Exhibit 2.01
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (this "Agreement") is made and entered
into as of March 22, 2000 by and among Mirror Image Internet, Inc., a Delaware
corporation (the "Company"), Xxxxxxx.xxx Inc., a Cayman Islands corporation and
a majority stockholder of the Company ("Xcelera"), and Exodus Communications,
Inc., a Delaware corporation (the "Investor").
Whereas, the Company desires to sell to the Investor, and the Investor
desire to purchase from the Company, shares of the Company's Common Stock on the
terms and conditions set forth in this Agreement;
Now, therefore, the parties hereby agree as follows:
1. AGREEMENT TO PURCHASE AND SELL STOCK.
------------------------------------
1.1 Authorization. As of the Closing (as defined below), the Company
-------------
will have authorized the issuance, pursuant to the terms and conditions of this
Agreement, of up to 8,213,552 shares of the Company's Common Stock, $0.01 par
value per share (the "Common Stock").
1.2 Agreement to Purchase and Sell. Subject to the terms and
------------------------------
conditions of this Agreement, at the Closing referred to in Section 2 below, the
Company agrees to sell to the Investor at the Closing, and the Investor agrees
to purchase from the Company at the Closing, 8,213,552 shares of Common Stock at
a price of $19.48 per share. The shares of Common Stock purchased and sold
pursuant to this Agreement will be collectively hereinafter referred to as the
"Purchased Shares."
2. CLOSING. The purchase and sale of the Purchased Shares will take
-------
place at the offices of Fenwick & West LLP, Two Palo Alto Square, Palo Alto,
California, at 10:00 a.m. Pacific Time, on the second business day after all of
the conditions to closing set forth in Sections 7 and 8 hereof have been
satisfied and/or waived (other than conditions which are not capable of being
satisfied until the Closing Date) in accordance with this Agreement, or at such
other time and place as the Company and the Investor mutually agree upon (which
time and place are referred to in this Agreement as the "Closing"). At the
Closing, the Company will deliver to the Investor a certificate representing the
Purchased Shares against delivery to the Company by the Investor of the full
purchase price of such Purchased Shares, paid by (a) a wire transfer of funds to
the Company in the amount of $50,000,000, and (b) a certificate representing
734,950 shares of the Investor's common stock, $0.01 par value per share
registered in the name of the Company ("Investor Common Shares").
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Each of the Company
---------------------------------------------
and Xcelera hereby represents and warrants to the Investor that, except as
disclosed in the Company disclosure letter (the "Company Disclosure Letter")
delivered by the Company and Xcelera to Exodus herewith, the statements in the
following paragraphs of this Section 3 are all true and complete:
3.1 Organization, Good Standing and Qualification. The Company has
---------------------------------------------
been duly incorporated and organized, and is validly existing in good standing,
under the laws of the State of Delaware. The Company has the corporate power and
authority to enter into and perform this Agreement, the Investors' Rights
Agreement, the Co-Sale Agreement and the Registration Rights Agreement, the
Letter Agreement and the Commercial Agreement dated as of March 22, 2000 between
the Company and the Investor (the "Commercial Agreement"), to own and operate
its properties and assets and to carry on its business as currently conducted
and as presently proposed to be conducted. The Company is duly qualified to do
business as a foreign corporation in good standing in all jurisdictions in which
it is required to be qualified to do intrastate business as the Company's
business is currently conducted and as presently proposed to be conducted by the
Company, except for jurisdictions in which failure to so qualify could not
reasonably be expected to have a material adverse effect on the business, assets
or financial condition of the Company taken as a whole (a "Material Adverse
Effect").
3.2 Capitalization. The capitalization of the Company as of the date
--------------
of this Agreement consists of, and, except as the capitalization may change on
conversion of outstanding shares of Preferred Stock or exercise of outstanding
options, immediately prior to the Closing will consist of, the following:
(a) Preferred Stock. A total of 23,508,644 authorized shares of
---------------
preferred stock, $0.01 par value per share (the "Preferred Stock"), all of which
are designated as Series A Preferred Stock ("Series A Stock") and all of which
will be issued and outstanding and owned by Xcelera.
(b) Common Stock. A total of 255,000,000 authorized shares of
------------
common stock, $0.01 par value per share (the "Common Stock"), of which
112,398,000 shares will be issued and outstanding, 101,832,000 of which are
owned by Xcelera.
(c) Options, Warrants, Reserved Shares. Except for (i) the
----------------------------------
conversion privileges of the Series A Stock, and (ii) the 29,911,338 shares of
Common Stock reserved for issuance under the Company's Amended and Restated 1999
Stock Incentive Plan (the "Stock Plan") and non-plan option grants under which
options to purchase 28,613,403 shares are outstanding, there is no outstanding
option, warrant, right (including conversion or preemptive rights) or agreement
for the purchase or acquisition from the Company of any shares of its capital
stock or any securities convertible into or ultimately exchangeable or
exercisable for any shares of the Company's capital stock. Apart from the
exceptions noted in this Section 3.2(c), and except for rights of first refusal
held by the Company to purchase shares of its stock issued under the Company's
Stock Plan, no shares of the Company's outstanding capital stock, or stock
issuable upon exercise or exchange of any outstanding options, warrants or
rights, or other stock issuable by the Company, are subject to any preemptive
rights, rights of first refusal or other rights to purchase such stock (whether
in favor of the Company or any other person), pursuant to any agreement or
commitment of the Company.
(d) The outstanding shares of the capital stock of the Company
are duly authorized and validly issued, fully paid and nonassessable.
3.3 Subsidiaries. The Company does not presently own or control,
------------
directly or indirectly, any interest in any other corporation, partnership,
trust, joint venture, association, or other entity.
3.4 Due Authorization. All corporate action on the part of the
-----------------
Company's directors and stockholders necessary for the authorization, execution,
delivery of, and the performance of all obligations of the Company under, this
Agreement, the Investors' Rights Agreement, the Co-Sale Agreement, the
Registration Rights Agreement, the Letter Agreement and the Commercial
Agreement, and the authorization, issuance, reservation for issuance and
delivery of all of the Purchased Shares being sold under this Agreement has been
taken or will be taken prior to the Closing, and this Agreement constitutes, and
the Investors' Rights Agreement, the Co-Sale Agreement, the Registration Rights
Agreement, the Letter Agreement and the Commercial Agreement, when executed and
delivered, will constitute, valid and legally binding obligations of the
Company, enforceable in accordance with their respective terms, except as may be
limited by (i) applicable bankruptcy, insolvency, reorganization or others laws
of general application relating to or affecting the enforcement of creditors'
rights generally and (ii) the effect of rules of law governing the availability
of equitable remedies.
3.5 Valid Issuance of Stock.
-----------------------
(a) The Purchased Shares, when issued and paid for as provided
in this Agreement, will be duly authorized and validly issued, fully paid and
nonassessable and will be free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest other than those created by the
Investor.
(b) Based in part on the representations made by the Investor in
Section 5 hereof, the offer and sale of the Purchased Shares solely to the
Investor in accordance with this Agreement are exempt from the registration and
prospectus delivery requirements of the Securities Act and the securities
registration and qualification requirements of the currently effective
provisions of the securities laws of the States of California and Massachusetts.
2
3.6 Governmental Consents. No consent, approval, order or
---------------------
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority is required on
the part of the Company in order to enable the Company to execute, deliver and
perform its obligations under this Agreement, the Investors' Rights Agreement,
the Co-Sale Agreement, the Registration Rights Agreement, the Letter Agreement
and the Commercial Agreement except for (i) the filings required by the Xxxx-
------ ---
Xxxxx-Xxxxxx Antitrust Improvements Act (the "HSR Act"), (ii) such
qualifications or filings under applicable securities laws as may be required in
connection with the transactions contemplated by this Agreement, and (iii) those
which would not be, individually or in the aggregate, material to the Company.
All such qualifications and filings (other than those described in clause (i) -
(iii), will, in the case of qualifications, be effective on the Closing and
will, in the case of filings, be made within the time prescribed by law.
3.7 Litigation. At the date of this Agreement, there is no action,
----------
proceeding, claim or investigation pending or, to the Company's or Xcelera's
knowledge, threatened against the Company or any subsidiary before any court or
administrative agency. At the date of this Agreement, there is no action, suit,
proceeding, claim, arbitration or investigation pending or as to which the
Company has received any notice of assertion against the Company, which in any
manner challenges or seeks to prevent, enjoin, materially alter or materially
delay any of the transactions contemplated by this Agreement.
3.8 Invention Assignment and Confidentiality Agreement. Each
--------------------------------------------------
employee of the Company has entered into and executed an Invention Assignment
and Confidentiality Agreement or an employment or consulting agreement
containing substantially similar terms.
3.9 Status of Proprietary Assets. The Company owns all right, title
----------------------------
and interest in, or has the right to use, all patent applications, patents,
trademark applications, trademarks, service marks, trade names, mask works,
copyright applications, copyrights, trade secrets, know-how, technology and
other intellectual property and proprietary rights that are material to or
reasonably necessary to the conduct of its business as presently conducted or
proposed to be conducted ("Company Intellectual Property"). The Company has
taken reasonable measures to protect all material Company Intellectual Property
and neither the Company nor Xcelera is aware of any infringement of any Company
Intellectual Property by any third party. The Company is not aware of any
material loss, cancellation, termination or expiration of any such registration
or patent. To the knowledge of the Company, the business of the Company as
conducted as of the date hereof does not and the business of the development,
production, marketing, licensing and sale of commercial products and services as
currently contemplated by the Company using the Company Intellectual Property
after the Closing, will not cause the Company or any successor entity to,
infringe or violate any of the patents, trademarks, service marks, trade names,
mask works, copyrights, trade secrets, proprietary rights or other intellectual
property of any other person, and, as of the date of this Agreement, neither the
Company nor Xcelera has received any written claim or notice of infringement or
potential infringement of the intellectual property of any other person. To the
knowledge of the Company, the Company is not using any confidential information
or trade secrets of any former employer of any past or present employees. The
Company has not granted any reseller, distributor, sales representative,
original equipment manufacturer, value added reseller or other third party any
right to reproduce, manufacture, sell, license or distribute any of its products
or services in any market segment or geographic location.
3.10 Compliance with Law and Documents. The Company is not in
---------------------------------
violation or default of any provisions of its Certificate of Incorporation or
Bylaws, both as amended, and to the Company's knowledge, except for any
violations that individually and in the aggregate would not have a material
adverse effect on the Company's business, the Company is in compliance with all
applicable statutes, laws, regulations and executive orders of the United States
of America and all states, foreign countries or other governmental bodies and
agencies having jurisdiction over the Company's business or properties. The
Company has not received any written notice of any material violation of any
such statute, law, regulation or order which has not been remedied prior to the
date hereof. The execution, delivery and performance of this Agreement, the
Investors' Rights Agreement, the Co-Sale Agreement, the Registration Rights
Agreement, the Letter Agreement and the Commercial Agreement and the
consummation of the transactions contemplated hereby or thereby will not result
in any such violation or default, or be in conflict with or result in a
violation or breach of, with or without the passage of time or the giving of
notice or both, the Company's Certificate of Incorporation or Bylaws, any
material judgment, order or decree of any court or
3
arbitrator to which the Company is a party or is subject, any material
agreement or contract of the Company, or, to the Company's knowledge, a material
violation of any statute, law, regulation or order, or an event which results in
the creation of any material lien, charge or encumbrance upon any asset of the
Company.
3.11 Registration Rights. Except as provided in the Investors'
-------------------
Rights Agreement, the Company is not under any obligation to register under the
Securities Act any of its currently outstanding securities or any securities
issuable upon exercise or conversion of its currently outstanding securities nor
is the Company obligated to register or qualify any such securities under any
state securities or blue sky laws.
3.12 Title to Property and Assets. The properties and assets the
----------------------------
Company owns are owned by the Company free and clear of all mortgages, deeds of
trust, liens, encumbrances and security interests except for statutory liens for
the payment of current taxes that are not yet delinquent and liens, encumbrances
and security interests which arise in the ordinary course of business and which
do not affect material properties and assets of the Company. With respect to the
property and assets it leases, the Company is in material compliance with such
leases.
3.13 Financial Statements. Attached to this Agreement as Exhibit A
-------------------- ---------
is an audited balance sheet of the Company dated June 30, 1999 (the "Balance
Sheet Date"), and an audited income statement and statement of changes in cash
flows of the Company for its six months ended June 30, 1999 (all such financial
statements being collectively referred to herein as the "Financial Statements").
Such financial statements (a) are in accordance with the books and records of
the Company, (b) present fairly in all material respects the financial condition
of the Company at the date or dates therein indicated and the results of
operations for the period or periods therein specified, and (c) have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis.
3.14 Certain Actions. Since the Balance Sheet Date, the Company has
---------------
carried on its business in the ordinary course in all material respects
substantially in accordance with the procedures and practices in effect on the
Balance Sheet Date, and except in connection with the transactions contemplated
by this Agreement, the Investors' Rights Agreement, the Co-Sale Agreement, the
Registration Rights Agreement, the Letter Agreement and the Commercial
Agreement, since the Balance Sheet Date (and through the date of this Agreement
with respect to Section 3.14(a)) there has not been with respect to the Company:
(a) any change in the financial condition, properties, assets,
liabilities, business or results of operations, which change by itself or in
conjunction with all other such changes, whether or not arising in the ordinary
course of business, have had or is reasonably likely to have a material adverse
effect;
(b) any contingent liability incurred thereby as guarantor or
surety with respect to the obligations of others;
(c) any mortgage, encumbrance or lien placed on any of the
material assets or properties thereof other than in connection with equipment
leases in the ordinary course of business or the Company's lease of its
headquarters;
(d) any obligation or liability for borrowed money incurred
thereby other than in the ordinary course of business, which obligations or
liabilities do not exceed in the aggregate $150,000;
(e) any purchase, license, sale or other disposition, or any
agreement or other arrangement for the purchase, license, sale or other
disposition, of any of the material properties, assets or goodwill thereof other
than in the ordinary course of business;
(f) any damage, destruction or loss, whether or not covered by
insurance, that would have or is reasonably likely to have a material adverse
effect;
4
(g) any declaration, setting aside or payment of any dividend
on, or the making of any other distribution in respect of, the capital stock
thereof, any split, stock dividend, combination or recapitalization of the
capital stock thereof, any direct or indirect redemption, purchase or other
acquisition of the capital stock thereof;
(h) any labor dispute or claim of unfair labor practices, any
change in the compensation payable or to become payable to any of its officers,
employees or agents, or any bonus payment or arrangement made to or with any of
such officers, employees or agents;
(i) any loss of key executive, management or development
personnel thereof that has had or would have a material adverse effect on the
Company;
(j) any payment or discharge of a lien or liability thereof,
which lien or liability was not either (i) shown on the balance sheet as of the
Balance Sheet Date included in the Financial Statements or (ii) incurred in the
ordinary course after the Balance Sheet Date;
(k) any obligation or liability incurred thereby to any of its
officers, directors, stockholders or affiliates, or any loans or advances made
thereby to any of its officers, directors, stockholders or affiliates, except
normal compensation and expense allowances payable to officers;
(l) any amendment or change in the Certificate of Incorporation
or Bylaws of the Company;
(m) except in connection with the issuance of the Series A
Stock, any issuance or sale of any debt or equity securities (including but not
limited to stock) thereby or of any options or other rights to acquire from the
Company, directly or indirectly, any debt or equity securities (including but
not limited to stock) thereof other than shares of Company Common Stock issued
upon exercise of Company options issued pursuant to the Stock Plan; or
(n) any deferral of the payment of any accounts payable outside
the ordinary course or in an amount which is material or any discount,
accommodation or other concession made outside the ordinary course in order to
accelerate or induce the collection of any receivable.
3.15 Agreements and Commitments.
--------------------------
(a) There are no agreements between the Company or Xcelera and
any of the Company's or Xcelera's officers, directors, affiliates, or any
affiliate thereof, and the Company does not contemplate entering into such
agreements between the date of this Agreement and the Closing Date.
(b) There are no agreements, instruments, contracts,
judgments, orders, writs or decrees to which the Company is a party or by which
it is bound that may involve (i) obligations (contingent or otherwise) of, or
payments to the Company in excess of, $150,000, or (ii) the license of any
patent, copyright, trade secret or other proprietary right to or from the
Company providing for payments in excess of $150,000, 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 to infringements of proprietary rights.
3.16 ERISA Plans. The Company does not have any Employee Pension
-----------
Benefit Plan as defined in Section 3 of the Employee Retirement Income Security
Act of 1974, as amended.
3.17 Insurance. The Company has in full force and effect fire and
---------
casualty insurance policies as are reasonable in amount (subject to reasonable
deductibles) for the business of the Company.
3.18 Tax Returns and Payments. The Company has timely filed all
------------------------
federal and all material state and foreign tax returns and reports required by
law and has never been audited by any state, federal or foreign
5
taxing authority. All tax returns and reports of the Company are true and
correct in all material respects. The Company has paid all taxes and other
assessments due, except those, if any, currently being contested by it in good
faith which are listed in the Company Disclosure Letter.
3.19 Labor Agreements and Actions. The Company is not bound by or
----------------------------
subject to any contract, commitment or arrangement with any labor union, and to
the Company's best knowledge, no labor union has requested, sought or attempted
to represent any employees, representatives or agents of the Company. There is
no strike or other labor dispute involving the Company pending nor, to the
Company's best knowledge, threatened, nor is the Company aware of any labor
organization activity involving its employees.
3.20 Real Property Holding Corporation Status. Since its inception
----------------------------------------
the Company has not been a "United States real property holding corporation," as
defined in Section 897(c)(2) of the U.S. Internal Revenue Code of 1986, as
amended, and in Section 1.897-2(b) of the Treasury Regulations issued thereunder
(the "Regulations"), and the Company has filed with the Internal Revenue Service
all statements, if any, with its United States income tax returns which are
required under Section 1.897-2(h) of the Regulations.
3.21 Purchase for Own Account. The Investor Common Shares to be
------------------------
received by the Company hereunder will be acquired for investment for the
Company's own account, not as a nominee or agent, and not with a view to the
public resale or distribution thereof within the meaning of the Securities Act,
except pursuant to the shelf registration statement on Form S-3 to be filed by
the Investor pursuant to the Registration Rights Agreement. The Company also
represents that the Company has not been formed for the specific purpose of
acquiring the Investor Common Shares.
3.22 Disclosure of Information. The Company has received or has had
-------------------------
full access to all the information it considers necessary or appropriate to make
an informed investment decision with respect to the Investor Common Shares to be
received by the Company under this Agreement. The Company further has had an
opportunity to ask questions and receive answers from the Investor regarding the
terms and conditions of the offering of the Investor Common Shares and to obtain
additional information (to the extent the Investor possessed such information or
could acquire it without unreasonable effort or expense) necessary to verify any
information furnished to the Company or to which the Company had access. The
foregoing, however, does not in any way limit or modify the representations and
warranties made by the Investor in Section 5.
3.23 Investment Experience. The Company understands that the receipt
---------------------
of the Investor Common Shares involves substantial risk. The Company: (a) has
experience as an investor in securities of companies in the development stage
and acknowledges that the Company is able to fend for itself, can bear the
economic risk of the Company's investment in the Investor Common Shares and has
such knowledge and experience in financial or business matters that the Company
is capable of evaluating the merits and risks of this investment in the Investor
Common Shares and protecting its own interests in connection with this
investment and/or (b) has a preexisting personal or business relationship with
the Investor and certain of its officers, directors or controlling persons of a
nature and duration that enables the Company to be aware of the character,
business acumen and financial circumstances of such persons.
3.24 Accredited Investor Status. The Company is an "accredited
--------------------------
investor" within the meaning of Regulation D promulgated under the Securities
Act.
3.25 Restricted Securities. The Company understands that the
---------------------
Investor Common Shares are characterized as "restricted securities" under the
Securities Act inasmuch as they are being acquired from the Investor in a
transaction not involving a public offering and that under the Securities Act
and applicable regulations thereunder such securities may be resold without
registration under the Securities Act only in certain limited circumstances. In
this connection, the Investor represents that the Company is familiar with Rule
144 of the U.S. Securities and Exchange Commission (the "SEC"), as presently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act. The Company understands that the Investor is under no obligation
to register any of the securities sold hereunder except as provided in the
Registration Rights Agreement.
6
3.26 Further Limitations on Disposition. Without in any way limiting
----------------------------------
the representations set forth above, the Company further agrees not to make any
disposition of all or any portion of the Investor Common Shares unless and
until:
(a) there is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or
(b) the Company shall have notified the Investor of the
proposed disposition and shall have furnished the Investor with a statement of
the circumstances surrounding the proposed disposition, and, at the expense of
the Company or its transferee, with an opinion of counsel, reasonably
satisfactory to the Investor, that such disposition will not require
registration of such securities under the Securities Act.
Paragraphs (a) and (b) above shall not be applicable: (i) for any transfer of
any Investor Common Shares in compliance with SEC Rule 144 or Rule 144A, or (ii)
for any transfer of Investor Common Shares to (A) a stockholder, or (B) the
estate of any such stockholder; provided that in each of the foregoing cases
--------
(other than a Rule 144 transfer) the transferee agrees in writing to be subject
to the terms of Sections 3.21, 3.22, 3.23, 3.25, 3.26 and 3.27 to the same
extent as if the transferee were the Company.
3.27 Legends. It is understood that the certificates evidencing the
-------
Investor Common Shares (and any securities issued in respect of the Investor
Common Shares upon any stock split, stock dividend, merger, reorganization or
recapitalization) will bear the legend set forth below:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT
AND ANY APPLICABLE STATE SECURITIES LAWS.
The legend set forth above shall be removed by the Investor from any certificate
evidencing Investor Common Shares in connection with a disposition pursuant to a
registration statement under the Securities Act or upon delivery to the Investor
of an opinion by counsel, reasonably satisfactory to the Investor that such
security can be freely transferred in a public sale without such a registration
statement being in effect and that such transfer will not jeopardize the
exemption or exemptions from registration pursuant to which the Investor issued
the Investor Common Shares.
3.28 Disclosure. As of the date of this Agreement, to the actual
----------
knowledge of Xxxxxxxxx Xxx, Cos Xxxxxxxx, Xxxx Aittola, Xxxxx Xx, Xxxxxx
Xxxxxxx, Xxxx Xxxxxxxx, Xxxxxx Xxxxx or Xxxxxx Xxx, neither this Agreement, its
exhibits and schedules and the Company Disclosure Letter, nor any agreements
delivered by the Company or Xcelera to the Investor under this Agreement, taken
together, contains any untrue statement of a material fact or omits to state any
material fact necessary in order to make the statements contained herein and
therein, in light of the circumstances under which such statements were made,
not misleading.
4. REPRESENTATIONS AND WARRANTIES OF XCELERA. Xcelera hereby represents
-----------------------------------------
and warrants to the Investor that the statements in the following paragraphs of
this Section 4 are all true and complete:
4.1 Organization, Good Standing and Qualification. Xcelera has been
---------------------------------------------
duly incorporated and organized, and is validly existing in good standing, under
the laws of the Cayman Islands. Xcelera has the corporate power and authority to
enter into and perform this Agreement, the Investors' Rights Agreement, the Co-
Sale Agreement, the Registration Rights Agreement and the Voting Agreement.
7
4.2 Due Authorization. All corporate action on the part of
-----------------
Xcelera's directors and stockholders necessary for the authorization, execution,
delivery of, and the performance of all obligations of Xcelera under, this
Agreement, the Investors' Rights Agreement, the Co-Sale Agreement, the
Registration Rights Agreement and the Voting Agreement has been taken or will be
taken prior to the Closing, and this Agreement constitutes, and the Investors'
Rights Agreement, the Co-Sale Agreement, the Registration Rights Agreement and
the Voting Agreement, when executed and delivered, will constitute, valid and
legally binding obligations of Xcelera, enforceable in accordance with their
respective terms, except as may be limited by (i) applicable bankruptcy,
insolvency, reorganization or others laws of general application relating to or
affecting the enforcement of creditors' rights generally and (ii) the effect of
rules of law governing the availability of equitable remedies.
4.3 Governmental Consents. No consent, approval, order or
---------------------
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority is required on
the part of Xcelera in order to enable Xcelera to execute, deliver and perform
its obligations under this Agreement, the Investors' Rights Agreement, the Co-
Sale Agreement, the Registration Rights Agreement and the Voting Agreement
except for the filings required by the HSR Act and those which would not be,
------ ---
individually or in the aggregate, material to Xcelera.
4.4 Compliance with Law and Documents. The execution, delivery and
---------------------------------
performance of this Agreement, the Investors' Rights Agreement, the Co-Sale
Agreement, the Registration Rights Agreement and the Voting Agreement and the
consummation of the transactions contemplated hereby or thereby will not result
in any such violation or default, or be in conflict with or result in a
violation or breach of, with or without the passage of time or the giving of
notice or both, Xcelera's organizational documents, any material judgment, order
or decree of any court or arbitrator to which Xcelera is a party or is subject,
any material agreement or contract of Xcelera, or, to Xcelera's knowledge, a
material violation of any statute, law, regulation or order, or an event which
results in the creation of any material lien, charge or encumbrance upon any
asset of Xcelera.
5. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF INVESTOR. The
--------------------------------------------------------------
Investor hereby represents and warrants to, and agrees with, the Company and
Xcelera that:
5.1 Organization, Good Standing and Qualification. The Investor has
---------------------------------------------
been duly incorporated and organized, and is validly existing in good standing,
under the laws of the State of Delaware. The Investor has the corporate power
and authority to enter into and perform this Agreement, the Investors' Rights
Agreement, the Co-Sale Agreement, the Registration Rights Agreement, the Letter
Agreement, the Commercial Agreement and the Voting Agreement, to own and operate
its properties and assets and to carry on its business as currently conducted
and as presently proposed to be conducted. The Investor is duly qualified to do
business as a foreign corporation in good standing in all jurisdictions in which
it is required to be qualified to do intrastate business as the Investor's
business is currently conducted and as presently proposed to be conducted by the
Company, except for jurisdictions in which failure to so qualify could not
reasonably be expected to have a material adverse effect on the business, assets
or financial condition of the Investor taken as a whole.
5.2 Authorized/Outstanding Capital Stock. The authorized capital
------------------------------------
stock of the Investor consists of 305,000,000 shares, consisting of two classes:
300,000,000 shares of Common Stock, $0.001 par value per share, and 5,000,000
shares of Preferred Stock, $0.001 par value per share. An aggregate of
184,128,894 shares of the Company's Common Stock were issued and outstanding as
of February 23, 2000. No shares of the Company's Preferred Stock are
outstanding. As of February 23, 2000, there were outstanding options to purchase
an aggregate of 51,282,418 shares of the Investor pursuant to the Investor's
stock option plans, 12,385,280 shares of the Investor's Common Stock reserved
for future issuance under its stock option plans and stock purchase plans, and
28,976,786 shares of the Investor's Common Stock reserved for the conversion of
its convertible notes.
5.3 Authorization. All corporate action on the part of the
-------------
Investor's directors and stockholders necessary for the authorization,
execution, delivery of, and the performance of all obligations of the Investor
under, this Agreement, the Investors' Rights Agreement, the Co-Sale Agreement,
the Registration Rights Agreement, the Letter Agreement, the Commercial
Agreement and the Voting Agreement has been taken or will be taken prior to the
Closing, and the authorization, issuance, reservation for issuance and delivery
of all of the
8
Investor Common Shares being sold under this Agreement has been
taken or will be taken prior to the Closing, and this Agreement, the Investors'
Rights Agreement, the Co-Sale Agreement, the Registration Rights Agreement, the
Letter Agreement, the Commercial Agreement and the Voting Agreement constitutes
the Investor's valid and legally binding obligation, enforceable in accordance
with its terms except as may be limited by (a) applicable bankruptcy,
insolvency, reorganization or other laws of general application relating to or
affecting the enforcement of creditors' rights generally and (b) the effect of
rules of law governing the availability of equitable remedies. The Investor
represents that the Investor has full power and authority to enter into this
Agreement, the Investors' Rights Agreement, the Co-Sale Agreement, the
Registration Rights Agreement, the Letter Agreement, the Commercial Agreement
and the Voting Agreement.
5.4 Valid Issuance of Stock.
-----------------------
(a) The Investor Common Shares, when issued and paid for as
provided in this Agreement will be duly authorized and validly issued, fully
paid and nonassessable and will be free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest other than those created by
the Company.
(b) Based in part on the representations made by the Company in
Section 3 hereof, the offer and sale of the Investor Common Shares solely to the
Company in accordance with this Agreement are exempt from the registration and
prospectus delivery requirements of the Securities Act and the securities
registration and qualification requirements of the currently effective
provisions of the securities laws of the States of California and Massachusetts.
5.5 Governmental Consents. No consent, approval, order or
---------------------
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority is required on
the part of the Investor in order to enable the Investor to execute, deliver and
perform its obligations under this Agreement, the Investors' Rights Agreement,
the Co-Sale Agreement, the Registration Rights Agreement, the Letter Agreement,
the Commercial Agreement and the Voting Agreement except for (i) the filings
------ ---
required by the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act (the "HSR Act"),
and (ii) such qualifications or filings under applicable securities laws as may
be required in connection with the transactions contemplated by this Agreement.
All such qualifications and filings will, in the case of qualifications, be
effective on the Closing and will, in the case of filings, be made within the
time prescribed by law.
5.6 Compliance with Law and Documents. The Investor is not in
---------------------------------
violation or default of any provisions of its Certificate of Incorporation or
Bylaws, both as amended, and to the Investor's knowledge, except for any
violations that individually and in the aggregate would not have a material
adverse effect on the Investor's business, the Investor is in material
compliance with all applicable statutes, laws, regulations and executive orders
of the United States of America and all states, foreign countries or other
governmental bodies and agencies having jurisdiction over the Company's business
or properties. The Investor has not received any written notice of any material
violation of any such statute, law, regulation or order which has not been
remedied prior to the date hereof. The execution, delivery and performance of
this Agreement, the Investors' Rights Agreement, the Co-Sale Agreement, the
Registration Rights Agreement, the Letter Agreement, the Commercial Agreement
and the Voting Agreement and the consummation of the transactions contemplated
hereby or thereby will not result in any such violation or default, or be in
conflict with or result in a violation or breach of, with or without the passage
of time or the giving of notice or both, the Investor's Certificate of
Incorporation or Bylaws, any material judgment, order or decree of any court or
arbitrator to which the Investor is a party or is subject, any agreement or
contract filed by the Investor as an exhibit to (or incorporated by reference
in) or required to be filed as an exhibit to (or incorporated by reference in)
reports pursuant to Section 13(a) or 15(d) or the Exchange Act since and
including the filing of the Investor's most recent annual report on Form 10-K
(the "SEC Reports"), or, to the Company's knowledge, a material violation of any
statute, law, regulation or order, or an event which results in the creation of
any lien, charge or encumbrance upon any material asset of the Company.
5.7 Financial Statements. Each of the consolidated financial
--------------------
statements (including, in each case, any related notes thereto) contained in the
Investor's SEC Reports (i) complied as to form in all material respects with the
published rules and regulations of the SEC with respect thereto, (ii) were
prepared in accordance
9
with the books and records of the Investor and generally accepted accounting
principles applied on a consistent basis (except as may be indicated in the
notes thereto or, in the case of unaudited interim financial statements, as may
be permitted by the SEC on Form 1O-Q, 8-K or any successor form under the
Exchange Act) and (iii) fairly presented in all material respects the
consolidated financial position of the Investor and its subsidiaries as at the
respective dates thereof and the consolidated results of the Investor's
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements may not contain footnotes and were or are subject
to normal and recurring year-end adjustments.
5.8 Certain Actions. Since September 30, 1999, the Investor has
---------------
carried on its business in the ordinary course in all material respects
substantially in accordance with the procedures and practices in effect on
September 30, 1999, and except in connection with the transactions contemplated
by this Agreement, the Investors' Rights Agreement, the Co-Sale Agreement, the
Registration Rights Agreement, the Letter Agreement, the Commercial Agreement
and the Voting Agreement, since September 30, 1999 there has not been with
respect to the Investor any change in the financial condition, properties,
assets, liabilities, business or results of operations, which change by itself
or in conjunction with all other such changes, whether or not arising in the
ordinary course of business, have had or is reasonably likely to have a material
adverse effect on the business, assets or financial condition of the Investor
taken as a whole.
5.9 Purchase for Own Account. The Purchased Shares to be purchased
------------------------
by the Investor hereunder will be acquired for investment for the Investor's own
account, not as a nominee or agent, and not with a view to the public resale or
distribution thereof within the meaning of the Securities Act, and the Investor
has no present intention of selling, granting any participation in, or otherwise
distributing the same. The Investor also represents that the Investor has not
been formed for the specific purpose of acquiring Purchased Shares.
5.10 Disclosure of Information. The Investor has received or has had
-------------------------
full access to all the information it considers necessary or appropriate to make
an informed investment decision with respect to the Purchased Shares to be
purchased by the Investor under this Agreement. The Investor further has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Purchased Shares and to obtain
additional information (to the extent the Company possessed such information or
could acquire it without unreasonable effort or expense) necessary to verify any
information furnished to the Investor or to which the Investor had access. The
foregoing, however, does not in any way limit or modify the representations and
warranties made by the Company in Section 3.
5.11 Investment Experience. The Investor understands that the
---------------------
purchase of the Purchased Shares involves substantial risk. The Investor: (a)
has experience as an investor in securities of companies in the development
stage and acknowledges that the Investor is able to fend for itself, can bear
the economic risk of the Investor's investment in the Purchased Shares and has
such knowledge and experience in financial or business matters that the Investor
is capable of evaluating the merits and risks of this investment in the
Purchased Shares and protecting its own interests in connection with this
investment and/or (b) has a preexisting personal or business relationship with
the Company and certain of its officers, directors or controlling persons of a
nature and duration that enables the Investor to be aware of the character,
business acumen and financial circumstances of such persons.
5.12 Accredited Investor Status. The Investor is an "accredited
--------------------------
investor" within the meaning of Regulation D promulgated under the Securities
Act.
5.13 Restricted Securities. The Investor understands that the
---------------------
Purchased Shares are characterized as "restricted securities" under the
Securities Act inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under the Securities Act
and applicable regulations thereunder such securities may be resold without
registration under the Securities Act only in certain limited circumstances. In
this connection, the Investor represents that the Investor is familiar with Rule
144 of the SEC, as presently in effect, which permits certain limited sales of
unregistered securities in specified circumstances, is not presently available
with respect to the Purchased Shares and, in any event, requires that the
Purchased Shares be held for a minimum of one year (and in some cases longer)
after they have been purchased and paid for (within the meaning of Rule 144)
before they may be resold under Rule 144. The Investor understands that the
Company is
10
under no obligation to register any of the securities sold hereunder
except as provided in the Investors' Rights Agreement. The Investor understands
that no public market now exists for any of the Purchased Shares and that it is
uncertain whether a public market will ever exist for the Purchased Shares.
5.14 Further Limitations on Disposition. Without in any way limiting
----------------------------------
the representations set forth above, the Investor further agrees not to make any
disposition of all or any portion of the Purchased Shares unless and until:
(a) there is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or
(b) the Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a statement of
the circumstances surrounding the proposed disposition, and, at the expense of
the Investor or its transferee, with an opinion of counsel, reasonably
satisfactory to the Company, that such disposition will not require registration
of such securities under the Securities Act.
Notwithstanding the provisions of paragraphs (a) and (b) above, no such
registration statement or opinion of counsel shall be required: (i) for any
transfer of any Purchased Shares in compliance with SEC Rule 144 or Rule 144A,
or (ii) for any transfer of Purchased Shares to (A) a stockholder, or (B) the
estate of any such stockholder; provided that in each of the foregoing cases the
--------
transferee agrees in writing to be subject to the terms of this Section 5 (other
than Section 5.6) to the same extent as if the transferee were the Investor.
5.15 Legends. It is understood that the certificates evidencing the
-------
Purchased Shares (and any securities issued in respect of the Purchased Shares
upon any stock split, stock dividend, merger, reorganization or
recapitalization) will bear the legends set forth below:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT
AND ANY APPLICABLE STATE SECURITIES LAWS.
The legend set forth above shall be removed by the Company from any certificate
evidencing Purchased Shares upon delivery to the Company of an opinion by
counsel, reasonably satisfactory to the Company, that a registration statement
under the Securities Act is at that time in effect with respect to the legended
security or that such security can be freely transferred in a public sale
without such a registration statement being in effect and that such transfer
will not jeopardize the exemption or exemptions from registration pursuant to
which the Company issued the Purchased Shares.
6. PRE-CLOSING COVENANTS. During the time period from the date of this
---------------------
Agreement until the Closing:
6.1 Regulatory Approvals. The parties will promptly execute and
--------------------
file, or join in the execution and filing, of any application, notification or
any other document that may be necessary in order to obtain the authorization,
approval or consent of any governmental authority, whether federal, state, local
or foreign, which may be reasonably required in connection with the consummation
of the transactions contemplated hereby. The parties will use diligent efforts
to obtain all such authorizations, approvals and consents.
6.2 Satisfaction of Conditions Precedent. The Company and Xcelera
------------------------------------
will use their diligent efforts to satisfy or cause to be satisfied all the
conditions precedent which are set forth in Section 7, the Investor
11
will use its diligent efforts to satisfy or cause to be satisfied all the
conditions precedent which are set forth in Section 8, and the parties will use
their diligent efforts to cause the transactions contemplated by this Agreement
to be consummated in accordance with this Agreement.
7. CONDITIONS TO INVESTORS' OBLIGATIONS AT CLOSING. The obligations of
-----------------------------------------------
the Investor under this Agreement are subject to the fulfillment or waiver, on
or before the Closing, of each of the following conditions:
7.1 Representations and Warranties True. The representations and
-----------------------------------
warranties of the Company set forth in Section 3 (other than those in Section
3.28 for which this Section 7.1 is not applicable) (a) that are qualified as to
materiality will be true and correct and (b) that are not qualified as to
materiality shall be true and correct in all material respects, in each case on
and as of the Closing with the same force and effect as if they had been made at
the Closing Date (except for any such representations or warranties that, by
their terms, speak only as of a specific date or dates, in which case such
representations and warranties that are qualified as to materiality shall be
true and correct, and such representations and warranties that are not qualified
as to materiality shall be true and correct in all material respects, on and as
of such specified date or dates).
7.2 Representations and Warranties True. The representations and
-----------------------------------
warranties of Xcelera set forth in Section 4 (a) that are qualified as to
materiality will be true and correct and (b) that are not qualified as to
materiality shall be true and correct in all material respects, in each case on
and as of the Closing with the same force and effect as if they had been made at
the Closing Date (except for any such representations or warranties that, by
their terms, speak only as of a specific date or dates, in which case such
representations and warranties that are qualified as to materiality shall be
true and correct, and such representations and warranties that are not qualified
as to materiality shall be true and correct in all material respects, on and as
of such specified date or dates).
7.3 Performance. Each of the Company and Xcelera shall have
-----------
performed and complied in all material respects with all agreements, obligations
and conditions contained in this Agreement that are required to be performed or
complied with by it on or before the Closing and shall have obtained all
material approvals, consents and qualifications necessary to complete the
purchase and sale described herein.
7.4 Compliance Certificate. The Company shall have delivered to the
----------------------
Investor at the Closing a certificate signed on its behalf by its President,
Chief Executive Officer, or Chief Financial Officer certifying that the
conditions specified in Sections 7.1 and 7.3 have been fulfilled. Xcelera shall
have delivered to the Investor at the Closing a certificate signed on its behalf
by its President, Chief Executive Officer, or Chief Financial Officer certifying
that the conditions specified in Section 7.3 have been fulfilled.
7.5 Securities Exemptions. The offer and sale of the Purchased
---------------------
Shares to the Investor pursuant to this Agreement shall be exempt from the
registration requirements of the Securities Act, the qualification requirements
of the California Corporate Securities Law of 1968, as amended (the "Law") and
the registration and/or qualification requirements of all other applicable state
securities laws.
7.6 Proceedings and Documents. All corporate and other proceedings
-------------------------
in connection with the transactions contemplated at the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Investor and to the Investor's counsel, and they shall each
have received all such certified or other copies of such documents as they may
reasonably request. Such documents shall consist of the following:
(a) Certified Charter Documents. A copy of the Certificate of
---------------------------
Incorporation and the Bylaws of the Company (as amended through the date of the
Closing), certified by the Secretary of the Company as true and correct copies
thereof as of the Closing.
(b) Corporate Actions.
-----------------
(i) A copy of the resolutions of the Board of Directors
and, if required, the stockholders of the Company evidencing the approval of
this Agreement, the Investors' Rights Agreement, the Co-
12
Sale Agreement, the Registration Rights Agreement and the Letter Agreement, the
issuance of the Purchased Shares and the other matters contemplated hereby,
certified by the Secretary of the Company to be true, complete and correct.
(ii) A copy of the resolutions of the Board of Directors
and, if required, the stockholders of Xcelera evidencing the approval of this
Agreement, the Investors' Rights Agreement, the Co-Sale Agreement, the
Registration Rights Agreement and the Voting Agreement and the other matters
contemplated hereby, certified by the Secretary of Xcelera to be true, complete
and correct.
7.7 Board of Directors. The Board Designee (as defined in the Voting
------------------
Agreement) shall be appointed to the Company's Board of Directors.
7.8 Investors' Rights Agreement. The Company and Xcelera shall have
---------------------------
executed and delivered the Investors' Rights Agreement in the form attached to
this Agreement as Exhibit C (the "Investors' Rights Agreement").
---------
7.9 Co-Sale Agreement. The Company and Xcelera shall have executed
-----------------
and delivered the Right of First Refusal and Co-Sale Agreement in the form
attached to this Agreement as Exhibit D (the "Co-Sale Agreement").
---------
7.10 Registration Rights Agreement. The Company and Xcelera shall
-----------------------------
have executed and delivered the Registration Rights Agreement in the form
attached to this Agreement as Exhibit E (the "Registration Rights Agreement").
---------
7.11 Letter Agreement. The Company shall have executed and delivered
----------------
the Letter Agreement in the form attached to this Agreement as Exhibit G (the
---------
"Letter Agreement").
7.12 Voting Agreement. Xcelera shall have executed and delivered the
----------------
Voting Agreement in the form attached to this Agreement as Exhibit I (the
---------
"Voting Agreement").
7.13 Xxxx-Xxxxx-Xxxxxx Compliance. All applicable waiting periods
----------------------------
under the HSR Act shall have expired or early termination shall have been
granted by both the Federal Trade Commission and the United States Department of
Justice.
8. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations
--------------------------------------------------
of the Company and Xcelera to the Investor under this Agreement are subject to
the fulfillment or waiver on or before the Closing of each of the following
conditions by the Investor:
8.1 Representations and Warranties. The representations and
------------------------------
warranties of the Investor set forth in Section 5 (a) that are qualified as to
materiality will be true and correct and (b) that are not qualified as to
materiality shall be true and correct in all material respects, in each case on
and as of the Closing with the same force and effect as if they had been made at
the Closing Date (except for any such representations or warranties that, by
their terms, speak only as of a specific date or dates, in which case such
representations and warranties that are qualified as to materiality shall be
true and correct, and such representations and warranties that are not qualified
as to materiality shall be true and correct in all material respects, on and as
of such specified date or dates).
8.2 Performance. The Investor shall have performed and complied
-----------
with all agreements, obligations and conditions contained in this Agreement that
are required to be performed or complied with by it on or before the Closing and
shall have obtained all material approvals, consents and qualifications
necessary to complete the purchase and sale described herein.
8.3 Compliance Certificate. The Investor shall have delivered to the
----------------------
Company and Xcelera at the Closing a certificate signed on its behalf by its
President, Chief Executive Officer, or Chief Financial Officer certifying that
the conditions specified in Sections 8.1 and 8.2 have been fulfilled.
13
8.4 Proceedings and Documents. All corporate and other proceedings
-------------------------
in connection with the transactions contemplated at the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Company and to the Company's counsel, and they shall each have
received all such certified or other copies of such documents as they may
reasonably request. Such documents shall consist of the following:
(a) Certified Charter Documents. A copy of the Certificate of
---------------------------
Incorporation and the Bylaws of the Investor (as amended through the date of the
Closing), certified by the Secretary of the Investor as true and correct copies
thereof as of the Closing.
(b) Corporate Actions. A copy of the resolutions of the Board
-----------------
of Directors and, if required, the stockholders of the Investor evidencing the
approval of this Agreement, the Investors' Rights Agreement, the Co-Sale
Agreement, the Registration Rights Agreement, the Letter Agreement, the
Commercial Agreement and the Voting Agreement, the issuance of the Investor
Common Shares and the other matters contemplated hereby, certified by the
Secretary of the Investor to be true, complete and correct.
8.5 Payment of Purchase Price. The Investor shall have delivered to
-------------------------
the Company the purchase price in accordance with the provisions of Section 2.
8.6 Securities Exemptions. The offer and sale of the Purchased
---------------------
Shares to the Investor pursuant to this Agreement shall be exempt from the
registration requirements of the Securities Act, the qualifications requirements
of the Law and the registration and/or qualification requirements of all other
applicable state securities laws.
8.7 Investors' Rights Agreement. The Investor shall have executed
---------------------------
and delivered the Investors' Rights Agreement.
8.8 Co-Sale Agreement. The Investor shall have executed and
-----------------
delivered the Co-Sale Agreement.
8.9 Registration Rights Agreement. The Investor shall have executed
-----------------------------
and delivered the Registration Rights Agreement.
8.10 Letter Agreement. The Investor shall have executed and
----------------
delivered the Letter Agreement.
8.11 Xcelera Purchase Agreement. The Closing (as defined in the
--------------------------
Xcelera Purchase Agreement) shall have occurred. This condition may be satisfied
concurrently with the Closing of this Agreement.
8.11 Voting Agreement. The Investor shall have executed and
----------------
delivered the Voting Agreement.
8.12 Xxxx-Xxxxx-Xxxxxx Compliance. All applicable waiting periods
----------------------------
under the HSR Act shall have expired or early termination shall have been
granted by both the Federal Trade Commission and the United States Department of
Justice.
8.13 Nasdaq Listing. The Investor Common Shares shall be authorized
--------------
for listing on the Nasdaq Stock Market, subject to notice of issuance.
9. GENERAL PROVISIONS.
------------------
9.1 Survival of Warranties.
----------------------
(a) Generally.
---------
14
(i) The representations, warranties and covenants of the
Company, Xcelera and the Investor contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing for a period of eighteen months, except with respect to the
representations, warranties and covenants in Sections 3.1 through 3.6, 3.10,
3.21 through 3.26, 4.1 through 4.4, 5.1 through 5.6, and 5.9 through 5.14, which
survive for the applicable statutory period; provided that nothing herein shall
limit the right of an Indemnified Person (as defined below) to make a claim at
any time against an Indemnifying Person (as defined below) for fraud or willful
misconduct and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Company, Xcelera or the Investor, or
their respective counsel, as the case may be. The indemnification provided for
in this Section 9.1 shall not apply unless and until the aggregate amounts of
losses, liabilities or damages ("Losses") incurred by an Indemnified Person (as
defined below) as a result of a breach of the representations, warranties and
covenants (other than Section 3.28) by an Indemnifying Person under this
Agreement exceed a cumulative aggregate of $6,375,000, in which event the
Indemnifying Person shall, subject to the other limitations herein, be liable
for all such amounts. The indemnification provided for in this Section 9.1 shall
not apply unless and until the aggregate amounts of the Losses incurred by an
Indemnified Person as a result of a breach of Section 3.28 exceed a cumulative
aggregate of $25 million, in which event the Indemnifying Person shall, subject
to the other limitations herein, be liable for all such amounts. Notwithstanding
the foregoing, in no event shall the aggregate liability of the Company and
Xcelera on one hand, or the Investor on the other hand, under this Section 9.1
or under Section 8.6 of the Xcelera Purchase Agreement, exceed $159,375,000.
(ii) Claims against an Indemnifying Person may be
satisfied, to the extent desired by an Indemnifying Person, by the delivery of
common stock acquired pursuant to this Agreement or the Xcelera Purchase
Agreement. Shares of such common stock then traded on a national securities
exchange or the Nasdaq National Market (or a similar national quotation system)
shall be deemed to have a value of the average of the closing prices of the
shares of common stock on such exchange or system over the ten-day period ending
three days prior to such delivery. Shares of such common stock with no active
public market shall be deemed to have a value of the fair market value thereof,
as determined in good faith by the Board of Directors of the issuer of such
shares of common stock.
(b) Procedure. Each person entitled to indemnification under this
---------
Agreement (an "Indemnified Person") shall give notice to the party required to
provide indemnification (the "Indemnifying Person") promptly after such
Indemnified Person has actual knowledge of any claim as to which indemnity may
be sought and shall permit the Indemnifying Person to assume the defense of any
such claim and any litigation resulting therefrom, provided that counsel for the
Indemnifying Person who conducts the defense of such claim or any litigation
resulting therefrom shall be approved by the Indemnified Person (whose approval
shall not unreasonably be withheld), and the Indemnified Person may participate
in such defense at such party's expense (unless the Indemnified Person has
reasonably concluded that there may be a conflict of interest between the
Indemnifying Person and the Indemnified Person in such action or unless the
Indemnifying Person fails to assume the defense or pursue it in good faith, in
which case the fees and expenses of counsel for the Indemnified Person shall be
at the expense of the Indemnifying Person), and provided further that the
failure of any Indemnified Person to give notice as provided herein shall not
relieve the Indemnifying Person of its obligations under this Section 9.1 except
to the extent the Indemnifying Person is materially prejudiced thereby. No
Indemnifying Person, in the defense of any such claim or litigation, shall
(except with the consent of each Indemnified Person) consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Person
of a release from all liability in respect to such claim or litigation. Each
Indemnified Person shall furnish such information regarding itself or the claim
in question as an Indemnifying Person may reasonably request in writing and as
shall be reasonably required in connection with the defense of such claim and
litigation resulting therefrom.
9.2 Successors and Assigns. The terms and conditions of this
----------------------
Agreement shall inure to the benefit of and be binding upon the respective
successors of the parties. This Agreement is not assignable by any party hereto
without the written consent of the other party hereto.
15
9.3 Governing Law. This Agreement shall be governed by and construed under
-------------
the internal laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California, without reference to principles of conflict of laws or choice of
laws.
9.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
9.5 Headings. The headings and captions used in this Agreement are used for
--------
convenience only and are not to be considered in construing or interpreting this
Agreement. All references in this Agreement to sections, paragraphs, exhibits
and schedules shall, unless otherwise provided, refer to sections and paragraphs
hereof and exhibits and schedules attached hereto, all of which exhibits and
schedules are incorporated herein by this reference.
9.6 Notices. Unless otherwise provided, any notice required or permitted
-------
under this Agreement shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified or on the next business
day following deposit with a nationally recognized overnight courier service and
addressed to the party to be notified at the following address:
(a) If to the Investor:
Exodus Communications, Inc.
0000 Xxxxxxx Xxxxxxx Xxxx.
Xxxxx Xxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, General Counsel
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Fenwick & West LLP
Xxx Xxxx Xxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
(b) If to the Company:
Mirror Image Internet, Inc.
00 Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Timo Aittola, Chief Financial Officer
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
16
(c) If to Xcelera:
Xxxxxxx.xxx Inc.
X.X. Xxx 000
Xxxxxx House
South Church Street
Grand Cayman Islands, British West Indies
Attention: Xxxxxx Xxxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
with copies to:
00 Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxxx X. Xxx, President
Phone: (000) 000-0000
Fax: (000) 000-0000
and
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
or to such other address as the party in question may have furnished to the
other party by written notice given in accordance with this Section 9.6.
9.7 No Finder's Fees. Each party represents that it neither is nor will be
----------------
obligated for any finder's or broker's fee or commission in connection with this
transaction, except that the Company shall be responsible for a fee to Chase
Securities Inc. and the Investor shall be responsible for a fee to Xxxxxxx,
Xxxxx & Co.
9.8 Costs, Expenses. Each party will bear its respective expenses incurred
---------------
with respect to this Agreement and the transactions contemplated hereby.
9.9 Amendments and Waivers. Any term of this Agreement may be amended and
----------------------
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Company, Xcelera and the Investor.
9.10 Severability. If one or more provisions of this Agreement are held to
------------
be unenforceable under applicable law, such provision(s) shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision(s) were so excluded and shall be enforceable in accordance with its
terms.
9.11 Entire Agreement. This Agreement, together with all exhibits and
----------------
schedules hereto, constitutes the entire agreement and understanding of the
parties with respect to the subject matter hereof and supersedes any and all
prior negotiations, correspondence, agreements, understandings duties or
obligations between the parties with respect to the subject matter hereof.
9.12 Further Assurances. From and after the date of this Agreement, upon the
------------------
request of the Investor or the Company, the Company and the Investor shall
execute and deliver such instruments, documents or
17
other writings as may be reasonably necessary or desirable to confirm and carry
out and to effectuate fully the intent and purposes of this Agreement.
9.13 Indemnification. The Company and Xcelera hereby agree, jointly and
---------------
severally, to indemnify and hold harmless the Investor and its subsidiaries and
each person, if any, who controls the Investor within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act of 1934, as
amended, and their respective directors, officers, agents and employees (each,
an "Indemnified Person") from and against and to pay any losses, claims, damages
or liabilities (or actions or proceedings in respect thereof) ("Damages") to
which such Indemnified Person may become subject as the result of any third-
party action, claim or proceeding brought by a stockholder or a former
stockholder of the Company with respect to events occurring prior to the date of
this Agreement or with respect to this Agreement and the transactions
contemplated hereby, and will reimburse any Indemnified Person for all expenses
(including, without limitation, reasonable counsel and expert fees) as they are
incurred by any such Indemnified Person in connection with investigating,
preparing or defending any such action or proceeding, whether pending or
threatened, and whether or not such Indemnified Person is a party hereto. The
agreement of the Company in this Section shall be in addition to any liability
the Company and Xcelera may otherwise have.
9.14 Public Announcement. Upon execution of this Agreement, the parties will
-------------------
issue a press release approved by the parties announcing this Agreement and the
transactions contemplated hereby. Thereafter, the Company, Xcelera or the
Investor may issue such press releases, and make such other disclosures
regarding this Agreement and the transactions contemplated hereby as it
determines are required under applicable securities laws or regulatory rules.
[Remainder of page intentionally left blank.]
18
In Witness Whereof, the parties hereto have executed this Agreement as of
the date first written above.
Mirror Image Internet, Inc., Exodus Communications, Inc.,
a Delaware corporation a Delaware corporation
Name: /s/ Timo Aittola Name: /s/ Xxxxx X. Xxxxxxx
------------------------- ---------------------------------------
By: Timo Aittola By: Xxxxx X. Xxxxxxx
--------------------------- -----------------------------------------
Title: Chief Financial Officer Title: President and Chief Executive Officer
------------------------ --------------------------------------
Xxxxxxx.xxx Inc.,
a Cayman Islands corporation
Name: /s/ Xxxxxxxxx X. Xxx
-------------------------
By: Xxxxxxxxx X. Xxx
---------------------------
Title: Chief Executive Officer
-----------------------
[Signature Page to Common Stock Purchase Agreement]
19
