JATO COMMUNICATIONS CORP.
SERIES B PREFERRED STOCK
PURCHASE AGREEMENT
APRIL 16, 1999
JATO COMMUNICATIONS CORP.
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES B PREFERRED STOCK PURCHASE AGREEMENT (the "AGREEMENT") is
entered into as of this 16th day of April, 1999, by and among JATO
COMMUNICATIONS CORP., 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 sixteen million (16,000,000) shares of its Series B Preferred Stock, $.01 par
value (the "SHARES"); and
WHEREAS, the Company desires to issue and sell the Shares to the
Purchasers and the Purchasers severally desire to purchase some or all of the
Shares from the Company 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 First 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
"CERTIFICATE").
1.2 SALE AND PURCHASE. Subject to the terms and conditions hereof, at
the First Closing (as hereinafter defined), 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
$1.50 per share.
SECTION 2. CLOSING, DELIVERY AND PAYMENT
2.1 CLOSING. The initial closing of the sale and purchase of the
Shares under this Agreement (the "FIRST CLOSING") shall take place on the date
hereof, at the offices of Xxxxxx Godward LLP, 0000 Xxxxxx Xxxxxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxxx 00000, or at such other time or place as the Company and
Purchasers may mutually agree. The subsequent closing(s) of the sale and
purchase of Shares as set forth in Section 2.3 below shall take place at such
time and place as the Company and Purchasers participating therein shall
mutually agree (a "SUBSEQUENT
1.
CLOSING") (the First Closing and any Subsequent Closing shall collectively be
referred to herein as a "CLOSING" and each such date is referred to as a
"CLOSING DATE")
2.2 DELIVERY. At each Closing, subject to the terms and conditions
hereof, the Company will deliver to the Purchasers one or more stock
certificates, as each Purchaser may request, representing the number of Shares
to be purchased at such Closing by each Purchaser, registered in such
Purchaser's name, against payment of the purchase price therefor, by check or
wire transfer made payable to the order of the Company.
2.3 SUBSEQUENT SALES OF SHARES. At any time on or before the 30th day
following the First Closing, the Company may sell up to the balance of the
Shares not sold at the First Closing. All such sales shall be made on the terms
and conditions set forth in this Agreement. Any Shares sold pursuant to this
Section 2.3 shall be deemed to be "Shares" for all purposes under this Agreement
and any purchasers thereof shall be deemed to be "Purchasers" for all purposes
under this Agreement; PROVIDED, THAT, the Company may not sell in excess of an
aggregate of fifteen million six hundred thousand (15,600,000) shares (including
those shares sold at the First Closing) of Series B Stock (as adjusted for stock
splits, stock dividends and the like).
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on a Schedule of Exceptions delivered by the Company
to the Purchasers at the First Closing or at any Subsequent Closing, as the case
may be, the Company hereby represents and warrants to each Purchaser as of the
date of this Agreement as follows:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of the
Company and Subsidiary (as defined in Section 3.2 below) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Each of the Company and Subsidiary has all requisite corporate power
and authority to own and operate their respective properties and assets. The
Company has all requisite corporate power and authority to execute and deliver
this Agreement, the Investors' Rights Agreement, in the form attached hereto as
EXHIBIT C (the "INVESTORS' RIGHTS AGREEMENT"), and the Stockholders' Agreement,
in the form attached hereto as EXHIBIT D (the "STOCKHOLDERS' AGREEMENT"), issue
and sell the Shares and the Conversion Shares and to carry out the provisions of
this Agreement, the Investors' Rights Agreement, the Stockholders' Agreement and
the Certificate. Each of the Company and Subsidiary has the requisite corporate
power and authority to carry on its business as presently conducted and as
presently proposed to be conducted. Each of the Company and Subsidiary is duly
qualified and is authorized to do business and is in good standing as a foreign
corporation in all jurisdictions in which the nature of their respective
activities and of their respective properties (both owned and leased) make such
qualifications necessary, except for those jurisdictions in which failure to do
so would not have a material adverse effect on the Company or Subsidiary or
their respective businesses. The Company has made available to the Purchasers
true, correct and complete copies of the Company's Restated Certificate of
Incorporation and Bylaws, each as amended to date and in full force and effect
on the date hereof. The Company has made available to the Purchasers true,
correct and complete copies of Subsidiary's Certificate of Incorporation and
Bylaws, each as amended to date and in full force and effect on the date hereof.
Since its inception, Subsidiary has had no operations and has not incurred any
material obligations.
2.
3.2 SUBSIDIARIES. Other than JATO Operating Corp., a Delaware
corporation (the "SUBSIDIARY"), 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. The
Company owns shares of the Subsidiary free and clear of all encumbrances.
3.3 CAPITALIZATION; VOTING RIGHTS.
(a) The authorized capital stock of the Company, immediately
prior to the Closing, will consist of (a) forty million (40,000,000) shares of
Common Stock, of which six million two hundred fifty thousand two (6,250,002)
shares are issued and outstanding, and (b) nineteen million (19,000,000) shares
of Preferred Stock, of which three million (3,000,000) shares are designated
Series A Preferred Stock, of which one million seven hundred fifty-one thousand
nine hundred eighty five (1,751,985) are issued and outstanding, and of which
sixteen million (16,000,000) shares are designated Series B 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, (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 Certificate. The Conversion Shares have been duly and
validly reserved for issuance. As of the First Closing, there has been no
action taken by the Company which would have required an adjustment to the
Series B Conversion Price, as defined in the Certificate. Except as set forth on
Schedule 3.3 hereto and except as may be granted pursuant to this Agreement or
the Investors' Rights Agreement, there are no outstanding options, warrants,
rights (including conversion or preemptive rights and rights of first refusal),
proxy or stockholder agreements, or agreements of any kind for the purchase or
acquisition from the Company of any of its securities. The Shares and the
Conversion Shares have been duly authorized and, when issued in compliance with
the provisions of this Agreement and the Certificate, will be validly issued
(including, without limitation, issued in compliance with applicable state and
federal securities laws), fully paid and nonassessable, subject to no preemptive
rights, 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 transfer is proposed.
(b) The authorized capital stock of Subsidiary consists of one
hundred (100) shares of Common Stock, all of which are issued and outstanding
and held of record by the Company.
3.4 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on the
part of the Company, its officers, directors and stockholders necessary for the
authorization of this Agreement, the Investors' Rights Agreement, the
Stockholders' Agreement and the Employment Agreements (as defined in
Section 5.1(j)), 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 Certificate
has been taken or will be taken prior to the Closing. The Agreement, the
Investors' Rights Agreement, the Stockholders' Agreement and the Employment
Agreements, when executed and delivered, will be valid and binding obligations
of the Company enforceable in accordance with their terms,
3.
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 3.11 of the
Investors' Rights Agreement may be limited by applicable laws. The sale of the
Shares and the subsequent conversion of the Shares into Conversion Shares are
not and will not be subject to any preemptive rights or rights of first refusal
that have not been properly waived or complied with.
3.5 FINANCIAL STATEMENTS. The Company has delivered to each Purchaser
(i) its unaudited balance sheet as at December 31, 1998 and unaudited statement
of income and cash flows for the period from inception and ending December 31,
1998 and (ii) its unaudited balance sheet as at March 31, 1999 (the "STATEMENT
DATE") and unaudited consolidated statement of income for the three-month period
ending on the Statement Date (collectively, the "FINANCIAL STATEMENTS"). 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, 1998 and the Statement
Date; PROVIDED, HOWEVER, that the unaudited financial statements are subject to
normal recurring year-end audit adjustments (which are not expected to be
material), and may not contain all footnotes required under generally accepted
accounting principles.
3.6 LIABILITIES. The Company has no material liabilities and, to its
knowledge, knows of no material contingent liabilities not otherwise 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.
3.7 AGREEMENTS; ACTION.
(a) Except as set forth on Schedule 3.3 hereto and except for
agreements explicitly contemplated hereby, 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 to infringements of proprietary
rights.
(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 for money borrowed or any
other liabilities (other than with respect to 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
4.
liabilities individually less than $25,000, in excess of $75,000 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.
3.8 OBLIGATIONS TO RELATED PARTIES. There are no obligations of the
Company to officers, directors, stockholders, 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 and (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). No such officer, director or stockholder, or any
member of their immediate families is, directly or indirectly, interested in any
material contract with the Company (other than such contracts as relate to any
such person's ownership of capital stock or other securities of the Company).
The Company is not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation.
3.9 ABSENCE OF CHANGES. Except as set forth in Schedule 3.9, since
the Statement Date, there has not been:
(a) Any change in the assets, liabilities, financial condition,
earnings 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, earnings 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 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 immaterial
advances made in the ordinary course of business;
5.
(g) Any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder including, without
limitation, any (i) increase in the compensation payable or to become payable by
the Company to any of the Company's employees, (ii) any bonus, incentive
compensation, service award or other like benefit, granted, made or accrued,
contingently or otherwise, to or for the credit of the Company's employees, or
(iii) any employee welfare, pension, retirement, profit-sharing or similar
payment or arrangement (whether or not subject to ERISA) made or agreed to by
the Company;
(h) Any declaration or payment of any dividend or other
distribution of the assets 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 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;
(m) (i) Any change in practice with respect to taxes, (ii) any
making, changing or revoking of any tax election, or (iii) any settlement or
compromise of any dispute involving a tax liability;
(n) Any change in the number of shares of capital stock of the
Company issued and outstanding;
(o) Any failure to conduct the business of the Company in the
ordinary course;
(p) Any change in the method of accounting or accounting
practice of the Company;
(q) Any change in the Company's lines of business; or
(r) 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. For purposes of this subsection (r), a material and adverse effect
shall only be deemed to occur if its monetary impact exceeds, or with the
passage of time, will exceed $75,000.
6.
3.10 REAL PROPERTIES; TANGIBLE PERSONAL PROPERTY.
(a) REAL PROPERTIES. Schedule 3.10 sets forth each lease or
other agreement (including easements) under which the Company leases or has
rights in any real property (the "REAL PROPERTY LEASES," and, each individually,
a "REAL PROPERTY LEASE"). The Company has a valid and subsisting leasehold
interest in all the real property which is the subject of each Real Property
Lease. The Company does not presently own, and has never owned, any real
property and does not presently operate, and has never operated, any real
property, other than as a lessee.
(b) TANGIBLE PERSONAL PROPERTY. Except as set forth in
Schedule 3.10 hereto, (i) the Company has good, marketable and valid title to
all of the items of tangible personal property used in its operations and (ii)
all such tangible personal property is reflected on the Company's unaudited
Financial Statements, except as sold or disposed of subsequent to the date
thereof in the ordinary course of business consistent with past practices. The
tangible personal property of the Company is in good repair and working order,
reasonable wear and tear excepted, and constitutes all of the tangible personal
property necessary for the operation of the business as currently conducted.
3.11 PATENTS AND TRADEMARKS. The Company is the sole owner, free of
any lien or encumbrance, of, or has a valid license, on commercially reasonable
terms, to, all U.S. and foreign patents, registered designs, copyrights,
computer software and databases, trademarks, service marks and trade names,
whether or not registered, and other trade secrets, research and development,
formulae, inventions, processes, know-how and proprietary and intellectual
property rights and information, including all grants, registrations and
applications relating thereto (collectively, the "PROPRIETARY RIGHTS") necessary
for the conduct of its business as now conducted (the "COMPANY RIGHTS"). The
Company's rights in the Company Rights are, to the Company's knowledge, valid
and enforceable. The Company has received no demand, claim, notice or inquiry
from any person in respect of the Company Rights which challenges, threatens to
challenge or inquires as to whether there is any basis to challenge, the
validity of, or the rights of the Company in, any such Company Rights. There
are no outstanding options, licenses or agreements of any kind relating to the
Company Rights, nor is the Company bound by or a party to any options, licenses
or agreements of any kind with respect to the Proprietary Rights 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 taken, and
will take, all actions which are necessary in order to protect the Company
Rights and to acquire additional Proprietary Rights, consistent with prudent
commercial practices in the telecommunications industry. To the knowledge of
the Company, the Company is not in violation or infringement of, and has not
violated or infringed, any Proprietary Rights of any other person. To the
knowledge of the Company, no person is infringing any Company Rights. 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's business by the
employees of the Company, nor will, to the Company's knowledge, the conduct of
the Company's business as proposed 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
7.
prior to their employment by the Company, except for inventions, trade secrets
or proprietary information that have been assigned to the Company.
3.12 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation or default of any term of its Certificate or Bylaws, or of any
provision of any mortgage, indenture, contract, agreement, instrument or
contract to which it is party or by which it is bound or of any judgment,
decree, order, writ or 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, the Investors'
Rights Agreement, the Stockholders' Agreement, the Employment Agreements and the
Compliance Certificate to be delivered pursuant to Section 5.1(f) hereof, and
the issuance and sale of the Shares pursuant hereto and of the Conversion Shares
pursuant to the Certificate, 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.
3.13 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, the Investors' Rights Agreement
or the Stockholders' Agreement 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 or in
violation of any order, writ, injunction, judgment or decree or any rule or
regulation 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.
3.14 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. Neither the Company nor the Subsidiary is
a party to any agreement relating to allocating or sharing the payment of, or
liability for taxes with respect to, any taxable period. Neither the Company
nor Subsidiary has any deferred income
8.
reportable for a period ending after the Closing Date that is attributable to a
transaction (e.g., an installment sale) occurring in, or resulting from a change
of accounting method for, a period ending on or prior to the Closing Date.
3.15 EMPLOYEES. 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. Neither the Company, nor any entity
which is required to be aggregated with the Company pursuant to Sections 414(b),
(c), (m) or (o) of the Internal Revenue Code of 1986 has any liability whether
actual or contingent, with respect to any employee benefit plan or arrangement.
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 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, nor does the Company have a present intention to terminate the
employment of any officer, key employee or group of key employees. To the
Company's knowledge, the Company is in compliance with all laws and orders
relating to the employment of labor, including, without limitation, all such
laws and orders relating to wages, hours, discrimination, civil rights, safety
and the collection and payment of withholding and/or Social Security taxes and
similar taxes. There are no complaints, charges or claims against the Company
pending, or, to the Company's knowledge, threatened to be brought or filed, with
any governmental entity or arbitrator based on, arising out of, in connection
with, or otherwise relating to the employment or termination of employment of
any individual by the Company.
3.16 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each current
employee, officer and consultant of the Company has executed a Proprietary
Information and Inventions Agreement that effectively waives any ownership
rights in the invention or authorship of any Company Rights and has assigned to
the Company all rights with respect thereto. No current employee, officer or
consultant of the Company has excluded works or inventions made prior to his or
her employment with the Company from his or her assignment of the works or
inventions pursuant to such employee, officer or consultant's Non-Competition,
Proprietary Information and Inventions Agreement in the form attached hereto as
EXHIBIT E.
3.17 OBLIGATIONS OF MANAGEMENT. Each officer of the Company is
currently devoting one hundred percent (100%) of his 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.
3.18 REGISTRATION RIGHTS. Except as required pursuant to the
Investors' Rights Agreement, the Company is presently not under any obligation,
and has not granted any rights, to
9.
register (as defined in Section 1 of the Investors' Rights Agreement) any of the
Company's presently outstanding securities or any of its securities that may
hereafter be issued.
3.19 COMPLIANCE WITH LAWS; PERMITS. 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. Schedule 3.19 sets forth the states in which
the Company has obtained 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.
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 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 or any state securities
laws.
3.21 FULL DISCLOSURE. This Agreement, the Exhibits hereto, the
Investors' Rights Agreement, the Stockholders' Agreement and all other documents
delivered by the Company to 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 omit to
state a material fact necessary in order to make the statements contained herein
or therein not misleading. There is no fact peculiar to the Company and known to
the Company which materially adversely affects, or reasonably could be expected
to materially adversely affect in the future, the business, property or assets,
or financial condition of the Company, which has not been set forth in this
Agreement or in the other documents described herein or furnished to the
Purchasers by or on behalf of the Company prior to the date hereof in connection
with the transactions contemplated hereby.
3.22 APPLICATION OF PROCEEDS. The proceeds of the sale of the Shares
will be used by the Company to fund the capital expenditures and working capital
needs of the Company and for other general corporate purposes. The Company does
not own any "margin security' within the meaning of Regulation G (12 CFR Part
207) of the Board of Governors of the Federal Reserve System (herein called a
"margin security"). Neither the Company nor any agent acting on its behalf, has
taken or will take any action which might cause this Agreement to violate
Regulation G, Regulation T, Regulation X or any other regulation of the Board of
Governors of the Federal
10.
Reserve System or to violate the Securities Exchange Act of 1934, in each case
as in effect now or as the same hereafter may be in effect.
3.23 CERTAIN LIMITATIONS. Neither the nature of the Company, nor any
of its respective businesses or properties, nor any relationship between the
Company and any other person, nor any circumstance in connection with the offer,
issue, sale or delivery of the Shares (other than in any such case, any matter
relating to the Purchasers) is, such as to require or give rise to any
limitation on any Purchaser's ownership of any equity securities of the Company.
3.24 ENVIRONMENTAL.
(a) To the Company's knowledge, the Company complies, and at
all times has complied, in all material respects with all applicable
Environmental Laws. For the purposes hereof, "ENVIRONMENTAL LAW" shall mean any
judgment, decree, order, law, permit, license, rule, regulation or agency
requirement relating to or addressing the environment, health or safety (to the
extent relating to exposure to any hazardous substance), including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act, as amended, the Resource Conservation and Recovery Act, as amended, the
Superfund Amendments and Reauthorization Act of 1986, the Federal Clean Water
Act, the Federal Clean Air Act, the Toxic Substances Control Act and any
federal, state, local or foreign statute, regulation, ordinance, order or decree
relating to health, safety (in the case of health and safety to the extent
relating to exposure in the workplace or otherwise to any Hazardous Substance)
or the environment.
(b) There is not now pending or, to the Company's knowledge,
threatened any action, claim, proceeding or investigation nor has the Company
received any notice, claim, demand letter, or request for information at any
time, alleging that the Company may be in violation of, or liable under, any
Environmental Law.
(c) To the Company's knowledge, without initiating any inquiry,
there are no hazardous substances located on the properties currently or
formerly owned or operated by the Company (including soil, groundwater or
surface features and buildings or structures thereon) other than as permitted
under applicable Environmental Laws, and none of the properties contain, or has
contained, any underground storage tank.
3.25 INSURANCE. The Company maintains and/or is covered by valid
policies of workers' compensation insurance and of insurance with respect to its
properties and business. The Company currently maintains, in full force,
insurance covering the risks of the Company, if any, of such types and in such
amounts and with such deductibles as are customary for other companies engaged
in similar lines of business and with good and responsible insurance companies.
3.26 SMALL BUSINESS MATTERS. The Company acknowledges that ABN AMRO
Private Equity is a federally licensed Small Business Investment Company (an
"SBIC HOLDER") under the Small Business Investment Company Act. The information
regarding the Company and its affiliates in Small Business Administration Form
480, Form 652 and Parts A and B of Form 1031 delivered at or promptly following
the Closing is accurate in all material respects. Neither the Company nor any
subsidiary of the Company presently engages in, or shall hereinafter
11.
engage in, any activities, nor shall the Company nor any subsidiary of the
Company use the proceeds from the sale of Series B Stock directly or indirectly
for any purpose for which an SBIC Holder is prohibited from providing funds by
Small Business Investment Company Act regulations.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby represents and warrants to the Company 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, the Investors' Rights Agreement, the Stockholders' Agreement and to
carry out their provisions. All action on Purchaser's part required for the
lawful execution and delivery of this Agreement, the Investors' Rights Agreement
and the Stockholders' Agreement has been or will be effectively taken prior to
the Closing. Upon their execution and delivery, this Agreement, the Investors'
Rights Agreement and the Stockholders' Agreement 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 the Investors' Rights Agreement may be limited by applicable laws.
4.2 INVESTMENT REPRESENTATIONS. Purchaser understands that neither
the Shares nor the Conversion Shares have 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 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.
12.
(c) ACCREDITED INVESTOR. Purchaser represents that it is an
"accredited investor" within the meaning of Regulation D under the Securities
Act.
(d) 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 as in effect from
time to time, 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 following the required holding period under
Rule 144 and the number of shares being sold during any three-month period not
exceeding specified limitations.
(e) 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 Investors' Rights Agreement and the
Stockholders' Agreement.
SECTION 5. CONDITIONS TO CLOSING
5.1 CONDITIONS TO PURCHASERS' OBLIGATIONS AT EACH CLOSING.
Purchasers' obligations to purchase the Shares at each Closing are subject to
the satisfaction, at or prior to each Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF
OBLIGATIONS. With respect to the First Closing, the representations and
warranties made by the Company in Section 3 hereof shall be true and correct in
all respects as of such Closing Date with the same force and effect as if they
had been made as of such 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 such Closing. With respect to any Subsequent Closing, the Company
shall have delivered an updated Schedule of Exceptions satisfactory to the
Purchasers, and the representations and warranties made by the Company in
Section 3 hereof, as modified by such revised Schedule of Exceptions, shall be
true and correct in all material respects as of such 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 such Closing.
(b) LEGAL INVESTMENT. On each 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, the Investors'
Rights Agreement and the
13.
Stockholders' Agreement (except for such as may be properly obtained subsequent
to the Closing).
(d) FILING OF CERTIFICATE. The Certificate shall have been
approved by the Board of Directors of the Company and filed with the Secretary
of State of the State of Delaware and shall be in full force and effect.
(e) 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.
(f) COMPLIANCE CERTIFICATE. The Company shall have delivered
to Purchasers a Compliance Certificate, executed by the President of the
Company, dated as of the Closing Date, to the effect that the conditions
specified in subsections (a), (c), (d) and (e) of this Section 5.1 have been
satisfied.
(g) INVESTORS' RIGHTS AGREEMENT. An Investors' Rights
Agreement, substantially in the form attached hereto as EXHIBIT C, shall have
been executed and delivered by the parties thereto.
(h) STOCKHOLDERS' AGREEMENT. A Stockholders' Agreement,
substantially in the form attached hereto as EXHIBIT D, shall have been executed
and delivered by the parties thereto.
(i) BOARD OF DIRECTORS. Upon the Closing, the authorized size
of the Board of Directors of the Company shall be five (5) members and the Board
shall consist of Xxxxxxx Xxxxxx, Xxxxx Xxxx, Xxxxx Xxxxxxxxxxx and Xxxxx Xxxxxx,
with one (1) vacancy existing.
(j) LEGAL OPINION. At the First Closing, the Purchasers shall
have received from Xxxxxx Godward LLP an opinion addressed to them, dated as of
the Closing Date, in substantially the form attached hereto as EXHIBIT F.
(k) EMPLOYMENT AGREEMENTS. Xxxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxx
Xxxx, Xxxxxxx Xxxxx and Xxx Xxxxxxx shall have each executed and delivered an
Employment Agreement (collectively, the "EMPLOYMENT AGREEMENTS"), in form and
substance satisfactory to the Purchasers participating in the First Closing.
(l) MINIMUM AMOUNT OF INVESTMENT. A minimum of ten million
(10,000,000) shares of the Company's Shares shall be sold at the First Closing.
(m) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
hereby, all documents and instruments incident to such transactions and all
documents, instruments and proceedings related to the Purchasers' business,
technical and legal due diligence 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.
14.
(n) EXPENSES. On the Closing Date, the Company shall have paid
(i) the reasonable out-of-pocket expenses of Crest Communications Partners, L.P.
and CEA Capital Partners USA, L.P. and (ii) the reasonable fees and expenses of
Xxxxx Xxxxxxxxxx LLP and Kraskin, Lesse & Xxxxxx, LLP as special counsel to the
Purchasers, in an amount not to exceed $75,000.
(o) CREDIT FACILITY. As of the First Closing Date, the Company
shall have received a commitment for the credit facility with Lucent
Technologies on terms and conditions acceptable to the Purchasers.
(p) BYLAWS. The Company shall have amended its bylaws,
substantially in the form attached hereto as EXHIBIT G.
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 the Purchasers in Section 4 hereof shall be true and
correct in all respects at the date of each 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 each Closing.
(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
Investors' Rights Agreement (except for such as may be properly obtained
subsequent to the Closing).
(d) FILING OF CERTIFICATE. The Certificate shall have been
approved by the Board of Directors of the Company and filed with the Secretary
of State of the State of Delaware and shall be in full force and effect.
(e) INVESTORS' RIGHTS AGREEMENT. An Investors' Rights
Agreement, substantially in the form attached hereto as EXHIBIT C, shall have
been executed and delivered by the Purchasers.
(f) STOCKHOLDERS' AGREEMENT. A Stockholders' Agreement,
substantially in the form attached hereto as EXHIBIT D, shall have been executed
and delivered by Purchasers.
(g) EMPLOYMENT AGREEMENTS. Xxxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxx
Xxxx, Xxxxxxx Xxxxx and Xxx Xxxxxxx shall have each executed and delivered an
Employment Agreement, in form and substance satisfactory to the Purchasers
participating in the First Closing.
15.
(h) MINIMUM AMOUNT OF INVESTMENT. A minimum of ten million
(10,000,000) shares of the Company's Shares shall be sold at the First Closing.
SECTION 6. MISCELLANEOUS
6.1 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Colorado without regard to its
conflict-of-laws rules.
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, including the Investors' Rights Agreement and the Stockholders'
Agreement, 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 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 sixty-six and two-thirds
percent (66 2/3%) 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 sixty-six and
two thirds percent (66 2/3%) 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 Investors'
Rights Agreement, the Stockholders' Agreement or the Certificate, shall impair
any such right, power or remedy, nor shall it be construed to be a
16.
waiver of any such 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 Investors' Rights Agreement, the Stockholders' Agreement or
under the Certificate or any waiver on such party's part of any provisions or
conditions of the Agreement, the Investors' Rights Agreement, the Stockholders'
Agreement or the 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 Investors' Rights Agreement, the Stockholders' Agreement,
the 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) upon receipt 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.
6.9 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.
6.10 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.
6.11 BROKER'S FEES. Each party hereto represents and warrants that,
with the exceptions of Xxxxxxx & Associates and North River Ventures, Inc., the
fees and expenses of which shall be paid by the Company, 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 6.11 being untrue.
6.12 ATTORNEYS' FEES. In the event that any dispute among the parties
to this Agreement, the Investors' Rights Agreement or the Stockholders'
Agreement, including any dispute with respect to, or attempt to enforce the
provisions of, the Certificate or Shares, 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, the Investors' Rights Agreement,
the Stockholders' Agreement or the Certificate or the Shares, including without
limitation, such reasonable fees and expenses of attorneys and accountants,
which shall include, without limitation, all fees, costs and expenses of
appeals.
17.
6.13 EXPENSES. The Company shall pay all reasonable costs and expenses
incurred with respect to the negotiation, execution and delivery of any
amendment to this Agreement, the Certificate, the Investors' Rights Agreement
and the Stockholders' Agreement, to the extent any such amendment would
adversely affect the holders of Series B Stock.
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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
18.
IN WITNESS WHEREOF, the parties hereto have executed the SERIES B
PREFERRED STOCK PURCHASE AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
JATO COMMUNICATIONS CORP. ------------------------------------
Please Print Name of Purchaser
By: /s/ Xxxxx X. Xxxx By:
----------------------------- ---------------------------------
Name: Name:
--------------------------- -------------------------------
Title: Title:
-------------------------- ------------------------------
0000-00xx Xxxxxx, Xxxxx 000 Address:
Xxxxxx, XX 00000 ----------------------------
------------------------------------
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
EXHIBIT A
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
FIRST CLOSING: APRIL 16,1999
NAME AND ADDRESS NUMBER OF SHARES PURCHASE PRICE
---------------- ---------------- --------------
Crest Communications 4,000,000 $6,000,000.00
Partners L.P.
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxxxxxx
CEA Capital Partners USA, L.P. 3,057,200 $4,585,800.00
00 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx XxXxxx
CEA Capital Partners USA 942,800 $1,414,200.00
CI, L.P.
00 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx XxXxxx
ABN AMRO Capital (USA), Inc. 1,631,816 $2,447,724.00
000 X. XxXxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxx
I Eagle Trust 590,554 $885,831.00
000 X. XxXxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxx
ABN AMRO Incorporated 110,963 $166,444.50
000 X. XxXxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxx
Access Technology Partners, L.P. 1,580,000 $2,370,000.00
Xxxxxxxxx & Xxxxx
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxx
Access Technology Partners 17,500 $26,250.00
Brokers Fund, X.X.
Xxxxxxxxx & Xxxxx
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxx
Xxxxxxxxx & Xxxxx California 195,000 $292,500.00
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxx
Xxxxxxxxx & Xxxxx Employee 75,000 $112,500.00
Venture Fund, X.X. XX
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxx
H&Q JATO Communications 132,500 $198,750.00
Investors, X.X.
Xxxxxxxxx & Xxxxx
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Xxxx X. Xxxxxx, Xx. and 133,333 $199,999.50
Xxxxxxx X. Xxxxxx, as Joint
Tenants
0000 X. Xxxxxxxx Xx.
Xxxxxxxxx Xxxxxxx, XX 00000
Xxxxxxx Family Trust 75,000 $112,500.00
0000 Xxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx
Xxxxxxx X. Xxxxxx 66,666 $99,999.00
0000 Xxx Xxxx Xxxx
Xxxxxxx, XX 00000
Xxxxx X. Xxxxxx 66,666 $99,999.00
0000 Xxx Xxxx Xxxx
Xxxxxxx, XX 00000
Xxxxx X. Xxxxxxx 66,666 $99,999.00
0000 Xxxxx Xxx Xxxxx
Xxxxxxxxx, XX 00000
Xxxxxxx X. Xxxxxxxx 66,666 $99,999.00
C/x Xxxxxx Brothers
000 Xxxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Xxxxxx X. Xxxxx 40,000 $60,000.00
0000 Xxxxxxxx Xxxxx
Xxxxx, XX 00000
Xxxxxxx X. Xxxxxxx, Xx. 33,333 $49,999.50
00 Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
GC&H Investments 33,333 $49,999.50
C/o Cooley Godward LLP
Xxx Xxxxxxxx Xxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx
Xxxx X. Xxxxxx 33,333 $49,999.50
00000 Xxxxxxx Xxxx
Xxxxxx, XX 00000
Xxxxxxx Brothers Investments 16,666 $24,999.00
0000 Xxxxxxxxx Xxxx
Xxxxxxxx Xxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxx 333 $500.00
0000 Xxxxxxx
Xxxx 000
Xxxxxx, XX 00000-0000
TOTAL 12,965,328 $19,447,992.50
SUBSEQUENT CLOSINGS
NAME AND ADDRESS NUMBER OF SHARES PURCHASE PRICE DATE OF
---------------- ---------------- -------------- -------
PURCHASE
--------
Xxxxxxx X.X. Xxxxx III 33,333 $50,000.00 April 19, 1999
Credit Suisse First Boston
0000 Xxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Xxxxxxx X. Xxxx and 133,333 $200,000.00 April 22, 1999
Xxxxxxx X. Xxxxxx, joint
Tenants w/Right of
Survivorship
00 Xxxxxxxxx Xxxxxx
Xxxxxxxx Xxxxxxx, XX
00000
Xxxxx X. Xxxxxxxxx and 33,333 $50,000.00 April 29, 1999
Xxxxxx Foderavo, Trustees
Xxxxxxxxx Family Trust
UTA DTD 9/14/91
Credit Suisse First Boston
0000 Xxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Xxx X. and Xxxxx X. Xxxxxxx 33,333 $50,000.00 April 30, 1999
0000 X. Xxxxxx Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Xxxxxxx Xxxxxxxx 40,000 $60,000.00 April 29, 1999
0000 00xx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Xxxx Xxxxxxxx 33,333 $50,000.00 April 29, 1999
000 Xxxxxxxx Xxxxxx
Xxxxxxx Xxxx, XX 00000
Benefactor Funding Corp. 33,333 $50,000.00 May 10, 1999
000 Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxx
Xxxxxxx & Xxxxx X. Xxxx 66,666 $100,000.00 May 00, 0000
XXXXXX
00 Xxxx Xxxx Xxxxx
Xxxxxx, XX 00000
Xxxxxx X. Xxxxxxx III 66,666 $100,000.00 May 11, 1999
00 Xxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Xxxxx X. Xxxxx, Xx. 3,333 $5,000.00 May 12, 1999
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Xxxx X. Xxxxx 3,333 $5,000.00 May 12, 1999
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Xxxxxxxxx Xxxxx 3,333 $5,000.00 May 12, 1999
0000 Xxxxxx Xxxxx #0-X
Xxxxxx, XX 00000
Xxxxxx X. Xxxxx 66,666 $100,000.00 May 13, 1999
0000 Xxxxxx Xxxx Xxxxx
Xxxxxxxxx, XX 00000
Xxxxx Xxxxxxx 66,666 $100,000.00 May 14, 1999
00000 X. Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Xxxxxxx X. Xxxxxxx, Xx. 33,333 $50,000.00 May 13, 1999
00 Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
SUBTOTAL: 649,994 $975,000.00
TOTAL SERIES B FINANCING 13,615,322 $20,422,992.50
EXHIBIT B
RESTATED CERTIFICATE OF INCORPORATION
EXHIBIT C
INVESTORS' RIGHTS AGREEMENT
EXHIBIT D
STOCKHOLDERS' AGREEMENT
EXHIBIT E
FROM OF PROPRIETARY INFORMATION
AND INVENTIONS AGREEMENT
NON-COMPETITION, PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
As an employee of JATO Communications Corp., a Delaware corporation, its
subsidiaries or its affiliates (together, the "Company"), and as a condition
of my employment by the Company and in consideration of the compensation now
and hereafter paid to me, I agree to the following (the "Agreement"):
1. MAINTAINING CONFIDENTIAL INFORMATION
(a) COMPANY INFORMATION. I agree at all times during the term of
my employment and thereafter to hold in strictest confidence, and not to use,
except for the benefit of the Company, or to disclose to any person, firm or
corporation, without the written authorization of the Board of Directors of
the Company, any trade secrets, confidential knowledge, data or other
proprietary information of the Company. By way of illustration and not
limitation, this shall include information relating to products, processes,
know-how, methods, software, developmental work, improvements, discoveries,
plans for marketing and selling, business plans, budgets and unpublished
financial statements, licenses, prices and costs, suppliers and customers,
and information regarding the skills and compensation of other employees of
the Company. Notwithstanding the foregoing, confidential information shall
not include any information which:
(i) at the time of disclosure, or thereafter, is generally available to
and known by the public;
(ii) was or is available to me on a non-confidential basis from a source
other than the Company; or
(iii) has been independently acquired or developed by me without
violating any of my obligations under this Agreement, as shown by my
competent written records.
(b) THIRD PARTY INFORMATION. I recognize that the Company has
received and in the future will receive confidential or proprietary
information from third parties subject to a duty on the Company's part to
maintain the confidentiality of such information and, in some cases, to use
it only for certain limited purposes. I agree that I owe the Company and
such third parties, both during the term of my employment and thereafter, a
duty to hold all such confidential or proprietary information in the
strictest confidence and not to, except as is consistent with the Company's
agreement with the third party, disclose it to any person, firm or
corporation or use it for the benefit of anyone other than the Company or
such third party, unless expressly authorized to act otherwise by an officer
of the Company.
2. ASSIGNMENT OF INVENTIONS AND ORIGINAL WORKS.
I agree that I will make prompt written disclosure to the Company, will
hold in trust for the sole right and benefit of the Company, and hereby
assign to the Company all my right, title and interest in and to any ideas,
inventions, original works of authorship, developments, improvements or trade
secrets which I may solely or jointly conceive or reduce to practice, or
cause to be conceived or reduced to practice, during the period of my
employment with the Company and for one (1) year after my employment. This
Agreement will not be deemed to require assignment of any invention developed
entirely on my own time without using the Company's equipment, supplies,
facilities or trade secrets and neither related to the Company's actual or
anticipated business, research or development, nor resulted from work
performed by me for the Company.
3. NO CONFLICTS OR SOLICITATION
For the period of my employment by the Company and for one (1) year
following my termination, I will not interfere with the business of the
Company by (i) soliciting, attempting to solicit, inducing, or otherwise
causing any employee of the Company to terminate his or her employment in
order to become an employee, consultant or independent contractor to or for
any other entity engaged in marketing or selling the type of products and
services offered by the Company or (ii) directly soliciting the business of
any customer or client of the Company (other than on behalf of the Company)
for the type of products and services offered by the Company.
4. COVENANT NOT TO COMPETE.
(a) I agree that during my employment with the Company, I will not
directly or indirectly engage in (whether as an employee, consultant,
proprietor, partner, director or otherwise), or have any ownership interest
1
in, or participate in the financing, operation, management or control of, any
person, firm, corporation or business that engages in a "Restricted Business"
in a "Restricted Territory" (as defined below). It is agreed that ownership
of (i) no more than ten percent (10%) of the outstanding voting stock of a
publicly traded corporation or (ii) any stock I presently own or (iii) any
options or other rights to acquire shares of a company's capital stock I
presently own shall not constitute a violation of this provision.
(b) As used herein, the terms:
(i) "Restricted Business" shall mean any competitive local exchange
carrier, high speed data communication services provider or any business
which otherwise engages in any other manner in any business which is
competitive with the Company.
(ii) "Restricted Territory" shall mean all regions within a fifty mile
radius of those cities in which the Company operates, or has disclosed to
you that it intends to operate, a business.
5. RETURN OF COMPANY DOCUMENTS
When I leave the employ of the Company, I will deliver to the Company
(and will not keep in my possession, recreate or deliver to anyone else) any
and all documents and other property, together with all copies thereof (in
whatever medium recorded) belonging to the Company, its successors or assigns
whether kept at the Company, home or elsewhere. I further agree that any
property situated on the Company's premises and owned by the Company,
including disks and other storage media, filing cabinets or other work areas,
is subject to inspection by Company personnel at any time with or without
notice.
6. LEGAL AND EQUITABLE REMEDIES
Because my services are personal and unique and because I may have access
to and become acquainted with the proprietary information of the Company, the
Company shall have the right to enforce this Agreement and any of its
provisions by injunction, specific performance or other equitable relief,
without bond and without prejudice to any other rights and remedies that the
Company may have for a breach of this Agreement.
7. NOT AN EMPLOYMENT CONTRACT. I agree and understand that nothing in
this Agreement shall confer any right with respect to continuation of my
employment by the Company, nor shall it interfere in any way with my right or
the Company's right to terminate my employment at a ny time, with or without
cause.
8. GENERAL PROVISIONS.
(a) GOVERNING LAW. This Agreement will be governed by and
construed according to the laws of the State of Colorado, excluding conflicts
of laws principles. I hereby expressly consent to the personal jurisdiction
of the state and federal courts located in Colorado for any lawsuit filed
there against me by the Company arising from or relating to this Agreement,
or such other location as the Company's principal executive office may then
be located.
(b) SEVERABILITY. If one or more of the provisions in this
Agreement are deemed unenforceable by law, then the remaining provisions will
continue in full force and effect. Moreover, if any restriction set forth in
Sections 3 or 4 hereof is found by any court of competent jurisdiction to be
unenforceable because it extends for too long a period of time or over too
great a range of activities or in too broad a geographic area, it shall be
interpreted to extend only over the maximum period of time, range of
activities or geographic area as to which it may be enforceable.
(c) BENEFIT; BINDING EFFECT. This Agreement will be binding upon
my heirs, executors, administrators and other legal representatives and will
be for the benefit of the Company, its successors and its assigns.
(d) SURVIVAL. The provisions of this Agreement shall survive the
termination of my employment and the assignment of this Agreement by the
Company to any successor in interest or other assignee.
2
I UNDERSTAND THAT THIS AGREEMENT AFFECTS MY RIGHTS TO INVENTIONS I MAKE
DURING MY EMPLOYMENT, AND RESTRICTS MY RIGHT TO DISCLOSE OR USE THE COMPANY'S
PROPRIETARY INFORMATION DURING OR SUBSEQUENT TO MY EMPLOYMENT.
I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS.
Dated:
----------------------- ------------------------------
Name
Address
-----------------------
------------------------------
------------------------------
ACCEPTED AND AGREED TO:
JATO COMMUNICATIONS CORP.
By:
--------------------------
Name:
------------------------
Title:
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3
EXHIBIT F
LEGAL OPINION
EXHIBIT G
FORM OF AMENDED BYLAWS
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
2.2 Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Subsequent Sales of Shares . . . . . . . . . . . . . . . . . . . . . 2
Section 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . . 2
3.1 Organization, Good Standing and Qualification. . . . . . . . . . . . 2
3.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.3 Capitalization; Voting Rights. . . . . . . . . . . . . . . . . . . . 3
3.4 Authorization; Binding Obligations . . . . . . . . . . . . . . . . . 3
3.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 4
3.6 Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.7 Agreements; Action . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.8 Obligations to Related Parties . . . . . . . . . . . . . . . . . . . 5
3.9 Absence of Changes . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.10 Real Properties; Tangible Personal Property. . . . . . . . . . . . . 7
3.11 Patents and Trademarks . . . . . . . . . . . . . . . . . . . . . . . 7
3.12 Compliance with Other Instruments. . . . . . . . . . . . . . . . . . 8
3.13 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.14 Tax Returns and Payments . . . . . . . . . . . . . . . . . . . . . . 8
3.15 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.16 Proprietary Information and Inventions Agreements. . . . . . . . . . 9
3.17 Obligations of Management. . . . . . . . . . . . . . . . . . . . . . 9
3.18 Registration Rights. . . . . . . . . . . . . . . . . . . . . . . . . 9
3.19 Compliance with Laws; Permits. . . . . . . . . . . . . . . . . . . .10
3.20 Offering Valid . . . . . . . . . . . . . . . . . . . . . . . . . . .10
3.21 Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . .10
3.22 Application of Proceeds. . . . . . . . . . . . . . . . . . . . . . .10
3.23 Certain Limitations. . . . . . . . . . . . . . . . . . . . . . . . .11
i.
TABLE OF CONTENTS
(CONTINUED)
PAGE
3.24 Environmental. . . . . . . . . . . . . . . . . . . . . . . . . . . .11
3.25 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
3.26 Small Business Matters . . . . . . . . . . . . . . . . . . . . . . .11
Section 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. . . . . . . . . . . .12
4.1 Requisite Power and Authority. . . . . . . . . . . . . . . . . . . .12
4.2 Investment Representations . . . . . . . . . . . . . . . . . . . . .12
4.3 Transfer Restrictions. . . . . . . . . . . . . . . . . . . . . . . .13
Section 5. CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . .13
5.1 Conditions to Purchasers' Obligations at each Closing. . . . . . . .13
5.2 Conditions to Obligations of the Company . . . . . . . . . . . . . .15
Section 6. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
6.1 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . .16
6.2 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
6.3 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . .16
6.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . .16
6.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
6.6 Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . .16
6.7 Delays or Omissions. . . . . . . . . . . . . . . . . . . . . . . . .16
6.8 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
6.9 Titles and Subtitles . . . . . . . . . . . . . . . . . . . . . . . .17
6.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
6.11 Broker's Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . .17
6.12 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . .17
6.13 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
6.14 Exculpation Among Purchasers . . . . . . . . . . . . . . . . . . . .18
ii.
INDEX OF EXHIBITS
Schedule of Purchasers Exhibit A
Restated Certificate of Incorporation Exhibit B
Investors' Rights Agreement Exhibit C
Stockholders' Agreement Exhibit D
Form of Non-Competition Proprietary
Information and Inventions Agreement Exhibit E
Form of Legal Opinion Exhibit F
Form of Amended Bylaws Exhibit G
