STOCK PURCHASE AND MASTER STRATEGIC RELATIONSHIP AGREEMENT
This Stock Purchase and Master Strategic Relationship Agreement
(this "Agreement") is entered into as of June ___, 1999, by and between
Commerce One, Inc., a California corporation (the "Company"), and Nippon
Telephone and Telegraph Corporation, a Japanese corporation (the
"Purchaser"). Capitalized terms used in this Agreement and not otherwise
defined are defined in EXHIBIT A attached hereto.
WHEREAS, the Purchaser wishes to purchase from the Company, and the
Company wishes to issue and sell to the Purchaser, following the Company's
reincorporation into Delaware (the "Delaware Reincorporation"), certain shares
of the Common Stock;
WHEREAS, such sale and purchase of Common Stock shall occur immediately
following the closing of the Company's initial public offering (the "IPO").
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein, the parties hereto, intending to be legally bound, agree as follows:
1. AGREEMENT TO SELL AND PURCHASE SHARES; OTHER AGREEMENTS
1.1 SALE AND PURCHASE OF SHARES.
(a) Subject to the terms and conditions hereof, at the
Closing, the Company will issue and sell to the Purchaser, and the Purchaser
will purchase from the Company, shares of Common Stock equal in number to
$7,000,000 divided by the Per Share Price. The "Per Share Price" shall be equal
to the IPO Price multiplied by 94%.
(b) At the Closing, the Purchaser shall pay the purchase
price (the "Purchase Price") for the shares of Common Stock purchased hereunder
(the "Purchased Shares") by wire transfer of immediately available funds in U.S.
dollars to an account specified in writing by the Company prior to the Closing.
(c) No fractional shares shall be issued upon the sale of
any Common Stock to the Purchaser pursuant to this Agreement, and the number of
shares of Common Stock to be issued to the Purchaser shall be rounded to the
nearest whole share.
(d) All certificates representing the Purchased Shares
shall bear the following legend:
(i) "THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). SUCH SHARES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM. THE
COMPANY MAY REQUIRE AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT THAT A
PROPOSED TRANSFER OR SALE IS IN COMPLIANCE WITH THE ACT. COPIES OF THE
AGREEMENT COVERING THE
PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT
NO COST BY WRITTEN REQUEST MADE BY THE HOLDERS OF RECORD OF THIS CERTIFICATE TO
THE SECRETARY OF THE COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY."
(ii) Any legend required by the blue sky or
securities laws of any state or jurisdiction to the extent such laws are
applicable to the shares represented by the certificate so legended.
(e) The certificates representing the Purchased Shares
will be subject to a stop transfer order with the Company's transfer agent
that restricts the transfer of the Purchased Shares except in compliance
with this Agreement.
1.2 REGISTRATION RIGHTS AGREEMENT.
At the Closing, the parties shall enter into an Amendment to the Fourth
Amended and Restated Registration Rights Agreement, substiantially in the form
attached hereto as EXHIBIT B, to provide the Purchaser with certain registration
rights relating to the Purchased Shares.
1.3 BOARD OF DIRECTORS ARRANGEMENTS.
(a) BOARD OF DIRECTORS DESIGNEE
(i) Concurrently with the Closing, the Company
shall take all corporate action necessary to increase the size of the Board of
Directors of the Company (the "Company Board") by one director and shall take
all corporate action necessary to appoint to the Company Board an individual
designated by the Purchaser and reasonably acceptable to the Company (such
person, the "Purchaser Board Designee"). The Company Board is classified and the
Purchaser Board Designee shall be a member of the second class of directors.
Subject to Section 1.3(a)(ii), the Purchaser Board Designee shall have an
initial term on the Company Board ending at the second annual stockholder
meeting following the Closing. At the second annual shareholder meeting, the
Company shall nominate a Purchaser Board Designee for election to the Company
Board by the shareholders and shall recommend to the shareholders that they vote
for the Purchaser Board Designee.
(ii) The Purchaser Board Designee shall be
entitled to serve as a member of the Company Board for term specified in the
preceding paragraph (a)(i) so long as the Purchaser and its Affiliates
collectively shall own beneficially at least eighty percent (80%) of the
aggregate Purchased Shares, adjusted as appropriate for any subsequent stock
split or reverse stock split or other similar action (the "Ownership
Threshold"). Upon such time as the Purchaser and its Affiliates collectively
shall cease to own beneficially Company Securities at least equal to the
Ownership Threshold the Purchaser shall, upon the request of the Company, cause
the Purchaser Board Designee to resign from the Company Board.
(b) ELIGIBLE INDIVIDUALS; CONFIDENTIALITY
-2-
The Purchaser Board Designee shall not be an employee of
the Company. Each such individual, as a condition to his or her appointment
or nomination, or prior to attending any meeting of the Company Board or
any committee thereof, shall execute the Company's standard form of
confidentiality agreement.
(c) VACANCIES
In the event that the Purchaser Board Designee ceases to serve
as a member of the Company Board during such individual's term of office for any
reason and at such time the Purchaser would have the right to a designation
hereunder if an election for the resulting vacancy were to be held, the director
to fill such vacancy shall be designated by the Purchaser, subject to the
requirements provided herein for any such designee.
1.4 CLOSING.
The closing of the purchase and sale of the Purchased Shares (the
"Closing") shall take place at the offices of Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000, at 11:00 a.m.
(California time) on the date of and immediately following the closing of the
IPO, or on such other date or at such other place or time as the Company and
the Purchaser may mutually agree (such date, the "Closing Date").
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as specifically set forth in the disclosure schedule attached
hereto as EXHIBIT C (the "Disclosure Schedule"), the Company hereby represents
and warrants to the Purchaser as follows:
2.1 ORGANIZATION, GOOD STANDING, AND QUALIFICATION.
Each of the Company and VEO Systems, Inc., a wholly-owned subsidiary of
the Company ("VEO"), is a corporation duly organized, validly existing and in
good standing under the laws of the State of California, and has all requisite
corporate power and authority to carry on its business as now conducted and as
proposed to be conducted. Each of the Company and VEO is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which the nature of its business or the location of its
properties requires such qualification and in which the failure to so qualify
would have a material adverse effect on its business.
2.2 CAPITALIZATION.
As of the date of this Agreement, the authorized capital of the Company
consists of the following:
(a) 29,000,000 shares of Preferred Stock, no par value
("Preferred Stock") of which 673,680 shares have been designated Series A
Preferred Stock, all of which are issued and outstanding, 3,595,976 have been
designated Series B Preferred Stock, of which 3,568,293 are issued and
outstanding, 6,450,000 shares have been designated Series C Preferred Stock,
of which 5,120,608 are issued and outstanding, 10,700,000 shares have been
designated Series D Preferred Stock, 8,866,757 of which are issued and
outstanding, 800,169 shares have been designated Series D'
-3-
Preferred Stock, 681,143 of which are issued and outstanding, and 5,518,764
shares have been designated Series E Preferred Stock, of which 5,517,638
shares are issued and outstanding. The rights, privileges and preferences of
the Series A Preferred Stock, the Series B Preferred Stock, the Series C
Preferred Stock, the Series D Preferred Stock, the Series D' Preferred Stock
and the Series E Preferred Stock are as stated in the Company's Amended and
Restated Articles of Incorporation. In connection with the Company's IPO, all
of the outstanding shares of Preferred Stock will convert into an equal
number of shares of Common Stock.
(b) 60,000,000 shares of common stock, no par value,
11,134,020 shares of which are issued and outstanding. In connection with the
Company's IPO, the Company will issue additional shares of Common Stock.
(c) Warrants. Warrants to purchase 27,562 shares of Series
B Preferred Stock (the "Series B Warrants"), warrants to purchase 1,293,580
shares of Series C Preferred Stock (the "Series C Warrants"), and warrants to
purchase 86,818 shares of Series D Preferred Stock (the "Series D Warrants")
are issued and outstanding.
(d) The Company has authorized 12,956,090 shares of common
stock for issuance to directors, employees or consultants under the Company's
stock option and stock benefit plans of which 6,773,886 shares of common
stock are subject to outstanding stock options as of the date hereof (the
"Outstanding Options"). Except for the Warrants described above, the
Outstanding Options, and as contemplated in connection with the Company's
IPO, there are no outstanding options, warrants, rights (including conversion
or preemptive rights) or agreements, orally or in writing, for the purchase
or acquisition from the Company of any shares of its capital stock.
(e) All issued and outstanding shares of the Company's
common stock have been duly authorized and validly issued, are fully paid and
nonassessable, and were offered, issued and sold in compliance with all
applicable state and federal laws concerning the offer, sale and issuance of
securities.
(f) Neither the offer nor the issuance or sale of the
Purchased Shares constitutes or will constitute an event, under any capital
stock or convertible security or any anti-dilution or similar provision of any
agreement or instrument to which the Company is a party or by which it is bound
or affected, which shall either increase the number of shares or units of
capital stock issuable upon conversion of any securities or upon exercise of
any warrant or right to subscribe to or purchase any stock or similar security,
or decrease the consideration per share or unit of capital stock to be received
by the Company upon such conversion or exercise.
2.3 SUBSIDIARIES.
Other than VEO, the Company does not currently own or control, directly
or indirectly, any interest in any other corporation, association, or other
business entity which is material to the Company's business.
2.4 AUTHORIZATION.
-4-
All corporate action on the part of the Company, its officers,
directors and shareholders necessary for the authorization, execution and
delivery of this Agreement and the other Transactional Agreements, the
performance of all obligations of the Company hereunder and thereunder and
the authorization, issuance and delivery of the Purchased Shares has been
taken or will be taken prior to the Closing. The Agreement, when executed and
delivered, will be a valid and binding obligation of the Company enforceable
in accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights; and (ii) general principles of
equity that restrict the availability of equitable remedies.
2.5 VALID ISSUANCE OF SECURITIES.
The Purchased Shares being issued hereunder, when issued, sold and
delivered in accordance with the terms hereof for the consideration expressed
herein, will be duly and validly issued, fully paid and nonassessable. Based
in part upon the representations of the Purchasers in this Agreement and
subject to the provisions of Section 2.7 below, the Purchased Shares will be
issued in compliance with all applicable federal and state securities laws.
The Purchased Shares shall be free of any liens or encumbrances, other than
any liens or encumbrances created by the Purchasers; PROVIDED, HOWEVER, that
the Purchased Shares may be subject to restrictions on transfer under state
and/or federal securities laws or pursuant to the Fourth Amended and Restated
Registration Rights Agreement, as amended. The Purchased Shares are not and
will not be subject to any preemptive rights, rights of first refusal, rights
of first offer or other similar rights that have not been properly waived or
complied with.
2.6 FIRPTA.
The Company is not a "United States Real Property Holding Corporation"
within the meaning of Section 847(c)(2) of the Internal Revenue Code of 1986, as
amended.
2.7 GOVERNMENTAL CONSENTS.
No consent, approval or authorization of or designation, declaration
or filing with any governmental authority on the part of the Company is
required in connection with the valid execution and delivery of this
Agreement, or the consummation of the transactions contemplated, hereby or
thereby, except as required in connection with the Delaware Reincorporation
and for the filing of notices required by applicable Blue Sky laws, the
filing of a Form D pursuant to Regulation D under the Securities Act of 1933,
as amended (the "Securities Act"), as promulgated by the Securities and
Exchange Commission, and the filing of any notices required by applicable
foreign securities laws.
2.8 LITIGATION.
There is no action, suit, arbitration, proceeding or investigation
pending or currently threatened against the Company or its properties before any
court, arbitrator or governmental agency, nor is the Company aware that there is
any basis for the foregoing. The foregoing includes, without limitation,
actions, suits, arbitration proceedings or investigations pending or threatened
(or any basis
-5-
therefor known to the Company) involving the prior employment of any of the
Company's employees, their use in connection with the Company's business of any
information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers. The
Company is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court of government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or that the Company intends to initiate.
2.9 INTELLECTUAL PROPERTY.
As of the Closing, the Company has legally enforceable rights to use
all patents, trademarks, service marks, trade names, copyrights, trade
secrets, information, proprietary rights, know-how and processes necessary
for its business as now conducted and as proposed to be conducted without any
conflict with or infringement on the rights of others, except as may
otherwise be described in Section 2.9 of the Disclosure Schedule. Except
pursuant to Contracts (as defined in Section 2.11 below) listed in the
Disclosure Schedule, copies of which have previously been delivered to the
Purchasers, there are no outstanding options, licenses, or agreements of any
kind relating to the foregoing, nor is the Company bound by or a party to any
options, licenses or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information, proprietary rights, know-how and processes of any other person
or entity. Except as described in Section 2.9 of the Disclosure Schedule, to
the best of the Company's knowledge the Company has not violated or, by
conducting its business as proposed, would not violate any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights of any other person or entity. Each current or former
employee, officer, director and consultant of the Company has executed an
agreement with the Company regarding confidentiality and proprietary
information, a copy of the form of which has previously been provided to the
Purchasers, and no exceptions have been taken by any such current or former
employee, officer or consultant. 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 the use of his or her best efforts to promote the interests of the
Company or that would conflict with the Company's business as conducted or
proposed to be conducted. Neither the execution nor delivery of this
Agreement or the other Transaction Agreements, nor the carrying on of the
Company's business as conducted or as currently proposed to be conducted,
will, to the Company's knowledge, conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any
contract, covenant or instrument under which any of such employees is now
obligated. The Company does not believe that it is or will be necessary for
the Company to utilize any inventions of any of its employees made prior to
their employment with the Company. Since its organization, the Company has
taken reasonable security measures to protect the secrecy, confidentiality,
and value of its trade secrets, including know-how, negative processes,
inventions, designs, computer programs, technical data and all information
that derives independent economic value, actual or potential, from not being
generally known or known by competitors.
2.10 COMPLIANCE WITH OTHER INSTRUMENTS.
-6-
The Company is not in violation or default of any provisions of its
charter documents or of any instrument, judgment, order, writ, decree or
contract to which it is a party or by which it is bound or, of any provision
of federal, state or foreign statute, rule, regulation, order or restriction
applicable to the Company, including but not limited to the Foreign Corrupt
Practices Act. The execution, delivery and performance of this Agreement and
the other Transaction Agreements and the consummation of the transactions
contemplated hereby will not result in any such violation or be in conflict
with or constitute, with or without the passage of time and giving of notice,
either a default under any such provision, instrument, judgment, order, writ,
decree or contract or an event which results in the creation of any lien,
charge or encumbrance upon any of the properties or assets of the Company or
the suspension, revocation, impairment, forfeiture, or nonrenewal of any
material permit, license, authorization, or approval applicable to the
Company, its business or operations or any of its assets or properties. No
consent, approval, qualification, order or authorization of, or filing with,
any governmental authority, or any consent or approval of any third party
person or entity is required in connection with the Company's valid
execution, delivery or performance of this Agreement or the offer, sale or
issuance of the Purchased Shares, or the consummation of any other
transaction contemplated on the part of the Company hereby, except as
required in connection with the Delaware Reincorporation and for the filing
of any notice required by applicable Blue Sky laws, the filing of a notice on
Form D, the filing of any notice required by applicable foreign securities
laws. Except as disclosed in the Disclosure Schedule, the Company has avoided
every condition and has not performed any act which would result in the
Company's loss of any right granted under any license, distribution or other
agreement.
2.11 MATERIAL CONTRACTS AND COMMITMENTS.
Except as listed in Section 2.11 of the Disclosure Schedule and except
for agreements explicitly contemplated hereby (the "Contracts"), there are no
agreements, instruments, leases, licenses, commitments (written or oral) or
contracts to which the Company is a party or by which it is bound, which (i)
involve obligations of or payments to the Company, absolute or contingent, in
excess of $20,000 individually, (ii) involve provisions restricting or affecting
the development, manufacture or distribution of the Company's products or
services, or (iii) involve indemnification by the Company with respect to
infringements of proprietary rights (other than indemnification obligations
arising from purchase and sale agreements entered into in the ordinary course of
business and ordinary course licensing agreements entered into with customers of
the Company). All of the Contracts are valid, binding and in full force and
effect in all material respects and enforceable by the Company in accordance
with their respective terms in all material respects, subject to the effect of
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium, usury or other laws of general application relating to or affecting
enforcement of creditors' rights and rules or laws concerning equitable
remedies. The Company is not in material default under any of such Contracts,
nor has the Company received notice that any third party does not intend to
renew any material contract it currently has with the Company, or that any third
party intends to terminate any material contract currently in place with the
Company. To the best knowledge of the Company, no other party to any of the
Contracts is in material default thereunder. Except for the merger of the
Company and VEO, the Company has not engaged in the past six (6) months in any
discussion (i) with any representative of any corporation or corporations
regarding the consolidation or merger of the Company with or into any such
corporation or corporations, (ii) with any corporation,
-7-
partnership, association or other business entity or any individual regarding
the sale, conveyance or disposition of all or substantially all of the assets of
the Company of a transaction or series of related transactions in which more
than fifty percent (50%) of the voting power of the Company is disposed of, or
(iii) regarding any other form of acquisition, liquidation, dissolution or
winding up of the Company.
2.12 REGISTRATION RIGHTS.
As of the Closing, except pursuant to the Fourth Amended and Restated
Registration Rights Agreement, as amended, the Company shall not be under any
contractual obligation to register any of its presently outstanding securities
or any of its securities which may hereafter be issued. As of the Closing,
except as set forth in this Agreement or the Fourth Amended and Restated
Registration Rights Agreement, there are no agreements, written or oral, between
the Company and any of its shareholders or among any shareholders, relating to
the acquisition, disposition or voting of the capital stock of the Company.
2.13 TITLE TO PROPERTY AND ASSETS.
The Company has good and marketable title to its property and assets,
free and clear of all mortgages, liens, loans and encumbrances, except such
encumbrances and liens which arise in the ordinary course of business and do not
materially impair the Company's ownership or use of such property or assets.
With respect to the property and assets it leases, the Company is in compliance
with such leases and, to the best of its knowledge, holds a valid leasehold
interest free of any liens, claims or encumbrances. Other than ordinary wear and
tear, all tangible assets owned or leased by the Company are in good operating
condition and repair, are reasonably fit and usable for the purposes for which
they are being used, and are adequate and sufficient for the Company's business.
2.14 FINANCIAL STATEMENTS.
The Purchasers have received the Company's audited consolidated balance
sheet, statements of income, cash flow and shareholders' equity for the fiscal
year ended December 31, 1998, together with the related opinion of Ernst &
Young, LLP, independent public accountants (the "Financial Statements"), which
are complete and correct in all material respects and have been prepared in
accordance with generally accepted accounting principles applied on a basis
consistent throughout the periods indicated and consistent with each other,
subject to normal end-of-period adjustments. The Financial Statements fairly
present the consolidated financial condition, operating results and cash flows
of the Company as of the respective dates and for the respective periods
indicated.
The Purchasers have received an unaudited consolidated balance sheet,
statements of income, cash flow and shareholders' equity for the three-month
period ended March 31, 1999 (the "Unaudited Financial Statements"). The
Unaudited Financial Statements were prepared in good faith by the Company, are
complete and correct in all material respects and have been prepared from the
books and records of the Company, in accordance with generally accepted
accounting principles consistently applied by the Company, and present the
consolidated financial condition, operating results and cash flows of the
Company as of the date and for the period indicated.
-8-
Except as disclosed in the Financial Statements and Unaudited Financial
Statements, the Company is not a guarantor or indemnitor of any indebtedness of
any other person, firm or corporation. The Company maintains and will continue
to maintain a standard system of accounting established and administered in
accordance with generally accepted accounting principles.
2.15 CHANGES.
Except as otherwise disclosed in the Financial Statements and Unaudited
Financial Statements, since March 31, 1999, there has not been:
(a) any change in the assets, liabilities, financial
condition or operating results of the Company from that reflected in the
Financial Statements and Unaudited Financial Statements, except changes in the
ordinary course of business that have not been, in the aggregate, materially
adverse;
(b) any incurrence of any indebtedness for money borrowed;
(c) any damage, destruction or loss, whether or not covered
by insurance, materially and adversely affecting the assets, properties,
financial condition, operating results, prospects or business of the Company
(as such business is presently conducted and as it is proposed to be conducted);
(d) any waiver by the Company of a valuable right or of a
material debt owed to it;
(e) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and that is not material to the assets, properties, financial
condition, operating results or business of the Company (as such business is
presently conducted and as it is proposed to be conducted);
(f) except as described in Section 2.11 of the Disclosure
Schedule, any material change or amendment to a material contract or arrangement
by which the Company or any of its assets or properties is bound or subject;
(g) any material change in any compensation arrangement or
agreement with any employee, contractor or director;
(h) any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets, except
licenses entered into in the ordinary course of business and consistent with
past practices;
(i) any resignation or termination of employment of any key
officer 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;
(j) receipt of notice that there has been a loss of, or
material order cancellation by, any major customer of the Company;
-9-
(k) any mortgage, pledge, transfer of a security interest
in, or lien, created by the Company with respect to any of its material
properties or assets, except liens for taxes not yet payable;
(l) any loans or guarantees made by the Company to or for
the benefit of its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made in the
ordinary course of its business;
(m) any declaration, setting aside or payment of dividends
or other distribution with respect to any of the Company's capital stock or any
direct or indirect redemption, purchase or other acquisition of any of such
stock by the Company;
(n) to the best of the Company's knowledge, any other event
or condition of any character that could reasonably be expected to materially
and adversely affect the assets, properties, financial condition, operating
results or business of the Company (as such business is presently conducted);
(o) any agreement or commitment by the Company to perform
any of the acts described in this Section 2.15; or
(p) any issuance or sale of any shares of the capital
stock or other securities of the Company, grant of any options with respect
thereto, or any modification of any of the capital stock of the Company.
2.16 OUTSTANDING INDEBTEDNESS; MATERIAL LIABILITIES.
Except pursuant to the Contracts or as disclosed in the Financial
Statements and Unaudited Financial Statements, the Company has no material
liabilities or obligations exceeding $500,000 in the aggregate, absolute or
contingent (individually or in the aggregate), except (i) liabilities and
obligations under a lease for its principal offices and leases for equipment
which do not exceed $5,000,000 in the aggregate, (ii) liabilities and
obligations under sales, procurement and other contracts and arrangements
entered into in the normal course of business, which do not exceed $20,000
individually, or $40,000 in the aggregate, (iii) liabilities incurred in the
ordinary course of business subsequent to March 31, 1999, and (iv) obligations
under contracts and commitments incurred in the ordinary course of business and
not required under generally accepted accounting principles to be reflected in
the Financial Statements and Unaudited Financial Statements, which, in all
cases, individually or in the aggregate, are not material to the financial
condition or operating results of the Company.
2.17 TAX RETURNS AND PAYMENTS.
The Company has accurately prepared all United States income tax
returns and all state and municipal tax returns required to be filed by it, has
paid all taxes, assessments, fees and charges when and as due under such
returns, and has made adequate provision for the payment of all other taxes,
assessments, fees and charges shown on such returns or on assessments received
by the Company. The Company has not requested any extension of time within which
to file any federal, state or local tax return, which tax return has not since
been filed. The Company has not been
-10-
advised that any of its returns, federal, state or other, have been or are being
audited as of the date hereof, and no deficiency assessment or proposed
adjustment of the Company's United States income tax or state or municipal taxes
is pending or, to the best knowledge of the Company, threatened. The provision
for taxes for the Company as shown in the Financial Statements and Unaudited
Financial Statements is adequate for taxes due or accrued as of the date
thereof. Since the date of the Financial Statements and Unaudited Financial
Statements, the Company has made adequate provisions on its books of account for
all taxes, assessments and governmental charges with respect to its business,
properties and operations for such period. The Company has withheld or collected
from each payment made to each of its employees the amount of all taxes
(including, but not limited to, federal income taxes, Federal Insurance
Contribution Act taxes and Federal Unemployment Tax Act taxes) required to be
withheld or collected therefrom and has paid the same to the proper tax
receiving officers or authorized depositaries.
2.18 EMPLOYEES AND EMPLOYEE BENEFIT PLANS.
(a) The employment of each officer and employee of the
Company is terminable at will. The Company does not have any collective
bargaining agreements covering any of its employees. There is no labor union
organizing activity pending or, to the Company's knowledge, threatened, with
respect to the Company.
(b) The Company is not aware of any key employee of the
Company who has any plans to terminate his or her employment with the Company.
Except as described in Section 2.18 of the Disclosure Schedule, the Company does
not have any deferred compensation, pension, profit sharing, bonus, insurance,
severance or other similar employee benefit plan or obligation covering any of
its employees or any plan subject to the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"). To the Company's knowledge, the Company has
complied with all applicable state and federal equal employment opportunity and
other laws relating to employment. The Company has not made any loans or
advances to any person other than ordinary expenses for travel expenses. There
is no strike or other labor dispute involving the Company pending, or to the
best of the Company's knowledge, threatened, that could have a material adverse
effect on the assets, properties, financial condition, operating results, or
business of the Company (as such business is presently conducted and as it is
proposed to be conducted), nor is the Company aware of any labor organization
activity involving its employees. The Company has no written employment
agreement or contract with any employee of the Company.
(c) Except as set forth in Section 2.18 of the Disclosure
Schedule, the Company does not maintain or make contributions to any employee
benefit plans ("Plans"), as defined in Section 3(3) of ERISA. The Company has no
material liability with respect to any such Plans (including, without
limitation, any unfunded liability or any accumulated funding deficiency) or any
material liability to the Pension Benefit Guaranty Corporation ("PBGC") or under
Title IV of ERISA, with respect to a multi-employer pension benefit plan, nor
would the Company have any such liability if any such plan were terminated or if
the Company withdrew, in whole or in part, from any multi-employer plan. To the
Company's best knowledge, the Company's ERISA Plans are in compliance in all
material respects with ERISA, the Internal Revenue Code and other applicable
legal requirements. The Company has filed all reports required to be filed by it
prior to the filing
-11-
deadlines (including extensions) with the Internal Revenue Service or the PBGC
under ERISA and the Internal Revenue Code.
2.19 CERTAIN TRANSACTIONS.
Except as set forth in Section 2.19 of the Disclosure Schedule, the
Company is not indebted, directly or indirectly, to any of its officers,
directors or shareholders or to their spouses or children, in any amount
whatsoever; and none of said officers, directors or, to the best of the
Company's knowledge, shareholders, or any member of their immediate families,
are indebted to the Company or have any direct or indirect ownership interest in
any firm or corporation with which the Company is affiliated or with which the
Company has a business relationship (except as a holder of securities of a
corporation whose securities are publicly traded and which is subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to the extent of owning not more than two percent (2%) of the
issued and outstanding securities of such corporation). Except as set forth in
Section 2.19 of the Disclosure Schedule, no such officer, director or
shareholder, or any member of their immediate families, is, directly or
indirectly, interested in any material contract with the Company. The Company is
not guarantor or indemnitor of any indebtedness of any other person, firm or
corporation.
2.20 INSURANCE.
The Company has in full force and effect the several insurance policies
listed in 2.20 of the Disclosure Schedule with such coverage and insurance
against such hazards, risks and liabilities to persons and property to the
extent and in the manner customary for companies in similar businesses similarly
situated.
2.21 PERMITS.
The Company has all franchises, permits, licenses, and any similar
authority necessary for the conduct of its business as now being conducted by
it, the lack of which could reasonably be expected to have a material adverse
effect on the Company, and the Company believes it can obtain, without undue
burden or expense, any similar authority for the conduct of its business as
planned to be conducted. The Company is not in default in any material respect
under any of such franchises, permits, licenses, or other similar authority.
2.22 ENVIRONMENTAL AND SAFETY LAWS.
The Company is not in violation of any applicable federal, state or
local statute, law or regulation relating to the environment or occupational
health and safety, and no material expenditures are or will be required in
order to comply with any such existing statute, law or regulation.
2.23 DISCLOSURE.
No representation or warranty of the Company contained in this
Agreement, or in any other Transactional Agreement, or any certificate furnished
or to be furnished to the Purchaser at the Closing, when read together, contains
any untrue statement of a material fact or omits to state a
-12-
material fact necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as follows:
3.1 ORGANIZATION AND GOOD STANDING.
The Purchaser is a corporation duly organized and validly existing
under the laws of Japan.
3.2 AUTHORITY; BINDING NATURE OF AGREEMENTS.
The Purchaser has the requisite corporate power and authority to
enter into and to perform its obligations under this Agreement and all other
Transactional Agreements to which it is a party. The execution, delivery and
performance by the Purchaser of this Agreement and the Transactional
Agreements, and the consummation or performance of the Transactions, have
been duly authorized by all necessary corporate action on the part of the
Purchaser. Each of this Agreement and such other Transactional Agreements
constitutes, or upon execution and delivery will constitute, the legal, valid
and binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms, except as limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights, and (ii) laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies.
3.3 NON-CONTRAVENTION; CONSENTS.
(a) Neither the execution and delivery by the Purchaser,
nor the consummation or performance by the Purchaser of any of the Transactions
to be consummated or performed by it, will directly or indirectly (with or
without notice or lapse of time): (i) violate any provision of the Purchaser's
certificate or articles of incorporation or bylaws or other charter documents;
(ii) constitute or result in a breach or default by the Purchaser, or give rise
to a right of termination on the part of any other party, or result in the
creation or imposition of any lien, claim or encumbrance on any Purchaser
assets, under any agreement or instrument to which the Purchaser is a party or
by which the Purchaser is bound; or (iii) constitute a violation by the
Purchaser of any Requirement of Law, except that the approval of the Japanese
Ministry of Post and Telecommunications is required to consummate the
Transactions.
(b) Except for compliance with the terms of Sections 13
and 16 of the Exchange Act (if required) and except for the approval of the
Japanese Ministry of Post and Telecommunications, no consent, approval, order
or authorization of, or registration, qualification, designation, declaration
or filing with, any Governmental Authority on the part of the Purchaser is
required in connection with the consummation of the Transactions.
3.4 LITIGATION.
As of the date hereof, there are no suits, proceedings or
investigations pending or, to the knowledge of the Purchaser, threatened against
the Purchaser, which in any such case would
-13-
materially adversely affect the Purchaser's ability to perform its obligations
under this Agreement or any of the other Transactional Agreements.
3.5 BROKERS.
The Purchaser has not granted or become obligated to pay, or taken any
action that likely would result in any Person claiming to be entitled to receive
from the Company, any brokerage commission, finder's fee or similar commission
or fee in connection with any of the Transactions.
3.6 INVESTMENT REPRESENTATIONS.
(a) The Purchaser understands that none of the Purchased Shares
has been registered under the Securities Act. The Purchaser also understands
that the Purchased Shares are being offered and sold pursuant to an exemption
from registration contained in the Securities Act based in part upon the
Purchaser's representations contained in this Agreement, and that the Company is
relying upon the truth and accuracy of the Purchaser's representations,
warranties, acknowledgements and understandings with respect to a material fact
set forth herein.
(b) The Purchaser is acquiring the Purchased Shares for the
Purchaser's own account for investment only, and not with the current intention
of making a public distribution thereof.
(c) The 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. The
Purchaser, by reason of its business or financial experience, has the capacity
to protect its own interests in connection with the Transactions. The Purchaser
is an "accredited investor" as that term is defined in Rule 501(a) of Regulation
D.
(d) The Purchaser acknowledges that the Purchased Shares must be
held indefinitely and that the Purchaser must bear the economic risk of this
investment indefinitely unless the Purchased Shares are subsequently registered
under the Securities Act or an exemption from such registration is available.
Without limiting the obligations of the Company under the Fourth Amended and
Restated Rights Agreement, as amended, the Purchaser understands that the
Company has no present intention of registering the Purchased Shares. The
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 the Purchaser to transfer all or any
portion of the Purchased Shares under the circumstances, in the amounts or at
the times the Purchaser might propose.
(e) The Purchaser has been advised or is aware of the provisions
of Rule 144 under the Securities Act ("Rule 144"), which permit limited resale
of shares purchased in a private placement subject to the satisfaction of
certain conditions, including, among other things: (i) the availability of
certain current public information about the Company, (ii) the resale occurring
not less than one year after a party has purchased and paid for the security to
be sold, (iii) the sale being through an unsolicited "broker's transaction" or
in transactions directly with a market maker (as said
-14-
term is defined under the Exchange Act) and (iv) the number of shares being sold
during any three-month period not exceeding specified limitations.
(f) The Purchaser initiated discussions with the Company
relating to the purchase and sale contemplated by this Agreement on an
unsolicited basis prior to the date of this Agreement. The Purchaser did not
receive any information regarding such purchase and sale through any general
solicitation or general advertising within the meaning of Rule 502(c) under the
Securities Act.
3.7 COMPANY DISCLOSURE DOCUMENTS.
(a) The Purchaser has received and reviewed a copy of the
Company's Registration Statement on Form S-1, as filed with the Securities and
Exchange Commission on April 26, 1999 (the "Registration Statement"), including,
without limitation, the language therein under the caption "Risk Factors."
(b) The Purchaser has been furnished with materials relating to
the Company and its proposed activities, including, without limitation, the
Registration Statement. Without limiting the Company's obligations with respect
to any representations or warranties made by the Company in this Agreement, the
Purchaser has been afforded the opportunity to obtain any additional information
deemed necessary by the Purchaser to verify the accuracy of any representations
made or information conveyed to the Purchaser. The Purchaser confirms that all
documents, records and books pertaining to its investment in Common Stock and
requested by the Purchaser have been made available or delivered to the
Purchaser. The Purchaser has had an opportunity to ask questions of and receive
answers from the Company, or from a person or persons acting on the Company's
behalf, concerning the terms and conditions of this investment.
3.8 FOREIGN OFFERING REPRESENTATIONS.
(a) No offer or solicitation of an offer was made by the
Company, any of its affiliates or any other person acting for or on behalf of
the Company, to the Purchaser to enter into this Agreement, or to consummate the
transactions contemplated hereby (including, without limitation, the issuance of
the Purchased Shares), while the Purchaser was inside the United States and, at
the time of the execution and delivery by the Purchaser of this Agreement, the
Purchaser was outside the United States.
(b) In making the decision to invest in the shares of the
Company's Common Stock to be issued hereto, the Purchaser has not relied upon
any materials received in connection with any "directed selling efforts" of the
Company, any of its affiliates or any person acting for or on behalf of the
Company, as such term is defined in Rule 902(b) under Regulation S ("Regulation
S") promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), including, without limitation, any printed materials distributed in a
publication with a general circulation within the United States, or
advertisements with radio or television stations broadcasting within the United
States, in each case which discuss the terms of this Agreement or the
transactions contemplated hereby (including, without limitation, the issuance of
the Purchased Shares pursuant hereto).
-15-
(c) In making the decision to invest in the shares of the
Company's Common Stock to be issued pursuant hereto, the Purchaser has not
relied upon any "Distributors", as such term is defined in Rule 902(c) of
Regulation S, including, without limitation, any underwriter or dealer.
(d) The Purchaser understands and acknowledges that the
Purchased Shares to be issued pursuant hereto are being issued in reliance upon
the exemption from the registration requirements of the Securities Act afforded
by Regulation S, that such shares will not be registered under the Securities
Act or any state securities or "blue sky" law, and that such shares may not be
offered or sold in the United States or to any "U.S. Person", as such term is
defined in Rule 902(o) of Regulation S ( a "U.S. Person"), or otherwise disposed
of, except in accordance with the provisions of Rules 903 and 904 of Regulation
S, pursuant to registration of such shares under the Securities Act, or pursuant
to another available exemption from the registration requirements of the
Securities Act.
(e) Purchaser is not a U.S. Person, and the Purchaser is not
acquiring the Purchased Shares for the account or benefit of any U.S. Person.
(f) The Purchaser understands and acknowledges that it may not
resell any of the Purchased Shares to be issued pursuant hereto unless any such
resale is effected in accordance with the provisions of Rule 904 of Regulation
S, pursuant to registration of such resale under the Securities Act, or pursuant
to another available exemption from the registration requirements of the
Securities Act.
4. CONDITIONS TO CLOSING
4.1 CONDITIONS TO THE PURCHASER'S OBLIGATIONS.
The Purchaser's obligations to purchase the Purchased Shares and to take
the other actions required to be taken by it at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Purchaser, in whole or in part):
(a) The representations and warranties of the Company contained
in this Agreement shall be true on and as of the Closing with the same effect as
though such representations and warranties had been made on and as of the
Closing Date, except to the extent any such representations and warranties are
stated to be made as of a specific date, in which case they shall be true as of
such date, except in each case for any inaccuracies in such representations and
warranties as would not have a material adverse effect on the Company. In
addition, the Company shall have performed in all material respects all
obligations required pursuant to the terms of this Agreement or any of the other
Transactional Agreements to be performed or observed by it on or prior to the
Closing.
(b) The Company shall have delivered to the Purchaser a
certificate, executed by an executive officer of the Company, dated the date of
the Closing, setting forth the Company's representation that the conditions set
forth in Section 4.1(a) above shall have been satisfied.
-16-
(c) The Company shall have obtained any and all consents,
permits, waivers and approvals necessary or appropriate for consummation of the
Transactions (except for such as may be properly obtained subsequent to the
Closing).
(d) There shall be no injunction, writ, preliminary restraining
order or other order in effect of any nature issued by a court or governmental
agency of competent jurisdiction directing that the Transactions not be
consummated in the manner provided for in this Agreement and the other
Transactional Agreements. No action or proceeding shall have been instituted and
remain pending before a court or other governmental body of competent
jurisdiction to restrain, prohibit or otherwise challenge any of the
Transactions (or seeking material damages from the Purchaser or the Company as a
result thereof), other than any such action or proceeding which would not have a
material adverse effect on the Company or prevent the Company or the Purchaser
from performing their respective obligations hereunder.
(e) The Company shall have delivered to the Purchaser a legal
opinion from counsel to the Company, in form and substance reasonably
satisfactory to the Purchaser and its counsel and addressing the matters listed
in EXHIBIT D hereto.
(f) On or prior to the Closing Date, the Purchaser shall have
received a certificate of the Secretary of State of the State of Delaware, dated
as of a recent date, as to the good standing of the Company.
(g) The Company shall have executed and delivered to the
Purchaser the Amendment to the Fourth Amended and Restated Registration Rights
Agreement.
(h) The Purchaser Board Designee shall have been appointed to a
term on the Board of Directors of the Company as provided in Section 1.3.
(i) The IPO shall have been closed.
(j) The approval of the Japanese Ministry of Post and
Telecommunications shall have been received.
4.2 CONDITIONS TO THE COMPANY'S OBLIGATIONS.
The Company's obligations to sell the Purchased Shares and to take the
other actions required to be taken by the Company at the Closing is subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by the Company, in whole or in part):
(a) The representations and warranties of the Purchaser
contained in this Agreement shall be true in all material respects on and as of
the Closing with the same effect as though such representations and warranties
had been made on and as of the Closing Date, except to the extent any such
representations and warranties are stated to be made as of a specific date, in
which case they shall be true in all material respects as of such date, and the
Purchaser shall have performed in all material respects all obligations required
pursuant to the terms of this Agreement or
-17-
any of the other Transactional Agreements to be performed or observed by either
of them on or prior to the Closing.
(b) The Purchaser shall have delivered to the Company a
certificate, executed by an executive officer of the Purchaser, dated the date
of the Closing, setting forth the Purchaser's representation that the conditions
set forth in Section 4.2(a) above shall have been satisfied.
(c) The Purchaser shall have obtained any and all consents,
permits, waivers and approvals necessary or appropriate for consummation of the
Transactions (except for such as may be properly obtained subsequent to the
Closing).
(d) There shall be no injunction, writ, preliminary restraining
order or other order in effect of any nature issued by a court or governmental
agency of competent jurisdiction directing that the Transactions not be
consummated in the manner provided for in this Agreement and the other
Transactional Agreements. No action or proceeding shall have been instituted and
remain pending before a court or other governmental body of competent
jurisdiction to restrain, prohibit or otherwise challenge any of the
Transactions (or seeking material damages from the Purchaser or the Company as a
result thereof), other than any such action or proceeding which would not have a
material adverse effect on the Company or prevent the Company or the Purchaser
from performing their respective obligations hereunder or under any of the other
Transactional Agreements.
(e) On or prior to the Closing Date, if the Purchaser is
organized in the United States, the Company shall have received a certificate of
the Secretary of State (or equivalent agency) of the state of the Purchaser's
organization, as to the good standing of such party.
(f) The IPO shall have been closed.
(g) Concurrently with such sale, the Purchaser shall have paid
to the Company the Purchase Price for the Purchased Shares.
5. COVENANTS OF THE PARTIES
5.1 FILINGS AND CONSENTS.
Concurrently with execution and delivery of this Agreement, the Purchaser
will promptly furnish all information as may be required by the Japanese
Ministry of Finance in order for the requisite approvals for the purchase and
sale of the Purchased Shares, and the consummation of the Transactions, to be
obtained. Each party hereto will cooperate with each other with respect to
obtaining, as promptly as practicable, and in any event prior to the Closing,
all necessary consents, approvals, authorizations and agreements of, and the
giving of all notices and making of all other filings with, any third parties,
including Governmental Authorities, necessary to authorize, approve or permit
the closing of the Transactions.
5.2 COVENANT TO SATISFY CONDITIONS.
-18-
Each party agrees to use all reasonable efforts to insure that the
conditions to the other party's obligations hereunder set forth in Section 4,
insofar as such matters are within the control of such party, are satisfied as
promptly as practicable, and in any event prior to the closing of the IPO,
PROVIDED HOWEVER, that notwithstanding anything herein to the contrary, the
Company shall have the sole and absolute discretion as to when, and whether, to
consummate or close the IPO, and may choose to cease pursuit of the IPO or to
postpone the IPO until after the termination of this Agreement, all without any
liability or obligation whatsoever to the Purchaser.
5.3 FURTHER ASSURANCES.
Each party shall execute and deliver such additional instruments, documents
or other writings as may be reasonably requested by any other party, before or
after the Closing, in order to confirm and carry out and to effectuate fully the
intent and purposes of this Agreement.
6. MARKET STANDOFF AGREEMENT
6.1 MARKET STANDOFF AGREEMENT
Without the prior written consent of the Company, the Purchaser will not,
during the period commencing on the Closing Date and ending one hundred eighty
(180) days after the date of the final prospectus relating to the IPO, (i)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of Common Stock, whether any such transaction described in clause
(i) or (ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. Notwithstanding the foregoing, the Purchaser
may transfer any of the Purchased Shares to any successor entity without the
prior written consent of the Company if such successor entity agrees in writing
to the provisions binding the Purchaser in this Section 6.1.
In furtherance of the foregoing, the Purchaser hereby agrees that the
Company and its transfer agent and registrar are authorized to decline to make
any transfer of any of the Purchased Shares if such transfer would constitute a
violation or breach of this Section 6.1.
The restrictions in this Section 6.1 shall be binding on the Purchaser and
the respective successors, heirs, personal representatives and assigns of the
Purchaser.
7. TERMINATION
7.1 TERMINATION.
This Agreement may be terminated at any time prior to the Closing:
(a) by the written agreement of the Purchaser and the Company;
-19-
(b) by the Company or the Purchaser, if the Closing shall not
have occurred by August 31, 1999; PROVIDED HOWEVER, that the failure to
consummate the Closing by such date is not a result of the Company, in the case
the Company is so electing to terminate this Agreement, or of the Purchaser, in
the case the Purchaser is so electing to terminate this Agreement, failing to
perform any of its obligations or breaching any of its representations and
warranties hereunder; and
(c) by the Company or the Purchaser in the event any court or
governmental agency of competent jurisdiction shall have issued an order, decree
or ruling or taken any other action restricting, enjoining or otherwise
prohibiting the Transactions and such order, decree, ruling or other action
shall have become final and unappealable, and the parties hereto hereby agree to
use all reasonable efforts to prevent any such order, decree, ruling or other
action from becoming final and unappealable.
7.2 EFFECT OF TERMINATION.
Except for the obligations of Section 9 hereof and this Section 7.2, if
this Agreement shall be terminated pursuant to the preceding Section 7.1, all
obligations, representations and warranties of the parties hereto under this
Agreement shall terminate and there shall be no liability hereunder of any party
hereto to any other party hereto; PROVIDED HOWEVER, that nothing in this Section
7 shall relieve any party of liability for breach of any warranty, covenant or
agreement herein or in any other Transactional Agreement.
8. SUCCESSORS AND ASSIGNS
8.1 SUCCESSORS AND ASSIGNS; REINCORPORATION.
(a) 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.
Except as otherwise expressly provided herein, neither party may assign any of
its rights or obligations hereunder without the written consent of the other
party hereto; PROVIDED, HOWEVER, that the Company shall have the right, with or
without the consent of the Purchaser, to reincorporate into Delaware prior to
the Closing and such Delaware successor corporation will succeed to all of the
Company's rights and obligations under this Agreement.
(b) In the event of a transfer of the rights and obligations of
the Purchaser under this Agreement pursuant to a statutory reorganization of the
Purchaser prescribed in the Supplementary Provisions to the Law Concerning
Partial Amendment to the Nippon Telegraph and Telephone Corporation Law (Law No.
98 of 1997) (the "Amendment"), the Purchaser shall ensure that all the rights
and obligations of the Purchaser under this Agreement and the ownership of the
Purchased Shares are transferred to the said successor entity without any
dilution or adverse effect on the enforceability of such obligations. Subject
to the aforesaid, the Company: (i) agrees that such a reorganization by itself
shall not constitute a default by the Purchaser or any successor entity of the
Purchaser under this Agreement and shall not constitute grounds for termination
of this Agreement by any of such parties; (ii) anything to the contrary herein
or elsewhere notwithstanding, consents to the transfer of all the rights and
obligations of the Purchaser under this Agreement to a successor entity as part
of such reorganization; (iii) consents to the transfer of the Purchaser Shares
to a
-20-
successor entity as part of such reorganization; and (iv) anything to the
contrary herein or elsewhere notwithstanding, agrees to absolutely and
irrevocably release the Purchaser from its obligations under this Agreement and
the other Transactional Agreements upon such reorganization, provided, in each
case, that the successor entity shall be subject to the terms and conditions of
this Agreement and the other Transactional Agreements, including, without
limitation, the representations and warranties of the Purchaser herein and in
the other Transactional Agreements, and shall deliver to the Company a written
agreement to such effect, in form and substance reasonably satisfactory to the
Company, and provided, further, in each case, that the successor entity is
either one of the Regional Companies or the Long Distance Company currently
contemplated in the Amendment.
9. MISCELLANEOUS
9.1 PRESS RELEASES AND ANNOUNCEMENTS.
All press releases and announcements concerning the Transactions shall be
mutually agreed to by the Company and the Purchaser, except for any such
disclosure required by law which, in the case of such disclosure by the Company,
shall, to the extent practicable under the circumstances, be first discussed
with the Purchaser and, in the case of such disclosure by the Purchaser, shall,
to the extent practicable under the circumstances, be first discussed with the
Company.
9.2 INTERPRETATION.
(a) The various section headings are inserted for purposes of
reference only and shall not affect the meaning or interpretation of this
Agreement or any provision hereof.
(b) Each party hereto acknowledges that it has been represented
by competent counsel and participated in the drafting of this Agreement and the
other Transactional Agreements, and agrees that any applicable rule of
construction to the effect that ambiguities are to be resolved against the
drafting party shall not be applied in connection with the construction or
interpretation of this Agreement and the other Transactional Agreements.
(c) The original and controlling version of this Agreement and
the other Transactional Agreements shall be the version using the English
language. All translations of this Agreement or any of the other Transactional
Agreements into other languages shall be for the convenience of the parties
only, and shall not control the meaning or application of this Agreement or any
of the other Transactional Agreements. All notices and other communications
required or permitted by this Agreement or any other Transactional Agreement
must be in English, and the interpretation and application of such notices and
other communications shall be based solely upon the English language version
thereof.
(d) When a reference is made in this Agreement or any other
Transactional Agreement to a Section, Exhibit or Schedule, such reference shall
be to a Section of, Exhibit to or Schedule to this Agreement or such other
Transactional Agreement, unless otherwise indicated.
-21-
9.3 FEES AND EXPENSES.
Each party hereto shall be solely responsible for the payment of the fees
and expenses of its advisers, counsel, accountants and other experts, if any,
and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement and the other
Transactional Agreements, except to the extent expressly set forth in this
Agreement and the other Transactional Agreements. Without limiting the
generality of the foregoing, the Purchaser shall pay all stamp and other taxes,
if any, which may be payable in respect of the issuance, sale and delivery to
the Purchaser or any Assignee of Common Stock pursuant to the terms of this
Agreement, and shall save the Company harmless against any loss or liability
resulting from nonpayment or delay in the payment of any such tax.
9.4 GOVERNING LAW; JURISDICTION AND VENUE.
(a) Prior to Closing, this Agreement and the other Transactional
Agreements are to be construed in accordance with and governed by the internal
laws of the State of California without giving effect to any choice of law rule
that would cause the application of the laws of any jurisdiction other than the
internal laws of the State of California to the rights and duties of the
parties. On and after Closing, this Agreement and the other Transactional
Agreements are to be construed in accordance with and governed by the internal
laws of the State of Delaware without giving effect to any choice of law rule
that would cause the application of the laws of any jurisdiction other than the
internal laws of the State of Delaware to the rights and duties of the parties.
(b) Any legal action or other legal proceeding relating to this
Agreement or the other Transactional Agreements or the enforcement of any
provision of this Agreement or the other Transactional Agreements may be brought
or otherwise commenced in any state or federal court located in the County of
Contra Costa, California. Each party to this Agreement and the other
Transactional Agreements:
(i) expressly and irrevocably consents and submits to
the jurisdiction of each state and federal court located in the County of Contra
Costa, California (and each appellate court located in the State of California)
in connection with any such legal proceeding, including to enforce any
settlement, order or award;
(ii) agrees that each state and federal court located
in the County of Contra Costa, California shall be deemed to be a convenient
forum; and
(iii) waives and agrees not to assert (by way of motion,
as a defense or otherwise), in any such legal proceeding commenced in any state
or federal court located in the County of Contra Costa, California, any claim
that such party is not subject personally to the jurisdiction of such court,
that such legal proceeding has been brought in an inconvenient forum, that the
venue of such proceeding is improper or that this Agreement or the other
Transactional Agreements or the subject matter hereof or thereof may not be
enforced in or by such court.
-22-
(c) Each party hereto agrees to the entry of an order to enforce
any resolution, settlement, order or award made pursuant to this Section by the
state and federal courts located in the County of Contra Costa, California and
in connection therewith hereby waives, and agrees not to assert by way of
motion, as a defense, or otherwise, any claim that such resolution, settlement,
order or award is inconsistent with or violative of the laws or public policy of
the laws of the State of California or any other jurisdiction.
(d) The Purchaser has irrevocably designated NTT America, Inc.,
a New York corporation, as agent for service of process hereunder and the above
named is authorized and directed to accept service of process on behalf of the
Purchaser in any suit regarding the Transactions or otherwise related to this
Agreement or the other Transactional Agreements.
9.5 SPECIFIC ENFORCEMENT.
The parties hereto agree that irreparable damage would occur in the event
that any of the provisions of this Agreement or the other Transactional
Agreements were not performed in accordance with their specific intent or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement or the other Transactional Agreements and to enforce specifically
the terms and provisions hereof, this being in addition to any other remedy to
which they may be entitled by law or equity.
9.6 SURVIVAL.
The representations and warranties of the parties hereunder shall terminate
upon the Closing and thereafter shall terminate and be of no force or effect.
9.7 NO THIRD PARTY BENEFICIARIES.
This Agreement and the other Transactional Agreements are intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and are not for the benefit of, nor may any provision hereof or thereof
be enforced by, any other Person.
9.8 ENTIRE AGREEMENT.
This Agreement, the other Transactional Agreements and the other documents
delivered expressly hereby, 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.
9.9 SEVERABILITY.
The provisions of this Agreement and the other Transactional Agreements
shall be severable, and any invalidity, unenforceability or illegality of any
provision or provisions of this Agreement and the other Transactional Agreements
shall not affect any other provision or provisions of this Agreement and the
other Transactional Agreements, and each term and provision of this
-23-
Agreement and the other Transactional Agreements shall be construed to be valid
and enforceable to the full extent permitted by law.
9.10 AMENDMENT AND WAIVER.
(a) This Agreement and the other Transactional Agreements may be
amended or modified only upon the mutual written consent of the Company and the
Purchaser.
(b) No failure to exercise and no delay in exercising any right,
power or privilege granted under this Agreement or the other Transactional
Agreements shall operate as a waiver of such right, power or privilege. No
single or partial exercise of any right, power or privilege granted under this
Agreement or the other Transactional Agreements shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies provided in this Agreement and the other Transactional
Agreements are cumulative and are not exclusive of any rights or remedies
provided by law.
9.11 RELATIONSHIP OF THE PARTIES.
For all purposes of this Agreement and the other Transactional Agreements,
each of the parties hereto and their respective Affiliates shall be deemed to be
independent entities and, anything in this Agreement or the other Transactional
Agreements to the contrary notwithstanding, nothing herein shall be deemed to
constitute the parties hereto or any of their respective Affiliates as partners,
joint venturers, co-owners, an association or any entity separate and apart from
each party itself, nor shall this Agreement or any other Transactional Agreement
make any party hereto an employee or agent, legal or otherwise, of the other
parties for any purposes whatsoever. This Agreement does not create or
constitute, and shall not be construed as creating or constituting, a voting
trust agreement under the Delaware General Corporation Law or any other
applicable corporation law. None of the parties to this Agreement or any other
Transactional Agreement is authorized to make any statements or representations
on behalf of any other party or in any way to obligate any other party, except
as expressly authorized in writing by the other parties. Anything in this
Agreement or any other Transactional Agreement to the contrary notwithstanding,
no party hereto or thereto shall assume nor shall be liable for any liabilities
or obligations of the other parties, whether past, present or future.
9.12 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)
seven (7) days after having been sent by registered or certified mail, return
receipt requested, postage prepaid; or (iv) two (2) days after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the parties
hereto at the respective addresses set forth below, or as notified by such party
from time to time at least ten (10) days prior to the effectiveness of such
notice:
if to the Purchaser: Nippon Telegraph and Telephone
Corporation
Xxxxx Xxxxxx NTT
-24-
Shinagawa-TWINS ANNEX
9-1 Konan, 0 Xxxxx
Xxxxxx-xx
Xxxxx, 000-0000
XXXXX
with a copy to: NTT America, Inc.
000 Xxxx Xx Xxxxxx Xxxx,
Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Attention: Xxxxxxxxx Xxxxx
Facsimile: (000) 000-0000
and a copy to: Skadden, Arps, Slate, Xxxxxxx
& Xxxx
000 Xxxxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxx
Facsimile: (000) 000-0000
if to the Company: Commerce One, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx,
Esq.
Facsimile: (000) 000-0000
with a copy to: Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx,
Esq.
Facsimile: (000) 000-0000
9.13 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.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-25-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
PURCHASER: Nippon Telegraph and Telephone Corporation
By:/s/ Xxxxxx Xxxxxx
----------------------------------
Name: Xxxxxx Xxxxxx
Title: Senior Vice President
COMPANY: Commerce One, Inc.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President & General Counsel
-26-
