registrable
Securities that each such Holder has requested to be registered.
6.4 Obligations of the Company. Whenever required under this Section 6
--------------------------
to effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for up to 120 days.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required to qualify to do business or to
file a general consent to service or process in any such states of
jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
-17-
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of 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 a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
(g) In the case of an underwritten public offering, furnish, at the
request of any Holder requesting registration of Registrable Securities pursuant
to this Section 6, on the date that such Registrable Securities are delivered to
the underwriters for sale in connection with a registration pursuant to this
Section 6, (i) an opinion, dated such date, of the counsel representing the
Company for the purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public offering, addressed
to the underwriters and (ii) a letter dated such date, from the independent
certified public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, addressed to the underwriters.
6.5 Furnish Information. It shall be a condition precedent to the
-------------------
obligations of the Company to take any action pursuant to this Section 6 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities.
6.6 Expenses of Demand Registration. All expenses other than
-------------------------------
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 6.2, including
without limitation all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company, and the
reasonable fees and disbursements of one counsel for the selling Holders shall
be borne by the Company.
6.7 Expenses of Company Registration. The Company shall bear and pay all
--------------------------------
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to the registrations pursuant to Section
6.3 for each Holder (which right may be assigned as provided in Section 6.13),
including without limitation all registration, filing, and qualification fees,
printers and accounting fees relating or allocable thereto and the reasonable
fees and disbursements of one counsel for the selling Holders selected by them,
but
-18-
excluding underwriting discounts and commissions relating to Registrable
Securities.
6.8 Underwriting Requirements. In connection with any offering involving
-------------------------
an underwriting of shares being issued by the Company, the Company shall not be
required under Section 6.3 to include any of the Holders' securities in such
underwriting unless they accept the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it, and then only in such
quantity as will not, in the opinion of the underwriters, jeopardize the success
of the offering by the Company. If the total amount of securities, including
Registrable Securities, requested by shareholders to be included in such
offering exceeds the amount of securities sold other than by the Company that
the underwriters reasonably believe compatible with the success of the offering,
then the Company shall be required to include in the offering only that number
of such securities, including Registrable Securities, which the underwriters
believe will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling shareholders according to
the total amount of securities entitled to be included therein owned by each
selling shareholder or in such other proportions as shall mutually be agreed to
by such selling shareholders) but in no event shall the amount of securities of
the selling Holders included in the offering be reduced below 25 percent of the
total amount of securities included in such offering, unless such offering is
the initial public offering of the Company's securities in which case the
selling Holders may be excluded if the underwriters make the determination
described above and no other shareholder's securities are included. For
purposes of the preceding parenthetical concerning apportionment, for any
selling Holder which is partnership or corporation, the partners, retired
partners and shareholders of such holder, or the estates and family members of
any such partners and retired partners and any trusts for the benefit of any of
the foregoing persons shall be deemed to be a single "selling shareholder," and
any pro-rata reduction with respect to such "selling shareholder" shall be
based upon the aggregate amount of shares carrying registration rights owned by
all entities and individuals included in such "selling shareholder," as defined
in this sentence.
6.9 Delay of Registration. No Holder shall have any right to obtain or
---------------------
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 6.
6.10 Indemnification. In the event any Registrable Securities are
---------------
included in a registration statement under this Section 6:
-19-
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, any underwriter (as defined in the Act) for such
Holder and each person, if any, who controls such Holder or underwriter within
the meaning of the Act or the Securities Exchange Act of 1934, as amended (the
"1934 Act"), against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus (but only if
such is not corrected in the final prospectus) contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading (but only if such is not corrected in
the final prospectus) or (iii) any violation or alleged violation by the Company
in connection with the registration of Registrable Securities under the Act, the
1934 Act, any state securities law or any rule or regulation promulgated under
the Act, the 1934 Act or any state securities law; and the Company will pay to
each such Holder, underwriter or controlling person, as incurred, any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this Section 6.10(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld), nor shall the Company be liable in
any such case for any such loss, claim, damage, liability or action to the
extent that it arises out of or is based upon a violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by any such Holder, underwriter or
controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation
-20-
occurs in reliance upon and in conformity with written information furnished by
such Holder expressly for use in connection with such registration; and each
such Holder will pay, as incurred, any legal or other expenses reasonably
incurred by any person intended to be indemnified pursuant to this Section
6.10(b), in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity agreement
contained in this Section 6.10(b) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Holder, which consent shall not be
unreasonably withheld; provided, that, in no event shall any indemnity under
this Section 6.10(b) exceed the gross proceeds from the offering received by
such Holder.
(c) If the indemnification provided for in this Section 6.10 is
unavailable or insufficient to hold harmless an indemnified party under Section
6.10(a) or (b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of the losses, claims, damages or liabilities referred to in
Section 6.10(a) or (b) in such proportion as is appropriate to reflect the
relative fault of the indemnifying party in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, or
actions in respect thereof, as well as any other relevant equitable
considerations. Relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by each indemnifying party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The parties agree that it would not be just and
equitable if contributions pursuant to this Section 6.10(c) were to be
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to in the next
preceding sentence. The amount paid by an indemnified party as a result of the
losses, claims, damages or liabilities, or actions in respect thereof, referred
to in the first sentence of this Section 6.10(c) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any loss, claim, damage, liability or
proceeding which is the subject of this Section 6.10(c). No person guilty of
fraudulent misrepresentation within the meaning of Section 11(f) of the Act
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(d) Promptly after receipt by an indemnified party under this Section
6.10 of notice of the commencement of any action (including any governmental
action), such indemnified
-21-
party will, if a claim in respect thereof is to be made against any indemnifying
party under this Section 6.10, deliver to the indemnifying party a written
notice of the commencement thereof and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume the
defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
6.10, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 6.10.
(e) The obligations of the Company and the Holders under this Section
6.10 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 6, and otherwise.
6.11 Reports Under Securities Exchange Act of 1934. With a view to
---------------------------------------------
making available to the Holders the benefits of Rules 144 and 144A promulgated
under the Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:
(a) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after 90 days following the
effective date of the first registration statement filed by the Company for the
offering of its securities to the general public.
(b) Take such action, including the voluntary registration of its
Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities, such
action to be taken as soon as practicable after the end of the fiscal year in
which the first registration statement filed by the Company for the offering of
its securities to the general public is declared effective.
-22-
(c) File with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act.
(d) Furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company as to
its compliance with the reporting requirements of SEC Rule 144 (at any time
after 90 days after the effective date of the first registration statement filed
by the Company), the Act and the 1934 Act (at any time after it has become
subject to such reporting requirements), or as to its qualification that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such rule or
regulation.
6.12 Form S-3 Registration. In case the Company shall receive from any
---------------------
Holder or Holders of at least 10 percent of the Registrable Securities then
outstanding a written request or requests that the Company effect a registration
on Form S-3 and any related qualification or compliance with respect to all or a
part of the Registrable Securities owned by such Holder or Holders, the Company
will:
(a) Promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other Holders.
(b) As soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within 15
days after receipt of such written notice from the Company; provided, however,
that the Company shall not be obligated to effect any such registration,
qualification or compliance, pursuant to this section 6.12: (i) if Form S-3 is
not available for such offering by the Holders; (ii) if the Holders, together
with the holders of any other securities of the Company entitled to inclusion in
such registration, propose to sell Registrable Securities and such other
securities (if any) at an aggregate price to the public (net of any
underwriters' discounts or commissions) of less than $500,000; (iii) if the
Company shall furnish to the Holders a certificate signed by the President of
the Company stating that
-23-
in the good faith judgment of the Board of Directors of the Company, it would
have a materially adverse effect on the Company and its shareholders for such
Form S-3 Registration to be effected at such time, in which event the Company
shall have the right to defer the filing of the Form S-3 registration statement
for a period of not more than 60 days after receipt of the request of the Holder
or Holders under this Section 6.12; provided, however, that the Company shall
not utilize this right more than once in any 12-month period; (iv) if the
Company has, within the 12-month period preceding the date of such request,
already effected one registration on Form S-3 for the Holders pursuant to this
Section 6.12; (v) if the Company has already effected three registrations on
Form S-3 for the Holders pursuant to this Section 6.12; or (vi) in any
particular jurisdiction in which the Company would be required to qualify to do
business or to execute a general consent to service of process in effecting such
registration, qualification or compliance.
(c) Subject to the foregoing, the Company shall file a registration
statement covering the Registrable Securities and other securities so requested
to be registered as soon as practicable after receipt of the request or requests
of the Holders. All expenses incurred in connection with the registrations
requested pursuant to Section 6.12, including without limitation all
registration, filing, qualification, printer's and accounting fees and the
reasonable fees and disbursements of counsel for the selling Holder or Holders
and counsel for the Company, shall be borne by the Company. Any underwriters'
discounts or commissions associated with Registrable Securities pursuant to
Section 6.12 shall be borne pro rata by the Holder or Holders participating in
the Form S-3 Registration. Registrations effected pursuant to this Section 6.12
shall not be counted as demands for registration or registrations effected
pursuant to Sections 6.2.
6.13 Assignment of Registration Rights. The rights to cause the Company
---------------------------------
to register Registrable Securities pursuant to this Section 6 may be assigned by
a Holder to a transferee or assignee of any Registrable Securities; provided,
however, the Company is, within a reasonable time after such transfer, furnished
with written notice of the name and address of such transferee or assignee and
the securities with respect to which such registration rights are being
assigned; and provided, further, that such assignment shall be effective only if
immediately following such transfer the further disposition of such securities
by the transferee or assignee is restricted under the Act; and provided,
further, that registration rights may not be transferred to a competitor of the
Company.
6.14 Limitations on Subsequent Registration Rights. From and after the
---------------------------------------------
date of this Agreement, the Company shall not, without the prior written consent
of the Holders of a majority of
-24-
the outstanding Registrable Securities, enter into any agreement with any holder
or prospective holder of any securities of the Company which would allow such
holder or prospective holder (a) to include such securities in any registration
filed under Section 6.2 hereof, unless under the terms of such agreement, such
holder or prospective holder may include such securities in any such
registration only to the extent that the inclusion of such holder's securities
will not reduce the amount of the Registrable Securities of the Holders which is
included or (b) to make a demand registration which could result in such
registration statement being declared effective prior to the earlier of either
of the dates set forth in Section 6.2(a)(i) or (ii) or within 120 days of the
effective date of any registration effected pursuant to Section 6.2.
6.15 "Lock-up" Agreement.
-------------------
(a) Each Holder agrees, if so requested by the Company or an
underwriter of Common Stock or other securities of the Company, not to sell,
grant any option or right to buy or sell, or otherwise transfer or dispose in
any manner (whether in privately-negotiated or open-market transactions) of any
Common Stock (or other securities) of the Company held by such Holder during the
180-day period following the effective date of the registration statement filed
under the Act in connection with the initial public offering of the Common
Stock, provided that: (i) such agreement shall apply only to the initial public
offering of the Common Stock and (ii) all Holders, any holders of Common Stock
whose securities are included in such registration statement, and all officers,
directors and key employees of the Company shall also enter into, and be bound
by, similar agreements. Such agreement shall be in writing and in a form
satisfactory to the Company and such underwriter, and may be included in the
underwriting agreement. The Company may impose stop-transfer instructions with
respect to the securities subject to the foregoing restriction until the end of
the 180-day period.
No Holder shall be so restricted unless all shareholders are similarly and
proportionally restricted.
(b) Each Holder agrees that if, after its initial registered public
offering of Common Stock, the Company proposes to offer any its Common Stock or
other equity securities for sale to the public and:
(i) if such Holder is an "affiliate" of the Company (e.g.,
because a general partner of the Holder is a director of the Company) or
otherwise holds beneficially or of record ten percent or more of the outstanding
equity securities of the Company;
-25-
(ii) if so requested by the Company or an underwriter of Common
Stock or other securities of the Company; and
(iii) if all other similarly situated "affiliates" and ten-
percent beneficial holders are requested by the Company and such underwriter to
sign, and actually do sign, a lock-up agreement containing the restrictions
described herein;
then, such Holder will not sell, grant any option or right to buy or sell, or
otherwise transfer or dispose in any manner to the public in open-market
transactions any Common Stock (or other securities) of the Company held by such
Holder during the 90-day period following the effective date of the registration
statement filed under the Act. Such agreement shall be in writing and in form
and substance reasonably satisfactory to the Holder, the Company and such
underwriter. The Company may impose stop-transfer instructions with respect to
the securities subject to the foregoing restriction until the end of the 90-day
period.
6.16 Mergers, Etc. The Company shall not, directly or indirectly, enter
-------------
into any merger, consolidation or reorganization in which the Company shall not
be the surviving corporation unless the proposed surviving corporation shall,
prior to such merger, consolidation or reorganization, agree in writing to
assume the obligations of the Company under this Section 6, and for that purpose
references herein to Registrable Shares shall be deemed to be references to the
securities which the Investors would be entitled to receive in exchange for
Registrable Shares under any such merger, consolidation or reorganization;
provided, however, that the provisions of this Section 6.16 shall not apply in
the event of any merger, consolidation or reorganization in which the Company is
not the surviving corporation if all Holders are entitled to receive in exchange
for their Registrable Shares consideration consisting solely of (a) cash, (b)
securities of the acquiring corporation which may be immediately sold to the
public without registration under the Act or (c) securities of the acquiring
corporation which the acquiring corporation has agreed to register for resale to
the public under the Act within 90 days after completion of the merger,
consolidation or reorganization.
6.17 Amendment of Registration Rights. Any provision of this Section 6
--------------------------------
may be amended or the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the holders of a majority of the Registrable
Securities then held by the Investors. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of any
securities purchased under this Agreement at the time outstanding (including
securities into which such
-26-
securities are convertible), each future holder of all such securities, and the
Company.
7. Special Registration in Connection with Rights Offering.
-------------------------------------------------------
7.1 Rights Offering.
---------------
(a) *
(b) Safeguard may initiate the Rights Offering at any time during
the period between the second and eighth anniversaries of the Initial Closing at
such time as the total market value of the Company is at least $30 million,
which determination shall be made in good faith, upon request by Safeguard from
time to time, by the Board of Directors of the Company with the assistance and
advice of such experts or consultants as the Board may choose to retain, if any.
(c) The gross proceeds of the Rights Offering, less the aggregate
amount of the underwriting discounts and commissions paid in respect of all the
Rights, shall be shared equally by the Company and Safeguard.
7.2 Stock Split. After Safeguard has notified the Company of its
-----------
intention to commence the Rights Offering, the Company
-27-
* This paragraph was amended and restated in its entirety pursuant to the First
Amendment to Diamond Technology Partners, Inc. Stock Purchase Agreement.
shall, prior to the filing of the Rights Registration Statement (or such earlier
date as may be agreed to by the Company and Safeguard), take all such actions as
shall be necessary to cause a split of the Common Stock in such ratio as
Safeguard shall determine. All references to share amounts in this Agreement
other than as specifically noted shall be deemed to refer to share amounts prior
to such split.
7.3 Rights Registration Statement. Upon notice by Safeguard to the
-----------------------------
Company of its intention to commence the Rights Offering, the Company shall
promptly prepare the Rights Registration Statement on Form S-1, or any form then
applicable under the Act, to register under the Act the Rights and the shares of
Common Stock to be issued upon exercise of the Rights (the "Rights Shares").
The Company covenants that the Rights Registration Statement and the prospectus
included therein shall be in form reasonably satisfactory to Safeguard, shall
comply in all respects with the Act and the rules and regulations thereunder,
and shall not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
7.4 Registration Services. The Company shall cause its regular counsel
---------------------
and auditors and the Company's employees to render such assistance in
consummating the Rights Offering, at the Company's expense, as is customary in
the consummation by a company of its initial public offering. Safeguard also
may engage special legal counsel, one or more rights, registrar and transfer
agents, and such other consultants as Safeguard may deem necessary or desirable
in connection with the Rights Offering, the expenses of which shall be paid by
the Company. In addition, Safeguard may require the Company to engage a
registered broker-dealer of Safeguard's designation, subject to the reasonable
approval of the Company, to provide such services in connection with the Rights
Offering as Safeguard may deem reasonably necessary or desirable, including
without limitation to effect or underwrite the offering of the Rights or the
Rights Shares in states in which applicable state laws require that a registered
broker-dealer effect such offering. The Company shall bear and pay all expenses
incurred in connection with the registration, filing or qualification of the
Rights, excluding the underwriting discounts and commissions relating to one-
half of the Rights, which discounts and commissions shall be borne by Safeguard.
7.5 Indemnification.
---------------
(a) To the extent permitted by law, the Company will indemnify and
hold harmless Safeguard, its executive officers, directors, each person who
controls Safeguard within the meaning of the Act, each person who participates
as an underwriter and
-28-
each person who controls any such participating underwriter against any losses,
claims, damages, or liabilities (joint or several) to which they may become
subject under the Act, the 1934 Act or other federal or state law, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively, a "Rights Violation"): (i) any untrue statement or
alleged untrue statement of a material fact contained in the Rights Registration
Statement, including any preliminary prospectus (but only if such is not
corrected in the final prospectus) contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading (but only if such is not corrected in the final
prospectus) or (iii) any violation or alleged violation by the Company in
connection with the registration of the Rights or the Rights Shares under the
Act, the 1934 Act, any state securities law or any rule or regulation
promulgated under the Act, the 1934 Act or any state securities law; and the
Company will pay to each such person, as incurred, any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 7.5(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Rights Violation which occurs in reliance upon
and in conformity with written information furnished expressly for use in
connection with such registration by such person.
(b) To the extent permitted by law, Safeguard will indemnify and
hold harmless the Company, each of its directors, each of its officers who has
signed the registration statement, each person, if any, who controls the Company
within the meaning of the Act, each person who participates as an underwriter
and each person who controls any such participating underwriter against any
losses, claims, damages, or liabilities (joint or several) to which any of the
foregoing persons may become subject, under the Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereto) arise out of or are based upon any Rights
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by Safeguard expressly for use in connection with the Rights
Registration
-29-
Statement; and Safeguard will pay, as incurred, any legal or other expenses
reasonably incurred by any person intended to be indemnified pursuant to this
Section 7.5(b), in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this Section 7.5(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of Safeguard, which consent shall not
be unreasonably withheld; provided, however, that in no event shall any
indemnity under this Section 7.5(b) exceed the gross proceeds from the offering
received by Safeguard.
(c) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under Section
7.5(a) or (b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of the losses, claims, damages or liabilities referred to in
Section 7.5(a) or (b) in such proportion as is appropriate to reflect the
relative fault of the indemnifying party in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, or
actions in respect thereof, as well as any other relevant equitable
considerations. Relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by each indemnifying party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The parties agree that it would not be just and
equitable if contributions pursuant to this Section 7.5(c) were to be determined
by pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to in the next preceding
sentence. The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities, or actions in respect thereof, referred to in
the first sentence of this Section 7.5(c) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any loss, claim, damage, liability or proceeding
which is the subject of this Section 7.5(c). No person guilty of fraudulent
misrepresentation within the meaning of Section 11(f) of the Act shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(d) Promptly after receipt by an indemnified party under this
Section 7.5 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 7.5, deliver to
the
-30-
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 7.5, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 7.5.
(e) The obligations of the Company and Safeguard under this Section
7.5 shall survive the completion of the Rights Offering in a Rights Registration
Statement under this Section 7, and otherwise.
8. Covenants of the Company.
------------------------
8.1 Delivery of Financial Statements. The Company shall deliver to each
--------------------------------
Investor:
(a) As soon as practicable, but in any event within 90 days after
the end of each fiscal year of the Company, the balance sheet of the Company as
of the end of such fiscal year, statements of operations of the Company for such
fiscal year and statements of cash flow of the Company for such fiscal year,
such year-end financial reports to be in reasonable detail, prepared in
accordance with GAAP, and audited and certified by independent public
accountants of nationally recognized standing selected by the Company.
(b) As soon as practicable, but in any event within 45 days after
the end of each of the first three quarters of each fiscal year of the Company,
an unaudited balance sheet of the Company as at the end of such fiscal quarter,
and unaudited statements of operations and statements of cash flow for such
fiscal quarter, in reasonable detail and prepared in accordance with GAAP.
(c) Within 30 days after the end of each month, an unaudited balance
sheet of the Company as at the end of such month, and unaudited statements of
operations and statements of
-31-
cash flow for such month, in reasonable detail and prepared in accordance with
GAAP, together with an analysis by management of the Company's financial
condition and results of operations during such period and explanation by
management of any differences between such condition or results and the budget
and business plan for such period.
(d) As soon as practicable, but in any event 30 days prior to the
end of each fiscal year, a budget and business plan for the next fiscal year,
prepared on a monthly basis, including balance sheets and sources and
applications of funds statements for such months and, as soon as prepared, any
other budgets or revised budgets prepared by the Company.
(e) With respect to the financial statements called for in Section
8.1(b) and (c), an instrument executed by the Chief Financial Officer or
President of the Company and certifying that such financial statements were
prepared in accordance with GAAP consistently applied with prior practice for
earlier periods and fairly present the financial condition of the Company and
its results of operation for the period specified, subject to normal year-end
audit adjustment, and certifying that such officer has reviewed the provisions
of this Agreement and has no knowledge of any default by the Company in the
performance or observance of any of the provisions of this Agreement or, if such
officer has such knowledge, specifying such default and the nature thereof.
(f) Such other information relating to the financial condition,
business, prospects or corporate affairs of the Company as the Investor may from
time to time reasonably request.
8.2 Inspection; Observer Rights. The Company shall permit each Investor,
---------------------------
at such Investor's expense, to visit and inspect the Company's properties, to
examine its books of account and records and to discuss the Company's affairs,
finances and accounts with its officers, all at such reasonable times as may be
requested by the Investor; provided, however, that the Company shall not be
obligated pursuant to this Section 8.2 to provide access to any information that
it reasonably considers to be a trade secret or the disclosure of which the
Company reasonably believes may adversely affect its business. The Company will
give each Investor (or any representative designated by such Investor) not less
than two days' prior written notice of each meeting of the Board of Directors of
the Company and of any committee of the Board of Directors, specifying the time
and place of such meeting and, to the extent then known, the matters to be
discussed thereat and inviting each such Investor (or such representative) to
attend and participate therein (without, however, a right to vote thereat in
such capacity).
-32-
8.3 Employee Stock Issuances. Each of the parties to this Agreement
------------------------
consents and agrees that after the date hereof the Company may issue, or grant
options with respect to, that number of shares of Common Stock (adjusted to
reflect subsequent stock dividends, stock splits or recapitalizations) as shall
be determined pursuant to the next succeeding sentence, to such employees of the
Company, as may be determined and specified from time to time, at any time after
the date of this Agreement, by the Chief Executive Officer of the Company, based
upon such information and committee recommendations as he deems necessary; it is
anticipated that such options will carry five-year, proportional vesting.*
During the first year after the date of this Agreement, the purchase price of
any shares of Common Stock issued, and the exercise price of any options
granted, to employees pursuant to this Section 8.3 shall be equal to $1.50 per
share, or underlying share, of Common Stock, as the case may be. From the first
anniversary of the date of this Agreement until thereafter changed by action of
the Board of Directors, the purchase price of any shares of Common Stock issued,
and the exercise price of any options granted, to employees pursuant to this
Section 8.3 shall be equal to $2.00 per share, or underlying share, of Common
Stock, as the case may be.
8.4 Right of First Offer. Subject to the terms and conditions specified
--------------------
in this paragraph 8.4, the Company hereby grants to each Investor and to each
member of the Management Group (in each case, so long as such person holds at
least 2% of the aggregate number of shares of Common Stock purchased hereunder
by all of the Investors or the Management Group and the Common Stock issued, or
issuable, upon exercise of the Warrant (collectively, the "Eligible
Purchasers"), adjusted to reflect subsequent changes after the date hereof in
the number of shares of Common Stock outstanding by reason of stock dividends,
stock splits or recapitalizations or the like), a right of first offer with
respect to future sales by the Company of its Shares (as hereinafter defined).
Each time the Company proposes to offer any shares of, or securities convertible
into or exercisable for any shares of, any class of its capital stock
("Shares"), the Company shall first make an offering of such Shares to each
Eligible Purchaser in accordance with the following provisions:
(a) The Company shall deliver a notice pursuant to Section 9.6
("Notice") to each of the Eligible Purchasers stating (i) its bona fide
intention to offer such Shares, (ii) the number of such Shares to be offered and
(iii) the price, if any, for which it proposes to offer such Shares.
-33-
* This paragraph was amended and restated in its entirety pursuant to the
Second Amendment to the Stock Purchase Agreement.
(b) Within 15 calendar days after mailing of the Notice, each
Eligible Purchaser may elect to purchase, at the price and on the terms
specified in the Notice, all but not less than all of such Shares which equals
(such number of Shares, the "First Offer Shares") the proportion that (x) the
number of shares of Common Stock then held, or Warrant Shares issuable upon
exercise of the Warrant, by such Eligible Purchaser bears to (y) the aggregate
number of shares of Common Stock then held by all Eligible Purchasers and
Warrant Shares issuable upon exercise of the Warrant by any Eligible Purchaser.
(c) The Company may, during the 120-day period following the
expiration of the period provided in Section 8.4(b) hereof, offer any Shares
which have not been subscribed for pursuant to Section 8.4(b) to any person or
persons at a price not less than, and upon terms no more favorable to the
offeree than, those specified in the Notice. If the Company does not consummate
the proposed sale of the Shares within such period, the right provided hereunder
shall be deemed to be revived and such Shares shall not be offered unless first
re-offered to the Eligible Purchaser in accordance herewith.
(d) The right of first offer in this Section 8.4 shall not be
applicable (i) to the issuance or sale of shares of Common Stock (or options
therefor) pursuant to Section 8.3 hereof, (ii) to shares issued or issuable by
the Company in connection with any merger or reorganization transaction in which
the Company is the surviving company, (iii) to the Rights Shares, (iv) to the
Warrant Shares or (v) to or after consummation of the Company's sale of its
Common Stock to the public in a bona fide, firm commitment underwriting pursuant
to a registration statement on Form S-1 under the Act (or any equivalent
successor form).
8.5 Insurance. The Company shall maintain term insurance on the lives of
---------
each of Xxxxxxxxx and Xxxxxxx, in each case in the amount of $1.5 million, with
the proceeds payable solely to the Company.
8.6 Board of Directors. The Company shall use its best efforts to fix
------------------
and maintain the number of directors on the Board of Directors of the Company at
five and to cause and maintain the election to the Board of Directors of the
persons designated from time to time in accordance the provisions of the form of
Voting and Stock Restriction Agreement attached hereto as Exhibit F. The Company
shall promptly reimburse such directors for any expenses incurred by them in
connection with their activities as directors of the Company. The Company shall
indemnify each of such directors against liability to the fullest extent
permitted by applicable law. The Company shall hold meetings of its Board of
Directors not less than once every three months.
-34-
8.7 Other Affirmative Covenants. Without limiting any other covenants
---------------------------
and provisions hereof, the Company covenants and agrees that it will perform and
observe, and cause each of its subsidiaries in existence from time to time to
observe and perform, the following covenants and provisions, unless, with
respect to a specific transaction, a waiver of certain specified provisions of
this Section 8.7 in connection solely with such transaction is given by the
affirmative vote of the holders of no less than 66-2/3% of the outstanding
shares of Common Stock then held, or Warrant Shares issuable upon exercise of
the Warrant, by any of the Investors:
(a) Payment of Taxes and Trade Debt. Pay and discharge all taxes,
-------------------------------
assessments and governmental charges or levies imposed upon it or upon its
income, profits or business, or upon any properties belonging to it, prior to
the date on which penalties attach thereto, and all lawful claims which, if
unpaid, might become a lien or charge upon any properties of the Company,
provided that the Company shall not be required to pay any such tax, assessment,
charge, levy or claim which is being contested in good faith and by appropriate
proceedings if the Company shall have set aside on its books sufficient
reserves, if any, with respect thereto. Pay, when due, or in conformity with
customary trade terms but not later than 90 days from the due date, all lease
obligations, all trade debt, and all other indebtedness incident to the
operations of the Company, except such as are being contested in good faith and
by proper proceedings if the Company shall have set aside on its books
sufficient reserves, if any, with respect thereto.
(b) Maintenance of Insurance. Maintain insurance with responsible
------------------------
and reputable insurance companies or associations in such amounts and covering
such risks as is customarily carried by companies engaged in similar businesses
and owning similar properties in the same general areas in which the Company
operates, but in any event in amounts sufficient to prevent the Company from
becoming a co-insurer.
(c) Preservation of Corporate Existence. Preserve and maintain its
-----------------------------------
corporate existence, rights, franchises and privileges in the jurisdiction of
its incorporation, and qualify and remain qualified as a foreign corporation in
each jurisdiction in which such qualification is necessary or desirable in view
of its business and operations or the ownership or lease of its properties.
Preserve and maintain all licenses and other rights to use Intellectual Property
owned or possessed by it and deemed by the Company to be necessary or useful to
the conduct of its business.
(d) Compliance with Laws. Comply with the requirements of all
--------------------
applicable laws, rules, regulations and orders of any governmental authority,
the non-compliance with
-35-
which could materially adversely affect its business or condition, financial or
otherwise.
(e) Keeping of Records and Books of Account. Keep adequate records
---------------------------------------
and books of account in which complete entries will be made in accordance with
generally accepted accounting principles consistently applied, reflecting all
financial transactions of the Company and in which, for each fiscal year, all
proper reserves for depreciation, depletion, obsolescence, amortization, taxes,
bad debts and other purposes in connection with its business shall be made.
(f) Maintenance of Properties. Maintain and preserve all of its
-------------------------
properties and assets, necessary or useful in the proper conduct of its
business, in good repair, working order and condition, ordinary wear and tear
excepted.
(g) Compliance with ERISA. Comply with all minimum funding
---------------------
requirements applicable to any pension, employee benefit plans or employee
contribution plans which are subject to ERISA or to the Code, and comply in all
other material respects with the provisions of ERISA and the Code, and the rules
and regulations thereunder, which are applicable to any such plan. The Company
shall not permit any event or condition to exist which could permit any such
plan to be terminated under circumstances which would cause the lien provided
for in Section 4068 of ERISA to attach to the assets of the Company.
(h) Approval of Budgets and Business Plan. Prior to the commencement
-------------------------------------
of each fiscal year commencing after the date hereof, prepare and submit to, and
obtain the approval of the Board of Directors of, monthly capital and operating
expense budgets, cash flow projections, profit and loss projections, and a
revised business plan. The operations of the Company's business shall be
conducted in a manner consistent with the Business Plan, as revised and approved
from time to time by the Board of Directors, including without limitation all
executive compensation and benefits set forth therein. The Company shall not
enter into any activity not envisioned by the budget and business plan as then
approved by the Board of Directors.
(i) Financings. Promptly, fully and in detail, inform the Board of
----------
Directors of any discussions, offers or contracts relating to possible
financings of any nature for the Company, whether initiated by the Company or
any other person, except for minor financings of less than $50,000 which do not
include as a feature thereof any right to acquire any of the equity securities
of the Company.
(j) New Developments. Cause all technological developments,
----------------
inventions, discoveries or improvements by the Company's employees or agents to
be fully documented in
-36-
accordance with the Company's existing practices, cause all key employees and
consultants of the Company to execute appropriate patent assignment agreements
to the Company and, where possible and appropriate, to file and prosecute United
States and foreign patent applications relating to and protecting such
developments on behalf of the Company.
(k) Compensation. Prepare and submit to, and obtain the approval of,
------------
the Board of Directors of a compensation policy for its officers, which shall
contain guidelines for reasonable levels of salary and other employment
benefits, and which shall be periodically updated, and comply with such
compensation policy in making all compensation offers to new officers and
compensation changes to existing officers, of which all cash compensation and
equity compensation offers or changes shall be subject to the approval of the
Board of Directors.
(l) Employees. *
---------
8.8 Certain Negative Covenants. Without limiting any other covenants and
--------------------------
provisions hereof, the Company covenants and agrees that it will comply with and
observe the following negative covenants and provisions and will not, unless,
with respect to a specific transaction, a waiver of certain specified provisions
of this Section 8.8 in connection solely with such transaction is given by the
affirmative vote of the holders of no less than 66-2/3% of the outstanding
shares of Common Stock then held by, or Warrant Shares issuable upon exercise of
the Warrant by, any of the Investors:
(a) Merger or Sale of Assets. Merge or consolidate with, or sell,
------------------------
assign, lease or otherwise dispose of or voluntarily part with the control of
(whether in one transaction or in a series of transactions) a material portion
of its assets to any person (whether now owned or hereinafter acquired) or sell,
assign or otherwise dispose of (whether in one transaction or in a series of
transactions) any of its accounts receivable (whether now in existence or
hereinafter created) at a discount or with recourse, to any person, except for
sales or other dispositions of assets in the ordinary course of business.
(b) Dealings with Affiliates. Enter into any transaction, including
------------------------
without limitation any loans or extensions of credit or royalty agreements with
any officer or director of the Company or holder of any class of capital stock
of the
-37-
* This paragraph was amended and restated in its entirety pursuant to the First
Amendment to Diamond Technology Partners, Inc. Stock Purchase Agreement.
Company, or any member of their respective immediate families or any corporation
or other entity directly or indirectly controlled by one or more of such
officers, directors or stockholders or members of their immediate families
except in the ordinary course of business and on terms not less favorable to the
Company than it would obtain in a transaction between unrelated parties.
(c) Change in Nature of Business. Make, or permit any material
----------------------------
change in the nature of its business as carried on at the date hereof or as
contemplated in the Business Plan prior to the date hereof.
(d) Acquisition of Shares by the Company. Redeem, purchase or
------------------------------------
otherwise acquire for value (or pay into or set aside for a sinking fund for
such purchase), any share or shares of any equity security of the Company,
except for shares of stock that are required or permitted to be purchased by the
Company from employees who are leaving the Company or pursuant to a right of
first refusal, in each case pursuant to any agreement disclosed herein or set
forth as an exhibit hereto.
(e) Amendment to Charter. Make any amendment to its Amended Articles
--------------------
or Bylaws which limits its legal capacity or ability to perform its obligations
under this Agreement, the Ancillary Agreements, the Business Plan, the
memorandum relating to governance matters dated December 1, 1993, as updated
January 7, 1994, or any other instrument or agreement executed or to be executed
pursuant to the provisions hereof or thereof or which may materially adversely
affect the rights of the Investors.
(f) Dividends and Distributions. Declare or pay any dividend or
---------------------------
distribution on its capital stock.
(g) Restriction on Indebtedness. Except in accordance with the
---------------------------
budgets then approved by the Board of Directors pursuant to Section 8.7(h),
incur, create or assume any indebtedness, or incur any guarantee or similar
contingent obligation in respect of the indebtedness of others, whether or not
classified on the Company's balance sheet as a liability, or permit any
subsidiary of the Company to do any of the foregoing.
(h) Restriction on Certain Amendments. Amend the Diamond Technology
---------------------------------
Partners, Inc. Partners' Operating Agreement between the Company and Xxxxxxxxx,
Xxxxxxx and Xxxxxxx X. Mikolaiczyk (as the Initial Partners) and Xxxxxxxxx (as
the CEO), or any of the Diamond Technology Partners' Inc. Employees' Proxy and
Stock Restriction Agreements now or hereafter entered into by and between the
Company, an employee of the Company and the person who is the Chairman of the
Board and Chief Executive Officer of the Company.
-38-
8.9 Indemnification. The Company shall indemnify and hold harmless each
---------------
Investor, and each of its officers, directors or partners, and agents, from and
against any losses, claims, damages and liabilities, and any reasonable legal or
other expenses incurred by any of them, arising as a result of claims brought
against such person by the previous employer of any employee of the Company, (i)
alleging any breach, for the benefit of the Company, of such employee's
obligations to the previous employer with respect to confidential information of
the previous employer, (ii) based upon the Company's hiring of such employee or
(iii) that are deemed by the Company, in its sole discretion, to be frivolous or
harassing.
8.10 Employees. Except with the approval of the Board of Directors,
---------
employ any key employee who is not a partner.
8.11 Termination of Certain Covenants. The covenants set forth in
--------------------------------
Sections 8.1(c), (d), (e) and (f), and Sections 8.2, 8.3, 8.4, 8.6, 8.7, 8.8 and
8.10 shall terminate and be of no further force or effect upon the consummation
of the first public offering of securities of the Company pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(including without limitation the Rights Offering).
9. Miscellaneous.
-------------
9.1 Survival of Warranties. The warranties, representations and
----------------------
covenants of the Company and Investors contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and each
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investors or the Company.
9.2 Successors and Assigns. The terms and conditions of this Agreement
----------------------
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
9.3 Governing Law. This Agreement shall be governed by and construed
-------------
under the laws of the Commonwealth of Pennsylvania as applied to agreements
entered into and to be performed entirely within Pennsylvania.
9.4 Counterparts. This Agreement may be executed 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.
-39-
9.5 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
9.6 Notices. Unless otherwise provided, any notice required or permitted
-------
under this Agreement shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified, either personally or
by recognized courier service, or upon deposit with the United States Post
Office, by registered or certified mail, in each case with charges prepaid and
addressed to the party to be notified at the address indicated for such party on
the signature page hereof, or at such other address as such party may designate
by ten days' advance written notice to the other parties.
9.7 Finder's Fee. Each party represents that it neither is nor will be
------------
obligated for any finders' fee or commission in connection with this
transaction. Each Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Investor or any of its officers, partners,
employees, or representatives is responsible. The Company agrees to indemnify
and hold harmless each Investor from any liability for any commission or
compensation in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for which the Company or
any of its officers, employees or representatives is responsible.
9.8 Expenses. Irrespective of whether any Closing is effected, each
--------
party shall pay all costs and expenses incurred by it with respect to the
negotiation, execution, delivery and performance of this Agreement, including
without limitation the reasonable fees and expenses of its counsel. If any
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the Amended Articles or any of the Ancillary Agreements, the
prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
9.9 Amendments and Waivers. Except as specified in Section 6.17, any
----------------------
term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the holders of a majority of the Common Stock held by the Investors or
issuable to an Investor upon exercise of the Warrant. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holders of
any securities purchased under this Agreement at the time outstanding
-40-
(including securities into which such securities are convertible), each future
holder of all such securities, and the Company; provided, however, that no
condition set forth in Section 4 hereof may be waived with respect to any
Investor who does not consent thereto.
9.10 Severability. If any provision of this Agreement or the application
------------
thereof to any person or circumstance is held invalid or unenforceable in any
jurisdiction, the remainder of this Agreement, and the application of such
provision to such person or circumstance in any other jurisdiction or to other
persons or circumstances in any jurisdiction, shall not be affected thereby, and
to this end the provisions of this Agreement shall be severable.
9.11 Aggregation of Stock. All shares of the Common Stock held or
--------------------
acquired by affiliated entities or persons shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement.
IN WITNESS WHEREOF, the undersigned have executed, or caused to be executed
on their behalf by an agent thereunto duly authorized, this Agreement as of the
date first above written.
The Company: DIAMOND TECHNOLOGY PARTNERS, INC.
By: [SIGNATURE APPEARS HERE]
---------------------------------
Title: Chairman
Address: Chicago, Ill.
The Investors: TECHNOLOGY LEADERS, L.P.
By: Technology Leaders Management, Inc.
(General Partner)
By: [SIGNATURE APPEARS HERE]
---------------------------------
As its: Managing Director
TECHNOLOGY LEADERS OFFSHORE C.V.
By: Technology Leaders Management, Inc.
(General Partner)
By: [SIGNATURE APPEARS HERE]
----------------------------------
As its: Managing Director
(Signatures Continued)
-41-
SAFEGUARD SCIENTIFICS, INC.
By: [SIGNATURE APPEARS HERE]
--------------------------------------
As its: Ex. V.P.
CIP, L.P.
By:
--------------------------------------
As its:
/s/ Xxxxxx X. Xxxxxxxxx
--------------------------------------
Xxxxxx X. Xxxxxxxxx
/s/ Xxxxxxxxxxx X. Xxxxxxx
------------------------------
Xxxxxxxxxxx X. Xxxxxxx
-42-
SAFEGUARD SCIENTIFICS, INC.
By: [SIGNATURE APPEARS HERE]
------------------------------
As its:
CIP CAPITAL L.P.
By: [SIGNATURE APPEARS HERE]
------------------------------
As its: President, CIP Capital
Management Inc.
(General Partner)
/s/ Xxxxxx X. Xxxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxxx
/s/ Xxxxxxxxxxx X. Xxxxxxx
---------------------------------
Xxxxxxxxxxx X. Xxxxxxx
-42-
INDEX OF DEFINED TERMS
Defined Term Page
------------ ----
1934 Act............................................................. 20
Act.................................................................. 11
Amended Articles...................................................... 1
Ancillary Agreements.................................................. 4
Xxxxxxxxx............................................................. 1
Business Plan......................................................... 3
Closing............................................................ 2, 3
Code................................................................. 10
Common Stock.......................................................... 1
Company............................................................... 1
Eligible Purchaser................................................... 33
ERISA................................................................. 9
First Offer Shares................................................... 34
Form S-3............................................................. 15
GAAP.................................................................. 5
Holder............................................................... 15
Initial Closing....................................................... 2
Initiating Holders................................................... 15
Intellectual Property................................................. 6
Investor.............................................................. 1
Investors............................................................. 1
Letter Revisions...................................................... 7
Management Group...................................................... 2
Material Contracts.................................................... 7
Xxxxxxx............................................................... 1
Notice............................................................... 33
Opening Balance Sheet................................................. 5
Register............................................................. 14
Registrable Securities............................................... 14
Registrable Securities then outstanding.............................. 15
Registration......................................................... 14
Rights............................................................... 27
Rights Offering...................................................... 27
Rights Registration Statement........................................ 27
Rights Shares........................................................ 28
Rights Violation..................................................... 29
Safeguard............................................................. 1
SEC.................................................................. 15
Second Closing........................................................ 2
Securities........................................................... 10
Shares............................................................... 33
Third Closing........................................................ 2
TSC.................................................................. 39
Violation............................................................ 20
Warrant............................................................... 1
FIRST AMENDMENT TO
DIAMOND TECHNOLOGY PARTNERS, INC
STOCK PURCHASE AGREEMENT
This is an amendment ("Amendment"), dated November ___, 1994, to a certain
Diamond Technology Partners, Inc. Stock Purchase Agreement dated as of March 22,
1994 (the "Stock Purchase Agreement") by and among Diamond Technology Partners,
Inc. (the "Company"), Xxxxxx X. Xxxxxxxxx ("Xxxxxxxxx"), Xxxxxxxxxxx X. Xxxxxxx
("Xxxxxxx"), Safeguard Scientifics, Inc. ("Safeguard"), and the investors listed
on Schedule I to the Stock Purchase Agreement (each, an "Investor," and,
together with Safeguard, collectively, the "Investors"); this Amendment is made
between the Company and the Investors.
In consideration of the mutual promises set forth in the Stock Purchase
Agreement and of the continuing mutual interests of the Company and the
Investors, the parties, in accordance with paragraph 9.9 of the Stock Purchase
Agreement, hereby amend that agreement as follows:
1. Paragraph 1.1 (c) is hereby amended so as to read, in its entirety, as
follows:
"(c) Except as otherwise provided in Schedule II hereto and Section 1.2(a)
and (b) hereof, concurrently with the purchase and sale by the Investors
under this Agreement at the Initial Closing, the Second Closing and the
Third Closing, a group of the Company's managers including Xxxxxxxxx and
Xxxxxxx and such additional managers as Xxxxxxxxx and Xxxxxxx shall have
designated (each of whom, as well as each individual designated by the
Company after the Third Closing as a "Partner", shall (for so long
thereafter as he or she remains a Partner) be deemed a member of the
"Management Group" herein), will purchase from the Company, and the Company
shall sell to the Management Group, the number of shares of Common Stock
set forth on Schedule II hereto, in exchange for the purchase price to be
paid therefor as set forth thereon."
2. Paragraph 7.1(a) is hereby amended so as to read, in its entirety, as
follows:
"(a) In consideration of the purchase of certain Common Stock and
the Warrant by Safeguard subject to the conditions set forth in this
Section 7, the Company hereby grants to Safeguard the right to conduct a
rights offering (the "Rights Offering") to Safeguard's stockholders in
respect of so many shares of Common Stock as Safeguard may specify, and the
Company agrees to register such Rights Offering under the Act in accordance
with Section 7.3 hereof. The rights to be issued in the Rights Offering
(the "Rights") shall be issued pursuant to a registration statement filed
under the Act (the "Rights Registration Statement"), shall be exercisable
for a period of no longer than 45 days after the commencement of the Rights
Offering and shall be transferable by the holder thereof during such
period. One-half of the shares of Common Stock in respect of which the
Rights are to be offered shall be newly authorized shares, and one-half of
such shares shall be shares theretofore held by Safeguard. Prior to the
commencement of the Rights Offering, the Company shall use its best efforts
to cause any holder of more than two
percent of the Common Stock (or rights to acquire more than two percent of
the Common Stock) to execute and deliver to the underwriter of the Rights
Offering an agreement to withhold such Common Stock from the market for such
period, not to exceed the period commencing 30 days prior to the effective date
of the registration statement for the Rights Offering and ending 90 days
following the closing thereof, or such other period as the underwriter shall
request."
3. Paragraph 8.7(l) is hereby amended so as to read, in its entirety, as
follows:
"(l) Employees. Enter into an agreement in respect of employment and
---------
proprietary information nondisclosure containing provisions substantially in the
form of paragraphs 6, 7 and 8 of Exhibit E-1 attached hereto, in the case of
each new partner, and containing provisions substantially in the form of
paragraphs 6, 7, 8 and 9 of Exhibit E-2 attached hereto, in the case of each
other new executive employee; and enter into an agreement with each other new
employee in respect of proprietary information nondisclosure substantially in
the form attached hereto as Exhibit E-3."
[SIGNATURE PAGE FOLLOWS]
-2-
IN WITNESS WHEREOF, the undersigned have executed this First Amendment to
Diamond Technology Partners, Inc. Stock Purchase Agreement on the date first
written above.
DIAMOND TECHNOLOGY PARTNERS, INC.
By:[SIGNATURE APPEARS HERE]
----------------------------------------
As its:
TECHNOLOGY LEADERS, L.P.
By: Technology Leaders Management, Inc.
(General Partner)
By:[SIGNATURE APPEARS HERE]
----------------------------------------
As its:
TECHNOLOGY LEADERS OFFSHORE C.V.
By: Technology Leaders Management, Inc.
(General Partner)
By:[SIGNATURE APPEARS HERE]
----------------------------------------
As its:
SAFEGUARD SCIENTIFICS, INC.
By:[SIGNATURE APPEARS HERE]
----------------------------------------
As its:
CIP, L.P.
By:[SIGNATURE APPEARS HERE]
----------------------------------------
As its:
-3-
SECOND AMENDMENT TO
DIAMOND TECHNOLOGY PARTNERS, INC.
STOCK PURCHASE AGREEMENT
This is an amendment ("Amendment"), dated as of April 27, 1995, to the
Diamond Technology Partners, Inc. Stock Purchase Agreement dated as of March 22,
1994 (the "Stock Purchase Agreement") by and among Diamond Technology Partners,
Inc. (the "Company"), Xxxxxx X. Xxxxxxxxx ("Xxxxxxxxx"), Xxxxxxxxxxx X. Xxxxxxx
("Xxxxxxx"), Safeguard Scientifics, Inc. ("Safeguard"), and the investors listed
on Schedule I to the Stock Purchase Agreement (each, an "Investor," and,
together with Safeguard, collectively, the "Investors"), as amended by the First
Amendment to Diamond Technology Partners, Inc. Stock Purchase Agreement dated as
of November 30, 1994.
WHEREAS, in connection with previous amendments to various agreements of
the Company, including the Stock Purchase Agreement and the Articles of
Incorporation of the Company, the authorized number of shares of common stock of
the Company was increased and 1,500,000 shares thereof were reserved for sale or
as option shares to employees of the Company hired on or after January 2, 1995;
and
WHEREAS, the parties desire to further amend the Stock Purchase Agreement
to clarify a provision thereof;
In consideration of the foregoing and the mutual promises set forth in the
Stock Purchase Agreement and of the continuing mutual interests of the Company
and the Investors, and for other good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties, in
accordance with paragraph 9.9 of the Stock Purchase Agreement, hereby agree as
follows:
1. The second sentence of Section 8.3 of the Stock Purchase Agreement is
hereby amended to read, in its entirety, as follows:
"The number of shares of Common Stock that may be issued, or made subject
to options granted, pursuant to this Section 8.3 shall be equal to
4,500,000 minus the number of shares of Common Stock actually purchased by
the Management Group pursuant to Section 1.2 hereof and Schedule II
hereto."
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the undersigned have executed this Second Amendment to
Diamond Technology Partners, Inc. Stock Purchase Agreement on the date first
written above.
DIAMOND TECHNOLOGY PARTNERS, INC.
By: [SIGNATURE APPEARS HERE]
-------------------------------------
As its:
TECHNOLOGY LEADERS, L.P.
By: Technology Leaders Management, Inc.
(General Partner)
By: [SIGNATURE APPEARS HERE]
-------------------------------------
As its:
TECHNOLOGY LEADERS OFFSHORE C.V.
By: Technology Leaders Management, Inc.
(General Partner)
By: [SIGNATURE APPEARS HERE]
-------------------------------------
As its:
SAFEGUARD SCIENTIFICS, INC.
By: [SIGNATURE APPEARS HERE]
-------------------------------------
As its:
CIP CAPITAL L.P. (Formerly, CIP, L.P.)
By: CIP Capital Management Inc.
(General Partner)
By: [SIGNATURE APPEARS HERE]
-------------------------------------
As its:
THIRD AMENDMENT TO
DIAMOND TECHNOLOGY PARTNERS, INC.
STOCK PURCHASE AGREEMENT
This is an amendment ("Amendment"), dated as of October 21, 1996, to the
Diamond Technology Partners, Inc. Stock Purchase Agreement dated as of March 22,
1994 (the "Stock Purchase Agreement") by and among Diamond Technology Partners
Incorporated, a Delaware corporation and the successor in interest by merger
to Diamond Technology Partners, Inc., an Illinois corporation (the "Company"),
Xxxxxx X. Xxxxxxxxx, Xxxxxxxxxxx X. Xxxxxxx, Safeguard Scientifics, Inc.
("Safeguard"), and the investors listed on Schedule I to the Stock Purchase
Agreement (each, an "Investor," and, together with Safeguard, the "Investors"),
as amended by (i) the First Amendment to Diamond Technology Partners, Inc. Stock
Purchase Agreement dated as of November 30, 1994, and (ii) the Second Amendment
to the Diamond Technology Partners, Inc. Stock Purchase Agreement dated as of
April 27, 1995.
WHEREAS, in connection with the authorization of an initial public
offering of the Company's Common Stock as contemplated by a rights offering to
the shareholders of Safeguard, the Board of Directors agreed with Safeguard that
Safeguard would approve, and seek approval of the other Investors, an increase
of 200,000 shares of Common Stock, as available for issuance by the Company
under Section 8.3 of the Stock Purchase Agreement, and
WHEREAS, the Company intends to (i) offer to its Partners the opportunity
to purchase, and receive options to purchase, additional shares of Common Stock,
and (ii) grant to certain of its other employees options to purchase additional
shares of Common Stock, and in connection therewith, it is necessary and
desirable to further increase, by 600,000 shares, the limit of the number of
shares of Common Stock available for issuance by the Company under Section 8.3,
and
In consideration of the foregoing and the mutual promises set forth in the
Stock Purchase Agreement and of the continuing mutual interests of the Company
and the Investors, and for other good and valuable consideration, the receipt,
sufficiency, and adequacy of which are hereby acknowledged, the parties, in
accordance with paragraph 9.9 of the Stock Purchase Agreement, hereby agree that
the second sentence of Section 8.3 of the Stock Purchase Agreement is hereby
amended to read, in its entirety, as follows:
"The number of shares of Common Stock that may be issued, or made
subject to options granted, pursuant to this Section 8.3 shall be
equal to 5,300,000 minus the number of shares of Common Stock
actually purchased by the Management Group pursuant to Section 1.2
hereof and Schedule II hereto."
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the undersigned have executed this Third Amendment to
Diamond Technology Partners, Inc. Stock Purchase Agreement as of the date first
written above.
DIAMOND TECHNOLOGY PARTNERS
INCORPORATED
By:[SIGNATURE APPEARS HERE]
-------------------------------------
As its:
TECHNOLOGY LEADERS, L.P.
By: Technology Leaders Management, Inc.
(General Partner)
By:[SIGNATURE APPEARS HERE]
-------------------------------------
As its:
TECHNOLOGY LEADERS OFFSHORE C.V.
By: Technology Leaders Management, Inc.
(General Partner)
By: [SIGNATURE APPEARS HERE]
-------------------------------------
As its:
SAFEGUARD SCIENTIFICS, INC.
By:[SIGNATURE APPEARS HERE]
-------------------------------------
As its:
CIP CAPITAL L.P. (Formerly, CIP, L.P.)
By: CIP Capital Management Inc.
(General Partner)
By:[SIGNATURE APPEARS HERE]
-------------------------------------
As its:
2
