EXHIBIT 10.17
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COAXICOM, INC.
8% SERIES C CONVERTIBLE REDEEMABLE
PREFERRED STOCK
SECURITIES PURCHASE AGREEMENT
Dated as of April 23, 1999
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SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, dated as of April 23, 1999 (this
"Agreement"), among Coaxicom, Inc., a Delaware corporation (the "Company"),
Xxxxx Communications Fund, L.P. ("Xxxxx") and the holders of Series A Preferred
Stock of the Company and Series B Preferred Stock of the Company listed on
Schedule A to this Agreement (the "Holders"; the Holders and Xxxxx being
collectively referred to herein as, the "Purchasers").
WITNESSETH:
WHEREAS, the Company desires to issue to the Purchasers, and the Purchasers
desire to purchase from the Company, the Preferred Shares (as such term is
defined below) as set forth below; and
WHEREAS, certain terms used in this Agreement are defined in Section 9.1
hereof;
NOW, THEREFORE, in consideration of the promises and mutual covenants and
agreements hereinafter contained, the parties hereto hereby agree as follows:
1. Sale and Purchase of Securities.
1.1. Sale and Purchase of Initial Preferred Shares.
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(a) Subject to the terms and conditions of this Agreement, on the date
hereof (sometimes referred to herein as, the "Closing Date"), the Company is
issuing, selling and delivering to Xxxxx, and Xxxxx is purchasing from the
Company, for the Xxxxx Purchase Price (as defined in Section 2.1(a) hereof)
4,478,481 shares of 8% Series C Convertible Redeemable Preferred Stock of the
Company (the "Xxxxx Preferred Shares").
(b) Subject to the terms and conditions of this Agreement, on the date
hereof, the Company is issuing, selling and delivering to the Holders in the
denominations set forth on Schedule A, and the Holders are purchasing from the
Company, for the Holders' Purchase Price (as defined in Section 2.1(b) hereof)
1,791,394 shares of 8% Series C Convertible Redeemable Preferred Stock of the
Company (the "Holders' Preferred Shares"; the Holders' Preferred Shares and the
Xxxxx Preferred Shares are collectively referred to herein as, the "Initial
Preferred Shares"). The Initial Preferred Shares shall have the rights,
preferences and designations set forth in the Amended and Restated Certificate
of Incorporation of the Company in the form attached hereto as Exhibit A (the
"Amended and Restated Certificate of Incorporation").
1.2. Sale and Purchase of Additional Preferred Shares. Subject to the
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terms and conditions of this Agreement, the Purchasers shall have the option to
purchase an aggregate of 5,300,892 shares of 8% Series D Convertible Redeemable
Preferred Stock of the Company
(the "Series D Preferred Shares" and together with the Initial Preferred Shares,
the "Preferred Shares"), on a pro-rata basis based on their ownership of the
Initial Preferred Shares, at any time after the Closing Date. The option to
purchase the Series D Preferred Shares shall be exercisable independently by
Xxxxx and each of the Holders in the denominations set forth on Schedule B, and
Xxxxx and each of the Holders, in each such case, shall be entitled to exercise
their respective portion of such option in whole but not in part. The Series D
Preferred Shares shall have the rights, preferences and designations set forth
in the Amended and Restated Certificate of Incorporation. The initial conversion
price applicable to the conversion of the Series D Preferred Shares into Common
Stock of the Company shall be set forth in the Amended and Restated Certificate
of Incorporation, except that the initial conversion price shall be subject to
adjustment for anti-dilutive events occurring prior to the purchase of the
Series D Preferred Shares, in accordance with the anti-dilution provisions
contained in paragraph 5 of Section (E) of the Amended and Restated Certificate
of Incorporation which shall apply as if the Series D Preferred Shares were
outstanding as of the date of such anti-dilutive events. After December 31,
1999, the Company may send a written notice to the Purchasers requesting the
Purchasers to exercise their option to purchase the Series D Preferred Shares
provided for in this Section 1.2. If no such notice is sent by the Company by
February 15, 2000, the option provided for in this Section 1.2 shall
automatically expire. If such notice is sent by the Company, the Purchasers
shall have thirty-five (35) days from the date of such notice to notify the
Company of its intention to exercise the option and forty-five (45) days from
the date of such notice to consummate its purchase of the Series D Preferred
Shares. If the Purchasers do not notify the Company of its election to exercise
the option within such thirty-five (35) day period and purchase the Series D
Preferred Shares within such forty-five (45) day period, the option provided for
in this Section 1.2 shall expire. Notwithstanding anything contained in this
Section 1.2 to the contrary, the option shall not be deemed to expire until such
time as the Company has delivered to the Purchasers the certificate and, if
applicable, the notice of adjustment to the conversion price referred to in
paragraph 5.14.3 of Section (D) of the Amended and Restated Certificate of
Incorporation with respect to the Performance Benchmark (as defined therein),
and thirty (30) days have elapsed from receipt of such certificate and, if
applicable, the notice of adjustment to the conversion price. The Purchasers
shall have the right to transfer all or a portion of their option to purchase
Series D Preferred Shares to one or more of their respective Affiliates.
2. Purchase Price.
2.1. Amount of Purchase Price.
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(a) The purchase price for the Xxxxx Preferred Shares being purchased
pursuant to Section 1.1(a) shall be an aggregate amount equal to Twenty Million
Dollars ($20,000,000) (the "Xxxxx Purchase Price"). The Xxxxx Purchase Price
shall be payable as provided in Section 2.2(a) hereof.
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(b) The purchase price for the Holders' Preferred Shares being
purchased pursuant to Section 1.1(b) shall be an aggregate amount equal to Eight
Million Dollars ($8,000,000) (the "Holders' Purchase Price"; the Holders'
Purchase Price and the Xxxxx Purchase Price are collectively referred to herein
as, the "Purchase Price"). The portion of the Holders' Purchase Price payable
by each of the Holders shall be in the amount specified in Schedule A and is
being paid as provided in Section 2.2(b) hereof.
2.2. Payment of the Purchase Price.
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(a) Xxxxx is paying the Xxxxx Purchase Price by wire transfer of
immediately available funds or by such other method as may be reasonably
acceptable to the Company and Xxxxx, to the account of the Company as shall have
been designated in advance to Xxxxx by the Company.
(b) At the Closing, the Holders are paying the Holders' Purchase
Price as follows: (i) Four Million Dollars ($4,000,000) plus interest accrued
thereon through the Closing Date through the conversion of a Four Million Dollar
($4,000,000) bridge loan evidenced by promissory notes dated February 26, 1999
(the "Notes") from the Holders to the Company, and (ii) the remainder of the
Holders' Purchase Price by wire transfer of clearing house funds or by such
other method as may be reasonably acceptable to the Company and the Holders, to
the account of the Company as shall have been designated in advance to the
Holders by the Company. The issuance of the Holders' Preferred Shares shall be
in complete satisfaction of the Company's obligations under the Notes.
2.3. Purchase Price for Additional Preferred Shares. If the
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Purchasers exercise their respective options to purchase the Series D Preferred
Shares provided for in Section 1.2, the purchase price for such Series D
Preferred Shares shall be $5.28213 per Series D Preferred Share or an aggregate
of Twenty Eight Million Dollars ($28,000,000) (the "Series D Purchase Price").
The Series D Purchase Price shall be paid at a closing as described in Section
3.2 hereof by wire transfer of clearing house funds or by such other method as
may be reasonably acceptable to the Company and the Purchasers, to the account
of the Company as shall have been designated in advance to the Purchasers by the
Company.
3. Closing.
3.1. Closing Date. The closing of this Agreement (the "Closing") is
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taking place on April 23, 1999 at the offices of Xxxxxxx Berlin Shereff
Xxxxxxxx, LLP in New York, New York, or at such other time, date or place as the
parties hereto may mutually agree. The date on which the Closing is held is
referred to in this Agreement as the "Closing Date." At the Closing, the parties
shall execute and deliver or cause to be delivered the documents referred to in
Section 8 hereof.
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3.2. Closing Date for Additional Preferred Shares. The closing for
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the purchase of the Series D Preferred Shares (the "Series D Preferred Shares
Closing Date") shall be at a mutually acceptable time and place. At the Series
D Preferred Shares Closing, the Company shall execute and deliver or cause to be
delivered such documents referred to in Section 8.1(f) and (i) hereof, dated as
of the Series D Preferred Shares Closing Date, as are requested by the
Purchasers, and stock certificates representing the Series D Preferred Shares
being purchased at such closing against delivery of the Series D Purchase Price
in respect of such shares paid in accordance with Section 2.3 hereof, provided,
however, the inability of counsel to the Company to render an unqualified
opinion on matters requested by the Purchasers shall not give rise to any
recourse on the part of the Purchasers other than to decline to exercise the
option specified in Section 1.2.
4. Representations and Warranties of the Company.
The Company hereby represents and warrants to the Purchasers that:
4.1. Organization and Good Standing, Capitalization.
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(a) The Company is duly organized, validly existing and in good
standing under the laws of the State of Delaware and has full corporate power
and authority to own, lease and operate its properties and assets and to carry
on its business as now conducted. The Company is duly qualified or authorized
to do business as a foreign corporation and, except as specifically stated
therein, is in good standing under the laws of each jurisdiction specified on
Schedule 4.1(a), which includes each jurisdiction in which the conduct of its
business or the ownership of its properties or assets requires such
qualification or authorization except where the failure to so qualify would not
individually, or in the aggregate, result in a Material Adverse Effect.
(b) The authorized and issued capital stock of the Company
immediately prior to and immediately after the Closing is as set forth on
Schedule 4.1(b). Except as disclosed on Schedule 4.1(b), (i) there is no option,
warrant, call, right, commitment or other agreement of any character to which
the Company is a party requiring, (ii) there are no securities of the Company
outstanding which upon conversion or exchange would require, and (iii) there are
no stock appreciation rights, or other similar rights based on securities of the
Company, which would require the issuance, sale or transfer of any additional
shares of capital stock or other equity securities of the Company or other
securities convertible into, exchangeable for or evidencing the right to
subscribe for or purchase shares of capital stock or other equity securities of
the Company. Except as disclosed on Schedule 4.1(b) and other than this
Agreement, the Company is not a party to, nor is it aware of, any voting trust
or other voting agreement or with respect to any of the securities of the
Company or to any agreement relating to the issuance, sale, redemption, transfer
or other disposition of the capital stock of the Company. Except as disclosed on
Schedule 4.1(b) and other than this Agreement, there are no securities of the
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Company that are entitled to registration rights and the Company is not a party
to, nor is it aware of, any registration rights agreement or other agreement
with respect to the registration of any of the securities of the Company.
4.2. Authorization of Agreement; Enforceability. The Company has all
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requisite corporate power and authority to execute and deliver this Agreement
and each other agreement, document, instrument and certificate to be executed by
the Company in connection with the consummation of the transactions contemplated
by this Agreement (the "Transaction Documents") and to perform fully its
obligations hereunder and thereunder. The execution, delivery and performance
by the Company of this Agreement and the Transaction Documents have been duly
authorized by all necessary corporate action on the part of the Company and its
stockholders. This Agreement and each of the Transaction Documents have been
duly and validly executed and delivered by the Company and (assuming the due
authorization, execution and delivery thereof by the Purchasers), this Agreement
and each of the Transaction Documents constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity).
4.3. Subsidiaries, Joint Ventures, Partnerships, Etc. Except as set
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forth on Schedule 4.3, the Company has no subsidiaries. The securities of each
subsidiary owned, directly or indirectly, by the Company are held free and clear
of all Liens, and all such securities have been duly authorized and validly
issued and are fully paid and non-assessable. Except as set forth on Schedule
4.3, the Company is not a participant in any joint venture, partnership or
similar arrangement.
4.4. Consents of Third Parties. Except as set forth on Schedule 4.4,
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none of the execution and delivery by the Company of this Agreement and the
Transaction Documents, the consummation of the transactions contemplated hereby
or thereby, or compliance by the Company with any of the provisions hereof or
thereof will (a) conflict with, or result in the breach of, any provision of the
certificate of incorporation or by-laws of the Company or any of its
subsidiaries, (b) conflict with, violate, result in the breach or termination
of, or constitute a default or give rise to any right of termination or
acceleration or right to increase the obligations or otherwise modify the terms
thereof under any Contract, Permit or Order to which the Company or its
subsidiaries is a party or by which the Company or its subsidiaries or any of
their properties or assets is bound, (c) constitute a violation of any Law
applicable to the Company or its subsidiaries; or (d) result in the creation of
any Lien upon the properties or assets of the Company or its subsidiaries.
Other than those which have been obtained or made, no consent, waiver, approval,
Order, Permit or authorization of, or declaration or filing with, or
notification to, any Person or Governmental Body is required on the part of the
Company or its subsidiaries in connection with the execution and delivery of
this Agreement or the Transaction Documents,
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or the compliance by the Company with any of the provisions hereof or thereof.
4.5. Authorization of Preferred Shares and Common Stock.
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(a) The issuance, sale, and delivery of the Preferred Shares to be
purchased pursuant to this Agreement have been duly authorized by all requisite
action of the Company, and, when issued and delivered to the Purchasers in
accordance with this Agreement, such Preferred Shares will be validly issued and
outstanding, fully paid, and non-assessable, with no personal liability
attaching to the ownership thereof, and, except as specifically provided for
herein with respect to the Purchasers, not subject to preemptive or any other
similar rights of the stockholders of the Company or others.
(b) The issuance, sale, and delivery of the Common Stock to be
delivered upon conversion of the Preferred Shares in accordance with the terms
of the Preferred Shares have been duly authorized by all requisite action of the
Company, and, when issued, sold, and delivered in accordance with this
Agreement, the Common Stock will be validly issued and outstanding, fully paid,
and non-assessable, with no personal liability attaching to the ownership
thereof, and, except as specifically provided for herein with respect to the
Purchasers, and those which have been waived as set forth on Schedule 4.5, not
subject to preemptive or any other similar rights of the stockholders of the
Company or others.
4.6. Financial Statements. Attached hereto as Schedule 4.6 are (a)
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copies of (i) the unaudited consolidated balance sheet of the Company and its
subsidiaries as of December 31, 1998, the unaudited consolidated statement of
income and retained earnings of the Company and its subsidiaries for the fiscal
year ended December 31, 1998, and the unaudited consolidated statement of cash
flows of the Company and its subsidiaries for the fiscal year ended December 31,
1998 and (ii) the unaudited consolidated balance sheet of the Company and its
subsidiaries as of December 31, 1997 and the unaudited consolidated statement of
income and retained earnings and the unaudited consolidated statement of cash
flows of the Company and its subsidiaries, each for the fiscal year ended
December 31, 1997 (the "Unaudited Year End Financial Statements") and (b) the
unaudited consolidated balance sheet of the Company and its subsidiaries as of
March 31, 1999, the unaudited consolidated statement of income and retained
earnings of the Company and its subsidiaries for the three month period ended
March 31, 1999, and the unaudited consolidated statement of cash flows of the
Company and its subsidiaries for the three-month period ended March 31, 1999
(the "Unaudited Quarterly Financial Statements," and together with the Unaudited
Year End Financial Statements, the "Financial Statements"). Each of the
Financial Statements was prepared in good faith, is complete and correct in all
material respects, has been prepared in accordance with GAAP, except that they
omit footnotes and other presentation items and, in the case of the Unaudited
Quarterly Financial Statements are subject to normal year end adjustments, and
in conformity with the practices consistently applied by the Company and its
subsidiaries and presents fairly the financial position, results of operations
and cash flows of the Company and its subsidiaries as of the dates and for the
periods
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indicated.
4.7. No Undisclosed Liabilities. Except as set forth on Schedule 4.7,
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the Company and its subsidiaries have no liabilities (whether accrued, absolute,
contingent or otherwise, and whether due or to become due or asserted or
unasserted), except (a) obligations under Contracts described in Schedule 4.13
or under Contracts that are not required to be disclosed thereon as a result of
dollar thresholds therein; (b) liabilities provided for in the Financial
Statements (other than liabilities which, in accordance with GAAP, need not be
disclosed); (c) liabilities (other than accounts payable) incurred since the
Unaudited Quarterly Financial Statements, in the ordinary course of business
consistent with past practice; and (d) accounts payable in excess of those shown
on the Financial Statements, incurred in the ordinary course of business
consistent with past practice, the sum of which (other than in respect of
accrued compensation and related benefits) is, in the aggregate, not greater
than $250,000.
4.8. Absence of Certain Developments.
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(a) Except as set forth on Schedule 4.8(a), the general nature of the
business of the Company and its subsidiaries is described in the business plan
of the Company (the "Business Plan"), which previously has been delivered to the
Purchasers. The financial projections contained in the Business Plan are based
on and reflect facts that the Company believes still exist and assumptions that
the Company believes are still reasonable, as of the date of this Agreement.
(b) Except as set forth on Schedule 4.8(b) and since the date of the
Unaudited Year End Financial Statements:
(i) there has not been any Material Adverse Change nor has any
event occurred which could reasonably be expected to result in any Material
Adverse Change;
(ii) there has not been any declaration, setting a record date,
setting aside or authorizing the payment of, any dividend or other distribution
in respect of any shares of capital stock of the Company or any repurchase,
redemption or other acquisition by the Company, of any of the outstanding shares
of capital stock or other securities of, or other ownership interest in, the
Company;
(iii) there has not been any transfer, issue, sale or other
disposition by the Company of any shares of capital stock or other securities of
the Company or any grant of options, warrants, calls or other rights to purchase
or otherwise acquire shares of such capital stock or such other securities;
(iv) except as accrued on the Unaudited Quarterly Financial
Statements, the Company and its subsidiaries have not awarded or paid any
bonuses to
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Employees or Representatives of the Company and its subsidiaries nor has the
Company and its subsidiaries entered into any employment, deferred compensation,
severance or similar agreements (nor amended any such agreement) or agreed to
increase the compensation payable or to become payable by the Company and its
subsidiaries to any of their Employees or Representatives or agreed to increase
the coverage or benefits available under any severance pay, deferred
compensation, bonus or other incentive compensation, pension or other employee
benefit plan, payment or arrangement made to, for or with such Employees or
Representatives, other than in the ordinary course of business consistent with
past practice and with the operating expense budget of the Company and its
subsidiaries reflected in the projections contained in the Business Plan, and
other than as may have been required by law or insurers;
(v) the Company and its subsidiaries have not made any loans,
advances (other than compensation advances to employees that in the aggregate do
not exceed $30,000) or capital contributions to, or investments in, any Person
or paid any fees or expenses to any Affiliate of the Company and its
subsidiaries (other than payments between the Company and a subsidiary);
(vi) the Company and its subsidiaries have not transferred or
granted any rights under any Contracts, leases, licenses, agreements or
intangible property (as set forth in Section 4.12 hereof) used by the Company or
its subsidiaries in their business which could result in a Material Adverse
Change;
(vii) there has not been any damage, destruction or loss, whether or
not covered by insurance, with respect to the property or assets of the Company
and its subsidiaries having a replacement cost of more than $100,000 for any
single loss or $100,000 for all such losses;
(viii) the Company and its subsidiaries have not mortgaged, pledged or
subjected to any Lien any of its assets, or acquired any assets or sold,
assigned, transferred, conveyed, leased or otherwise disposed of any assets of
the Company or its subsidiaries, except for assets acquired or sold, assigned,
transferred, conveyed, leased or otherwise disposed of in the ordinary course of
business consistent with past practice;
(ix) the Company and its subsidiaries have not canceled or
compromised any debt or claim or amended, canceled, terminated, relinquished,
waived or released any Contract or right except in the ordinary course of
business consistent with past practice and which would not have a Material
Adverse Effect;
(x) the Company and its subsidiaries have not entered into any
contract or made any binding commitment to make any capital expenditures or
capital additions or betterments in any such case obligating the Company or its
subsidiaries to pay an amount in any twelve-month period in excess of $25,000
individually or $100,000 in the aggregate;
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(xi) there has not been any default under any material
agreement or the occurrence of any event, which with notice or lapse of time or
both would result in a default under any such agreement;
(xii) the Company and its subsidiaries have not incurred any
debts, obligations or liabilities, whether due or to become due, except current
liabilities incurred in the usual and ordinary course of business which did not
result in a Material Adverse Change;
(xiii) the Company and its subsidiaries have not entered into any
material transaction other than in the usual and ordinary course of business
except for this Agreement;
(xiv) the Company and its subsidiaries have not encountered any
labor difficulties or labor union organizing activities which could reasonably
be expected to result in a Material Adverse Effect;
(xv) the Company and its subsidiaries have not made any change
in the accounting principles, methods or practices followed by it or
depreciation or amortization policies or rates theretofore adopted;
(xvi) the Company and its subsidiaries have not disclosed to any
Person any material trade secrets except for disclosures made to Persons subject
to valid and enforceable confidentiality agreements; or
(xvii) to the Company's knowledge, suffered or experienced any
change in the relationship or course of dealings between the Company or its
subsidiaries and any of their suppliers or customers which supply goods or
services to the Company and its subsidiaries or purchase goods or services from
the Company and its subsidiaries, which resulted or is likely to result in a
Material Adverse Effect.
4.9 Taxes. Except as disclosed on Schedule 4.9, the Company and its
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subsidiaries have filed all Tax returns (including statements of estimated Taxes
owed) required to be filed within the applicable periods (subject to extensions)
for such filings and have paid all Taxes required to be paid, and have
established adequate reserves (net of estimated Tax payments already made) for
the payment of all Taxes payable in respect of the period subsequent to the last
periods covered by such returns. All information provided in such returns is
complete and accurate in all material respects. No deficiencies for any Tax are
currently assessed against the Company and/or its subsidiaries, and, except as
set forth on Schedule 4.9, no Tax returns of the Company and/or its subsidiaries
have ever been audited, and, to the knowledge of the Company, there is no such
audit pending or contemplated. There is no Tax lien, whether imposed by any
federal, state or local taxing authority, outstanding against the assets,
properties or business of the Company or any of its subsidiaries. Except as
disclosed on Schedule 4.9, the
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Company and its subsidiaries have withheld from its employees and timely paid to
the appropriate taxing authority proper and accurate amounts in all material
respects through all periods in compliance in all material respects with all
employee Tax withholding provisions of all applicable Laws.
4.10. Real Property.
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(a) The Company and its subsidiaries do not own any real property.
(b) Schedule 4.10(b) sets forth a complete list of all real
property and interests in real property leased by the Company and its
subsidiaries (each a "Real Property Lease", and collectively, the "Real Property
Leases") as lessee or lessor. To the knowledge of the Company, the Company and
its subsidiaries have good and marketable title to the leasehold estates in all
Real Property Leases in each case free and clear of all Liens. The Company and
its subsidiaries have no reason to believe that such title would not be
insurable subject to customary exceptions.
(c) To the knowledge of the Company, each of the Real Property
Leases is valid and enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity), and there is no
default under any Real Property Lease by the Company or its subsidiaries or, to
the knowledge of the Company, by any other party thereto, and no event has
occurred that with the lapse of time or the giving of notice or both would
constitute a default thereunder. The Company has delivered or otherwise made
available to the Purchasers true, correct and complete copies of the Real
Property Leases, together with all amendments, modifications, supplements or
side letters affecting the obligations of any party thereunder.
(d) No previous or current party to any Real Property Lease has
given notice of or made a claim with respect to any breach or default
thereunder. To the knowledge of the Company, with respect to those Real Property
Leases that were assigned or subleased to the Company or its subsidiaries by a
third party, all necessary consents to such assignments or subleases have been
obtained.
4.11. Tangible Personal Property. Except for property sold or
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otherwise disposed of in the ordinary course of business since December 31, 1998
and except as set forth on Schedule 4.11, the Company and its subsidiaries own
free and clear of any Liens, all of the personal property reflected as owned by
the Company and its subsidiaries in the balance sheet contained in the Unaudited
Quarterly Financial Statements, and all other material items of personal
property acquired by the Company through the date hereof All material items of
such personal property are in good operating condition, normal wear and tear
excepted.
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4.12. Intangible Property. Except where failure could not reasonably
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be foreseen to have a Material Adverse Effect, the Company and its subsidiaries
own or possess adequate licenses or other rights to use all patents, patent
applications, trademarks, trademark applications, service marks, service xxxx
applications, trade names, copyrights, manufacturing processes, formulae, trade
secrets and know-how (collectively, "Intellectual Property") necessary or
desirable to the conduct of its business, and no claim is pending or, to the
knowledge of the Company, threatened to the effect that the operations of the
Company or its subsidiaries infringe upon or conflict with the asserted rights
of any other Person under any Intellectual Property, and the Company does not
know of any basis for any such claim (whether or not pending or threatened). No
claim is pending or, to the knowledge of the Company, threatened to the effect
that any such Intellectual Property owned or licensed by the Company or its
subsidiaries, or which the Company or its subsidiaries otherwise has the right
to use, is invalid or unenforceable by the Company or its subsidiaries, and the
Company does not know of any basis for any such claim (whether or not pending or
threatened). No Employee of the Company or its subsidiaries has any rights to
own or license the Intellectual Property owned or licensed by the Company or its
subsidiaries in connection with the operation of its business. No Employee of
the Company or its subsidiaries has infringed on the Intellectual Property
rights of another entity. The Company and its subsidiaries have not granted or
assigned to any other person or entity any right to assemble or sell the
products or proposed products or to provide the services or proposed services of
the Company and its subsidiaries.
4.13. Material Contracts.
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(a) Except as set forth on Schedule 4.13(a), neither the Company,
its subsidiaries nor any of their properties or assets is a party to or bound by
any (i) Contract not made in the ordinary course of business, or involving a
commitment or payment by the Company or its subsidiaries in excess of $100,000
in any twelve-month period (whether or not in the ordinary course) or, in the
Company's belief, otherwise material to the business of the Company or its
subsidiaries; (ii) Contract among stockholders or granting a right of first
refusal or for a partnership or a joint venture or for the acquisition, sale or
lease of any assets or capital stock of the Company, its subsidiaries or any
other Person or involving a sharing of profits; (iii) mortgage, pledge,
conditional sales contract, security agreement, factoring agreement or other
similar Contract with respect to any real or tangible personal property of the
Company or its subsidiaries; (iv) loan agreement, credit agreement, promissory
note, guarantee, subordination agreement, letter of credit or any other similar
type of Contract; (v) Contract with any Governmental Body other than in the
ordinary course of business; (vi) Contract with respect to the discharge,
storage or removal of hazardous materials; or (vii) binding commitment or
agreement to enter into any of the foregoing. The Company has delivered or
otherwise made available to the Purchasers true, correct and complete copies of
the Contracts listed on Schedule 4.13(a) (except as noted thereon), together
with all amendments, modifications, supplements or side letters to such
Contracts.
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(b) (i) Each of the Contracts listed on Schedule 4.13(a) is
valid and enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity), and there is no default under any Contract
listed on Schedule 4.13(a) by the Company, its subsidiaries or, to the knowledge
of the Company, by any other party thereto, and no event has occurred that with
the lapse of time or the giving of notice or both would constitute a default
thereunder that could have a Material Adverse Effect.
(ii) No previous or current party to any Contract has given
written notice to the Company or any of its subsidiaries of or made a claim with
respect to any breach or default thereunder and the Company has no knowledge of
any notice of or claim with respect to any such breach or default.
(c) With respect to the Contracts listed on Schedule 4.13(a) that
were assigned to the Company or its subsidiaries by a third party, all necessary
consents to such assignment have been obtained.
4.14. Employee Benefit Plans, ERISA.
-----------------------------
(a) Schedule 4.14. sets forth an accurate and complete list of
-------------
all employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), and all other
employee benefit plans, arrangements or policies, which are currently maintained
and/or sponsored by the Company and its subsidiaries, or to which the Company
and its subsidiaries currently contribute, or have an obligation to contribute
(collectively the "Plans").
(b) The Company has made available to the Purchasers, for each
Plan, a true and complete copy of (i) the plan document currently in effect, and
any amendments thereto, (ii) any trust agreement, insurance contract or other
agreement or arrangement for the funding of benefits under the Plan, (iii) a
copy of the most recent summary plan description ("SPD"), and all summaries of
material modifications to such SPD, (iv) if the Plan is intended to qualify
under Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), the most recent determination letter issued by the Internal Revenue
Service (the "IRS") for the Plan, and the request filed with the IRS for such
determination, (v) the most recent annual report (Form 5500) for the Plan, if
such form is required by law to be filed for the Plan and (vi) the most recently
issued financial statement, if any, for the Plan.
(c) All of the Plans are in substantial compliance with all
applicable provisions of ERISA and the Code, and the regulations issued
thereunder, as well as with all other applicable laws, and have been
administered, operated and managed in substantial
-12-
accordance with the governing documents. All Plans that are intended to qualify
(the "Qualified Plans") under Section 401(a) of the Code are so qualified and
have been determined by the IRS to be so qualified (or applications for
determination letters have been timely submitted to the IRS). All reports and
other documents required to be filed with the IRS, the Department of Labor or
any other Governmental Body or distributed to plan participants or beneficiaries
(including, but not limited to, annual reports, summary annual reports, or tax
returns) have been timely filed or distributed. Neither any Plan, the Company or
any of its subsidiaries has engaged in any transaction prohibited under the
provisions of Section 4975 of the Code or Section 406 of ERISA. No Plan is
subject to Title IV of ERISA or the funding requirements of Section 412 of the
Code or Section 302 of ERISA. For the six-year period ending on the date of this
Agreement, the Company and its subsidiaries have not contributed to, or been
obligated to contribute to, any multiemployer plan (within the meaning of
Section 3(37) of ERISA), a multiple employer plan (as described in Section
413(c) of the Code), any multiple employer welfare arrangement (within the
meaning of Section 3(40) of ERISA) or any plan which is subject to Title IV of
ERISA.
(d) The Company and its subsidiaries are not, or at any time during
the six-year period ending on the date of this Agreement have been, aggregated,
and treated as a single employer, with any other entity under Section 414(b),
(c), (m) or (o) of the Code.
(e) All contributions to each Plan, including both employee and
employer contributions, which are required to have been made, whether by virtue
of the terms of the particular Plan or by operation of law, have been made by
the due date thereof (including all applicable extensions), and all
contributions to each Plan which are not yet due but which relate to periods
which began prior to the date hereof have been paid or have been appropriately
reflected on the financial statements.
(f) No Governmental Body has initiated any examination or audit or,
to the Company's knowledge, any investigation of any Plan which has not been
completed.
(g) There is no litigation, arbitration, disputed claim, settlement
or adjudication proceeding pending or, to the Company's knowledge, threatened
with respect to any Plan.
(h) Except as disclosed in Schedule 4.14, the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
will not (i) cause any payment (whether of severance pay or otherwise) not
otherwise due from becoming due from any of the Plans, or from the Company and
its subsidiaries with respect to any of the Plans, to any individual, or (ii)
cause the vesting, acceleration of payment, or increase in the amount of any
benefit payable under any of the Plans to any individual.
-13-
(i) Except as disclosed in Schedule 4.14, any hospital, medical,
dental, vision, sickness or accident, survivor or death benefit, disability or
similar benefit coverage provided under any Plan is provided solely through
insurance policies. Except as disclosed in Schedule 4.14, no Plan provides for
hospital, medical, death, survivor or any other welfare benefit for retired or
former employees, officers or directors, except as required by the Section 4980B
of the Code or Sections 601 to 608 of ERISA.
(j) Except as disclosed in Schedule 4.14, the Company and its
subsidiaries are not under any obligation (express or implied) to modify any
Plan or to establish any additional employee benefit plan.
(k) The Financial Statements of the Company and its subsidiaries
reflect the approximate total pension, medical and other benefit expense for all
Plans, and no material funding changes or irregularities are reflected thereon
which would cause such financial statements to be not representative of prior
periods.
4.15. Employees.
---------
(a) To the knowledge of the Company, no key executive Employee and
no group of Employees or independent contractors of the Company or any of its
subsidiaries has any plans to terminate his, her or its employment or
relationship as an Employee or independent contractor with the Company or any of
its subsidiaries.
(b) Schedule 4.15 sets forth a true and complete list of the name
and amount of annual cash compensation of each Employee of the Company and its
subsidiaries whose current annual cash compensation is $75,000 or more, together
with such person's job title and amounts and forms of compensation and fringe
and severance benefits.
(c) To the knowledge of the Company, no key executive Employee or
any other Employee of the Company and its subsidiaries is a party to or is
otherwise bound by any agreement or arrangement (including, without limitation,
confidentiality agreements, noncompetition agreements, licenses, covenants, or
commitments of any nature), or subject to any judgment, decree, or order of any
court or administrative agency, (i) that would conflict with such Employee's
obligations to the Company and its subsidiaries or (ii) that would conflict with
the business of the Company and its subsidiaries as now conducted or proposed to
be conducted.
4.16. Labor Laws. The Company and its subsidiaries are in
----------
compliance in all material respects with all applicable Laws relating to labor,
employment, fair employment practices, terms and conditions of employment, and
wages and hours.
-14-
4.17. Litigation. There are no Legal Proceedings pending or, to the
----------
knowledge of the Company, threatened that question the validity of this
Agreement or the Transaction Documents or any action taken or to be taken by the
Company and its subsidiaries in connection with the consummation of the
transactions contemplated hereby or thereby. There are no Legal Proceedings
pending or, to the knowledge of the Company, threatened against or involving the
Company and its subsidiaries or any of their properties or assets, at law or in
equity, and, to the knowledge of the Company, there exists no reasonable basis
therefor. There is no outstanding or, to the knowledge of the Company,
threatened Order of any Governmental Body against the Company and its
subsidiaries or any of their properties or assets.
4.18. Compliance with Laws; Permits.
-----------------------------
(a) The Company and its subsidiaries are and, to the knowledge of
the Company, at all times have been in compliance with all material Laws and
material Orders promulgated by any Governmental Body applicable to the Company
and its subsidiaries or to the conduct of the business or operations of the
Company and its subsidiaries or the use of their properties (including any
leased properties) and assets. The Company and its subsidiaries have not
received any notices of violation or alleged violation of any such Law or Order
by any Governmental Body.
(b) Except as set forth on Schedule 4.18(b), and to the knowledge of
the Company, the Company and its subsidiaries have all Permits necessary for the
conduct of its business where the failure to have such Permits could have a
Material Adverse Effect; such Permits have been validly issued, and the Company
and its subsidiaries have complied in all material respects with all conditions
of such Permits applicable to it; no default or violation, or event that with
the lapse of time or giving of notice or both would become a default or
violation, has occurred in the due observance of any such Permit; all such
Permits are in full force and effect without further consent or approval of any
Person; and the Company and its subsidiaries have not received any notice from
any source to the effect that there is lacking any such material Permit required
in connection with the current operations of the Company and its subsidiaries.
4.19. Investment Company Act. The Company and its subsidiaries are
----------------------
not, nor are they directly or indirectly controlled by or acting on behalf of,
any Person that is an investment company within the meaning of the Investment
Company Act of 1940, as amended.
4.20. Transactions with Affiliates. Except for expenses in the
----------------------------
ordinary course of business and except as set forth on Schedule 4.20, neither
the Company nor its subsidiaries has made any payment to, or received any
payment from, or made or received any investment in, or entered into any
transaction with, any Affiliate, including without limitation, the purchase,
sale or exchange of property or the rendering of any service, where the amount
involved is material to the business of the Company.
-15-
4.21. Disclosures; Survival. This Agreement, the Financial Statements,
---------------------
the schedules provided in connection with this Agreement and the Business Plan
do not contain any untrue statement of material fact and do not fail to state a
material fact necessary in order to make the statements contained herein and
therein not misleading. All representations, warranties, covenants and
agreements set forth in this Agreement or in any writing or certificate
delivered in connection with this Agreement shall survive for a period of
twenty-four (24) months following the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, except that the
representations and warranties set forth in Sections 4.1, 4.2, and 4.5 shall
survive in perpetuity and the representations and warranties set forth in
Sections 4.9 and 4.14 shall survive for the applicable period of the statute of
limitations. No representations and warranties of the Company in this Agreement
shall be affected by any examination made for or on behalf of the Purchasers,
the knowledge of the Purchasers, or the acceptance by the Purchasers of any
certificate or opinion.
4.22. Insurance. There is in full force and effect certain policies of
---------
insurance issued by insurers of recognized responsibility, including, without
limitation, directors and officers insurance, business interruption insurance
and key man insurance in the minimum amounts set forth on Schedule 4.22,
insuring the Company and its subsidiaries and their properties, business and
projects against such losses and risks, and in such amounts, as are customary in
the case of corporations of established reputation engaged in the same or
similar business and similarly situated. The Company has no reason to believe
that the Company or its subsidiaries will be unable to renew its existing
insurance coverage as and when the same shall expire upon terms at least as
favorable as those presently in effect, other than possible increases in
premiums that do not result from any act or omission of the Company or its
subsidiaries. Schedule 4.22 sets forth a list of each insurance policy
(specifying the insurer, the amount of coverage, the type of insurance, the
policy number, the expiration date, the annual premium (current and for each of
the last three years) and any pending claims thereunder) maintained by the
Company and its subsidiaries relating to their properties, assets, business or
personnel. Except as disclosed on Schedule 4.22 and to the knowledge of the
Company, neither the Company nor its subsidiaries are in default with respect to
any provision contained in any insurance policy, and the Company and its
subsidiaries have not failed to give any notice or present any presently
existing claims under any insurance policy in due and timely fashion.
4.23. Customers and Suppliers. Schedule 4.23 sets forth a list of the
-----------------------
ten (10) largest customers and all suppliers paid more than $25,000 per month of
the Company and its subsidiaries and the dollar amount of purchases or sales
which each such customer or supplier represents. There exists no actual or, to
the knowledge of the Company, threatened termination or cancellation of the
business conducted by the Company or its subsidiaries with any customer,
supplier or group of customers or group of suppliers set forth on Schedule 4.23.
-16-
4.24. Year 2000 Problem. The Company has developed and is in the
-----------------
process of implementing a plan which the Company believes in good faith is
sufficient to ensure that in all material respects all hardware, software,
firmware, systems, files, applications, interfaces, databases and other
computer-related materials ("Software") that the Company and its subsidiaries
own, possess and/or control is or will be designed to be used prior to, during,
and after the calendar year 2000 A.D., and will operate in all material respects
during each such time period, either on a stand-alone basis, or by interacting
or interoperating with third-party Software, without material error relating to
the processing, calculating, comparing, sequencing or other use of date data,
including: (i) any material error relating to or resulting from date data which
represents or references more than one century ("Century-Based Data"), (ii) any
abnormal ending or provision of materially invalid or incorrect results as a
result of any Century-Based Data; or (iii) any material error relating to
century recognition or calculations accommodating Century-Based Data, values or
formulae, and the implementation of such plan is expected in good faith to be
completed in a timely manner. The Company has performed all necessary due
diligence and is in the process of performing tests and implementing
modifications to all Software that the Company and its subsidiaries own, possess
and/or control to design an appropriate plan and to ensure the accuracy of this
representation and warranty. The cost of becoming Year 2000 compliant will not
exceed $200,000.
4.25. Financial Advisors. No agent broker, investment banker, finder,
------------------
financial advisor or other person is or will be entitled to any broker's or
finder's fee or any other commission or similar fee from the Company, directly
or indirectly, in connection with the transactions contemplated by this
Agreement or any Transaction Document.
4.26. Condition of Properties. All facilities, machinery, equipment,
-----------------------
fixtures, vehicles and other properties owned, leased or used by the Company and
its subsidiaries are in good operating condition and repair, are reasonably fit
and usable for the purposes for which they are being used, are adequate and
sufficient for the business of the Company and its subsidiaries and conform in
all material respects with all applicable Laws.
4.27. Illegal or Unauthorized Payments; Political Contributions.
---------------------------------------------------------
Neither the Company and its subsidiaries nor, to the Company's knowledge, any of
their respective officers, directors, Employees, agents or other Representatives
of the Company and its subsidiaries have, directly or indirectly, made or
authorized any payment, contribution or gift of money, property, or services,
whether or not in contravention of applicable law, (a) as a kickback or bribe to
any person or (b) to any political organization, or the holder of or any
aspirant to any elective or appointive public office except for personal
political contributions not in excess of $5,000 in any single instance and not
involving the direct or indirect use of funds of the Company and its
subsidiaries.
-17-
4.28. Pending Changes. To the knowledge of the Company, there is no
---------------
pending or imminent change in any Law which is likely to result in a Material
Adverse Effect. To the knowledge of the Company, there has been no discovery,
change or development in the development, design or marketing of any product or
service of the Company and its subsidiaries or of any product or service that is
or may be competitive with any such product or service which is likely to result
in a Material Adverse Effect.
4.29. Governmental Inquiries. To the knowledge of the Company, the
----------------------
Company has provided to the Representatives of the Purchasers each material
inspection report, questionnaire, inquiry, demand or request for information
received by the Company and its subsidiaries from (and the response of the
Company thereto), and each material statement, report or other document filed by
the Company and its subsidiaries with, the federal government or a federal
administrative agency (including but not limited to, the Securities and Exchange
Commission, Department of Justice, Internal Revenue Service, Department of
Labor, Occupational Safety and Health Administration, Federal Trade Commission,
National Labor Relations Board, Interstate Commerce Commission, Nuclear
Regulatory Commission, Federal Communications Commission), any state securities
administrator or any local or state taxing authority.
4.30. No Public Solicitation. Neither the Company nor any Person
----------------------
acting on its behalf has offered the Preferred Shares to any Person by means of
general or public solicitation or general or public advertising, such as by
newspaper or magazine advertisements, by broadcast media, or at any seminar or
meeting whose attendees were solicited by such means.
4.31. Access Lines. As of April 21, 1999, the Company had 52,513
------------
access lines in total resale service, none of which qualify for the Performance
Benchmark.
4.32. General Telecommunications Matters.
----------------------------------
(a) Neither the Company nor any of its subsidiaries has received any
notice of proceedings relating to the revocation, modification or non-renewal of
any authorizations necessary to provide telecommunications services currently
provided to customers.
(b) There are no proceedings or investigations pending or
threatened, to the Company's knowledge, before the Federal Communications
Commission ("FCC") or any of the various state regulatory agencies with primary
regulatory jurisdiction over telecommunications matters ("State Regulatory
Agencies") directed specifically at the Company or, in the case of matters of
general applicability to the telecommunications industry, in which the Company
is identified for possible disparate treatment or whose outcome may have a
disparate impact on the Company, in which any of the following matters are being
considered which are reasonably likely to have a material adverse effect on the
Company, nor has the Company or any of its subsidiaries received written notice
or inquiry from the FCC or any State Regulatory Agency,
-18-
indicating that any of such matters should be considered or may become the
object of consideration or investigation specifically regarding the Company
which are reasonably likely to have a material adverse effect on the Company or,
in the case of matters of general applicability to the telecommunications
industry, in which the Company is identified for possible disparate treatment or
whose outcome may have a disparate impact on the Company; (a) increases in
access charges, universal service contributions or the like; (b) traffic routing
restrictions or restrictions on use of facilities; (c) reduction or restriction
of rates charged to customers; (d) reduction of earnings; (e) refunds or other
forfeitures of amounts previously charged to customers; (f) use of NXX codes; or
(g) failure to meet any expense, infrastructure, service quality or other
commitments previously made to or imposed by the FCC or any State Regulatory
Agency.
(c) Neither the Company nor any of its subsidiaries has any
outstanding commitments made in the context of a matter or proceeding related
specifically to the Company or, in the case of matters of general applicability
to the telecommunications industry, in which the Company is identified for
possible disparate treatment or whose outcome may have a disparate impact on the
Company (and no such obligations have been imposed upon the Company and remain
outstanding), regarding; (a) increases in access charges, universal service
contributions or the like; (b) traffic routing restrictions or restrictions on
use of facilities; (c) reduction or restriction of rates charged to customers;
(d) reduction of earnings; (e) refunds or other forfeitures of amounts
previously charged to customers; (f) use of NXX codes; or (g) expenses,
infrastructure expenditures, service quality or other regulatory requirements,
to or by the FCC or any State Regulatory Agency, in each case which are
reasonably likely to have a material adverse effect on the Company.
(d) The Company has not transferred, sold any interest in or
otherwise taken action to reduce its control over any federal or state
regulatory licenses, certificates, approvals or other authorizations under which
it operates, and the transfer of such authorizations, subject to regulatory
approval, would not violate the terms of any agreement to which the Company is a
party or by which the Company is bound, or impinge the rights of any third
party.
(e) The Company has obtained Section 214 authorization from the FCC,
an application for which was filed with the FCC on August 18, 1996.
(f) The Company has an interstate tariff on file with the FCC,
effective as of January 31, 1998.
(g) No notice of termination has been provided by either Frontier
Communications of the West, Inc. or Community Networks, Inc. in connection with
that certain Wholesale Service Agreement between Frontier Communications of the
West, Inc. and Briar Joy Development Corp., d/b/a/ SCC Telecommunications, Inc.
(presently known as Community Networks, Inc.).
-19-
(h) The Company (i) does not own any international facilities or
provide services over leased international capacity and (ii) does not have any
affiliations with foreign carriers.
(i) As of the Closing Date, the Company does not have any
interlocking directorates within the meaning of 47 C.F.R. 62.2 and 47 C.F.R.
68.18(h)(2).
(j) The Company has retained for a period of eighteen (18) months
the following billing information about each toll telephone call: the name,
address, and telephone number of the caller, the telephone number of the party
called, and the date, time and length of the call. The Company maintains a
master index of records which identifies records, their location and the
Company's record destruction policies. The master index contains a certified
statement regarding any lost or destroyed documents prior to the expiration of
the eighteen (18) month period. The Company has included in its master index,
and in the future will include in its master index, any documents which are
relevant to a complaint proceeding, and the Company will include such documents
in its master index until the final disposition of the complaint proceeding.
(k) To the Company's knowledge, no complaint has been filed, and no
action or investigation is pending, against the Company or any of its
subsidiaries with the FCC's Enforcement Division of the Common Carrier Bureau as
of the Closing Date.
(l) The Company and Community Networks, Inc. have obtained
certifications to resell telephone service in New York.
(m) As of the Closing Date, all resold intrastate telecommunications
services have been provided by Community Networks, Inc.
(n) The Company has a New York P.S.C. Tariff No. 1 on file with the
New York Public Service Commission for the provision of communications services
in New York.
5. Representations and Warranties of the Purchasers.
Each Purchaser hereby represents and warrants to the Company, only as to
itself, that:
5.1. Capacity; Authorization. Such Purchaser has all legal capacity
-----------------------
to enter into this Agreement and to carry out its obligations hereunder.
Assuming due execution and delivery by the Company of this Agreement, this
Agreement will constitute a legal, valid and binding obligation of such
Purchaser, enforceable against such Purchaser in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and subject, as
to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in
-20-
equity).
5.2. Investment Purposes. (a) Such Purchaser is acquiring the
-------------------
Preferred Shares it has agreed to purchase for investment purposes only, for its
own account, and not as nominee or agent for any other Person, and not with a
view to, or for resale in connection with, any distribution thereof within the
meaning of the Securities Act, (b) such Purchaser has knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of its investment, (c) such Purchaser is an "accredited investor" within
the meaning of Rule 501 of Regulation D under the Securities Act, (d) in the
case of Xxxxx, it is a resident of the State of New York and the Holders are
residents of Maryland and California and (e) the Company has made available to
it the opportunity to ask questions and to receive answers, and to obtain the
information it has deemed material and necessary to evaluate the merits and
risks of this investment.
5.3. Consents of Third Parties. None of the execution and delivery by
-------------------------
such Purchaser of this Agreement and the Transaction Documents, the consummation
of the transactions contemplated hereby or thereby, or compliance by such
Purchaser with any of the provisions hereof or thereof will (a) conflict with,
or result in the breach of, any provision of the governing documents of such
Purchaser or (b) constitute a violation of any Law applicable to such Purchaser.
Other than those which have been obtained or made, no consent, waiver, approval,
Order, Permit or authorization of, or declaration or filing with, or
notification to, any Person or Governmental Body is required on the part of such
Purchaser in connection with the execution and delivery of this Agreement or the
Transaction Documents, or the compliance by such Purchaser with any of the
provisions hereof or thereof.
5.4. Litigation. Except as set forth on Schedule 5.4, there are no
----------
Legal Proceedings pending or, to the knowledge of such Purchaser, threatened
that question the validity of this Agreement or the Transaction Documents or any
action taken or to be taken by such Purchaser in connection with the
consummation of the transactions contemplated hereby or thereby.
6. Further Agreements of the Parties.
6.1. Covenants. For so long as the Preferred Shares are convertible,
---------
the Company shall reserve that number of shares of Common Stock issuable upon
conversion of the Preferred Shares, which shares shall not be subject to any
preemptive or other similar rights.
6.2. Use of Proceeds.
---------------
The Company shall use the cash proceeds from the sale of the Preferred
Shares under this Agreement for the following purposes:
-21-
(a) approximately $100,000 in payment of (i) reasonable fees and
expenses of the Purchasers to be reimbursed on the Closing Date as contemplated
by Section 9.2 hereof and (ii) fees and expenses incurred by the Company in
connection with the transactions contemplated hereby; and
(b) the remainder for other working capital purposes.
6.3. Confidentiality. Except as may be required by applicable law or
---------------
as otherwise agreed among the parties hereto, neither the Company, the
Purchasers nor any of their respective Affiliates shall at any time publicly
divulge, disclose, disseminate, announce or release any information to any
Person concerning this Agreement, the Transaction Documents, the transactions
contemplated hereby or thereby, any trade secrets or other confidential
information of the Company or the Purchasers, without first obtaining the prior
written consent of the other parties hereto; provided, however, that (i) the
Purchasers shall be entitled to disclose information with respect to their
investment in the Company on any reports that the Purchasers furnish to their
investors or as otherwise required by Law and (ii) the Company shall be entitled
to disclose its trade secrets or other confidential information not related to
this Agreement, the Transaction Documents or the transactions contemplated
hereby or thereby in any manner consistent with good business practice.
6.4. Other Actions. The Company and the Purchasers agree to execute
-------------
and deliver such other documents and take such other actions as the other
parties may reasonably request for the purpose of carrying out the intent of
this Agreement and the Transaction Documents. The Purchasers shall use their
reasonable efforts, at no cost to themselves, to cooperate in the Company's
efforts to undertake a public offering of its stock.
6.5. Indemnity.
---------
(a) The Company agrees to indemnify, defend and hold harmless the
Purchasers (and their partners (and each officer and director thereof),
directors, officers, members, stockholders, Employees, Affiliates, agents and
permitted assigns) from and against any and all losses, claims, liabilities,
damages, deficiencies, costs or expenses (including interest, penalties and
reasonable attorneys' fees, disbursements and related charges) (collectively,
"Losses") based upon, arising out of or otherwise in respect of any inaccuracy
in or breach of any representations, warranties, covenants or agreements of the
Company contained in this Agreement or the Transaction Documents; provided,
--------
however, that any claim in respect of an inaccuracy or breach of a
-------
representation or warranty shall be made prior to the end of the survival period
set forth in Section 4.21 hereof.
(b) The Purchasers agree to indemnify, defend and hold harmless the
Company (and its directors, officers, members, stockholders, Employees,
Affiliates, agents and permitted assigns) from and against any and all Losses
based upon, arising out of or otherwise in
-22-
respect of any inaccuracy in or breach of any representations, warranties,
covenants or agreements of the Purchasers contained in this Agreement.
7. Transfer Restrictions.
7.1. Transfer Restrictions: Private Placement.
----------------------------------------
(a) The Purchasers understand and agree that the Preferred Shares
have not been registered under the Securities Act, and that accordingly they
will not be fully transferable except as permitted under various exemptions
contained in the Securities Act, or upon satisfaction of the registration and
prospectus delivery requirements of the Securities Act. The Purchasers
acknowledge that they must bear the economic risk of the Preferred Shares for an
indefinite period of time (subject, however, to the Company's obligation to
redeem the Preferred Shares at the election of the Purchasers in accordance with
the terms thereof, and to the Company's obligation to effect the registration of
the Preferred Shares under the Securities Act in accordance with the terms of
the Shareholders' Agreement (as defined in Section 8.1(k)) since they have not
been registered under the Securities Act and therefore cannot be sold unless
they are subsequently registered or an exemption from registration is available.
(b) The Purchasers agree with the Company that the certificates
evidencing the Preferred Shares will bear the following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR
TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT COVERING SUCH SECURITIES OR THE SECURITIES ARE SOLD AND
TRANSFERRED IN A TRANSACTION THAT IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT."
(c) The legend endorsed on the certificates pursuant to Section
8.1(b) hereof shall be removed and the Company shall issue a certificate without
such legend to the holder thereof at such time as the securities evidenced
thereby cease to be restricted securities upon the earliest to occur of (i) a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (ii) the securities
shall have been sold to the public pursuant to Rule 144 (or any successor
provision) under the Securities Act, or (iii) such securities may be sold by the
holder without restriction or registration under Rule 144(k) under the
Securities Act (or any successor provision).
-23-
8. Conditions to Closing.
8.1. Conditions of Obligations of the Purchase. The obligation of the
-----------------------------------------
Purchasers to purchase and pay for the Initial Preferred Shares which it has
agreed to purchase on the Closing Date is subject to the fulfillment prior to or
on the Closing Date of the following conditions, any of which may be waived in
whole or in part by the Purchasers:
(a) Representations and Warranties. The representations and
------------------------------
warranties of the Company under this Agreement shall be deemed to have been made
again on the Closing Date and shall then be true and correct.
(b) Compliance with Agreement. The Company shall have performed and
-------------------------
complied with all agreements and conditions required by this Agreement to be
performed or complied with by the Company on or before the Closing Date.
(c) Approvals. The Company shall have obtained any and all consents,
---------
waivers, approvals or authorizations, with or by any Governmental Body or any
other Person required for the valid execution of this Agreement and the
Transaction Documents.
(d) No Material Adverse Change. Since December 31, 1998, there shall
--------------------------
not have been a Material Adverse Change.
(e) Certificate of Officer. The Company shall have delivered to the
----------------------
Purchasers a certificate dated the Closing Date, executed by its Chief Executive
Officer, certifying the satisfaction of the conditions specified in paragraphs
(a), (b), (c) and (d) of this Section 8.1.
(f) Opinion of the Company's Counsel. The Purchasers shall have
--------------------------------
received from Xxxxx, Xxxxx & Xxxxx, counsel for the Company, a favorable opinion
dated the Closing Date, in form and substance satisfactory to the Purchasers and
their counsel.
(g) Amendment to Certificate of Incorporation. The Amended and
-----------------------------------------
Restated Certificate of Incorporation required as a result of the rights granted
under this Agreement and the Transaction Documents shall have been duly adopted
and executed and filed with the Secretary of State of the State of Delaware.
The Company shall not have adopted or filed any other document designating the
terms, relative rights or preferences of the Preferred Shares. The Amended and
Restated Certificate of Incorporation shall be in full force and effect as of
the Closing under the laws of Delaware and shall not have been amended or
modified, and a copy of the Amended and Restated Certificate of Incorporation
certified by the Secretary of State of the State of Delaware shall have been
delivered to counsel for the Purchasers.
-24-
(h) Qualification Under State Securities Laws. All registrations,
-----------------------------------------
qualifications, permits and approvals required under applicable state securities
laws shall have been obtained for the lawful execution, delivery and performance
of this Agreement and the transactions contemplated hereby, including without
limitation, the offer, sale, issuance and delivery of the Preferred Shares.
(i) Supporting Documents. The Purchasers shall have received the
--------------------
following:
(i) Copies of resolutions of the Board and the stockholders
of the Company, certified by the Secretary of the Company, authorizing and
approving the Amended and Restated Certificate of Incorporation and, as to the
Board, the execution, delivery and performance of this Agreement and the
Transaction Documents and the issuance of the Preferred Shares, the form of By-
laws of the Company, the forms of stock certificates, and all other documents
and instruments to be delivered pursuant hereto and thereto;
(ii) A certificate of incumbency executed by the Secretary of
the Company certifying the names, titles and signatures of the officers
authorized to execute the documents referred to in subparagraph (i) above and
further certifying that the Certificate of Incorporation and By-laws of the
Company delivered to the Purchasers at the time of the execution of this
Agreement have been validly adopted and have not been amended or modified; and
(iii) Such additional supporting documentation and other
information with respect to the transactions contemplated hereby as the
Purchasers or their counsel may reasonably request.
(j) Proceedings and Documents. All corporate and other proceedings
-------------------------
and actions taken in connection with the transactions contemplated hereby and
all certificates, opinions, agreements, instruments and documents mentioned
herein or incident to any such transactions, shall be reasonably satisfactory in
form and substance to the Purchasers and to their counsel.
(k) Shareholders' Agreement. The Purchasers shall have entered into
-----------------------
a certain Shareholders' Agreement (the "Shareholders' Agreement") with the
Company and each of the following individuals: Xxxx X. Xxxxxxx, Xxxxxxxx X.
Xxxxxxxx, Xxxxxx X. Xxxxx and Xxxxx X. Xxxxxx.
8.2. Conditions of Company's Obligations. The Company's obligation to
-----------------------------------
issue and sell the Preferred Shares to the Purchasers on the Closing Date is
subject to the fulfillment prior to or on the Closing Date of the following
conditions, any of which may be waived in whole or in part by the Company:
-25-
(a) Representations and Warranties. The representations and
------------------------------
warranties of the Purchaser under this Agreement shall be deemed to have been
made again on the Closing Date and shall then be true and correct in all
material respects.
(b) Qualification Under State Securities Laws. All registrations,
-----------------------------------------
qualifications, permits and approvals required under applicable state securities
laws shall have been obtained for the lawful execution, delivery and performance
of this Agreement and the performance of the transactions contemplated hereby,
including without limitation, the offer, sale, issuance and delivery of the
Preferred Shares.
(c) Payment of Purchase Price. The Purchasers shall have delivered
-------------------------
the Purchase Price specified in Section 2.1 hereof.
(d) Approvals. The Purchasers shall have obtained any and all
---------
consents, waivers, approvals or authorizations, with or by any Governmental Body
or any other Person required for the valid execution of this Agreement and the
Transaction Documents.
(e) Amendment to Certificate of Incorporation. The Amended and
-----------------------------------------
Restated Certificate of Incorporation shall have been duly adopted and executed
and filed with the Secretary of State of the State of Delaware.
(f) Shareholders' Agreement. The Company shall have entered into the
-----------------------
Shareholders' Agreement.
9. Miscellaneous.
9.1. Certain Definitions.
-------------------
"Affiliate" of any Person means any Person that directly or indirectly
controls, or is under common control with, or is controlled by, such Person. As
used in this definition, "control" (including with its correlative meanings,
"controlled by" and "under common control with") shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"Common Stock" means the common stock, $.01 par value per share, of the
Company.
"Contract" means any contract, agreement, indenture, note, bond, loan,
instrument, lease, conditional sale contract, mortgage, license, franchise,
insurance policy, commitment or other
-26-
arrangement or agreement, whether written or oral.
"Employee" means any current, former, or retired Employee, office
consultant, independent contractor, agent, officer or director of the Company.
"GAAP" means generally accepted accounting principles, as in effect in the
United States.
"Governmental Body" means any government or governmental or regulatory body
thereof, or political subdivision thereof, whether federal, state, local or
foreign, or any agency, instrumentality or authority thereof, or any court or
arbitrator (public or private).
"Law" means any federal, state, local or foreign law (including common
law), statute, code, ordinance, rule, regulation or other requirement or
guideline.
"Legal Proceeding" means any judicial, administrative or arbitral actions,
suits, proceedings (public or private), claims or governmental proceedings.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind, including, without limitation, any conditional sale or other
title retention agreement, any lease in the nature thereof and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction and including any lien or charge arising by statute or other
law.
"Material Adverse Change" means any material adverse change in the
business, assets, liabilities, prospects, properties, results of operations or
condition (financial or otherwise) of the Company and its subsidiaries, in the
aggregate.
"Material Adverse Effect" means any material adverse effect on the
business, assets, liabilities, prospects, properties, results of operations or
condition (financial or otherwise) of the Company and its subsidiaries, in the
aggregate.
"Order" means any order, injunction, judgment, decree, ruling, writ,
assessment or arbitration award.
"Permits" means any approvals, authorizations, consents, licenses, permits
or certificates by or of any Governmental Body.
"Person" means any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
Governmental Body or other entity.
"Representatives" of a Person means its officers, Employees, agents, legal
advisors and accountants.
-27-
"Securities Act" means the Securities Act of 1933, as amended.
"Taxes" means any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Section 59A of the Code),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
9.2. Expenses.
--------
(a) At the Closing, the Company shall reimburse the Purchasers for
all reasonable out-of-pocket fees and expenses of the Purchasers incurred in
connection with the transactions contemplated hereby (including, without
limitation, reasonable attorneys' and accountants' fees), up to a maximum of
$100,000 in the aggregate. The Company agrees that such fees and expenses
incurred through the Closing Date may be deducted by the Purchasers from the
Purchase Price payable at the Closing.
(b) The Company shall pay its own out-of-pocket expenses and all
stamp and other Taxes which may be payable in respect of the execution and
delivery of this Agreement, the Transaction Documents, or the issuance, delivery
or acquisition of the Preferred Shares.
(c) The Company further agrees to reimburse the Purchasers on demand
for the Purchasers' reasonable out-of-pocket fees and expenses incurred in
connection with any amendment to or waiver or enforcement of this Agreement.
9.3. Specific Performance. Each of the parties hereto acknowledges
--------------------
and agrees that the breach of this Agreement would cause irreparable damage to
the other parties hereto and that the other parties hereto will not have an
adequate remedy at law. Therefore, the obligations of each of the parties
hereto under this Agreement shall be enforceable by a decree of specific
performance issued by any court of competent jurisdiction, and appropriate
injunctive relief may be applied for and granted in connection therewith. Such
remedies shall, however, be cumulative and not exclusive and shall be in
addition to any other remedies which any party may have under this Agreement or
otherwise.
9.4. Further Assurances. The Company and the Purchasers each agree
------------------
to execute and deliver such other documents or agreements as may be necessary or
desirable for the implementation of this Agreement and the consummation of the
transactions contemplated hereby.
-28-
9.5. Submission to Jurisdiction, Consent to Service of Process.
---------------------------------------------------------
(a) The parties hereto hereby irrevocably submit to the non-
exclusive jurisdiction of any federal or state court located within the Borough
of Manhattan, State of New York over any dispute arising out of or relating to
this Agreement or any of the transactions contemplated hereby and each party
hereby irrevocably agrees that all claims in respect of such dispute or any
suit, action or proceeding related thereto may be heard and determined in such
courts. The parties hereby irrevocably waive, to the fullest extent permitted by
applicable law, any objection which they may now or hereafter have to the laying
of venue of any such dispute brought in such court or any defense of
inconvenient forum for the maintenance of such dispute. Each of the parties
hereto agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
(b) Each of the parties hereto hereby consents to process being
served by any party to this Agreement in any suit, action or proceeding by the
mailing of a copy thereof in accordance with the provisions of Section 9.9
hereof.
9.6. Entire Agreement, Amendments and Waiver. This Agreement
---------------------------------------
(including the schedules and exhibits hereto) represents the entire
understanding and agreement among the parties hereto with respect to the subject
matter hereof and can be amended, supplemented or changed, and any provision
hereof can be waived, only by written instrument making specific reference to
this Agreement signed by the parties hereto. No action taken pursuant to this
Agreement, including without limitation, any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representation, warranty, covenant or agreement
contained herein. The waiver by any party hereto of a breach of any provision
of this Agreement shall not operate or be construed as a further or continuing
waiver of such breach or as a waiver of any other or subsequent breach. No
failure on the part of any party to exercise, and no delay in exercising, any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of such right, power or remedy by such party
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. All remedies hereunder are cumulative and are not
exclusive of any other remedies provided by law.
9.7. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of New York without giving
effect to the principles of conflict of laws thereunder which would specify the
application of the law of another jurisdiction.
9.8. Table of Contents; Headings; Interpretive Matters. The table of
-------------------------------------------------
contents and section headings of this Agreement are for reference purposes only
and are to be given no effect in the construction or interpretation of this
Agreement. No provision of this Agreement will be interpreted in favor of, or
against, any of the parties hereto by reason of the extent to
-29-
which any such party or its counsel participated in the drafting thereof or by
reason of the extent to which any such provision is inconsistent with any prior
draft hereof or thereof.
9.9 Notices. All notices and other communications under this
-------
Agreement shall be in writing and shall be deemed given when delivered
personally, by telecopy or mailed by certified mail, return receipt requested,
to the parties at the following addresses (or to such other address as a party
may have specified by notice given to the other party pursuant to this
provision):
If to the Company, to:
Coaxicom, Inc.
00-00 Xxxxx Xxxxxx
Xxxxx 000
Xxxx Xxxxxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxx
Facsimile: (000) 000-0000
With a copy (which shall by itself not constitute notice) to:
Xxxxx, Xxxxx & Xxxxx
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to the Purchasers, to:
Xxxxx Communications Fund, L.P.
c/x Xxxxx Capital Partners, LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Facsimile: (212.) 486-0410
and to the other Purchasers as set forth on Schedule A to this
Agreement
-30-
With a copy (which shall by itself not constitute notice) to:
Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
and:
Wise & Xxxxxxx, LLP
0000 Xxxxxx Xxx, Xxxxx 000
Xxxx Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxxxxxx
Facsimile: (000) 000-0000
All notices are effective upon receipt or upon refusal if properly
delivered.
9.10. Severability. If any provision of this Agreement is invalid or
------------
unenforceable, the balance of this Agreement shall remain in effect.
9.11. Binding Effect; Assignment. This Agreement shall be binding upon
--------------------------
and inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third-party beneficiary rights in any person or entity not a party to this
Agreement except as provided below. No assignment of this Agreement or of any
rights or obligations hereunder may be made by the Company or the Purchasers (by
operation of law or otherwise) without the prior written consent of the other
parties hereto and any attempted assignment without the required consents shall
be void; provided, however, that the Purchasers may assign this Agreement and
any or all rights and obligations hereunder, in whole or in part, to any
Affiliate of the Purchasers, but any such assignment shall not relieve the
Purchasers of its obligations hereunder. In addition, and whether or not any
express assignment has been made, the provisions of this Agreement which are for
the benefit of the Purchasers as a purchaser or holder of Preferred Shares (or
any securities pursuant to which such Preferred Shares may be converted or
exercised into) are also for the benefit of and enforceable by, any subsequent
holder of such Preferred Shares who acquires at least $100,000 in original
purchase price value of the Preferred Shares other than pursuant to open-market
purchases. Upon any permitted assignment, the references in this Agreement to
the Purchasers shall also apply to any such assignee unless the context
otherwise requires.
9.12. Counterparts. This Agreement may be executed simultaneously in
------------
two or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
-31-
COMMUNICATIONS VENTURES II
AFFILIATES FUND, L.P.
By:______________________
Name:
Title:
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, Xxxxxxxxxx 00000
Fax: 000-000-0000
IN WITNESS WHEREOF, the parties hereto have executed, or have caused this
Agreement to be executed, by their respective officers thereunto duly
authorized, as of the date first written above.
COAXICOM, INC.
By: /s/ Xxxx Xxxxxxx
-----------------------------
Name:
Title: President and CEO
XXXXX COMMUNICATIONS FUND, L.P.,
By: Xxxxx Capital Partners, LLC
Its General Partner
By: /s/ Xxxxxx Xxxxx
-----------------------------
Name:
Title: Manager
COMMUNICATIONS VENTURES II, L.P.
By:/s/: Xxxxxx X. XxxxxxXxxx
-------------------------------
Name: Xxxxxx X. XxxxxxXxxx
Title: Managing Member
COMMUNICATIONS VENTURES II
AFFILIATES FUND, L.P.
By:/s/: Xxxxxx X. XxxxxxXxxx
_______________________________
Name: Xxxxxx X. XxxxxxXxxx
Title: Managing Member
Securities Purchase Agreement Signature Page
NEW ENTERPRISE ASSOCIATES VII, L.P.
By:______________________________
Name:
Title:
Securities Purchase Agreement Signature Page
IN WITNESS WHEREOF, the parties hereto have executed, or have caused this
Agreement to be executed, by their respective officers thereunto duly
authorized, as of the date first written above.
COAXICOM, INC.
By:______________________________
Name:
Title:
XXXXX COMMUNICATIONS FUND, L.P.,
By: Xxxxx Capital Partners, LLC
Its General Partner
By:______________________________
Name:
Title:
COMMUNICATIONS VENTURES II, L.P.
By:______________________________
Name:
Title:
COMMUNICATIONS VENTURES II
AFFILIATES FUND, L.P.
By:______________________________
Name:
Title:
Securities Purchase Agreement Signature Page
NEW ENTERPRISE ASSOCIATES VII, L.P.
By:/s/ Xxxxx Xxxxx
------------------------------
Name:
Title:
WPG ENTERPRISE FUND III, L.L.C.
By: WPG VC Fund Adviser, L.L.C
Fund Investment Advisory Member
By: /s/: Xxxxx Xxxxxx
------------------------------
Name: Xxxxx Xxxxxx
Title: Managing Member
WPG INFORMATION SCIENCES
ENTREPRENEUR FUND, L.P.
By: WPG VC Fund Adviser, LLC
General Partner
By: ______________________________
Name: Xxxxx Xxxxxx
Title: Managing Member
Securities Purchase Agreement Signature Page
XXXXX, XXXX & XXXXX VENTURE
ASSOCIATES IV CAYMAN, L.P.
By: WPG Venture Advisers, Ltd.
Administrative General Partner
By:__________________________________
Name: Xxxxx Xxxxx or Xxxxx Xxxxxx
Title: Director
WPG ENTERPRISE FUND III,L.L.C.
By: WPG VC Fund Adviser, LLC,
Fund Investment Advisory Member
By: /s/ Xxxxx Xxxxxx
----------------------------------
Name: Xxxxx Xxxxxx
Title: Managing Member
XXXXX, XXXX & XXXXX VENTURE
ASSOCIATES IV, L.L.C.
By: WPG VC Fund Adviser, L.L.C.,
Fund Investment Advisory Member
By: /s/ Xxxxx Xxxxxx
---------------------------------
Name: Xxxxx Xxxxxx
Title: Managing Member
Securities Purchase Agreement Signature Page
WPG INFORMATION SCIENCES
ENTREPRENEUR FUND, L.P.
By: WPG VC Fund Adviser, L.L.C.
General Partner
By:______________________________________
Name: Xxxxx Xxxxxx
Title: Managing Member
XXXXX, XXXX & XXXXX VENTURE
ASSOCIATES IV CAYMAN, L.P.
By: WPG Venture Advisers, Ltd.
Administrative General Partner
By:/s/: Xxxxx Xxxxxx
--------------------------------------
Name: Xxxxx Xxxxxx
Title: Director
Securities Purchase Agreement Signature Page
SCHEDULE A
The Holders Purchase Price Holders' Preferred
----------- -------------- ------------------
Shares
------
Communications Ventures II, L.P. $2,573,015.33 576,160
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, Xxxxxxxxxx 00000
Fax: 000-000-0000
Communications Ventures II $ 109,176.78 47,245
Affiliates
Fund, L.P.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, Xxxxxxxxxx 00000
Fax: 000-000-0000
New Enterprise Associates VII, L.P. $2,784,002.05 623,405
00000 Xxxxxxx Xxxxx
Xxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Fax: 000-000-0000
WPG Enterprise Fund III, LLC $1,042,844.68 233,518
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Fax: 000-000-0000
Xxxxx, Xxxx & Xxxxx Venture $1,192,408.79 267,009
Associates IV, LLC
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Fax: 000-000-0000
Xxxxx, Xxxx & Xxxxx Venture $ 150,542.12 33,710
Associates IV Cayman, L.P.
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Fax: 000-000-0000
The Holders Purchase Price Holders' Preferred
----------- -------------- ------------------
Shares
------
WPG Information Sciences $ 46,207.63 10,347
Entrepreneur Fund, L.P.
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Fax: 000-000-0000
SCHEDULE B
Breakdown of Option to Purchase Series D Preferred Shares
Xxxxx Communications Fund, L.P. - 3,786,351 shares
The Holders - 1,514,541 shares
EXHIBIT A
The Amended and Restated Certificate of Incorporation of Coaxicom, Inc., is
located behind Tab 4 of this volume.
