EXHIBIT 10.01
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XXX.XXX, INC.
NOTE AND WARRANT PURCHASE AGREEMENT
JULY 18, 2003
TABLE OF CONTENTS
Page
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1. ISSUANCE, SALE AND DELIVERY OF THE NOTES AND WARRANTS..................1
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1.1 SALE AND ISSUANCE OF NOTES AND WARRANTS.........................1
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1.2 CLOSINGS........................................................1
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1.3 ALLOCATION OF PURCHASE PRICE....................................2
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1.4 USE OF PROCEEDS.................................................3
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1.5 FAILURE OF SECOND CLOSING TO OCCUR..............................3
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1.6 VOTING AGREEMENT................................................4
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2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................4
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2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION...................4
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2.2 CAPITALIZATION AND VOTING RIGHTS................................5
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2.3 SUBSIDIARIES....................................................6
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2.4 AUTHORIZATION...................................................7
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2.5 VALID ISSUANCE OF NOTES, WARRANTS AND WARRANT SHARES............8
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2.6 GOVERNMENTAL CONSENTS...........................................8
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2.7 OFFERING........................................................9
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2.8 LITIGATION......................................................9
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2.9 PATENTS AND TRADEMARKS..........................................9
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2.10 COMPLIANCE WITH OTHER INSTRUMENTS...............................9
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2.11 GOVERNMENT PERMITS.............................................10
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2.12 REGISTRATION RIGHTS............................................10
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2.13 REPORTING STATUS...............................................10
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2.14 FINANCIAL STATEMENTS...........................................11
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2.15 NO MATERIAL ADVERSE EFFECT.....................................11
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2.16 LISTING........................................................11
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2.17 COMPANY NOT AN INVESTMENT COMPANY..............................12
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2.18 NO UNDISCLOSED LIABILITIES.....................................12
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2.19 TAXES..........................................................12
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3. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS.......................12
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3.1 AUTHORIZATION..................................................12
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3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT..............................12
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3.3 DISCLOSURE OF INFORMATION......................................13
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3.4 INVESTMENT EXPERIENCE..........................................13
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3.5 ACCREDITED INVESTOR............................................13
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3.6 INVESTOR NOT AN INVESTMENT COMPANY.............................13
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3.7 RESTRICTED SECURITIES..........................................13
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3.8 FURTHER LIMITATIONS ON DISPOSITION.............................13
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3.9 PROHIBITION AGAINST HEDGING....................................14
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3.10 RELIANCE; MATERIAL CHANGES.....................................14
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3.11 LEGENDS........................................................14
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4. CONDITIONS OF INVESTORS' OBLIGATIONS AT INITIAL CLOSING...............15
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4.1 INITIAL CLOSING................................................15
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4.2 SECOND CLOSING.................................................17
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5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSINGS...................17
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5.1 INITIAL CLOSING................................................17
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5.2 SECOND CLOSING.................................................18
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6. COVENANTS.............................................................18
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6.1 EFFORTS TO OBTAIN REQUIRED STOCKHOLDER APPROVALS...............18
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6.2 CORPORATE ACTIONS..............................................19
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6.3 ACCESS; NOTIFICATION OF CERTAIN MATTERS........................19
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6.4 HSR ACT FILINGS................................................19
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6.5 OTHER GOVERNMENTAL APPROVALS...................................20
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6.6 COVENANTS PENDING INITIAL CLOSING..............................20
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6.7 FURTHER ASSURANCES.............................................20
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6.8 CORPORATE SPENDING POLICY......................................20
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6.9 FLEET ACCOUNT AGREEMENT........................................20
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7. MISCELLANEOUS.........................................................21
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7.1 SURVIVAL.......................................................21
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7.2 INDEMNIFICATION................................................21
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7.3 SUCCESSORS AND ASSIGNS.........................................22
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7.4 GOVERNING LAW..................................................23
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7.5 COUNTERPARTS...................................................23
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7.6 TITLES AND SUBTITLES...........................................23
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7.7 NOTICES........................................................23
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7.8 EXPENSES.......................................................23
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7.9 AMENDMENTS AND WAIVERS.........................................23
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7.10 SEVERABILITY...................................................24
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7.11 ENTIRE AGREEMENT...............................................24
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SCHEDULE A Schedule of DB Investors
SCHEDULE B Schedule of Existing Investors
SCHEDULE C Schedule of Approved Transferees
EXHIBIT A Form of Note
EXHIBIT B Form of Warrant
EXHIBIT C Form of Legal Opinion of Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
EXHIBIT D Form of Amended and Restated Stockholders Agreement
EXHIBIT E Form of Security Agreement
EXHIBIT F Amendments to the Certificate of Incorporation
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INDEX OF DEFINED TERMS
Act................................................................ 2.2(b)
Agreement.......................................................... Preamble
Closing............................................................ 1.2(b)
Code............................................................... 1.3
Common Stock....................................................... 1.1
Company............................................................ Preamble
Company SEC Reports................................................ 2.13
Copper Mountain Networks Agreement................................. 4.1(i)
DB Investors....................................................... Preamble
Disposition........................................................ 3.9
Exchange Act....................................................... 2.1
Exchange Act Documents............................................. 2.1
Existing Investors................................................. Preamble
Financial Statements............................................... 2.14
Fleet Account Agreement............................................ 6.9
Fleet Loan Agreement............................................... 2.2(c)
GAAP............................................................... 2.14
Guaranties......................................................... 4.1(j)
HSR Act............................................................ 6.4
Initial Closing.................................................... 1.2(a)
Initial Closing Date............................................... 1.2(a)
Initial Warrants................................................... 1.1
Initial Warrant Shares............................................. 2.4
Intellectual Property.............................................. 2.9
Investment Company Act............................................. 2.17
Investors.......................................................... Preamble
Laws............................................................... 2.10(b)
Loss............................................................... 7.2(a)
Material Adverse Effect............................................ 2.1
NAS................................................................ 4.1(k)
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NAS Agreement ..................................................... 4.1(k)
Nasdaq............................................................. 2.16
New Stockholders Agreement......................................... 4.1(h)
Notes.............................................................. 1.1
NSCM............................................................... 2.16
Permits............................................................ 2.11
Person............................................................. 1.2(c)
Preferred Stock.................................................... 2.2(a)
Required Stockholder Approval...................................... 2.4
Restated Certificate............................................... 4.1(e)
Schedule of Exceptions............................................. 2
SEC................................................................ 2.13
Second Closing..................................................... 1.2(b)
Second Closing Date................................................ 1.2(b)
Securities......................................................... 3.2
Security Agreement................................................. 4.1(l)
Series X Designation............................................... 2.2(a)
Series X Preferred Stock........................................... 2.2(a)
Series Y Designation............................................... 2.2(a)
Series Y Preferred Stock........................................... 2.2(a)
Stockholders Agreement............................................. 2.12
Stock Plans........................................................ 2.2(c)
Subsequent Warrants................................................ 1.1
Subsequent Warrant Shares.......................................... 2.4
Subsidiary......................................................... 2.3
Tax................................................................ 2.19
Voting Agreement................................................... 1.6
VPVP III........................................................... 2.2(c)
Warrants........................................................... 1.1
Warrant Shares..................................................... 2.4
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XXX.XXX, INC.
NOTE AND WARRANT PURCHASE AGREEMENT
THIS NOTE AND WARRANT PURCHASE AGREEMENT (the "Agreement") dated as of July
18, 2003 by and among XXX.xxx, Inc., a Delaware corporation (the "Company"), the
investors listed on Schedule A hereto (the "DB Investors") and the investors
listed on Schedule B hereto (the "Existing Investors" and together with the DB
Investors, the "Investors"):
THE PARTIES HEREBY AGREE AS FOLLOWS:
1 Issuance, Sale and Delivery of the Notes and Warrants.
1.1 Sale and Issuance of Notes and Warrants. Subject to the terms and
conditions set forth in this Agreement, at the Initial Closing (as defined
below), each Investor shall, severally and not jointly, purchase from the
Company, and the Company shall sell and issue to such Investor, in exchange for
cash in the amount set forth opposite such Investor's name under the heading
"Purchase Price" on Schedule A or Schedule B hereto, as applicable, (i) a senior
secured promissory note in substantially the form attached hereto as Exhibit A
(each, a "Note" and collectively, the "Notes") in the principal amount set forth
opposite such Investor's name under the heading "Principal Amount of Note to be
Purchased" on Schedule A or Schedule B hereto, as applicable, which Note shall
be delivered to such Investor at the Initial Closing, (ii) a warrant in the form
attached hereto as Exhibit B (each, an "Initial Warrant" and collectively, the
"Initial Warrants") to purchase such number of shares of the Company's common
stock, par value $0.0005 per share (the "Common Stock"), set forth opposite such
Investor's name under the heading "Number of Initial Warrants to be Issued" on
Schedule A hereto, which Initial Warrants shall be delivered to such Investor at
or reasonably promptly (but in no event more than 15 days) after the Initial
Closing (as specified in Section 1.2(a)), and (iii) a warrant in the form
attached hereto as Exhibit B (each, a "Subsequent Warrant" and collectively, the
"Subsequent Warrants"; together with the Initial Warrants, the "Warrants") to
purchase such number of shares of the Company's Common Stock set forth opposite
such Investor's name under the heading "Number of Subsequent Warrants to be
Issued" on Schedule A or Schedule B hereto, as applicable, which Subsequent
Warrant shall be delivered to such Investor at the Second Closing (as defined
below).
1.2 Closings.
(a) Initial Closing. The purchase and sale of the Notes and Warrants as
described in Section 1.1 shall take place at a closing (the "Initial Closing")
to be held at the offices of Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP, 000 Xxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, at 10:00 A.M., on a date within two business days
after the date on which the last of the conditions set forth in Section 4.1 and
Section 5.1 have been satisfied or waived, or at such other location, on such
other date and at such time as may be mutually agreed upon by the Company and
the Investors (the day on which the Initial Closing takes place being the
"Initial Closing Date"). At the Initial Closing, (i) each Investor shall pay to
the Company the full amount set forth opposite such Investor's name under the
heading "Purchase Price" on Schedule A or Schedule B hereto, as applicable, by
wire transfer of immediately available funds to an account designated by the
Company, and (ii) the Company shall deliver to such Investor the Note being
purchased by it at
the Initial Closing against receipt of such amount. At the Initial Closing or
reasonably promptly after the Company has received approval from Nasdaq for the
listing of the Initial Warrant Shares (as defined below), the Company shall
deliver to each DB Investor the Initial Warrants purchased by such Investor at
the Initial Closing; provided, however, that the Company shall use its
commercially reasonable efforts to obtain such approval from Nasdaq and shall
issue the Initial Warrants to the DB Investors in no event later than 15 days
after the Initial Closing.
(b) Second Closing. The issuance of the Subsequent Warrants described in
Section 1.1 shall take place at an additional closing (the "Second Closing") to
be held at the offices of Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP, 000 Xxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, at 10:00 A.M. on a date within two business days
after the date on which the last of the conditions set forth in Section 4.2 and
Section 5.2 has been satisfied or waived, or at such other location, on such
other date and at such time as may be mutually agreed upon by the Company and
the Investors (the day on which the Second Closing the takes place being the
"Second Closing Date"). At the Second Closing, the Company shall issue and
deliver to each Investor the Subsequent Warrants purchased by such Investor at
the Initial Closing. The Initial Closing and the Second Closing each may be
referred to herein as a "Closing."
(c) Assignment of Right to Purchase Notes and Warrants. Each Investor may
assign all or any portion of its right and obligation to purchase the Notes and
Warrants hereunder to any Person (as defined below) listed on Schedule C or to
any other financial investor upon obtaining the prior written consent of the
Company, which consent shall not be unreasonably withheld or delayed; provided,
however, that the assignee (if not at the relevant time already a signatory
hereto) executes a counterpart signature page to this Agreement agreeing to be
bound by all the terms of this Agreement. Notwithstanding the foregoing, any
Investor who assigns all or any portion of its right and obligation to purchase
Notes and Warrants hereunder shall remain obligated to purchase such Notes and
Warrants and perform its assigned obligations hereunder to the extent that the
assignee fails to do so. The Company shall, without the consent of the
Investors, amend Schedule A or Schedule B to provide for the sale and issuance
of Notes and Warrants to one or more investors that shall become party to this
Agreement in accordance with the provisions of this Section 1.2(c). The terms
"Investor" and "Investors" shall include such additional investors as exist,
from time to time. "Person" shall mean any individual, partnership, limited
partnership, limited liability company, unlimited liability company,
corporation, trust, unincorporated organization, government, governmental agency
or governmental subdivision or any similar entity.
1.3 Allocation of Purchase Price. The Company and the Investors, having
adverse interests and as a result of arm's length bargaining, agree that (i) the
Investors have not rendered or agreed to render any services to the Company in
connection with this Agreement or the issuance of the Notes and Warrants; (ii)
the Warrants are not being issued as compensation; and (iii) for the purpose,
and within the meaning, of Section 1273(c)(2) of the Internal Revenue Code of
1986, as amended (the "Code"), the issue price for each $1,000 of principal
amount of the Notes is $672.10 and the issue price for a Warrant to purchase one
share of the Common Stock is $.0623. The Company and the Investors acknowledge
that this allocation is based on the relative fair market values of the Notes
and Warrants. The Company and the Investors recognize that this Agreement
determines the original issue discount to be taken into account by the Company
and
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the Investors for federal income tax purposes on the Notes and they agree to
adhere to this Agreement for such purposes.
1.4 Use of Proceeds. The proceeds from the sale and issuance of the Notes
and Warrants will be used for acquisitions and for general corporate purposes,
including expansion of the Company's salesforce, repayment of debt and lease
obligations (including the Company's obligations under the Fleet Loan Agreement,
the Copper Mountain Networks Agreement and the NAS Agreement) and working
capital.
1.5 Failure of Second Closing to Occur.
(a) This Agreement may be terminated by the DB Investors at any time if the
Second Closing does not occur on or before the 180th day after the Initial
Closing Date for any reason, other than the failure of the DB Investors to
fulfill any of their obligations under this Agreement (the "Termination Event").
Upon (i) the Termination Event and (ii) receipt by the Company of a written
notice from DB Investors holding at least 51% of the aggregate principal amount
of the Notes held by the DB Investors indicating that the DB Investors intend to
exercise their termination rights under this Section 1.5 (the "Termination
Notice"), the Company agrees to pay in full all accrued interest under the Notes
and 110% of the outstanding principal under the Notes to each of the Investors
(with respect to each Investor, the "Termination Amount") on or before the
second business day following receipt by the Company of the Termination Notice.
Upon receipt by the Investors of the Termination Amount on or before the second
business day after receipt by the Company of the Termination Notice, (i) the
Investors shall deliver to the Company for cancellation their Notes and all
security interests granted pursuant to the Security Agreement shall be
terminated and released pursuant to the terms of the Security Agreement, (ii)
the DB Investors shall deliver to the Company for cancellation their Initial
Warrants, and (iii) the DB Investors shall cause the Warrant Investor Directors
(as defined in the New Stockholders Agreement) to resign from the Company's
Board of Directors effective immediately.
(b) The failure of the Company to pay the Investors the Termination Amount
on or before the second business day after receipt by the Company of the
Termination Notice is an Event of Default (as defined in the Security Agreement)
upon which the Investors shall have all the rights granted to them pursuant to
the Security Agreement until each of the Investors has received the Termination
Amount. Upon failure of the Company to pay the Investors the Termination Amount
on or before the second business day after receipt by the Company of the
Termination Notice, (i) the Initial Warrants shall become immediately
exercisable and transferable pursuant to the terms of Section 1 of the Initial
Warrants, (ii) the DB Investors shall retain their registration rights pursuant
to Article III of the New Stockholders Agreement, and (iii) until receipt by the
DB Investors of the Termination Amount, the DB Investors shall retain the
ability to name the Warrant Investor Directors pursuant to Section 1.1(b) of the
New Stockholders Agreement.
(c) If the Company pays the Investors the Termination Amount after the
second business day after receipt by the Company of the Termination Notice, (i)
the Investors shall deliver to the Company for cancellation the Notes and all
security interests granted pursuant to the Security Agreement shall be
terminated and released pursuant to the terms of the Security
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Agreement, (ii) the DB Investors shall retain their Initial Warrants (including
the right to immediately exercise such Initial Warrants pursuant to the terms of
Section 1 of the Initial Warrants and the registration rights with respect to
such Initial Warrants contained in Article III of the New Stockholders
Agreement), and (iii) the DB Investors shall cause the Warrant Investor
Directors (as defined in the New Stockholders Agreement) to resign from the
Company's Board of Directors effective immediately.
(d) In the event that the DB Investors exercise their termination rights
under this Section 1.5, this Agreement shall terminate upon the receipt by the
Investors of the payment in full of the Termination Amount; provided, however,
that the representations contained in Section 2.5 and Section 3.8, the covenants
contained in Section 6.2(a) and Section 6.2(c) and the indemnification
provisions of Section 7.2 of this Agreement shall not terminate until the DB
Investors cease to own the Initial Warrant Shares.
(e) The failure of the DB Investors to exercise their rights under this
Section 1.5 immediately upon the Termination Event shall not constitute a waiver
of such rights, nor shall it prevent the DB Investors from exercising their
rights under this Section 1.5 at any time prior to the earlier of (i) the Second
Closing or (ii) payment of the Termination Amount.
1.6 Voting Agreement. Simultaneous with the execution and delivery of this
Agreement, the parties to the Voting Agreement, dated the date hereof, by and
among the Company, certain stockholders of the Company and Investors who have
executed a signature page thereto (the "Voting Agreement") shall execute and
deliver to one another the Voting Agreement.
1.7 Register of Notes and Warrants. The Company will maintain at its
principal office a register of the Notes and the Warrants and will record
therein the names and addresses of the holders of the Notes and Warrants
provided to the Company by such holders, the address to which notices are to be
sent as designated by such holders and the address to which any payments or
deliveries of shares of Common Stock are to be made as designated by the holder
(if other than the address of the holder) and the particulars of all transfers,
exchanges and replacements of Notes and Warrants. In making any payments or
deliveries of shares of Common Stock to holders of the Notes or the Warrants,
the Company may rely upon the contact information contained in such register.
2 Representations and Warranties of the Company. The Company hereby
represents and warrants to each Investor that, except as set forth on a Schedule
of Exceptions (the "Schedule of Exceptions") furnished to each Investor and
special counsel for the Investors, specifically identifying the relevant
subparagraph hereof, which exceptions shall be deemed to be representations and
warranties as if made hereunder:
2.1 Organization, Good Standing and Qualification. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority to carry on its business as now conducted as described in the
documents filed by the Company under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), since the end of its most recently completed
fiscal year through
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the date hereof, including, without limitation, its annual report on Form 10-K
for the year ended December 31, 2002 (the "Exchange Act Documents") and as
currently proposed to be conducted. The Company is duly qualified to transact
business and is in good standing in each jurisdiction in which the failure to so
qualify would, either individually or in the aggregate, have a Material Adverse
Effect (as defined below). "Material Adverse Effect" means any change, event,
condition or circumstance that, (a) has, or reasonably could be expected to
have, a material adverse effect upon the business, assets, operations, results
of operation or condition (financial or otherwise) of the Company and its
Subsidiaries, considered as one enterprise; or (b) reasonably could be expected
to materially adversely affect the ability of the Company and its Subsidiaries,
considered as one enterprise, to operate or conduct their businesses in the
manner in which they are currently operated or conducted or currently
contemplated to be operated or conducted; provided, however, that "Material
Adverse Effect" shall not include any change, event, circumstance, or condition,
considered alone or in combination with other changes, events, circumstances and
conditions, arising out of or attributable to (i) any change in the Company's
stock price or trading volume in and of itself; (ii) events, circumstances,
changes or effects that generally affect the industry in which the Company
operates and do not affect the Company in a materially disproportionate manner
relative to other Persons engaged in the same industry; (iii) general economic
conditions or events, circumstances, changes or effects affecting the United
States economy generally; (iv) changes arising from the consummation of the
transactions contemplated by, or the announcement of the execution of, this
Agreement; (v) any increases in the Company's debt under its Fleet Loan
Agreement, or any demands or requests from the Company's suppliers for payments,
pre-payments or deposits; or (vi) any decreases in the Company's cash resources
or increases in accounts payable relating to payments incurred in the ordinary
course of business consistent with past practice.
2.2 Capitalization and Voting Rights.
(a) The authorized capital stock of the Company consists of: (i) 20,000,000
shares of Preferred Stock, par value $.001 per share (the "Preferred Stock"), of
which (A) 15,000 shares have been designated Series Y Preferred Stock (the
"Series Y Preferred Stock"), all of which are issued and outstanding as of the
date hereof, and (B) 20,000 shares have been designated Series X Convertible
Preferred Stock (the "Series X Preferred Stock"), all of which are issued and
outstanding as of the date hereof, and (ii) 400,000,000 shares of Common Stock
of the Company, of which 65,306,999 shares were issued and outstanding as of
June 27, 2003. Immediately after the Initial Closing, the respective Conversion
Prices (as defined in the Certificate of Designation of the Series X Preferred
Stock, which constitutes a part of the certificate of incorporation of the
Company (the "Series X Designation"), and the Certificate of Designation of the
Series Y Preferred Stock, which constitutes a part of the certificate of
incorporation of the Company (the "Series Y Designation")) per share for shares
of each of the Series X Preferred Stock and the Series Y Preferred Stock will be
$.18 and $.4423 per share, respectively.
(b) The outstanding shares of Common Stock are all duly and validly
authorized and issued, fully paid and nonassessable, and were issued in
accordance with the registration or qualification provisions of the Securities
Act of 1933, as amended (the "Act"), and any relevant state securities laws, or
pursuant to valid exemptions therefrom.
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(c) Except for (i) the transactions contemplated by this Agreement, (ii)
the conversion privileges of the Series Y Preferred Stock, (iii) the conversion
privileges of the Series X Preferred Stock, (iv) an aggregate of no more than
30,823,270 shares of its Common Stock reserved for issuance under the Company's
Amended and Restated 1999 Stock Plan, the Vector Internet Services Inc. 1997
Stock Option Plan, the Vector Internet Services Inc. 1999 Stock Option Plan, the
Company's 1999 Employee Stock Purchase Plan and the Company's Amended and
Restated 2001 Stock Option and Incentive Plan (together, the "Stock Plans"), (v)
an aggregate of 83,314 shares of its Common Stock reserved for issuance upon the
exercise of warrants issued to VantagePoint Venture Partners 1996, L.P. and
VantagePoint Communications Partners, L.P., (vi) an aggregate of 12,950,000
shares of its Common Stock reserved for issuance upon the exercise of warrants
issued in connection with the guaranty of the Company's obligations under the
Revolving Credit and Term Loan Agreement dated as of December 13, 2002 by and
between the Company and Fleet National Bank (the "Fleet Loan Agreement") and
(vii) an aggregate of 2,260,909 shares of its Common Stock reserved for issuance
upon the exercise of warrants issuable to VantagePoint Venture Partners III (Q),
L.P. ("VPVP III") as contemplated by the Letter Agreement dated as of March 5,
2003 by and between the Company and VPVP III, there are no outstanding options,
warrants, subscriptions, calls, convertible securities, phantom equity, equity
appreciation or similar rights, or other rights, agreements, arrangements or
commitments (contingent or otherwise) (including, without limitation, any right
of conversion or exchange under any outstanding security, instrument or other
agreement or any preemptive right) obligating either the Company or its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, any shares of its capital stock or other securities, instruments or rights
which are, directly or indirectly, convertible into or exercisable or
exchangeable for any shares of its capital stock. There are no outstanding
contractual obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares or make any investment (in the form of a
loan, capital contribution or otherwise) in any other Person. Other than the
Voting Agreement and the Stockholders Agreement (as defined below), the Company
is not a party or subject to any agreement or understanding, and, to the best of
the Company's knowledge, there is no agreement or understanding between any
Persons, which affects or relates to the voting or giving of written consents
with respect to any security of the Company.
(d) The shares of Common Stock, the shares of Series X Preferred Stock and
the shares of Series Y Preferred Stock held as of the date hereof by the Company
stockholders that have executed the Voting Agreement are sufficient, if voted in
accordance with the terms of the Voting Agreement, under the Delaware General
Corporation Law and the Company's certificate of incorporation and by-laws to
obtain the Required Stockholder Approvals (as defined in Section 2.4 below),
regardless of whether all options, warrants, rights or agreements for the
purchase or acquisition of any shares of Common Stock, shares of Series X
Preferred Stock or shares of Series Y Preferred Stock or other voting stock of
the Company that may be exercised by any Person prior to any DSLN Stockholders
Meeting (as defined in the Voting Agreement) are exercised.
2.3 Subsidiaries. Each of the Company's Subsidiaries (as defined in Rule
405 under the Act) (each a "Subsidiary") is duly organized, validly existing and
in good standing under the
6
laws of the jurisdiction in which it was formed and has all requisite corporate
or limited liability company power and authority to carry on its business as now
conducted and as proposed to be conducted as described in the Exchange Act
Documents. Each of the Company's Subsidiaries is duly qualified to transact
business and is in good standing in each jurisdiction in which the failure to so
qualify or be in good standing would have a Material Adverse Effect. The
outstanding shares of capital stock or limited liability company interests, as
applicable, of each of the Subsidiaries have been duly authorized and validly
issued, are fully paid and nonassessable and are owned by the Company or another
Subsidiary free and clear of all liens, encumbrances and equities and claims
other than liens in favor of the guarantors under the Fleet Loan Agreement; and
no options, warrants or other rights to purchase, agreements or other
obligations to issue or other rights to convert any obligations into shares of
capital stock or ownership interests in the Subsidiaries are outstanding.
2.4 Authorization. All corporate action on the part of the Company and its
officers, directors and stockholders necessary for the authorization, execution
and delivery of this Agreement, the performance of all obligations of the
Company to be performed by it at or before the Closings hereunder, and the
authorization, issuance (or reservation for issuance), sale and delivery of the
Notes and Warrants being sold hereunder and the Warrant Shares (as defined
below) has been taken or will be taken prior to the Initial Closing, including
the authorization and reservation of the shares of Common Stock to be issued
upon exercise of the Initial Warrant (the "Initial Warrant Shares"), except that
(i) the issuance and delivery of the Warrants being sold hereunder and the
Warrant Shares may require certain filings with, and the approval of, Nasdaq for
the listing of the Warrant Shares; (ii) the issuance and delivery of the
Subsequent Warrants being sold hereunder and the shares of Common Stock to be
issued upon exercise of the Subsequent Warrants (the "Subsequent Warrant
Shares", together with the Initial Warrant Shares, the "Warrant Shares")
requires the approval of the Company's stockholders pursuant to Nasdaq
Marketplace Rule 4350(i); (iii) the number of Subsequent Warrant Shares issuable
upon exercise of the Subsequent Warrants exceeds the number of authorized,
unissued and unreserved shares of Common Stock on the date of this Agreement
and, as a result, all corporate action necessary to amend the certificate of
incorporation of the Company to authorize an additional number of shares of
Common Stock necessary to allow for the issuance of the Subsequent Warrant
Shares will need to be taken, including the approval of such an amendment by the
Company's stockholders and the filing of an instrument necessary to implement
such an amendment with the Secretary of State of Delaware; and (iv) all
corporate action necessary to effectuate the amendments to the certificate of
incorporation of the Company set forth on Exhibit F hereto will need to be
taken, including the approval of such an amendment by the Company's Board of
Directors and the Company's stockholders, including the holders of the Series X
Preferred Stock and the holders of the Series Y Preferred Stock, and the filing
of an instrument necessary to implement such an amendment with the Secretary of
State of the State of Delaware (the stockholder approvals specified in clauses
(ii), (iii) and (iv) of this sentence shall constitute the "Required Stockholder
Approvals"). This Agreement constitutes a valid and legally binding obligation
of the Company, enforceable in accordance with its terms, except (i) as limited
by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws
of general application affecting enforcement of creditors' rights generally and
(ii) as limited by laws and
7
principles relating to the availability of specific performance, injunctive
relief, or other equitable remedies.
2.5 Valid Issuance of Notes, Warrants and Warrant Shares. The Notes have
been duly authorized by the Company and, when executed and delivered by the
Company, will be valid and binding obligations of the Company enforceable in
accordance with their terms. The Warrants, when issued in compliance with the
provisions of this Agreement, will be duly authorized and executed by the
Company and be valid and binding obligations of the Company enforceable in
accordance with their terms. The Initial Warrant Shares have been duly
authorized and validly reserved for issuance and, upon issuance in accordance
with the terms of the Initial Warrants for the consideration expressed therein,
will be duly and validly issued, fully paid, and nonassessable, and will be free
of restrictions on transfer other than restrictions on transfer under this
Agreement and under applicable state and federal securities laws. Upon issuance
of the Subsequent Warrants, the Subsequent Warrant Shares will be duly
authorized and validly reserved for issuance and, upon issuance in accordance
with the terms of the Subsequent Warrants for the consideration expressed
therein, will be duly and validly issued, fully paid, and nonassessable, and
will be free of restrictions on transfer other than restrictions on transfer
under this Agreement and under applicable state and federal securities laws.
2.6 Governmental Consents. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of the Company is
required in connection with the execution and delivery of this Agreement, the
issuance of the Notes and Warrants pursuant to the terms of this Agreement and
the issuance of Warrant Shares upon exercise of the Warrants in accordance with
the terms thereof, except (i) the filing of certificates of amendment or amended
and restated certificates of incorporation necessary to implement any amendments
to the certificate of incorporation of the Company to increase the number of
authorized shares of Common Stock and to amend the terms of the Series X
Preferred Stock and Series Y Preferred Stock and to implement any other matter
contemplated by this Agreement, (ii) such filings with, and approvals of,
Nasdaq, (iii) regulatory filings, approvals and notices, including filings and
notices with the Federal Communications Commission and state public utility
commissions, which either have been made, will be made prior to the issuance of
the Warrants (if such approvals are not needed prior to such issuance) or for
which the failure to make would not have a Material Adverse Effect, (iv) filings
as are required pursuant to applicable federal and state securities laws, which
filings will be made within the required periods, and (v) if and to the extent
that, as a result of any anti-dilution adjustment to the Conversion Price (as
defined in both the Series X Designation and Series Y Designation) or to the
number of shares of Common Stock issuable upon exercise of then outstanding
warrants to purchase shares of the Company's capital stock or the Warrants, the
number of shares of Common Stock issuable upon conversion of shares of Series X
Preferred Stock and Series Y Preferred Stock and upon exercise of then
outstanding options and warrants to purchase shares of the Company's capital
stock and the Warrants exceeds the number of authorized and unissued shares of
Common Stock on the date of such adjustment, corporate action will need to be
taken to amend the certificate of incorporation of the Company to authorize an
additional number of shares of Common Stock and to reserve such number of shares
of Common Stock necessary to allow for the issuance of such excess number of
shares of Common Stock.
8
2.7 Offering. Subject in part to the completeness and accuracy of each
Investor's representations set forth in Section 3 of this Agreement, the offer,
sale and issuance of the Notes and Warrants as contemplated by this Agreement
is, and the issuance of the Warrant Shares in accordance with the terms of the
Warrants will be, exempt from the registration requirements of any applicable
state and federal securities laws, and neither the Company nor any authorized
agent acting on its behalf will take any action hereafter that would cause the
loss of such exemption.
2.8 Litigation. There is no action, suit, proceeding or known investigation
pending or, to the Company's knowledge, currently threatened against the Company
or any of its Subsidiaries, officers or directors (i) to which the Company or
any of its Subsidiaries is or, to the Company's knowledge, may be named as a
party or its business or assets are or, to the Company's knowledge, may be
subject and which, individually or in the aggregate, could reasonably be
expected to result in the Company or any of its Subsidiaries being subject to
any costs, fees, fines, lost profits, judgments or awards in excess of $50,000
in the aggregate, or (ii) that questions the validity of this Agreement, or the
right of the Company to enter into this Agreement, or to consummate the
transactions contemplated hereby, or that might result, either individually or
in the aggregate, in any Material Adverse Effect, or any change in the current
equity ownership of the Company, nor is the Company aware that there is any
basis for the foregoing. There is no pending or, to the knowledge of the
Company, threatened claim or litigation, against or affecting the Company
contesting its right to conduct its business in the manner and in the locations
in which the Company currently does business.
2.9 Patents and Trademarks. The Company and its Subsidiaries own and have
good title to, or are party to enforceable license agreements or possess other
sufficient rights permitting the Company and its Subsidiaries the use of, all
patents, patent rights, trademarks, service marks, domain names, trade dress,
logos, copyrights, licenses, inventions, trade secrets, trade names and know-how
(collectively, "Intellectual Property") used in the conduct of its business as
now conducted as described in the Exchange Act Documents or as currently
proposed to be conducted, free from liens or other restrictions, except where
the failure to currently own or have permission to use such rights could not
reasonably be expected to have a Material Adverse Effect. To the knowledge of
the Company, after due inquiry, none of the products or operations of the
Company or any of its Subsidiaries, or the use by the Company or any of its
Subsidiaries of any such Intellectual Property, infringes or otherwise violates,
any Intellectual Property owned by any other Person, and there is no pending or,
to the knowledge of the Company, threatened claim, demand, litigation,
investigation, arbitration or other proceeding against or affecting the Company
or any of its Subsidiaries contesting the right of any of them to distribute or
sell any such product or to engage in any such operation, or to use any of such
Intellectual Property.
2.10 Compliance with Other Instruments.
(a) The Company and its Subsidiaries are (i) in compliance with their
respective organizational documents or by-laws, in each case, as in effect on
the date hereof and (ii) in compliance in all material respects with all Laws
(as defined below).
9
(b) The execution and delivery of this Agreement, the issuance and sale of
the Notes and Warrants under this Agreement, the issuance of the Warrant Shares
upon exercise of the Warrants in accordance with the terms thereof, the
fulfillment of the terms of this Agreement and the consummation of the
transactions contemplated hereby will not (a) conflict with or constitute a
violation of, or default (with the passage of time or otherwise) under, (i) any
bond, debenture, note or other evidence of indebtedness, material lease,
material contract, indenture, mortgage, deed of trust, loan agreement, joint
venture or other material agreement or instrument to which the Company or any
Subsidiary is a party or by which it or any of its Subsidiaries or their
respective properties are bound, (ii) the charter, by-laws or other
organizational documents of the Company or any Subsidiary; provided, however,
that the issuance and sale of the Subsequent Warrants and the issuance of the
Subsequent Warrant Shares upon exercise of the Subsequent Warrants will require
the authorizations specified in the first sentence of Section 2.4, or (iii) any
law, administrative regulation, ordinance or order of any court or governmental
agency, arbitration panel or authority (collectively, "Laws") applicable to, or
Permit (as defined below) held by, the Company or any Subsidiary or their
respective properties, except in the case of clauses (i) and (iii) for any such
conflicts, violations or defaults which are not reasonably likely to have a
Material Adverse Effect or (b) result in the creation or imposition of any lien,
encumbrance, claim, security interest or restriction whatsoever upon any of the
properties or assets of the Company or any Subsidiary other than those created
in favor of the Investors, or an acceleration of indebtedness pursuant to any
obligation, agreement or condition contained in any bond, debenture, note or any
other material evidence of indebtedness or any indenture, mortgage, deed of
trust or any other material agreement or instrument to which the Company or any
Subsidiary is a party or by which any of them is bound or to which any of the
property or assets of the Company or any Subsidiary is subject.
2.11 Government Permits. The Company and each of its Subsidiaries has
obtained all necessary franchises, permits, licenses, and other rights and
privileges from governmental authorities necessary to permit them to own their
properties and to conduct their businesses as now being conducted and as
proposed to be conducted by them (collectively, "Permits"), except where the
failure to obtain such Permit could not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby will not adversely affect any Permits.
2.12 Registration Rights. Except as provided herein, in the Amended and
Restated Investors' Rights Agreement dated as of July 16, 1999 between the
Company and the purchasers named therein and the Stockholders Agreement dated as
of December 24, 2001 by and among the Company and the investors named therein,
as amended (the "Stockholders Agreement"), the Company has not granted to or
agreed to grant to any holders of shares of its Common Stock or securities
convertible into Common Stock registration rights with respect to such shares
under the Act.
2.13 Reporting Status.
(a) The Company has filed in a timely manner all documents that the Company
was required to file with the Securities and Exchange Commission ("SEC") since
January 1, 2002 (the "Company SEC Reports"). All such documents complied in all
material
10
respects with the applicable requirements of the Act or the Exchange
Act and the rules and regulations promulgated thereunder as of their respective
filing dates, and the information contained therein as of the date thereof did
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(b) The Company has timely filed all certifications and statements required
by (x) Rule 13a-14 or Rule 15d-14 under the Exchange Act or (y) 18 U.S.C.
Section 1350 (Section 906 of the Xxxxxxxx-Xxxxx Act of 2002) with respect to any
Company SEC Report. The Company maintains disclosure controls and procedures
required by Rule 13a-15 or Rule 15d-15 under the Exchange Act; and such controls
and procedures are designed to provide reasonable assurance that all material
information concerning the Company and its Subsidiaries is made known on a
timely basis to the individuals responsible for the preparation of the Company's
SEC filings and other public disclosure documents. The Company maintains
complete copies of all policies, manuals and other documents promulgating such
disclosure controls and procedures (and all written descriptions thereof). As
used in this Section 2.13, the term "file" shall be broadly construed to include
any document or information "filed" or "furnished" to the SEC.
2.14 Financial Statements. The financial statements of the Company and the
related notes contained in the Company SEC Reports (the "Financial Statements")
present fairly, in accordance with generally accepted accounting principles
("GAAP"), the financial position of the Company and its Subsidiaries as of the
dates indicated, and the results of its operations, stockholders' equity (with
respect to annual financial statements only) and cash flows for the periods
therein specified consistent with the books and records of the Company and its
Subsidiaries except that the unaudited interim Financial Statements were or are
subject to normal year-end adjustments which are not expected to be material in
amount. Such Financial Statements (including the related notes) have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods therein specified, except as may be included in the notes to such
Financial Statements, or in the case of unaudited statements, as may be
permitted by the SEC on Form 10-Q under the Exchange Act and except as disclosed
in the Company SEC Reports. The other financial information contained in the
Company SEC Reports has been prepared on a basis consistent with the Financial
Statements of the Company.
2.15 No Material Adverse Effect. Except as disclosed in Exchange Act
Documents and except for the transactions contemplated by this Agreement, since
June 18, 2003, there has not been (i) any change that has had a Material Adverse
Effect, (ii) any obligation, direct or contingent, that is material to the
Company and its Subsidiaries considered as one enterprise, incurred by the
Company, except obligations incurred in the ordinary course of business
consistent with past practice, (iii) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company or any of its
Subsidiaries, or (iv) any loss or damage (whether or not insured) to the
physical property of the Company or any of its Subsidiaries which has had, or
could reasonably be expected to have, a Material Adverse Effect.
2.16 Listing. The Company's Common Stock is registered pursuant to Section
12(g) of the Exchange Act and is listed on the Nasdaq SmallCap Market (the
"NSCM").
11
2.17 Company not an "Investment Company." The Company has been advised of
the rules and requirements under the Investment Company Act of 1940, as amended
(the "Investment Company Act"). The Company is not, and immediately after
receipt of payment for the Notes and Warrants will not be, an "investment
company" or an entity "controlled" by an "investment company" within the meaning
of the Investment Company Act (provided that none of the Investors is an
"investment company" or an entity "controlled" by an "investment company" within
the meaning of the Investment Company Act) and shall conduct its business in a
manner so that it will not become subject to the Investment Company Act.
2.18 No Undisclosed Liabilities. None of the Company or any of its
Subsidiaries has any liabilities of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, other than (i)
liabilities to the extent disclosed or provided for in the Financial Statements
(or not disclosed or provided for therein due to the immateriality of such
liabilities), (ii) liabilities incurred in the ordinary course of business since
the date of the Exchange Act Documents or (iii) liabilities arising under this
Agreement.
2.19 Taxes. The Company and its Subsidiaries have timely filed all material
Tax (as defined below) returns required to be filed by or with respect to such
Person. All such Tax returns are true and correct in all material respects. All
Taxes shown to be due on such Tax returns have been paid. "Tax" means any and
all federal, state or other local taxes, and any interest, penalties, or
additions to such tax related thereto.
3 Representations and Warranties of the Investors. Each Investor hereby
represents and warrants that:
3.1 Authorization. Such Investor has full power and authority to enter into
this Agreement and such Agreement constitutes its valid and legally binding
obligation, enforceable in accordance with its terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies.
3.2 Purchase Entirely for Own Account. This Agreement is made with such
Investor in reliance upon such Investor's representation to the Company, which
by such Investor's execution of this Agreement such Investor hereby confirms,
that the Notes and Warrants and the Warrant Shares (collectively, the
"Securities") will be acquired for investment for such Investor's own account,
not as a nominee or agent, and not with a view to the resale or distribution of
any part thereof and that such Investor has no present intention of selling,
granting any participation in, or otherwise distributing same to any Person
other than to an approved transferee listed on Schedule C hereto. By executing
this Agreement, such Investor further represents that such Investor does not
have any contract, undertaking, agreement or arrangement with any Person (other
than an approved transferee listed on Schedule C hereto) to sell, transfer or
grant participation to such person or to any third person, with respect to any
of the Securities, provided, however, that, subject to compliance with the terms
of this Agreement, the New Stockholders Agreement and applicable law, the
disposition of such Investor's property shall at all times be within its
control.
12
3.3 Disclosure of Information. Such Investor represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Securities, and the business,
properties, prospects and financial condition of the Company.
3.4 Investment Experience. Such Investor is an investor in securities of
companies in the development stage and acknowledges that it is able to fend for
itself, can bear the economic risk of its investment, and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Securities. If other than an
individual, such Investor also represents it has not been organized for the
purpose of acquiring the Securities. Such Investor has carefully considered the
potential risks relating to the Company and a purchase of the Securities, and
fully understands that the Securities are speculative investments which involve
a high degree of risk of loss of such Investor's entire investment. Among
others, such Investor has carefully considered each of the risks identified
under the caption "Risk Factors" in the Exchange Act Documents.
3.5 Accredited Investor. Such Investor is an "accredited investor" within
the meaning of SEC Rule 501 of Regulation D, as presently in effect.
3.6 Investor Not an Investment Company. Such Investor is not an "investment
company" or an entity "controlled" by an "investment company" within the meaning
of the Investment Company Act.
3.7 Restricted Securities. Such Investor understands that the Securities
are characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Act only in certain
limited circumstances. In this connection, such Investor represents that it is
familiar with SEC Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Act.
3.8 Further Limitations on Disposition. Without in any way limiting the
representations set forth above, such Investor further agrees not to make any
disposition of all or any portion of the Securities to any third party unless:
(a) Such proposed disposition is made pursuant to an effective registration
statement under the Act; or
(b) (i) Such Investor shall have notified the Company of the proposed
disposition and shall have furnished the Company with a statement which
describes briefly the manner of such disposition and identifies the proposed
transferee, (ii) if reasonably requested by the Company, such Investor shall
have furnished the Company with an opinion of counsel, reasonably satisfactory
to the Company, that such disposition will not require registration of such
shares under the Act; and (iii) the transferee has agreed in writing for the
benefit of the Company to be bound by Sections 3.8 and 3.9 of this Agreement to
the extent such Section is then applicable.
13
Notwithstanding the provisions of paragraphs (a) and (b) above, no such
registration statement or opinion of counsel shall be necessary for a transfer
by an Investor that is a partnership to any general or limited partner of such
partnership or to the estate of any such partner or to any corporation,
partnership, or other entity which is an affiliate of such partnership or the
transfer by gift, will or intestate succession by any such partner to his or her
spouse or to the siblings, lineal descendants or ancestors of such partner or
his or her spouse, if the transferee agrees in writing to be subject to the
terms hereof to the same extent as if he or she were an original Investor
hereunder.
3.9 Prohibition Against Hedging. Until the date that is 180 days after the
date of this Agreement, the Investors and their affiliates and transferees will
not engage in any hedging or other transaction which is designed to or could
reasonably be expected to lead to or result in a sale, offer for sale,
solicitation of offers to buy, disposition of, loan, or pledge (collectively, a
"Disposition") by the Investors, their affiliates and transferees, or any other
Person or entity, of the Warrants, the Warrant Shares or any other shares of
capital stock of the Company now owned or hereafter acquired by the Investors
and their affiliates and transferees. Such prohibited hedging or other
transactions would include, without limitation, effecting any short sale or
having in effect any short position (whether or not such sale or position is
against the box and regardless of when such position was entered into) or any
purchase, sale or grant of any right (including without limitation any put or
call option) with respect to the Warrants, the Warrant Shares or any other
shares of Capital Stock of the Company now owned or hereafter acquired by the
Investors or any of their affiliates or transferees, or with respect to any
security (other than a broad-based market basket or index) that includes,
relates to or derives a significant part of its value from the Warrants, the
Warrants Shares or any other shares of Capital Stock of the Company now owned or
hereafter acquired by the Investors or any of their affiliates or transferees.
3.10 Reliance; Material Changes. The information contained in this Section
3 is complete and accurate and may be relied upon by the Company, and such
Investor will notify the Company promptly of any material change in any of such
information occurring prior to each Closing.
3.11 Legends. It is understood that the certificates evidencing the Warrant
Shares may bear the following legend:
These securities have not been registered under the
Securities Act of 1933, as amended, or any state
securities laws. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration
statement in effect with respect to the securities under
such Act and any applicable state securities laws or
pursuant to an exemption under such laws, together with,
in certain cases, an opinion of counsel reasonably
satisfactory to the Company that such registration is
not required.
14
4 Conditions of Investors' Obligations at Closings.
4.1 Initial Closing. The obligations of each Investor to purchase Notes and
Warrants at the Initial Closing are subject to the fulfillment on or before the
Initial Closing of each of the following conditions, unless such condition or
conditions are waived by the Investors purchasing at least a majority of the
principal amount of Notes being purchased at the Initial Closing:
(a) Representations and Warranties. The representations and warranties of
the Company contained in Section 2 of this Agreement shall be true in all
material respects (other than representations and warranties subject to
"materiality" or "Material Adverse Effect" qualifiers, which shall be true in
all respects) on and as of the Initial Closing with the same effect as though
such representations and warranties had been made on and as of the date of such
Closing, except to the extent such representations and warranties are by their
express provisions made as of the date of this Agreement or another specified
date.
(b) Performance. The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Initial
Closing.
(c) Compliance Certificate. The President or Chief Executive Officer of the
Company shall deliver to each Investor at the Initial Closing a certificate
stating that the conditions specified in Section 4.1(a) and Section 4.1(b) have
been fulfilled.
(d) Regulatory Approvals. All Permits, if any, that are required in
connection with the lawful issuance and sale of the Notes and the Initial
Warrants pursuant to this Agreement shall be duly obtained and effective as of
the Initial Closing, except any regulatory filings, approvals and notices,
including filings with and approvals from the Federal Communications Commission
and state public utility commissions, which the failure to obtain or to be
effective would not have a Material Adverse Effect.
(e) Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Initial Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Investors, and they shall have received all such counterpart
original and certified or other copies of such documents as they may reasonably
request. This may include, without limitation, good standing certificates and
certification by the Company's Secretary regarding the Amended and Restated
Certificate of Incorporation (the "Restated Certificate") and Bylaws and Board
of Directors and stockholder resolutions (if any) relating to this transaction.
(f) Opinion of Company Counsel. Each Investor shall have received from
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP, counsel for the Company, an opinion, dated as
of the Initial Closing, substantially in the form attached hereto as Exhibit C.
(g) Existing Investors' Investment. The obligations of the DB Investors to
purchase Notes and Warrants at the Initial Closing is subject to the purchase of
at least $7,500,000 of Notes and Warrants hereunder by the Existing Investors.
15
(h) Stockholders Agreement. The Second Amended and Restated Stockholders
Agreement in the form attached hereto as Exhibit D (the "New Stockholders
Agreement") shall have been executed and delivered by the Company, each of the
Investors (other than such Investor), all the holders of the Series X Preferred
Stock, and the holders of a majority of the Series Y Preferred Stock.
(i) Satisfaction of Certain Obligations. All outstanding obligations of the
Company to (i) Copper Mountain Networks, Inc. under equipment leases shall be
satisfied contemporaneously with the Closing and paid in full on the terms set
forth in the letter agreement dated June 30, 2003, between the Company and
Copper Mountain Networks, Inc. (the "Copper Mountain Networks Agreement"), and
(ii) Fleet National Bank pursuant to the Fleet Loan Agreement shall have been
satisfied contemporaneously with the Initial Closing.
(j) Cancellation of Guarantees and Existing Investors' Security Interests.
Each of (i) the guaranties of any borrowings by the Company under the Fleet Loan
Agreement (collectively, the "Guarantees"), (ii) the Reimbursement Agreement,
dated December 27, 2002, by and among the Company, the Guarantors party thereto
and VPVP III, as Administrative Agent, (iii) the related Subsidiary Guaranty,
dated as of December 27, 2002, by certain Subsidiaries of the Company, (iv) the
Security Agreement, dated as of December 27, 2002, by the Company and certain of
its Subsidiaries in favor of VPVP III, as Administrative Agent and (v) the
related liens on the assets of the Company and its Subsidiaries shall be
terminated contemporaneously with the Initial Closing.
(k).........NAS Agreement. The Company, DSLnet Atlantic, LLC and
Network Access Solutions Corporation ("NAS") shall have entered into a
settlement stipulation pursuant to which all the outstanding obligations of the
Company under the Promissory Note dated January 10, 2003 may be satisfied on
terms and conditions acceptable to the Investors and the Company (the "NAS
Agreement"), subject to the approval of any such agreement (which such approval
may occur after the Initial Closing Date) by the United States Bankruptcy Court
for the District of Delaware; the NAS Agreement shall have been approved by the
NAS creditors committee and the NAS Agreement shall have been filed in the
United States Bankruptcy Court for the District of Delaware for approval.
(l) Security Agreement. A Security Agreement in the form of Exhibit E (the
"Security Agreement") shall have been executed and delivered by the Company and
certain of its Subsidiaries in favor of Deutsche Bank Trust Company Americas as
Administrative Agent.
(m) Material Adverse Effect. There shall not have been any change, event or
occurrence which, individually or in the aggregate, has had or could reasonably
be expected to have a Material Adverse Effect.
(n) Election of Directors. The Warrant Investor Directors (as named in the
New Stockholders Agreement) shall have been appointed to the Board of Directors
of the Company effective as of the Initial Closing in accordance with the terms
of the New Stockholders Agreement.
16
4.2 Second Closing. The right of each Investor to receive Subsequent
Warrants at the Second Closing is subject to the fulfillment on or before the
Second Closing of each of the following conditions:
(a) Initial Closing. The Initial Closing shall have occurred.
(b) Required Stockholder Approvals. The Company shall have obtained the
Required Stockholder Approvals.
(c) Regulatory Approvals. All Permits, regulatory filings and approvals,
including filings with and approvals from the Federal Communications Commission
and state public utility commissions, if any, that are required in connection
with the lawful issuance, sale and exercise of the Subsequent Warrants pursuant
to this Agreement as specified in Section 4.2(c) of the Schedule of Exceptions,
shall be duly obtained and effective as of the Second Closing, except any
regulatory filings, approvals and notices, including filings with and approvals
from the Federal Communications Commission and state public utility commissions,
which are not specified in Section 4.2(c) of the Schedule Exceptions the failure
of which to obtain or be effective would not have a Material Adverse Effect.
(d) Bringdown Certificate. The President or Chief Executive Officer of the
Company shall deliver to each Investor at the Second Closing a certificate
stating that the representations and warranties of the Company contained in
Section 2.4 and the second and fourth sentences of Section 2.5 of this Agreement
are true on and as of the Second Closing with the same effect as though such
representations and warranties had been made on and as of the date of the Second
Closing, except that the representations and warranties contained in Section 2.4
shall be made without the qualifications contained in subsections (ii), (iii)
and (iv) of Section 2.4.
5 Conditions of the Company's Obligations at Closings.
5.1 Initial Closing. The obligations of the Company to each Investor to
sell and deliver the Notes and the Initial Warrants at the Initial Closing, are
subject to the fulfillment on or before the Initial Closing of each of the
following conditions, unless such condition or conditions are waived by the
Company:
(a) Representations and Warranties. The representations and warranties of
such Investor contained in Section 3 shall be true on and as of the Initial
Closing Date with the same effect as though such representations and warranties
had been made on and as of the Initial Closing Date.
(b) Performance. Such Investor shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Initial
Closing.
(c) Compliance Certificate. Such Investor shall deliver to the Company a
certificate stating that the conditions specified in Section 5.1(a) and Section
5.1(b) have been satisfied.
17
(d) Regulatory Approvals. All Permits, if any, that are required in
connection with the lawful issuance and sale of the Notes and the Initial
Warrants, pursuant to this Agreement shall be duly obtained and effective as of
the Initial Closing, except any regulatory filings, approvals and notices,
including filings with and approvals from the Federal Communications Commission
and state public utility commissions, which the failure to obtain or to be
effective would not have a Material Adverse Effect.
5.2 Second Closing. The obligation of the Company to deliver the Subsequent
Warrants to each Investor at the Second Closing is subject to the fulfillment on
or before the Second Closing of each of the following conditions, unless such
conditions are waived by the Company:
(a) Initial Closing. The Initial Closing shall have occurred.
(b) Required Stockholder Approvals. The Company shall have obtained the
Required Stockholder Approvals on or prior to the Second Closing.
(c) Regulatory Approvals. All Permits, regulatory filings and approvals,
including filings with and approvals from the Federal Communications Commission
and state public utility commissions, if any, that are required in connection
with the lawful issuance, sale and exercise of the Subsequent Warrants pursuant
to this Agreement as specified in Section 4.2(c) of the Schedule of Exceptions,
shall be duly obtained and effective as of the Second Closing, except any
regulatory filings, approvals and notices, including filings with and approvals
from the Federal Communications Commission and state public utility commissions,
which are not specified in Section 4.2(c) of the Schedule of Exceptions the
failure of which to obtain or be effective would not have a Material Adverse
Effect.
6 Covenants.
6.1 Efforts to Obtain Required Stockholder Approvals. The Company shall
take all action required under the Delaware General Corporation Law and the
Company's certificate of incorporation and its by-laws to convene a meeting of
the stockholders of the Company to consider and obtain the Required Stockholder
Approvals. As promptly as practicable after the execution of this Agreement, the
Company shall prepare and file with the SEC the proxy statement to be sent to
the stockholders of the Company relating to the meeting of the Company's
stockholders to be held to consider the Required Stockholder Approvals, and the
Company shall include in such proxy statement the recommendation of the
Company's Board of Directors in favor of the Required Stockholder Approvals. The
Company shall grant the Investors the right to review, and comment on, the proxy
statement before such proxy statement is filed with the SEC. The Company shall
use its reasonable best efforts to hold the meeting of the stockholders to
obtain the Required Stockholder Approvals as promptly as possible following the
filing of such proxy statement with the SEC but in no event later than 90 days
after the date of this Agreement.
18
6.2 Corporate Actions.
(a) So long as any Warrants are outstanding, the Company shall not enter
into any transaction or take any action that would cause, as a result of any
anti-dilution adjustment to the Conversion Price (as defined in both the Series
X Designation and Series Y Designation) or to the number of shares of Common
Stock issuable upon exercise of the Warrants issued in connection with this
Agreement, the number of shares of Common Stock issuable upon conversion of
shares of Series X Preferred Stock and Series Y Preferred Stock and upon
exercise of the Warrants and any other warrants outstanding as of the date
hereof to exceed the number of authorized and unissued shares of Common Stock on
the date of such adjustment unless the Company has first taken all corporate
action that will need to be taken to amend the certificate of incorporation of
the Company (including filing such amendment with the Secretary of State of
Delaware) to authorize an additional number of shares of Common Stock and to
reserve such number of shares of Common Stock necessary to allow for the
issuance of such excess number of shares of Common Stock.
(b) If, at any time or from time to time, the Company's certificate of
incorporation needs to be amended to increase the number of authorized but
unissued shares of Common Stock to permit full conversion of the outstanding
shares of Series X Preferred Stock, Series Y Preferred Stock and exercise of the
Warrants or any other action of the Company's stockholders is required to fully
implement the transactions contemplated by this Agreement (including the actions
necessary to obtain the Required Stockholder Approvals), each Investor shall
vote all shares of capital stock of the Company beneficially owned by it in
favor of such action.
(c) So long as any Warrants are outstanding, the Company shall at all times
have authorized and reserved for issuance a sufficient number of shares of
Common Stock to permit the exercise of the Warrants issues in connection with
this Agreement and any other warrants outstanding as of the date hereof.
6.3 Access. The Company shall permit each Investor who: (i) either (a)
holds Notes with an aggregate outstanding principal balance of at least
$5,000,000 or (b) beneficially owns at least 26,315,790 shares of Common Stock
issued, or issuable, upon the exercise of Warrants; and (ii) enters into a
non-disclosure agreement in a form mutually acceptable to the Company and such
Investor, reasonable access during normal business hours to the offices,
properties, books, records and personnel of the Company and its Subsidiaries and
such additional information concerning the business and properties of the
Company and its Subsidiaries as the Investors and their representatives may
reasonably request.
6.4 HSR Act Filings. If required by law, the Company and the Investors
shall file with the proper authorities all forms and other documents necessary
to be filed pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the regulations promulgated thereunder (the "HSR Act"), as
promptly as possible and shall cooperate with each other in promptly producing
such additional information as those authorities may reasonably require to allow
early termination of the notice period provided by the HSR Act or as otherwise
necessary
19
to comply with requirements of the Federal Trade Commission or the Department of
Justice. Each Investor shall pay half of any filing fee required to be paid by
it in connection with a filing pursuant to the HSR Act required as a result of
the exercise of Warrants held by such Investor, and the Company shall pay the
other half of any such filing fee. Each of the Investors and the Company shall
bear its own expenses (other than such filing fees) incurred in connection with
any filing required pursuant to the HSR Act.
6.5 Other Governmental Approvals. As soon as practicable after the
execution of this Agreement, the Company and the Investors shall file all
applications and reports and take such other action (in addition to filings
required under the HSR Act) which is reasonably required to be taken or filed
with any governmental authority in connection with the transactions contemplated
by this Agreement. The Company and the Investors shall give all additional
notices to third parties and take other action reasonably required to be taken
by it under any material authorization, lease, note, mortgage, indenture,
agreement or other instrument or any law, rule, regulation, demand or court or
administrative order in connection with the transactions contemplated by this
Agreement.
6.6 Covenants Pending Initial Closing.
(a) Between the date of this Agreement and the Initial Closing, the Company
will (i) promptly advise the Investors of any action or event of which it has
knowledge which has the effect of making incorrect, in any material respect, any
of the Company's representations or warranties or which has the effect of
rendering any of the Company's covenants incapable of performance and (ii)
promptly provide the Investors with copies of any correspondence received by the
Company from the SEC.
(b) Between the date of the Initial Closing and the Second Closing, the
Company will promptly advise the Investors of any action or event of which it
has knowledge which has the effect of making incorrect, in any material respect,
any of the Company's representations or warranties contained in Section 2.4 and
the second and third sentences of Section 2.5.
6.7 Further Assurances. Each party shall use its commercially reasonable
efforts to timely effectuate the intents and purposes of this Agreement and the
consummation of the transactions contemplated hereby.
6.8 Corporate Spending Policy. . The Company agrees that, so long as any
Notes remain outstanding, the Company will abide by the corporate spending
policy adopted by the Company's Board of Directors, as amended from time to time
(which amendment shall be with the approval of the Warrant Investor Directors
(as defined in the New Stockholders Agreement)).
6.9 Fleet Account Agreement. . The Company agrees that, within 10 business
days after the date hereof, it will obtain an amendment to paragraph 15 of the
Three-party Springing Blocked Account Service Agreement with Fleet Bank (the
"Fleet Account Agreement") deleting the second sentence of paragraph 15 and if
it fails to obtain such amendment, will close the account covered by the Fleet
Account Agreement and transfer (within 20 business days) any and all of the
funds deposited in such account to a bank acceptable to the Agent and will
execute with
20
such bank an account control agreement in substantially the form of Exhibit C to
the Security Agreement.
7 Miscellaneous.
7.1 Survival. The warranties, representations and covenants of the Company
and Investors contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closings for a period of twelve
months following the Initial Closing (except that the representations and
warranties in Section 2.5 shall survive indefinitely and the covenants in
Section 6 which by their terms are to be performed by a specific date shall
survive for the applicable period specified in such covenant or, if no such
period is specified, shall survive indefinitely) and shall in no way be affected
by any investigation of the subject matter thereof made by or on behalf of the
Investors or the Company. Notwithstanding the foregoing, to the extent any claim
is asserted in accordance with Section 7.2 with respect to any representation or
warranty prior to the end of such twelve-month period, the Investors may
continue to pursue such claim as if such representation or warranty had survived
until the resolution of such claim.
7.2 Indemnification.
(a) To the greatest extent permitted by applicable law, the Company agrees
to indemnify each Investor against and hold it harmless from all claims, losses,
damages, liabilities (or actions in respect thereof), obligations, penalties,
awards, judgments, expenses (including, without limitation, reasonable fees and
expenses of counsel) or disbursements (each a "Loss") incurred by such Investor
and arising out of or resulting from: (i) the breach of any representation or
warranty of the Company in this Agreement or in any written agreement,
certificate or instrument delivered pursuant hereto, or (ii) the breach of any
agreement by the Company contained in this Agreement or any written agreement,
certificate or instrument delivered pursuant hereto.
(b) To the greatest extent permitted by applicable law, each Investor
agrees, severally and not jointly, to indemnify the Company against and hold it
harmless from any Loss arising out of or resulting from: (i) the breach of any
representation or warranty of such Investor in this Agreement or in any written
agreement, certificate or instrument delivered pursuant hereto, or (ii) the
breach of any agreement by such Investor contained in this Agreement or any
written agreement, certificate or instrument delivered pursuant hereto.
(c) Notwithstanding the provisions of Sections 7.2(a) and 7.2(b), (i) no
party shall be liable for any Losses under this Section 7.2 unless the aggregate
amount of Losses by all parties seeking indemnification under this Agreement
from such indemnifying party exceeds $100,000 and then only to the extent of
such excess; provided, however, that the limitations in this Section 7.2(c)(i)
shall not apply to breaches by the Company of its representations and warranties
contained in Section 2.4 and Section 2.5 or a breach of the covenants in Section
6.2(a) and Section 6.2(c); and (ii) the maximum liability of the Company under
this Section 7.2 shall not exceed $30,000,000 and the aggregate maximum
liability of the Investors under this Section 7.2 shall not exceed $30,000,000
(and the maximum liability of each Investor under this Section
21
7.2 shall not exceed the amount set forth opposite such Investor's name under
the heading "Purchase Price" on Schedule A or Schedule B hereto, as applicable).
(d) Each party agrees to give the other party prompt written notice of any
claim, assertion, event or proceeding by a third party of which it has actual
knowledge concerning any Losses as to which it intends to request
indemnification hereunder. The indemnifying party shall have the right to
direct, through counsel of its own choosing, the defense or settlement of any
such claim or proceeding at its own expense. The indemnified party shall
cooperate with the indemnifying party in the defense or settlement thereof, and
the indemnifying party shall reimburse indemnified party of its reasonable
out-of-pocket expenses in connection therewith. If the indemnifying party elects
to assume the defense of any such claim or proceeding, the indemnified party may
participate in such defense, but in such case the expenses of the indemnified
party shall be paid by such indemnified party. If the indemnifying party elects
to direct the defense of any such claim or proceeding, the indemnified party
shall not pay, or permit to be paid, any part of any claim or demand arising
from such asserted liability, unless the indemnifying party consents in writing
to such payment or unless the indemnifying party, subject to the last sentence
of this Section 7.2(d), withdraws from the defense of such asserted liability,
or unless a final judgment from which no appeal may be taken by or on behalf of
the indemnifying party is entered against the indemnified party for such
liability. If the indemnifying party shall fail to defend any such claim or
proceeding, or if, after commencing or undertaking any defense, fails to
prosecute or withdraws from such defense, the indemnified party shall have the
right to undertake the defense or settlement thereof, at the indemnifying
party's expense. If the indemnified party assumes the defense of any claim or
proceeding pursuant to this Section 7.2(d) and proposes to settle such claim or
proceeding prior to a final judgment thereon or to forego appeal with respect
thereto, then such indemnified party shall give the indemnifying party prompt
written notice thereof and the indemnifying party shall have the right to
participate in the settlement or assume or reassume the defense of such claim or
proceeding
(e) This Section 7.2 shall provide the exclusive remedy for any
misrepresentation or breach of warranty, covenant or other agreement or claims
arising out of this Agreement or the transactions contemplated hereby, other
than with respect to claims for fraud, willful misrepresentation or willful
breach.
7.3 Successors and Assigns. Except as otherwise provided herein, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties (including transferees
of any Securities); provided, however, (i) the transferor shall, within ten (10)
days after such transfer, furnish to the Company written notice of the name and
address of such transferee or assignee and the securities with respect to which
such registration rights are being assigned, and (ii) such transferee shall
agree to be subject to all applicable terms and restrictions set forth in this
Agreement. Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.
22
7.4 Governing Law. This Agreement shall be governed by and construed under
the laws of the State of New York as applied to agreements among New York
residents entered into and to be performed entirely within New York
7.5 Counterparts. This Agreement may be executed and delivered (including
by facsimile transmission) in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
7.6 Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
7.7 Notices. Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified or upon deposit with
the United States Post Office, by registered or certified mail, postage prepaid
and addressed to the party to be notified, in the case of the Investors, at the
address indicated for such Investor on Schedule A or Schedule B hereto, as
applicable, and, in the case of the Company, at 000 Xxxx Xxxxx Xxxxx, Xxxxx
Xxxxx, Xxx Xxxxx, XX 00000, Attention: Chief Financial Officer with a copy to
the General Counsel at the same address and with another copy to Xxxxx, Xxxxxxx
& Xxxxxxxxx, LLP, 000 Xxxx Xxxxxx, Xxxxxx, XX 00000, Attention: Xxxx X. Xxxxxxx,
or at such other address as such party may designate by ten (10) days' advance
written notice to the other parties.
7.8 Expenses. Irrespective of whether a particular Closing is effected, the
Company and the Investors shall bear their own costs and expenses incurred with
respect to the negotiation, execution, delivery and performance of this
Agreement; provided, however, that contemporaneously with the Initial Closing,
the Company shall reimburse the DB Investors for up to $150,000 the reasonable
out-of-pocket expenses actually incurred by the DB Investors for third-party
professional fees and expenses in connection with the transactions contemplated
by this Agreement.
7.9 Amendments and Waivers. Except as otherwise set forth in this
Agreement, any term of this Agreement may be amended and the observance of any
term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and holders of a majority of the aggregate principal
amount of the Notes then outstanding; provided, that if any proposed amendment
or waiver would adversely affect the rights, preferences or privileges of the
Existing Investors in a disproportionate manner with respect to the rights,
preferences and privileges of the holders of a majority of the aggregate
principal amount of the Notes then outstanding, the consent of a
majority-in-interest of the Existing Investors shall be required. Any amendment
or waiver effected in accordance with this paragraph shall be binding upon each
holder of any securities purchased under this Agreement at the time outstanding
(including securities for which such securities are exercisable), each future
holder of all such securities, and the Company. Notwithstanding anything to the
contrary contained herein, the Investors holding the right to purchase a
majority of the aggregate principal amount of the Notes hereunder shall have the
right to waive any condition in order to effectuate the purchase of the Notes
and Warrants contemplated herein.
23
7.10 Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
7.11 Entire Agreement. This Agreement and the documents referred to herein
constitute the entire agreement among the parties with respect to the subject
matter hereof and no party shall be liable or bound to any other party in any
manner by any warranties, representations, or covenants with respect to such
subject matter except as specifically set forth herein or therein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
24
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
XXX.xxx, Inc.
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------
Title: Chief Executive Officer
-----------------------------------
Address: 000 Xxxx Xxxxx Xxxxx
Xxx Xxxxx, XX 00000
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGE TO NOTE AND WARRANT PURCHASE AGREEMENT]
DEUTSCHE BANK AG LONDON,
BY DB ADVISORS LLC AS INVESTMENT ADVISOR
By: /s/ Xxxxx Xxxxxxxxx
--------------------------------------
Name: Xxxxx Xxxxxxxxx
------------------------------------
Title: President
-----------------------------------
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGE TO NOTE AND WARRANT PURCHASE AGREEMENT]
VantagePoint Venture Partners III (Q), L.P.
By: VantagePoint Venture Associates III, L.L.C.,
its general partner
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------------
Managing Member
VantagePoint Venture Partners III, L.P.
By: VantagePoint Venture Associates III, L.L.C.,
its general partner
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------------
Managing Member
VantagePoint Communications Partners, L.P.
By: VantagePoint Communications Associates, L.L.C.,
its general partner
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------------
Managing Member
VantagePoint Venture Partners 1996, L.P.
By: VantagePoint Associates, L.L.C.,
its general partner
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------------
Managing Member
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
INSTRUMENT OF ACCESSION
Each undersigned Investor hereby executes the XXX.xxx, Inc. Note and
Warrant Purchase Agreement dated as of July 18, 2003, by and among the Company
and the investors listed on Schedule A and Schedule B thereto (the "Agreement")
and hereby agrees to all of the provisions of the Agreement and hereby
authorizes this signature page to be attached to a counterpart of such Agreement
executed by the other parties thereto.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Address:
Dated:
Accepted and Agreed:
XXX.xxx, Inc.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Dated:
-----------------------------
[SIGNATURE PAGE TO NOTE AND WARRANT PURCHASE AGREEMENT]
SCHEDULE A
------------------- ----------------------------- ---------------------------- ----------------------- ----------------
NAME AND ADDRESS PRINCIPAL AMOUNT OF NOTE TO NUMBER OF INITIAL WARRANTS NUMBER OF SUBSEQUENT PURCHASE PRICE
BE PURCHASED TO BE ISSUED WARRANTS TO BE ISSUED
------------------- ----------------------------- ---------------------------- ----------------------- ----------------
$22,500,000 12,950,000 105,471,053 $22,500,000
Deutsche Bank AG
London, by DB
Advisors LLC as
Investment Advisor
16th Floor
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
SCHEDULE B
--------------------------------------------- -------------------- ------------------ ------------------------ ------------------
PRINCIPAL AMOUNT NUMBER OF NUMBER OF SUBSEQUENT
NAME AND ADDRESS OF NOTE TO BE INITIAL WARRANTS WARRANTS TO BE PURCHASE PRICE
PURCHASED TO BE ISSUED ISSUED
--------------------------------------------- -------------------- ------------------ ------------------------ ------------------
VantagePoint Venture Partners III (Q), L.P. $5,014,350 0 26,391,316 $5,014,350
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
VantagePoint Venture Partners III, L.P. $610,650 0 3,213,946 $610,650
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
VantagePoint Communications Partners, L.P. $937,500 0 4,934,211 $937,500
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
VantagePoint Venture Partners 1996, L.P. $937,500 0 4,934,211 $937,500
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
-------------------- ------------------ ------------------------ ------------------
TOTAL $7,500,000 0 39,473,684 $7,500,000
SCHEDULE C
----------
Approved Transferees
Wall Street Technology Partners LP
EXHIBIT A
Form of Note
------------
EXHIBIT B
Form of Warrant
---------------
EXHIBIT C
Form of Legal Opinion of Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
--------------------------------------------------------
EXHIBIT D
Form of Amended and Restated Stockholders Agreement
---------------------------------------------------
EXHIBIT E
Form of Security Agreement
--------------------------
EXHIBIT F
Amendments to Certificate of Incorporation
------------------------------------------
