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EXHIBIT 10.20
WLL INTERNATIONAL, INC.
SERIES A PREFERRED STOCK
PURCHASE AGREEMENT
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TABLE OF CONTENTS
1. Agreement To Sell And Purchase........................................3
1.1 Authorization of Shares .........................................3
1.2 Sale and Purchase ...............................................3
2. Closing, Delivery And Payment.........................................3
2.1 Initial Closing .................................................3
2.2 Subsequent Closings .............................................4
2.3 Certificates; Payment ...........................................4
3. Representations And Warranties Of The Company.........................4
3.1 Organization, Good Standing and Qualification ...................4
3.2 Capitalization ..................................................5
3.3 Authorization; Binding Obligations ..............................5
3.4 Consents and Approvals ..........................................5
3.5 No Violations ...................................................5
3.6 Compliance with Laws ............................................6
3.7 Proprietary Rights ..............................................6
3.8 Actions Pending .................................................6
3.9 Material Contracts ..............................................6
3.10 Investments in United States Real Property Interests ...........6
3.11 Unrelated Business Taxable Income ..............................7
4. Representations And Warranties Of The Purchasers......................7
4.1 Requisite Power and Authority ...................................7
4.2 Investment Representations ......................................7
(1) Purchaser Bears Economic Risk ...............................7
(2) Acquisition for Own Account .................................8
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(3) Purchaser Can Protect Its Interest ...........................8
(4) Accredited Investor ..........................................8
(5) Company Information ..........................................8
(6) Rule 144 .....................................................8
5. Conditions Precedent To Purchasers' Obligations........................8
6. Miscellaneous..........................................................9
6.1 Governing Law ....................................................9
6.2 Survival .........................................................9
6.3 Successors and Assigns ...........................................9
6.4 Entire Agreement .................................................9
6.5 Specific Enforcement .............................................9
6.6 Severability .....................................................9
6.7 Notices .........................................................10
6.8 Counterparts ....................................................10
6.9 Broker's Fees ...................................................10
6.10 Future Financings ..............................................10
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WLL INTERNATIONAL, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
This Series A Preferred Stock Purchase Agreement (this "Agreement") is
entered into as of January 26, 1999, by and among WLL INTERNATIONAL, INC., a
Delaware corporation (the "Company"), and each of those persons and entities,
severally and not jointly, whose names are set forth on the Schedule of
Purchasers attached hereto as Exhibit A (collectively the "Purchasers" and
individually a "Purchaser").
WHEREAS, The parties hereto executed the Irrevocable Equity
Contribution Agreement, dated as of December 7, 1998 (the "Irrevocable Equity
Agreement"), pursuant to which the Purchasers agreed to subscribe for certain
Shares (as defined below) in the event that Bidco was awarded the License (each
as defined in the Irrevocable Equity Agreement); and
WHEREAS, Bidco has been awarded the License;
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND PURCHASE
1.1 Authorization of Shares. On or prior to the Initial Closing (as
defined in Section 2.1 below), the Company shall have authorized the sale and
issuance to the Purchasers of shares of its Series A Preferred Stock (the
"Shares") having the rights, preferences, privileges and restrictions set forth
in the Certificate of Designation of the Company, attached hereto as Exhibit B
(the "Certificate").
1.2 Sale and Purchase. Subject to the terms and conditions hereof, the
Company hereby agrees to issue and sell to each Purchaser and each Purchaser
severally and not jointly agrees to purchase from the Company, the aggregate
number of Shares set forth opposite such Purchaser's name on Exhibit A (the
"Purchaser Share Limit"), at a purchase price of Three Dollars ($3.00) per
Share, at such time or times as determined by the Company pursuant to Section 2
below.
2. CLOSING, DELIVERY AND PAYMENT
2.1 Initial Closing. The initial closing of the sale and purchase of
the Shares under this Agreement (the "Initial Closing") shall take place at 9:00
a.m. on January 26, 1999, at the offices of Holland & Xxxx LLP, 000 Xxxxxxxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxx, XX 00000 or at such other time or place as the
Company and the Purchasers may mutually agree (such date is hereinafter referred
to as the "Initial Closing Date"). The
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total number of Shares to be purchased by all Purchasers in the Initial Closing
shall be 2,333,334, and each Purchaser shall purchase such Purchaser's pro rata
share of this number of Shares; provided, however that Crescendo III, L.P.'s pro
rata share of the Initial Closing shall be purchased by Crescendo World Fund,
LLC and Eagle Ventures WF, LLC as follows: Crescendo World Fund, LLC shall
purchase a total of 742,234 Shares in the Initial Closing; Eagle Ventures WF,
LLC shall purchase a total of 35,544 Shares in the Initial Closing; and
Crescendo III, L.P. shall purchase a total of 0 Shares in the Initial Closing.
2.2 Subsequent Closings. At any time after the Initial Closing until
December 1, 2000, the Company may request each Purchaser to purchase additional
Shares, subject to the Purchaser Share Limit, on the same terms and conditions
as in the Initial Closing (each such closing is hereinafter referred to as a
"Subsequent Closing," and together with the Initial Closing, a "Closing"). The
Company shall give written notice to each Purchaser setting forth the number of
additional Shares to be purchased by such Purchaser in such Subsequent Closing
(which number shall represent such Purchaser's pro rata share of the total
number of Shares to be purchased by all Purchasers in such Subsequent Closing).
Notwithstanding the foregoing, Crescendo III, L.P. shall be entitled, in its
sole discretion, to purchase any or all of Crescendo World Fund, LLC's and/or
Eagle Ventures WF, LLC's pro rata share of the total number of Shares to be
purchased by all Purchasers in such Subsequent Closing, by giving written notice
of such intent to the Company and all other Purchasers no later than the fifth
business day following the delivery of the Company's notice to the Purchasers.
Each Subsequent Closing shall be held at such place as may be mutually agreeable
to the Company and the Purchasers, on the tenth business day following the
delivery of the Company's notice to the Purchasers, or on such other date as may
be mutually agreeable to the Company and the Purchasers (each such date, a
"Subsequent Closing Date," and together with the Initial Closing Date, a
"Closing Date"). If the Purchasers have not purchased all of the Shares set
forth on Exhibit A by December 1, 2000, the Company shall sell, and the
Purchasers shall purchase, all of the remaining Shares in a Subsequent Closing
on that date.
2.3 Certificates; Payment. At each Closing, subject to the terms and
conditions hereof, the Company shall deliver to the Purchasers certificates
representing the number of Shares to be purchased at each such Closing by each
Purchaser, against payment of the purchase price therefor by certified check or
wire transfer of immediately available funds.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Purchaser as of the
date hereof, as follows:
3.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the
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State of Delaware. The Company and each of its subsidiaries has all requisite
corporate power and authority to own and operate its properties and assets and
to carry on its business as presently conducted and as presently proposed to be
conducted. The Company has all requisite corporate power and authority to
execute and deliver this Agreement and the Investors Agreement attached hereto
as Exhibit C (the "Investors Agreement"), to issue and sell the Shares and the
shares of Common Stock issuable upon conversion thereof (the "Conversion
Shares") and to carry out the other provisions of this Agreement and the
Investors Agreement.
3.2 Capitalization. The authorized capital stock of the Company,
immediately prior to the Initial Closing Date, shall consist of (i) Forty
Million (40,000,000) shares of Common Stock, Three Million Two Hundred Fifty
Five Thousand (3,355,000) shares of which are issued and outstanding, and (ii)
Twenty Million (20,000,000) shares of Preferred Stock, Ten Million (10,000,000)
of which are designated Series A Preferred Stock, and no shares of which are
issued and outstanding. All issued and outstanding shares of the Company's
Common Stock have been duly authorized and validly issued and are fully paid and
nonassessable. Immediately prior to the Initial Closing Date, there will be no
outstanding options, warrants or other rights to purchase from the Company any
of its securities. The Company has reserved 3,000,000 shares of its Common Stock
for issuance pursuant to its 1998 Stock Option Plan.
3.3 Authorization; Binding Obligations. All corporate action on the
part of the Company, its officers, directors and stockholders necessary for the
authorization of this Agreement, the performance of all obligations of the
Company hereunder and under the Investors Agreement, and for the authorization,
sale, issuance and delivery of the Shares, has been taken or shall be taken
prior to the Closing. When issued in compliance with the provisions of this
Agreement and paid for by the Purchasers, the Shares will be validly issued,
fully paid and nonassessable. The Conversion Shares have been duly and validly
reserved for issuance and, when issued upon conversion of the Series A Preferred
Stock, will be validly issued, fully paid and nonassessable. This Agreement and
the Investors Agreement have been duly executed by the Company and constitute
valid and binding obligations of the Company enforceable in accordance with
their terms.
3.4 Consents and Approvals. No filings with, notices to, or approvals
of any governmental or regulatory body are required to be obtained or made by
the Company or any subsidiary in connection with the consummation of the
transactions contemplated hereby.
3.5 No Violations. The execution and delivery of this Agreement and the
Investors Agreement and the performance by the Company of its obligations
hereunder and thereunder (i) do not and will not conflict with or violate any
provision of the certificate of incorporation or bylaws of the Company or any
subsidiary and (ii) do not and will not (a) conflict with or result in a breach
of the terms, conditions or provisions of, (b) constitute a default under, (c)
result in the creation of any encumbrance upon the
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capital stock or assets of the Company or any subsidiary pursuant to, (d) give
any third party the right to modify, terminate or accelerate any obligation
under, (e) result in a violation of, or (f) require any authorization, consent,
approval, exemption or other action by or notice to any court or administrative
or governmental body or other third party pursuant to, any law, statute, rule or
regulation or any agreement or instrument or any order, judgment or decree to
which the Company or any subsidiary is subject or by which any of its assets are
bound except for such consents which have been obtained by the Company or such
subsidiary, as the case may be.
3.6 Compliance with Laws. The Company's and its subsidiaries' business
has been conducted in compliance with all applicable laws and regulations of
governmental authorities, except for such violations that have been cured or
that, individually or in the aggregate, may not reasonably be expected to have a
material adverse effect on the business, operations, financial condition or
prospects of the Company or such subsidiary, as the case may be.
3.7 Proprietary Rights. The Company or any subsidiary has not received
any communications alleging that it has violated or, by conducting its business
as proposed would violate, any proprietary rights of any other person, nor is
the Company aware of any basis for the foregoing.
3.8 Actions Pending. There is no action, suit or proceeding pending or,
to the best knowledge of the Company, threatened against or affecting the
Company or any subsidiary or any of its respective properties or rights before
any court or by or before any governmental body or arbitration board or
tribunal.
3.9 Material Contracts. Except for the Equity Subscription Agreement
dated as of June 30, 1998 among the Company and the other parties thereto, as
amended, the Irrevocable Equity Agreement, and the Memorandum of Understanding
dated as of December 8, 1998 between the Company and the other parties thereto,
as of the date of this Agreement, the Company is not a party to (and is not
otherwise bound by) any of the following: (i) any employment or consulting
contract, (ii) any agreement providing for the issuance or repurchase of any
securities of the Company, (iii) any agreement in respect of registration
rights, preemptive rights, rights of first refusal, voting rights or other
rights of security holders, (iv) any agreement evidencing or providing for any
indebtedness for borrowed money, or (v) any other agreement that could
reasonably be deemed material to the Company.
3.10 Investments in United States Real Property Interests. The
Company's capital stock does not, and the Company shall use its reasonable
commercial effects to ensure that its capital stock will not, constitute a
United States real property interest as that term is defined in Section
897(c)(1)(A)(ii) of the Internal Revenue Code of 1986, as amended (the "Code").
The preceding representation is based on a determination by the Company that the
Company is not and has not been a United States real property holding
corporation (as that term is defined in Section 897(c)(2) of the Code)
("USRPHC")
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during the five (5) year period preceding the date of this letter. From time to
time, upon the request of any Purchaser, the Company shall make a determination
as to its status as a USRPHC. If at any time in the future the Company should
become a United States real property holding corporation, the Company shall, as
promptly as possible, notify each Purchaser of such change in status.
3.11 Unrelated Business Taxable Income. The Company shall use its
reasonable commercial efforts to ensure that any gross income derived by the
Purchasers from the Company shall be in the form of dividends, interest, capital
gains and losses from the disposition of property, and rents and royalties, but
only such rents and royalties as are excluded pursuant to Code Sections
512(b)(2) and 512(b)(3), respectively, in calculating unrelated business taxable
income and only such dividends, interest, capital gains and losses, and rents
and royalties that are not included under Section 512(b)(4) of the Code in
calculating unrelated business taxable income.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser severally and not jointly hereby represents and warrants
to the Company, as of the date hereof, as follows:
4.1 Requisite Power and Authority. Such Purchaser has all necessary
power and authority under all applicable provisions of law to execute and
deliver this Agreement and to carry out its provisions. All actions on such
Purchaser's part required for the lawful execution and delivery of this
Agreement have been or will be effectively taken prior to the Initial Closing.
4.2 Investment Representations. Such Purchaser understands that neither
the Shares nor the Conversion Shares have been registered under the Securities
Act of 1933, as amended (the "Securities Act"). Such Purchaser also understands
that the Shares are being offered and sold pursuant to an exemption from
registration contained in the Securities Act based in part upon the Purchaser's
representations contained in this Agreement.
(1) Purchaser Bears Economic Risk. Such Purchaser has
substantial experience in evaluating and investing in private placement
transactions of securities in companies similar to the Company so that it is
capable of evaluating the merits and risks of its investment in the Company and
has the capacity to protect its own interests. Such Purchaser must bear the
economic risk of this investment indefinitely unless the Shares (or the
Conversion Shares) are registered pursuant to the Securities Act, or an
exemption from registration is available. Such Purchaser understands that the
Company has no present intention of registering the Shares, the Conversion
Shares or any shares of its Common Stock. Such Purchaser also understands that
there is no assurance that any exemption from registration under the Securities
Act will be available and that, even if available, such exemption may not allow
such Purchaser to transfer all or any portion of the Shares or the Conversion
Shares under the circumstances, in the amounts or at the times such Purchaser
might propose.
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(2) Acquisition for Own Account. Such Purchaser is acquiring
the Shares and the Conversion Shares for own account for investment only, and
not with a view towards their distribution in violation of applicable securities
laws.
(3) Purchaser Can Protect Its Interest. Such Purchaser
represents that, by reason of its or of its management's business or financial
experience, such Purchaser has the capacity to protect its own interests in
connection with the transactions contemplated in this Agreement. Further, such
Purchaser is aware of no publication of any advertisement in connection with the
transactions contemplated by the Agreement.
(4) Accredited Investor. Such Purchaser represents that it is
an accredited investor within the meaning of Regulation D under the Securities
Act.
(5) Company Information. Such Purchaser has had an opportunity
to discuss the Company's business, management and financial affairs with
directors, officers and management of the Company. Such Purchaser has also had
the opportunity to ask questions of, and receive answers from, the Company and
its management regarding the terms and conditions of this investment.
(6) Rule 144. Such Purchaser acknowledges and agrees that the
Shares and the Conversion Shares must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. Such Purchaser has been advised or is aware of the
provisions of Rule 144 promulgated under the Securities Act, which permits
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things: the
availability of certain current public information about the Company, the resale
occurring not less than one year after a party has purchased and paid for the
security to be sold, the sale being through an unsolicited "broker's
transaction" or in transactions directly with a market maker (as said term is
defined under the Securities Exchange Act of 1934, as amended) and the number of
shares being sold during any three-month period not exceeding specified
limitations.
5. CONDITIONS PRECEDENT TO PURCHASERS' OBLIGATIONS
The obligation of each Purchaser to purchase and pay for the Shares to
be delivered to it at any Closing shall be subject to the satisfaction of the
following conditions as of each Closing Date:
(A) the representations and warranties of the Company
contained in this Agreement shall be true and correct on and as of such Closing
Date;
(B) with respect to the Initial Closing only,
concurrent with the Initial Closing, the Company, the Purchasers and the
existing management stockholders of the Company shall have entered into the
Investors Agreement in the form attached hereto as Exhibit C; and
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(C) with respect to the Initial Closing only, each
Purchaser shall have received from Holland & Xxxx LLP, counsel for the Company,
an opinion in substantially the form attached hereto as Exhibit D, dated the
date of the Initial Closing.
6. MISCELLANEOUS
6.1 Governing Law. This Agreement shall be governed in all respects by
the laws of the State of Colorado as such laws are applied to agreements between
Colorado residents entered into and performed entirely in Colorado, except that
the General Corporation Law of the State of Delaware shall govern as to matters
of corporate law.
6.2 Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any Purchaser and the
closing of the transactions contemplated hereby. All statements as to factual
matters contained in any certificate or other instrument delivered by or on
behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.
6.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
6.4 Entire Agreement; Amendment and Waiver. This Agreement, the
Exhibits and the other documents expressly delivered pursuant hereto, including
the Investors Agreement, supersede any other agreement, whether written or oral,
that may have been made or entered into by the parties hereto, including,
without limitation, the Irrevocable Equity Agreement, relating to the matters
contemplated hereby and constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof, and no party
shall be liable or bound to any other in any manner by any representations,
warranties, covenants and agreements except as specifically set forth herein and
therein. Neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated except by a written instrument signed by the Company
and the holders of a majority of the Shares held by the Purchasers, and any such
amendment, waiver, discharge or termination shall be binding on all Purchasers.
6.5 Specific Enforcement. Any Purchaser shall be entitled to specific
enforcement of its rights under this Agreement. The parties acknowledge that
money damages would be an inadequate remedy for its breach of this Agreement and
consent to an action for specific performance or other injunctive relief in the
event of any such breach.
6.6 Severability. Unless otherwise expressly provided herein, a
Purchaser's rights hereunder are several rights, not rights jointly held with
any of the other Purchasers. In case any provision of this Agreement shall be
invalid, illegal or
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unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
6.7 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified; (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one (1) day after deposit
with a nationally recognized overnight courier, special next day delivery, with
verification of receipt. All communications shall be sent to the Company at 0000
Xxxxx Xxxxxxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000, Attention:
President, with a copy to Holland & Xxxx LLP, 000 00xx Xxxxxx, Xxxxx 0000,
Xxxxxx, XX 00000, Attention: Xxxxxxx X. Xxxxx, and to a Purchaser at the address
set forth on Exhibit A attached hereto or at such other address as the Company
or Purchaser may designate by ten (10) days advance written notice to the other
parties hereto.
6.8 Counterparts; Facsimile. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument. This Agreement may be executed and
delivered by facsimile.
6.9 Broker's Fees. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein. Each party hereto further agrees to
indemnify each other party for any claims, losses or expenses incurred by such
other party as a result of the representation in this Section 6.9 being untrue.
6.10 Future Financings. Nothing contained in this Agreement or any
Purchaser's prior dealings with the Company shall be deemed to constitute a
commitment on the part of any Purchaser to participate in any future financings
by the Company.
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IN WITNESS WHEREOF, the parties hereto have executed the Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
WLL INTERNATIONAL, INC.
By:
-----------------------------------------
Title:
--------------------------------------
PURCHASERS:
TELECOM PARTNERS II, L.P.
BY: TELECOM MANAGEMENT II, L.L.C.
ITS: GENERAL PARTNER
By:
-----------------------------------------
Title:
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CENTENNIAL FUND V, L.P.
BY: CENTENNIAL HOLDINGS V, L.P.
ITS: GENERAL PARTNER
By:
-----------------------------------------
Title:
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CENTENNIAL ENTREPRENEURS FUND V, L.P.
BY: CENTENNIAL HOLDINGS V, L.P.
ITS: GENERAL PARTNER
By:
-----------------------------------------
Title:
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CENTENNIAL HOLDINGS I, LLC
BY: CENTENNIAL HOLDINGS, INC.
ITS: SOLE MANAGER
By:
-----------------------------------------
Title:
--------------------------------------
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CRESCENDO WORLD FUND, LLC
BY: CRESCENDO VENTURES WORLD FUND, LLC
ITS: GENERAL PARTNER
By:
-----------------------------------------
Title:
--------------------------------------
CRESCENDO III, L.P.
BY: CRESCENDO VENTURES III, LLC
ITS: GENERAL PARTNER
By:
-----------------------------------------
Title:
--------------------------------------
EAGLE VENTURES WF, LLC
By:
-----------------------------------------
Title:
--------------------------------------
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SERIES A STOCK PURCHASE AGREEMENT
EXHIBIT A
SCHEDULE OF PURCHASERS
AGGREGATE
NUMBER OF PURCHASE
NAME AND ADDRESS SHARES PRICE
Telecom Partners II, L.P. 3,666,667 $ 11,000,001
0000 X. Xxxxxxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Centennial Fund V, L.P. 2,797,800 $ 8,393,400
0000 00xx Xxxxxx
Xxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Centennial Entrepreneurs Fund V, L.P. 86,820 $ 260,460
0000 00xx Xxxxxx
Xxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Centennial Holdings I, LLC 115,380 $ 346,140
0000 00xx Xxxxxx
Xxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Crescendo World Fund, L.L.C. 742,234 $ 2,226,702
000 XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
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AGGREGATE
NUMBER OF PURCHASE
NAME AND ADDRESS SHARES PRICE
Crescendo III, L.P. 2,555,555 $ 7,666,665
000 XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Eagle Ventures WF, LLC 35,544 $ 106,632
000 XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
TOTAL 10,000,000 $ 30,000,000
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SERIES A STOCK PURCHASE AGREEMENT
EXHIBIT B
FORM OF CERTIFICATE OF DESIGNATION
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CERTIFICATE OF DESIGNATION OF
POWERS, PREFERENCES, RIGHTS, QUALIFICATIONS, LIMITATIONS AND
RESTRICTIONS
OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
WLL INTERNATIONAL, INC.
WLL International, Inc., a corporation duly organized and existing
under the laws of the State of Delaware (the "Corporation"), DOES HEREBY
CERTIFY:
That pursuant to authority conferred upon the Board of Directors of the
Corporation by the Certificate of Incorporation of the Corporation (the
"Certificate of Incorporation") and pursuant to the provisions of Section 151 of
the General Corporation Law of the State of Delaware, the Board of Directors of
the Corporation, at a meeting held on January 6, 1999, has duly adopted the
following resolution relating to this Certificate of Designation for the Series
A Preferred Stock of the Corporation (the "Certificate of Designation"):
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation by the provisions of the Certificate of
Incorporation, the Board of Directors of the Corporation hereby designates and
creates a total of 10,000,000 shares of Series A Preferred Stock from the
authorized but unissued Preferred Stock of the Corporation, and the Board of
Directors of the Corporation hereby fixes the designation, powers, preferences
and relative, participating, optional and other special rights, and the
qualifications, limitations or restrictions thereof, of the shares of such
Series A Preferred Stock as follows:
1. DIVIDEND RIGHTS.
(a) DECLARED DIVIDENDS. Holders of Series A Preferred, in preference to
the holders of Common Stock and any other stock of the Corporation that is not
by its terms expressly senior in right of payment to the Series A Preferred
(collectively, "Junior Stock"), shall be entitled to receive dividends, when and
as declared by the Board of Directors, but only out of funds that are legally
available therefor. In the event that the Corporation declares or pays any
dividends upon the Common Stock (whether payable in cash, securities or other
property) other than dividends payable solely in shares of Common Stock, the
Corporation shall also declare and pay to the holders of the Series A Preferred
at the same time that it declares and pays such dividends to the holders of the
Common Stock, the dividends which would have been declared and paid with respect
to the Common Stock issuable upon conversion of the Series A Preferred had all
of the outstanding Series A Preferred been converted immediately prior to the
record date for
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such dividend, or if no record date is fixed, the date as of which the record
holders of Common Stock entitled to such dividends are to be determined.
(b) PREFERENCE. So long as any Series A Preferred remains outstanding,
without the prior written consent of the holders of a majority of the
outstanding shares of Series A Preferred (the "Required Holders"), the
Corporation shall not, nor shall it permit any Subsidiary to, redeem, purchase
or otherwise acquire directly or indirectly any Junior Stock, nor shall the
Corporation directly or indirectly pay or declare any dividend or make any
distribution upon any Junior Stock. The provisions of this Section 1(b) shall
not, however, apply to (i) the acquisition of shares of any Junior Stock in
exchange for shares of any other Junior Stock, (ii) the payment of cash
dividends on the Common Stock to the extent that equivalent dividends are paid
on the Series A Preferred as provided above, or (iii) any repurchase of any
Reserved Employee Stock from former employees, directors or consultants in
connection with termination of employment or service as a director or consultant
that is approved by the Corporation's Board of Directors.
2. VOTING RIGHTS.
(a) GENERALLY. Except as otherwise provided herein or as required by
law, the Series A Preferred shall vote with the shares of the Common Stock of
the Corporation (and not as a separate class) at any annual or special meeting
of stockholders of the Corporation, and may act by written consent in the same
manner as the Common Stock, in either case upon the following basis: each holder
of shares of Series A Preferred shall be entitled to such number of votes as
shall be equal to the whole number of shares of Common Stock into which such
holder's aggregate number of shares of Series A Preferred are convertible
(pursuant to Section 5 below) immediately after the close of business on the
record date fixed for such meeting or the effective date of such written
consent.
(b) CLASS VOTE REQUIREMENT. Without the affirmative vote of the
Required Holders, the Corporation shall not (i) create, issue or authorize the
issuance of any additional Series A Preferred or create or authorize any new
class or series of the Company's capital stock, (ii) amend the Corporation's
Certificate of Incorporation or bylaws, (iii) engage in any merger,
consolidation, recapitalization, liquidation or sale or purchase of substantial
assets outside the ordinary course of business, (iv) engage in any business
other than the business of the Corporation, described in the Company's most
recent annual business plan approved by the Board of Directors of the
Corporation and activities incidental thereto, (v) increase the amount of
Reserved Employee Stock, or (vi) engage in any transaction with an affiliate of
the Corporation that is not approved by a majority of the Corporation's
disinterested directors.
3. LIQUIDATION RIGHTS.
(a) LIQUIDATION VALUE. Upon any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, before any distribution or
payment
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shall be made to the holders of any Junior Stock, the holders of Series A
Preferred shall be entitled to be paid out of the assets of the Corporation an
amount with respect to each share of Series A Preferred equal to the sum of (i)
the Original Series A Issue Price plus (ii) all declared but unpaid dividends
thereon (the "Series A Liquidation Value"). The "Original Series A Issue Price"
shall be Three Dollars ($3.00), as appropriately adjusted for any future stock
splits, stock combinations, stock dividends or similar transactions affecting
the Series A Preferred.
(b) PARTICIPATION. After the payment of the full liquidation preference
of the Series A Preferred as set forth in Section 3(a) above, the remaining
assets of the Corporation legally available for distribution, if any, shall be
distributed to the holders of Junior Stock entitled to a preference over the
Common Stock and, thereafter, to the holders of Common Stock. The holders of
Series A Preferred shall be entitled to participate in distributions to holders
of the Common Stock such that, giving effect to all distributions pursuant to
Section 3(a), the holders of Series A Preferred receive aggregate distributions
equal to the greater of Series A Liquidation Value or the amounts that such
holders would have received if the Series A Preferred Stock had been converted
into Common Stock immediately prior to such liquidation, dissolution or winding
up of the Corporation.
(c) LIQUIDATION EVENTS. At the option of the Required Holders, the
following events shall be considered a liquidation for purposes of Section 3(a).
(i) any merger, consolidation, business combination, reorganization
or recapitalization of the Corporation in which the Corporation is not the
surviving entity or in which the stockholders of the Corporation immediately
prior to such transaction own capital stock representing less than fifty percent
(50%) of the Corporation's voting power immediately after such transaction, or
any transaction or series of related transactions in which capital stock
representing in excess of fifty percent (50%) of the Corporation's voting power
is transferred (an "Acquisition"); or
(ii) a sale, lease or other disposition of all or substantially all
of the assets of the Corporation (an "Asset Transfer").
(d) PROPORTIONATE PAYMENTS. If, upon any liquidation, dissolution or
winding up, the assets of the Corporation shall be insufficient to make payment
in full to all holders of Series A Preferred, then such assets shall be
distributed among the holders of Series A Preferred at the time outstanding,
ratably in proportion to the full amounts to which they would otherwise be
respectively entitled.
4. REDEMPTION RIGHTS.
(a) SCHEDULED REDEMPTIONS. The Corporation shall redeem thirty three
and one-third percent (33 1/3%) of the then-outstanding shares of Series A
Preferred on the sixth anniversary of the first date of issuance of any shares
of Series A Preferred (such initial issuance date, the "Original Series A Issue
Date"), shall redeem fifty percent
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(50%) of the then-outstanding shares of Series A Preferred on the seventh
anniversary of the Original Series A Issue Date and shall redeem all remaining
shares of Series A Preferred on the eighth anniversary of the Original Series A
Issue Date (such redemption dates, the "Scheduled Redemption Dates"), at a price
per share equal to the Series A Liquidation Value.
(b) REDEMPTION PAYMENTS. For each share of Series A Preferred which is
to be redeemed hereunder, the Corporation shall be obligated on the Scheduled
Redemption Date to pay to the holder thereof (upon surrender by such holder at
the Corporation's principal office of the certificate representing such share)
an amount in cash equal to the Series A Liquidation Value. If the funds of the
Corporation legally available for redemption of Series A Preferred on any
Scheduled Redemption Date are insufficient to redeem the total number of shares
to be redeemed on such date, those funds which are legally available shall be
used to redeem the maximum possible number of shares pro rata among the holders
of Series A Preferred to be redeemed based upon the aggregate Series A
Liquidation Value of such shares held by each such holder. At any time
thereafter when additional funds of the Corporation are legally available for
the redemption of Series A Preferred, such funds shall immediately be used to
redeem the balance of the shares which the Corporation has become obligated to
redeem on any Scheduled Redemption Date but which it has not redeemed.
(c) NOTICE OF REDEMPTION. Except as otherwise provided herein, the
Corporation shall mail written notice of each redemption of Series A Preferred
to each record holder thereof not more than 60 nor less than 30 days prior to
the Scheduled Redemption Date. The holders of Series A Preferred to be redeemed
shall in any event have the right to convert any or all of their shares into
Common Stock at any time prior to the close of business on the Scheduled
Redemption Date. In case fewer than the total number of shares represented by
any certificate are redeemed, a new certificate representing the number of
unredeemed shares shall be issued to the holder thereof without cost to such
holder within five business days after surrender of the certificate representing
the redeemed shares.
(d) DETERMINATION OF THE NUMBER OF SHARES TO BE REDEEMED. The number of
shares of Series A Preferred to be redeemed from each holder thereof in
redemptions hereunder shall be the number of shares determined by multiplying
the total number of shares of Series A Preferred to be redeemed by a fraction,
the numerator of which shall be the total number of shares of Series A Preferred
then held by such holder and the denominator of which shall be the total number
of shares of Series A Preferred then outstanding.
(e) OTHER REDEMPTIONS OR ACQUISITIONS. The Corporation shall not, nor
shall it permit any Subsidiary to, redeem or otherwise acquire any shares of
Series A Preferred, except as expressly authorized herein or pursuant to a
purchase offer made pro rata to all holders of Series A Preferred on the basis
of the number of shares owned by each such holder.
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5. CONVERSION RIGHTS.
The holders of the Series A Preferred shall have the following rights
with respect to the conversion of the Series A Preferred into shares of Common
Stock:
(a) OPTIONAL CONVERSION. Subject to and in compliance with the
provisions of this Section 5, any shares of Series A Preferred may, at the
option of the holder, be converted at any time into fully-paid and nonassessable
shares of Common Stock. The number of shares of Common Stock to which a holder
of Series A Preferred shall be entitled upon conversion shall be the product
obtained by multiplying the "Series A Conversion Rate" then in effect
(determined as provided in Section 5(b)) by the number of shares of Series A
Preferred being converted.
(b) SERIES CONVERSION RATE. The conversion rate in effect at any time
for conversion of the Series A Preferred (the "Series A Conversion Rate") shall
be the quotient obtained by dividing the Series A Liquidation Value by the
"Series A Conversion Price" calculated as provided in Section 5(c).
(c) CONVERSION PRICE. The conversion price for the Series A Preferred
(the "Series A Conversion Price") shall initially be the Original Series A Issue
Price (i.e., $3.00). Such initial Series A Conversion Price shall be adjusted
from time to time in accordance with this Section 5. If and whenever on or after
the Original Series A Issue Date the Corporation issues or sells, or in
accordance with this Section 5(c) is deemed to have issued or sold, any shares
of its Common Stock (other than pursuant to a Permitted Issuance) for a
consideration per share less than the Series A Conversion Price in effect
immediately prior to the time of such issue or sale, then immediately upon such
issue or sale or deemed issue or sale the Series A Conversion Price shall be
reduced to the amount determined by dividing (a) the sum of (1) the product
derived by multiplying the Series A Conversion Price in effect immediately prior
to such issue or sale by the number of shares of Common Stock Deemed Outstanding
immediately prior to such issue or sale, plus (2) the consideration, if any,
received or deemed to have been received by the Corporation upon such issue or
sale, by (b) the number of shares of Common Stock Deemed Outstanding immediately
after such issue or sale. All references to the Series A Conversion Price herein
shall mean the Series A Conversion Price as so adjusted. For purposes of
determining the adjusted Series A Conversion Price, the following shall be
applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. Except for Permitted Issuances,
if the Corporation in any manner grants or sells any Options and the price per
share for which Common Stock is issuable upon the exercise of such Options, or
upon conversion or exchange of any Convertible Securities issuable upon exercise
of such Options, is less than the Series A Conversion Price in effect
immediately prior to the time of the granting or sale of such Options, then the
total maximum number of shares of Common Stock issuable upon the exercise of
such Options or upon conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Options shall be
deemed to have been issued and sold by the Corporation at the time of
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the granting or sale of such Options for such price per share. For purposes of
this paragraph, the "price per share for which Common Stock is issuable" shall
be determined by dividing (1) the total amount, if any, received or receivable
by the Corporation as consideration for the granting or sale of such Options,
plus the minimum aggregate amount of additional consideration payable to the
Corporation upon exercise of all such Options, plus in the case of such Options
which relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon the issuance
or sale of such Convertible Securities and the conversion or exchange thereof,
by (2) the total maximum number of shares of Common Stock issuable upon the
exercise of such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Options. No further
adjustment of the Series A Conversion Price shall be made when Convertible
Securities are actually issued upon the exercise of such Options or when Common
Stock is actually issued upon the exercise of such Options or the conversion or
exchange of such Convertible Securities.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the Corporation in any
manner issues or sells any Convertible Securities and the price per share for
which Common Stock is issuable upon conversion or exchange thereof is less than
the Series A Conversion Price in effect immediately prior to the time of such
issue or sale, then the maximum number of shares of Common Stock issuable upon
conversion or exchange of such Convertible Securities shall be deemed to have
been issued and sold by the Corporation at the time of the issuance or sale of
such Convertible Securities for such price per share. For the purposes of this
paragraph, the "price per share for which Common Stock is issuable" shall be
determined by dividing (1) the total amount received or receivable by the
Corporation as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Corporation upon the conversion or exchange thereof, by (2)
the total maximum number of shares of Common Stock issuable upon the conversion
or exchange of all such Convertible Securities. No further adjustment of the
Series A Conversion Price shall be made when Common Stock is actually issued
upon the conversion or exchange of such Convertible Securities, and if any such
issue or sale of such Convertible Securities is made upon exercise of any
Options for which adjustments of the Series A Conversion Price had been or are
to be made pursuant to other provisions of this Section 5, no further adjustment
of the Series A Conversion Price shall be made by reason of such issue or sale.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If the purchase
price provided for in any Options, the additional consideration, if any, payable
upon the conversion or exchange of any Convertible Securities or the rate at
which any Convertible Securities are convertible into or exchangeable for Common
Stock changes at any time, the Series A Conversion Price in effect at the time
of such change shall be immediately adjusted to the Series A Conversion Price
which would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or conversion rate, as the case may be, at the time
initially granted, issued or sold.
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(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED CONVERTIBLE
SECURITIES. Upon the expiration of any Option or the termination of any right to
convert or exchange any Convertible Security without the exercise of any such
Option or right, the Series A Conversion Price then in effect hereunder shall be
adjusted immediately to the Series A Conversion Price which would have been in
effect at the time of such expiration or termination had such Option or
Convertible Security, to the extent outstanding immediately prior to such
expiration or termination, never been issued.
(v) CALCULATION OF CONSIDERATION RECEIVED. If any Common Stock,
Option or Convertible Security is issued or sold or deemed to have been issued
or sold for cash, the consideration received therefor shall be deemed to be the
amount received by the Corporation therefor (net of discounts, commissions and
related expenses). If any Common Stock, Option or Convertible Security is issued
or sold for a consideration other than cash, the amount of the consideration
other than cash received by the Corporation shall be the fair value of such
consideration. If any Common Stock, Option or Convertible Security is issued to
the owners of the non-surviving entity in connection with any merger in which
the Corporation is the surviving corporation, the amount of consideration
therefor shall be deemed to be the fair value of such portion of the net assets
and business of the non-surviving entity as is attributable to such Common
Stock, Option or Convertible Security, as the case may be. The fair value of any
consideration other than cash and securities shall be determined jointly by the
Corporation and the Required Holders. If such parties are unable to reach
agreement within a reasonable period of time, the fair value of such
consideration shall be determined by an independent appraiser experienced in
valuing such type of consideration jointly selected by the Corporation and the
Required Holders. The determination of such appraiser shall be final and binding
upon the parties, and the fees and expenses of such appraiser shall be borne by
the Corporation.
(vi) INTEGRATED TRANSACTIONS. In case any Option is issued in
connection with the issue or sale of other securities of the Corporation,
together comprising one integrated transaction in which no specific
consideration is allocated to such Option by the parties thereto, the Option
shall be deemed to have been issued for a consideration of $.01.
(vii) TREASURY SHARES. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Corporation or any Subsidiary, and the disposition of any
shares so owned or held shall be considered an issue or sale of Common Stock.
(d) ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the Corporation
shall at any time or from time to time after the Original Series A Issue Date
effect a subdivision of the outstanding Common Stock, the Series A Conversion
Price in effect immediately before that subdivision shall be proportionately
decreased. Conversely, if the Corporation shall at any time or from time to time
after the Original Series A Issue Date combine the outstanding shares of Common
Stock into a smaller number of shares, the Series A Conversion Price in effect
immediately before the combination shall be propor-
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tionately increased. Any adjustment under this Section 5(d) shall become
effective at the close of business on the date the subdivision or combination
becomes effective.
(e) ADJUSTMENT FOR COMMON STOCK DIVIDENDS AND DISTRIBUTIONS. If the
Corporation at any time or from time to time after the Original Series A Issue
Date makes, or fixes a record date for the determination of holders of Common
Stock entitled to receive, a divided or other distribution payable in additional
shares of Common Stock, in each such event the Series A Conversion Price that is
then in effect shall be decreased as of the time of such issuance or, in the
event such record date is fixed, as of the close of business on such record
date, by multiplying the Series A Conversion Price then in effect by a fraction
(1) the numerator of which is the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance or the close of
business on such record date, and (2) the denominator of which is the total
number of shares of Common Stock issued and outstanding immediately prior to the
time of such issuance or the close of business on such record date plus the
number of shares of Common Stock issuable in payment of such dividend or
distribution; provided, however, that if such record date is fixed and such
dividend is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Series A Conversion Price shall be recomputed accordingly as
of the close of business on such record date and thereafter the Series A
Conversion Price shall be adjusted pursuant to this Section 5(e) to reflect the
actual payment of such dividend or distribution.
(f) ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. If the
Corporation at any time or from time to time after the Original Series A Issue
Date makes, or fixes a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
securities of the Corporation other than shares of Common Stock, in each such
event provision shall be made so that the holders of the Series A Preferred
shall receive upon conversion thereof, in addition to the number of shares of
Common Stock receivable thereupon, the amount of other securities of the
Corporation which they would have received had their Series A Preferred been
converted into Common Stock on the date of such event and had they thereafter,
during the period from the date of such event to and including the conversion
date, retained such securities receivable by them as aforesaid during such
period, subject to all other adjustments called for during such period under
this Section 5 with respect to the rights of the holders of the Series A
Preferred or with respect to such other securities by their terms.
(g) ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. If at
any time or from time to time after the Original Series A Issue Date, the Common
Stock issuable upon the conversion of the Series A Preferred is changed into the
same or a different number of shares of any class or classes of stock, whether
by recapitalization, reclassification or otherwise (other than a subdivision or
combination of shares or stock dividend or a reorganization, merger,
consolidation or sale of assets provided for elsewhere in this Section 5), in
any such event each holder of Series A Preferred shall have the right thereafter
to convert such stock into the kind and amount of stock and other securities and
property receivable in connection with such recapitalization, reclassifica-
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tion or other change by holders of the maximum number of shares of Common Stock
into which such shares of Series A Preferred could have been converted
immediately prior to such recapitalization, reclassification or change, all
subject to further adjustments as provided herein or with respect to such other
securities or property by the terms thereof.
(h) REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALES OF ASSETS. If at
any time or from time to time after the Original Series A Issue Date, there is a
capital reorganization of the Common Stock (other than a recapitalization,
subdivision, combination, reclassification, exchange or substitution of shares
provided for elsewhere in this Section 5), as a part of such capital
reorganization, provision shall be made so that the holders of the Series A
Preferred shall thereafter be entitled to receive upon conversion of the Series
A Preferred the number of shares of stock or other securities or property of the
Corporation to which a holder of the maximum number of shares of Common Stock
deliverable upon conversion would have been entitled in connection with such
capital reorganization, subject to adjustment in respect of such stock or
securities by the terms thereof. In any such case, appropriate adjustment shall
be made in the application of the provisions of this Section 5 with respect to
the rights of the holders of Series A Preferred after the capital reorganization
to the end that the provisions of this Section 5 (including adjustment of the
Series A Conversion Price then in effect and the number of shares of Common
Stock issuable upon conversion of the Series A Preferred) shall be applicable
after that event and be as nearly equivalent as practicable.
(i) CERTIFICATE OF ADJUSTMENT. In each case of an adjustment or
readjustment of the Series A Conversion Price for the number of shares of Common
Stock or other securities issuable upon conversion of the Series A Preferred,
the Corporation, at its expense, shall compute such adjustment or readjustment
in accordance with the provisions hereof and prepare a certificate showing such
adjustment or readjustment, and shall mail such certificate, by first class
mail, postage prepaid, to each registered holder of Series A Preferred at the
holder's address as shown in the Corporation's books. The certificate shall set
forth such adjustment or readjustment, showing in detail the facts upon which
such adjustment or readjustment is based, including a statement of (1) the
consideration received or deemed to be received by the Corporation for any
additional shares of Common Stock issued or sold or deemed to have been issued
or sold, (2) the Series A Conversion Price at the time in effect, (3) the number
of additional shares of Common Stock issued or sold or deemed to have been
issued or sold, and (4) the type and amount, if any, of other property which at
the time would be received upon conversion of the Series A Preferred.
(j) NOTICES OF RECORD DATE. Upon (i) any taking by the Corporation of a
record of the holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend or other
distribution, or (ii) any Acquisition (as defined in Section 3(c)) or other
capital reorganization of the Corporation, any reclassification or
recapitalization of the capital stock of the Corporation, any merger or
consolidation of the Corporation with or into any other
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26
corporation, any Asset Transfer (as defined in Section 3(c)), or any voluntary
or involuntary dissolution, liquidation or winding up of the Corporation, the
Corporation shall mail to each holder of Series A Preferred at least twenty (20)
days prior to the record date specified therein a notice specifying (1) the date
on which any such record is to be taken for the purpose of such dividend or
distribution and a description of such dividend or distribution, (2) the date on
which any such Acquisition, reorganization, reclassification, transfer,
consolidation, merger, Asset Transfer, dissolution, liquidation or winding up is
expected to become effective, and (3) the date, if any, that is to be fixed for
determining the holders of record of Common Stock (or other securities) that
shall be entitled to exchange their shares of Common Stock (or other securities)
for securities or other property deliverable upon such Acquisition,
reorganization, reclassification, transfer, consolidation, merger, Asset
Transfer, dissolution, liquidation or winding up.
(k) AUTOMATIC CONVERSION. Each share of Series A Preferred shall
automatically be converted into shares of Common Stock, based on the
then-effective Series A Conversion Price, immediately upon the closing of a
firmly underwritten public offering pursuant to an effective registration
statement under the Securities Act of 1933, as amended, covering the offer and
sale of Common Stock for the account of the Corporation in which (i) the per
share price to the public is at least $15.00 per share (as adjusted for stock
splits, recapitalizations and the like), and (ii) the gross cash proceeds to the
Corporation (prior to expenses and underwriting commissions) are at least
$10,000,000. Upon such automatic conversion, all declared but unpaid dividends,
if any, shall be paid in accordance with Section 5(1).
(l) MECHANICS OF CONVERSION.
(i) OPTIONAL CONVERSION. Each holder of Series A Preferred who
desires to convert the same into shares of Common Stock pursuant to this Section
5 shall surrender the certificate or certificates therefor, duly endorsed, at
the office of the Corporation or any transfer agent for the Series A Preferred,
and shall give written notice to the Corporation at such office that such holder
elects to convert the same. Such notice shall state the number of shares of
Series A Preferred being converted. Thereupon, the Corporation shall promptly
issue and deliver at such office to such holder a certificate or certificates
for the number of shares of Common Stock to which such holder is entitled and
shall promptly pay in cash or, to the extent sufficient funds are not then
legally available therefor, in Common Stock (at the Common Stock's fair market
value determined by the Board of Directors as of the date of such conversion),
any declared but unpaid dividends on the shares of Series A Preferred being
converted. Such conversion shall be deemed to have been made at the close of
business on the date of such surrender of the certificate representing the
shares of Series A Preferred to be converted, and the person entitled to receive
the shares of Common Stock issuable upon such conversion shall be treated for
all purposes as the record holder of such shares of Common Stock on such date.
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(ii) AUTOMATIC CONVERSION. Upon the occurrence of the event
specified in Section 5(k) above, the outstanding shares of Series A Preferred
shall be converted into Common Stock automatically without any further action by
the holders of such shares and whether or not the certificates representing such
shares are surrendered to the Corporation or its transfer agent; provided,
however, that the Corporation shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such conversion unless the
certificates evidencing such shares of Series A Preferred are either delivered
to the Corporation or its transfer agent as provided below, or the holder
notifies the Corporation or its transfer agent that such certificates have been
lost, stolen or destroyed and executes an agreement satisfactory to the
Corporation to indemnify the Corporation from any loss incurred by it in
connection with such certificates. Upon surrender by any holder of the
certificates formerly representing shares of Series A Preferred at the office of
the Corporation or any transfer agent for the Series A Preferred, there shall be
issued and delivered to such holder promptly at such office and in its name as
shown on such surrendered certificate or certificates, a certificate or
certificates for the number of shares of Common Stock into which the shares of
Series A Preferred surrendered were convertible on the date on which such
automatic conversion occurred, and the Corporation shall promptly pay in cash
or, at the option of the Corporation, Common Stock (at the Common Stock's fair
market value determined by the Board as of the date of such conversion) or, at
the option of the Corporation, a combination of both, all declared but unpaid
dividends on the shares of Series A Preferred being converted. Until surrendered
as provided above, each certificate formerly representing shares of Series A
Preferred shall be deemed for all corporate purposes to represent the number of
shares of Common Stock resulting from such automatic conversion.
(m) FRACTIONAL SHARES. No fractional shares of Common Stock shall be
issued upon conversion of Series A Preferred. All shares of Common Stock
(including fractions thereof) issuable upon conversion of more than one share of
Series A Preferred by a holder thereof shall be aggregated for purposes of
determination whether the conversion would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the conversion would
result in the issuance of any fractional share, the Corporation shall, in lieu
of issuing any fractional share, pay cash equal to the product of such fraction
multiplied by the Common Stock's fair market value (as determined by the Board)
on the date of conversion.
6. CERTAIN DEFINITIONS.
"COMMON STOCK" means the Common Stock, par value $.01 per share, of the
Corporation.
"COMMON STOCK DEEMED OUTSTANDING" means, at any given time, the number
of shares of Common Stock actually outstanding at such time, plus (a) the number
of shares of Common Stock which would be issued upon exercise of all of the
Corporation's outstanding Options and (b) the number of shares of Common Stock
which would be issued upon conversion or exchange of all of the Corporation's
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outstanding Convertible Securities (including Convertible Securities issuable
upon exercise of Options).
"CONVERTIBLE SECURITIES" means any stock or securities directly or
indirectly convertible into or exchangeable for Common Stock.
"INVESTORS AGREEMENT" means the Investors Agreement executed on the
Original Series A Issue Date, by and among the Corporation, the purchasers of
Series A Preferred and certain other stockholders of the Corporation, as such
agreement may from time to time be amended in accordance with its terms.
"OPTIONS" means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities.
"PERMITTED ISSUANCE" means any issuance of Reserved Employee Stock.
"RESERVED EMPLOYEE STOCK" means up to 3,000,000 shares of Common Stock
issuable to employees, directors or consultants of the Corporation and its
Subsidiaries pursuant to the WLL International, Inc. 1998 Stock Option Plan.
"SUBSIDIARY" means any corporation of which the shares of outstanding
capital stock possessing the voting power (under ordinary circumstances) in
electing the board of directors are, at the time as of which any determination
is being made, owned by the Corporation either directly or indirectly through
Subsidiaries.
7. AMENDMENT AND WAIVER.
No amendment, modification or waiver of any of the terms or provisions
of the Series A Preferred shall be binding or effective without the prior
written consent of the Required Holders and no change in the terms hereof may be
accomplished by merger or consolidation of the Corporation with another
corporation or entity unless the Corporation has obtained the prior written
consent of the Required Holders; provided, however, that no such action shall
adversely alter or change any of the rights, preferences, or privileges of the
Series A Preferred without the prior written consent of the holders of at least
75% of the Series A Preferred then outstanding. Any amendment, modification or
waiver of any of the terms or provisions of the Series A Preferred by the
Required Holders (or such higher vote of holders of Series A Preferred as may be
required), whether prospective or retroactively effective, shall be binding upon
all holders of Series A Preferred.
8. GENERAL PROVISIONS.
(a) REGISTRATION OF TRANSFER. The Corporation shall keep at its
principal office a register for the registration of the Series A Preferred. Upon
the surrender of any certificate representing Series A Preferred at such place,
the Corporation shall, at the request of the record holder of such certificate,
execute and deliver (at the Corporation's expense) a new certificate or
certificates in exchange therefor representing in the aggre-
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gate the number of shares represented by the surrendered certificate. Each such
new certificate shall be registered in such name and shall represent such number
of shares as is requested by the holder of the surrendered certificate and shall
be substantially identical in form to the surrendered certificate.
(b) REPLACEMENT. Upon receipt of evidence reasonably satisfactory to
the Corporation (an affidavit of the registered holder shall be satisfactory) of
the ownership and the loss, theft, destruction or mutilation of any certificate
evidencing shares of Series A Preferred, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation (provided, however, that if the holder is a financial institution or
other institutional investor its own agreement shall be satisfactory), or in the
case of any such mutilation upon surrender of such certificate, the Corporation
shall (at its expense) execute and deliver in lieu of such certificate a new
certificate of like kind representing the number of shares of such class
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate.
(c) RESERVATION OF COMMON STOCK ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series A Preferred, such number of its shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of the Series A Preferred. If at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then-outstanding shares of the Series A Preferred,
the Corporation shall take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose.
(d) NOTICES. Any notice required by the provisions of this Certificate
of Designation shall be in writing and shall be deemed effectively given: (i)
upon personal delivery to the party to be notified, (ii) when sent by confirmed
telex or facsimile if sent during normal business hours of the recipient; if
not, then on the next business day, (iii) five (5) days after having been sent
by registered or certified mail, return receipt requested, postage prepaid, or
(iv) one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All notices
to stockholders shall be addressed to each holder of record at the address of
such holder appearing on the books of the Corporation.
(e) PAYMENT OF TAXES. The Corporation shall pay all taxes (other than
taxes based upon income) and other governmental charges that may be imposed with
respect to the issue or delivery of shares of Common Stock upon conversion of
shares of Series A Preferred, excluding any tax or other charge imposed in
connection with any transfer involved in the issue and delivery of shares of
Common Stock in a name other than that in which the shares of Series A Preferred
so converted were registered.
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(f) NO DILUTION OR IMPAIRMENT. The Corporation shall not amend its
Certificate of Incorporation or participate in any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, for the purpose of avoiding or seeking to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Corporation.
(g) NO REISSUANCE OF SERIES A PREFERRED. No share or shares of Series A
Preferred acquired by the Corporation by reason of redemption, purchase,
conversion or otherwise shall be reissued.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be signed and executed in its corporate name by Xxxxx X. Xxxxxxx,
its President, and attested to by Xxxx X. Xxxxxx, its Secretary, and its
Corporate Seal to be affixed on this 26th day of January, 1999.
WLL INTERNATIONAL, INC.
By:
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
Attest:
------------------------------
Name: Xxxx X. Xxxxxx
Title: Secretary
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SERIES A STOCK PURCHASE AGREEMENT
EXHIBIT C
FORM OF INVESTORS AGREEMENT
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WLL INTERNATIONAL, INC.
INVESTORS AGREEMENT
JANUARY 26, 1999
33
TABLE OF CONTENTS
PAGE
----
Article I Certain Definitions....................................................................................1
Article II Registration Rights....................................................................................3
2.1 Demand Registrations.....................................................................................3
2.2 Piggyback Registrations..................................................................................5
2.3 Expenses of Registration.................................................................................5
2.4 Registration Procedures..................................................................................6
2.5 Indemnification..........................................................................................7
2.6 Other Obligations........................................................................................9
2.7 Termination of Registration Rights......................................................................10
Article III Restrictions On Transfer Of Management Stock........................................................10
3.1 Rights of First Refusal.................................................................................10
3.2 Exempt Transactions.....................................................................................11
Article IV Covenants Of The Company.............................................................................11
4.1 Basic Financial Information.............................................................................11
4.2 Additional Information Rights...........................................................................12
4.3 Prompt Payment of Taxes, Etc............................................................................12
4.4 Maintenance of Properties and Leases....................................................................13
4.5 Insurance...............................................................................................13
4.6 Accounts and Records....................................................................................13
4.7 Independent Accountants.................................................................................13
4.8 Compliance with Laws....................................................................................13
4.9 Maintenance of Corporate Existence, Etc.................................................................14
4.10 Limited Preemptive Rights..............................................................................14
Article V Corporate Governance..................................................................................15
5.1 Board of Directors......................................................................................15
5.2 Meetings of the Board...................................................................................16
5.3 Committees..............................................................................................16
5.4 Reimbursement of Expenses...............................................................................16
5.5 Certain Approvals.......................................................................................16
Article VI Miscellaneous........................................................................................17
6.1 Governing Law...........................................................................................17
6.2 Successors and Assigns..................................................................................17
6.3 Entire Agreement; Amendment and Waiver..................................................................17
6.4 Specific Enforcement....................................................................................17
6.5 Severability............................................................................................17
6.6 Notices, Etc............................................................................................18
6.7 Counterparts; Facsimile.................................................................................18
6.8 Delays or Omissions.....................................................................................18
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6.9 Compliance With Purchase Agreement.....................................................................18
6.10 Termination............................................................................................18
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INVESTORS AGREEMENT
Investors Agreement (this "Agreement") dated as of January 26, 1999,
by and among (i) WLL International, Inc. a Delaware corporation (the
"Company"), (ii) the holders of the Company's Series A Preferred Stock
identified as the "Investors" on the signature pages hereto (the "Investors"),
and (iii) the other holders of the Company's stock, including Management
Holders (as defined below), identified as "Other Holders" on the signature
pages hereto (the "Other Holders"). The Investors and the Other Holders are
referred to collectively as the "Stockholders."
The Investors and the Company are parties to a Series A Preferred
Stock Purchase Agreement of even date herewith (the "Purchase Agreement"). The
Investors' obligations under the Purchase Agreement are conditioned upon the
execution and delivery of this Agreement by the Stockholders and the Company.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the
following respective meanings:
1.1 "CLOSING" shall mean the date of the initial sale of shares of the
Company's Series A Preferred Stock pursuant to the Purchase Agreement.
1.2 "COMMISSION" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
1.3 "COMMON STOCK" shall mean the Company's Common Stock, $.01 par
value per share.
1.4 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934 (or
any similar successor federal statute), as amended, and the rules and
regulations thereunder, all as the same shall be in effect from time to time.
1.5 "INITIATING HOLDERS" shall mean holders of Registrable Securities
representing not less than thirty-three percent (33%) of the then-outstanding
Registrable Securities.
1.6 "INVESTOR STOCK" shall mean (i) shares of Common Stock owned by
the Investors or any transferee thereof; (ii) shares of Common Stock issued or
issuable upon the conversion or exercise of any stock (including, without
limitation, the Series A Preferred Stock) warrants, options or other securities
of the Company owned by the
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Investors or any transferee thereof; and (iii) any shares of Common Stock
issued as a dividend or other distribution with respect to or in exchange for
or in replacement of the shares referenced in (i) and (ii)above.
1.7 "MANAGEMENT HOLDERS" shall mean members of the Company's
management that hold Shares and are parties to this Agreement or have agreed to
be bound by the provisions of this Agreement. As of the date hereof, the
Management Holders are Xxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxx.
1.8 "MANAGEMENT STOCK" shall mean (i) shares of Common Stock owned by
the Management Holders or any Permitted Transferee thereof; (ii) shares of
Common Stock issued or issuable upon the conversion or exercise of any options
or other securities of the Company owned by the Management Holders; and (iii)
any shares of Common Stock issued as a dividend or other distribution with
respect to or in exchange for or in replacement of the shares referenced in (i)
and (ii) above.
1.9 "OTHER STOCK" shall mean (i) shares of Common Stock owned by the
Other Holders (including, without limitation, shares of Management Stock held
by any Management Holder or any Permitted Transferee thereof); (ii) shares of
Common Stock issued or issuable upon the conversion or exercise of any options
or other securities of the Company owned by the Other Holders (including,
without limitation, any Management Holder); and (iii) any shares of Common
Stock issued as a dividend or other distribution with respect to or in exchange
for or in replacement of the shares referenced in (i) and (ii) above.
1.10 "PERMITTED TRANSFEREE" shall mean with respect to a Management
Holder, a member of such Management Holder's immediate family, a trust
established for the benefit of members of such Management Holder's immediate
family, or a transferee of such Other Holder by will or the laws of intestate
succession.
1.11 "QUALIFIED PUBLIC OFFERING" shall mean an underwritten public
offering of Common Stock resulting in proceeds to the Company of not less than
$30,000,000 (prior to expenses and underwriting commissions) and at an offering
price per share of at least $15.00 per share (as adjusted for stock splits,
recapitalizations and the like).
1.12 "REGISTRABLE SECURITIES" shall mean the Investor Stock and the
Other Stock; provided, however, that Registrable Securities shall not include
any shares of Investor Stock or Other Stock that have previously been
registered under the Securities Act or that have otherwise been sold to the
public in an open-market transaction under Rule 144.
1.13 The terms "REGISTERS," "REGISTERED" and "REGISTRATION" shall
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and the declaration or ordering
of the effectiveness of such registration statement by the Commission.
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1.14 "REGISTRATION EXPENSES" shall mean all expenses incurred in
effecting any registration pursuant to this Agreement, including without
limitation all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for the Company, blue sky fees
and expenses, expenses of any regular or special audits incident to or required
by any such registration, and the fees and expenses of one counsel for the
selling holders of Registrable Securities, but excluding Selling Expenses.
1.15 "RESERVED EMPLOYEE STOCK" shall mean the 3,000,000 shares
reserved pursuant to the WLL International, Inc. 1998 Stock Option Plan.
1.16 "RULE 144" shall mean Rule 144 as promulgated by the Commission
under the Securities Act, as such Rule may be amended from time to time, or any
similar successor rule that may be promulgated by the Commission.
1.17 "SECURITIES ACT" shall mean the Securities Act of 1933 (or any
similar successor federal statute), as amended, and the rules and regulations
thereunder, all as the same shall be in effect from time to time.
1.18 "SELLING EXPENSES" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities.
1.19 "SERIES A PREFERRED STOCK" shall mean the Company's Series A
Preferred Stock, $.01 par value per share.
1.20 "STOCK" shall mean Investor Stock and Other Stock.
1.21 "SUBSIDIARY" means any subsidiary of the Company over which the
Company exercises control. For purposes of this definition, "control" shall
mean the direct or indirect ownership by the Company of at least 50.1% of the
voting securities of such subsidiary.
ARTICLE II
REGISTRATION RIGHTS
2.1 DEMAND REGISTRATIONS.
(a) REQUEST FOR REGISTRATION. At any time or times after the
third anniversary of the Closing or at any time following the effective date of
the first registration statement filed by the Company under the Securities Act
in respect of its Common Stock, the Initiating Holders may require that the
Company effect a registration under the Securities Act four times utilizing a
registration on Form S-1 or any similar form (a "Long Form Registration") and
as many times as requested by the Initiating Holders utilizing a Form S-3 or
any similar form, if available (a "Short-Form Registration") (each a "Demand
Registration"). Upon receipt of written notice of such demand, the Company
shall promptly give written notice of the proposed registration to all other
holders of Registrable Securities and shall include in such registration all
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38
Registrable Securities specified in such demand, together with all Registrable
Securities of any other holder of Registrable Securities joining in such demand
as are specified in a written request received by the Company within twenty
(20) days after delivery of the Company's notice.
(b) DEFERRAL OF DEMAND REGISTRATION. The Company shall file a
registration statement with respect to each Demand Registration requested
pursuant to Section 2.1(a) as soon as practicable after receipt of the demand
of the Initiating Holders; provided, however, that if in the good faith
judgment of the Board of Directors of the Company, such registration would be
seriously detrimental to the Company in that such registration would interfere
with a proposed primary registration of securities by the Company or any other
material corporate transaction and the Board of Directors concludes, as a
result, that it is advisable to defer the filing of such registration statement
at such time (as evidenced by an appropriate resolution of the Board), then the
Company shall have the right to defer such filing for the period during which
such registration would be seriously detrimental; provided further, however,
that (i) the Company may not defer the filing for a period of more than one
hundred eighty (180) days after receipt of the demand of the Initiating
Holders, (ii) the Company shall not exercise its right to defer a Demand
Registration more than once, and (iii) if the Company undertakes a primary
registration following an exercise of its deferral right, the holders of
Registrable Securities shall have "piggyback" rights under Section 2.2 hereof
with respect to not less than one-third (1/3) of the number of shares of Common
Stock to be sold in such offering.
(c) UNDERWRITING. If the Initiating Holders intend to
distribute the Registrable Securities covered by a Demand Registration by means
of an underwritten offering, they shall so advise the Company as a part of
their demand made pursuant to Section 2.1 and the Company shall include such
information in its written notice to holders of Registrable Securities. The
Initiating Holders shall have the right to select investment banker(s) of a
recognized national reputation to administer the offering, subject to the
approval of the Company's Board of Directors, such approval not to be
unreasonably withheld or delayed. The right of any holder of Registrable
Securities to participate in an underwritten Demand Registration shall be
conditioned upon such holder's participation in such underwriting in accordance
with the terms and conditions thereof, and the Company and such holders shall
enter into an underwriting agreement in customary form with the representative
of the underwriter or underwriters selected by the Company.
(d) PRIORITIES. The holders of Registrable Securities shall
have absolute priority over any other securities included in a Demand
Registration. If other securities are included in any Demand Registration that
is not an underwritten offering, all Registrable Securities included in such
offering shall be sold prior to the sale of any of such other securities. If
other securities are included in any Demand Registration that is an
underwritten offering, and the managing underwriter for such offering advises
the Company that in its opinion the amount of securities to be included exceeds
the amount of securities which can be sold in such offering without adversely
affecting the
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marketability thereof, the Company shall include in such registration all
Registrable Securities requested to be included therein prior to the inclusion
of any other securities. If the number of Registrable Securities requested to
be included in such registration exceeds the amount of securities which in the
opinion of such underwriter can be sold without adversely affecting the
marketability of such offering, such Registrable Securities shall be included
pro rata among the holders thereof based on the percentage of the outstanding
Common Stock held by each such Stockholder (assuming the conversion of the
Series A Preferred Stock and the exercise of all options, warrants and similar
rights held by such Stockholder).
2.2 PIGGYBACK REGISTRATIONS.
(a) REQUEST FOR INCLUSION. If the Company shall determine to
register any of its securities for its own account or for the account of other
security holders of the Company on any registration form (other than Form S-4
or S-8) which permits the inclusion of Registrable Securities (a "Piggyback
Registration"), the Company shall promptly give each holder of Registrable
Securities written notice thereof and, subject to Section 2.2(c), shall include
in such registration all the Registrable Securities requested to be included
therein pursuant to the written requests of holders of Registrable Securities
received within twenty (20) days after delivery of the Company's written notice
to such holders.
(b) UNDERWRITING. If the Piggyback Registration relates to an
underwritten public offering, the Company shall so advise the holders of
Registrable Securities as a part of the written notice given pursuant to
Section 2.2(a). In such event, the right of any holder of Registrable
Securities to participate in such registration shall be conditioned upon such
holder's participation in such underwriting in accordance with the terms and
conditions thereof. All holders of Registrable Securities proposing to
distribute their securities through such underwriting shall (together with the
Company) enter into an underwriting agreement in customary form with the
representative of the underwriter or underwriters selected by the Company.
(c) PRIORITIES. If such proposed Piggyback Registration is an
underwritten offering and the managing underwriter for such offering advises
the Company that the securities requested to be included therein exceeds the
amount of securities that can be sold in such offering, except as provided in
Section 2.1(b), any securities to be sold by the Company in such offering shall
have priority over any Registrable Securities, and the number of shares to be
included by a holder of Registrable Securities in such registration shall be
reduced pro rata on the basis of the percentage of the outstanding Common Stock
held by such Stockholder (assuming the conversion of the Series A Preferred
Stock and the exercise of all options, warrants and similar rights held by such
Stockholder) and all other holders exercising similar registration rights.
2.3 EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with up to two Long-Form Registrations and all Short-Form and
Piggyback
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Registrations shall be borne by the Company; provided, however, that no
registration shall count as one of the Company-paid Long Form Registrations
unless the holders of Registrable Securities are able to register and sell at
least 90% of the Registrable Securities requested to be included. All Selling
Expenses relating to Registrable Securities included in any Demand Registration
or Piggyback Registration shall be borne by the holders of such securities pro
rata on the basis of the number of shares sold by them.
2.4 REGISTRATION PROCEDURES. In the case of each registration effected
by the Company pursuant to this Article II, the Company shall keep each holder
of Registrable Securities advised in writing as to the initiation of such
registration and as to the completion thereof. At its expense, the Company
shall use its best efforts to:
(a) cause such registration to be declared effective by the
Commission and, in the case of a Demand Registration, keep such registration
effective for a period of one hundred eighty (180) days or until the holders of
Registrable Securities included therein have completed the distribution
described in the registration statement relating thereto, whichever first
occurs;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement (including post-effective
amendments) as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement;
(c) obtain appropriate qualifications of the securities
covered by such registration statement under state securities or "blue sky"
laws in such jurisdictions as may be requested by the holders of Registrable
Securities; provided, however, that the Company shall not be required to file a
general consent to service of process in any jurisdiction in which it is not
otherwise subject to service in order to obtain any such qualification;
(d) furnish such number of prospectuses and other documents
incident thereto, including any amendment of or supplement to the prospectus,
as a holder of Registrable Securities from time to time may reasonably request;
(e) 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 Securities 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 or incomplete in the light of the
circumstances then existing and, at the request of any such holder, prepare and
furnish to such holder a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares, such prospectus shall not include
an untrue statement of a
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material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or incomplete in the
light of the circumstances then existing;
(f) cause all Registrable Securities covered by such
registration to be listed on each securities exchange or inter-dealer quotation
system on which similar securities issued by the Company are then listed;
(g) provide a transfer agent and registrar for all
Registrable Securities covered by such registration and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration;
(h) otherwise comply with all applicable rules and
regulations of the Commission, and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering the period of at
least 12 months, but not more than 18 months, beginning with the first month
after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act;
and
(i) in connection with any underwritten Demand Registration,
the Company shall enter into an underwriting agreement reasonably satisfactory
to the Initiating Holders containing customary underwriting provisions,
including indemnification and contribution provisions.
2.5 INDEMNIFICATION.
(a) The Company shall indemnify each holder of Registrable
Securities, each of such holders' officers, directors, partners, agents,
employees and representatives, and each person controlling such holder within
the meaning of Section 15 of the Securities Act, with respect to each
registration, qualification or compliance effected pursuant to this Article II,
against all expenses, claims, losses, damages and liabilities (or actions,
proceedings or settlements in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by
the Company of the Securities Act or any rule or regulation thereunder
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification or compliance,
and shall reimburse each such indemnified person for any legal and any other
expenses reasonably incurred in connection with investigating and defending or
settling any such claim, loss, damage, liability or action; provided, however,
that the Company shall not be liable in any such case to the extent that any
such claim, loss, damage, liability or expense arises out of or is based on any
untrue statement or omission based upon written information furnished to the
Company by such holder of
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Registrable Securities and stated to be specifically for use therein. It is
agreed that the indemnity agreement contained in this Section 2.5(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.
(b) Each holder of Registrable Securities included in any
registration effected pursuant to this Article II shall indemnify the Company,
each of its directors, officers, agents, employees and representatives, and
each person who controls the Company within the meaning of Section 15 of the
Securities Act, each other such holder of Registrable Securities and each of
their officers, directors and partners, agents, employees and representatives,
and each person controlling such holder, against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and shall reimburse such indemnified persons for any legal or
any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, in each case, to
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in strict conformity with written information furnished to
the Company by such holder of Registrable Securities; provided, however, that
(x) no holder of Registrable Securities shall be liable hereunder for any
amounts in excess of the net proceeds received by such holder pursuant to such
registration, and (y) the obligations of such holder of Registrable Securities
hereunder shall not apply to amounts paid in settlement of any such claims,
losses, damages or liabilities (or actions in respect thereof) if such
settlement is effected without the consent of such holder.
(c) Each party entitled to indemnification under this Section
2.5 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may
be sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom; provided, however, that
counsel for the Indemnified Party, who shall conduct the defense of such claim
or any litigation resulting therefrom, shall be approved by the Indemnified
Party (whose approval shall not unreasonably be withheld), and the Indemnified
Party may participate in such defense at such party's expense; and provided
further, however, that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 2.5 to the extent such failure is not prejudicial. No
Indemnifying Party in the defense of any such claim or litigation shall, except
with the consent of each Indemnified Party, consent to entry of any judgment or
enter into any settlement which does not include an unconditional release of
such Indemnified Party from all liability in respect to such claim or
litigation. Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably request
in
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writing and as shall be reasonably required in connection with defense of such
claim and litigation resulting therefrom.
(d) If the indemnification provided for in this Section 2.5
is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any loss, liability, claim, damage or expense
referred to therein, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party hereunder, shall contribute to the amount paid or payable by
such Indemnified Party as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party on the one hand and of the Indemnified Party on the
other in connection with the statements or omissions which resulted in such
loss, liability, claim, damage or expense as well as any other relevant
equitable considerations. The relative fault of the Indemnifying Party and of
the Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in an underwriting
agreement entered into in connection with an underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
2.6 OTHER OBLIGATIONS. With a view to making available the benefits of
certain rules and regulations of the Commission which may effectuate the
registration of Registrable Securities or permit the sale of Registrable
Securities to the public without registration, the Company agrees to:
(a) after its initial registration under the Securities Act,
exercise reasonable efforts to cause the Company to be eligible to utilize Form
S-3 (or any similar form) for the registration of Registrable Securities;
(b) at such time as any Registrable Securities are eligible
for transfer under Rule 144(k), upon the request of the holder of such
Registrable Securities, remove any restrictive legend from the certificates
evidencing such securities at no cost to such holder;
(c) make and keep available public information as defined in
Rule 144 under the Securities Act at all times from and after ninety (90) days
following its initial registration under the Securities Act;
(d) file with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Exchange Act at any time after it has become subject to such reporting
requirements; and
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(e) furnish any holder of Registrable Securities upon request
a written statement by the Company as to its compliance with the reporting
requirements of Rule 144 (at any time from and after ninety (90) days following
the effective date of the first registration statement filed by the Company for
an offering of its securities to the general public), and of the Securities Act
and the Exchange Act (at any time after it has become subject to such reporting
requirements), a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents as a holder of Registrable
Securities may reasonably request in availing itself of any rule or regulation
of the Commission (including Rule 144A) allowing a holder of Registrable
Securities to sell any such securities without registration.
2.7 TERMINATION OF REGISTRATION RIGHTS. The right of any holder of
Registrable Securities to request inclusion of Registrable Securities in any
registration pursuant to this Article II shall terminate when (i) all
Registrable Securities beneficially owned by such holder of Registrable
Securities may immediately be sold under Rule 144(k), and (ii) the Company's
Common Stock is listed on a national securities exchange or traded in The
Nasdaq Stock Market; provided, however, that the provisions of this Section 2.7
shall not apply to any holder of Registrable Securities representing more than
five percent (5%) of the Company's then-outstanding Common Stock.
ARTICLE III
RESTRICTIONS ON TRANSFER OF MANAGEMENT STOCK
3.1 RIGHTS OF FIRST REFUSAL. No shares of Management Stock or any
interest therein may be transferred other than in compliance with the
provisions of this Article III. If at any time a Management Holder receives a
bona fide offer from any person (a "Third Party") to purchase shares of Common
Stock held by such Management Holder (a "Third-Party Offer") which such
Management Holder wishes to accept, such Management Holder shall cause such
Third-Party Offer to be reduced to writing and shall notify the Company and
each holder of Investor Stock of such Management Holder's desire to accept the
Third-Party Offer. The Management Stockholder's notice (the "Sale Notice")
shall contain an irrevocable offer to sell such Common Stock to the Company
and/or the Investors at a purchase price equal to the price contained in, and
on the same terms and conditions of, the Third-Party Offer and shall be
accompanied by a copy of the Third-Party Offer (which shall identify the
offeror); provided, however, the Company and the Investors may pay cash to the
selling Management Holder equal in amount to the fair market value of any
non-cash consideration offered by the Third Party in the Third-Party Offer. At
any time within 10 business days after the date of receipt by the Company of
the Sale Notice, the Company shall have the right to purchase the Common Stock
covered by the Third-Party Offer at the same price and on the same terms and
conditions as the Third-Party Offer. If, at the end of such 10-business day
period, the Company has not elected to purchase all Common Stock covered by
such Third-Party Notice, the Management Holder shall provide the Sale Notice to
the Investors along with a statement as to the number of shares to be purchased
by the Company (if any). Within 10 business days after receipt by the Investors
of such Sale Notice, each Investor, by providing notice to the Management
Holder, shall have the
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right to purchase that portion of the shares equal to the Investors Pro Rata
Number of Shares (as defined below) at the same price and on the same terms and
conditions as the Third-Party Offer. In the event any Investor does not
exercise its right to purchase its respective Investors Pro Rata Number of
Shares, the other Investors shall have the right to purchase such shares, and
the purchase of such shares shall be allocated among the participating
Investors pro rata in proportion to the Investor Stock held by such Investors,
or in such other proportions as the participating Investors may agree upon. To
the extent the Investors have not notified the selling Management Holder in
writing of a desire to purchase all of the Common Stock as set forth herein,
the selling Management Holder may within 90 days thereafter sell the remaining
Management Stock covered by the Third-Party Offer to the Third Party on the
terms set forth in the original Third-Party Offer. Any Management Stock covered
by the Third Party Offer that is not so transferred during such 90-day period
shall again be subject to this Section 3.1. The Company may assign its rights
to purchase Management Stock pursuant to this Section 3.1 to one or more third
parties subject only to compliance with applicable securities laws; provided,
however, that the Company shall offer to assign such rights to the Investors
pro rata prior to offering such rights to other persons. For purposes of this
Section 3.1, the "Investors Pro Rata Number of Shares" shall be equal to that
number of shares of Common Stock derived by multiplying the total number of
shares to be purchased by the Third Party as set forth in the Sale Notice by a
fraction, the numerator of which is the total number of shares of Common Stock
beneficially owned by such participating holder of Investor Stock and the
denominator of which is the total number of shares beneficially owned by all
holders of Common Stock, in each case, determined on an as converted basis.
3.2 EXEMPT TRANSACTIONS. The restrictions set forth in this Article
III shall not apply to transfers of Management Stock to a Permitted Transferee
of the transferring Management Holder; provided, however, that such Permitted
Transferee shall agree in writing to be bound by such restrictions in
connection with subsequent transfers.
ARTICLE IV
COVENANTS OF THE COMPANY
The Company hereby covenants and agrees, so long as any Registrable
Securities are outstanding, as follows:
4.1 BASIC FINANCIAL INFORMATION. The Company shall furnish the
following reports to each holder of Registrable Securities:
(a) As soon as practicable after the end of each fiscal year
of the Company and, in any event within ninety (90) days thereafter, a
consolidated balance sheet of the Company and its Subsidiaries, if any, as of
the end of such fiscal year, and consolidated statements of income and cash
flow of the Company and its Subsidiaries, if any, for such year, prepared in
accordance with generally accepted accounting principles consistently applied
and setting forth in each case in comparative form the figures for
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the previous fiscal year, all in reasonable detail and certified by independent
public accountants of recognized national standing selected by the Company.
(b) As soon as practicable after the end of each quarterly
accounting period in each fiscal year of the Company and, in any event within
forty-five (45) days thereafter, a consolidated balance sheet of the Company
and its Subsidiaries, if any, as of the end of each such quarterly period, and
an unaudited consolidated statement of income and cash flow of the Company and
its Subsidiaries, if any, for such period and for the current fiscal year to
date, prepared in accordance with generally accepted accounting principles
consistently applied and setting forth in comparative form the figures for the
corresponding periods of the previous fiscal year, subject to changes resulting
from normal year-end audit adjustments, all in reasonable detail and certified
by the chief financial officer of the Company (or the chief accounting officer
if no chief financial officer is in place), except that such statements need
not contain the notes required by generally accepted accounting principles.
4.2 ADDITIONAL INFORMATION RIGHTS.
(a) The Company shall deliver the reports described below in
this Section 4.2(b) to each holder of Registrable Securities owning at least
ten percent (10%) of the fully-diluted Common Stock (a "Qualified Holder"):
(i) Annually (prior to the commencement of each
fiscal year of the Company) the operating budget and updated five year
strategic plan of the Company, in such manner and form as approved by the Board
of Directors of the Company.
(ii) Concurrently with delivery thereof, copies of
all reports and other written material submitted to the Board of Directors.
(b) Each Qualified Holder shall have full access during
normal business hours and on reasonable notice to the Company to the books,
records, properties and personnel of the Company.
(c) Each Qualified Holder hereby agrees to hold in confidence
and trust and not to misuse or disclose any confidential information provided
pursuant to this Section 4.2; provided, however, that an Investor shall not be
prohibited from using any such information for the purpose of generating and
delivering portfolio valuation information to its investors.
4.3 PROMPT PAYMENT OF TAXES, ETC. The Company shall promptly pay and
discharge, or cause to be paid and discharged, when due and payable, all lawful
taxes, assessments and governmental charges or levies imposed upon the income,
profits, property or business of the Company or any Subsidiary; provided,
however, that any such tax, assessment, charge or levy need not be paid if the
validity thereof shall currently be contested in good faith by appropriate
proceedings and if the Company or such Subsidiary shall have set aside on its
books adequate reserves with respect thereto;
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and, provided further, however, that the Company shall pay, and shall cause its
Subsidiaries to pay, all such taxes, assessments, charges or levies forthwith
upon the commencement of proceedings to foreclose any lien which may have
attached as security therefore. The Company shall promptly pay or cause to be
paid when due, in conformance with customary trade terms, all other obligations
incident to the operations of the Company or its Subsidiaries, as the case may
be.
4.4 MAINTENANCE OF PROPERTIES AND LEASES. The Company shall keep its
properties and those of its Subsidiaries, if any, in good repair, working order
and condition, reasonable wear and tear excepted, and from time to time make
all needful and proper repairs, renewals, replacements, additions and
improvements thereto; and the Company and its Subsidiaries shall at all times
comply with each material provision of all leases to which any of them is a
party or under which any of them occupies property if the breach of such
provision might have a material and adverse effect on the condition, financial
or otherwise, or operations of the Company or such Subsidiaries.
4.5 INSURANCE. The Company shall keep its assets and those of its
Subsidiaries which are of an insurable character insured by financially sound
and reputable insurers against loss or damage by fire, explosion and other
risks customarily insured against by companies in the Company's line of
business, and the Company shall maintain, with financially sound and reputable
insurers, insurance against other hazards and risks and liability to persons
and property to the extent and in the manner customary for companies in similar
businesses similarly situated.
4.6 ACCOUNTS AND RECORDS. The Company and its Subsidiaries shall keep
true records and books of account in which full, true and correct entries shall
be made of all dealings or transactions in relation to their respective
businesses and affairs in accordance with generally accepted accounting
principles applied on a consistent basis.
4.7 INDEPENDENT ACCOUNTANTS. The Company shall retain a "Big Five"
national accounting firm as its independent public accountants who shall
certify the Company's financial statements at the end of each fiscal year. In
the event the services of the independent public accountants so selected are
terminated, the Company shall promptly thereafter notify the holders of
Investor Stock and shall request the firm of independent public accountants
whose services are terminated to deliver to the Investors a letter from such
firm setting forth the reasons for the termination of their services. In the
event of such termination, the Company shall promptly thereafter engage another
"Big Five" national accounting firm as its independent public accountants. In
its notice to the holders of Investor Stock, the Company shall state whether
the change of accounts was recommended or approved by the Board of Directors of
the Company or any committee thereof.
4.8 COMPLIANCE WITH LAWS. The Company and all its Subsidiaries shall
duly observe and comply with all applicable laws and valid requirements of
governmental authorities relating to the conduct of their businesses or to
their properties or assets.
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4.9 MAINTENANCE OF CORPORATE EXISTENCE, ETC. The Company shall
maintain in full force and effect its corporate existence and shall cause all
of its Subsidiaries, the existence of which is deemed by the Company as
necessary to conduct its business, to maintain in full force and effect their
respective corporate existence. The Company and its Subsidiaries shall maintain
in full force and effect all rights and franchises and all licenses and other
rights in or to use patents, processes, licenses, trademarks, trade names or
copyrights owned or possessed by them and deemed by the Company or such
Subsidiary to be necessary to the conduct of their business.
4.10 LIMITED PREEMPTIVE RIGHTS.
(a) Except for the issuance of Common Stock or any securities
containing options or rights to acquire any shares of Common Stock ("Equity
Securities") (i) to the Company's employees pursuant to the Company's employee
stock option plan, (ii) upon the conversion of the Series A Preferred Stock,
(iii) pursuant to a public offering registered under the Securities Act, (iv)
pursuant to a merger, consolidation, acquisition or similar business
combination approved by the Company's Board of Directors, (v) in connection
with any stock split, stock dividend, or recapitalization, (vi) to a lender or
equipment lessor in connection with any loan or lease financing transaction, or
(vii) in connection with strategic transactions involving the Company and other
entities, (including (A) joint ventures, manufacturing, marketing or
distribution arrangements or (B) technology transfer or development
arrangements; provided, however, that such strategic transactions and the
issuance of shares therein, have been approved by the Company's Board of
Directors), if the Company authorizes the issuance or sale of any Equity
Securities (other than as a dividend on the outstanding Common Stock), the
Company shall first offer to sell to each of the holders of Stock its "pro rata
portion" of 80% of such Equity Securities. A holder's "pro rata portion" shall
equal the quotient determined by dividing (1) the number of shares of Stock
held by each such holder by the (2) sum of the total number of shares of Stock
held by all holders of Stock. Each holder of Stock shall be entitled to
purchase such Equity Securities at the most favorable price and on the most
favorable terms as such Equity Securities are to be offered to any other
Persons. The purchase price for all Equity Securities offered to the holders of
the Stock shall be payable in cash.
(b) In order to exercise its purchase rights hereunder, a
holder of Stock must within 15 days after receipt of written notice from the
Company describing in reasonable detail the Equity Securities being offered,
the purchase price thereof, the payment terms and such holder's percentage
allotment deliver a written notice to the Company describing its election
hereunder. If all of the Equity Securities offered to the holders of Common
Stock are not fully subscribed by such holders, the remaining Equity Securities
shall be reoffered by the Company to the holders purchasing their full
allotment upon the terms set forth in this Section 4.10, except that such
holders must exercise their purchase rights within two days after receipt of
such reoffer.
(c) Upon the expiration of the offering periods described
above, the Company shall be entitled to sell such Equity Securities which the
holders of Stock have
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not elected to purchase during the 90 days following such expiration on terms
and conditions no more favorable to the purchasers thereof than those offered
to such holders. Any Equity Securities offered or sold by the Company after
such 90-day period must be reoffered to the holders of Stock pursuant to the
terms of this paragraph.
4.11 Additional Investor Rights. The Investors shall, in addition to
the aforementioned rights, have further rights as required for the purpose of
qualifying the Investors' ownership of Stock as a "venture capital investment"
for purposes of the United States Department of Labor "plan assets"
regulations, 29 C.F.R. Section 2510.3-101.
ARTICLE V
CORPORATE GOVERNANCE
5.1 BOARD OF DIRECTORS.
(a) Concurrently with the Closing and at all times
thereafter, each Stockholder agrees to vote all securities of the Company over
which such Stockholder has voting control and to take all other necessary or
desirable actions within its control (whether as a stockholder, director or
officer of the Company or otherwise, and including without limitation
attendance at meetings in person or by proxy for purposes of obtaining a quorum
and execution of written consents in lieu of meetings), and the Company shall
take all necessary and desirable actions within its control (including, without
limitation, calling special board and stockholder meetings), so that:
(i) the Company shall have a Board of Directors
comprising no more than eight members;
(ii) the following persons shall be elected to the
Board of Directors:
(A) Two representatives designated by the
holders of a majority of the outstanding Management Stock (the "Management
Directors"); provided, however, that, until the next annual meeting of the
Company's stockholders, Xxxxxxxx Xxxxxx and Xxxxx X. Xxxxxxx shall serve as the
Management Directors;
(B) Two representatives designated by
Telecom Partners II, LP (the "Telecom Directors"); provided, however, that,
until the next annual meeting of the Company's stockholders, Xxxxxxx X. Xxxxxx
and Xxxxxxx X. Xxxxxxx shall serve as the Telecom Directors;
(C) One representative designated jointly
by Centennial Fund V, L.P., Centennial Entrepreneurs Fund V, L.P. and
Centennial Holdings I, LLC (together, the "Centennial Entities," and such
representative, the "Centennial Entities Director"); provided, however, that,
until the next annual meeting of the Company's stockholders, Xxxxxx X. Xxxxxxxx
shall serve as the Centennial Entities Director;
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(D) One representative designated jointly
by Crescendo World Fund, L.L.C., Eagle Ventures WF, L.L.C., and Crescendo III,
L.P. (together, the "Crescendo Entities," and such representative, the
"Crescendo Entities Director"); provided, however, that, until the next annual
meeting of the Company's stockholders, Xxxxxxx Xxxxxx shall serve as the
Crescendo Entities Director; and
(E) Two directors (the "Outside Directors")
approved by a Nominating Committee of the Board of Directors consisting of one
of the Telecom Directors, the Centennial Entities Director, the Crescendo
Entities Director and one of the Management Directors; provided, however, that,
until the next annual meeting of the Company's stockholders, Xxxxxx X. XxXxxxxx
and Xxxx X. Xxxxxx shall serve as the Outside Directors.
(iii) in the event that any director for any reason
ceases to serve as a member of the Board during his term of office, the
resulting vacancy on the Board shall be filled by a majority vote of the
Stockholders entitled to elect such director as provided in this Section 5.1;
and
(iv) if the Stockholders fail within sixty (60) days
of a directorship being vacated to designate a representative to fill such
directorship pursuant to the terms of this Section 5.1, the election of such
director shall be accomplished in accordance with the Company's certificate of
incorporation and bylaws and applicable law.
(b) To the extent that any provision of the Company's
certificate of incorporation or bylaws is inconsistent with the provisions of
this Agreement, the Stockholders agree to take all actions necessary to effect
such amendments to the certificate of incorporation or bylaws as may be
necessary and appropriate to give full effect to the provisions of this
Agreement.
5.2 MEETINGS OF THE BOARD. The Board of Directors shall meet at least
six times each calendar year in accordance with an agreed-upon schedule.
5.3 COMMITTEES. Promptly after the Closing, the Board of Directors
shall establish audit, nominating and compensation committees and shall
delegate to such committees those duties and powers as are customarily
performed by committees of such type. The audit committee shall not include any
of the Management Directors.
5.4 REIMBURSEMENT OF EXPENSES. The reasonable travel expenses of each
director incurred in attending or observing Board or committee meetings shall
be reimbursed by the Company.
5.5 CERTAIN APPROVALS. Without the approval of the holders of a
majority of the Investor Stock, which shall not be unreasonably withheld, the
Company shall not (i) engage any underwriter or placement agent for any public
or private offering of securities other than an investment banking firm of
recognized national reputation,
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(ii) issue any stock or options to employees of the Company that are not
subject to vesting and/or buy-back restrictions, or (iii) waive or accelerate
any vesting or buy-back restrictions with respect to Management Stock.
ARTICLE VI
MISCELLANEOUS
6.1 GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of Colorado as such laws are applied to agreements
between Colorado residents entered into and performed entirely in Colorado,
except that the General Corporation Law of the State of Delaware shall govern
as to matters of corporate law.
6.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
6.3 ENTIRE AGREEMENT; AMENDMENT AND WAIVER. This Agreement and the
Purchase Agreement supersede any other agreement, whether written or oral, that
may have been made or entered into by the parties hereto relating to the
matters contemplated hereby (including, without limitation, the Seed Round
Equity Subscription Agreement of WLL International, dated as of June 30, 1998,
as amended or supplemented to the date hereof (the "Seed Round Agreement")) and
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof, and no party shall be liable or bound to
any other in any manner by any representations, warranties, covenants and
agreements except as specifically set forth herein and therein. In particular,
the execution of this Agreement shall terminate all prior stockholders
agreements and registration rights agreements, or any similar agreement to the
foregoing, among any Investor and the Company, except for the Seed Round
Agreement, which shall remain in full force and effect. Neither this Agreement
nor any term hereof may be amended, waived, discharged or terminated except by
a written instrument signed by the Company and the holders of a majority of the
outstanding Investor Stock, and any such amendment, waiver, discharge or
termination shall be binding on all the Stockholders. Notwithstanding the
foregoing, additional Management Holders may be added as parties to this
Agreement by the execution of a Joinder Agreement executed solely by the
Company and the new Management Holders.
6.4 SPECIFIC ENFORCEMENT. Any holder of Investor Stock shall be
entitled to specific enforcement of its rights under this Agreement. The
parties acknowledge that money damages would be an inadequate remedy for a
breach of this Agreement and consent to an action for specific performance or
other injunctive relief in the event of any such breach. The Company shall
reimburse the holders of Investor Stock for all reasonable expenses incurred in
securing the relief provided by this Section 6.4.
6.5 SEVERABILITY. Unless otherwise expressly provided herein, a
Stockholder's rights hereunder are several rights, not rights jointly held with
any of the other Stockholders. In case any provision of this Agreement shall be
invalid, illegal or
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unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
6.6 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given:
(i) upon personal delivery to the party to be notified, (ii) when sent by
confirmed telex or facsimile if sent during normal business hours of the
recipient, if not, then on the next business day, (iii) five (5) days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid, or (iv) one (1) day after deposit with a nationally recognized
overnight courier, special next day delivery, with verification of receipt. All
communications shall be sent to the Company at 0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000, Attention: President, with a copy to
Holland & Xxxx LLP, 000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, XX 00000,
Attention Xxxxxxx X. Xxxxx, and to a Stockholder at the address reflected in
the Company's stock ledger or at such other address as such Stockholder shall
have furnished to the Company in writing.
6.7 COUNTERPARTS; FACSIMILE. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument. This Agreement may be executed and
delivered by facsimile.
6.8 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to any Stockholder under this Agreement shall impair
any such right, power or remedy of such Stockholder nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any Stockholder of any breach
or default under this Agreement or any waiver on the part of any Stockholder of
any provisions or conditions of this Agreement must be made in writing and
shall be effective only to the extent specifically set forth in such writing.
All remedies, either under this Agreement or by law or otherwise afforded to
any Stockholder, shall be cumulative and not alternative.
6.9 COMPLIANCE WITH PURCHASE AGREEMENT. The Investors' rights and
privileges under this Agreement are conditioned on the Investors' continued
compliance with their obligations under the Purchase Agreement. In the event of
any breach by an Investor of its obligations under the Purchase Agreement,
which breach shall remain uncured for 30 days, all of such Investor's rights
under this Agreement shall terminate.
6.10 TERMINATION. The provisions of this Agreement (other than Article
II hereof) shall terminate upon consummation of a Qualified Public Offering.
The provisions of Article II shall terminate on the seventh anniversary of the
date hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Investors
Agreement effective as of the day and year first above written.
COMPANY:
WLL INTERNATIONAL, INC.
By:
-----------------------------------------
Title:
--------------------------------------
INVESTORS:
TELECOM PARTNERS II, L.P.
BY: TELECOM MANAGEMENT II, L.L.C.
ITS: GENERAL PARTNER
By:
-----------------------------------------
Title:
--------------------------------------
CENTENNIAL FUND V, L.P.
BY: CENTENNIAL HOLDINGS V, L.P.
ITS: GENERAL PARTNER
By:
-----------------------------------------
Title:
--------------------------------------
CENTENNIAL ENTREPRENEURS FUND V, L.P.
BY: CENTENNIAL HOLDINGS V, L.P.
ITS: GENERAL PARTNER
By:
-----------------------------------------
Title:
--------------------------------------
CENTENNIAL HOLDINGS I, LLC
BY: CENTENNIAL HOLDINGS, INC.
ITS: SOLE MANAGER
By:
-----------------------------------------
Title:
--------------------------------------
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CRESCENDO WORLD FUND, LLC
BY: CRESCENDO VENTURES WORLD FUND, LLC
ITS: GENERAL PARTNER
By:
-----------------------------------------
Title:
--------------------------------------
CRESCENDO III, L.P.
BY: CRESCENDO VENTURES III, LLC
ITS: GENERAL PARTNER
By:
-----------------------------------------
Title:
--------------------------------------
EAGLE VENTURES WF, LLC
By:
-----------------------------------------
Title:
--------------------------------------
OTHER HOLDERS:
------------------------------------------
Xxxxx X. Xxxxxxx*
------------------------------------------
Xxxxxxx X. Xxxxxx*
------------------------------------------
Xxxx X. Xxxxxx
------------------------------------------
Xxxxxx XxXxxxxx
------------------------------------------
C. Xxxxx Xxxxx
*Denotes Management Holder.
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SERIES A STOCK PURCHASE AGREEMENT
EXHIBIT D
FORM OF LEGAL OPINION
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EXHIBIT D
FORM OF LEGAL OPINION
We are of the opinion that:
1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, with full
corporate power and authority to own, lease and operate its properties and to
conduct its business.
2. The Company's authorized capital stock consists of (a) forty
million (40,000,000) shares of Common Stock, of which three million two hundred
fifty five thousand (3,355,000) shares are issued and outstanding, and (b)
twenty million (20,000,000) shares of Preferred Stock of which ten million
(10,000,000) shares have been designated as Series A Preferred Stock, none of
which was outstanding prior to the Initial Closing (as such term is defined in
the Purchase Agreement).
3. All the shares of capital stock of the Company outstanding prior to
the Initial Closing have been duly authorized, validly issued and are fully
paid and nonassessable. The rights, preferences and privileges of the Series A
Preferred Stock are as stated in the Certificate of Designation.
4. Each of the Agreements has been duly authorized, validly executed
and delivered by the Company and is a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except
as rights to indemnity under Section 2.5 of the Investors Agreement may be
limited by applicable laws and public policy and except as enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws affecting creditors' rights, and subject to
general equity principles and to limitations on availability of equitable
relief, including specific performance.
5. The Series A Preferred Stock has been duly authorized by the
Company and, upon delivery to the Purchasers against payment therefor in
accordance with the Purchase Agreement and the terms of the Series A Preferred
Stock, the shares of Series A Preferred Stock will be validly issued, fully
paid and nonassessable.
6. The shares of Common Stock to be issued on conversion of the Series
A Preferred Stock have been duly authorized and reserved for issuance by the
Company and, when issued and delivered upon conversion of the Series A
Preferred Stock in accordance with the Certificate of Incorporation, such
shares of Common Stock will have been validly issued and will be fully paid and
nonassessable.
7. The execution of the Agreements by the Company and the offer and
sale of the Series A Preferred Stock pursuant to the Purchase Agreement (a) do
not
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violate any provision of the Company's Certificate of Incorporation or Bylaws,
and (b) do not violate or contravene (i) the laws of the State of Colorado, the
General Corporation Law of the State of Delaware or any Federal law of the
United States of America applicable to the Company or (ii) any order, writ,
judgment, injunction, decree, determination or award which has been entered
against the Company and of which we have knowledge, the default, violation or
contravention of which would materially and adversely affect the Company, its
assets, financial condition or operations.
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WLL INTERNATIONAL, INC.
SECOND SERIES A PREFERRED STOCK
PURCHASE AGREEMENT
59
TABLE OF CONTENTS
1. Agreement To Sell And Purchase..........................................3
1.1 Authorization of Shares ...........................................3
1.2 Sale and Purchase .................................................3
2. Closing, Delivery And Payment...........................................3
2.1 Closing ...........................................................3
2.2 Certificates; Payment .............................................4
3. Representations And Warranties Of The Company...........................4
3.1 Organization, Good Standing and Qualification .....................4
3.2 Capitalization ....................................................4
3.3 Authorization; Binding Obligations ................................4
3.4 Consents and Approvals ............................................5
3.5 No Violations .....................................................5
3.6 Compliance with Laws ..............................................5
3.7 Proprietary Rights ................................................5
3.8 Actions Pending ...................................................5
3.9 Material Contracts ................................................5
3.10 Investments in United States Real Property Interests .............6
3.11 Unrelated Business Taxable Income ................................6
3.12 Use of Proceeds ..................................................6
3.13 Not a Qualified Small Business ...................................6
4. Representations And Warranties Of The Purchasers........................6
4.1 Requisite Power and Authority .....................................6
4.2 Investment Representations ........................................6
(1) Purchaser Bears Economic Risk .................................7
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(2) Acquisition for Own Account ...................................7
(3) Purchaser Can Protect Its Interest ............................7
(4) Accredited Investor ...........................................7
(5) Company Information ...........................................7
(6) Rule 144 ......................................................7
5. Conditions Precedent To Purchasers' Obligations.........................8
6. Miscellaneous...........................................................8
6.1 Governing Law .....................................................8
6.2 Survival ..........................................................8
6.3 Successors and Assigns ............................................8
6.4 Entire Agreement ..................................................8
6.5 Specific Enforcement ..............................................9
6.6 Severability ......................................................9
6.7 Notices ...........................................................9
6.8 Counterparts ......................................................9
6.9 Broker's Fees .....................................................9
6.10 Future Financings ................................................9
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WLL INTERNATIONAL, INC.
SECOND SERIES A PREFERRED STOCK PURCHASE AGREEMENT
This Second Series A Preferred Stock Purchase Agreement (this
"Agreement") is entered into as of May __, 1999, by and among WLL INTERNATIONAL,
INC., a Delaware corporation (the "Company"), and each of those persons and
entities, severally and not jointly, whose names are set forth on the Schedule
of Purchasers attached hereto as Exhibit A (collectively the "Purchasers" and
individually a "Purchaser").
WHEREAS, The parties hereto executed the Second Irrevocable Equity
Contribution Agreement, dated as of April 16, 1999 (the "Second Irrevocable
Equity Agreement"), pursuant to which the Purchasers agreed to subscribe for
certain Shares (as defined below) in the event that Bidco was awarded the
License (each as defined in the Second Irrevocable Equity Agreement); and
WHEREAS, Bidco has been awarded the License;
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND PURCHASE
1.1 Authorization of Shares. On or prior to the Closing (as defined in
Section 2.1 below), the Company shall have authorized the sale and issuance to
the Purchasers of shares of its Series A Preferred Stock (the "Shares") having
the rights, preferences, privileges and restrictions set forth in the
Certificate of Designation of Powers, Preferences, Rights, Qualifications,
Limitations and Restrictions of Series A Convertible Preferred Stock dated and
filed as of January 26, 1999, as amended by the Certificate of Increase dated
and filed as of May __, 1999, attached hereto as Exhibit B (as amended, the
"Certificate of Designation").
1.2 Sale and Purchase. Subject to the terms and conditions hereof, the
Company hereby agrees to issue and sell to each Purchaser and each Purchaser
severally and not jointly agrees to purchase from the Company, the aggregate
number of Shares set forth opposite such Purchaser's name on Exhibit A, at a
purchase price of Three Dollars ($3.00) per Share (in cash, or in contributed
services, as set forth on Exhibit A), at such time or times as determined by the
Company pursuant to Section 2 below.
2. CLOSING, DELIVERY AND PAYMENT
2.1 Closing. The closing of the sale and purchase of the Shares under
this Agreement (the "Closing") shall take place at 9:00 a.m. on May 7, 1999, at
the offices of
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Holland & Xxxx LLP, 000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, XX 00000 or at
such other time or place as the Company and the Purchasers may mutually agree
(such date is hereinafter referred to as the "Closing Date").
2.2 Certificates; Payment. At the Closing, subject to the terms and
conditions hereof, the Company shall deliver to the Purchasers certificates
representing the number of Shares to be purchased at the Closing by each
Purchaser, against payment of the purchase price therefor by certified check or
wire transfer of immediately available funds.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Purchaser as of the
date hereof, as follows:
3.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company and each of its subsidiaries has all
requisite corporate power and authority to own and operate its properties and
assets and to carry on its business as presently conducted and as presently
proposed to be conducted. The Company has all requisite corporate power and
authority to execute and deliver this Agreement, to issue and sell the Shares
and the shares of Common Stock issuable upon conversion thereof (the "Conversion
Shares") and to carry out the other provisions of this Agreement.
3.2 Capitalization. The authorized capital stock of the Company,
immediately prior to the Closing Date, shall consist of (i) Forty Million
(40,000,000) shares of Common Stock, Three Million Four Hundred Fifty Five
Thousand (3,455,000) shares of which are issued and outstanding, and (ii) Twenty
Million (20,000,000) shares of Preferred Stock, Fifteen Million (15,000,000)
shares of which are designated Series A Preferred Stock, and Ten Million
(10,000,000) shares of which are issued and outstanding. All issued and
outstanding shares of the Company's Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable. Immediately prior to the
Closing Date, there will be no outstanding options, warrants or other rights to
purchase from the Company any of its securities. The Company has reserved
3,000,000 shares of its Common Stock for issuance pursuant to its 1998 Stock
Option Plan.
3.3 Authorization; Binding Obligations. All corporate action on the
part of the Company, its officers, directors and stockholders necessary for the
authorization of this Agreement, the performance of all obligations of the
Company hereunder, and for the authorization, sale, issuance and delivery of the
Shares, has been taken or shall be taken prior to the Closing. When issued in
compliance with the provisions of this Agreement and paid for by the Purchasers,
the Shares will be validly issued, fully paid and nonassessable. The Conversion
Shares have been duly and validly reserved for issuance and, when issued upon
conversion of the Series A Preferred Stock, will be
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validly issued, fully paid and nonassessable. This Agreement has been duly
executed by the Company and constitutes a valid and binding obligation of the
Company enforceable in accordance with its terms.
3.4 Consents and Approvals. No filings with, notices to, or approvals
of any governmental or regulatory body are required to be obtained or made by
the Company or any subsidiary in connection with the consummation of the
transactions contemplated hereby.
3.5 No Violations. The execution and delivery of this Agreement and the
performance by the Company of its obligations hereunder (i) does not and will
not conflict with or violate any provision of the certificate of incorporation
or bylaws of the Company or any subsidiary and (ii) does not and will not (a)
conflict with or result in a breach of the terms, conditions or provisions of,
(b) constitute a default under, (c) result in the creation of any encumbrance
upon the capital stock or assets of the Company or any subsidiary pursuant to,
(d) give any third party the right to modify, terminate or accelerate any
obligation under, (e) result in a violation of, or (f) require any
authorization, consent, approval, exemption or other action by or notice to any
court or administrative or governmental body or other third party pursuant to,
any law, statute, rule or regulation or any agreement or instrument or any
order, judgment or decree to which the Company or any subsidiary is subject or
by which any of its assets are bound except for such consents which have been
obtained by the Company or such subsidiary, as the case may be.
3.6 Compliance with Laws. The Company's and its subsidiaries' business
has been conducted in compliance with all applicable laws and regulations of
governmental authorities, except for such violations that have been cured or
that, individually or in the aggregate, may not reasonably be expected to have a
material adverse effect on the business, operations, financial condition or
prospects of the Company or such subsidiary, as the case may be.
3.7 Proprietary Rights. The Company or any subsidiary has not received
any communications alleging that it has violated or, by conducting its business
as proposed would violate, any proprietary rights of any other person, nor is
the Company aware of any basis for the foregoing.
3.8 Actions Pending. There is no action, suit or proceeding pending or,
to the best knowledge of the Company, threatened against or affecting the
Company or any subsidiary or any of its respective properties or rights before
any court or by or before any governmental body or arbitration board or
tribunal.
3.9 Material Contracts. Except as set forth on Schedule 3.9, as of the
date of this Agreement, the Company is not a party to (and is not otherwise
bound by) any of the following: (i) any employment or consulting contract, (ii)
any agreement providing for the issuance or repurchase of any securities of the
Company, (iii) any agreement in respect of registration rights, preemptive
rights, rights of first refusal, voting rights or
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other rights of security holders, (iv) any agreement evidencing or providing for
any indebtedness for borrowed money, or (v) any other agreement that could
reasonably be deemed material to the Company.
3.10 Investments in United States Real Property Interests. The
Company's capital stock does not, and the Company shall use its reasonable
commercial effects to ensure that its capital stock will not, constitute a
United States real property interest as that term is defined in Section
897(c)(1)(A)(ii) of the Internal Revenue Code of 1986, as amended (the "Code").
The preceding representation is based on a determination by the Company that the
Company is not and has not been a United States real property holding
corporation (as that term is defined in Section 897(c)(2) of the Code)
("USRPHC") during the five (5) year period preceding the date of this letter.
From time to time, upon the request of any Purchaser, the Company shall make a
determination as to its status as a USRPHC. If at any time in the future the
Company should become a United States real property holding corporation, the
Company shall, as promptly as possible, notify each Purchaser of such change in
status.
3.11 Unrelated Business Taxable Income. The Company shall use its
reasonable commercial efforts to ensure that any gross income derived by the
Purchasers from the Company shall be in the form of dividends, interest, capital
gains and losses from the disposition of property, and rents and royalties, but
only such rents and royalties as are excluded pursuant to Code Sections
512(b)(2) and 512(b)(3), respectively, in calculating unrelated business taxable
income and only such dividends, interest, capital gains and losses, and rents
and royalties that are not included under Section 512(b)(4) of the Code in
calculating unrelated business taxable income.
3.12 Use of Proceeds. The proceeds generated from the sale of the
Shares will be used substantially by the Company to fund its share of Bidco's
operational expenses.
3.13 Not a Qualified Small Business. The Company does not qualify as a
"Qualified Small Business" as defined in Section 1202(d) of the Code.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser severally and not jointly hereby represents and warrants
to the Company, as of the date hereof, as follows:
4.1 Requisite Power and Authority. Such Purchaser has all necessary
power and authority under all applicable provisions of law to execute and
deliver this Agreement and to carry out its provisions. All actions on such
Purchaser's part required for the lawful execution and delivery of this
Agreement have been or will be effectively taken prior to the Closing.
4.2 Investment Representations. Such Purchaser understands that neither
the Shares nor the Conversion Shares have been registered under the Securities
Act of 1933, as amended (the "Securities Act"). Such Purchaser also understands
that the Shares are
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65
being offered and sold pursuant to an exemption from registration contained in
the Securities Act based in part upon the Purchaser's representations contained
in this Agreement.
(1) Purchaser Bears Economic Risk. Such Purchaser has
substantial experience in evaluating and investing in private placement
transactions of securities in companies similar to the Company so that it is
capable of evaluating the merits and risks of its investment in the Company and
has the capacity to protect its own interests. Such Purchaser must bear the
economic risk of this investment indefinitely unless the Shares (or the
Conversion Shares) are registered pursuant to the Securities Act, or an
exemption from registration is available. Such Purchaser understands that the
Company has no present intention of registering the Shares, the Conversion
Shares or any shares of its Common Stock. Such Purchaser also understands that
there is no assurance that any exemption from registration under the Securities
Act will be available and that, even if available, such exemption may not allow
such Purchaser to transfer all or any portion of the Shares or the Conversion
Shares under the circumstances, in the amounts or at the times such Purchaser
might propose.
(2) Acquisition for Own Account. Such Purchaser is acquiring
the Shares and the Conversion Shares for its own account for investment only,
and not with a view towards their distribution in violation of applicable
securities laws.
(3) Purchaser Can Protect Its Interest. Such Purchaser
represents that, by reason of its or of its management's business or financial
experience, such Purchaser has the capacity to protect its own interests in
connection with the transactions contemplated in this Agreement. Further, such
Purchaser is aware of no publication of any advertisement in connection with the
transactions contemplated by the Agreement.
(4) Accredited Investor. Such Purchaser represents that it is
an accredited investor within the meaning of Regulation D under the Securities
Act.
(5) Company Information. Such Purchaser has had an opportunity
to discuss the Company's business, management and financial affairs with
directors, officers and management of the Company. Such Purchaser has also had
the opportunity to ask questions of, and receive answers from, the Company and
its management regarding the terms and conditions of this investment.
(6) Rule 144. Such Purchaser acknowledges and agrees that the
Shares and the Conversion Shares must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. Such Purchaser has been advised or is aware of the
provisions of Rule 144 promulgated under the Securities Act, which permits
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things: the
availability of certain current public information about the Company, the resale
occurring not less than one year after a party has purchased and paid for the
security to be sold, the sale being through an unsolicited "broker's
transaction" or in
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66
transactions directly with a market maker (as said term is defined under the
Securities Exchange Act of 1934, as amended) and the number of shares being sold
during any three-month period not exceeding specified limitations.
5. CONDITIONS PRECEDENT TO PURCHASERS' OBLIGATIONS
The obligation of each Purchaser to purchase and pay for the Shares to
be delivered to it at the Closing shall be subject to the satisfaction of the
following conditions as of the Closing Date:
(A) the representations and warranties of the Company
contained in this Agreement shall be true and correct on and as of the Closing
Date; and
(B) each Purchaser shall have received from Holland &
Xxxx LLP, counsel for the Company, an opinion, in substantially the form
attached hereto as Exhibit C, dated as of the Closing Date.
6. MISCELLANEOUS
6.1 Governing Law. This Agreement shall be governed in all respects by
the laws of the State of Colorado as such laws are applied to agreements between
Colorado residents entered into and performed entirely in Colorado, except that
the General Corporation Law of the State of Delaware shall govern as to matters
of corporate law.
6.2 Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any Purchaser and the
closing of the transactions contemplated hereby. All statements as to factual
matters contained in any certificate or other instrument delivered by or on
behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.
6.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
6.4 Entire Agreement; Amendment and Waiver. This Agreement, the
Exhibits and the other documents expressly delivered pursuant hereto supersede
any other agreement, whether written or oral, that may have been made or entered
into by the parties hereto, including, without limitation, the Second
Irrevocable Equity Agreement, relating to the matters contemplated hereby and
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof, and no party shall be liable or bound to any
other in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein. Neither this Agreement nor
any term hereof may be amended, waived, discharged or terminated except by a
written instrument signed by the Company and the holders of a
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67
majority of the Shares held by the Purchasers, and any such amendment, waiver,
discharge or termination shall be binding on all Purchasers.
6.5 Specific Enforcement. Any Purchaser shall be entitled to specific
enforcement of its rights under this Agreement. The parties acknowledge that
money damages would be an inadequate remedy for its breach of this Agreement and
consent to an action for specific performance or other injunctive relief in the
event of any such breach.
6.6 Severability. Unless otherwise expressly provided herein, a
Purchaser's rights hereunder are several rights, not rights jointly held with
any of the other Purchasers. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
6.7 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified; (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one (1) day after deposit
with a nationally recognized overnight courier, special next day delivery, with
verification of receipt. All communications shall be sent to the Company at 0000
Xxxxx Xxxxxxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000, Attention:
President, with a copy to Holland & Xxxx LLP, 000 00xx Xxxxxx, Xxxxx 0000,
Xxxxxx, XX 00000, Attention: Xxxxxxx X. Xxxxx, and to a Purchaser at the address
set forth on Exhibit A attached hereto or at such other address as the Company
or Purchaser may designate by ten (10) days advance written notice to the other
parties hereto.
6.8 Counterparts; Facsimile. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument. This Agreement may be executed and
delivered by facsimile.
6.9 Broker's Fees. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein. Each party hereto further agrees to
indemnify each other party for any claims, losses or expenses incurred by such
other party as a result of the representation in this Section 6.9 being untrue.
6.10 Future Financings. Nothing contained in this Agreement or any
Purchaser's prior dealings with the Company shall be deemed to constitute a
commitment on the part of any Purchaser to participate in any future financings
by the Company.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
WLL INTERNATIONAL, INC.
By:
---------------------------------------
Title:
------------------------------------
PURCHASERS:
TELECOM PARTNERS II, L.P.
BY: TELECOM MANAGEMENT II, L.L.C.
ITS: GENERAL PARTNER
By:
---------------------------------------
Title:
------------------------------------
CENTENNIAL FUND V, L.P.
BY: CENTENNIAL HOLDINGS V, L.P.
ITS: GENERAL PARTNER
By:
---------------------------------------
Title:
------------------------------------
CENTENNIAL ENTREPRENEURS FUND V, L.P.
BY: CENTENNIAL HOLDINGS V, L.P.
ITS: GENERAL PARTNER
By:
---------------------------------------
Title:
------------------------------------
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69
CENTENNIAL HOLDINGS I, LLC
By:
---------------------------------------
Title:
------------------------------------
CRESCENDO WORLD FUND, LLC
BY: CRESCENDO VENTURES WORLD
FUND, LLC
ITS: GENERAL PARTNER
By:
---------------------------------------
Title:
------------------------------------
CRESCENDO III, L.P.
BY: CRESCENDO VENTURES III, LLC
ITS: GENERAL PARTNER
By:
---------------------------------------
Title:
------------------------------------
EAGLE VENTURES WF, LLC
By:
---------------------------------------
Title:
------------------------------------
------------------------------------------
C. XXXXX XXXXX
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70
------------------------------------------
R. XXXXXX HOUSE
------------------------------------------
XXXXXXX XXXXXX
------------------------------------------
XXXXXX XXXXXXXX
------------------------------------------
XXXXXXX X. XXXXXX
------------------------------------------
XXXX X. XXXXXX
------------------------------------------
XXXXX X. XXXXXXX
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71
SECOND SERIES A STOCK PURCHASE AGREEMENT
EXHIBIT A
SCHEDULE OF PURCHASERS
AGGREGATE
NUMBER OF PURCHASE
NAME AND ADDRESS SHARES PRICE
Telecom Partners II, L.P. 1,939,108 $ 5,817,324
0000 X. Xxxxxxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Centennial Fund V, L.P. 1,388,831 $ 4,166,493
0000 00xx Xxxxxx
Xxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Centennial Entrepreneurs Fund V, L.P. 43,098 $ 129,294
0000 00xx Xxxxxx
Xxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Centennial Holdings I, LLC 57,275 $ 171,825
0000 00xx Xxxxxx
Xxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Crescendo World Fund, L.L.C. 457,649 $ 1,372,947
000 XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
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72
AGGREGATE
NUMBER OF PURCHASE
NAME AND ADDRESS SHARES PRICE
Crescendo III, L.P. 959,128 $2,877,384
000 XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Eagle Ventures WF, LLC 21,916 $ 65,748
000 XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Xxxxx X. Xxxxxxx 18,615 $ 55,845
0000 X. Xxxxxxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Xxxxxxx X. Xxxxxx 9,383 $ 28,149
0000 X. Xxxxxxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Xxxx X. Xxxxxx 37,531 $ 112,593
0000 XXX Xxxxxxx
Xxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Xxxxxx XxXxxxxx 18,766 $ 56,298
0000 Xxxxx Xxxxx Xx
Xxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
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73
C. Xxxxx Xxxxx 1,862 Contribution of
0000 Xxxxxxxxx 00xx Xx. Services valued at
Xxxxxxxx, XX 00000 $ 5,586
Phone: 000-000-0000
Fax: 000-000-0000
Xxxxxx House 9,307 $ 27,921
0000 X. Xxxxxxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Xxxxxxx Xxxxxx 37,531 $ 112,593
0000 X. Xxxxxxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
TOTAL 5,000,000 $15,000,000
----------- -----------
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74
SECOND SERIES A STOCK PURCHASE AGREEMENT
EXHIBIT B
CERTIFICATE OF INCREASE
16
75
CERTIFICATE OF INCREASE
OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
WLL INTERNATIONAL, INC.
WLL International, Inc., a corporation duly organized and existing
under the laws of the State of Delaware (the "Corporation"), hereby increases
the number of designated shares of Series A Preferred Stock of the Corporation
from 10,000,000 shares to 15,000,000 shares. The powers, preferences, rights,
qualifications, limitations and restrictions of the Series A Preferred Stock
are set forth in that certain Certificate of Designation of Powers,
Preferences, Rights, Qualifications, Limitations and Restrictions of Series A
Convertible Preferred Stock dated and filed as of January 26, 1999 (the
"Certificate of Designation"). The Corporation DOES HEREBY CERTIFY:
That pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, the Board of Directors of the
Corporation, at a meeting held on March 26, 1999, duly adopted the following
resolutions:
RESOLVED, that the number of designated shares of Series A Preferred
Stock of the Corporation be, and it hereby is, increased from 10,000,000 shares
to 15,000,000 shares, as set forth in this Certificate of Increase; and
RESOLVED FURTHER, that the powers, preferences, rights,
qualifications, limitations and restrictions of the Series A Preferred Stock
shall remain as set forth in that certain Certificate of Designation of Powers,
Preferences, Rights, Qualifications, Limitations and Restrictions of Series A
Convertible Preferred Stock dated and filed as of January 26, 1999.
* * * * * * * *
76
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Increase to be signed and executed in its corporate name by Xxxxx X. Xxxxxxx,
its President, and attested to by Xxxxxxx X. Xxxxxx, its Secretary, and its
Corporate Seal to be affixed on this __th day of May, 1999.
WLL INTERNATIONAL, INC.
By:
----------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
Attest:
----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Secretary
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SECOND SERIES A STOCK PURCHASE AGREEMENT
EXHIBIT C
FORM OF LEGAL OPINION
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78
EXHIBIT C
FORM OF LEGAL OPINION
We are of the opinion that:
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware, with full corporate
power and authority to own, lease and operate its properties and to conduct its
business.
2. The Company's authorized capital stock consists of (a) forty million
(40,000,000) shares of Common Stock, of which three million four hundred fifty
five thousand (3,455,000) shares are issued and outstanding, and (b) twenty
million (20,000,000) shares of Preferred Stock of which fifteen million
(15,000,000) shares have been designated as Series A Preferred Stock, of which
ten million (10,000,000) were issued and outstanding prior to the Closing (as
such term is defined in the Purchase Agreement).
3. All the shares of capital stock of the Company outstanding prior to
the Closing have been duly authorized, validly issued and are fully paid and
nonassessable. The rights, preferences and privileges of the Series A Preferred
Stock are as stated in the Certificate of Designation.
4. The Purchase Agreement has been duly authorized, validly executed
and delivered by the Company and is a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium or other similar laws affecting creditors' rights, and
subject to general equity principles and to limitations on availability of
equitable relief, including specific performance.
5. The Series A Preferred Stock has been duly authorized by the Company
and, upon delivery to the Purchasers against payment therefor in accordance with
the Purchase Agreement and the terms of the Series A Preferred Stock, the shares
of Series A Preferred Stock will be validly issued, fully paid and
nonassessable.
6. The shares of Common Stock to be issued on conversion of the Series
A Preferred Stock have been duly authorized and reserved for issuance by the
Company and, when issued and delivered upon conversion of the Series A Preferred
Stock in accordance with the Certificate of Incorporation, such shares of Common
Stock will have been validly issued and will be fully paid and nonassessable.
7. The execution of the Purchase Agreement by the Company and the offer
and sale of the Series A Preferred Stock pursuant to the Purchase Agreement (a)
do not violate any provision of the Company's Certificate of Incorporation or
Bylaws, and (b) do not violate or contravene (i) the laws of the State of
Colorado,
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the General Corporation Law of the State of Delaware or any Federal law of the
United States of America applicable to the Company or (ii) any order, writ,
judgment, injunction, decree, determination or award which has been entered
against the Company and of which we have knowledge, the default, violation or
contravention of which would materially and adversely affect the Company, its
assets, financial condition or operations.
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SECOND SERIES A STOCK PURCHASE AGREEMENT
SCHEDULE 3.9
MATERIAL CONTRACTS
1. Equity Subscription Agreement dated as of June 30, 1998 between the
Company, Telecom Partners II, L.P. ("Telecom"), Centennial Fund V, L.P.
("Centennial Fund V"), Centennial Entrepreneurs Fund V,
L.P.("Centennial Entrepreneurs Fund"), Centennial Holdings I, LLC
("Centennial Holdings I" and, together with Centennial Fund V and
Centennial Entrepreneurs Fund, "Centennial"), IAI World Fund, L.L.C.,
Eagle Ventures WF, L.L.C. ("Eagle Ventures"), Xxxx X. Xxxxxx, Xxxxxx
XxXxxxxx and Xxx Xxxxx, as amended.
2. Letter Agreement dated as of December 4, 1998 between the Company,
Telecom, Centennial, Crescendo World Fund, L.L.C. ("Crescendo World
Fund"), Eagle Ventures, Xxxx X. Xxxxxx, Xxxxxx XxXxxxxx, Xxx Xxxxx,
Xxxxx X. Xxxxxxx and Xxxx Xxxxxx.
3. Memorandum of Understanding dated as of December 8, 1998 between the
Company, Xxxx Canada International Inc., Taquari Participacoes S.A.,
SLI Wireless S.A., and XXXXXXXX Xxxxxxxxxxxx.
4. Equity Subscription Agreement dated as of January 6, 1999 between the
Company and Xxxxxxx Xxxxxx
5. Series A Preferred Stock Purchase Agreement dated as of January 26,
1999 between the Company, Telecom, Centennial and Crescendo.
6. Investors Agreement dated as of January 26, 1999 between the Company,
Telecom, Centennial, Crescendo World Fund, Eagle Ventures, Crescendo
III, L.P. ("Crescendo III" and, together with Crescendo World Fund and
Eagle Ventures, "Crescendo"), Xxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxx, Xxxx
X. Xxxxxx, Xxxxxx XxXxxxxx and C. Xxxxx Xxxxx.
7. Shareholders Agreement dated as of February 4, 1999 between Taquari
Participacoes S.A., SLI Wireless S.A., Qualcomm do Brasil S.A., Xxxx
Canada International (Brazil telecom I) Limited, WLL Brasil Holdings
Ltda. and Canbra Holding S.A.
8. Equity Subscription Agreement dated as of February 12, 1999 between the
Company and Xxxxx Xxxxxxx.
9. Equity Subscription Agreement dated as of February 12, 1999 between the
Company and REINCO Corp.
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10. Equity Subscription Agreement dated as of February 12, 1999 between the
Company and Xxxxxx House.
11. Memorandum of Understanding, dated as of March 15, 1999, between the
Company, Xxxx Canada International Inc., SLI Wireless S.A., and
XXXXXXXX Xxxxxxxxxxxx.
12. Letter Agreements dated as of March 31, 1999 between the Company,
Telecom, Centennial, Crescendo, REINCO Corp., C. Xxxxx Xxxxx, Xxxxxx
House, Xxxxxxx Xxxxxx, Xxxxx X. Xxxxxxx, Xxxxxx XxXxxxxx, Xxxxxxx X.
Xxxxxx and Xxxx X. Xxxxxx.
13. Second Irrevocable Equity Contribution Agreement dated as of April 16,
1999 between the Company, Telecom, Crescendo, Centennial, Xxxxx X.
Xxxxxxx, Xxxxxxx X. Xxxxxx, Xxxx X. Xxxxxx, Xxxxxx XxXxxxxx, C. Xxxxx
Xxxxx, R. Xxxxxx House and Xxxxxxx Xxxxxx.
14. Management Rights Agreement dated as of April 27, 1999 between the
Company and Telecom.
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