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EXHIBIT 10.2
SERIES C PREFERRED STOCK
PURCHASE AGREEMENT
REQUISITE TECHNOLOGY, INC.
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TABLE OF CONTENTS
PAGE
SECTION 1. AGREEMENT TO SELL AND PURCHASE...............................................1
1.1. Authorization of Shares................................................1
1.2. Sale and Purchase......................................................1
SECTION 2. CLOSING, DELIVERY AND PAYMENT................................................1
2.1. Closing................................................................1
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................2
3.1. Organization, Good Standing and Qualification..........................2
3.2. Capitalization; Voting Rights..........................................2
3.3. Authorization; Binding Obligations.....................................3
3.4. Financial Statements...................................................3
3.5. Liabilities............................................................3
3.6. Agreements; Action.....................................................3
3.7. Obligations to Related Parties.........................................4
3.8. Changes................................................................5
3.9. Title to Properties and Assets; Liens, etc.............................6
3.10. Patents and Trademarks.................................................6
3.11. Compliance with Other Instruments......................................6
3.12. Litigation.............................................................7
3.13. Tax Returns and Payments...............................................7
3.14. Employees..............................................................7
3.15. Non-Competition and Non-Disclosure Agreements..........................7
3.16. Obligations of Management..............................................8
3.17. Registration Rights....................................................8
3.18. Compliance with Laws; Permits..........................................8
3.19. Environmental and Safety Laws..........................................8
3.20. Offering Valid.........................................................8
3.21. Full Disclosure........................................................8
3.22. Qualified Small Business...............................................9
3.23. Minute Books...........................................................9
3.24. Section 83(b) Elections................................................9
3.25. Real Property Holding Corporation......................................9
3.26. Insurance..............................................................9
3.27. Investment Company Act.................................................9
3.28. ERISA..................................................................9
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.............................9
4.1. Requisite Power and Authority..........................................9
4.2. Investment Representations............................................10
4.3. Transfer Restrictions.................................................11
SECTION 5. CONDITIONS TO CLOSING.......................................................11
5.1. Conditions to Purchasers' Obligations at the Closing..................11
5.2. Conditions to Obligations of the Company..............................12
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TABLE OF CONTENTS
(CONTINUED)
PAGE
SECTION 6. MISCELLANEOUS...............................................................13
6.1. Governing Law.........................................................13
6.2. Survival..............................................................13
6.3. Successors and Assigns................................................13
6.4. Entire Agreement......................................................13
6.5. Severability..........................................................13
6.6. Amendment and Waiver..................................................13
6.7. Delays or Omissions...................................................13
6.8. Notices...............................................................14
6.9. Expenses..............................................................14
6.10. Attorneys' Fees.......................................................14
6.11. Titles and Subtitles..................................................14
6.12. Counterparts..........................................................14
6.13. Broker's Fees.........................................................14
6.14. Exculpation Among Purchasers..........................................14
6.15. Pronouns..............................................................15
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INDEX OF EXHIBITS
Schedule of Purchasers Exhibit A
Restated Certificate Exhibit B
Schedule of Exceptions Exhibit C
Amended and Restated Investor Rights Agreement Exhibit D
Amended and Restated Shareholders Agreement Exhibit E
List of Shareholders and Optionholders Exhibit F
Financial Statements Exhibit G
Non-Competition and Non-Disclosure Agreement Exhibit H
Form of Legal Opinion Exhibit I
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SERIES C PREFERRED STOCK
PURCHASE AGREEMENT
THIS SERIES C PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is
entered into as of this 25th day of August, 1997, by and among REQUISITE
TECHNOLOGY, INC., a Delaware corporation (the "Company") and each of those
persons and entities, severally and not jointly, whose names are set forth on
the Schedule of Purchasers attached hereto as Exhibit A (which persons and
entities are hereinafter collectively referred to as "Purchasers" and each
individually as a "Purchaser").
RECITALS
WHEREAS, the Company has authorized the sale and issuance of an aggregate
of 3,050,000 shares of its Series C Preferred Stock (the "Shares");
WHEREAS, Purchasers desire to purchase the Shares on the terms and
conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Shares to Purchasers on
the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
SECTION 1. AGREEMENT TO SELL AND PURCHASE.
1.1. AUTHORIZATION OF SHARES. On or prior to the Closing (as defined in
Section 2 below), the Company shall have authorized (i) the sale and issuance to
Purchasers of the Shares, and (ii) the issuance of such shares of Common Stock
to be issued upon conversion of the Shares (the "Conversion Shares"). The Shares
and the Conversion Shares shall have the rights, preferences, privileges and
restrictions set forth in the Restated Certificate of Incorporation of the
Company in the form attached hereto as Exhibit B (the "Restated Certificate").
1.2. SALE AND PURCHASE. Subject to the terms and conditions hereof, at the
Closing the Company hereby agrees to issue and sell to each Purchaser, severally
and not jointly, and each Purchaser agrees to purchase from the Company,
severally and not jointly, the number of Shares set forth opposite such
Purchaser's name on Exhibit A, at a purchase price of two dollars and thirty
cents ($2.30) per share.
SECTION 2. CLOSING, DELIVERY AND PAYMENT.
2.1. CLOSING. The closing of the sale and purchase of the Shares under this
Agreement (the "Closing") shall take place at 10:00 a.m. on August 25, 1997, at
the offices of Xxxxxx Godward LLP, 0000 Xxxxxx Xxxx., Xxxxx 000, Xxxxxxx,
Xxxxxxxx 00000, or at such other time or place as the Company and Purchasers may
mutually agree (such date is hereinafter referred to as the "Closing Date").
2.2 DELIVERY. At the Closing, subject to the terms and conditions hereof,
the Company will deliver to the Purchasers certificates representing the number
of Shares to be purchased at the Closing by each Purchaser, against payment of
the purchase price therefor by check or wire transfer of immediately available
funds made payable to the order of the Company.
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SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth on the Schedule of Exceptions attached hereto as
Exhibit C, the Company hereby represents and warrants to each Purchaser as
follows:
3.1. ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement, the Amended and Restated Investor Rights Agreement in the form
attached hereto as Exhibit D (the "Investor Rights Agreement"), and the Amended
and Restated Shareholders Agreement attached hereto as Exhibit E (the
"Shareholders Agreement") (collectively, the "Related Agreements"), to issue and
sell the Shares and the Conversion Shares and to carry out the provisions of
this Agreement, the Related Agreements and the Restated Certificate and to carry
on its business as presently conducted and as presently proposed to be
conducted. The Company is duly qualified and is authorized to do business and is
in good standing as a foreign corporation in Colorado and all other
jurisdictions in which the nature of its activities and of its properties (both
owned and leased) makes such qualification necessary, except for those
jurisdictions in which failure to do so would not have a material adverse effect
on the Company or its business. The Company owns no equity securities of any
other corporation, limited partnership or similar entity. The Company is not a
participant in any joint venture, partnership or similar arrangement.
3.2. CAPITALIZATION; VOTING RIGHTS. The authorized capital stock of the
Company, immediately prior to the Closing, will consist of (x) 15,000,000 shares
of Common Stock, 1,546,377 shares of which are issued and outstanding and
2,130,000 shares of which are reserved for future issuance to key employees and
consultants pursuant to the Company's 1995 Stock Option Plan, of which 974,425
remain available for issuance under such plan, and (y) 6,519,955 shares of
Preferred Stock, 337,420 of which are designated Series A Preferred Stock,
189,630 shares of which are issued and outstanding, 3,132,535 of which are
designated Series B Preferred Stock, 3,118,785 shares of which are issued and
outstanding, and 3,050,000 of which are designated Series C Preferred Stock,
none of which are issued and outstanding. All issued and outstanding shares of
the Company's Common Stock and Preferred Stock (i) have been duly authorized and
validly issued to the persons listed on Exhibit F hereto, (ii) are fully paid
and nonassessable, and (iii) were issued in compliance with all applicable state
and federal laws concerning the issuance of securities. The rights, preferences,
privileges and restrictions of the Shares are as stated in the Restated
Certificate and are valid, binding and enforceable in accordance with applicable
law. The Conversion Shares have been duly and validly reserved for issuance.
Other than as set forth on Exhibit F, and except as may be granted pursuant to
the Related Agreements, there are no outstanding options, warrants, rights
(including conversion or preemptive rights and rights of first refusal), proxy
or shareholder agreements, or agreements of any kind for the purchase or
acquisition from the Company of any of its securities. There are no rights of
first refusal with respect to the issuance of the Shares and the subsequent
conversion of the Shares into Conversion Shares that have not been complied with
or for which waivers have not been obtained. When issued in compliance with the
provisions of this Agreement and the Restated Certificate, the Shares and the
Conversion Shares will be validly issued, fully paid and nonassessable with no
personal liability attaching to the ownership thereof, and will be free of any
liens or encumbrances; provided, however, that the Shares and the Conversion
Shares may be subject to restrictions on transfer under state and/or federal
securities laws as set forth herein or as otherwise required by such laws at the
time a transfer is proposed. The Company has no obligation to purchase, acquire
or redeem any of its outstanding securities. After giving effect to the
transactions contemplated hereby, all officers, directors and holders of one
percent (1%) of the
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outstanding capital stock of the Company are subject to a market stand-off
agreement in substantially the form contained in Section 2.13 of the Investor
Rights Agreement.
3.3. AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on the part
of the Company, its officers, directors and stockholders necessary for the
authorization of this Agreement and the Related Agreements, the performance of
all obligations of the Company hereunder and thereunder at the Closing and the
authorization, sale, issuance and delivery of the Shares pursuant hereto and the
Conversion Shares pursuant to the Restated Certificate has been taken or will be
taken prior to the Closing. The Agreement and the Related Agreements, when
executed and delivered, will be legal, valid and binding obligations of the
Company enforceable in accordance with their terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights; (ii) general
principles of equity that restrict the availability of equitable remedies; and
(iii) to the extent that the enforceability of the indemnification provisions in
Section 2.9 of the Investor Rights Agreement may be limited by applicable laws.
3.4. FINANCIAL STATEMENTS. The Company has delivered to each Purchaser (i)
its unaudited balance sheet as at December 31, 1996 and unaudited statement of
income and cash flows for the twelve months ending December 31, 1996 and (ii)
its unaudited balance sheet as at July 31, 1997 (the "Statement Date") and
unaudited consolidated statement of income and cash flows for the seven month
period ending on the Statement Date (collectively, the "Financial Statements"),
copies of which are attached hereto as Exhibit G. The Financial Statements,
together with the notes thereto, are complete and correct in all material
respects, have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods indicated,
except as disclosed therein, and present fairly the financial condition and
position of the Company as of December 31, 1996 and the Statement Date;
provided, however, that the financial statements as of the Statement Date are
subject to normal recurring year-end audit adjustments (which are not expected
to be material), and do not contain all footnotes required under generally
accepted accounting principles.
3.5. LIABILITIES. The Company has no material liabilities and, to the best
of its knowledge, knows of no material contingent liabilities not disclosed in
the Financial Statements, except current liabilities incurred in the ordinary
course of business subsequent to the Statement Date which have not been, either
in any individual case or in the aggregate, materially adverse.
3.6. AGREEMENTS; ACTION.
(a) Except for agreements explicitly contemplated hereby and
agreements between the Company and its employees with respect to the sale of the
Company's Common Stock, there are no agreements, understandings or proposed
transactions between the Company and any of its officers, directors, affiliates
or any affiliate thereof.
(b) There are no agreements, understandings, instruments, contracts,
proposed transactions, judgments, orders, writs or decrees to which the Company
is a party or to its knowledge by which it is bound which may involve (i)
obligations (contingent or otherwise) of, or payments to, the Company in excess
of $25,000 or (ii) the license of any patent, copyright, trade secret or other
proprietary right to or from the Company (other than licenses arising from the
purchase of "off the shelf" or other standard products), or (iii) provisions
restricting or affecting the development, manufacture or distribution of the
Company's products or services, or (iv) indemnification by the Company with
respect
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to infringements of proprietary rights (other than indemnification obligations
arising from purchase or sale agreements entered into in the ordinary course of
business).
(c) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness which is currently
outstanding for money borrowed or any other liabilities (other than with respect
to dividend obligations, distributions, indebtedness and other obligations
incurred in the ordinary course of business or as disclosed in the Financial
Statements) individually in excess of $25,000 or, in the case of indebtedness
and/or liabilities individually less than $25,000, in excess of $50,000 in the
aggregate, (iii) made any loans or advances to any person, other than ordinary
advances for travel expenses, or (iv) sold, exchanged or otherwise disposed of
any of its assets or rights, other than the sale of its inventory in the
ordinary course of business.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
(e) The Company has performed all material obligations required to be
performed by it as of the date hereof under any material agreement to which the
Company is a party or by which it is bound. There are no agreements not
otherwise disclosed that could reasonably be expected to materially and
adversely affect the Company. No party to any such material contract has
notified the Company with a claim to the effect that the Company has failed to
perform an obligation thereunder. To the knowledge of the Company, there is no
plan, intention or indication of any contracting party to such material contract
to cause the termination, cancellation or modification of such material contract
or to reduce or otherwise change its activity thereunder so as to materially and
adversely effect the benefits derived as expected to be derived therefrom by the
Company.
(f) The Company has not engaged in the past three (3) months in any
discussion (i) with any representative of any corporation or corporations
regarding the consolidation or merger of the Company with or into any such
corporation or corporations, (ii) with any corporation, partnership, association
or other business entity or any individual regarding the sale, conveyance or
disposition of all or substantially all of the assets of the Company, or a
transaction or series of related transactions in which more than fifty percent
(50%) of the voting power of the Company is disposed of, or (iii) regarding any
other form of acquisition, liquidation, dissolution or winding up of the
Company.
3.7. OBLIGATIONS TO RELATED PARTIES. There are no obligations of the
Company to officers, directors or employees of the Company other than (a) for
payment of salary for services rendered, (b) reimbursement for reasonable
expenses incurred on behalf of the Company, (c) for other standard employee
benefits made generally available to all employees (including stock option
agreements outstanding under any stock option plan approved by the Board of
Directors of the Company). None of the officers or directors who are employees
of the Company, or any members of their immediate families, are indebted to the
Company or have any direct or indirect ownership interest in any firm or
corporation with which the Company is affiliated or with which the Company has a
business relationship, or any firm or corporation which competes with the
Company, except that officers, directors and/or stockholders of the Company may
own stock in publicly traded companies which may compete with the Company. No
officer or director who is an employee of the Company, or any member of their
immediate families, is, directly or indirectly, interested in any material
contract with the Company (other
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than such contracts as relate to any such person's ownership of capital stock or
other securities of the Company). Except as may be disclosed in the Financial
Statements, the Company is not a guarantor or indemnitor of any indebtedness of
any other person, firm or corporation.
3.8. CHANGES. Since the Statement Date, there has not been to the Company's
knowledge:
(a) Any change in the assets, liabilities, financial condition or
operations of the Company from that reflected in the Financial Statements, other
than changes in the ordinary course of business, none of which individually or
in the aggregate has had or is expected to have a material adverse effect on
such assets, liabilities, financial condition or operations of the Company;
(b) Any resignation or termination of any key officers of the Company;
and the Company, to the best of its knowledge, does not know of the impending
resignation or termination of employment of any such officer;
(c) Any material change, except in the ordinary course of business, in
the contingent obligations of the Company by way of guaranty, endorsement,
indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, business or
prospects or financial condition of the Company;
(e) Any waiver by the Company of a valuable right or of a material
debt owed to it;
(f) Any direct or indirect loans made by the Company to any
stockholder, employee, officer or director of the Company, other than advances
made in the ordinary course of business;
(g) Any material change in any compensation arrangement or agreement
with any employee, officer, director or stockholder;
(h) Any declaration or payment of any dividend or other distribution
of the assets of the Company or any repurchase or redemption of any outstanding
security of the Company;
(i) Any labor organization activity;
(j) Any debt, obligation or liability incurred, assumed or guaranteed
by the Company, except those for immaterial amounts and for current liabilities
incurred in the ordinary course of business;
(k) Any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
(l) Any issuance of any capital stock (or rights or options to acquire
capital stock of the Company), other than options granted pursuant to the
Company's 1995 Stock Option Plan;
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(m) Any change in any material agreement to which the Company is a
party or by which it is bound which materially and adversely affects the
business, assets, liabilities, financial condition, operations or prospects of
the Company, including compensation agreements with the Company's employees; or
(n) Any other event or condition of any character that, either
individually or cumulatively, has materially and adversely affected the
business, assets, liabilities, financial condition, operations or prospects of
the Company.
3.9. TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company has good and
marketable title to its properties and assets, including the properties and
assets reflected in the most recent balance sheet included in the Financial
Statements, and good title to its leasehold estates, in each case subject to no
mortgage, pledge, lien, lease, encumbrance or charge, other than (i) those
resulting from taxes which have not yet become delinquent and (ii) minor liens
and encumbrances which do not materially detract from the value of the property
subject thereto or materially impair the operations of the Company. All
facilities, machinery, equipment, fixtures, vehicles and other properties owned,
leased or used by the Company are in good operating condition and repair and are
reasonably fit and usable for the purposes for which they are being used.
3.10. PATENTS AND TRADEMARKS. The Company owns or possesses sufficient
legal rights to all patents, and, to the best of its knowledge after reasonable
investigation, all trademarks, service marks, trade names, copyrights, trade
secrets, information and other proprietary rights and processes necessary for
its business as now conducted and as proposed to be conducted, without any known
infringement of the rights of others. Set forth on the Schedule of Exceptions is
a list of the Company's patents, pending patent applications, registered
trademarks and pending trademark applications. There are no outstanding options,
licenses or agreements of any kind relating to the foregoing, nor is the Company
bound by or a party to any options, licenses or agreements of any kind with
respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information and other proprietary rights and processes
of any other person or entity other than such licenses or agreements arising
from the purchase of "off the shelf" or standard products. The Company has not
received any communications alleging that the Company has violated or, by
conducting its business as proposed, would violate any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights of any other person or entity, nor to the Company's
knowledge, is there a basis for any such claim. The Company is not aware that
any of its employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with their duties to the Company or that would conflict with the
Company's business as proposed to be conducted. Neither the execution nor
delivery of this Agreement, nor the carrying on of the Company's business by the
employees of the Company, nor the conduct of the Company's business as proposed,
will, to the Company's knowledge, conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any employee is now obligated. The Company
does not believe it is or will be necessary to utilize any inventions, trade
secrets or proprietary information of any of its employees made prior to their
employment by the Company, except for inventions, trade secrets or proprietary
information that have been assigned to the Company.
3.11. COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation or
default of any term of its Restated Certificate or Bylaws, or of any provision
of any mortgage, indenture, agreement, instrument or contract to which it is
party or by which it is bound or of any judgment, decree,
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order, writ or, to its knowledge, any statute, rule or regulation applicable to
the Company which would materially and adversely affect the business, assets,
liabilities, financial condition, operations or prospects of the Company. The
execution, delivery, and performance of and compliance with this Agreement, and
the Related Agreements, and the issuance and sale of the Shares pursuant hereto
and of the Conversion Shares pursuant to the Restated Articles, will not, with
or without the passage of time or giving of notice, result in any such material
violation, or be in conflict with or constitute a default under any such term,
or result in the creation of any mortgage, pledge, lien, encumbrance or charge
upon any of the properties or assets of the Company or the suspension,
revocation, impairment, forfeiture or nonrenewal of any permit license,
authorization or approval applicable to the Company, its business or operations
or any of its assets or properties.
3.12. LITIGATION. There is no action, suit, proceeding or investigation
pending or to the Company's knowledge currently threatened against the Company
that questions the validity of this Agreement, or the Related Agreements or the
right of the Company to enter into any of such agreements, or to consummate the
transactions contemplated hereby or thereby, or which might result, either
individually or in the aggregate, in any material adverse change in the assets,
condition, affairs or prospects of the Company, financially or otherwise, or any
change in the current equity ownership of the Company, nor is the Company aware
that there is any basis for the foregoing. The foregoing includes, without
limitation, actions pending or threatened (or any basis therefor known to the
Company) involving the prior employment of any of the Company's employees, their
use in connection with the Company's business of any information or techniques
allegedly proprietary to any of their former employers, or their obligations
under any agreements with prior employers. The Company is not a party or subject
to the provisions of any order, writ, injunction, judgment or decree of any
court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Company currently pending or which the
Company intends to initiate.
3.13. TAX RETURNS AND PAYMENTS. The Company has timely filed all tax
returns (federal, state and local) required to be filed by it. All taxes shown
to be due and payable on such returns, any assessments imposed, and to the
Company's knowledge all other taxes due and payable by the Company on or before
the Closing have been paid or will be paid prior to the time they become
delinquent. The Company has not been advised (i) that any of its returns,
federal, state or other, have been or are being audited as of the date hereof,
or (ii) of any deficiency in assessment or proposed judgment to its federal,
state or other taxes. The Company has no knowledge of any liability of any tax
to be imposed upon its properties or assets as of the date of this Agreement
that is not adequately provided for.
3.14. EMPLOYEES. The Company has no collective bargaining agreements with
any of its employees. There is no labor union organizing activity pending or, to
the Company's knowledge, threatened with respect to the Company. No employee has
any agreement or contract, written or verbal, regarding his employment. The
Company is not a party to or bound by any currently effective employment
contract, deferred compensation arrangement, bonus plan, incentive plan, profit
sharing plan, retirement agreement or other employee compensation plan or
agreement. To the Company's knowledge, no employee of the Company, nor any
consultant with whom the Company has contracted, is in violation of any term of
any employment contract, proprietary information agreement or any other
agreement relating to the right of any such individual to be employed by, or to
contract with, the Company because of the nature of the business to be conducted
by the Company; and to the Company's knowledge the continued employment by the
Company of its present employees, and the performance of the Company's contracts
with its independent contractors, will not result in any such violation. The
Company has not received any notice alleging that any such violation has
occurred. No employee of the
7.
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Company has been granted the right to continued employment by the Company or to
any material compensation following termination of employment with the Company.
The Company is not aware that any officer or key employee, or that any group of
key employees, intends to terminate their employment with the Company.
3.15. NON-COMPETITION AND NON-DISCLOSURE AGREEMENTS. Each former and
current employee, officer and consultant of the Company has executed an
agreement regarding non-competition and/or non-disclosure of the Company's
confidential information in one of the forms attached as Exhibit H hereto, or an
agreement containing substantially the same restrictions as those set forth in
such forms.
3.16. OBLIGATIONS OF MANAGEMENT. Each officer of the Company is currently
devoting one hundred percent (100%) of his or her business time to the conduct
of the business of the Company. The Company is not aware of any officer or key
employee of the Company planning to work less than full time at the Company in
the future.
3.17. REGISTRATION RIGHTS. Except as required pursuant to the Investor
Rights Agreement, the Company is presently not under any obligation, and has not
granted any rights, to register (as defined in Section 1.1 of the Investor
Rights Agreement) any of the Company's presently outstanding securities or any
of its securities that may hereafter be issued.
3.18. COMPLIANCE WITH LAWS; PERMITS. To its knowledge, the Company is not
in violation of any applicable statute, rule, regulation, order or restriction
of any domestic or foreign government or any instrumentality or agency thereof
in respect of the conduct of its business or the ownership of its properties
which violation would materially and adversely affect the business, assets,
liabilities, financial condition, operations or prospects of the Company. No
governmental orders, permissions, consents, approvals or authorizations are
required to be obtained and no registrations or declarations are required to be
filed in connection with the execution and delivery of this Agreement and the
issuance of the Shares or the Conversion Shares, except such as has been duly
and validly obtained or filed, or with respect to any filings that must be made
after the Closing, as will be filed in a timely manner. The Company has all
franchises, permits, licenses and any similar authority necessary for the
conduct of its business as now being conducted by it, the lack of which could
materially and adversely affect the business, properties, prospects or financial
condition of the Company and believes it can obtain, without undue burden or
expense, any similar authority for the conduct of its business as planned to be
conducted.
3.19. ENVIRONMENTAL AND SAFETY LAWS. To its knowledge, the Company is not
in violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety, and to its knowledge, no material
expenditures are or will be required in order to comply with any such existing
statute, law or regulation.
3.20. OFFERING VALID. Assuming the accuracy of the representations and
warranties of the Purchasers contained in Section 4.2 hereof, the offer, sale
and issuance of the Shares and the Conversion Shares will be exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act") and will have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit or qualification
requirements of all applicable state securities laws. Neither the Company nor
any agent on its behalf has solicited or will solicit any offers to sell or
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has offered to sell or will offer to sell all or any part of the Shares to any
person or persons so as to bring the sale of such Shares by the Company within
the registration provisions of the Securities Act.
3.21. FULL DISCLOSURE. This Agreement, the Exhibits hereto, the Related
Agreements and any certificate delivered by the Company to the Purchasers or
their attorneys or agents in connection herewith or therewith or with the
transactions contemplated hereby or thereby do not contain any untrue statement
of a material fact nor, to the Company's knowledge after reasonable
investigation, omit to state a material fact necessary in order to make the
statements contained herein or therein not misleading. To the Company's
knowledge after reasonable investigation, there are no facts which (individually
or in the aggregate) materially adversely affect the business, assets,
liabilities, financial condition, prospects or operations of the Company that
have not been set forth in the Agreement, the Exhibits hereto, the Related
Agreements or in other documents delivered to the Purchasers or their attorneys
or agents in connection therewith.
3.22. QUALIFIED SMALL BUSINESS. The Company represents and warrants to the
Purchasers that, to the best of its knowledge, the Shares should qualify as
"Qualified Small Business Stock" as defined in Section 1202(c) of the Internal
Revenue Code of 1986, as amended (the "Code") as of the date hereof. The Company
will use reasonable efforts to comply with the reporting and record keeping
requirements of Section 1202 of the Code, any regulations promulgated thereunder
and any similar state laws and regulations, and agrees not to repurchase any
stock of the Company if such repurchase would cause such Shares not to so
qualify as "Qualified Small Business Stock" unless the Board of Directors
otherwise determines that such repurchase would be in the best interests of the
Company.
3.23. MINUTE BOOKS. The minute books of the Company provided to the
Purchasers contain a complete summary of all meetings of directors and
stockholders since July 18, 1996.
3.24. SECTION 83(b) ELECTIONS. To the Company's knowledge, all elections
and notices permitted by Section 83(b) of the Internal Revenue Code and any
analogous provisions of applicable state tax laws have been timely filed by all
employees who have purchased shares of the Company's common stock under
agreements that provide for the vesting of such shares.
3.25. REAL PROPERTY HOLDING CORPORATION. The Company is not a real property
holding corporation within the meaning of Internal Revenue Code Section
897(c)(2) and any regulations promulgated thereunder.
3.26. INSURANCE. The Company fire and casualty insurance policies and other
insurance coverage customary for companies similarly situated to the Company.
3.27. INVESTMENT COMPANY ACT. The Company is not an "investment company",
or a company "controlled" by an "investment", within the meaning of the
Investment Company Act of 1940, as amended.
3.28. ERISA. The Company has complied in all material respects with the
applicable rules and regulations of the Employee Retirement Income Security Act
of 1974, as amended, with respect to any employee benefit plans subject thereto.
9.
14
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
Each Purchaser hereby represents and warrants to the Company as of the
Closing as follows (such representations and warranties do not lessen or obviate
the representations and warranties of the Company set forth in this Agreement):
4.1. REQUISITE POWER AND AUTHORITY. Purchaser has all necessary power and
authority under all applicable provisions of law to execute and deliver this
Agreement and the Related Agreements and to carry out their provisions. All
action on Purchaser's part required for the lawful execution and delivery of
this Agreement and the Related Agreements have been or will be effectively taken
prior to the Closing. Upon their execution and delivery, this Agreement and the
Related Agreements will be valid and binding obligations of Purchaser,
enforceable in accordance with their terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights, (ii) general principles
of equity that restrict the availability of equitable remedies, and (iii) to the
extent that the enforceability of the indemnification provisions of Section 2.9
of the Investor Rights Agreement may be limited by applicable laws.
4.2. INVESTMENT REPRESENTATIONS. Purchaser understands that the Shares and
the Conversion Shares have not been registered under the Securities Act.
Purchaser also understands that the Shares are being offered and sold pursuant
to an exemption from registration contained in the Securities Act based in part
upon Purchaser's representations contained in the Agreement. Purchaser hereby
represents and warrants as follows:
(a) PURCHASER BEARS ECONOMIC RISK. Purchaser has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that it is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests. Purchaser must bear the economic risk of
this investment indefinitely unless the Shares (or the Conversion Shares) are
registered pursuant to the Securities Act, or an exemption from registration is
available. Purchaser understands that the Company has no present intention of
registering the Shares, the Conversion Shares or any shares of its Common Stock.
Purchaser also understands that there is no assurance that any exemption from
registration under the Securities Act will be available and that, even if
available, such exemption may not allow Purchaser to transfer all or any portion
of the Shares or the Conversion Shares under the circumstances, in the amounts
or at the times Purchaser might propose.
(b) ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring the Shares and
the Conversion Shares for Purchaser's own account for investment only, and not
with a view towards their distribution.
(c) PURCHASER CAN PROTECT ITS INTEREST. Purchaser represents that by
reason of its, or of its management's, business or financial experience,
Purchaser has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement, and the Related Agreements.
Further, Purchaser is aware of no publication of any advertisement in connection
with the transactions contemplated in the Agreement.
(d) ACCREDITED INVESTOR. Purchaser represents that it is an accredited
investor within the meaning of Regulation D under the Securities Act.
10.
15
(e) COMPANY INFORMATION. Purchaser has received and read the Financial
Statements and has had an opportunity to discuss the Company's business,
management and financial affairs with directors, officers and management of the
Company and has had the opportunity to review the Company's operations and
facilities. Purchaser has also had the opportunity to ask questions of and
receive answers from, the Company and its management regarding the terms and
conditions of this investment.
(f) RULE 144. Purchaser acknowledges and agrees that the Shares, and,
if issued, the Conversion Shares must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. Purchaser has been advised or is aware of the
provisions of Rule 144 promulgated under the Securities Act, which permits
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things: the
availability of certain current public information about the Company, the resale
occurring not less than one year after a party has purchased and paid for the
security to be sold, the sale being through an unsolicited "broker's
transaction" or in transactions directly with a market maker (as said term is
defined under the Securities Exchange Act of 1934, as amended) and the number of
shares being sold during any three-month period not exceeding specified
limitations.
(g) RESIDENCE. If the Purchaser is an individual, then the Purchaser
resides in the state or province identified in the address of the Purchaser set
forth on Exhibit A; if the Purchaser is a partnership, corporation, limited
liability company or other entity, then the office or offices of the Purchaser
in which its investment decision was made is located at the address or addresses
of the Purchaser set forth on Exhibit A.
4.3. TRANSFER RESTRICTIONS. Each Purchaser acknowledges and agrees that the
Shares and, if issued, the Conversion Shares are subject to restrictions on
transfer as set forth in the Investor Rights Agreement.
SECTION 5. CONDITIONS TO CLOSING.
5.1. CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE CLOSING. Each Purchasers'
obligations to purchase the Shares at the Closing are subject to the
satisfaction, at or prior to such Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF OBLIGATIONS.
The representations and warranties made by the Company in Section 3 hereof shall
be true and correct in all material respects as of the Closing Date with the
same force and effect as if they had been made as of the Closing Date, and the
Company shall have performed all obligations and conditions herein required to
be performed or observed by it on or prior to the Closing.
(b) LEGAL INVESTMENT. On the Closing Date, the sale and issuance of
the Shares, and the proposed issuance of the Conversion Shares, shall be legally
permitted by all laws and regulations to which Purchasers and the Company are
subject.
(c) CONSENTS, PERMITS, AND WAIVERS. The Company shall have obtained
any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement and the Related
Agreements (except for such as may be properly obtained subsequent to the
Closing).
11.
16
(d) FILING OF RESTATED CERTIFICATE. The Restated Certificate shall
have been filed with the Secretary of State of the State of Delaware.
(e) CORPORATE DOCUMENTS. The Company shall have delivered to
Purchasers or their counsel, copies of all corporate documents of the Company as
Purchasers shall reasonably request, including without limitation, its
Certificate of Incorporation and Bylaws.
(f) RESERVATION OF CONVERSION SHARES. The Conversion Shares issuable
upon conversion of the Shares shall have been duly authorized and reserved for
issuance upon such conversion.
(g) COMPLIANCE CERTIFICATE. The Company shall have delivered to
Purchasers a Compliance Certificate, executed by the President of the Company,
dated the date of the Closing, to the effect that the conditions specified in
subsections (a), (c), (d) and (f) of this Section 5.1 have been satisfied.
(h) INVESTOR RIGHTS AGREEMENT. An Investor Rights Agreement
substantially in the form attached hereto as Exhibit D shall have been executed
and delivered by the parties thereto.
(i) SHAREHOLDERS AGREEMENT. A Shareholders Agreement substantially in
the form attached hereto as Exhibit E shall have been executed and delivered by
the parties thereto.
(j) BOARD OF DIRECTORS. Upon the Closing, the authorized size of the
Board of Directors of the Company shall be six members and the Board shall
consist of Xxxx Xxxxx, Xxxxx Xxxxxxxxxx, Xxxxx Xxxxxxxx, Xxxxxx X. Washing,
Xxxxxxx Xxxxx and Xxxx Xxxxxx.
(k) LEGAL OPINION. The Purchasers shall have received from legal
counsel to the Company an opinion addressed to them, dated as of the Closing
Date, in substantially the form attached hereto as Exhibit I.
(l) SBA MATTERS. The Company shall have executed and delivered to each
Purchaser that is a licensed Small Business Investment Company a Size Status
Declaration on SBA Form 480, an Assurance of Compliance on SBA Form 652 and an
SBA Certification in the form provided to the Company, and shall have provided
to each such Purchaser information necessary for the preparation of a Portfolio
Financing Report on SBA Form 1031.
(m) MINIMUM INVESTMENT. The Purchasers shall purchase a minimum of
2,826,088 Shares at the Closing.
(n) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated at the Closing hereby and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Purchasers and their special counsel,
and the Purchasers and their special counsel shall have received all such
counterpart originals or certified or other copies of such documents as they may
reasonably request.
12.
17
5.2. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's obligation to
issue and sell the Shares at each Closing is subject to the satisfaction, on or
prior to such Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties made by Purchasers in Section 4 hereof shall be true and correct in
all material respects at the date of the Closing, with the same force and effect
as if they had been made on and as of said date.
(b) PERFORMANCE OF OBLIGATIONS. Purchasers shall have performed and
complied with all agreements and conditions herein required to be performed or
complied with by Purchasers on or before the Closing.
(c) FILING OF RESTATED CERTIFICATE. The Restated Certificate shall
have been filed with the Secretary of State of the State of Delaware.
(d) INVESTOR RIGHTS AGREEMENT. An Investor Rights Agreement
substantially in the form attached hereto as Exhibit D shall have been executed
and delivered by the Purchasers.
(e) SHAREHOLDERS AGREEMENT. A Shareholders Agreement substantially in
the form attached hereto as Exhibit E shall have been executed and delivered by
the parties thereto.
(f) CONSENTS, PERMITS, AND WAIVERS. The Company shall have obtained
any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement and the Related
Agreements (except for such as may be properly obtained subsequent to the
Closing).
SECTION 6. MISCELLANEOUS.
6.1. GOVERNING LAW. This Agreement shall be governed in all respects by the
laws of the State of Delaware as such laws are applied to agreements between
Delaware residents entered into and performed entirely in Delaware.
6.2. SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any Purchaser and the
closing of the transactions contemplated hereby. All statements as to factual
matters contained in any certificate or other instrument delivered by or on
behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.
6.3. SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto
and shall inure to the benefit of and be enforceable by each person who shall be
a holder of the Shares from time to time.
6.4. ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules hereto,
the Related Agreements and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and no party shall be
13.
18
liable or bound to any other in any manner by any representations, warranties,
covenants and agreements except as specifically set forth herein and therein.
6.5. SEVERABILITY. In case any provision of the Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
6.6. AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only upon the written
consent of the Company and holders of at least a majority of the Shares (treated
as if converted and including any Conversion Shares into which the Shares have
been converted that have not been sold to the public).
(b) The obligations of the Company and the rights of the holders of
the Shares and the Conversion Shares under the Agreement may be waived only with
the written consent of the holders of at least a majority of the Shares (treated
as if converted and including any Conversion Shares into which the Shares have
been converted that have not been sold to the public).
6.7. DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement, the Related
Agreements or the Restated Certificate, shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of or in any similar breach,
default or noncompliance thereafter occurring. It is further agreed that any
waiver, permit, consent or approval of any kind or character on any Purchaser's
part of any breach, default or noncompliance under this Agreement, the Related
Agreements or under the Restated Certificate or any waiver on such party's part
of any provisions or conditions of the Agreement, the Related Agreements, or the
Restated Certificate must be in writing and shall be effective only to the
extent specifically set forth in such writing. All remedies, either under this
Agreement, the Related Agreements, the Restated Certificate, by law, or
otherwise afforded to any party, shall be cumulative and not alternative.
6.8. NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified; (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
Company at the address as set forth on the signature page hereof and to
Purchaser at the address set forth on Exhibit A attached hereto or at such other
address as the Company or Purchaser may designate by ten (10) days advance
written notice to the other parties hereto.
14.
19
6.9. EXPENSES. The Company shall pay all costs and expenses that it incurs
with respect to the negotiation, execution, delivery and performance of the
Agreement. The Company shall, at the Closing, reimburse the reasonable fees and
expenses of Berenbaum, Weinshienk & Xxxxx, P.C., counsel to the Purchasers,
incurred in connection with the negotiation, execution, delivery and performance
of this Agreement.
6.10. ATTORNEYS' FEES. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
6.11. TITLES AND SUBTITLES. The titles of the sections and subsections of
the Agreement are for convenience of reference only and are not to be considered
in construing this Agreement.
6.12. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
6.13. BROKER'S FEES. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein. Each party hereto further agrees to
indemnify each other party for any claims, losses or expenses incurred by such
other party as a result of the representation in this Section 6.13 being untrue.
6.14. EXCULPATION AMONG PURCHASERS. Each Purchaser acknowledges that it is
not relying upon any person, firm, or corporation, other than the Company and
its officers and directors, in making its investment or decision to invest in
the Company. Each Purchaser agrees that no Purchaser nor the respective
controlling persons, officers, directors, partners, agents, or employees of any
Purchaser shall be liable for any action heretofore or hereafter taken or
omitted to be taken by any of them in connection with the Shares and Conversion
Shares.
6.15. PRONOUNS. All pronouns contained herein, and any variations thereof,
shall be deemed to refer to the masculine, feminine or neutral, singular or
plural, as to the identity of the parties hereto may require.
[THIS SPACE INTENTIONALLY LEFT BLANK]
15.
20
IN WITNESS WHEREOF, the parties hereto have executed the SERIES C PREFERRED
STOCK PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof.
COMPANY: PURCHASERS:
REQUISITE TECHNOLOGY, INC. XXXX, XXXXXXX VENTURES IV, L.P.
BY: FOURTH MDV PARTNERS, L.L.C.,
GENERAL PARTNER
By: /s/ XXXX XXXXX By: /s/ XXXXX X. XXXXXXXXXX
---------------------------------------- -------------------------------------
Xxxx Xxxxx Member
President and Chief Executive Officer
Address: 0000 Xxxxx Xxxx Xxxxxx XXX IV ENTREPRENEURS' NETWORK FUND, L.P.
Suite 300 BY: FOURTH MDV PARTNERS, L.L.C.,
Xxxxxxx, XX 00000 GENERAL PARTNER
By: /s/ XXXXX X. XXXXXXXXXX
-------------------------------------
Member
SEQUEL LIMITED PARTNERSHIP
BY: SEQUEL LIMITED PARTNERS, L.L.C.,
GENERAL PARTNER
By: /s/ XXXXXX X. WASHING
-------------------------------------
Manager
PHILADELPHIA VENTURES LIBERTY FUND, L.P.
BY: LIBERTY VENTURES, INC.
MANAGING GENERAL PARTNER
By: /s/ XXXXX XXXXXXXX XXXXX
-------------------------------------
Vice President
21
TRINITY VENTURES V, L.P.,
A CALIFORNIA LIMITED PARTNERSHIP
BY: TRINITY TVL PARTNERS V, L.P.,
A CALIFORNIA LIMITED PARTNERSHIP
ITS GENERAL PARTNER
By: /s/ XXXX XXXXXX
---------------------------------
General Partner
TRINITY V SIDE-BY-SIDE FUND, L.P.,
A CALIFORNIA LIMITED PARTNERSHIP
BY: TRINITY TVL PARTNERS V, L.P.,
A CALIFORNIA LIMITED PARTNERSHIP
ITS GENERAL PARTNER
By: /s/ XXXX XXXXXX
---------------------------------
General Partner
COMDISCO, INC.
By: /s/ XXXXX X. XXXX
---------------------------------
Name: Xxxxx X. Xxxx
-------------------------------
Title: President
------------------------------
22
EXHIBIT A
SCHEDULE OF PURCHASERS
SERIES C AGGREGATE
NAME AND ADDRESS STOCK PURCHASE PRICE
---------------- --------- --------------
Xxxx, Xxxxxxx Ventures IV, L.P. 728,247 $1,674,968.10
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxxx
MDV IV Entrepreneurs' Network Fund, L.P. 38,329 $ 88,156.70
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxxx
Sequel Limited Partnership 531,413 $1,222,249.90
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Washing
Trinity Ventures V, L.P. 1,026,944 $2,361,971.20
0000 Xxxx Xxxx Xxxx
Xxxx. 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attn: Xxxx Xxxxxx
Trinity V Side-by-Side Fund, L.P. 60,013 $ 138,029.90
0000 Xxxx Xxxx Xxxx
Xxxx. 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attn: Xxxx Xxxxxx
Philadelphia Ventures Liberty Fund, L.P. 434,783 $1,000,000.90
000 Xxxxx Xxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxx-Xxxxx
23
Comdisco, Inc. 6,359 $ 14,625.70
0000 Xxxx Xxxx xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Attn: Xx. Xxxxx Xxxxxx
with a copy to:
0000 Xxxxx Xxxxx Xxxx
Xxxxxxxx, Xxx. 00000
Attn: Venture Division
--------- -------------
TOTAL 2,826,088 $6,500,002.40
