EXHIBIT 10.58
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STOCK PURCHASE AGREEMENT
among
CONSUMER FINANCIAL NETWORK, INC.
and
GE CAPITAL EQUITY INVESTMENTS, INC.
Dated as of April 7, 1999
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TABLE OF CONTENTS
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PAGE
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ARTICLE I DEFINITIONS.......................................................................... 1
Section 1.1 Definitions................................................................... 1
Section 1.2 Rules of Construction......................................................... 7
ARTICLE II
SALE AND PURCHASE OF PREFERRED STOCK......................................................... 8
Section 2.1 Sale and Purchase of Preferred Stock.......................................... 8
Section 2.2 Closing of Transaction........................................................ 8
Section 2.3 Issue Taxes................................................................... 9
ARTICLE III
CLOSING CONDITIONS........................................................................... 9
Section 3.1 Conditions to Obligations of the Investor..................................... 9
Section 3.2 Conditions to Obligations of the Company at the Closing....................... 11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................ 13
Section 4.1 Due Incorporation and Good Standing........................................... 13
Section 4.2 Capitalization................................................................ 13
Section 4.3 Subsidiaries.................................................................. 14
Section 4.4 Authority..................................................................... 14
Section 4.5 Authorization, Etc. of Preferred Stock........................................ 15
Section 4.6 No Violation or Conflict; No Default.......................................... 15
Section 4.7 No Material Adverse Change; Financial Statements.............................. 16
Section 4.8 Full Disclosure............................................................... 17
Section 4.9 Private Offering.............................................................. 17
Section 4.10 No Brokers.................................................................... 18
Section 4.11 Litigation.................................................................... 18
Section 4.12 Labor Relations............................................................... 18
Section 4.13 Taxes......................................................................... 19
i
Section 4.14 Environmental Matters........................................................ 20
Section 4.15 ERISA........................................................................ 21
Section 4.16 Intellectual Property........................................................ 22
Section 4.17 Compliance with Laws......................................................... 22
Section 4.18 Agreements................................................................... 23
Section 4.19 Year 2000.................................................................... 23
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR............................................... 24
Section 5.1 Organization and Standing.................................................... 24
Section 5.2 Purchase for Own Account..................................................... 24
Section 5.3 Accredited Investor; No General Solicitation................................. 24
Section 5.4 Authorization; Consents...................................................... 24
Section 5.5 ERISA........................................................................ 25
ARTICLE VI
COVENANTS.................................................................................... 26
Section 6.1 Compliance with Laws; Maintenance of Licenses................................ 26
Section 6.2 Information to Prospective Holders........................................... 26
Section 6.3 Inspection of Properties and Records......................................... 26
Section 6.4 Financial Statements......................................................... 27
Section 6.5 Indemnification for Finder's Fees............................................ 27
Section 6.6 HSR Filing................................................................... 28
Section 6.7 Publicity; Press Releases.................................................... 28
Section 6.8 Lock-up...................................................................... 28
Section 6.9 Consent...................................................................... 28
Section 6.10 Securities Act Registration Statements....................................... 28
Section 6.11 Reasonable Best Efforts...................................................... 29
Section 6.12 Access to Information........................................................ 30
Section 6.13 Use of Proceeds.............................................................. 30
ARTICLE VII
MISCELLANEOUS................................................................................ 30
Section 7.1 Notices...................................................................... 30
Section 7.2 Successors and Assigns....................................................... 31
Section 7.3 No Waivers; Amendments....................................................... 32
Section 7.4 Counterparts................................................................. 32
Section 7.5 Section Headings............................................................. 32
Section 7.6 GOVERNING LAW; SUBMISSION TO JURISDICTION;................................... 32
Section 7.7 Entire Agreement............................................................. 33
Exhibits
A - Series A Certificate of Designations
B - Series B Certificate of Designations
C - Opinion of Xxxxxx & Xxxxxx
D - Stockholders Agreement
E - Investors Agreement
F - Registration Rights Agreement
G - Amendment to Certificate of Incorporation
ii
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is dated as of April 7,
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1999, and entered into by and among Consumer Financial Network, Inc., a Delaware
corporation (the "Company"), and GE Capital Equity Investments, Inc.
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Corporation, a Delaware corporation (the "Investor").
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In consideration of the mutual covenants and agreements set forth herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and intending to be legally bound hereby, the
Company and the Investor mutually agree, as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following terms
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shall have the following meanings:
"Affiliate," as applied to any specified Person, shall mean any other
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Person that, directly or indirectly, controls, is controlled by or is under
common control with such specified Person. For purposes of the foregoing,
"control," when used with respect to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of Voting Securities,
by contract or otherwise, and the terms "controlled" and "controlling" shall
have meanings correlative to the foregoing. In the case of a Person who is an
individual, the term "Affiliate" shall include, with respect to such specified
Person (i) members of such specified Person's immediate family (as defined in
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Instruction 2 of Item 404(a) of Regulation S-K under the Securities Act) and
(ii) trusts, the trustee or the beneficiaries of which are such specified Person
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or members of such Person's immediate family as determined in accordance with
the foregoing clause (i). Notwithstanding the foregoing, the Investor and its
respective Affiliates shall not be deemed Affiliates of the Company for purposes
of this Agreement.
"Audit" means any audit, assessment of Taxes, other examination by any Tax
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Authority, proceeding or appeal of such proceeding relating to Taxes.
"Board of Directors" means, as to any Person, the board of directors of
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such Person.
"Business Day" means each day other than Saturdays, Sundays and days when
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commercial banks are required or authorized by law or executive order to be
closed for business in New York, New York.
"Capital Stock" means any and all shares, interests, participations or
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other equivalents (however designated) of or in capital stock, including,
without limitation, all common stock and preferred stock.
"Certificate of Incorporation" means the Amended and Restated Certificate
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of Incorporation.
"Certificates of Designations" means the Series A Certificate of
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Designations and the Series B Certificate of Designations.
"Charter Documents" means the certificate of incorporation, bylaws and any
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other organizational document, as amended.
"Closing" and "Closing Date" each has the meaning ascribed thereto in
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Section 2.2(a).
"Code" means the Internal Revenue Code of 1986, as amended from time to
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time, and any successor statute or law thereto.
"Common Stock" means all classes of the common stock of the Company, par
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value $.01 per share.
"Consolidated" or "consolidated," when used with reference to any
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accounting term, means the amount described by such accounting term, determined
on a consolidated basis in accordance with GAAP, after elimination of
intercompany items.
"Contracts" has the meaning ascribed thereto in Section 4.6(a)(3).
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"Documents" means this Agreement, the Certificate of Incorporation, the
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Certificates of Designations, the Investors Agreement, the Registration Rights
Agreement and the Stockholders' Agreement, collectively, or each of such
documents singularly, and any documents or instruments contemplated by or
executed in connection with any of them or any of the transactions contemplated
hereby or thereby.
"Employee Benefit Plan" has the meaning ascribed thereto in Section 4.15.
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"Environmental Claim" means any claim, action, cause of action,
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investigation of which the Company or any of its Subsidiaries, including any of
their management employees, are aware, or written notice by any Person alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries or penalties) arising out
of, based on or resulting from (a) the presence, or release into the
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environment, of any Material of Environmental Concern at any location owned,
leased, used or operated by the Company or any of its Subsidiaries, or (b)
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circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law.
"Environmental Laws" means all Federal, state, local and foreign laws and
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regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata and natural resources), including,
without limitation, laws and regulations relating to emissions, discharges,
releases or threatened releases of Materials of Environmental Concern, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environmental Concern.
"Equity Interest" means (i) with respect to a corporation, any and all
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issued and outstanding Capital Stock and warrants, options or other rights to
acquire Capital Stock and (ii) with respect to a partnership, limited liability
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company or similar Person, any and all units, interests, or other equivalents
of, or other ownership interests in any such Person and warrants, options or
other rights to acquire any such units or interests.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
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amended from time to time, and any successor statute or law thereto.
"ERISA Affiliate" has the meaning ascribed thereto in Section 4.15.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
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the rules and regulations of the SEC thereunder, and any successor statute or
law thereto.
"GAAP" means those generally accepted accounting principles and practices
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which are recognized as such from time to time by the American Institute of
Certified Public Accountants acting through its Accounting Principles Board or
by the Financial Accounting Standards Board or through other appropriate boards
or committees thereof and which are consistently applied for all periods after
the date hereof.
"Governmental Body" means any Federal, state, local or foreign
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governmental authority or regulatory body, any subdivision, agency, commission
or authority thereof or
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any quasi-governmental or private body exercising any governmental regulatory
authority thereunder and any Person directly or indirectly owned by and subject
to the control of any of the foregoing, or any court, arbitrator or other
judicial or quasi-judicial tribunal.
"Holder" or "Holders" means the Investor and any Affiliate of the Investor
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that is or becomes a holder of any of the Preferred Stock, in each case, so long
as such Person holds any Preferred Stock.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
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as amended, and the rules and regulations thereunder.
"Investor" has the meaning ascribed thereto in the recitals to this
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Agreement.
"Investors Agreement" means the Investors Agreement, to be dated as of the
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Closing Date, between the Company, iXL and the Investors named herein, as set
forth as Exhibit E hereto.
"iXL" means iXL Enterprises, Inc., a Delaware corporation.
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"Laws" has the meaning ascribed thereto in Section 4.6.
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"Legal Requirements" means, as to any Person, all Federal, state, local or
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foreign laws, statutes, rules, regulations, ordinances, judgments, orders,
decrees, permits, certificates, requirements, regulations and restrictions of
any Governmental Body applicable to such Person or any of its properties or
assets.
"Lien" means any mortgage, pledge, lien, encumbrance, charge or adverse
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claim affecting title or resulting in a charge against real or personal
property, or security interest of any kind (including, without limitation, any
conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell and any filing of any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Material Adverse Effect" means (a) a material adverse effect upon the
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business, operations, prospects, properties, assets or condition (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole or (b) a
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material adverse effect on the ability of the Company to perform its obligations
under this Agreement or any of the other Documents.
"Materials of Environmental Concern" means chemicals, pollutants,
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contaminants, industrial, toxic or hazardous wastes, substances or constituents,
petroleum and
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petroleum products (or any by-product or constituent thereof), asbestos or
asbestos-containing materials, or PCBs.
"Notices" has the meaning ascribed thereto in Section 7.1.
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"Permitted Lien" shall mean the following Liens: (a) Liens existing on
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the Closing Date as listed on Schedule 1.1; (b) Liens for taxes, assessments or
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other governmental charges or levies not yet due; (c) statutory Liens of
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landlords, carriers, warehousemen, mechanics, materialmen and other Liens
imposed by law created in the ordinary course of business of the Company
consistent with past practices for amounts not yet due; (d) Liens (other than
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any Lien imposed by ERISA) incurred or deposits made in the ordinary course of
business of the Company consistent with past practices in connection with
worker's compensation, unemployment insurance or other types of social security;
and (e) with respect to interests in real property, minor defects of title,
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easements, rights-of-way, restrictions and other similar charges or encumbrances
not materially detracting from the value or materially interfering with the use
of such real property.
"Person" means an individual, partnership, corporation, trust, limited
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liability company, association or unincorporated organization or a government or
agency or political subdivision thereof.
"Preferred Stock" means the Series A Preferred Stock and the Series B
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Preferred Stock.
"Proceedings" means any legal, administrative or arbitration action, suit,
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complaint, charge, hearing, inquiry, investigation or proceeding (including any
partial or threatened proceedings).
"Property" or "property" means any assets or property of any kind or
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nature whatsoever, real, personal or mixed (including fixtures), whether
tangible or intangible, provided that the terms "Property" or "property," when
used with respect to any Person, shall not include securities issued by such
Person.
"QPO" means a "Qualified Public Offering" as such term is defined in the
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Stockholders' Agreement.
"Registration Rights Agreement" means the Amended and Restated
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Registration Rights Agreement, to be dated the Closing Date, among the Company,
iXL and the Investor, as set forth as Exhibit F hereto.
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"Rule 144A" means Rule 144A as promulgated by the SEC under the Securities
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Act, as amended from time to time, and any successor rule or regulation thereto.
"SEC" means the Securities and Exchange Commission and any successor
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thereto.
"Series A Certificate of Designations" means the Certificate of
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Designations, Powers, Preferences and Relative, Participating, Optional and
Other Special Rights of the Series A Convertible Preferred Stock, filed by the
Company with the Secretary of State of the State of Delaware on or about
November 2, 1998, to be amended and filed on or before the Closing Date as set
forth as Exhibit A hereto.
"Series B Certificate of Designations" means the Certificate of
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Designations, Powers, Preferences and Relative, Participating, Optional and
Other Special Rights of the Series B Convertible Preferred Stock, to be filed on
or before the Closing Date with the Secretary of State of the State of Delaware,
as set forth as Exhibit B hereto.
"Series A Preferred Stock" means the Series A Convertible Preferred Stock
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of the Company, $.01 par value per share.
"Series B Preferred Stock" means the Series B Convertible Preferred Stock
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of the Company, par value $.01 per share.
"Securities Act" means the Securities Act of 1933, as amended, and the
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rules and regulations of the SEC thereunder, and any successor statute or law
thereto.
"Stockholders' Agreement" means the Amended and Restated Stockholders'
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Agreement, to be dated as of the Closing Date, among the Company and the
stockholders named therein, as set forth as Exhibit D hereto.
"Subsidiary" of any person means (a) a corporation in which such Person, a
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subsidiary of such Person, or such Person and one or more subsidiaries of such
Person, directly or indirectly, at the date of determination, has either (i) a
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majority ownership interest or (ii) the power, under ordinary circumstances, to
--
elect, or to direct the election of, a majority of the board of directors of
such corporation, or (b) a partnership in which such Person, a subsidiary of
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such Person, or such Person and one or more subsidiaries of such Person (i) is,
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at the date of determination, a general partner of such partnership, or (ii) has
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a majority ownership interest in such partnership or the right to elect, or to
direct the election of, a majority of the governing body of such partnership, or
(c) any other
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Person (other than a corporation or a partnership) in which such Person, a
subsidiary of such Person, or such Person and one or more subsidiaries of such
Person has either (i) at least a majority ownership interest or (ii) the power
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to elect, or to direct the election of, a majority of the directors or
other governing body of such Person.
"Tax Authority" means the Internal Revenue Service and any other domestic
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or foreign governmental authority responsible for the administration of any
Taxes.
"Taxes" shall mean with respect to any Person, (A) all income taxes
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(including any tax on or based upon net income, or gross income, or income as
specially defined, or earnings, or profits, or selected items of income,
earnings or profits) and all gross receipts, sales, use, ad valorem, transfer,
franchise, license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property or windfall profits taxes, alternative or add-on
minimum taxes, customs duties or other taxes, fees, assessments or charges of
any kind whatsoever, together with any interest and any penalties, additions to
tax, or additional amounts imposed by any taxing authority (domestic or foreign)
on such Person and (B) any Liability for the payment of any amount of the type
described in the immediately preceding clause (A) as a result of being a
"transferee" (within the meaning of Section 6901 of the Code or any other Law)
of another Person or a member of an affiliated or combined group.
"Tax Returns" shall mean all Federal, state, local and foreign tax
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returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax Return relating to Taxes.
"Transactions" has the meaning ascribed thereto in Section 4.4.
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"Voting Securities" means any class of Equity Interests of a Person
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pursuant to which the holders thereof have, at the time of determination, the
general power under ordinary circumstances to vote for the election of
directors, managers, trustees or general partners of such Person (irrespective
of whether or not at the time any other class or classes will have or might have
the general power under ordinary circumstances to vote for the election of
directors, managers, trustees or general partners by reason of the happening of
any contingency).
Section 1.2 Rules of Construction. Unless the context otherwise
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requires:
(a) a term has the meaning assigned to it;
(b) "or" is not exclusive;
(c) words in the singular include the plural, and words in the plural
include the singular;
(d) provisions apply to successive events and transactions; and
(e) "herein," "hereof," "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular section or other
subdivision.
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ARTICLE II
SALE AND PURCHASE OF PREFERRED STOCK
Section 2.1 Sale and Purchase of Preferred Stock. On the Closing Date,
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subject to the terms and conditions set forth herein and in reliance on the
respective representations and warranties contained herein of the Company, on
the one hand, and the Investor, on the other hand, the Company shall issue and
sell to the Investor, and the Investor shall purchase, an aggregate of
16,190,475 shares of Series B Preferred Stock, for an aggregate purchase price
of $49,999,424.90.
Section 2.2 Closing of Transaction.
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(a) Closing. The closing (the "Closing") hereunder with respect to the
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issuance and sale of the Series B Preferred Stock shall take place at the
offices of Debevoise & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, on
the earlier of (i) August 31, 1999 and (ii) the closing of the initial public
offering of the common stock of iXL, provided that the termination or expiration
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of the waiting period under the HSR Act applicable to the Transactions shall
have occurred by such date (the "Closing Date"). At the Closing, the Company
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will deliver to the Investor the certificates for the Preferred Stock to be
purchased by the Investor (registered on the Company's stock register in the
Investor's name or the name of such nominee or nominees as the Investor may
request), dated the Closing Date, against payment of the purchase price therefor
by intra-bank or Federal funds bank wire transfer of same day funds to such bank
account within the United States as the Company shall have designated at least
two Business Days prior to the Closing.
(b) Fees and Expenses. Provided that the Closing occurs, the Company
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agrees to pay or reimburse all reasonable expenses of the Investor relating to
this Agreement, including, but not limited to:
(1) the Investor's expenses incurred in connection with the
transactions contemplated by this Agreement and the other Documents, including
the reasonable fees and other charges and expenses of the Investor's counsel
incurred in connection herewith or with the other Documents;
(2) any reasonable fees and other charges and expenses (including
the reasonable fees and other charges and expenses of counsel) incurred in
connection with any registration or qualification of the Series B Preferred
Stock required in connection with the offer and sale of the Series B Preferred
Stock to the Investor pursuant to this Agreement under the securities or "blue
sky" laws of any jurisdiction requiring such
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registration or qualification or in connection with obtaining any exemptions
from such requirements; and
(3) the Investor's or Holder's expenses (including the reasonable fees and
other expenses of counsel) relating to any amendment to, or modification of, or
any waiver or consent under, this Agreement, the Series B Preferred Stock or any
of the other Documents.
Reimbursement of the expenses to which such Investor is entitled
pursuant to this Section 2.2(b), including, without limitation, the reasonable
fees and other charges and expenses of such Investor's counsel, shall be made
concurrently with the Closing by intra-bank or Federal funds bank wire transfer
of same day funds, or at such other time and in such other manner as the Company
and the Investors may agree.
Section 2.3 Issue Taxes. The Company agrees to pay all Taxes (other
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than Taxes of the Investor in the nature of income, franchise or gift taxes) and
governmental fees arising in connection with the issuance, sale, delivery or
transfer of Series B Preferred Stock by the Company to the Investor and, as the
case may be, the execution and delivery of the other Documents and any
modification thereof, and will hold the Investor harmless without limitation as
to time against any and all liabilities with respect to all such Taxes and fees.
ARTICLE III
CLOSING CONDITIONS
Section 3.1 Conditions to Obligations of the Investor. The obligations
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of the Investor to purchase and pay for the Series B Preferred Stock to be
delivered to the Investor at the Closing shall be subject to the satisfaction
(or waiver by the Investor) of each of the following conditions at or before the
Closing:
(a) Delivery of Documents. The Company shall have delivered to the
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Investor, in form and substance satisfactory to the Investor, the following:
(i) Certificates representing the 16,190,475 shares of the Series B
Preferred Stock, duly executed by the Company.
(ii) An opinion, dated the Closing Date and addressed to the Investor,
from Xxxxxx & Xxxxxx, a professional corporation, counsel for the Company, as
to the matters set forth in Exhibit C.
(iii) A copy of the Certificate of Incorporation and the Certificates of
Designations, together with good standing certificates from the State of
Delaware and from all states in which the laws thereof require the Company to
be qualified and/or licensed to do business, except where the failure to be
so qualified would not result in a Material Adverse Effect, each to be dated
a recent date prior to the Closing Date and certified by the Secretary of
State.
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(iv) A certificate of the Secretary of the Company dated the Closing Date
certifying (A) the bylaws of the Company, (B) resolutions of the Board of
- -
Directors, authorizing the execution, delivery and performance of this
Agreement and the other Documents and the consummation of the transactions
contemplated hereby and thereby, including the issuance of the Series B
Preferred Stock to the Investor pursuant to this Agreement and (C) as to the
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incumbency and genuineness of the signatures of the officers of the Company.
(v) A certificate of an officer of the Company, dated the Closing Date,
certifying as to the satisfaction of the conditions specified in Sections
3.1(b) and 3.1(d).
(vi) Such additional information and materials as the Investor may
reasonably and timely request.
(b) Compliance with Agreements. The Company shall have performed and
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complied with all agreements, covenants and conditions contained herein, in each
of the other Documents and in any other document contemplated hereby or thereby
which are required by the terms hereof or thereof to be performed or complied
with by the Company on or before the Closing Date.
(c) Completion of Other Transactions. Simultaneously with or prior to
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the sale to the Investor of the Series B Preferred Stock hereunder, the Company
shall have executed and delivered the Investors Agreement, the Registration
Rights Agreement and the Stockholders' Agreement and shall have filed with the
Secretary of State of the State of Delaware the Certificate of Incorporation and
the Certificates of Designations.
(d) Representations and Warranties. All of the representations and
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warranties of the Company contained herein or in any of the other Documents
shall be true and correct in all material respects on and as of the Closing
Date, except those representations and warranties of the Company that speak as
of a certain date, which representations and warranties shall have been true and
correct in all material respects as of such date both before and after giving
effect to the transactions contemplated hereby and by the other Documents.
(e) Proceedings Satisfactory. All proceedings taken in connection with
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the sale of the Series B Preferred Stock, the transactions contemplated hereby,
and all documents and papers relating thereto, shall be reasonably satisfactory
to the Investor. The Investor and its counsel shall have received copies of
such documents and papers as they may
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reasonably request in connection therewith, or as a basis for the opinions to be
delivered pursuant to Section 3.1(a)(ii), all in form and substance satisfactory
to the Investor.
(f) Consents and Permits. The Company shall have received all consents,
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permits, approvals and authorizations and sent or made all notices, filings,
registrations and qualifications as may be required pursuant to any law,
statute, regulation or rule (Federal, state, local or foreign) including,
without limitation, the HSR Act, or pursuant to any other agreement, order or
decree to which it is a party or to which it is subject, in connection with the
transactions to be consummated on or prior to the Closing Date as contemplated
by this Agreement or any of the other Documents.
(g) No Material Adverse Change. There shall not have been any material
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adverse change in the properties, business, operations, prospects, assets,
condition (financial or otherwise) of the Company and its Subsidiaries, taken as
a whole since December 31, 1998.
(h) No Material Judgment or Order. The waiting period under the HSR Act
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applicable to the Transactions shall have terminated, and there shall not be on
the Closing Date any judgment or order of a court of competent jurisdiction or
any ruling of any Federal, state or local Governmental Body that, in the
reasonable judgment of the Investor or its counsel, would prohibit the sale or
issuance of the Series B Preferred Stock hereunder or would subject the Company
or the Investor to any material penalty or liability if the Series B Preferred
Stock were to be issued and sold hereunder or the other Transactions are
consummated.
(i) No Material Proceedings. No Proceeding shall have been pending or
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threatened as of the Closing Date to restrain, prohibit or otherwise challenge
the Transactions, nor shall any Governmental Body have notified either party to
this Agreement that the consummation of the Transactions hereby would constitute
a violation of the laws of the United States or the laws of any State thereof or
the laws of the jurisdiction to which such Governmental Body is subject and that
it intends to commence proceedings to restrain the consummation of such
transactions, to force divestiture if the same are consummated or to materially
modify the terms or results of such Transactions unless such Governmental Body
shall have withdrawn such notice, or has otherwise indicated in writing that it
will not take any action.
Section 3.2 Conditions to Obligations of the Company at the Closing.
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The obligations of the Company to sell and issue the Series B Preferred Stock to
be delivered to the Investor at the Closing shall be subject to the satisfaction
or waiver of each of the following conditions on or before the Closing Date:
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(a) Delivery of Documents. the Investor shall have delivered to the
---------------------
Company satisfactory evidence of its authorization to consummate the
Transactions.
(b) Completion of Other Transactions. Simultaneously with or prior to
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the sale to the Investor of the Preferred Stock to hereunder:
(1) the Investor shall have executed and delivered the Investors
Agreement, Stockholders' Agreement and the Registration Rights Agreement.
(c) The Investor shall have performed and complied with all agreements,
covenants and conditions contained herein, in each of the other Documents and in
any other document contemplated hereby or thereby which are required by the
terms hereof or thereof to be performed or complied with by the Investor on or
before the Closing Date.
(d) Representations and Warranties. All of the representations and
------------------------------
warranties of the Investor contained herein or in any of the other Documents to
which it is a party shall be true and correct in all material respects on and as
of the Closing Date, except for those representations and warranties of the
Investor that speak as of a certain date, which representations and warranties
shall have been true and correct in all material respects as of such date, both
before and after giving effect to the transactions contemplated hereby and by
the other Documents.
(e) HSR Act; No Material Judgment or Order. The waiting period under the
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HSR Act applicable to the Transactions shall have terminated, and there shall
not be on the Closing Date any judgment or order of a court of competent
jurisdiction or any ruling of any Federal, state or local Governmental Body that
prohibits the sale or issuance of the Preferred Stock to the Investor hereunder
or would subject the Company to any material penalty or liability if the Series
B Preferred Stock were to be issued and sold to the Investor hereunder or the
other Transactions are consummated.
(f) No Material Proceedings. No Proceeding shall have been pending or
-----------------------
threatened as of the Closing Date to restrain, prohibit or otherwise challenge
the Transactions, nor shall any Governmental Body have notified either party to
this Agreement that the consummation of the Transactions hereby would constitute
a violation of the laws of the United States or the laws of any State thereof or
the laws of the jurisdiction to which such Governmental Body is subject and that
it intends to commence proceedings to restrain the consummation of such
transactions, to force divestiture if the same are consummated or to materially
modify the terms or results of such Transactions
12
unless such Governmental Body shall have withdrawn such notice, or has otherwise
indicated in writing that it will not take any action.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor on the date hereof and
as of the Closing as follows:
Section 4.1 Due Incorporation and Good Standing. The Company has been
-----------------------------------
duly incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware with corporate power and authority to
own, lease and operate its properties, to conduct its business as currently
conducted and as proposed to be conducted and to enter into and perform its
obligations under this Agreement and the other Documents to which it is a party.
The Company is duly qualified as a foreign corporation to transact business and
is in good standing in each jurisdiction in which such qualification is required
except where the failure to be so qualified would not reasonably be expected to
have a Material Adverse Effect.
Section 4.2 Capitalization. (a) As of the Closing, the authorized
--------------
capital stock of the Company will consist of (1) 250,000,000 shares of Common
-
Stock, and (2) 70,000,000 shares of blank check preferred stock, 13,333,334
-
shares of which have been designated as the Series A Preferred Stock and
16,190,475 shares of which have been designated as the Series B Preferred Stock.
After giving effect to the transactions contemplated hereby, (i) there will be
-
issued and outstanding (A) 100,000,000 shares of Common Stock, (B) 13,333,334
- -
shares of Series A Preferred Stock, all of which are validly issued and fully
paid and nonassessable and (C) 16,190,475 shares of Series B Preferred Stock,
-
all of which will be validly issued and fully paid and nonassessable, and (ii)
--
there will be reserved for issuance 29,523,809 shares of Common Stock to be
issued upon conversion of the Preferred Stock. Except as set forth above and on
Schedule 4.2 hereto, after giving effect to the Closing, no Equity Interests of
the Company or any Subsidiary of the Company will be issued or outstanding and
there are not, and at the Closing Date there will not be, any options,
agreements, instruments or securities relating to the issued or unissued Equity
Interests of the Company or any Subsidiary of the Company, or obligating the
Company or any Subsidiary of the Company to issue, transfer, grant or sell any
Equity Interests in the Company or any Subsidiary of the Company.
13
(b) The Company has complied with all federal and state securities laws
in connection with the issuance of all outstanding Equity Interests, except
where such failure would not have a Material Adverse Effect.
(c) Except as listed on Schedule 4.2, and except as contemplated by the
Documents, there are no preemptive rights, voting agreements, transfer
restrictions (except those imposed by applicable federal and state securities
laws), or registration rights (except as set forth in the Registration Rights
Agreement) affecting the Equity Interests in the Company.
Section 4.3 Subsidiaries. Schedule 4.3 hereto sets forth a list of all
------------
Subsidiaries of the Company and the respective state or jurisdiction of
incorporation or organization. All of the issued or outstanding Equity Interests
of such Subsidiaries have been duly and validly issued and are fully paid and
nonassessable and are owned, directly or indirectly, by the Company. Each
Subsidiary of the Company is duly incorporated and is in good standing in its
respective state or jurisdiction of incorporation and has the corporate
authority to own, lease or operate its properties and to conduct its business as
currently conducted and as proposed to be conducted. Each Subsidiary of the
Company is duly qualified to transact business and is in good standing as a
foreign corporation in each state or jurisdiction in which such qualification is
required, except where the failure to be so qualified would not reasonably be
expected to have a Material Adverse Effect.
Section 4.4 Authority. The Company has all necessary corporate power
---------
and authority to execute and deliver this Agreement and each of the other
Documents, and to perform its obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby (the
"Transactions"). The execution and delivery of this Agreement and the other
------------
Documents have been authorized by all necessary corporate action on the part of
the Company and no other corporate proceedings or approvals are required on the
part of the Company to authorize this Agreement or the other Documents or to
consummate the Transactions. This Agreement has been, and, at the Closing, the
Investors Agreement, the Registration Rights Agreement and the Stockholders'
Agreement will have been, duly and validly executed and delivered by the
Company. Assuming the due authorization, execution and delivery of the
applicable Documents by the other parties thereto, other than iXL, this
Agreement constitutes, and each of the Investors Agreement, the Stockholders'
Agreement and the Registration Rights Agreement will constitute at the Closing,
the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with each of its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to or affecting creditors' rights
generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
14
Section 4.5 Authorization, Etc. of Preferred Stock The issuance and
--------------------------------------
sale of the Series B Preferred Stock have been duly authorized by all necessary
corporate action on the part of the Company and the Series B Preferred Stock,
when issued to the Investor for the consideration set forth herein, will be duly
authorized, validly issued and fully paid and non-assessable, free of preemptive
rights, with no personal liability attached to the ownership thereof.
Section 4.6 No Violation or Conflict; No Default. (a) None of the
------------------------------------
nature of the business of the Company or any of its Subsidiaries, the execution,
delivery or performance by the Company of this Agreement or the other Documents,
the compliance by the Company with its obligations hereunder or thereunder, the
consummation of the Transactions, and the issuance, sale or delivery of the
Series B Preferred Stock will:
(1) violate or conflict with any provision of the Charter Documents of
the Company or any of its Subsidiaries;
(2) violate or conflict with any statute, law, rule or regulation or any
judgment, decree, order, regulation or rule of any court or governmental
authority or body (collectively, "Laws") applicable to the Company or any of
----
its Subsidiaries or by which any of their respective properties or assets may
be subject, except (solely with respect to the nature of the business of the
Company and its Subsidiaries) where such violation would not reasonably be
expected to have a Material Adverse Effect; or
(3) violate, be in conflict with, or constitute a breach or default (or
any event which, with the passage of time or notice or both, would become a
default) under, or permit the termination of, or require the consent of any
Person under, result in the creation or imposition of any Lien upon any
property of the Company or any of its Subsidiaries under, result in the loss
(by the Company or any of its Subsidiaries) or modification in any manner
adverse to the Company and its Subsidiaries of any right or benefit under, or
give to any other Person any right of termination, amendment, acceleration,
repurchase or repayment, increased payments or cancellation under, any
mortgage, indenture, note, debenture, agreement, lease, license, permit,
franchise or other instrument or obligation, whether written or oral
(collectively, "Contracts") to which the Company or any of its Subsidiaries
---------
is a party or by which their properties are bound or affected except as would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(b) The Company is not in default (without giving effect to any grace or
cure period or notice requirement) under any Contract, its Certificate of
Incorporation, the Series A Certificate of Designations or bylaws or any
applicable judgments or orders,
15
except where such default would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(c) The execution and delivery of this Agreement and the other Documents
do not, and the performance of its obligations under this Agreement and the
other Documents and the consummation of the Transactions will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Body under any Laws, except for (i) notification pursuant
-
to, and expiration or termination of the waiting period under, the HSR Act, (ii)
--
required filings under the Securities Act or state "blue sky" laws and (iii)
---
those filings or notifications listed on Schedule 4.6 hereto.
Section 4.7 No Material Adverse Change; Financial Statements.
------------------------------------------------
(a) Except as set forth on Schedule 4.7 hereto, subsequent to December
31, 1998, there has not been (i) any material adverse change in the properties,
-
business, prospects, operations, assets or condition (financial or otherwise) of
the Company and its Subsidiaries taken as a whole, (ii) any asset or property of
--
the Company made subject to a Lien of any kind, other than Permitted Liens,
(iii) any waiver of any valuable right of the Company or any Subsidiary, or the
---
cancellation of any material debt or material claim held by the Company or any
Subsidiary, (iv) any payment of dividends on, or other distributions with
--
respect to, or any direct or indirect redemption or acquisition of, any shares
of the capital stock of the Company, or any agreement or commitment therefor,
(v) any mortgage, pledge, sale, assignment or transfer of any material tangible
-
or intangible assets of the Company, except in the ordinary course of business,
(vi) any loan by the Company or any Subsidiary to any officer, director,
--
employee, consultant or direct or indirect stockholder or any agreement or
commitment therefor, other than travel expense advances made by the Company to
its officers, directors, employees, consultants or stockholders in the ordinary
course of business, (vii) any material damage, destruction or loss (whether or
---
not covered by insurance) affecting the assets of the Company or any Subsidiary
or (viii) any increase, direct or indirect, in the compensation paid or payable
----
to any officer, director, employee, or consultant of the Company or any
Subsidiary other than in the ordinary course of business.
(b) The Company has heretofore furnished the Investor with a true and
complete copy of (i) (A) the audited financial statements of the Company for the
-
years ended December 31, 1996, 1997 and (B) the draft audited year-end financial
statements of the Company (which are being audited as of the date hereof) for
the year ended December 31, 1998. Such financial statements present fairly in
all material respects the financial position, results of operations,
shareholders' equity and cash flows of the Company at the respective dates or
for the respective periods to which they apply. Except as disclosed therein,
such statements and related notes have been prepared each in accordance with
GAAP
16
consistently applied throughout the periods involved. Except as set forth on
Schedule 4.7, since December 31, 1998, the Company has not incurred any
liabilities or obligations (whether absolute, accrued, fixed, contingent, or
otherwise and whether due or to become due) of any nature, except for
liabilities, obligations or contingencies (a) which are reflected in the audited
-
balance sheet of the Company at December 31, 1998, (b) which were incurred in
-
the ordinary course of business after December 31, 1998, (c) which would not,
-
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, or (d) which arise as a result of this Agreement or the other
-
Documents. Since December 31, 1998, there has been no change in any significant
accounting (including tax accounting) policies, practices or procedures of the
Company.
(c) Except as set forth on Schedule 4.7, the Company has good and
marketable title to all properties, interests in properties and assets, real,
personal and mixed, tangible or intangible, used in the conduct of its business,
free and clear of all Liens other than Permitted Liens.
Section 4.8 Full Disclosure. Neither this Agreement, the financial
---------------
statements referred to in Section 4.7 nor any other Document contains any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made.
Section 4.9 Private Offering. Assuming the correctness of the
----------------
representations and warranties set forth in Sections 5.1, 5.2 and 5.3 hereof,
the offer and sale of the Series B Preferred Stock to the Investor hereunder is
exempt from the registration and prospectus delivery requirements of the
Securities Act. No form of general solicitation or general advertising was used
by the Company and its representatives in respect of the Series B Preferred
Stock, including, but not limited to, advertisements, articles, notices or other
communications published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.
Section 4.10 No Brokers. Except as may be set forth in Schedule 4.10,
----------
the Company has not engaged any broker, finder, commission agent or other such
intermediary in connection with the sale of the Series B Preferred Stock and the
Transactions, and the Company is under no obligation to pay any broker's or
finder's fee or commission or similar payment in connection with such
Transactions.
Section 4.11 Litigation. (a) Except as set forth on Schedule 4.11,
----------
there is no Proceeding, whether commenced, or to the knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries or any of
their respective
17
properties or assets, except for such Proceedings that would not reasonably be
expected to have, singly or in the aggregate, a Material Adverse Effect, and
there is no Proceeding seeking to restrain, enjoin, prevent the consummation of
or otherwise challenge this Agreement or any of the other Documents or the
Transactions.
(b) Neither the Company nor any of its Subsidiaries is subject to (i) any
-
judgment, order or decree of any Governmental Body, or (ii) any rule or
--
regulation of any Governmental Body that has had a Material Adverse Effect or
that would reasonably be expected to have, singly or in the aggregate, a
Material Adverse Effect.
Section 4.12 Labor Relations. (a) Neither the Company nor any of its
--------------- -
Subsidiaries, nor any Person for whom the Company or any of its Subsidiaries is
or may be responsible by law or contract, is engaged in any unfair labor
practice that would reasonably be expected to have, singly or in the aggregate,
a Material Adverse Effect. There is (i) no unfair labor practice charge or
-
complaint pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries, or any Person for whom the Company or any of
its Subsidiaries is or may be responsible by law or contract, before the
National Labor Relations Board or any corresponding state, local or foreign
agency, and no grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is so pending or threatened, (ii) no strike,
--
labor dispute, slowdown or stoppage pending or threatened against the Company or
any of its Subsidiaries, or any Person for whom either the Company or any of its
Subsidiaries is or may be responsible by law or contract, and (iii) no union
---
representation claim or question existing with respect to the employees of the
Company or any of its Subsidiaries, or any Person for whom either the Company or
any of its Subsidiaries is or may be responsible by law or contract, and no
union organizing activities taking place. Neither the Company nor any of its
Subsidiaries, nor any Person for whom the Company or any of its Subsidiaries is
or may be responsible by law or contract, is a party to any collective
bargaining agreement.
(b) Except as set forth on Schedule 4.12 or such as would not
reasonably be expected to have in a Material Adverse Effect, neither the Company
nor any of its Subsidiaries has violated any applicable Laws relating to
employment or employment practices or the terms and conditions of employment,
including, without limitation, discrimination in the hiring, promotion or pay of
employees, wages, hours of work, plant closings and layoffs, collective
bargaining, immigration and occupational safety and health. To the knowledge of
the Company or any of its Subsidiaries, no charges with respect to or relating
to the Company or any of its Subsidiaries are pending before the Equal
Employment Opportunity Commission or any other corresponding state agency, and
the Company and each of its Subsidiaries have at all times been in material
compliance with all Legal Requirements prohibiting discrimination in the
workplace including, without limitation, laws and regulations that prohibit
discrimination and/or harassment on account
18
of race, national origin, religion, gender, disability, age, immigration status,
workers compensation status or otherwise.
Section 4.13 Taxes. Except as set forth on Schedule 4.13:
-----
(a) The Company and its Subsidiaries have timely filed or will timely
file or cause to be timely filed, all Tax Returns (or extensions) required by
Law to be filed by any of the Company or its Subsidiaries. All such Tax Returns
and amendments thereto are or will be true, complete and correct in all material
respects.
(b) The Company and its Subsidiaries have paid, or where payment is not
yet due, have established, or will establish or cause to be established on or
before the Closing Date, an adequate accrual for the payment of all Taxes due
with respect to any period ending prior to or as of the Closing Date.
(c) No Audit by a Tax Authority is pending or threatened with respect to
any Tax Returns filed by, or Taxes due from, the Company or its Subsidiaries. No
issue has been raised by any Tax Authority in any Audit of the Company or its
Subsidiaries that if raised with respect to any other period not so audited
would reasonably be expected to result in a material proposed deficiency for any
period not so audited. No deficiency or adjustment for any Taxes has been
threatened, proposed, asserted or assessed against the Company or its
Subsidiaries. There are no liens for Taxes upon the assets of the Company or its
Subsidiaries, except liens for current Taxes not yet due.
(d) Neither the Company nor its Subsidiaries has given or been requested
to give any waiver of statutes of limitations relating to the payment of Taxes
or has executed powers of attorney with respect to Tax matters, which will be
outstanding as of the Closing Date.
(e) Neither the Company nor its Subsidiaries is a party to, or is bound by
any tax sharing, cost sharing, or similar agreement or policy relating to Taxes.
(f) Neither the Company nor its Subsidiaries has entered into agreements
that would result in the disallowance of any tax deductions pursuant to Section
280G of the Code. No "consent" within the meaning of Section 341(f) of the Code
has been filed with respect to the Company or its Subsidiaries.
19
Section 4.14 Environmental Matters.
---------------------
(a) Each of the Company and its Subsidiaries is in compliance with all
Environmental Laws, except where such non-compliance would not reasonably be
expected to have a Material Adverse Effect, and neither the Company nor any of
its Subsidiaries has received any written communication that alleges that the
Company or its Subsidiaries is not in compliance with any Environmental Laws,
and there are no circumstances that may prevent or interfere with such
compliance in the future.
(b) There is no Environmental Claim pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries with respect
to the operations or business of the Company or its Subsidiaries, or against any
person or entity whose liability for any Environmental Claim the Company or its
Subsidiaries has retained or assumed either contractually or by operation of
law.
(c) To the Company's knowledge, there are no past or present actions,
activities, circumstances, conditions, events or incidents, including, without
limitation, the release, emission, discharge, presence or disposal of any
Material of Environmental Concern, that could form the basis of any
Environmental Claim against the Company or its Subsidiaries, or against any
person or entity whose liability for any Environmental Claim the Company or its
Subsidiaries has retained or assumed either contractually or by operation of
law, which would reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect.
(d) Without in any way limiting the generality of the foregoing, Schedule
4.14 sets forth (i) all permits, licenses and other governmental authorizations
-
held by the Company and its Subsidiaries, or required for any of their
operations or business, under any Environmental Law, including the current
status of each such permit, license and authorization, (ii) all on-site and to
--
the knowledge of the Company off-site locations where the Company or any of its
Subsidiaries has stored, disposed or arranged for the disposal of Materials of
Environmental Concern, (iii) to the knowledge of the Company, all underground
---
storage tanks, and the capacity and contents of such tanks, located on property
owned, leased or controlled by the Company or its Subsidiaries, (iv) to the
--
knowledge of the Company, the location and condition of any asbestos or lead
(including furnishings or lead-based paints) contained in or forming part of any
building, building component, structure or office space owned, leased or
controlled by the Company or its Subsidiaries, and (v) to the knowledge of the
-
Company, all PCBs or PCB-containing items that are used or stored at any
property owned, leased or controlled by the Company or its Subsidiaries.
20
Section 4.15 ERISA. (a) Except as set forth on Schedule 4.15, none of
-----
the Company nor any of its Subsidiaries, or any other trade or business, whether
or not incorporated, that together with the Company or its Subsidiaries would be
deemed a "single employer" (within the meaning of Section 4001 of ERISA) (an
"ERISA Affiliate") is a "party in interest" (as defined in Section 3(14) of
ERISA) or a "disqualified person" (within the meaning of Section 4975 of the
Code), with respect to any profit-sharing, pension or retirement plan, program,
arrangement or agreement, or any other "employee benefit plan" (within the
meaning of Section 3(3) of ERISA) or any "plan" (within the meaning of Section
4975 of the Code) (collectively, each such plan, program, arrangement or
agreement an "Employee Benefit Plan").
---------------------
(b) With respect to each Employee Benefit Plan: (i) each Employee Benefit
-
Plan has been administered in compliance in all material respects, with its
terms including, but not limited to, any provisions relating to contributions
thereunder, and is in compliance in all material respects with the applicable
provisions of ERISA, the Code and all other Federal, state and other applicable
laws, rules and regulations, as they relate to such Employee Benefit Plans; (ii)
--
no "employee pension benefit plan" (as defined in Section 3(2) of ERISA) has
been the subject of a "reportable event" (as defined in Section 4043 of ERISA)
and there have been no "prohibited transactions" (as described in Section 4975
of the Code or Title I of ERISA) effected by the Company or any of its
Subsidiaries with respect to any Employee Benefit Plan and, to the knowledge of
the Company or any of its Subsidiaries, there have been no "prohibited
transactions" (as described in Section 4975 of the Code or Title I of ERISA)
effected by any Person other than the Company or any of its Subsidiaries with
respect to any Employee Benefit Plan; (iii) there are no proceedings, suits or
---
material claims (other than routine claims for benefits) pending or to the
knowledge of the Company threatened with respect to any Employee Benefit Plan,
the assets of any trust thereunder or the Employee Benefit Plan sponsor with
respect to the design or operation of any Employee Benefit Plan; (iv) no
--
condition exists or event or transaction has occurred in connection with any
Employee Benefit Plan that has resulted or is reasonably likely to result in the
Company or any of its Subsidiaries or any such ERISA Affiliate incurring any
liability, fine or penalty except as would not reasonably be expected to have,
singly or in the aggregate, a Material Adverse Effect; (v) no Employee Benefit
-
Plan is or ever has been subject to Title IV of ERISA and neither the Company
nor any of its Subsidiaries has any liability under Title IV of ERISA, whether
actual or contingent; and (vi) no amounts payable pursuant to any Employee
--
Benefit Plan will, in connection with the transactions contemplated under this
Agreement, the other Documents, fail for any reason to be deductible for Federal
income tax purposes.
Section 4.16 Intellectual Property. Each of the Company and its
---------------------
Subsidiaries owns or possesses adequate licenses or other rights to use all
material intellectual property, including but not limited to trademarks, service
marks, trade names, copyrights,
21
computer software, and know-how, necessary to conduct its business as currently
conducted and as proposed to be conducted, and neither the Company nor any of
its Subsidiaries has received any written notice of infringement of or conflict
with asserted rights of others with respect to the use of such intellectual
property that would reasonably be expected to have a Material Adverse Effect. To
the knowledge of the Company, all intellectual property used in its business as
currently conducted and as proposed to be conducted is valid and enforceable and
the Company has performed all acts and has paid all required fees and taxes to
maintain all registrations and applications of such intellectual property in
full force and effect, except for any failure to do so which would not
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any of its Subsidiaries, in the conduct of their respective businesses as
now conducted or as proposed to be conducted, infringes or conflicts with any
right of any third party known to the Company, where such infringement or
conflict would reasonably be expected to have a Material Adverse Effect. Neither
the Company nor any of its Subsidiaries is, nor will it be as a result of the
execution and delivery of this Agreement and the other Documents or the
performance of any obligations hereunder and thereunder, in breach of any
license or other agreement relating to any intellectual property, except as
would not reasonably be expected to have a Material Adverse Effect. To the
knowledge of the Company, no third party is infringing or has infringed any
intellectual property of the Company or its Subsidiaries except for any
infringement that would not reasonably be expected to have a Material Adverse
Effect. Schedule 4.16 hereto lists all registered intellectual property owned or
licensed by the Company or its Subsidiaries.
Section 4.17 Compliance with Laws. Each of the Company and its
--------------------
Subsidiaries has obtained and has maintained in good standing any licenses,
permits, consents and authorizations required to be obtained by it under all
Legal Requirements relating to its business, other than those licenses, permits,
consents and authorizations the absence of which would not reasonably be
expected to have, singly or in the aggregate, a Material Adverse Effect, and any
such licenses, permits, consents and authorizations remain in full force and
effect, except as to any of the foregoing, the absence of which would not
reasonably be expected to have, singly or in the aggregate, a Material Adverse
Effect. Each of the Company and its Subsidiaries is in compliance, in all
material respects, with all Laws and there is no pending or, to the Company's
knowledge, threatened, Proceedings against either the Company or its
Subsidiaries pursuant to any Legal Requirements, other than any such Proceedings
which would not reasonably be expected to have, singly or in the aggregate, a
Material Adverse Effect.
Section 4.18 Agreements. Except as set forth on Schedule 4.18, neither
----------
the Company nor any of its Subsidiaries is a party to any written or oral (a)
-
Contract with any labor union; (b) Contract for the future purchase of fixed
-
assets or for the future purchase of materials, supplies or equipment in excess
of normal operating requirements; (c)
-
22
Contract for the employment of any officer, individual employee or other person
on a fulltime basis or any contract with any Person on a consulting basis; (d)
-
agreement or indenture relating to the borrowing of money or to the mortgaging,
pledging or otherwise placing a Lien on any assets of the Company or any of its
Subsidiaries; (e) guaranty of any obligation for borrowed money; (f) material
- -
lease or agreement under which the Company or any of its Subsidiaries is lessee
of or holds or operates any property, real or personal, owned by any other
party; (g) material lease or agreement under which the Company or any of its
-
Subsidiaries is lessor of or permits any third party to hold or operate any
property, real or personal, owned or controlled by the Company or any of its
Subsidiaries; (h) agreement or other commitment for capital expenditures in
-
excess of $100,000; (i) Contract, agreement or commitment under which the
-
Company or any of its Subsidiaries is obligated to pay any broker's fees,
finder's fees or any such similar fees, to any third party in connection with
the transactions contemplated herein; or (j) any other Contract, agreement,
-
arrangement or understanding which is material to the business of the Company
and its Subsidiaries, taken as a whole. All such Contracts constitute the valid
and binding obligations of the Company or its Subsidiaries, as the case may be,
and, to the best knowledge of the Company, the other parties thereto,
enforceable in accordance with their terms, except as enforcement may be limited
by general principles of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally. For the purposes of this
Section 4.18, "material" shall mean any Contract calling for payments from one
party to the other of more than $100,000.00.
Section 4.19 Year 2000. The Company represents and warrants that its
---------
computer system and software are able to accurately process date data, including
but not limited to, calculating comparing and sequencing from, into and between
the twentieth century (through the year 1999), the year 2000 and the twenty-
first century, including leap year calculations.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor represents and warrants to the Company that:
Section 5.1 Organization and Standing. The Investor is a corporation or
-------------------------
other legally recognizable entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization.
Section 5.2 Purchase for Own Account. The Investor is purchasing the
------------------------
Series B Preferred Stock to be purchased by it solely for its own account and
not as nominee or
23
agent for any other person and not with a view to, or for offer or sale in
connection with, any current distribution thereof (within the meaning of the
Securities Act) that would cause the original purchase of the Series B Preferred
Stock to be in violation of the securities laws of the United States of America
or any state thereof, without prejudice, however, to its right at all times to
sell or otherwise dispose of all or any part of such Series B Preferred Stock
pursuant to a registration statement under the Securities Act or pursuant to an
exemption from the registration requirements of the Securities Act, and subject,
nevertheless, to the disposition of its property being at all times within its
control.
Section 5.3 Accredited Investor; No General Solicitation. (a) The
-------------------------------------------- -
Investor is knowledgeable, sophisticated and experienced in business and
financial matters and in investing in privately held business enterprises; it
has previously invested in securities similar to the Series B Preferred Stock
and it acknowledges that the Series B Preferred Stock has not been registered
under the Securities Act and understands that the Series B Preferred Stock must
be held indefinitely unless they are subsequently registered under the
Securities Act or such sale is permitted pursuant to an available exemption from
such registration requirement; it is able to bear the economic risk of its
investment in the Series B Preferred Stock and is presently able to afford the
complete loss of such investment; and it is an "accredited investor" as defined
in Regulation D promulgated under the Securities Act.
(b) The Investor did not make its investment decision to purchase the
-
Series B Preferred Stock based on any form of general solicitation or general
advertising used by the Company or iXL, including, but not limited to,
advertisements, articles, notices or other communications published in any
newspaper, magazine or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
Section 5.4 Authorization; Consents. (a) The Investor has taken all
-----------------------
corporate actions necessary to authorize it (i) to execute, deliver and perform
-
all of its obligations under this Agreement, (ii) to perform all of its
--
obligations under the Documents and (iii) to consummate the transactions
---
contemplated hereby and thereby. Assuming the due authorization, execution and
delivery of the applicable Documents by the other parties thereto, this
Agreement constitutes a legally valid and binding obligation of the Investor
enforceable against it in accordance with its terms, except for (A) the effect
-
thereon of bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting the rights of creditors generally and (B)
-
limitations imposed by Federal or state law or equitable principles upon the
specific enforceability of any of the remedies, covenants or other provisions
thereof and upon the availability of injunctive relief or other equitable
remedies.
24
(b) The execution and delivery by the Investor of this Agreement and the
other Documents to which the Investor is a party do not, and the performance of
its obligations under this Agreement and the other Documents and the
consummation of the Transactions will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Body under any Laws, except for (i) notification pursuant to and expiration or
-
termination of the waiting period under the HSR Act, (ii) required filings under
--
the Securities Act or state "blue sky" laws and (iii) where the failure to
---
obtain such consents, approvals, authorizations or permits or to make such
filings or notifications, would not, individually or in the aggregate,
reasonably be expected to prevent or materially delay the consummation of the
Transactions.
Section 5.5 ERISA. The Investor represents that either:
-----
(a) it is not acquiring the Series B Preferred Stock for or on behalf of
any Employee Benefit Plan;
(b) the assets used to acquire the Series B Preferred Stock are assets of
an insurance company general account and the purchase of the Preferred Stock
would be exempt under the provisions of Prohibited Transaction Class Exemption
95-60;
(c) the assets used to acquire the Series B Preferred Stock are assets of
a "venture capital operating company" or "real estate operating company" (as
defined in 29 C.F.R ' 25 10.3-101); or
(d) if it is otherwise acquiring the Series B Preferred Stock on behalf
of an employee pension benefit plan, an employee welfare benefit plan or a
"Plan," either directly or through an investment fund (such as a bank collective
investment fund or insurance company pooled separate account), then, assuming
that the plans identified to such Investor by the Company in writing are the
only employee benefit plans (as defined in Section 3 of ERISA) or Plans with
respect to which the Company is a "party in interest" or "disqualified person"
(as such terms are defined in section 3 of ERISA and section 4975 of the Code,
respectively), either
(i) no part of the funds to be used to purchase the Series B
Preferred Stock constitutes assets allocable to any trust that contains
assets of any of such employee benefit plans, or
(ii) exemption from the prohibited transaction rules applies such that
the use of such funds does not constitute a non-exempt prohibited
transaction in violation of section 406 of ERISA or section 4975 of the
Code, which could be subject to a civil
25
penalty assessed pursuant to section 502 of ERISA or a tax imposed under
section 4975 of the Code.
ARTICLE VI
COVENANTS
Section 6.1 Compliance with Laws; Maintenance of Licenses. The Company
---------------------------------------------
shall, and shall cause each of its Subsidiaries to, comply with all Legal
Requirements (including all Environmental Laws) to which any of them is subject,
and maintain, obtain and keep in effect all licenses, permits, franchises and
other governmental authorizations necessary to the ownership or operation of its
properties or the conduct of its businesses, except to the extent that the
failure to so comply or maintain, obtain and keep in effect would not reasonably
be expected to have, singly or in the aggregate, a Material Adverse Effect.
Section 6.2 Information to Prospective Holders. Provided that a sale
----------------------------------
pursuant to Rule 144A is available to the Holders, until the closing of a QPO,
the Company shall, upon the request of any Holder, deliver to such Holder and
any prospective purchaser designated by such Holder promptly following the
request of such Holder or such prospective purchaser the information which such
Holder or prospective purchaser may reasonably request in order to comply with
the information requirements of Rule 144A.
Section 6.3 Inspection of Properties and Records. Until the closing of
------------------------------------
a QPO, the Company agrees to allow, and to cause each of its Subsidiaries to
allow, each Holder who continues to hold Series B Preferred Stock with an
aggregate liquidation value of at least $1,000,000 (or, such Persons as any of
them may designate) (individually and collectively, "Inspectors"), subject to
----------
appropriate agreements as to confidentiality, (i) to visit and inspect any of
-
the properties of the Company or any of its Subsidiaries, (ii) to examine all
--
their books of account, records, reports and other papers and to make copies and
extracts therefrom, (iii) to discuss its affairs, finances and accounts with its
---
officers and employees, and (iv) to discuss the financial condition of the
--
Company and its Subsidiaries with their independent accountants upon reasonable
notice to the Company of its intention to do so and so long as the Company shall
be given the reasonable opportunity to participate in such discussions (and by
this provision the Company authorizes such accountants to have such discussions
with the Inspectors). All such visits, examinations and discussions set forth
in the preceding sentence shall be at such reasonable times and as often as may
be reasonably requested.
26
Section 6.4 Financial Statements. Until the closing of a QPO, the
--------------------
Company will deliver to each Holder who continues to hold Preferred Stock with
an aggregate liquidation value of at least $2,000,000:
(a) Not more than 30 days after the end of each month, beginning with
April, 1999, a consolidated balance sheet of the Company as at the end of such
month and the related consolidated statements of income of the Company for such
month and (in the case of all months other than the first month of such fiscal
year) for the period from the beginning of the current fiscal year to the end of
such month, and setting forth, in each case in comparative form, figures for the
corresponding month and each previous month and period in the Company's budget
for the current fiscal year, certified by the chief financial officer of the
Company as fairly presenting in all material respects the financial condition of
the Company as at the dates indicated and the results of their operations for
the periods indicated, prepared in accordance with GAAP consistently applied
except for the absence of footnotes and subject to changes resulting from
periodic adjustments; and
(b) Not more than 90 days after the end of each fiscal year of the
Company, a consolidated balance sheet of the Company as of such year and the
related consolidated statements of income and cash flows of the Company for such
year, corresponding figures from the preceding fiscal year, and in the case of
such consolidated financial statements, accompanied by a report thereon of Price
Waterhouse Coopers or such other independent public accountants of recognized
national standing selected by the Company, which report shall state that such
consolidated financial statements were prepared in accordance with GAAP
consistently applied and present fairly in all material respects the
consolidated financial condition of the Company as of the dates indicated; and
(c) Not later than 30 days prior to the start of each fiscal year
beginning with the fiscal year beginning January 1, 2000, monthly and annual
management projections and budgets for such fiscal year.
Section 6.5 Indemnification for Finder's Fees. The Company hereby
---------------------------------
agrees to indemnify the Investor, each of its Affiliate and each director,
officer, partner, employee, counsel, agent or representative thereof against and
hold them harmless from all losses, claims, damages or other liabilities arising
from any finder's or other brokers or investment banker fees with respect to any
finder, broker or investment banker retained by or authorized to act on behalf
of, iXL, the Company or any of its respective Subsidiaries, with respect to the
transactions contemplated hereunder.
Section 6.6 HSR Filing. Each party hereto agrees to (i) take reasonable
---------- -
best efforts to prepare and file, as soon as practicable after the date hereof,
but in any event in not more than 10 Business Days from the date hereof, the
notification required under the
27
HSR Act with respect to the Transactions, (ii) request early termination of the
--
waiting period with respect thereto, and (iii) diligently respond to any
---
inquiries arising therefrom.
Section 6.7 Publicity; Press Releases. Neither party hereto shall issue
-------------------------
any press release or make any public disclosure (other than any public
disclosure required by law) identifying or describing the Investor's investment
in the Company contemplated hereby or any of the other Transactions unless such
press release or public disclosure is approved by the other party in writing and
in advance, provided, however, that this Section 6.7 shall not prevent iXL from
disclosing any such information required to be disclosed by the federal
securities laws in a registration statement filed by iXL pursuant to the
Securities Act or in any of its filings pursuant to the Exchange Act.
Section 6.8 Lock-up. The Investor agrees that it shall not Transfer (as
-------
such term is defined in the Stockholders' Agreement) any shares of Preferred
Stock or Common Stock issuable upon conversion of Preferred Stock for 180 days
after any underwritten public offering of shares of common stock of iXL unless
the managing underwriter for such offering decides such restriction is
unnecessary, and each Holder agrees to execute any agreement or document
reasonably requested by any such underwriter which relates to such restriction;
provided, however, that this Section 6.8 shall not apply to (a) transfers
pursuant to Section 1.2(i) or Section 2 of the Stockholders' Agreement, (b) any
transfer pursuant to the exercise of incidental registration rights of the
Investor or (c) any transfer required under the Investors Agreement or
explicitly permitted under Sections 1(c) or 2(c) of the Investors Agreement.
Section 6.9 Consent. The Investor hereby consents to the amendment (and
-------
if desirable, restatement) of the Certificate of Incorporation attached hereto
as Exhibit G, the amendment to the Series A Certificate of Designations and the
creation of the Series B Preferred Stock and agrees to execute and deliver any
instruments which are necessary to reflect such consent.
Section 6.10 Securities Act Registration Statements. Except for
--------------------------------------
securities of the Company registered on Form S-4 or Form S-8 promulgated under
the Securities Act or any successor forms thereto, the Company shall not file
any registration statement under the Securities Act covering any securities
unless it shall first have given the Investor written notice thereof. In
connection with any registration statement referred to in this Section 6.11, the
Company will indemnify, to the extent permitted by law, the Investor, its
partners, officers and directors and each person, if any, who controls the
Investor within the meaning of Section 15 of the Securities Act, against all
losses, claims, damages, liabilities and expenses caused by any untrue statement
or alleged untrue statement of a material fact contained in any registration
statement or prospectus or any preliminary prospectus or any amendment thereof
or supplement thereto or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary
28
to make the statements therein not misleading, except insofar as such losses,
claims, damages, liabilities or expenses are caused by any untrue statement or
alleged untrue statement or omission or alleged omission contained in written
information furnished to the Company by such Investor for use in such
registration statement. If, in connection with any such registration statement,
the Investor shall furnish written information to the Company expressly for use
in the registration statement, the Investor will indemnify, to the extent
permitted by law, the Company, its directors, each of its officers who sign such
registration statement and each person, if any, who controls the Company within
the meaning of the Securities Act against all losses, claims, damages,
liabilities and expenses caused by any untrue statement or alleged untrue
statement of a material fact or any omission or alleged omission of a material
fact required to be stated in the registration statement or prospectus or any
preliminary prospectus or any amendment thereof or supplement thereto or
necessary to make the statements therein not misleading, but only to the extent
that such untrue statement or alleged untrue statement or such omission or
alleged omission is contained in information so furnished in writing by such
Investor for use therein, provided, however, that in no case shall the Investor
be liable or responsible for any amount in excess of the net amount of proceeds
(after taking into account underwriters' discounts and commissions) actually
received by the Investor from the sale of securities pursuant to such
registration statement, prospectus or preliminary prospectus.
Section 6.11 Reasonable Best Efforts. Each of the parties hereto agrees
-----------------------
to use its reasonable best efforts to take, or cause to be taken, all
appropriate action, and to do, or cause to be done, all actions required to be
done by such party pursuant to this Agreement in the most expeditious manner
practicable, including, but not limited to, the satisfaction of all conditions
to the Closing.
Section 6.12 Access to Information. From and after the date hereof and
---------------------
until the Closing Date, the Company shall make available for inspection by the
Investor or its representatives, during normal business hours, the Company's
books and records and all other documents reasonably requested by the Investor
or its representatives to permit the Investor and its representatives to make
reasonable inspection and examination of the business and affairs of the
Company.
Section 6.13 Use of Proceeds. The Company shall use the proceeds from
---------------
the sale of the Series B Preferred Stock for general corporate purposes,
including without limitation, research and development, marketing and technology
capital improvements.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Notices. All notices, demands, requests, consents or
-------
approvals (collectively, "Notices") required or permitted to be given hereunder
-------
or which are given with respect to this Agreement shall be in writing and shall
be personally delivered or mailed, registered or certified, return receipt
requested, postage prepaid (or by a substantially similar method), or
delivered by a reputable overnight courier service with charges prepaid, or
transmitted by hand delivery, telegram, telex or facsimile, addressed as set
forth below, or such other address (and with such other copy) as such party
shall have specified most recently by written notice. Notice shall be deemed
given or delivered on the date of service or transmission if personally served
or transmitted by telegram, telex or facsimile. Notice otherwise sent as
provided herein shall be deemed given or delivered on
29
the third Business Day following the date mailed or on the next Business Day
following delivery of such notice to a reputable overnight courier service.
To the Company:
Consumer Financial Network, Inc.
Two Park Place
0000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxx, 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
with a copy (which shall not constitute Notice) to:
Xxxxxx & Xxxxxx, PC
One Buckhead Plaza
0000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
and
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxxx
Telecopy No.: (000) 000-0000
with an additional copy (which shall not constitute Notice) to:
Xxxxx & Company
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx XX, Esq.
Telecopy No.: (000) 000-0000
30
To the Investor:
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: General Counsel of GE Equity
Telecopy: (000) 000-0000
with a copy (which shall not constitute Notice) to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
To any subsequent Holder:
To the address specified by such Holder to the Company upon such Holder's
purchase of the Series B Preferred Stock.
Section 7.2 Successors and Assigns. This Agreement shall be binding upon
----------------------
and shall inure to the benefit of the parties hereto, and their respective
successors and permitted assigns; provided that (i) neither this Agreement nor
-
any rights or obligations hereunder may be transferred or assigned by the
Company (except by operation of law in any merger) and (ii) neither this
--
Agreement nor any rights or obligations hereunder may be transferred or assigned
by any Holder except to any Person to whom such Holder has transferred Series B
Preferred Stock to the extent not prohibited by the Stockholders' Agreement.
Section 7.3 No Waivers; Amendments. (a) No failure or delay by any party
----------------------
in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
(b) This Agreement may not be amended or modified, nor may any provision
hereof be waived, other than by a written instrument signed by (x) the Company
-
and (y) each Holder to which any such amendment pertains.
-
31
Section 7.4 Counterparts. This Agreement may be signed in counterparts,
------------
each of which shall constitute an original and which together shall constitute
one and the same agreement.
Section 7.5 Section Headings. The section headings contained in this
----------------
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
Section 7.6 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
---------------------------------------------------------
TRIAL. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
-----
LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN
THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OR RULES OF CONFLICT OF LAWS
TO THE EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE OR PERMIT THE APPLICATION
OF THE LAWS OF ANOTHER JURISDICTION.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK IN RESPECT OF ANY ACTION ARISING OUT OF OR RELATING TO THIS
AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY
AGREES THAT IT WILL NOT COMMENCE ANY SUCH ACTION IN ANY OTHER JURISDICTION. EACH
OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH ACTION BROUGHT IN ANY SUCH
COURT AND ANY CLAIM THAT ANY SUCH ACTION BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. NOTWITHSTANDING THE FOREGOING, NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE HOLDER TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE COMPANY IN ANY OTHER JURISDICTION.
EACH OF THE PARTIES HERETO HEREBY WAIVES THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE OTHER DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING
TO
32
THE SUBJECT MATTER OF THE HOLDER'S INVESTMENT IN THE COMPANY CONTEMPLATED
HEREBY. THE SCOPE OF THIS JURY TRIAL WAIVER SHALL BE LIMITED TO DISPUTES BETWEEN
THE COMPANY AND THE HOLDER AND SHALL NOT EXTEND TO DISPUTES BETWEEN THE COMPANY
AND ANY OTHER PERSON.
Section 7.7 Entire Agreement. This Agreement, together with the other
----------------
Documents, constitutes the entire agreement and understanding among the parties
hereto with respect to the subject matter hereof and thereof and supersedes any
and all prior agreements, documents, projections, representations, warranties
and understandings, written or oral, relating to the subject matter hereof.
Section 7.8 Severability. Any term or provision of this Agreement which
------------
is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdictions, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.
Section 7.9 Further Assurances. The Company shall, and shall cause each
------------------
of its Subsidiaries to, at its cost and expense, upon request of any Holder,
duly execute and deliver, or cause to be duly executed and delivered, to such
Holder such further instruments and do or cause to be done such further acts as
may be necessary or proper in the reasonable opinion of such Holder to carry out
more effectually the provisions and purposes of this Agreement and the other
Documents.
Section 7.10 Survival of Representations, Warranties and Agreements; No
----------------------------------------------------------
Recourse. The representations, warranties and agreements of the Investor and
--------
the Company in this Agreement shall survive the Closing until the date that is
12 months from the date hereof. Notwithstanding the foregoing, the covenants
contained in Article VI and the agreements contained in this Article VII shall
survive the Closing indefinitely. In no event shall any Holder have any recourse
against the present or former directors, officers or stockholders of the Company
or any of its Affiliates with respect to any representation, warranty or
agreement made by the Company in this Agreement, except in the case of fraud, in
which case such Holder's rights shall be governed by applicable state law.
Section 7.11 Disclosure of Financial Information. Each Holder is hereby
-----------------------------------
authorized to deliver a copy of any financial statement or any other information
relating to the business, operations or financial condition of the Company or
each of its Subsidiaries which may be furnished to it hereunder or otherwise, to
any other Holder, any court,
33
Governmental Body claiming to have jurisdiction over such Holder, to the
National Association of Insurance Commissioners or similar organization, as may
be required or appropriate in response to any summons or subpoena in connection
with any litigation, to the extent necessary to comply with any law, order,
regulation or ruling applicable to such Holder, or to any rating agency, in
order to protect its investment hereunder; provided, however, that prior to
disclosing any such information, such Holder shall provide the Company with
prompt written notice so that the Company may seek a protective order or other
appropriate remedy if the Company reasonably determines that such information
must be kept confidential.
Each Holder is hereby authorized to deliver a copy of any financial
statement or any other information relating to the business, operations or
financial condition of the Company or each of its Subsidiaries which may be
furnished to it hereunder or otherwise, to any Person which shall, or shall have
any right or obligation to, succeed to all or any part of such Holder's interest
in any of the Series B Preferred Stock (or any Common Stock into which such
Series B Preferred Stock is convertible) and this Agreement or to any actual
purchaser or assignee thereof; provided, however, that no disclosure may be made
unless such other Person first executes a confidentiality agreement reasonably
acceptable to the Company with respect to any such information disclosed.
Section 7.12 Termination. At any time after August 31, 1999, either
-----------
party may terminate this Agreement if the Closing shall not have taken place by
August 31, 1999, unless the failure to consummate the Closing is the result of a
willful and material breach by the party seeking to terminate this Agreement.
In the event of the termination of this Agreement pursuant to this Section 7.12,
this Agreement shall be of no further force and effect.
34
IN WITNESS WHEREOF, this Stock Purchase Agreement has been signed by each of the
parties hereto as of the date first written above.
CONSUMER FINANCIAL NETWORK, INC.
Address: By: /s/ M. Xxxxx Xxxxxxxx
------- _____________________________
Title: Executive Vice President
___________________________
GE CAPITAL EQUITY INVESTMENTS, INC.
By: General Electric Investment Corporation,
its investment manager
000 Xxxx Xxxxx Xxxx By: /s/ Xxxxxxx X. XxXxxxx
Xxxxxxxx, XX 00000 --------------------------------
Title: Vice President
-----------------------------
SCHEDULE 1
NAME OF INVESTOR PREFERRED STOCK PURCHASED AGGREGATE PURCHASE
---------------- ------------------------- ------------------
PRICE
-----
1 GE Capital Equity 16,190,475 shares of Series B $49,999,424.90
Investments, Inc. Convertible Preferred Stock
36
CERTIFICATE OF DESIGNATIONS,
POWERS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL
AND OTHER SPECIAL RIGHTS
OF THE
SERIES B CONVERTIBLE PREFERRED STOCK
OF
CONSUMER FINANCIAL NETWORK, INC.
Pursuant to Section 151
-----------------------
of the Delaware General Corporation Law
---------------------------------------
The undersigned, , a duly elected officer of
CONSUMER FINANCIAL NETWORK, INC. (the "Corporation"), a corporation duly
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify that pursuant to the authority contained in
Article 4th of the Corporation's Amended and Restated Certificate of
Incorporation, and in accordance with the provisions of Sections 103 and 151 of
the Delaware General Corporation Law, the Corporation's Board of Directors has
adopted the following resolution creating the following class of the
Corporation's $.01 par value Convertible Preferred Stock and determining the
voting powers, designations, powers, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations and
restrictions thereof, of such class:
RESOLVED, that, pursuant to authority conferred upon the Board of
Directors by the Amended and Restated Certificate of Incorporation of the
Corporation (the "Certificate of Incorporation"), 16,190,475 shares of the
Preferred Stock of the Corporation shall be hereby designated Series B
Convertible Preferred Stock, liquidation value $3.0882 per share (the "Series B
Preferred Stock"). The designations, powers, preferences, and relative,
participating, optional and other special rights and the qualifications,
limitations and restrictions of the Series B Preferred Stock in addition to
those set forth in the Certificate of Incorporation of the Corporation shall be
as follows (all terms used herein without definition shall have the meaning
assigned thereto in Section 8 hereof):
1. Voting Rights. Except as otherwise provided by applicable law, each
-------------
holder of the Series B Preferred Stock (i) shall be entitled to vote with the
-
holders of the Common Stock on all matters submitted for a vote of holders of
the Common Stock, (ii) shall be entitled to a number of votes per share of
--
Series B Preferred Stock equal to the Conversion Rate then in effect and (iii)
---
shall be entitled to notice of any stockholders' meeting in accordance with the
certificate of incorporation and by-laws of the Corporation.
2. Dividends. (a) Dividends on the Common Stock. The Corporation may
--------- -----------------------------
make distributions (as defined below) on the Common Stock, provided that no
distributions shall be declared or paid with respect to the Common Stock without
there
2
being contemporaneously declared and paid a dividend on the Series B Preferred
Stock (with the same record and payment date) so that each share of Series B
Preferred Stock shall receive a dividend equal to the distribution paid per
share of Common Stock times the number of shares of Common Stock into which the
Preferred Stock is then convertible. For the purpose of this Section 2, unless
the context otherwise requires, "distribution" shall mean the transfer of cash
or property by the Corporation without consideration, whether by way of dividend
or otherwise, payable other than in Common Stock, or the purchase or redemption
of shares of the Corporation for cash or property, including any such transfer,
purchase or redemption by a subsidiary of the Corporation.
(b) Dividends on the Series A Preferred Stock. The Corporation may make
-----------------------------------------
distributions on the Series A Preferred Stock, provided that no distributions
shall be declared or paid with respect to the Series A Preferred Stock without
there being contemporaneously declared and paid a dividend on the Series B
Preferred Stock (with the same record and payment date) so that each share of
Series B Preferred Stock and each share of Series A Preferred Stock shall
receive a dividend pro rata based on the relative number of shares of Common
--------
Stock into which each such respective share of Series B Preferred Stock and
Series A Preferred Stock is convertible.
3. Liquidation. (a) Liquidation Value. In the event of any Liquidation
----------- -----------------
Event, the holders of the Series B Preferred Stock shall be entitled pari passu
to be paid, before any distribution or payment is made upon any Common Stock,
but on a pari passu basis with the holders of the Series A Preferred Stock and
any other parity securities hereafter authorized and issued by the Corporation
("Parity Securities"), an amount in cash equal to the Liquidation Value of each
share of the Series B Preferred Stock held by them, plus an amount equal to all
declared and unpaid dividends thereon. If upon any Liquidation Event, the
Corporation's assets to be distributed among the holders of the Series A
Preferred Stock, the Series B Preferred Stock and any other Parity Securities
are insufficient to permit payment in full of the Liquidation Value to the
holders of the Series B Preferred Stock, the Series A Preferred Stock and any
other Parity Securities, such assets shall be distributed ratably among them
based upon the respective amounts that would be payable on the Series B
Preferred Stock, the Series A Preferred Stock and any other Parity Securities if
all amounts payable thereon were paid in full.
(b) Notice of Liquidation Event. At least fifteen (15) days' previous
---------------------------
notice by mail, postage prepaid, shall be given to the holders of record of the
Series B Preferred Stock of any Liquidation Event, such notice to be addressed
to each such holder at the address of such holder appearing on the books of the
Corporation or given by such holder to the Corporation for the purpose of
notice, or if no such address appears or is so given, at the place where the
principal office of the Corporation is located. Such notice shall
3
state the anticipated date fixed for the Liquidation Event, the Liquidation
Value, and shall call upon such holder to surrender to the Corporation on said
date at the place designated in the notice such holder's certificate or
certificates representing their Series B Preferred Stock; provided that failure
to so surrender such certificate or certificates shall not affect such holder's
rights under this Section 3.
(c) No Participation in Balance. Upon any Liquidation Event, after the
---------------------------
holders of the Series B Preferred Stock have been paid in full the amounts to
which they are entitled pursuant to Section 3(a), the holders of Series B
Preferred Stock shall not share in any remaining assets of the Corporation
pursuant to this Section 3.
(d) Adjustment to Liquidation Value. If the Corporation subdivides (by
-------------------------------
any stock split, stock dividend, recapitalization or otherwise) Series B
Preferred Stock into a greater number of shares, the Liquidation Value of such
Series B Preferred Stock will be pro portionately reduced, and if the
Corporation combines (by reverse stock split or otherwise) Series B Preferred
Stock into a lesser number of shares, the Liquidation Value of such Series B
Preferred Stock will be proportionately increased.
4. Conversion. (a) Conversion Right; Conversion Rate; Corporation's
---------- ------------------------------------------------
Option to Convert. Subject to the provisions of this Section 4, a holder of
-----------------
Series B Preferred Stock shall have the right at any time, at such holder's
option, to convert its outstanding shares of Series B Preferred Stock, in whole
or in part, into the number of shares of Common Stock derived by multiplying the
number of shares of Series B Preferred Stock to be converted by the Conversion
Rate (as defined in Section 4(c) hereof) then in effect. In addition, upon the
occurrence of a Qualified Public Offering, the Corporation shall have the right,
at its option, to convert the then outstanding shares of Series B Preferred
Stock, in whole or in part, into the number of shares of Common Stock derived by
multiplying the number of shares of Series B Preferred Stock to be converted by
the Conversion Rate then in effect.
(b) Exercise of Conversion Right. The right to convert shall be exercised
----------------------------
by the holder thereof by giving at least 10 days' prior written notice to the
Corporation that the holder elects to convert a stated number of shares of
Series B Preferred Stock into Common Stock and by surrender of a certificate or
certificates for the shares so to be converted to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the holder or holders of the
Series B Preferred Stock) at any time during its usual business hours on the
date set forth in such notice, together with a statement of the name or names
(with address) in which the certificate or certificates for shares of Common
Stock shall be issued.
4
(c) Conversion Rate.
---------------
(i) The initial rate of conversion for the Series B Preferred Stock is
1.00 (the "Conversion Rate"). In order to prevent dilution of the conversion
rights granted under this Section 4 the Conversion Rate will be subject to
adjustment from time to time pursuant to this Section 4(c).
(ii If and whenever the Corporation shall issue or sell any shares of its
Common Stock including pursuant to any rights or options to subscribe for or to
purchase Common Stock or any stock or other securities convertible into or
exchangeable for Common Stock (such rights or options being herein called
"Options" and such convertible or exchangeable stock or securities being herein
called "Convertible Securities") for a consideration per share less than the
Antidilution Price, then the Conversion Rate in effect immediately prior to such
issuance or sale shall be increased to the product of (1) the then effective
-
Conversion Rate multiplied by (2) a fraction, the numerator of which shall be
-
the sum of (w) the number of shares of Common Stock Deemed Outstanding
immediately prior to such issuance or sale plus (x) the number of shares of
Common Stock so issued or sold and the denominator of which shall be the sum of
(y) the number of shares of Common Stock Deemed Outstanding immediately prior to
such issuance or sale plus (z) the number of shares of Common Stock that could
-
have been purchased with the total consideration received by the Corporation in
such issuance or sale had such shares been purchased at a purchase price per
share equal to the Antidilution Price. Notwithstanding the foregoing, no
adjustment to the Conversion Rate shall be made for the issuance or sale of any
shares of Common Stock which constitute Excluded Shares (other than issuances of
the type referred to in clauses (v) and (vi) of the definition of Excluded
Shares in the Investors Agreement, as to which such adjustment to the Conversion
Rate shall be made pursuant to the terms hereof).
(ii If the Corporation at any time subdivides (by any stock split, stock
dividend, recapitalization or otherwise) one or more classes of its outstanding
shares of its Common Stock into a greater number of shares, the Conversion Rate
in effect immediately prior to such subdivision will be proportionately
increased, and if the Corporation at any time combines (by reverse stock split
or otherwise) one or more classes of its outstanding shares of its Common Stock,
the Conversion Rate in effect immediately prior to such combination will be pro
portionately reduced.
(iv In case the Corporation shall declare a dividend or make any other
distribution upon any stock of the Corporation payable in (a) Common Stock or
(b) Options or Convertible Securities without making a ratable distribution
thereof to holders
5
of Series B Preferred Stock (based upon the number of shares
of Common Stock into which such Series B Preferred Stock would be convertible,
assuming conversion), then the Conversion Rate in effect immediately prior to
the declaration of such dividend or distribution shall be increased to the
product of (1) the then effective Conversion Rate multiplied by (2) a fraction,
- -
the numerator of which shall be the number of shares of Common Stock Deemed
Outstanding immediately after such declaration and the denominator of which
shall be the number of shares of Common Stock Deemed Outstanding immediately
prior to such declaration.
(v) Effect on Conversion Rate of Certain Events. For purposes of
-------------------------------------------
determining the adjusted Conversion Rate, the following will be applicable:
(A) Change in Number of Options, Option Price or Conversion Rate. If the
-------------------------------------------------------------
number of Options available, the purchase price provided for in any Options, the
additional con sideration, 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 shall change at any time
(other than a change resulting from the antidilution provisions thereof), the
Conversion Rate in effect at the time of such change will be readjusted to the
Conversion Rate which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed number,
purchase price, additional consideration or changed conversion rate, as the case
may be, at the time initially granted, issued or sold; provided, however, that
-------- -------
if such adjustment would result in a decrease of the Conversion Rate then in
effect, such adjustment will not be effective until 20 days after written notice
thereof has been given by the Corporation to all holders of the Series B
Preferred Stock (and then only with respect to the shares of Series B Preferred
Stock outstanding and not previously converted to Common Stock as of such
effective date).
(B) Treatment of Expired Options and Unexercised Convertible Securities.
-------------------------------------------------------------------
Upon the expiration of any Option or the termination 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 Conversion Rate then in effect
hereunder will be adjusted to the Conversion Rate 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.
(vi) Notwithstanding anything to the contrary set forth herein, no
adjustment to the Conversion Rate under clause (ii) above shall take effect with
respect to any Common Stock, Options or Convertible Securities which are sold,
issued, deemed sold or deemed
6
issued to a holder of Series B Preferred Stock pursuant to the exercise of such
holder's preemptive rights pursuant to Section 5 of the Investors Agreement.
(d) Reorganization, Reclassification, Consolidation, Merger or Sale. Any
---------------------------------------------------------------
capital reorganization, reclassification, consolidation, merger or sale of all
or substantially all of the Corporation's assets to another Person which is
effected in such a way that holders of Common Stock are entitled to receive
(either directly or upon subsequent liquidation) stock, securities or assets
with respect to or in exchange for Common Stock is referred to herein as an
"Organic Change." Prior to the consummation of any Organic Change, the
Corporation will make appropriate provisions to ensure that each of the holders
of Series B Preferred Stock will thereafter have the right to acquire and
receive such shares of stock, securities, cash or other assets as such holder
would have received in connection with such Organic Change if such holder had
converted its Series B Preferred Stock immediately prior to such Organic Change.
The Corporation will not effect any such consolidation, merger or sale, unless
prior to the consummation thereof, the successor corporation (if other than the
Corporation) resulting from consolidation or merger or the Corporation
purchasing such assets assumes by written instrument the obligation to deliver
to each such holder such shares of stock, securities or assets as, in accordance
with the foregoing provisions, such holder may be entitled to acquire.
(e) Certain Events. If any event occurs of a type similar to that
--------------
contemplated by the provisions of this Section 4 but not expressly provided for
by such provisions, then the Corporation's Board of Directors will make an
appropriate adjustment in the applicable Conversion Rate so as to protect the
rights of the holders of Series B Preferred Stock; provided, however, that no
-------- -------
such adjustment will decrease the applicable Conversion Rate as otherwise
determined pursuant to this Section 4 or decrease the number of shares of Common
Stock issuable upon conversion of each share of Series B Preferred Stock.
(f) Notices.
-------
(i) The Corporation will, to the extent practicable, give written notice
to all holders following the commencement of proceedings for any of the
following events so as to give holders of Series B Preferred Stock at least 20
days prior notice to the consummation of any such event within which to exercise
their rights to convert: (A) any Liquidation Event, or (B) any event causing an
- -
adjustment in the Conversion Rate.
(ii As soon as practicable following any adjustment of a Conversion Rate,
the Corporation will give written notice thereof to all holders of Series B
Preferred Stock.
7
(iii The Corporation will give written notice to all holders of Series B
Preferred Stock at least 20 days prior to the date on which the Corporation
closes its books or fixes a record date (a) with respect to any dividend or
-
distribution upon Common Stock, (b) with respect to any pro rata subscription
-
offer to holders of Common Stock or (c) for determining rights to vote with
-
respect to any Organic Change, dissolution or liquidation.
(iv The Corporation will also give written notice to the holders of
Series B Preferred Stock at least 20 days prior to the date on which any Organic
Change will take place.
5. Mechanics of Conversion. (a) Issuance of Certificates; Time
----------------------- ------------------------------
Conversion Effected. Promptly after the receipt of the written notice referred
-------------------
to in Section 4(b) hereof, and surrender of the certificate or certificates for
the share or shares of the Series B Preferred Stock to be converted, the
Corporation shall issue and deliver, or cause to be issued and delivered, to the
holder, registered in such name or names as such holder may direct, a
certificate or certificates for the number of shares of Common Stock issuable
upon the conversion of such share or shares of Series B Preferred Stock. At the
effective time of conversion, the rights of the holder of such share or shares
of Series B Preferred Stock shall cease, and the Person or Persons in whose name
or names any certificate or certificates for shares of Common Stock shall be
issuable upon such conversion shall be deemed to have become the holder or
holders of record of the shares represented thereby.
(b) Fractional Shares; Partial Conversion. No payment or adjustment shall
-------------------------------------
be made upon any conversion on account of any cash dividends paid or payable on
the Common Stock issued upon such conversion. In case the number of shares of
Series B Preferred Stock represented by the certificate or certificates
surrendered pursuant to Section 4 exceeds the number of shares converted, the
Corporation shall, upon such conversion execute and deliver to the holder
thereof, at the expense of the Corporation, a new certificate or certificates
for the number of shares of Series B Preferred Stock represented by the
certificate or certificates surrendered which are not to be converted. If any
fractional interest in a share of Common Stock is deliverable upon any such
conversion, the Corporation, in lieu of delivering fractional shares thereof,
shall pay to the holder surrendering the Series B Preferred Stock for conversion
an amount in cash equal to the Fair Market Value of such fractional interest as
of the date of conversion.
(c) Stock to be Reserved. The Corporation will at all times reserve and
--------------------
keep available out of its authorized Common Stock or its treasury shares, solely
for the purpose of issue upon the conversion of the Series B Preferred Stock as
herein provided, such number of shares of Common Stock as shall then be issuable
upon the conversion of
8
all outstanding shares of Series B Preferred Stock. The Corporation covenants
that all shares of Common Stock which shall be so issued shall be duly and
validly issued and fully paid and nonassessable and free from all liens and
charges with respect to the issue thereof. The Corporation will take all such
action as may be necessary to assure that all such shares of Common Stock may be
so issued without violation of any applicable law or regulation.
(d) No Reissuance of Preferred Stock. Shares of Series B Preferred Stock
--------------------------------
which are converted into shares of Common Stock as provided herein or which are
repurchased by the Corporation shall not be reissued and the authorized number
of Series B Preferred Stock shall be reduced upon the conversion of such Series
B Preferred Stock or the repurchase thereof by the Corporation by the number of
shares of such converted or repurchased Series B Preferred Stock.
(e) Issue Tax. The issuance of certificates for shares of Common Stock
---------
upon conversion of the Series B Preferred Stock shall be made without charge to
the holders thereof for any issuance tax in respect thereof, provided that the
Corporation shall not be required to pay any income or similar taxes of a holder
arising in connection with a conversion or any tax that may be payable in
respect of any transfer involved in the issuance and delivery of any
certificates in a name other than that of the holder of the Series B Preferred
Stock which is being converted.
(f) Closing of Books. The Corporation will at no time close its transfer
----------------
books against the transfer of any Series B Preferred Stock or of any shares of
Common Stock issued or issuable upon the conversion of any shares of Series B
Preferred Stock in any manner that interferes with the timely conversion of such
Series B Preferred Stock.
(g) Determination of Fair Market Value. The Fair Market Value will be
----------------------------------
determined in the manner set forth in the Stockholders' Agreement provided,
however, that any appraisal used to determine Fair Market Value must have
occurred less than three months prior to the date of such conversion, and shall
have been deemed by the Board of Directors to be reasonably current. If there
exists no such appraisal at the date of conversion, the Corporation shall
promptly commission an appraisal for such purpose.
6. Redemption. The holder of any share or shares of Series B Preferred
----------
Stock shall have the right at its option to require the Corporation, upon thirty
(30) days prior written notice, to redeem any or all of the Series B Preferred
Stock held by such holder on or after December 31, 2005 (or, if such date is not
a business day, the first business day immediately after such date). Such
redemption as contemplated by this Section 6 shall be at a redemption price per
share equal to the Liquidation Value plus an amount equal to all declared and
unpaid dividends with respect to such share, if any. The Corporation shall
9
give prompt written notice to all holders of Series B Preferred Stock of the
exercise by a holder of Series B Preferred Stock of its right to require the
Corporation to redeem under this Section 6. If applicable law limits the ability
of the Corporation to redeem all of the shares of Series B Preferred Stock
requested to be so redeemed, the Corporation shall redeem Series B Preferred
Stock, to the extent permitted by law, on a pro rata basis as to those holders
of Series B Preferred Stock requesting redemption and shall redeem the remainder
of such Series B Preferred Stock on such pro rata basis from time to time as and
to the extent legally permitted.
7. Preferred Shareholder Approvals. Without the prior vote or consent of
-------------------------------
the holders of a majority of the Series B Preferred Stock, voting as a separate
class, the Corporation shall not:
(a) amend, alter, or repeal its Certificate of Incorporation or its Bylaws
in a manner adverse to either (i) the holders of the Series B Preferred Stock or
-
(ii) any other rights or benefits of General Electric Capital Corporation or any
--
of its Affiliates that own Stock of the Corporation, under agreements relating
to their equity interests in the Corporation;
(b) redeem any shares of Common Stock (i) except pursuant to Sections 3
or 4 of the Stockholders' Agreement or (ii) unless greater than 80% of the
--
Common Stock is redeemed simultaneously and on a pro rata basis pursuant to
Section 2.3 of the Stockholders' Agreement and, so long as such section is in
effect, in accordance with Section 1(c) of the Investors Agreement.
(c) declare or pay any dividend or distribution in respect of any of the
Corporation's capital stock (except for distributions following a Liquidation
Event, in accordance with Section 3 above) other than any dividend or
distribution required pursuant to the terms of an equity security the issuance
of which was approved by the holders of a majority of the Series B Preferred
Stock.
(d) enter into any transaction with an Affiliate, other than Excluded
Affiliate Transactions, except as in the ordinary course of business or approved
by the Board of Directors; or
(e) authorize or issue any additional shares of Series B Preferred Stock
or any additional class or series of capital stock of the Corporation that shall
rank senior to or on parity with the Series B Preferred Stock as to dividends,
redemption, distributions or payments in respect of the occurrence of a
Liquidation Event; provided, however, that the Corporation may authorize and
-------- -------
issue additional series of preferred stock (other than
10
Series B Preferred Stock) ranking on parity with (and not senior to) the Series
B Preferred Stock if (and only so long as) the liquidation value per share
equals the purchase price per share paid to the Corporation for such shares of
preferred stock (subject to any adjustments to the liquidation value pursuant to
the applicable certificate of designations) and the terms of such additional
series of preferred stock are no more favorable to the holders thereof than the
terms of the Series B Preferred Stock.
8. Definitions.
-----------
For purposes herein, the following terms shall have the meanings
indicated:
"Affiliate" shall mean (i) any Person directly or indirectly controlling,
-
controlled by, or under common control with the Corporation; (ii) any Person,
--
directly or indirectly owning or controlling 10% or more of the outstanding
voting securities of such Person; and (iii) any officer or director of the
---
Corporation.
"Antidilution Price" shall mean $3.0882; provided that if the Conversion
Rate is increased or decreased pursuant to Section 4(c)(iii) hereof, then the
Antidilution Price in effect at the time shall be proportionately reduced (in
the event of any such increase in the Conversion Rate) or increased (in the
event of any such reduction in the Conversion Rate).
"Board of Directors" shall mean the Board of Directors of the Corporation.
"Common Stock" means the Common Stock of the Corporation, par value $.01
per share.
"Common Stock Deemed Outstanding" shall mean:
(a) the number of shares of Common Stock actually outstanding at such
time, plus
(b) the number of shares of Common Stock issuable upon the exercise,
exchange or conversion of all outstanding securities exercisable or exchangeable
for, or convertible into, shares of Common Stock for which, as of the most
recent Appraisal Date, the value of the Common Stock into which such securities
are exercisable or exchangeable exceeds the exercise price or conversion price
therefor.
"Excluded Affiliate Transactions" shall mean:
11
(a) the CFN Technology Services Agreement between iXL and the Corporation;
(b) the Tax Allocation Agreement, among iXL and its subsidiaries
(including the Corporation and its subsidiaries);
(c) travel expense advances made by the Corporation to its officers,
directors, employees, consultants or stockholders in the ordinary course of
business, professional fees incurred in the ordinary course of business, and all
transactions in the ordinary course of business with customers of the
Corporation who constitute Affiliates.
"Excluded Shares" shall have the meaning ascribed thereto in the Investors
Agreement.
"Fair Market Value" shall mean the value of one share of Common Stock as
determined pursuant to Section 5(g) hereof.
"iXL" shall mean iXL Enterprises, Inc.
"Investors Agreement" shall mean the Investors Agreement, dated as of __,
1999, among the Corporation, iXL and the Investors named therein.
"Liquidation Event" shall mean any liquidation, dissolution, or winding up
of the Corporation, whether voluntary or involuntary.
"Liquidation Value" of any share of Series B Preferred Stock shall be
$3.0882, as adjusted from time to time by Section 3(d) hereof.
"Person" means an individual, a partnership, a corporation, a limited
liability company, a trust, a joint venture, an unincorporated organization or
any department or agency thereof.
"Qualified Public Offering" shall have the meaning assigned thereto in the
Stock holders' Agreement.
"Series A Preferred Stock" means the Series A Convertible Preferred Stock
of the Corporation, par value $.01 per share.
"Stockholders' Agreement" means the Amended and Restated Stockholders'
Agreement, dated as of the date hereof, among the Corporation and the
Stockholders
12
named therein, as the same may be amended from time to time in accordance with
the provisions thereof.
[the remainder of the page left intentionally blank]
13
IN WITNESS WHEREOF, this Certificate has been duly executed and
acknowledged by the ____________________________________ of the Corporation this
__ day of _________ 1999.
CONSUMER FINANCIAL NETWORK, INC.
By:
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