Exhibit 10.17
ARBINET HOLDINGS, INC.
SERIES B AND C SENIOR PREFERRED
STOCK PURCHASE AGREEMENT
(Sale by the Company of 11,980,561 shares of Series B Cumulative
Redeemable Senior Preferred Stock and 11,980,562 shares of
Series C Cumulative Convertible Senior Preferred Stock
Aggregate Sale Price $30,449,795.59)
November 24, 1999
Series B and C Senior Preferred Stock Purchase Agreement
TABLE OF CONTENTS
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1. Basic Terms of Purchase and Sale. 1
1.1 Purchase and Sale of Senior Preferred Stock 1
1.2 The Closing 2
1.3 Additional Shares 2
2. Representations and Warranties of the Company 3
2.1 Organization Good Standing and Qualification 3
2.2 Capitalization; Stock Option Plan 3
2.3 Subsidiaries 5
2.4 Authorization 5
2.5 Consents 6
2.6 Permits 6
2.7 Litigation 7
2.8 Proprietary Information and Inventions Agreement 7
2.9 Intellectual Property 7
2.10 Manufacturing and Marketing Rights 10
2.11 Compliance with Other Instruments 10
2.12 Agreements, Action 10
2.13 Brokers or Finders 12
2.14 Disclosure 12
2.15 No Conflict of Interest 12
2.16 Rights of Registration 13
2.17 Private Placement 13
2.18 Corporate Documents; Board of Directors 13
2.19 Title to Property and Assets 13
2.20 Financial Statements 13
2.21 Changes 14
2.22 Employment Benefit Plans 15
2.23 Tax Returns and Payments 17
2.24 Insurance 17
2.25 Labor Agreements and Actions 17
2.26 Environmental and Safety Laws 18
2.27 Year 2000 Compliance 18
2.28 Minute Books 19
2.29 Small Business Concern 19
2.30 Section 897 of the Internal Revenue 20
2.31 Use of Proceeds 20
2.32 Absence of Certain Commercial Practices 20
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3. Representations and Warranties of the Investor 21
3.1 Authorization 21
3.2 Purchase Entirely for Own Account 21
3.3 Investment Experience 21
3.4 Restricted Securities 21
3.5 No Public Market 22
3.6 Legends 22
3.7 Accredited Investor 22
3.8 Brokers or Finders 22
4. Conditions to Investors' Obligations at Closing 23
4.1 Accuracy of Representations and Warranties 23
4.2 Performance 23
4.3 Compliance Certificate 23
4.4 Qualifications and Consents 23
4.5 Proceedings and Documents 23
4.6 Opinion of Company Counsel 24
4.7 Board of Directors 24
4.8 Rights Agreement 24
4.9 Co-Sale Agreement 24
4.10 Voting Agreement 24
4.11 Series A-2 Restructuring 24
4.12 Officer's Certificate 24
4.13 Blue Sky Approvals 24
4.14 SBA Documentation 24
4.15 No Material Adverse Change 25
4.16 No Litigation 25
4.17 Satisfactory Completion of Due Diligence; Etc. 25
4.18 Payment of Expenses 25
4.19 Foundation Limited Partner Certificate 25
4.20 Management Rights Agreement 25
4.21 Regulatory Compliance Side Letter 25
4.22 Stock Certificates, etc. 25
5. Conditions of the Company's Obligations at Closing 25
5.1 Representations and Warranties True at Closing 25
5.2 Qualifications 26
5.3 Covenants 26
5.4 Rights Agreement 26
5.5 Co-Sale Agreement 26
5.6 Voting Agreement 26
5.7 Restated Amendment 26
5.8 Series A-2 Restructuring Agreement 26
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6. Affirmative Covenants of the Company 26
6.1 Observer Rights 26
6.2 Information 27
6.3 Exemption from Investment Company Act; FIRPTA 28
6.4 Accounting and Reserves 28
6.5 Payment of Taxes and Claims 29
6.6 Availability of Common Stock for Conversion 29
6.7 Governing Instruments 29
6.8 SBIC Covenants 29
6.9 Assistance in Sales 30
6.10 Employee Agreements 30
6.11 Stock Option Plan 31
7. Miscellaneous Provisions 31
7.1 Survival; Termination 31
7.2 Transfer of Successors and Assigns 31
7.3 Governing Law 31
7.4 Counterparts 31
7.5 Titles and Subtitles 31
7.6 Notices 31
7.7 Expenses 32
7.8 Indemnification. 32
7.9 Attorneys' Fees 32
7.10 Amendments and Waivers 32
7.11 Severability 33
7.12 Delays or Omissions 33
7.13 Entire Agreement 33
7.14 California Corporate Securities Law 33
7.15 Further Assurances 33
7.16 Specific Performance 33
7.17 Understanding Among Investors 34
7.18 Publicity 34
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SCHEDULE OF EXHIBITS
Designation Description
Schedule I Investors
Exhibit A Company's Amended and Restated Certificate of Incorporation
Exhibit B Schedule of Exceptions
Exhibit C Company's Stockholders
Exhibit D Amended and Restated Investor Rights Agreement
Exhibit E Amended and Restated Co-Sale and Right of First Refusal Agreement
Exhibit F Amended and Restated Voting Agreement
Exhibit G Series A-2 Restructuring Agreement
Exhibit H Opinion of Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
Exhibit I By-Laws
Exhibit J Employee Proprietary Information and Inventions Agreement
Exhibit K Foundation Limited Partner Certificate
Exhibit L Management Rights Agreement
Exhibit M Regulatory Compliance Side Letter
ARBINET HOLDINGS, INC.
SERIES B AND C SENIOR PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES B AND C SENIOR PREFERRED STOCK PURCHASE AGREEMENT (the
"Agreement") is made and entered into as of the 24th day of November, 1999, by
and among Arbinet Holdings, Inc., a Delaware corporation (the "Company"), X. X.
Xxxxxx Investment Corporation, a Delaware corporation ("JPMIC"), Sixty Wall
Street SBIC Fund, L.P., a Delaware limited partnership ("Sixty Wall" and
together with JPMIC, the "JPM Investors"), CB Capital Investors, L.P., a
Delaware limited partnership ("Chase"), BancBoston Ventures Inc., a
Massachusetts corporation ("BBV" and, together with the JPM Investors and Chase,
the "SBIC Investors"), and each of the other parties listed on the signature
pages hereto under the caption "Other Investors" (collectively, the "Other
Investors" and together with the SBIC Investors, the "Investors").
WHEREAS, the Company desires to sell (i) Eleven Million Nine Hundred
Eighty Thousand Five Hundred Sixty One (11,980,561) of its authorized but
unissued shares of Series B Cumulative Redeemable Senior Preferred Stock, par
value $.001 per share (the "Series B Preferred Stock"), and (ii) Eleven Million
Nine Hundred Eighty Thousand Five Hundred Sixty Two (11,980,562) of its
authorized but unissued shares of Series C Cumulative Convertible Senior
Preferred Stock, par value $.001 per share (the "Series C Preferred Stock" and
collectively with the Series B Preferred Stock, the "Senior Preferred Stock" or
the "Shares") to the Investors at the Closing (as defined in Section 1.2 below)
for an aggregate cash consideration equal to Thirty Million Four Hundred Forty
Nine Thousand Seven Hundred Ninety Five Dollars Fifty Nine Cents
($30,449,795.59) in accordance with the terms hereof; and
WHEREAS, subject to the terms and conditions of this Agreement, the
Investors desire to purchase the Shares from the Company at the aggregate
purchase price set forth herein.
IT IS HEREBY AGREED AS FOLLOWS:
1
Basic Terms of Purchase and Sale.
Purchase and Sale of Senior Preferred Stock .
The Company shall adopt and file with the Secretary of State of Delaware on
or before the date of the Closing an Amended and Restated Certificate of
Incorporation in the form attached hereto as Exhibit A (the "Restated
Certificate"). The rights, preferences and privileges of the Shares will be
as provided in the Restated Certificate.
(a) Subject to the terms and conditions of this Agreement each of the
Investors agrees, severally and not jointly, to purchase from the Company at
the Closing, and the Company agrees to sell and issue to each of the
Investors at the Closing, (i) that number of shares of Series B Preferred
Stock as is set forth opposite such Investor's name on Schedule I for cash
equal to $1.2708 per share, and (ii) that number of shares of Series C
Preferred Stock as is set forth opposite such Investor's name on Schedule I
for cash equal to $1.2708 per share, with the aggregate amount to be paid by
each Investor for the Shares to be acquired by such Investor being as stated
on Schedule I opposite such Investor's name. The Company's agreements with
each of the Investors are separate agreements, and the sale of the Shares to
each of the Investors are separate sales.
1.2 The Closing. The closing of the sale and purchase of the Shares
pursuant to this Agreement shall take place at the offices of Paul, Hastings,
Xxxxxxxx & Xxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000 on or
about November 24, 1999, at 10:00 a.m., eastern standard time, or at such
other time and place as the Company and each of the Investors may mutually
agree (the "Closing"). At the Closing, the Company shall deliver to each
Investor a certificate representing that number of the shares of Series B
Preferred Stock and Series C Preferred Stock, respectively, set forth on
Schedule I opposite the name of such Investor against delivery to the Company
by such Investor of a wire transfer of immediately available funds in the
amount set forth opposite such Investor's name on Schedule I. If, at the
Closing, any of the conditions specified in Section 4 of this Agreement shall
not have been fulfilled, each of the Investors shall, at its election, be
relieved of all of its obligations under this Agreement.
1.3 Additional Shares.
(a) Upon the earlier to occur of (i) May 24, 2001 or (ii) the effective
date of the Company's first registered public offering of its Common Stock,
par value $.001 per share, other than a registration relating either to the
sale of securities to employees of the Company pursuant to a stock option,
stock purchase or similar plan or any transaction described in Rule 145(a)
promulgated under the Securities Act of 1933, as amended, the Company shall
cause its Chief Executive Officer and Chief Financial Officer to execute and
deliver to the Investors a certificate certifying the Net Bellfax Liability
(as defined below) (the "Net Bellfax Liability Certificate"). If the Net
Bellfax Liability is greater than zero, the Company shall issue and deliver
to each Investor as a purchase price adjustment, without payment of any
additional consideration
therefor, such Investor's pro rata share of the Additional Shares (as defined
below). The Additional Shares, when issued in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable. The Additional Shares (and
the Common Stock issuable upon conversion thereof) will be free of any liens,
charges or encumbrances other than those created by or imposed upon the holders
thereof through no action of the Company, and the Additional Shares (and the
Common Stock issuable upon conversion thereof) will be free of restrictions on
transfer, other than the restrictions on transfer under this Agreement, the
Related Documents (as defined below) and under applicable state and federal
securities laws. Unless holders of a majority of the Shares dispute the
computation of the Net Bellfax Liability in accordance with Section 1.3(b), the
Additional Shares shall be delivered to the Investors on the 30th day following
the delivery of the Net Bellfax Liability Certificate.
(b) The Net Bellfax Liability Certificate shall present in reasonable
detail the Company's computation of the Net Bellfax Liability. Without
limitation of any other rights of the Investors under this Agreement or the
Related Documents, the Investors (and/or their representatives) shall have
the right at reasonable times and on reasonable notice to review and/or audit
the books and records of the Company and its subsidiaries for the purpose of
verifying any computation of the Net Bellfax Liability. The Company shall pay
the fees and expenses incurred by any representative or representatives
designated by the holders of a majority of the Shares (which may include an
Investor); provided, however, if it is ultimately determined that the
Company's computation of the Net Bellfax Liability was within five percent
(5%) of the actual amount thereof, then the total amount of such fees and
expenses shall be applied against, and therefore reduce, the Net Bellfax
Liability.
(c) Capitalized terms used in this Section 1.3 shall have the meaning
ascribed thereto elsewhere in this agreement, except the following terms used
in this Section 1.3 shall have the following meanings:
(i) "Additional Shares" shall mean a number of shares of Series C
Preferred Stock equal to the Net Bellfax Liability divided by the original
issuance price of the Series C Preferred Stock, or $1.2708, as such original
issuance price may be adjusted in accordance with the Restated Certificate.
(ii) "Net Bellfax Liability" shall mean the total amount of payments
made by the Company, indebtedness or obligations assumed, liabilities and
obligations, fixed or contingent, incurred or accrued by the Company, or
other credit support provided, or liability of any kind whatsoever suffered
(including, without limitation, all liabilities which the Company is required
to accrue in accordance with generally accepted accounting principles), by
the Company or any of its subsidiaries (other than Xxxx Fax (as defined
below)) which is attributable to the business and operations of Xxxx Fax,
Inc., a Delaware corporation and wholly-owned subsidiary of the Company
("Xxxx Fax"), unrelated to the principal business of the Company as
described in the Business Plan (the "Principal Business"); provided, however,
such amount shall be reduced by the total net cash proceeds realized from (i)
the sale or other disposition of any assets of Xxxx Fax not used or useful in
the Principal Business or (ii) the sale or other disposition of the capital
stock or assets of ArbiNet Israel Ltd.
2. Representations and Warranties of the Company.
The Company hereby represents and warrants to each Investor that,
except as set forth on the Schedule of Exceptions attached hereto as Exhibit
B, specifically identifying the relevant subsection hereof (which exceptions
shall be deemed to be representations and warranties as if made hereunder),
the following are true and correct:
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 the requisite corporate power and
authority to carry on its business as now conducted and as proposed to be
conducted. The Company is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure so to qualify could
reasonably be expected to have a material adverse effect on its business,
operations, operating results, properties, prospects, assets, condition
(financial or otherwise) or liabilities.
2.2 Capitalization; Stock Option Plan. The authorized capital of the
Company consists, or will consist, contemporaneously with, or immediately
following the Closing (after giving effect to the Series A-2 Restructuring
(as such term is defined in Section 4.11 below)), of:
(i) Preferred Stock. Forty Million (40,000,000) shares of Preferred
Stock, par value $.001 per share, of which (x) Ten Million (10,000,000)
shares have been designated Series A Preferred Stock, of which Five Million
One Hundred Twenty Four Thousand Nine Hundred Eighty Five (5,124,985) have
been designated Series A-1 Preferred Stock, par value $.001 per share
("Series A-1 Junior Preferred Stock), and Five Million One Hundred Twenty
Four Thousand Nine Hundred Eighty Five (5,124,985) shares of Series A-1
Preferred Stock are issued and outstanding, (y) Twelve Million (12,000,000)
shares will have been designated Series B Preferred Stock, of which Eleven
Million Nine Hundred Eighty Thousand Five Hundred Sixty One (11,980,561)
shares of Series B Preferred Stock will be issued and outstanding and (z)
Twelve Million (12,000,000) shares have been designated Series C Preferred
Stock, of which Eleven Million Nine Hundred Eighty Thousand Five Hundred
Sixty Two (11,980,562) shares of Series C Preferred Stock will be issued and
outstanding. The rights, privileges and preferences of the Preferred Stock
are as stated in the Restated Certificate.
(ii) Common Stock. Forty Million (40,000,000) shares of Common Stock,
par value $.001 per share, Five Million Nine Hundred Two Thousand Nine
Hundred Thirty Nine and Forty One-Hundreths (5,902,939.40) shares of which
are issued and outstanding and (w) Five Million One Hundred Twenty Four
Thousand Nine Hundred Eighty Five (5,124,985) shares of Common Stock are
reserved for issuance upon conversion of issued and outstanding shares of
Series A-1 Junior Preferred Stock, (x) Eleven Million Nine Hundred Eighty
Thousand Five Hundred Sixty Two (11,980,562) shares of Common Stock will be
reserved for issuance upon conversion of issued and outstanding shares of Series
C Preferred Stock, (y) Ten Million Four Hundred Twenty Six Thousand Nine Hundred
Eighteen (10,426,918) shares of Common Stock will be reserved for issuance to
key employees, officers, directors and consultants pursuant to the Company's
1997 Stock Incentive Plan, as amended (the "Stock Option Plan"), and (z) One
Hundred Eighty Four Thousand Nine Hundred Twenty Three (184,923) shares of
Common Stock will be reserved for issuance upon conversion of issued and
outstanding warrants issued pursuant to the Series A-2 Restructuring Agreement.
The rights, privileges and preferences of the Common Stock are as stated in the
Restated Certificate.
(iii) An accurate list of (x) the Company's stockholders and their
holdings and (y) those Persons (as defined below) holding options, warrants
or other rights to purchase any class of the Company's capital stock
(excluding conversion privileges of the Series A-1 Junior Preferred Stock and
Series C Preferred Stock) and their holdings is set forth in Exhibit C to
this Agreement. All of the issued and outstanding shares of the Company as of
the Closing (including the Shares) are duly authorized, validly issued, fully
paid and nonassessable and were issued in compliance with state and federal
securities laws. Based upon the representations of the Investors in this
Agreement and subject to the provisions of Section 2.5 below, the Shares (and
the Common Stock issuable upon conversion thereof) have been issued or will
be issued in compliance with all applicable federal and state securities laws.
(iv) Except for (A) conversion privileges of the Series A-1 Junior
Preferred Stock and Series C Preferred Stock and (B) options to purchase an
aggregate of Five Million Three Hundred Eighty Three Thousand Eight Hundred
Sixty Eight and Thirty One One-Hundreths (5,383,868.31) shares of Common
Stock granted to present or former employees, officers, directors or
consultants of the Company pursuant to the Stock Option Plan and (C) warrants
to purchase an aggregate of One Hundred Eighty Four Thousand Nine Hundred
Twenty Three (184,923) shares of Common Stock issued pursuant to the A-2
Restructuring Agreement, there are no outstanding options, warrants, rights
(including conversion or preemptive rights) or agreements, orally or in
writing, for the purchase, redemption or acquisition from the Company of any
shares of its capital stock. Except as otherwise contemplated herein, 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 individual partnership, limited liability company, joint venture,
corporation, association trust or any other entity or organization
(collectively, a "Person") that affects or relates to (i) the voting or
giving of written consents with respect to any security of the Company
(including, without limitation, any voting agreements, voting trust
agreements, shareholder agreements or similar agreements) or the voting by a
director of the Company or (ii) the sale, transfer or other disposition with
respect to any security of the Company.
(b) The shares of Common Stock presently available for issuance under
the Stock Option Plan are sufficient to cover all grants of stock options to
eligible participants under the
Stock Option Plan which the Company reasonably anticipates it will be necessary
or advisable to issue within the eighteen month period following the date of the
Closing.
2.3 Subsidiaries. Section 2.3 of Exhibit B sets forth a true and
complete list of all of the subsidiaries of the Company (collectively, the
"Subsidiaries") the place of incorporation of each such subsidiary and its
authorized capitalization, its shares of capital stock outstanding, and the
record and beneficial owner of those shares. Except as set forth in Section
2.3 of Exhibit B, none of the Subsidiaries has conducted any business or
entered into any contract, agreement or undertaking and have been inactive
from the date of its formation. Except for the Subsidiaries, the Company does
not, and prior to the Closing will not, own or control, directly or
indirectly, any partnership interests, stock or other equity interests in any
partnership, corporation, limited liability company or partnership or other
entity. There are no outstanding (and neither the Company nor any Subsidiary
has any plan to issue, grant or enter into any) options, warrants, rights
(including conversion or preemptive rights), subscriptions or agreements for
the purchase or acquisition from or by the Company or any Subsidiary of any
shares of capital stock of any Subsidiary or other entity. There are no
voting agreements, voting trust agreements, shareholder agreements or other
similar agreements relating to the capital stock of any of the Subsidiaries.
2.4 Authorization. The Company has all requisite corporate power to
execute and deliver this Agreement and to carry out and perform its
obligations under this Agreement. All corporate action on the part of the
Company, its officers, directors and stockholders (including, without
limitation, holders of Preferred Stock (other than holders of Senior
Preferred Stock)) necessary for the authorization, execution and delivery of
this Agreement, the Restated Certificate, the Amended and Restated Investors'
Rights Agreement in the form attached as Exhibit D (the "Rights Agreement"),
the Amended and Restated Co-Sale and Right of First Refusal Agreement in the
form attached as Exhibit E (the "Co-Sale Agreement"), the Amended and
Restated Voting Agreement in the form attached as Exhibit F (the "Voting
Agreement") and the Series A-2 Restructuring Agreement in the form attached
as Exhibit G (the "Series A-2 Restructuring Agreement" and, together with the
Restated Certificate, the Rights Agreement, the Co-Sale Agreement and the
Voting Agreement, the "Related Documents"), the performance of all
obligations of the Company hereunder and thereunder and the authorization,
issuance and delivery of the Shares (and the Common Stock issuable upon
conversion of the Shares) has been taken or will be taken prior to the
Closing, and this Agreement, the Restated Certificate, the Rights Agreement,
the Co-Sale Agreement, the Voting Agreement and the Series A-2 Restructuring
Agreement constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, and other laws of general application
affecting enforcement of creditors rights generally, as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies, and (ii) to the extent the indemnification
provisions contained in the Rights Agreement may be limited by applicable
federal or state securities laws. The Shares, when issued in compliance with
the provisions of this Agreement, will be validly issued and will be fully
paid and nonassessable and will have the rights, preferences and privileges
described in the Restated
Certificate. The shares of Common Stock issuable upon conversion of the Series C
Preferred Stock have been duly and validly reserved and, when issued in
compliance with the provisions of this Agreement and the Restated Certificate
will be validly issued, fully paid and nonassessable. The Shares (and the Common
Stock issuable upon conversion thereof) will be free of any liens, charges or
encumbrances other than those created by or imposed upon the holders thereof
through no action of the Company, and the Shares (and the Common Stock issuable
upon conversion thereof) will be free of restrictions on transfer, other than
the restrictions on transfer under this Agreement and the Related Documents
under the applicable state and federal securities laws.
2.5 Consents. No consent, approval, license, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority or any party to a Contract (as
defined in Section 2.11(a) below) or any other third party is required by the
Company or any Subsidiary in connection with (x) the valid execution and
delivery of this Agreement and the Related Documents, (y) the offer and sale
of the Shares (and the Common Stock issuable upon conversion of the Series C
Preferred Stock) or (z) the consummation of the transactions contemplated by
this Agreement and the Related Documents, except (i) the filing of the
Restated Certificate with the Secretary of State of the State of Delaware and
(ii) such filings as may be required under applicable state and federal
securities laws, which filings will be timely filed within the applicable
periods therefor.
2.6 Permits. The Company and each Subsidiary has all franchises,
permits, licenses and any similar authority as necessary for the conduct of
its business as now being conducted by it, and believes it can obtain,
without undue burden or expense, any similar authority for the conduct of its
business as planned to be conducted, except for those franchises, permits,
licenses or similar authority the failure of which to obtain could not
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any Subsidiary is in material default under any of such franchises,
permits, licenses or other similar authority. The execution, delivery and
performance of and compliance with this Agreement and Related Documents and
the issuance of the Shares and the Common Stock issuable upon conversion of
the Series C Preferred Stock will not result in suspension, revocation,
impairment, forfeiture or nonrenewal of any such franchise, permit, license
or similar authority which could not be reasonably expected to result in a
Material Adverse Effect (as defined below in Section 2.11).
2.7 Litigation. There is no action, suit, proceeding or investigation
pending or, to the Company's knowledge, currently threatened against the
Company or any Subsidiary or any of their respective properties nor is the
Company aware that there is any basis for the foregoing, including, without
limitation, any action, suit, proceeding or investigation which questions the
validity of this Agreement or any Related Document or any action to be taken
in connection herewith or therewith. The foregoing includes, without
limitation, actions pending or, to the Company's knowledge, threatened (or
any basis therefor known to the Company) involving the prior employment of
any of the Company's or any Subsidiary's employees, their use in connection
with the Company's or any Subsidiary's business of any information or
techniques
allegedly proprietary to any of their former employers, or their obligations
under any agreements with prior employers. Neither the Company nor any
Subsidiary nor any of their respective properties is a party or subject to the
provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality. There is no action, suit, proceeding or
investigation by the Company or any Subsidiary currently pending or which the
Company or any such Subsidiary currently intends to initiate.
2.8 Proprietary Information and Inventions Agreement. Each current and
prior employee, consultant and officer of the Company has executed an
agreement with the Company regarding confidentiality and proprietary
information with provisions addressing confidentiality and corporate
ownership of inventions in the form provided to counsel for the Investors.
The Company is not aware that any parties are in violation thereof.
2.9 Intellectual Property .
(a)(i) Set forth in Section 2.9 of the Schedule of Exceptions is a true,
correct and complete list of all patents, trademarks, service marks, trade
names, brand names, registered copyrights, franchises, technology, and areas
of know-how and processes, and any applications for any of the foregoing
(collectively, the "Intellectual Property") of any kind in which the Company
or any of the Subsidiaries has an interest or which is otherwise used in the
business of the Company or any of the Subsidiaries. Section 2.12 of the
Schedule of Exceptions also contains a true, correct and complete list of all
licenses, agreements or potential conflicts that materially affect the rights
of the Company and the Subsidiaries to any of the Intellectual Property or
any trade secret material of the Company and the Subsidiaries (the
"Intellectual Property Licenses").
(ii) The Company and the Subsidiaries are the sole and exclusive owners,
free and clear of all Liens, and have all right, title and interest in all of
the Intellectual Property. With respect to any Intellectual Property or trade
secret material to the conduct of its business, the Company and each of the
Subsidiaries owns or has the right to use such Intellectual Property or trade
secret in its business. The Company and each of the Subsidiaries has the
right to use all Intellectual Property necessary to conduct the business of
such Company or Subsidiary as now being conducted and as proposed to be
conducted by such Company or Subsidiary.
(iii) Each of the Intellectual Property Licenses is in full force and
effect and constitutes a legal, valid, binding and enforceable obligation in
accordance with its terms against the Company and each of the Subsidiaries
party thereto, except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting the
enforceability of creditors' rights in general or by general principles of
equity and, to the best knowledge of the Company, each other Person party
thereto. The Company and each of the Subsidiaries has performed all
obligations imposed upon it under each of the Intellectual Property Licenses
to which it is a party. Neither the Company or any of the Subsidiaries nor,
to the
best knowledge of the Company, any other party thereto is in default thereunder,
nor, to the best knowledge of the Company, is there any event that with notice
or lapse of time, or both, would constitute a default thereunder. Neither the
Company nor any of its subsidiaries has received any notice that any other party
to any of the Intellectual Property Licenses intends to cancel, terminate or
refuse to renew the same or to exercise or decline to exercise any option or
other right thereunder. No licenses, sublicenses, covenants or agreements have
been granted or entered into by the Company or any of the Subsidiaries in
respect of any of the Intellectual Property or any trade secret material of the
Company or any of the Subsidiaries, except the Intellectual Property Licenses.
To the best knowledge of the Company, no director, officer, stockholder,
employee or other affiliate of the Company owns, directly or indirectly, in
whole or in part, any of the Intellectual Property or any trade secret material
to the Company or any of the Subsidiaries. To the best knowledge of the Company,
none of the officers, employees, consultants, distributors, agents,
representatives or advisors of the Company or any of the Subsidiaries have
entered into any agreement relating to the Company's or such Subsidiary's
business regarding the Intellectual Property, including know-how, trade secrets,
assignment of rights in inventions, or prohibition or restriction of competition
or solicitation of customers, or any other similar restrictive agreement or
covenant, whether written or oral, with any Person other than the Company and
the Subsidiaries.
(iv) Neither the Company nor any of the Subsidiaries has disclosed other
than in the ordinary course of business consistent with past practice any
proprietary information relating to the Intellectual Property or the
Intellectual Property Licenses to any Person other than the Investors and the
Company's and the Subsidiary's employees, consultants, accountants, lawyers
and other advisors. The Company and each of the Subsidiaries have at all
times maintained reasonable procedures to protect and have enforced all of
their respective trade secrets. The Company and each of the Subsidiaries has
disclosed trade secrets to other Persons solely as required for the conduct
of the Company's or such Subsidiary's business and solely under nondisclosure
agreements that are enforceable by the Company or such subsidiary. Neither
the Company nor any of the Subsidiaries is under any contractual or other
obligation to disclose any proprietary information relating to the
Intellectual Property, any trade secret material of the Company or any of the
Subsidiaries or the Intellectual Property Licenses, nor, to the best
knowledge of the Company, is any other party to the Intellectual Property
Licenses under any such obligation to disclose proprietary information
included in or relating to Intellectual Property, any trade secret material
to the Company or any of the Subsidiaries or the Intellectual Property
Licenses to any Person, and no event has taken place, including the execution
and delivery of this Agreement and the transactions contemplated hereby or
any related change in the business activities of the Company or any of the
Subsidiaries, that would give rise to such obligation.
(v) The consummation of the transactions contemplated hereby will not
alter or impair the rights of the Company or any of the Subsidiaries to any
of the Intellectual Property,
any trade secret material to the Company or any of the Subsidiaries, or under
any of the Intellectual Property Licenses.
(b)(i) No claim with respect to the Intellectual Property, any trade
secret material to the Company or any of the Subsidiaries, or any
Intellectual Property License which would materially adversely affect the
ability of the Company or any of the Subsidiaries to conduct its business as
presently conducted and as proposed to be conducted or, to the best knowledge
of the Company, has been asserted, or threatened by any Person. Nor does the
Company know of any grounds for any claim against the Company or any of the
Subsidiaries, (A) to the effect that any operation or activity of the Company
or any of the Subsidiaries presently occurring or contemplated, including,
inter alia, the manufacture, use or sale of any software, product, device,
instrument, or other material made or used according to the patents or patent
applications included in the Intellectual Property or Intellectual Property
Licenses, infringes or misappropriates any United States or foreign
copyright, patent, trademark, service xxxx or trade secret; (B) to the effect
that any other Person infringes on the Intellectual Property or
misappropriates any trade secret or know-how or other proprietary rights
material to the Company or any of the Subsidiaries; (C) challenging the
ownership, validity or effectiveness of any of the Intellectual Property or
trade secret material to the Company or such Subsidiary; or (D) challenging
the license of the Company or any of the Subsidiaries or other legally
enforceable right under, any Intellectual Property or the Intellectual
Property Licenses.
(ii) Neither the Company nor any of the Subsidiaries is aware of any
presently existing United States or foreign patents or any patent
applications which if issued as patents would be infringed by any activity of
the Company or any Subsidiary.
(c)(i) The Intellectual Property listed in Section 2.9 of the Schedule
of Exceptions hereto as part of the Intellectual Property, to the best
knowledge of the Company, have been properly prepared and filed on behalf of
the Company and each of the Subsidiaries named therein and are being
diligently pursued by the Company and such Subsidiaries. The inventions and
marks described in the Intellectual Property are assigned or licensed to the
Company or a Subsidiary and no other entity or individual has any right or
claim in any of the inventions, marks, Intellectual Property or any patents
or registered trademarks to be issued therefrom. Neither the Company nor any
Subsidiary is aware of any material defects in any of the Intellectual
Property which would cause any of them to be held invalid or unenforceable.
The Company and each of the Subsidiaries named in any of the Intellectual
Property has filed or will file in the patent applications of the
Intellectual Property to which it is a party all relevant and noncumulative
prior art of which it is aware.
(ii) The Company has no knowledge of any objection or proceeding,
pending or threatened, that would affect the validity of any patent or
trademark issued pursuant thereto.
(iii) Except in connection with the prosecution of the patent and
trademark applications listed in Section 2.9 of the Schedule of Exceptions,
there are no pending judicial or
governmental proceedings, including but not limited to interferences and
oppositions, relating to any of the Intellectual Property or any other
proprietary information to which the Company or any of the Subsidiaries is a
party or by which any property (such term "property" specifically to include
rights pursuant to licenses or options or other rights to acquire licenses) of
the Company or any of the Subsidiaries is subject, and no such proceedings are
threatened or contemplated by Governmental Authorities or other Persons.
(d) The Company will use its best, commercially reasonable, efforts to
prosecute all pending patent and trademark applications listed in Section 2.9
of the Schedule of Exceptions to issuance.
2.10 Manufacturing and Marketing Rights. Neither the Company nor any of
its Subsidiaries has granted rights to manufacture, produce, assemble,
license, market or sell its products to any other Person and is not bound by
any agreement that affects the Company's or any Subsidiary's exclusive right
to develop, manufacture, assemble, distribute, license, market or sell its
products.
2.11 Compliance with Other Instruments. Neither the Company nor any
Subsidiary is in violation or default of any provisions of (i) its
certificate of incorporation or by-laws (or comparable governing instruments)
or (ii) any instrument, contract, undertaking, understanding, indenture or
agreement to which it is a party or by which it is bound (each a "Contract")
or, of any federal or state judgment, order, writ, decree, statute, rule or
regulation applicable to the Company or any such Subsidiary (or any of their
respective properties), except, with respect to the subject matter of this
clause (ii) only, where any such violation or default could not reasonably be
expected to result in (x) the Company's or any Subsidiary's loss of any right
granted under any Contract or (y) a material adverse effect (financial or
otherwise) on the business, operations, operating results, properties,
prospects, assets, condition (financial or otherwise) or liabilities of the
Company and the Subsidiaries taken as a whole (such an effect, a "Material
Adverse Effect"). To the best of the Company's knowledge, all parties having
contracts, agreements and commitments with the Company or any Subsidiary are
in compliance therewith in all material respects. The execution, delivery and
performance of this Agreement, the Related Documents and the consummation of
the transactions contemplated hereby and thereby will not result in any
violation or be in conflict with or constitute, with or without the passage
of time and giving of notice, either a default under any such Contract,
judgment, order, writ, decree, statute, rule or regulation or an event which
results in the creation of any lien, charge or encumbrance upon any assets of
the Company or any Subsidiary.
2.12 Agreements, Action.
(a) Neither the Company nor any Subsidiary is a party to or bound by:
(i) any note, bond debenture or other evidence of indebtedness, or any
Contract, judgment, order, writ, decree, commitment or understanding under
which it has borrowed any money or issued any note, bond, debenture or other
evidence of indebtedness, or any mortgage, pledge, security agreement, deed
of trust, financing statement or other document granting any lien,
encumbrance or security interest (including liens, encumbrances or security
interests upon properties acquired under conditional sales, capital leases
and other title retention or security devices), or any guaranty or
endorsement (other than endorsements for collection in the ordinary course of
business) of, or other contingent obligations in respect of, indebtedness for
borrowed money or other liabilities or obligations of others, in any separate
case in excess of $50,000 in principal amount or $250,000 in the aggregate;
(ii) any Contract, judgment, order, writ, decree, commitment, arrangement
or understanding relating to any joint venture, partnership or sharing of
profits or losses with any Person or entity or permitting any Person or
entity to utilize any technology, know-how or proprietary information of the
Company or any Subsidiary;
(iii) any Contract, instrument, judgment, order, writ, decree, commitment
for the future purchase by the Company or any Subsidiary of any materials,
equipment, services or supplies which (w) involves the payment of more than
$50,000, (x) continues for a period of more than six months, (y) by its terms
requires the Company or any Subsidiary to purchase the entire output or
services of a supplier or (z) provides that any supplier will be the
exclusive supplier of the Company or any Subsidiary;
(iv) any Contract, instrument, proposed transaction, judgment, order,
writ or decree for the sale or other disposition by the Company or any
Subsidiary of its assets or properties other than in the ordinary course of
business, or for the merger, or consolidation of the Company or any
Subsidiary with any other Person or entity;
(v) any Contract, instrument, judgment, order, writ or decree containing
covenants purporting to limit the freedom of the Company or any Subsidiary to
compete in any line of business or in any geographic area;
(vi) any Contract, instrument, judgment, order, writ or decree not
elsewhere specifically disclosed pursuant to this Agreement involving the
payment or receipt by the Company or any Subsidiary of more than $50,000 per
year or $100,000 over the term thereof;
(vii) any Contract with a consultant which provides for payment during the
term of the Contract of more than $50,000; or
(viii) any Contract with any employee of the Company which provides for
payment of $100,000 or more per annum.
(b) True and complete copies of all Contracts identified in Section
2.12(a) of Exhibit B (collectively, the "Scheduled Contracts") have been made
available to counsel for the Investors. Neither the Company nor any
Subsidiary has received any written notification of any breach, or default
under any of the Scheduled Contracts and, to the knowledge of the Company, no
other party to any of the Scheduled Contracts has materially breached or
defaulted thereunder, and, to the knowledge of the Company, no event has
occurred and no condition or state of facts exists which, with the passage of
time or the giving of notice or both, would constitute such a default or
breach by any such other party. Neither the Company nor any Subsidiary is
currently paying liquidated damages in lieu of performance under any
Scheduled Contract.
(c) Neither the Company nor any Subsidiary has (i) declared or paid any
dividends, or authorized or made any distribution upon or with respect to any
class or series of its capital stock, (ii) other than as expressly set forth
in the Financial Statements (as defined below in Section 2.20), incurred any
indebtedness for money borrowed or incurred any other liabilities
individually in excess of $50,000 or in excess of $50,000 in the aggregate,
(iii) made any loans or advances to any Person or entity other than ordinary
advances for travel expenses for employees in the ordinary course of
business, or (iv) sold, exchanged or otherwise disposed of any of its assets
or rights, other than the sale of its inventory in the ordinary course of
business.
(d) Neither the Company nor any Subsidiary has engaged in the past six
(6) months in any material discussion (i) with any representative of any
corporation or corporations regarding the merger of the Company and/or such
Subsidiary with or into any such corporation or corporations, (ii) with any
corporation, partnership, association or other business entity or any
individual regarding the sale, conveyance or disposition of all or
substantially all of the assets of the Company and/or such Subsidiary or a
transaction or series of related transactions in which more than fifty
percent (50%) of the voting power of the Company and/or such Subsidiary is
disposed of, or (iii) regarding any other form of liquidation, dissolution or
winding up of the Company and/or such Subsidiary.
2.13 Brokers or Finders. Neither the Company nor any Subsidiary has
incurred, and will not incur, directly or indirectly, as a result of any
action taken by the Company and/or any such Subsidiary, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement and the Related Documents.
2.14 Disclosure. To its knowledge, the Company has fully provided the
Investors or their representatives with all the information which the
Investors have requested for deciding whether to purchase the Shares and all
information which the Company believes is reasonably necessary to enable the
Investors to make such a decision, including certain of the Company's
projections describing its proposed business (collectively, the "Business
Plan"). No representation or warranty of the Company contained in the
exhibits to this Agreement or the Business Plan contains any untrue statement
of a material fact or omits to state a material fact necessary in order to
make the statements contained herein or therein not misleading in light of
the circumstances under which they were made. The Business Plan and the
financial projections
contained in the Business Plan were prepared in good faith and based upon
assumptions which the Company believes are reasonable; provided, however,
that the Company does not represent or warrant that it will achieve such
financial projections.
2.15 No Conflict of Interest. Except as described in the Financial
Statements, neither the Company nor any Subsidiary is indebted, directly or
indirectly, to any of its officers, directors or stockholders (including
holders of Preferred Stock), or to their respective spouses, parents,
children or siblings or any of their respective affiliates, in any amount
whatsoever other than in connection with expenses or advances of expenses
incurred in the ordinary course of business. None of the Company's or any of
its Subsidiaries' officers, directors or stockholders (including holders of
Preferred Stock), or any members of their immediate families, are indebted to
the Company and/or any Subsidiary or, to the best of the Company's knowledge,
have any direct or indirect ownership interest in any firm or corporation
with which the Company or any Subsidiary is affiliated or with which the
Company or any Subsidiary has a business relationship, or any firm or
corporation which competes with the Company or any Subsidiary, except that
officers, directors and/or stockholders of the Company may own up to 1% of
the outstanding stock in publicly traded companies which may compete with the
Company or any Subsidiary. To the best of the Company's knowledge, no
officer, director or stockholders (including holders of Preferred Stock) or
any member of their immediate families is, directly or indirectly, interested
in any Contract. Neither the Company nor any Subsidiary is a guarantor or
indemnitor of any indebtedness of any other Person, firm or corporation.
2.16 Rights of Registration. Except as contemplated in the Rights
Agreement, the Company has not granted or agreed to grant any registration
rights, including piggyback rights, to any Person or entity.
2.17 Private Placement. Subject to the truth and accuracy of each
Investor's representations set forth in this Agreement, the offer, sale and
issuance of the Shares as contemplated by this Agreement is and the issuance
of shares of Common Stock upon conversion of the Series C Preferred Stock
will be exempt from the registration requirements of the Securities Act of
1933, as amended (the "Securities Act"), 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.
2.18 Corporate Documents; Board of Directors. A true and complete copy
of the Bylaws of the Company are in the form of Exhibit I. As of the Closing,
the Bylaws of the Company shall provide that the number of members of the
Board of Directors of the Company is eight (8). As of the Closing, the Board
of Directors of the Company shall be comprised of Xxxxxx Van der Meer, Xxxx
Xxxxxxxxx, Xxxx Xxxxxxxxx, Xxxxxx Xxxxxx, the chief executive officer of the
Company, Xxxx Xxxxxxxxxx and Xxxxxx Xxxxx and there shall be one (1) vacancy,
which shall be filled by a designee selected in accordance with the Restated
Certificate and the Voting Agreement. The current officers of the Company and
each Subsidiary are as set forth in Section 2.18 of Exhibit B.
2.19 Title to Property and Assets. The Company and each Subsidiary owns its
property and assets free and clear of all mortgages, liens, loans and
encumbrances, except such mortgages, encumbrances, loans and liens which arise
in the ordinary course of business and do not materially impair the Company's or
any such Subsidiary's ownership or use of such property or any assets. With
respect to the property and assets it leases, the Company and each Subsidiary is
in compliance in all material respects with such leases and, to the best of the
Company's knowledge, holds a valid leasehold interest free of any material
liens, claims, loans or encumbrances.
2.20 Financial Statements. The Company has delivered to the Investors its
audited consolidated financial statements (including balance sheet and profit
and loss statement and statement of cash flows) for the fiscal year ended
December 31, 1998, as well as its unaudited, consolidated and consolidating
financial statements (including balance sheet and profit and loss statement)
for the ten months ended October 31, 1999 (collectively referred to as the
"Financial Statements"). The Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated. The Financial Statements
fairly present the financial condition and operating results of the Company
as of the dates, and for the periods, indicated therein, subject to normal
year-end audit adjustments which are not expected in the aggregate to be
material. Except as set forth in the Financial Statements, neither the
Company nor any Subsidiary has any liabilities, contingent or otherwise,
other than (i) liabilities incurred in the ordinary course of business
subsequent to October 31, 1999 and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required
under generally accepted accounting principles to be reflected in the
Financial Statements, which, in both cases, individually or in the aggregate
are not material to the financial condition or operating results of the
Company and its Subsidiaries taken as a whole. The Company and each
Subsidiary maintains a system of internal accounting controls that will
enable it to prepare financial statements in accordance with generally
accepted accounting principles.
2.21 Changes. Since October 31, 1999, there has not been:
(a) any change in the business, assets, properties, liabilities,
condition (financial or otherwise) or operating results of the Company or any
of its Subsidiaries from that reflected in the Financial Statements, except
changes in the ordinary course of business that have not been, individually
or in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the business (as such business
is presently conducted and as it is proposed to be conducted), assets,
properties, liabilities, prospects, or condition (financial or otherwise) or
operating results of the Company or any of the Subsidiaries;
(c) any waiver (or partial waiver) or compromise by the Company of a
valuable right or of a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim or encumbrance or
payment of any obligation by the Company or any of the Subsidiaries, except
in the ordinary course of business and that is not material to the business
(as such business is presently conducted and as it is proposed to be
conducted), properties, prospects, or condition (financial or otherwise) of
the Company and the Subsidiaries taken as a whole;
(e) any material change to a Contract;
(f) any change in any compensation arrangement or agreement with any
employee, officer, director, stockholder, consultant or finder;
(g) any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets of the Company or any of
the Subsidiaries;
(h) any sale, assignment or transfer of any tangible assets of the
Company or any of the Subsidiaries, except for the sale of inventory in the
ordinary course of business;
(i) any resignation or termination of employment of any officer or key
employee of the Company or any of the Subsidiaries, and the Company, to the
best of its knowledge, does not know of any impending resignation or
termination of employment of any such officers or employees;
(j) receipt of notice that there has been a loss of, or order
cancellation by, any major customer of the Company or any of the Subsidiaries
or cancellation or discontinuance by any major supplier or service provider
of the Company or any of the Subsidiaries;
(k) any mortgage, pledge, transfer of a security interest in, or lien,
created by the Company or any of the Subsidiaries with respect to any of its
properties or assets, except liens for taxes not yet due or payable;
(l) any payment, loan, advance or guaranty made by the Company or any of
the Subsidiaries to, or any sale, transfer or lease of any properties or
assets by the Company or any of the Subsidiaries or any other agreement or
arrangement entered into by the Company or any of the Subsidiaries with or
for the benefit of, its employees, officers, directors or stockholders
(including holders of Preferred Stock), or any members of their immediate
families, other than travel advances to employees or directors made in the
ordinary course of its business consistent with past practice;
(m) any declaration, setting aside or payment or other distribution in
respect to any of the capital stock of the Company or any of the
Subsidiaries, or any direct or indirect redemption, purchase or other
acquisition of any of such stock by the Company or any of the Subsidiaries;
(n) any labor trouble at the Company or any of the Subsidiaries which
could reasonably be expected to have a Material Adverse Effect;
(o) any change in the line of business of the Company or any of the
Subsidiaries;
(p) any dissolution, winding-up, liquidation or discontinuance of a line
of business involving the Company or any of the Subsidiaries;
(q) any other event or condition of any character which has had or could
reasonably be expected to have a Material Adverse Effect; or
(r) any arrangement or commitment by the Company or any of the
Subsidiaries to do any of the above items described in this Section 2.21.
2.22 Employment Benefit Plans .
(a) Except as listed in Section 2.22 of Exhibit B, neither the Company
nor any entity that would be deemed a "single employer" with the Company
under Section 414(b), (c), (m), or (o) of the Internal Revenue Code of 1986,
as amended (the "Code") or Section 4001 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") (an "ERISA Affiliate") maintains,
sponsors, contributes to, or has or has had an obligation to, or otherwise
participated in or participates in or in any way, directly or indirectly, has
or has had any liability with respect to any "employee benefit plan," as
defined in Section 3(3) of ERISA, or any other bonus, profit sharing,
pension, deferred compensation, incentive, stock option, fringe benefit,
health, welfare, change in control, or other plan, agreement, policy, trust
fund, or arrangement, whether written or unwritten, insured or self-insured
(each a "Plan" and, collectively, the "Plans"). None of the Company, any
ERISA Affiliate, or any of their respective predecessors has ever contributed
to, contributes to, has ever been required to contribute to, or otherwise
participated in or participates in or in any way, directly or indirectly, has
any liability with respect to any plan subject to Section 412 of the Code,
Section 302 of ERISA or Title IV of ERISA, including, without limitation any,
"multiemployer plan" (within the meaning of Sections (3)(37) or 4001(a)(3) of
ERISA or Section 414(f) of the Code), or any single employer pension plan
(within the meaning of Section 4001(a)(15) of ERISA). No event, condition, or
circumstance exists that would prevent the amendment or termination of any
Plan.
(b) With respect to each of the Plans in Section 2.22 of Exhibit B:
(i) each Plan complies in all material respects and has been maintained
and administered at all times in accordance with its terms and all
applicable laws, rules and regulations, including, without limitation,
ERISA and the Code and any trust maintained pursuant thereto is exempt
from federal income taxation under Section 501 of the Code and nothing has
occurred or is expected to occur through the date of the
Closing that caused or could cause the loss of such exemption or the
imposition of any penalty or tax liability;
(ii) no claim, lawsuit, arbitration or other action has been threatened,
asserted, instituted, or anticipated against the Plans (other than
non-material routine claims for benefits, and appeals of such claims), any
trustee or fiduciaries thereof, the Company, any ERISA Affiliate, any
director, officer, or employee thereof, or any of the assets of any trust
of the Plans;
(iii) no "prohibited transaction," within the meaning of Section 4975 of
the Code and Section 406 of ERISA, has occurred or is expected to occur
with respect to the Plan (and the consummation of the transactions
contemplated by this Agreement will not constitute or directly or
indirectly result in a "prohibited transaction");
(iv) with respect to each Plan that is funded mostly or partially through
an insurance policy, neither the Company nor any ERISA Affiliate has any
liability in the nature of retroactive rate adjustment, loss sharing
arrangement or other actual or contingent liability arising wholly or
partially out of events occurring on or before the Closing.
(c) The consummation of the transactions contemplated by this Agreement
will not give rise to any liability, including, without limitation, liability
for severance pay, unemployment compensation, termination pay, or withdrawal
liability, or accelerate the time of payment or vesting or increase the
amount of compensation or benefits due to any employee, director,
shareholder, or beneficiary of the Company (whether current, former, or
retired) or their beneficiaries solely by reason of such transactions. No
amounts payable under any Plan will fail to be deductible for federal income
tax purposes by virtue of Section 280G or 162(m) of the Code. Neither the
Company nor any ERISA Affiliate maintains, contributes to, or in any way
provides for any benefits of any kind whatsoever (other than under Section
4980B of the Code, the Federal Social Security Act, or a plan qualified under
Section 401(a) of the Code) to any current or future retiree or terminee.
Neither the Company nor any ERISA Affiliate has any unfunded liabilities
pursuant to any Plan that is not intended to be qualified under Section
401(a) of the Code.
2.23 Tax Returns and Payments. The Company and the Subsidiaries have
filed or caused to be filed all required Tax Returns (as defined below) with
the appropriate governmental agencies in all jurisdictions in which such Tax
Returns are required to be filed by the Company or any of the Subsidiaries
and all Taxes (as defined below) shown on such Tax Returns payable by such
entity have been properly accrued or paid to the extent such Taxes have
become due or are being contested in good faith, and for which reserves
therefor have been established by the Company in accordance with generally
accepted accounting principles. Neither the Company, nor any Subsidiary has
executed any waiver or extensions of any statute of limitations on the
assessment or collection of any Tax or with respect to any liability arising
therefrom. None of the federal,
state or local income Tax Returns for the Company or any of the Subsidiaries
have been audited by any taxing authority, including the United States Internal
Revenue Service. For purposes of this Section 2.23, "Taxes" means any federal,
state, or local taxes, assessments, interest, penalties, deficiencies, fees and
other governmental charges or impositions; and "Tax Return" means any federal,
state, or local tax return, report, statement and other similar filings required
to be filed by the Company or any of the Subsidiaries with respect to Taxes.
2.24 Insurance. The Company and the Subsidiaries have in full force and
effect fire, casualty and liability insurance policies issued by insurers of
recognized responsibility, with extended coverage, sufficient in amount to
allow any of them, as applicable, to replace any of its properties that might
be damaged or destroyed. Neither the Company nor any of the Subsidiaries have
been refused any insurance coverage sought or applied for, and the Company
has no reason to believe that the Company or any Subsidiary will be unable to
renew its existing insurance coverage.
2.25 Labor Agreements and Actions. Neither the Company nor any
Subsidiary is bound by or subject to (and none of its assets or properties is
bound by or subject to) any written or oral, express or implied, contract,
commitment or arrangement (including, without limitation, collective
bargaining agreements) with any labor union, and no labor union has requested
or, to the knowledge of the Company, has sought to represent any of the
employees, representatives or agents of the Company or any of the
Subsidiaries. There is no strike or other labor dispute involving the Company
or any of the Subsidiaries pending, or to the knowledge of the Company,
threatened, which could reasonably be expected to have a Material Adverse
Effect. The Company and the Subsidiaries have complied in all material
respects with all applicable state and federal equal employment opportunity
and other laws related to employment. Neither the Company nor any of the
Subsidiaries has engaged in any unfair labor practice which could reasonably
be expected to result in a Material Adverse Effect. Neither the Company nor
any of the Subsidiaries has any agreements or arrangements with persons
titled as independent contractors or consultants, as a result of which, by
virtue of the control exercised by the Company or the Subsidiaries, the type
of work performed by the persons or any other circumstances, said persons
could reasonably be deemed to be employees of the Company or the
Subsidiaries. Neither the Company nor any Subsidiary is aware that any
officer or key employee, or that any group of key employees, intends to
terminate their employment with the Company or any such Subsidiary, nor does
the Company or any such Subsidiary have a present intention to terminate the
employment of any of the foregoing. The employment of each officer and
employee of the Company and the Subsidiaries is terminable at the will of the
Company or the Subsidiaries to the extent permitted by law.
2.26 Environmental and Safety Laws. The business, assets and properties
of the Company and the Subsidiaries are and have been operated and maintained
in compliance with all applicable federal, state, city, county and local
environmental protection and occupational health and safety laws and
regulations (collectively, the "Environmental and Safety Laws"), except where
the failure to so comply could not reasonably be expected to have a Material
Adverse
Effect. No event has occurred which, with or without the passage of time or the
giving of notice, or both, would constitute non-compliance by the Company or the
Subsidiaries with, or a violation by any of the Company or the Subsidiaries of,
the Environmental and Safety Laws, except for violations which could not
reasonably be expected to have a Material Adverse Effect. None of the Company
nor any of the Subsidiaries nor any of their respective predecessor companies
has caused or permitted to exist, as a result of an intentional or unintentional
act or omission by the Company, any such Subsidiary, any of their respective
predecessor companies or, to the best knowledge of the Company, by any
contractor or supplier of any of their raw materials, a disposal, discharge or
release of solid wastes, pollutants or hazardous substances, on or from any site
which currently is or formerly was owned, leased, occupied or used by any of the
Company, the Subsidiaries or any predecessor company, or, to the best knowledge
of the Company, any contractor or supplier of any of their raw materials, except
where such disposal, discharge or release was in compliance with the
Environmental and Safety Laws. Section 2.26 of Exhibit B hereto contains a
complete and correct list of the name and location of each site (i) which is
listed, or proposed for listing on a registry or inventory of inactive hazardous
waste sites maintained by any governmental authority and which currently is or
formerly was owned, leased, occupied or used by any of the Company, the
Subsidiaries or any predecessor company or (ii) with respect to which any of the
Company, the Subsidiaries or any predecessor company has received notice that
such company is considered to be a potentially responsible Person for cleanup or
other liability in respect of Environmental and Safety Laws.
2.27 Year 2000 Compliance. The computer software of the Company and the
Subsidiaries, including, without limitation, any software incorporated or
imbedded in any product or specification used or offered by the Company or
any Subsidiary or proposed for use or sale by the Company or any Subsidiary,
and including, to the Company's knowledge, software the Company or any
Subsidiary licenses from third parties, is "Millennium Compliant". As used in
this Agreement, "Millennium Compliant" means the ability of the software to
provide the following functions: (a) consistently handle date information
before, during and after January 1, 2000, including, but not limited to,
accepting date input, providing date output, and performing calculations on
dates or portions of dates; (b) function accurately in accordance with its
specifications and without interruption before, during and after January 1,
2000, without any change in operations associated with the advent of the new
century (defined for purposes of this paragraph as commencing at 12:00 A.M.,
January 1, 2000); (c) respond to two-digit date input in a way that resolves
any ambiguity as to century in a disclosed, defined and predetermined manner;
and (d) store and provide output of date information in ways that are
unambiguous as to century.
2.28 Minute Books. The copy of the minute books of the Company and its
Subsidiaries provided to the counsel for the Investors contains minutes of
all material meetings of directors (including committees thereof) and
stockholders and all material actions by written consent without a meeting by
the directors and stockholders since the date of incorporation and reflects
all actions by the directors (and any committee of directors) and
stockholders with respect to all transactions referred to in such minutes
accurately in all material respects.
2.29 Small Business Concern .
(a) The Company, together with its "affiliates" (as that term is defined
in Title 13 of the United States Code of Federal Regulations) is a "Small
Business" within the meaning of the Small Business Investment Act of 1958, as
amended (the "Small Business Investment Act"), and the regulations
promulgated thereunder (including Part 107 and 121 of Title 13 of the United
States Code of Federal Regulations). The information provided by the Company
on SBA Forms 480, 652 and 1031 delivered in connection herewith is true and
correct.
(b) The proceeds from the sale of the Series B Preferred Stock and
Series C Preferred Stock to any Investor that is a small business investment
company (an "SBIC") will be used by the Company to fund working capital and
for general corporate purposes. No portion of such proceeds (i) will be used
to purchase stock in, provide capital to or repay any indebtedness incurred
for the purpose of investing in a company licensed under the Small Business
Investment Act, (ii) will be used to acquire realty or to discharge an
obligation relating to the prior acquisition of realty, (iii) will be used
outside the United States (except to acquire abroad materials and equipment
or property rights for use or sale in the United States), or (iv) will be
used for any purpose contrary to the public interest (including but not
limited to activities which are in violation of law) or inconsistent with
free competitive enterprise, in each case, within the meaning of ss. 107.720
of Title 13 of the United States Code of Federal Regulations.
(c) The Company's primary business activity does not involve, directly
or indirectly, providing funds to others, the purchase or discounting of debt
obligations, factoring or long-term leasing of equipment with no provision
for maintenance or repair, and the Company is not classified under Major
Group 65 (Real Estate) or Industry No. 1531 (Operative Builders) of the SIC
Manual. Not more than 49% of the Company's employees or tangible assets are
located outside of the United States.
(d) The Company confirms that it has been advised that each of the SBIC
Investors is a Federal licensee under the Small Business Investment Act.
2.30 Section 897 of the Internal Revenue. The Company is not a U.S. Real
Property Holding Company as defined in Section 897 of the Internal Revenue
Code of 1986, as amended (the "Code").
2.31 Use of Proceeds. The Company will use the proceeds from the sale of
the Shares to the SBIC Investors as set forth in Section 2.29(b). The Company
may also use such proceeds for research and development. The Company will use
the proceeds from the sale of Shares to the Other Investors for general,
corporate and working capital purposes. None of the proceeds from the sale of
the Shares will be used, directly or indirectly, by the Company for the
purpose of purchasing or carrying, or for the purpose of reducing or retiring
any indebtedness which was originally incurred to purchase or carry, any
"margin security" or "margin stock" within the meaning of Regulation U (12
CFR Part 221), of the Board of Governors of the Federal Reserve
System or for any other purpose which might make the transactions contemplated
in this Agreement a "purpose credit" within the meaning of said Regulation U, or
cause this Agreement to violate any other regulation of the Board of Governors
of the Federal Reserve System or the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or any rules or regulations promulgated under any of such
statutes. Neither the Company nor any of the Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying "margin security" or "margin
stock" within the meaning of Regulation U (12 CFR Part 221) of the Board of
Governors of the Federal Reserve System.
2.32 Absence of Certain Commercial Practices. Neither the Company nor
any of the Subsidiaries nor, to the knowledge of the Company, any officer,
director, employee or agent of the Company or any of the Subsidiaries (or any
Person acting on behalf of any of the foregoing), has (i) given or agreed to
give any gift or similar benefit of more than nominal value on behalf of the
Company or any Subsidiary to any official of any governmental authority
(domestic or foreign), to induce the recipient or his employer to do
business, grant favorable treatment or compromise or forego any claim, (ii)
made any payment which is illegal under prevailing law (regardless of the
jurisdiction in which such payment was made) to promote or retain sales or to
help procure or maintain good relations with suppliers, (iii) engaged in any
activity which constitutes a violation of the Foreign Corrupt Practices Act
of 1977, as amended, and the rules and regulations promulgated thereunder,
(iv) engaged in any practice violating any United States federal law
prohibiting compliance with an unsanctioned foreign boycott or (v) failed to
perform its obligations in any respect under any contract with, or violated
in any material respect any federal law known to the Company or any of the
Subsidiaries in its dealings with, the federal government or any agency or
department thereof, including, but not limited to, any law with respect to
conspiracy to defraud, false claims, conspiracy to defraud the United States,
embezzlement or theft of public money, fraud and false statements, false
demands against the United States, mail fraud, wire fraud, RICO, and truth in
negotiations, which failure or violation would result in a Material Adverse
Effect. No such gift or benefit is required in connection with the operations
of the Company or any of the Subsidiaries or their businesses to avoid any
fine, penalty, cost, expense or change in the business, assets, properties,
prospects, operations or financial condition of the Company or any of the
Subsidiaries which could reasonably be expected to result in a Material
Adverse Effect.
3. Representations and Warranties of the Investor.
Each Investor, severally and not jointly, hereby represents and
warrants to the Company as follows:
3.1 Authorization. This Agreement and the Related Documents, when
executed and delivered by such Investor, will each constitute a valid and
legally binding obligation of such Investor, enforceable in accordance with
its terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and any other laws of
general application affecting enforcement of creditors rights generally, and
as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (ii) to the extent the
indemnification provisions contained in the Rights Agreement may be limited
by applicable federal or state securities laws.
3.2 Purchase Entirely for Own Account. This Agreement is made with the
Investor in reliance upon the Investor's representation to the Company, which
by the Investor's execution of this Agreement the Investor hereby confirms,
that the Shares (and Common Stock issuable upon conversion thereof) to be
acquired by the Investor will be acquired for investment for the Investor's
own account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof in violation of federal securities laws. The
Investor represents that it has the requisite power and authority to enter
into, execute, deliver and perform this Agreement.
3.3 Investment Experience. The Investor understands that the Shares
(and the Common Stock issuable upon conversion of the Series C Preferred
Stock) have not been, and will not be, registered under the Securities Act by
reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature
of the investment intent and the accuracy of the Investor's representations
as expressed herein. The Investor has not been formed for the specific
purpose of acquiring the Shares (or the Common Stock issuable upon conversion
of the Series C Preferred Stock).
3.4 Restricted Securities. The Investor understands that the Shares
(and the Common Stock issuable upon conversion of the Series C Preferred
Stock) 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 Shares (and the Common Stock issuable upon
conversion of the Series C Preferred Stock) may be resold without
registration under the Securities Act only in certain limited circumstances.
The Investor acknowledges that the Shares (and the Common Stock issuable upon
conversion of the Series C Preferred Stock) must be held indefinitely unless
subsequently registered under the Securities Act or an exemption from such
registration is available. The Investor is aware of the provisions of Rule
144 promulgated under the Securities Act which permit limited resale of
shares purchased in a private placement subject to the satisfaction of
certain conditions, including, among other things, the existence of a public
market for the shares, the availability of certain current public information
about the Company, the resale occurring not less than one year after a party
has purchased and paid for the security to be sold, the sale being effected
through a "broker's transaction" or in transactions directly with a "market
maker" (as provided by Rule 144(f)) and the number of shares being sold
during any three-month period not exceeding specified limitations.
3.5 No Public Market. The Investor understands that no public market
now exists for any of the securities issued by the Company, that the Company
has made no assurances that a public market will ever exist for the Shares or
the Common Stock issuable upon conversion of the Series C Preferred Stock and
that, even if such a public market exists at some future time, the Company
may not then be satisfying the current public information requirements of
Rule 144.
3.6 Legends. The Investor understands that the Shares (and the Common
Stock issuable upon conversion of the Series C Preferred Stock), and any
securities issued in respect thereof or exchange therefor, may bear one or
all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. 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 OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
(b) Any legend required by the laws of the State of New York.
(c) Any legend required by the Blue Sky laws of any other state to the
extent such laws are applicable to the shares represented by the certificate
so legended.
The requirement that the foregoing legend(s) be placed upon
certificates evidencing any such securities shall cease and terminate upon
the earliest of the following events: (i) when such securities are
transferred in a public offering under the Securities Act, (ii) when such
securities are transferred pursuant to Rule 144 under the Securities Act or
(iii) when such shares are transferred in any other transaction if the seller
delivers to the Company an opinion of its counsel, which counsel and opinion
shall be reasonably satisfactory to the Company (it being agreed that Paul,
Hastings, Xxxxxxxx & Xxxxxx LLP, Xxxxxxxxx Xxxx LLP, Xxxxxxx Xxxx LLP or
X'Xxxxxxxx Graev & Karabell, LLP shall be satisfactory), or a "no-action"
letter from the staff of the SEC, in either case, to the effect that such
legend is no longer necessary in order to protect the Company against a
violation by it of the Securities Act upon any sale or other disposition of
such shares without registration thereunder. Upon the occurrence of any event
permitting the removal of a legend hereunder, the Company, upon the surrender
of certificates containing such legend, shall, at its own expense, deliver to
the holder of any such shares as to which the requirement for such legend
shall have terminated, one or more new certificates evidencing such shares
not bearing such legend.
3.7 Accredited Investor. The Investor is an accredited investor as
defined in Rule 501 (a) of Regulation D promulgated under the Act.
3.8 Brokers or Finders. Except as disclosed in the Schedule of
Exceptions, the Company will not incur, directly or indirectly, as a result
of any action taken by the Investor, any liability
for brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement.
4. Conditions to Investors' Obligations at Closing.
The obligations of each of the Investors under this Agreement are
subject to the fulfillment, or the waiver by each of the Investors, of the
conditions set forth in this Section 4 on or before the Closing.
4.1 Accuracy of Representations and Warranties. Each representation and
warranty of the Company contained in this Agreement shall be true in all
material respects on and as of the date of the Closing with the same effect
as though such representation and warranty had been made on and as of that
date. Immediately prior to the Closing, the Company shall provide each of the
Investors with a new Disclosure Schedule, updated for such Closing, provided
that, the obligation set forth in the preceding sentence with respect to the
accuracy of the representations and warranties of the Company as of the
Closing shall be based solely on Exhibit B, Schedule of Exceptions, provided
to the Investors at or prior to the execution of this Agreement.
4.2 Performance. The Company shall have performed and complied with all
covenants, agreements, obligations and conditions contained in this Agreement
that are required to be performed or complied with by it on or before the
Closing.
4.3 Compliance Certificate. The President of the Company shall deliver
to the Investors at the Closing a certificate certifying that the conditions
specified in Sections 4. 1 and 4.2 have been fulfilled.
4.4 Qualifications and Consents. All authorizations, approvals or
permits, if any, of any governmental authority or regulatory body and all
consents and approvals of any third party that are required in connection
with the lawful consummation of the transactions provided for herein and in
the Related Documents (including, without limitation, the lawful issuance and
sale of the Shares pursuant to this Agreement) shall be obtained and
effective as of the Closing without the imposition of any obligations,
liabilities or conditions adverse to the Company, the Subsidiaries or any
Investor. Without limiting the generality of the foregoing, each of the
Company's existing stockholders shall have waived any preemptive right or
right of first offer (or any comparable right) any such stockholder may have
to purchase any of the Shares (or the shares of Common Stock issuable upon
conversion of the Series C Preferred Stock).
4.5 Proceedings and Documents. On or prior to the date of the Closing,
the Restated Certificate shall have been filed with the Secretary of State of
the State of Delaware. All corporate and other proceedings in connection with
the transactions contemplated by this Agreement and the Related Documents at
the Closing and all documents incident thereto shall be reasonably
satisfactory in form and substance to the Investors'
counsel, and the Investors' counsel shall have received all such counterpart
original and certified or other copies of such documents as it may reasonably
request.
4.6 Opinion of Company Counsel. The Investors shall have received from
(i) Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, counsel for the Company, an
opinion, dated as of the Closing, in the form of Exhibit H and (ii) Xxxxxx &
Xxxxxxx LLP, special counsel for the Company, an opinion, dated as of the
Closing, in the form of Exhibit I.
4.7 Board of Directors. The Company's Bylaws shall reflect that the
size of the Board of Directors of the Company shall be set at eight (8). As
of the Closing, the Board of Directors of the Company shall be comprised of
Xxxxxx Van der Meer, Xxxx Xxxxxxxxx, Xxxx Xxxxxxxxx, Xxxxxx Xxxxxx, the chief
executive officer of the Company, Xxxx Xxxxxxxxxx and Xxxxxx Xxxxx, and there
shall be one (1) vacancy, which shall be filled by a designee selected in
accordance with the Restated Certificate and the Voting Agreement.
4.8 Rights Agreement. The Company and each holder of Series A-1 Junior
Preferred Stock shall have executed and delivered the Rights Agreement.
4.9 Co-Sale Agreement. The Company, Xxxx Xxxxxxxxx and each holder of
Series A-1 Junior Preferred Stock shall have executed and delivered the
Co-Sale Agreement.
4.10 Voting Agreement. The Company, Xxxx Xxxxxxxxx and each holder of
Series A-1 Junior Preferred Stock shall have executed and delivered the
Voting Agreement.
4.11 Series A-2 Restructuring. Prior to or concurrently with the
Closing, the Company shall have consummated the following (i) all existing
shares of the Company's Series A-2 Preferred Stock, par value $.001 per share
(the "Series A-2 Preferred Stock"), shall have been repurchased by the
Company and (ii) all warrants to purchase shares of Common Stock which were
issued in connection with the original issuance of the Series A-2 Preferred
Stock, shall have been canceled and of no further force or effect, in each
case, as more particularly set forth in the Series A-2 Restructuring
Agreement (the "Series A-2 Restructuring"). The terms and conditions of the
Series A-2 Restructuring Agreement and the transactions contemplated thereby
shall be satisfactory to each Investor and counsel to the Investors.
4.12 Officer's Certificate. The Company's Chairman shall have delivered
to each Investor a certificate dated as of the Closing and signed by the
Chairman certifying, among other things, copies of the Board of Directors and
stockholder resolutions approving the transactions contemplated by this
Agreement and the Related Documents and true and correct copies of the
Restated Certificate and the Bylaws.
4.13 Blue Sky Approvals. The Company shall have received all requisite
approvals, if any, of the securities authorities of each jurisdiction in
which such approval is required, and such approvals shall be in full force
and effect on and as of the date of the Closing.
4.14 SBA Documentation. The Company shall have completed, executed
(where applicable) and delivered to the SBIC Investors, SBA Form 480, SBA
Form 652 and SBA Form 1031.
4.15 No Material Adverse Change. There shall not have occurred any
material adverse change in the business, assets, properties, prospects,
liabilities or condition (financial or otherwise) of the Company or the
Subsidiaries taken as a whole.
4.16 No Litigation. There shall not be any action, suit, proceeding or
investigation of or before any governmental authority pending or threatened
(i) with respect to this Agreement, the Related Documents or any of the
transactions contemplated hereby or thereby or (ii) which could reasonably be
expected to result in a Material Adverse Effect.
4.17 Satisfactory Completion of Due Diligence; Etc. The Investors and
their respective representatives (including, without limitation, attorneys,
agents and accountants) shall have completed their legal due diligence review
and accounting review of the business and affairs, assets and liabilities and
condition (financial and otherwise) of the Company and the Subsidiaries.
4.18 Payment of Expenses. The Company shall have paid all fees and
expenses in accordance with Section 7.7 hereof.
4.19 Foundation Limited Partner Certificate. The Company shall have
executed and delivered the Foundation Limited Partner Certificate in the form
of Exhibit K.
4.20 Management Rights Agreement. The Company shall have executed and
delivered the Management Rights Letter in the form of Exhibit L.
4.21 Regulatory Compliance Side Letter. The Company shall have executed
and delivered the Regulatory Compliance Side Letter in the form of Exhibit M.
4.22 Stock Certificates, etc. At the Closing, the Company shall have
tendered to each Investor a certificate representing shares of Senior
Preferred Stock in accordance with Schedule I hereof, all in form and
substance satisfactory to such Investor and sufficient to transfer to and
vest in such Investor good and valid title to the Shares, free and clear of
any lien, charge or encumbrance.
If at the Closing the Company fails to tender to the Investors the
documents specified herein which are required to be delivered to the
Investors at the Closing or if at the Closing any of the conditions specified
in this Section 4 shall not have been fulfilled to each Investor's
satisfaction, or waived by each Investor, such Investor shall, at its
election, be relieved of all further obligations under this Agreement.
5. Conditions of the Company's Obligations at Closing.
The obligations of the Company under Section 1 of this Agreement are
subject to the fulfillment, or waiver by the Company, of each of the
following conditions on or before the Closing.
5.1 Representations and Warranties True at Closing. The representations
and warranties of the Investors contained in Section 3 hereof shall be true
in all material respects on and as of the date of the Closing with the same
effect as though said representations and warranties had been made on and as
of that date.
5.2 Qualifications. All authorizations, approvals or permits, if any,
of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale
of the Shares pursuant to this Agreement shall be obtained and effective as
of the date of the Closing.
5.3 Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by the Investors on or prior to the date of
the Closing shall have been performed or complied with.
5.4 Rights Agreement. Each Investor and each holder of Series A-1
Junior Preferred Stock shall have executed and delivered the Rights Agreement.
5.5 Co-Sale Agreement. Each Investor and each holder of Series A-1
Junior Preferred Stock shall have executed and delivered the Co-Sale
Agreement.
5.6 Voting Agreement. Each Investor and each holder of Series A-1
Junior Preferred Stock shall have executed and delivered the Voting Agreement.
5.7 Restated Amendment. The Restated Certificate shall have been filed
with the Secretary of State of the State of Delaware.
5.8 Series A-2 Restructuring Agreement. The transactions contemplated
by the Series A-2 Restructuring Agreement shall have been consummated in
accordance with the terms thereof.
6. Affirmative Covenants of the Company.
The Company hereby covenants and agrees with the Investors (except
that Section 6.8 shall be for the benefit of the SBIC Investors only) as
follows:
6.1 Observer Rights. The Company shall give to BBV notice of each
meeting of the Board of Directors of the Company and its subsidiaries and of
each committee thereof at the same time and in the same manner as notice is
given to the directors of the Company or any such subsidiary. If no designee
of BBV shall then be serving on the Board of Directors of the Company, one
(1) designee of BBV shall be entitled to attend in person or by telephone, as
an observer, all meetings of the Board of Directors of the Company and each
of its subsidiaries and of each committee thereof. The Company shall provide
to BBV in connection with each meeting its respective observer designee is
entitled to attend, whether or not present at such meeting, copies of all
notices, minutes, consents, and all other materials or information that it
provides to the directors of the applicable company with respect to such
meeting, at the same time such materials and information are given to the
directors of such company (except that materials and information provided to
directors of the Company or any such subsidiary at meetings at which a
designee of BBV is not present (in person or by telephone) may be provided to
BBV promptly after the meeting). If the Board of Directors of any of the
Company or any of its subsidiaries or any committee thereof proposes to take
any action by written consent in lieu of a meeting, the Company shall give
written notice thereof to BBV prior to the effective date of such consent
describing in reasonable detail the nature and substance of such action.
Notwithstanding anything herein to contrary, if pursuant to applicable law or
regulations (or prevailing interpretation thereof), either the JPM Investors
or Chase is prohibited (or reasonably believes it is prohibited) from
designating a director to the Board of Directors of the Company and do not
designate such a director, then the JPM Investors and/or Chase, as the case
may be, shall be entitled to one (1) observer to the same extent as BBV.
6.2 Information. The Investors and their assignees shall be entitled to
receive, and the Company agrees to provide to such Investors and their
assignees, the following:
(a) Financial and Related Data.
(i) As soon as available, but in any event not later than forty-five
(45) days after the end of each month, the unaudited consolidated balance
sheet as at the end of such month of the Company and its subsidiaries and
the related unaudited consolidated statements of operations, stockholders'
equity and cash flows for such month and for the elapsed period in such
fiscal year, all in reasonable detail and stating in comparative form the
figures as of the end of and for the comparable period of the preceding
fiscal year and budgeted figures for the period. All such financial
statements shall be complete and correct in all material respects, and
shall be accompanied by a certificate of the President or chief financial
officer of the Company to such effect.
(ii) As soon as available, but in any event not later than 45 days after
the end of each fiscal quarter, the unaudited consolidated balance sheet
of the Company and its subsidiaries as at the end of such fiscal quarter
and the related unaudited consolidated statements of operations,
stockholders' equity and cash flows of the Company and its subsidiaries
for such fiscal quarter, all in reasonable detail and stating in
comparative form the figures as at the end of and for such quarter in the
previous fiscal year and budgeted figures for the period. All such
financial statements shall be complete and correct in all material
respects and prepared in reasonable detail and in accordance with
generally accepted accounting principles applied, except as stated
therein, on a consistent basis throughout the periods reflected therein
(except that such financial statements may omit footnotes and may be
subject to normal year end adjustments which are not, in the aggregate,
material), and shall be accompanied by a certificate of the President or
chief financial officer of the Company to such effect.
(iii) As soon as available, but in any event within 90 days after the end
of each fiscal year of the Company, the audited consolidated and unaudited
consolidating balance sheet of the Company and its subsidiaries as at the
end of such fiscal year and the related audited consolidated statements
and unaudited consolidating statements of operations, stockholders' equity
and cash flows of the Company and its subsidiaries for such fiscal year,
all in reasonable detail and stating in comparative form the figures as at
the end of and for the previous fiscal year and budgeted figures for the
fiscal year accompanied by an opinion of an accounting firm of nationally
recognized standing selected by the Company with respect to the
consolidated statements, which opinion shall state that such accounting
firm's audit was conducted in accordance with generally accepted auditing
standards and, accordingly, included such tests of accounting records and
such other auditing procedures as were considered necessary under the
circumstances and which opinion shall not be subject to any qualification
resulting from a limit on the scope of the examination of the financial
statements or the underlying data or which could be eliminated by changes
in the financial statements or the notes thereto or by the creation of or
increase in a reserve or a decreased carrying value of assets, as such
standards may change from time to time. All such financial statements
shall be complete and correct in all material respects and prepared in
reasonable detail and in accordance with generally accepted accounting
principles applied, except as stated therein, on a consistent basis
throughout the periods reflected therein.
(iv) As soon as available, but in any event not later than 45 days prior
to the end of each fiscal year of the Company, the financial plan of the
Company for the next succeeding fiscal year to be submitted to the Board
of Directors of the Company for approval, including but not limited to, at
minimum, assumptions with respect to (a) revenues, (b) customers and
contracts, (c) operating costs and (d) capital expenditures and cash flow
and balance sheet projections and operating budget, calculated monthly,
comparisons to comparable periods in the prior year and any updates or
revisions as soon as available.
(v) Promptly after receipt, copies of all management letters from
accountants and all certificates prepared by or for the Company or its
subsidiaries as to compliance, defaults, material adverse changes,
material litigation or similar matters.
(b) Access. The Company shall permit, and shall cause its subsidiaries
to permit, representatives designated by each of the JPM Investors, Chase and
BBV, upon reasonable prior notice to the Company, to visit and inspect each
of the Company's or its subsidiaries' properties, to examine their respective
corporate and financial records (and make copies thereof or extracts
therefrom), to discuss their respective affairs, finances and accounts with
the Company's or its subsidiaries' directors and officers, and, through the
President or chief financial officer of the Company or any of its
subsidiaries, as the case may be, such company's key employees and
accountants, all at such reasonable times as may be requested by any such
Investor during normal business hours of the Company or any such subsidiary;
provided, however, that such access shall not materially disrupt the
operation of the business of the Company or any such subsidiary.
6.3 Exemption from Investment Company Act; FIRPTA. The Company shall
conduct its business so that neither the Company nor any of its subsidiaries
shall become (i) an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or (ii) a United States real property
holding corporation (as defined in Section 897(c)(2) of the Code).
6.4 Accounting and Reserves. The Company shall, and the Company shall
cause each of its subsidiaries to, maintain a standard and uniform system of
accounting and shall keep proper books and records and accounts in which
full, true and correct entries shall be made of its transactions, all in
accordance with generally accepted accounting principles applied on a
consistent basis through all periods, and shall set aside on such books for
each fiscal year all such proper reserves for depreciation, obsolescence,
amortization, bad debts and other purposes in connection with its operations
as are required by such principles so applied.
6.5 Payment of Taxes and Claims. The Company shall, and the Company
shall cause each of its subsidiaries to, pay and discharge promptly all
lawful taxes, assessments and governmental charges or levies imposed upon it
or any such subsidiary, as the case may be, or upon their respective income
or profits or upon any of their respective properties, real, personal or
mixed, before the same shall become delinquent, as well as all lawful claims
for labor, materials and supplies which, if unpaid, would by law become a
lien or charge upon their respective properties; provided that if both of the
following conditions are met in any instance, the Company shall not be
obligated, and the Company shall not be obligated to cause any of its
subsidiaries, to pay or discharge, or to cause to be paid or discharged, such
tax, assessment, charge, levy or claim: (i) if and for so long as the Company
or such subsidiary, as the case may be, is contesting in good faith by
appropriate proceedings the amount, applicability or validity thereof, and
(ii) if the Company or such subsidiary, as the case may be, shall have set
aside on its books reserves deemed by it in accordance with generally
accepted accounting principles to be adequate with respect to such tax,
assessment, charge, levy or claim; provided further that notwithstanding the
previous provision, the Company shall pay or cause to be paid all such taxes,
assessments, charges, levies or claims forthwith upon the commencement of
proceedings to perfect or foreclose any lien which attached as security
therefor.
6.6 Availability of Common Stock for Conversion. The Company shall at
all times reserve and keep available out of its authorized but unissued
shares of Common Stock, such number of its duly authorized shares of Common
Stock as shall be sufficient to effect the conversion of the Series C
Preferred Stock. If at any time the number of authorized but unissued shares
of Common Stock shall not be sufficient to effect the conversion of the
Series C Preferred Stock, or otherwise comply with the terms of this
Agreement or any Related Document, the Company shall forthwith take such
corporate action as may be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for
such purposes.
6.7 Governing Instruments. The Company shall not amend the Restated
Certificate or the By-Laws in any manner adverse to the rights of the holders
of the Shares.
6.8 SBIC Covenants .
(a) The Company will provide to each Investor that is a Small Business
Investment Company (an "SBIC") (upon reasonable notice and during normal
business hours) and the U.S. Small Business Administration access to the
Company's books and records for the purpose of confirming the use of the
proceeds provided by such SBIC pursuant to this Agreement and for all other
purposes required by the U.S. Small Business Administration. Upon the request
of an SBIC, the Company will promptly provide to such SBIC and the U.S. Small
Business Administration a certificate of the chief financial officer (or
other executive officer) of the Company verifying the use of such proceeds
and certifying compliance by the Company with the provisions of Section 2.31
of this Purchase Agreement and paragraph (b) below.
(b) For a period of one year following the date hereof, the Company will
not change its business activity if such change would cause the Company to be
engaged in a business activity that would render the Company ineligible as a
"Small Business" under the Small Business Investment Act of 1958, as amended,
and the regulations thereunder.
(c) The Company will at all times comply with the non-discrimination
requirements of Parts 112, 113 and 117 of Title 13 of the United States Code
of Federal Regulations.
(d) Upon the request of an SBIC, the Company promptly (and in any event
within twenty (20) days of such request) will provide to such SBIC an
assessment, in form and substance satisfactory to such SBIC, of the economic
impact of the financing provided by such SBIC, specifying the full-time
equivalent jobs created or retained, the impact of the financing on the
Company's business, in terms of expanded revenue and profits, and on taxes
paid by the business and its employees. Upon the request of an SBIC, the
Company promptly (and in any event within twenty (20) days of such request)
will furnish to such SBIC all information requested by such SBIC in order for
it to prepare and file SBA Form 468 or any other filing required to be filed
by such SBIC.
(e) The Company promptly will provide to each SBIC such financial
statements and other information as such SBIC may from time to time
reasonably request for the purpose of assessing the financial condition of
the Company and complying with any requirements of any governmental agency
asserting jurisdiction over such SBIC.
(f) Without the consent of each SBIC Investor, the Company will not
issue Securities to any SBIC in the future if such issuance would cause the
SBIC Investor to be deemed to be a member of an "Investor Group" in "Control"
of the Company (as such terms are defined in 13 C.F.R. ss. 107.865).
6.9 Assistance in Sales. Anything in this Agreement or any Related
Document to the contrary notwithstanding, in the event that it becomes
unlawful for any Investor to continue to hold all or some portion of the
Shares to be held by it, or restrictions are imposed on such Investor by any
law or regulation which, in the reasonable judgement of such Investor, make
it unduly burdensome to continue to hold all or some portion of such Shares,
then such Investor may sell or otherwise dispose of all or any portion of its
Shares, and the Company shall use reasonable efforts to assist such Investor
in disposing of such interest in a prompt and orderly manner, and, at the
request of any such Investor, shall provide (and authorize such Investor to
provide) financial and other information concerning the Company and its
subsidiaries to any prospective purchaser of such interest, subject to the
execution by the Person receiving such information of a confidentiality
agreement in a form reasonably acceptable to the Company; provided, however,
that in effecting any such sale or other disposition of such Shares, such
Investor shall use its best efforts to comply with Section 3 of the Co-Sale
Agreement.
6.10 Employee Agreements. For so long as the Investors own any of the
Shares, all employees of the Company shall enter into a proprietary
information and assignment of inventions agreement, substantially in the form
attached hereto as Exhibit K.
6.11 Stock Option Plan. The Company shall not issue any stock options or
other rights to acquire Common Stock under the Stock Option Plan to satisfy
any obligations which the Company may have to those former consultants to the
Company referred to in the capitalization chart of Arbinet Holdings, Inc. (as
of November 23, 1999) delivered to the Investors by the Company prior to the
Closing.
7. Miscellaneous Provisions.
7.1 Survival; Termination. Subject to the last sentence of this Section
7.1, the warranties, representations and covenants of the Company and the
Investors contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and shall in no way be limited,
diminished or affected by any investigation made by or on behalf of the
Investors. This Agreement, including the representations, warranties and
covenants made herein, will terminate on the closing of a Qualified IPO (as
such term is defined in the Restated Certificate).
7.2 Transfer of Successors and Assigns. 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 hereto. This Agreement may
not be assigned by any party hereto without the prior written consent of the
other parties to this Agreement; provided, however, that this Agreement may
be assigned to any affiliate of an Investor or any subsequent holder of any
Shares. Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective permitted
successors and assigns any rights, remedies, obligations, or liabilities
under or by reason of this Agreement, except as expressly provided in this
Agreement.
7.3 Governing Law. It is the intention of the parties that the internal
laws of the State of New York, as such laws are applied to agreements between
New York residents entered into and to be performed entirely within New York,
shall govern this Agreement in all respects, whether or not all parties
hereto are residents of New York.
7.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.5 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.
7.6 Notices .
(a) All notices, requests, demands and other communications under this
Agreement or (i) in connection herewith shall be given to or made upon (i)
the Investors at each such Investors address set forth on Schedule I with a
copy to Proskauer Rose LLP, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000,
attention: Xxxx X. Xxxxxxx, Esq.; and (ii) the Company at 000 Xxxx 00xx
Xxxxxx, 0xx Xxxxx, Xxx Xxxx, XX 00000, attention: Chief Executive Officer,
with a copy to Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000-0000, attention: Xxxx X. Xxxxxx, Esq.
(b) All notices, requests, demands and other communications given or
made in accordance with the provisions of this Agreement shall be in writing,
and shall be sent by airmail, return receipt requested, or by facsimile with
confirmation of receipt, and shall be deemed to be given or made when receipt
is so confirmed.
(c) Any party may, by written notice to the Company, alter its address
or respondent, and such notice shall be considered to have been given three
(3) days after the airmailing or faxing thereof.
7.7 Expenses. Each of the Company and the Investors shall bear their
own expenses incurred with respect to this Agreement, the Related Documents
and the transactions contemplated hereby and thereby; provided, however, the
Company will pay at the Closing and
from time to time thereafter the reasonable out-of-pocket expenses of the
Investors, including, without limitation, the reasonable fees and expenses of
counsel to the SBIC Investors, attributable to the negotiation, execution,
delivery, amendment or enforcement of this Agreement, the Related Documents or
the transactions contemplated hereby, in any case, in an amount not to exceed
$100,000.
7.8 Indemnification. Notwithstanding anything herein to the contrary,
the Company agrees to indemnify each Investor and each officer, director,
employee, agent, partner, stockholder and affiliate of each Investor
(collectively, the "Indemnified Parties") for, and hold each Indemnified
Party harmless from and against: (i) any and all damages, losses, claims and
other liabilities of any and every kind, including, without limitation,
judgments and costs of settlement, and (ii) any and all out-of-pocket costs
and expenses of any and every kind, including, without limitation, reasonable
fees and disbursements of counsel for such Indemnified Parties (all of which
expenses periodically shall be reimbursed as incurred), in each case, arising
out of or suffered or incurred in connection with any of the following: (a)
any misrepresentation or any breach of any warranty made by the Company
herein or in any of the other covenant or agreement made by the Company
herein or in any of the other Related Documents, (b) any breach or
non-fulfillment by the Company of any Related Documents, (c) any claim
relating to or arising out of a violation of applicable federal or state
securities laws by the Company in connection with the sale of the Shares by
the Company to any such Investor other than any such claim resulting from,
arising out of, or relating to, any gross negligence or willful misconduct on
the part of any such Investor and (d) any failure by the Company to use the
proceeds from the sale of the Shares as specified herein.
7.9 Attorneys' Fees. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of this Agreement
or any Related Document, the prevailing party shall be entitled to reasonable
attorneys' fees, costs and necessary disbursements in addition to any other
relief to which such party may be entitled as determined by such court,
equity or arbitration proceeding.
7.10 Amendments and Waivers. Any term of this Agreement may be amended
only with the written consent of the Company and the holders of a majority of
the Common Stock issued or issuable upon conversion of the Series C Preferred
Stock. Any amendment or waiver effected in accordance with this Section 7.10
shall be binding upon each of the Investors and each transferee of the Shares
(or the Common Stock issuable upon conversion of the Series C Preferred
Stock), each future holder of all such securities and the Company.
7.11 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, portions of such provisions, or
such provisions in their entirety, to the extent necessary, shall be severed
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.
7.12 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any holder of any of the Shares, upon any breach
or default of the Company under this Agreement shall impair any such right,
power or remedy of such holder nor shall it be construed to be a waiver of
any such breach or default, or an acquiescence therein, or of or in any
similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval
of any kind or character on the part of any holder of any breach or default
under this Agreement, or any waiver on the part of any holder of any
provisions or conditions of this agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
holder shall be cumulative and not alternative.
7.13 Entire Agreement. This Agreement and the documents referred to
herein constitute the entire agreement between the parties hereto pertaining
to the subject matter hereof, and any and all other written or oral
agreements existing between the parties hereto are expressly canceled.
7.14 California Corporate Securities Law. THE SALE OF THE SECURITIES
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF
SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS AN EXEMPTION FROM
SUCH QUALIFICATION IS AVAILABLE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT
ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR SUCH
EXEMPTION BEING AVAILABLE.
7.15 Further Assurances. Upon request of any of the Investors, all
parties hereto agree to promptly execute and deliver all such other
instruments and take all such other actions as any Investor may reasonably
request from time to time in order to effectuate and carry out the purposes,
privileges, restrictions, rights and duties of the parties and the other
provisions of this Agreement and the Related Documents.
7.16 Specific Performance. The parties hereby declare that it is
impossible to measure in money the damages which will accrue to a party
hereto by reason of a failure to perform any of the obligations under this
Agreement and that a breach hereof shall cause irreparable injury and, in
addition to any other right or remedy available to the parties hereto at law
or in equity, any injured party hereunder shall be entitled to enforcement by
court injunction or specific performance of the obligations of the parties
hereunder, without the necessity for posting a bond. Notwithstanding the
foregoing sentence, nothing herein shall be construed as prohibiting any
injured party hereunder from also pursuing any other rights or remedies for
such breach or threatened breach, including receiving damages and attorneys'
fees. The election of any remedy shall not be construed as a waiver on the
part of any injured party hereunder of any right such party might otherwise
have at law or in equity, which rights and remedies shall be cumulative.
7.17 Understanding Among Investors. The decision of each Investor to
purchase Shares pursuant to this Agreement has been made by such Investor
independently of any other Investor and independently of any statements or
opinions as to the condition (financial or otherwise) of the Company which
may have been made or given by any other Investor or by any agent or employee
of any other Investor. Each Investor acknowledges that no other Investor has
acted as agent for such Investor in connection with making its investment
hereunder and that no other Investor will be acting as agent of such Investor
in connection with monitoring its investment hereunder.
7.18 Publicity. Except as may be required by applicable law, the Company
shall not use the name of, or make reference to, any Investor or any of its
affiliates in any press release or in any public manner without such
Investor's prior written consent.
IN WITNESS WHEREOF, the parties hereto have executed this Series B and C
Senior Preferred Stock Purchase Agreement with the intent and agreement that the
same shall be effective as of the day and year first written above.
COMPANY:
Address: ARBINET HOLDINGS, INC.
00 Xxxxxxxxx Xxxxxx, 00 Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attention: CEO
/s/ Xxxx Xxxxxxxxx
--------------------------------------------
By: Xxxx Xxxxxxxxx
Title: Chairman
INVESTORS:
Address: X.X. XXXXXX INVESTMENT CORPORATION
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000 /s/ Xxxx X. Xxxxxxxxxx
Fax: (000) 000-0000 --------------------------------------------
Attention: Xxxx X. Xxxxxxxxxx By: Xxxx X. Xxxxxxxxxx
Title: Vice President
SIXTY WALL STREET SBIC FUND, L.P.
By: Sixty Wall Street SBIC Corporation, its
Address: general partner
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000 /s/ Xxxx X. Xxxxxxxxxx
Fax: (000) 000-0000 --------------------------------------------
Attention: Xxxx X. Xxxxxxxxxx By: Xxxx X. Xxxxxxxxxx
Title: Vice President
CB CAPITAL INVESTORS, L.P.
Address:
000 Xxxxxxx Xxxxxx By: CB Capital Investors, Inc., its General
00xx Xxxxx Xxxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000 By: /s/ Xxxxxxxx X. Xxxxx
Attention: Xxxxxx Xxxxx ----------------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Executive Partner
Signature Page to Series B and C Senior Preferred Stock Purchase Agreement.
Address: BANCBOSTON VENTURES INC.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Fax: (000) 000-0000 /s/ Xxxxx X. Xxxxxxx
--------------------------------------------
By: Xxxxx X. Xxxxxxx
Title: Vice President
BAYVIEW 99 I, LP
Address: By: BAYVIEW 99 GP, LLC, its General Partner
Fax: (000) 000-0000
Attention: By: /s/ Xxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxx
Title: Authorized Signatory
BAYVIEW 99 II, LP
Address: By: BAYVIEW 99 GP, LLC, its General Partner
Fax: (000) 000-0000
Attention: By: /s/ Xxxxx X. Xxxxx
----------------------------------------
Name: Xxxxx X. Xxxxx
Title: Authorized Signatory
Address:
Xxxxx Xxxx
Xxxxx Xxxxx, XX 00000
Fax: (000) 000-0000 /s/ Xxxxxxx Xxxxxxxxxx
--------------------------------------------
Xxxxxxx Xxxxxxxxxx
Address:
000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000 /s/ Xxxxxx Xxxxxx
Fax: (000) 000-0000 --------------------------------------------
Xxxxxx Xxxxxx
Signature Page to Series B and C Senior Preferred Stock Purchase Agreement.
Address: GATEHOUSE INVESTORS, LLC
00 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000-0000 By: /s/ Xxxx Xxxxxx
Attention: Xxxx Xxxxxx ----------------------------------------
Fax: (000) 000-0000 Name: Xxxx Xxxxxx
Title: Managing Member
Address: MOMENTUM INVESTMENTS LLC
c/o Deutsche Bank Xxxx Xxxxx
Attention: Xxxxxxx Xxxx Xxxxxx
0000 Xxxxxx Xxxxxx, 17 Floor By: /s/ Xxxxxxx Xxxx Xxxxxx
Xxxxxxxxxxxx, Xx 00000 ----------------------------------------
Fax: (000) 000-0000 Name: Xxxxxxx Xxxx Xxxxxx
Title:
Address:
c/o FAC Equities/First Albany
Exchange Place
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000-0000 /s/ Xxxxx Xxxx
Fax: (000) 000-0000 --------------------------------------------
Xxxxx Xxxx
Address:
00 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000-0000 /s/ Xxx Xxxxxxx
Fax: (000) 000-0000 --------------------------------------------
Xxx Xxxxxxx
Address: BELFREY PARTNERS, XX
Xxxxxxx Partners, LP
c/o US Bancorp Xxxxx Xxxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000 By: /s/ Xxxx Xxxxxx
Fax: (000) 000-0000 ----------------------------------------
Attention: Xxxx Xxxxxx, General Name: Xxxx Xxxxxx
Partner Title: General Partner
Signature Page to Series B and C Senior Preferred Stock Purchase Agreement.
Address: AUGUSTA PARTNERS
By: /s/ Xxxx X. Xxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxx
Title: General Partner
OTHER INVESTORS
Address: COMMUNICATIONS VENTURES III, L.P.,
By its General Partner Communications
Ventures III, LLC
000 Xxxxxxxx Xxx., Xxxxx 000
Xxxx Xxxx, XX 00000
Attention: Xxxxxx X. Van der Meer By: /s/ Xxxxxx X. Van der Meer
Fax: (000) 000-0000 ----------------------------------------
Name: Xxxxxx X. Van der Meer
Title: Manager
COMMUNICATIONS VENTURES III CEO &
Address: ENTREPRENEURS' FUND, L.P.,
By its General Partner Communications
Ventures III, LLC
000 Xxxxxxxx Xxx., Xxxxx 000
Xxxx Xxxx, XX 00000
Attention: Xxxxxx Van der Meer By: /s/ Xxxxxx X. Van der Meer
Fax: (000) 000-0000 ----------------------------------------
Name: Xxxxxx X. Van der Meer
Title: Manager
Address: INTERNET CAPITAL GROUP, INC.
800 The Safeguard Building
000 Xxxxx Xxxx Xxxxx
Xxxxx, XX 00000 By: /s/ Xxxxxxx X. Xxxxxxxxx
Attention: Xxxxxxx X. Xxxxxxxxx ----------------------------------------
Fax: (000) 000-0000 Name: Xxxxxxx X. Xxxxxxxxx
Title:
Signature Page to Series B and C Senior Preferred Stock Purchase Agreement.
BEDROCK CAPITAL PARTNERS I, L.P.
Address: By: BEDROCK GENERAL PARTNER I, LLC
One Boston Place By: /s/ Xxxxx X. Xxxxx
Suite 3310 ----------------------------------------
Xxxxxx, XX 00000 Name: Xxxxx X. Xxxxx
Title: Managing Member
Signature Page to Series B and C Senior Preferred Stock Purchase Agreement.
VBW EMPLOYEE BEDROCK FUND, L.P.
Address: By: BEDROCK GENERAL PARTNER I, LLC
One Boston Place By: /s/ Xxxxx X. Xxxxx
Suite 3310 ----------------------------------------
Xxxxxx, XX 00000 Name: Xxxxx X. Xxxxx
Title: Managing Member
CREDIT SUISSE FIRST BOSTON BEDROCK FUND,
L.P.
By: BEDROCK GENERAL PARTNER I, LLC, its
Address: Attorney in Fact
One Boston Place By: /s/ Xxxxx X. Xxxxx
Suite 3310 ----------------------------------------
Xxxxxx, XX 00000 Name: Xxxxx X. Xxxxx
Title: Managing Member
Signature Page to Series B and C Senior Preferred Stock Purchase Agreement.
SCHEDULE I
INVESTORS
-------------------------------------------------------------------------------------------------------------------
Name and Address No. of Shares of Series B No. of Shares of Series C Aggregate
of Each Investor Preferred Stock Being Preferred Stock Being Purchase
Purchased Purchased Price
-------------------------------------------------------------------------------------------------------------------
X. X. Xxxxxx Investment Corporation 2,655,789 2,655,789 $6,749,954.19
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxxxxxxx
Telecopy: (000) 000-0000
With a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq
Telecopy: (000) 000-0000
-------------------------------------------------------------------------------------------------------------------
Sixty Wall Street SBIC Fund, L.P. 295,088 295,088 $749,994.91
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxxxxxxx
Telecopy: (000) 000-0000
With a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq
Telecopy: (000) 000-0000
-------------------------------------------------------------------------------------------------------------------
CB Capital Investors, L.P. 2,950,877 2,950,877 $7,499,949.11
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxx
Telecopy: (000) 000-0000
With a copy to:
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
-------------------------------------------------------------------------------------------------------------------
BancBoston Ventures Inc. 1,967,265 1,967,265 $5,000,000
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
-------------------------------------------------------------------------------------------------------------------
Communications Ventures III L.P. 1,592,546 1,592,546 $4,047,615.44
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Attention: Xxxxxx Van der Meer
Telecopy: (000) 000-0000
-------------------------------------------------------------------------------------------------------------------
Communications Ventures III 79,612 79,612 $202,342.52
CEO & Intrepreneur's Fund L.P.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Attention: Xxxxxx Van der Meer
Telecopy: (000) 000-0000
-------------------------------------------------------------------------------------------------------------------
Bedrock Capital Partners I, L.P. 1,552,917 1,552,917 $3,946,893.85
Xxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxx. 00000
Attention: [____________________]
Telecopy: (617) [_______________]
-------------------------------------------------------------------------------------------------------------------
VBW Employee Bedrock Fund, L.P. 54,178 54,178 $137,698.80
Xxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxx. 02108
Attention: [____________________]
Telecopy: (617) [_______________]
-------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston 65,063 65,064 $165,365.39
Bedrock Fund, L.P.
Xxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxx. 00000
Attention: [____________________]
Telecopy: (617) [_______________]
-------------------------------------------------------------------------------------------------------------------
Internet Capital Group, Inc. 491,812 491,812 $1,249,989.44
800 The Safeguard Building
000 Xxxxx Xxxx Xxxxx
Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Telecopy: (000) 000-0000
-------------------------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxxxxxxx 19,672 19,672 $49,997.46
Xxxxx Xxxx
Xxxxx Xxxxx, XX 00000
Telecopy: (000) 000-0000
-------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxx 19,672 19,672 $49,997.46
000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
-------------------------------------------------------------------------------------------------------------------
Bayview 99 I, L.P. 53,278 53,278 $135,410.09
-------------------------------------------------------------------------------------------------------------------
Bayview 99 II, L.P. 45,086 45,086 $114,589.31
-------------------------------------------------------------------------------------------------------------------
Gatehouse Investors, LLC 49,181.5 49,181.5 $124,999.15
00 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
-------------------------------------------------------------------------------------------------------------------
Momentum Investments LLC 49,181.5 49,181.5 $124,999.15
c/o Deutsche Bank Xxxx Xxxxx
Attention: Xxxxxxx Xxxx Xxxxxx
0000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
-------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxx 9,836 9,836 $24,999.83
c/o FAC Equities/First Albany
Exchange Place
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
-------------------------------------------------------------------------------------------------------------------
Xxx Xxxxxxx 9,836 9,836 $24,999.83
00 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
-------------------------------------------------------------------------------------------------------------------
Belfrey Partners, L.P. 9,836 9,836 $24,999.83
c/o US Bancorp Xxxxx Xxxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxxx
-------------------------------------------------------------------------------------------------------------------
Augusta Partners L.P. 9,836 9,836 $24,999.83
-------------------------------------------------------------------------------------------------------------------
TOTALS 11,980,561 11,980,562 $30,449,795.59
-------------------------------------------------------------------------------------------------------------------
Signature Page to Series B and C Senior Preferred Stock Purchase Agreement.
EXHIBIT A
COMPANY'S AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
EXHIBIT B
SCHEDULE OF EXCEPTIONS
EXHIBIT C
COMPANY'S STOCKHOLDERS
EXHIBIT D
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
EXHIBIT E
AMENDED AND RESTATED CO-SALE AGREEMENT
EXHIBIT F
AMENDED AND RESTATED VOTING AGREEMENT
EXHIBIT G
SERIES A-2 RESTRUCTURING AGREEMENT
EXHIBIT H
OPINION OF PAUL, HASTINGS, XXXXXXXX & XXXXXX LLP
EXHIBIT I
BY-LAWS
EXHIBIT J
EMPLOYEE PROPRIETARY INFORMATION
AND
INVENTIONS AGREEMENT
EXHIBIT K
FOUNDATION LIMITED PARTNER CERTIFICATE
EXHIBIT L
MANAGEMENT RIGHTS AGREEMENT
EXHIBIT M
REGULATORY COMPLIANCE SIDE LETTER
