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Redacted portions have been marked with asterisks (****). Confidential treatment
has been requested for the redacted portions. The confidential redacted portions
have been filed separately with the Securities and Exchange Commission.
CONFIDENTIAL TREATMENT
EXHIBIT 10.31
CONCENTRIC NETWORK CORPORATION
NOTE AND WARRANT PURCHASE AGREEMENT
THIS NOTE AND WARRANT PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of the 19th day of June, 1997, by and among Concentric Network
Corporation, a Florida corporation (the "Company"), and Xxxxxxxx Communications
Group, Inc., a Delaware corporation (the "Purchaser").
In consideration of the mutual promises, covenants, and conditions
hereinafter set forth, the parties hereto mutually agree as follows:
1. The Loan and the Note. The Purchaser hereby agrees to lend to the
Company, on the date hereof, and on the terms of and conditions hereof, up to an
aggregate principal amount of **** (the "Loan"). The Loan made to the Company by
the Purchaser shall be evidenced by a secured promissory note in substantially
the form attached hereto as Exhibit A (the "Note").
2. The Warrant. As an inducement to the Purchaser to make the Loan, the
Company shall issue to the Purchaser a warrant to purchase up to the number of
shares of the Common Stock of the Company set forth in the Common Stock
Purchase Warrant in substantially the form attached hereto as Exhibit B (the
"Warrant").
3. Representations and Warranties of the Company. Except as set forth in
the Schedule of Exceptions attached hereto as Schedule 3, and except as
otherwise disclosed in the section captioned "Business--Legal Proceedings" of
the Registration Statement on Form S-1 filed with the Securities and Exchange
Commission by the Company, the Company hereby represents and warrants to the
Purchaser as follows:
3.1 Organization and Standing. The Company is a corporation duly
organized and validly existing under, and by virtue of, the laws of its
jurisdiction of incorporation and is in good standing under the laws of said
jurisdiction. The Company has requisite corporate power and authority to own
and operate its properties and assets and to carry on its business as currently
conducted. The Company is qualified to do business as a foreign corporation in
each jurisdiction in which the failure to be so qualified would have a material
adverse effect on its business.
3.2 Corporate Power; Authorization. The Company has all requisite
legal and corporate power to execute and deliver the Transaction Documents (as
defined in Section 5.4) and to carry out and perform all of its obligations
under the Transaction Documents. The execution, delivery and performance of the
Transaction Documents by the Company have been duly authorized by all requisite
corporate action. The Transaction Documents constitute the legal, valid and
binding obligations of the Company, enforceable in accordance with their
respective terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization or similar laws relating to or affecting
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the enforcement of creditors' rights, and (ii) as limited by equitable
principles generally.
3.3 Non-Contravention. The execution, delivery and performance of the
Transaction Documents and the compliance with the provisions thereof by the
Company do not (i) materially conflict with, or result in a material breach or
violation of, or constitute a material default under, or result in the creation
or imposition of any material lien, or (ii) violate, conflict with or result in
the breach of any material terms of, or result in the material modification of,
any material contract or otherwise give any other contracting party the right to
terminate a material contract, or constitute (or with notice or lapse of time
both constitute) a material default under any material contract to which the
Company is a party or by or to which it or any of its assets or properties may
be bound or subject.
3.4 Litigation. There is no material action, proceeding or
investigation pending against the Company or any of its properties or assets,
nor has the Company received any threat of action, proceeding or investigation,
that questions the validity of the Transaction Documents or any action taken or
to be taken in connection herewith or therewith, or that, alone or in the
aggregate, is reasonably likely to result in any material adverse effect on the
financial condition, assets, liabilities, earnings or business of the Company
and its subsidiaries taken as a whole, nor is the Company aware that there is
any material basis for the foregoing. The Company is not a party to or subject
to the provisions of any material order, writ, injunction judgment or decree of
any court or government agency or instrumentality that will have a material
effect on the operations or business of the Company.
4. Representation and Warranties of the Purchaser. The Purchaser
represents and warrants to the Company as follows:
4.1 Binding Obligations. The Purchaser has full legal capacity,
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement is a valid and binding obligation of the
Purchaser, enforceable in accordance with its terms, except as limited by
bankruptcy, insolvency or other laws of general application relating to or
affecting the enforcement of creditors' rights generally and general principles
of equity.
4.2 Securities Law Compliance. The Purchaser has been advised that
neither the Note nor the Warrant has been registered under the Securities Act of
1933, as amended (the "Act"), or any state securities laws and, therefore,
cannot be resold unless they are registered under the Act and applicable state
securities laws or unless an exemption from such registration requirements is
available. The Purchaser is aware that Company is under no obligation to effect
any such registration with respect to the Note or to file for or comply with any
exemption from registration. The Purchaser has not been formed solely for the
purpose of making this investment and is purchasing the Note to be acquired by
the Purchaser hereunder for its own account for investment, not as a nominee or
agent, and not with a view to, or for resale in connection with, the
distribution thereof. The Purchaser has such knowledge and experience in
financial and business matters that the Purchaser is capable of evaluating the
merits and risks of such investment, is able to incur a complete loss of such
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investment and is able to bear the economic risk of such investment for an
indefinite period of time. The Purchaser is an accredited investor as such term
is defined in Rule 501 of Regulation D under the Securities Act.
4.3 Access to Information. Such Purchaser acknowledges that Company
has given such Purchaser access to the corporate records and accounts of Company
and to all information in its possession relating to Company, has made its
officers and representatives available for interview by such Purchaser, and has
furnished such Purchaser with all documents and other information required for
such Purchaser to make an informed decision with respect to the purchase of the
Note and Warrant.
5. Conditions to Transaction. The obligation of the Purchaser to make the
Loan, and the obligations of the Company to issue the Note and Warrant, shall be
subject to each of the following conditions having been fulfilled on or before
such date:
5.1 Blue Sky. The Company shall have obtained all necessary Blue Sky
law permits and qualifications, or have the availability of exceptions
therefrom, required by any state for the offer and sale of the Note and Warrant
and the issuance of the shares of Common Stock, par value $.001 per share, of
the Company (the "Shares") upon exercise of the Warrant.
5.2 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated hereby shall have been completed.
5.3 Consents and Waivers. The Company shall have obtained any and all
consents and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement.
5.4 Transaction Documents. The Company shall have duly executed and
delivered to the Purchaser the following documents (the "Transaction
Documents"):
(a) this Agreement;
(b) the Note issued hereunder;
(c) the Warrant issued hereunder;
(d) the Security Agreement in the form of Exhibit C hereto (the
"Security Agreement") and any financing statements on form UCC-1
executed in connection herewith;
(f) the Technology Escrow Agreement in the form of Exhibit D
hereto; and
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(g) a Term Sheet in the form of Exhibit E hereto setting forth
the basic terms under which Purchaser would serve as an agent and a
reseller of the Company's products and services.
The agreement of the Purchaser to enter into this Agreement or any of the other
Transaction Documents does not obligate or require the Purchaser to enter into
any other contract, agreement or arrangement with the Company.
5.5 Accounts Payable. The Company shall have no accounts payable
outstanding to the Purchaser more than sixty days, or the Company shall have
made provision satisfactory to the Purchaser for the payment of such accounts
payable.
5.6 Opinion. The Company shall have delivered an opinion of its
counsel to the Purchaser in form and substance satisfactory to the Purchaser.
6. Investment Representations; Legends.
6.1 Investment Representations of the Purchaser. The Purchaser
hereby represents and warrants to the Company that the Purchaser is acquiring
the Note and the Warrant for its own account for investment and not with a view
toward the distribution thereof. The Purchaser understands that neither of the
Notes, the Warrant or the Shares have been registered under the Securities Act
of 1933, as amended (the "Act"), and that they are being offered and sold
pursuant to an exemption from registration contained in the Act based in part
upon the representations of the Purchaser contained herein.
6.2 Legends.
(a) The Note, the Warrant, and the certificates representing any
Shares will each be stamped or otherwise imprinted with legends as set forth in
the form of Note and Warrant attached as Exhibits A and B, respectively. Such
legends shall be removed by the Company from the Notes, the Warrant, or the
certificates representing the Shares upon delivery to it of an opinion of
counsel that a registration statement under the Act is at the time in effect
with respect to the legended security or that such security can be freely
transferred without such registration statement being in effect and that such
transfer will not jeopardize the exemption or exemptions from registration
pursuant to which the Note and Warrant were issued.
(b) The Note, the Warrant, and the certificates representing the
Shares shall also bear any legends required under applicable state securities
laws.
7. Modification: Waiver. No modification or waiver of any provision of
this Agreement or consent to departure therefrom shall be effective unless in
writing and signed by the Company and the Purchaser.
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8. Notices. Any notice or report herein required or permitted to be
given shall be given by depositing the same in the United States mail, postage
prepaid and addressed or confirmed facsimile transmission to the parties as
follows:
(a) To the Company:
Concentric Network Corporation
00000 X. Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
(b) To the Purchaser:
Xxxxxxxx Communications Group, Inc.
000 Xxxx 0xx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attn: Vice President-Finance
or to such other place or places as any of the parties shall designate by
written notice to the others.
9. Successors and Assigns. All covenants and agreements of the parties
contained in this Agreement shall be binding and inure to the benefit of their
respective successors and assigns.
10. Governing Law. This Agreement shall in all respects be governed by
the laws of the State of California.
11. Section Headings. The section and paragraph headings contained herein
are for reference purposes only and shall not in any way affect the meaning and
interpretation of this Agreement.
12. Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original, and such counterparts together shall constitute only one
instrument.
13. Expenses of Agreement. The parties to this Agreement shall each bear
their own expenses incurred in connection with the preparation, execution and
delivery of Transaction Documents.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
themselves
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or by their respective representatives thereunto duly authorized the day and
year first above written.
CONCENTRIC NETWORK CORPORATION
By: /s/
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Xxxxx X. Xxxxxxxx, President and CEO
XXXXXXXX COMMUNICATIONS GROUP, INC.
By: /s/
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