Exhibit 10.10
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
This SERIES C PREFERRED STOCK PURCHASE AGREEMENT (this "AGREEMENT") is
made as of March 7, 2000, by and between FREEI NETWORKS, INC., a Washington
corporation (the "COMPANY"), and the Investors listed on SCHEDULE I hereto (the
"Investors").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF STOCK
1.1 SALE AND ISSUANCE OF SERIES C STOCK
(a) The Company has adopted and filed with the Secretary of
State of the State of Washington the Certificate of Designation with the
designation of the Series C Convertible Preferred Stock (the "SERIES C STOCK")
in the form attached hereto as EXHIBIT A (the "CERTIFICATE OF DESIGNATION").
(b) Subject to the terms and conditions of this Agreement,
each Investor agrees severally to purchase, the number of shares listed on
Schedule I, and the Company agrees to sell and issue to each Investor, at the
Closing (as defined in Section 1.2(a)) a total of 2,545,430 shares of Series C
Stock at $19.643052 per share, for a total purchase price of $50,000,000.00.
Each Investor's purchase price and number of acquired shares of Series C Stock
are listed on Schedule I hereto which is incorporated herein by this reference.
1.2 CLOSING
(a) The purchase and sale of the Series C Stock (the
"Closing") shall take place at the offices of Summit Law Group, PLLC, 0000
Xxxxxxxx Xxxxxx X., Xxxxx 000, Xxxxxxx Xxxxxxxxxx 00000, after satisfaction of
the conditions set forth in Sections 4 and 5 on a date mutually acceptable to
the Company and the Investors, but in no event later than March 10, 2000.
(b) At the Closing, the Company shall deliver to the Investors
certificates representing 2,545,430 shares of Series C Stock against payment to
the Company of the purchase price therefor by wire transfer of funds or a bank
check payable to the Company's order. The certificates and the purchase price
shall be as indicated on Schedule I.
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2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Investors that,
except as set forth on a Schedule of Exceptions attached hereto as EXHIBIT B:
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION
The Company is a corporation duly organized and validly existing under
the laws of the State of Washington and has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement and the Investor Rights Agreement as amended by the First and
Second Amendments to Investor Rights Agreement, to issue and sell the Series C
Stock and the Common Stock issuable upon conversion thereof (the "CONVERSION
SHARES"), to carry out its obligations under this Agreement, the Investor Rights
Agreement, the Articles of Incorporation and the Certificate of Designation and
to carry on its business as presently conducted and as recently proposed to be
conducted. The Company is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure to so qualify would have a
material adverse effect on its business or properties.
2.2 CAPITALIZATION
The authorized capital stock of the Company consists of the preferred
stock, common stock and rights described in paragraphs (a), (b) and (c) below.
(a) PREFERRED STOCK
There are 10,000,000 shares of preferred stock authorized, 4,812,074 of
which have been designated as Series A Stock, all of which is outstanding,
1,552,655 of which have been designated as Series B Stock, all of which is
outstanding and 2,545,430 of which have been designated as Series C Stock, none
of which is outstanding. The rights, privileges, and preferences of the
preferred stock generally and of the Series A, Series B and Series C Stock are
as stated in the Company's Articles of Incorporation, as amended, and the
Certificate of Designation.
(b) COMMON STOCK
As of Closing, there will be 200,000,000 shares of Common Stock
authorized, 26,879,000 shares of which are currently outstanding. Of the
authorized but unissued Common Stock, 9,624,148 shares are reserved for issuance
upon the conversion of the Series A Stock, 3,105,310 are reserved for issuance
upon the conversion of the Series B Stock and 2,545,430 will be reserved for
issuance upon conversion of the Series C Stock; 2,879,000 shares are reserved by
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board action for issuance upon the exercise of warrants granted to certain
investors (the "First Round Investors"); and 8,421,128 shares are reserved for
issuance upon the exercise of stock options granted or to be granted under the
Company's stock option plan (the "OPTION PLAN"); provided, however, that this
number includes 331,550 shares that have reserved by board action for issuance
upon the exercise of warrants granted to Lucent Technologies f/k/a Ascend
Communications, Inc. ("Lucent"); and 307,974 shares that have been reserved by
board action for issuance upon the exercise of warrants granted to Pacific Crest
Securities Inc. pursuant to an engagement letter executed March 16, 1999.
(c) RIGHTS
Except for the conversion privileges of the Series A Stock and Series B
Stock and other rights, privileges and agreements contemplated for the Series C
Stock pursuant to this Agreement, and as set forth in subsection 2.2(b), there
are not outstanding any options, warrants, subscriptions, rights (including
conversion or preemptive rights or first refusal rights), agreements for the
purchase or acquisition from the Company or by the Company of any shares of the
Company's capital stock or securities convertible into its capital stock or, to
the Company's knowledge, any voting agreements with respect to the Company's
securities.
2.3 SUBSIDIARIES
The Company does not presently own or control, directly or indirectly,
any interest in any other corporation, association, partnership or other
business or investment entity.
2.4 AUTHORIZATION
All corporate action necessary for the authorization, execution, and
delivery by the Company of this Agreement and the other agreements and
transactions provided for herein, the performance of all obligations of the
Company hereunder and thereunder, and the authorization, issuance, and delivery
of the Series C Stock and the Conversion Shares have been taken or will be taken
before the Closing. This Agreement and the other agreements provided for herein
constitute valid and legally binding obligations of the Company, enforceable in
accordance with their terms, subject to (a) the laws of bankruptcy and the laws
affecting creditors' rights generally, (b) the effect of public policy on the
indemnification provisions of Section 2.9 of the Investor Rights Agreement, and
(c) the availability of equitable remedies.
2.5 VALID ISSUANCE OF PREFERRED AND COMMON STOCK
(a) The Series C Stock, when issued, sold, and delivered in
accordance with the terms hereof for the consideration expressed herein, will be
duly and validly issued, fully
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paid and nonassessable, and free of any liens or encumbrances created by the
Company. The Conversion Shares have been duly and validly reserved for issuance
and, upon issuance in accordance with the terms of the Articles of
Incorporation, as amended, and the Certificate of Designation, will be duly and
validly issued, fully paid and nonassessable, and free of any liens or
encumbrances created by the Company.
(b) The outstanding shares of Common Stock (i) have been duly
authorized and validly issued to the persons listed on the Schedule of
Exceptions, (ii) are fully paid and nonassessable, and (iii) were issued in
compliance with all applicable state and federal laws concerning the issuance of
securities.
2.6 GOVERNMENTAL CONSENTS; COMPLIANCE WITH LAWS
No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, regional,
state or local governmental authority on the part of the Company is required in
connection with the consummation of the transactions contemplated by this
Agreement, except for filings, if any, required pursuant to applicable state
securities laws, which filings will be made within the required statutory
period, and the filing pursuant to Regulation D of the Securities and Exchange
Commission (the "SEC"), which filing will be effected within 15 days of the
Closing. The Company is not in violation of any applicable statute, rule,
regulation, order or restriction of any domestic or foreign government or any
instrumentality or agency thereof in respect of the conduct of its business or
the ownership of its properties which violation would materially and adversely
affect the business, assets, financial condition, or operations of the Company.
2.7 LITIGATION
There is no action, suit, claim, proceeding or investigation pending
or, to the Company's knowledge, currently threatened against the Company that
questions the validity of this Agreement or the other agreements provided for
herein or the right of the Company to enter into any of such agreements, or to
consummate the transactions provided for hereby or thereby, or that could,
individually or in the aggregate, have a material adverse effect on the
business, assets, financial condition or operations of the Company, or any
change in the current equity ownership of the Company, nor is the Company aware
that there is any basis for the foregoing. The foregoing includes, without
limitation, actions pending or threatened (or any basis therefor known to the
Company) involving the prior employment of the Company's employees, their use in
connection with the Company's business of any information or techniques
allegedly proprietary to any of their former employers, or their obligations
under any agreements with prior employers. There is no action, suit, proceeding
or investigation by the Company currently pending or that the Company intends to
initiate. The Company is not a party or subject to the
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provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality that could have a material adverse effect
on its business, assets, financial condition or operations.
2.8 INTELLECTUAL PROPERTY
To its knowledge, the conduct of the Company's business does not
conflict with or infringe on the patents, trademarks, service marks, trade
names, copyrights, trade secrets, proprietary rights and processes (the
"INTELLECTUAL PROPERTY") of others. To its knowledge, the Company has sufficient
title to or rights to use all Intellectual Property necessary for the conduct of
its business. The Company has not granted any options, licenses or agreements of
any kind relating to any of its Intellectual Property, nor is the Company bound
by or a party to any options, licenses or agreements with respect to the
Intellectual Property of any other person or entity. The Company is not aware
that any of its employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with their duties to the Company or that would conflict with the
Company's business. The execution or delivery of this Agreement, the carrying on
of the Company's business by the employees of the Company, and the conduct of
the Company's business as proposed, will not, to the Company's knowledge,
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any contract, covenant or instrument under which
any employee is now obligated. The Company does not believe it is or will be
necessary to use any inventions, trade secrets or proprietary information of any
of its employees made prior to their employment by the Company, except for
inventions, trade secrets or proprietary information that have been assigned to
the Company.
2.9 COMPLIANCE WITH OTHER INSTRUMENTS
The Company is not in violation of any provision of its Articles of
Incorporation or Bylaws or in violation or default of any provision of any
instrument, judgment, order, writ, decree or contract to which it is a party or
by which it is bound, or in violation of any provision of federal or state
statute, rule or regulation applicable to the Company, which violation or
default would have a material adverse effect on its business, assets, financial
condition or operations. The execution, delivery, and performance of this
Agreement and the consummation of the transactions provided for herein will not
result in any such violation or default or require any consent under or be in
conflict with or constitute, with or without the passage of time and giving of
notice, either a violation or default under any such provision, instrument,
judgment, order, writ, decree or contract or an event which results in the
creation of any lien, charge or encumbrance upon any assets of the Company which
violation, default, lien, charge
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or encumbrance, individually or in the aggregate with any other such violation,
default, lien, charge or encumbrance would have a material adverse effect on its
business, assets, financial condition or operations.
2.10 AGREEMENTS; ACTION
(a) There are no agreements, understandings, instruments,
contracts or proposed transactions to which the Company is a party or by which
it is bound that involve obligations or payments to the Company in excess of
$200,000.
(b) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) made any loans or advances to any person, other than
in the ordinary course of business, (iii) sold, exchanged or otherwise disposed
of any of its assets or rights, other than in the ordinary course of business,
(iv) redeemed or obligated itself to redeem any of its capital stock (other than
the Series A Stock and Series B Stock), or (v) incurred any indebtedness for
money borrowed or incurred any other liabilities in excess of $200,000.
(c) Except for agreements explicitly contemplated hereby,
there are no agreements, understandings or proposed transactions between the
Company and any of its officers, directors, affiliates or any affiliate thereof.
2.11 DISCLOSURE
The Company has fully provided the Investors and its attorneys and
agents with all the information in the Company's possession that they have
requested for deciding whether to purchase the Series C Stock. This Agreement,
the Exhibits hereto and all other documents delivered by the Company to the
Investors or its attorneys or agents in connection herewith or therewith or with
the transactions provided for herein or therein, do not contain any untrue
statement of a material fact nor omit to state a material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading. There are no facts
which (individually or in the aggregate) materially adversely affect the
business, assets, financial condition or operations of the Company that have not
been set forth in this Agreement, the Exhibits hereto or other documents
delivered to the Investors or its attorneys or agents in connection herewith.
2.12 REGISTRATION RIGHTS
Except as provided in the Investor Rights Agreement, as amended by the
First and Second Amendments to Investor Rights Agreement, the Company has not
granted or agreed to grant any registration rights to any person or entity.
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2.13 CORPORATE DOCUMENTS
The Certificate of Designation is, or at the Closing will be, in the
form attached hereto as EXHIBIT A hereto. The Articles of Incorporation of the
Company, as amended, are in the form attached hereto as EXHIBIT C hereto. The
Bylaws of the Company are in the form attached hereto as EXHIBIT D.
2.14 TITLE TO PROPERTY AND ASSETS; CONDITION OF ASSETS
The Company owns its property and assets free and clear of all
mortgages, liens, loans and encumbrances, except liens and encumbrances that
arise in the ordinary course of business and do not materially impair the
Company's ownership or use of such property or assets. With respect to the
property and assets it leases, the Company is in compliance with such leases in
all material respects and holds a valid leasehold interest free of any liens,
claims or encumbrances. All facilities and all material machinery, equipment,
fixtures, vehicles, and other properties owned, leased or used by the Company
are in good operating condition and repair and are reasonably fit and usable for
the purposes for which they are being used.
2.15 LICENSES
The Company has all governmental licenses and permits (federal, state,
foreign, and local) the failure to obtain which would have a material adverse
effect on its business, assets, financial condition or operations, and such
licenses and permits are in full force and effect. No violations have been
communicated to the Company in respect of such licenses or permits and no
proceeding is pending or, to the Company's knowledge, threatened toward the
revocation of any of such licenses or permits.
2.16 FINANCIAL STATEMENTS
The Company has delivered to the Investors its unaudited balance sheets
as at December 31, 1999 and December 31, 1998, and unaudited statements of
income and cash flows for each of the years ended December 31, 1999 and December
31, 1998, respectively (collectively, the "FINANCIAL STATEMENTS"). The Financial
Statements, together with the notes thereto, are complete and correct in all
material respects, have been prepared consistent with methods used in prior
years and present fairly the financial condition and position of the Company as
of the dates and for the periods indicated.
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2.17 UNDISCLOSED LIABILITIES
Except as and to the extent reflected or reserved against in the
Financial Statements, the Company did not have, as of the respective dates of
the Financial Statements, any material debts, liabilities or obligations of any
nature, whether accrued, absolute, contingent or otherwise, and whether due or
to become due, including, without limitation, liabilities or obligations on
account of taxes or other governmental charges or penalties, interest or fines
thereon or in respect thereof required by generally accounting principles to be
shown or reflected thereon that were not so shown or reflected. The Company does
not know and does not have any reasonable grounds to know of any basis for any
assertion against the Company of any material debt, liability or obligation of
any nature or in any amount not fully reflected or reserved against in the
Financial Statements or disclosed in this Agreement.
2.18 CHANGES
Since December 31, 1999, there has not been:
(a) Any change in the business, assets, financial condition or
operations of the Company, except changes in the ordinary course of business,
none of which has been materially adverse, and all of which in the aggregate
have not been materially adverse, to the Company;
(b) Any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the business, assets, financial
condition or operations of the Company;
(c) Any material increase in the compensation or rate of
compensation or commissions payable or to become payable by the Company to any
of its directors, officers, salaried employees, sales persons or agents, or any
hiring of any employee at a salary in excess of $150,000 per annum, or any
payment in excess of $50,000 of any bonus, profit-sharing amount or other
extraordinary compensation to any employee, or any material change in any then
existing bonus, profit-sharing, retirement or other similar plan, agreement or
arrangement, or any adoption of or entry into of any new bonus, profit-sharing,
group life or health insurance, or other similar plan, agreement or arrangement;
(d) Any material change in the accounting methods or practices
followed by the Company;
(e) Any material debt, obligation or liability (whether
absolute or contingent) incurred by the Company (whether or not presently
outstanding) except (i) current liabilities incurred, and obligations under
agreements entered into, in the ordinary course of business and
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(ii) obligations or liabilities entered into or incurred in connection with the
execution of this Agreement;
(f) Any sale, lease, abandonment or other disposition by the
Company of any real property or, other than in the ordinary course of business,
of any equipment or other operating properties or any sale, assignment,
transfer, license or other disposition by the Company of any Intellectual
Property or other intangible asset;
(g) Any labor trouble, strike or any other occurrence, event
or condition of any similar character that materially and adversely affects or
may materially and adversely affect the business, assets, financial condition or
prospects of the Company;
(h) Any change, except in the ordinary course of business, in
the contingent obligations of the Company by way of guaranty, endorsement,
indemnity, warranty or otherwise;
(i) Any waiver by the Company of a valuable right or a
material debt owed to it except in the ordinary course of business;
(j) Any direct or indirect loans made by the Company to any
shareholder, employee, officer or director of the Company, other than advances
made in the ordinary course of business; or
(k) Any declaration or payment of any dividend or other
distribution of the assets of the Company.
2.19 EMPLOYEE BENEFIT PLANS
The Company does not have any "employee benefit plan" as defined in the
Employee Retirement Income Security Act of 1974, as amended.
2.20 TAXES
The Company has filed all tax returns (federal, state, foreign, and
local) required to be filed by it and all taxes shown to be due and payable on
such returns or on any assessments received by the Company and all other taxes
(federal, state, foreign, and local) due and payable by the Company on or before
the date hereof have been paid. There are no agreements, waivers or other
arrangements providing for an extension of time with respect to the assessment
of any tax or deficiency against the Company, nor are there any actions, suits,
proceedings, investigations or claims now pending against the Company in respect
of any tax or assessment, or, to the Company's knowledge, any matters under
discussion within any federal, state, foreign
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or local authority relating to any taxes or assessments, or any claims for
additional taxes or assessments asserted by any such authority. The provisions
made for taxes in the Financial Statements are sufficient for the payment of all
unpaid federal, state, foreign, and local taxes of the Company for all periods
prior to such date.
2.21 MINUTES
The minutes of the Company reflect all meetings of directors and
shareholders since the incorporation of the Company and reflect all transactions
referred to in such minutes accurately in all material respects.
2.22 BROKERS OR FINDERS
The Company has not incurred and will not incur, directly or
indirectly, any liability for brokers' or finders' fees, agents' commissions or
other similar charges in connection with this Agreement or the transactions
contemplated hereby.
2.23 EMPLOYEES
The Company has no collective bargaining agreements with any of its
employees. There is no labor union organizing activity ending or, to the
Company's knowledge, threatened with respect to the Company. No employee has any
agreement or contract, written or verbal, regarding his or her employment. To
the Company's knowledge, no employee of the Company, nor any consultant with
whom the Company has contracted, is in violation of any term of any employment
contract, proprietary information agreement, patent disclosure agreement or any
other agreement relating to the right of any such individual to be employed by,
or to contract with, the Company because of the nature of the business to be
conducted by the Company and, to the Company's knowledge, the continued
employment by the Company of its present employees, and the performance of the
Company's contracts with its independent contractors, will not result in any
such violation. The Company has not received any notice alleging that any such
violation has occurred. No employee of the Company has been granted the right to
continued employment by the Company or to any material compensation following
termination of employment with the Company. The Company is not aware that any
officer or key employee, or that any group of key employees, intends to
terminate their employment with the Company, nor does the Company have a present
intention to terminate the employment of any officer, key employee or group of
key employees.
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2.24 ENVIRONMENTAL AND SAFETY LAWS
To its knowledge, the Company is not in violation of any applicable
statute, law or regulation relating to the environment or occupational health
and safety, and, to its knowledge, no material expenditures are or will be
required to comply with any such existing statute, law or regulation.
2.25 OFFERING VALID
Assuming the accuracy of the representations and warranties of the
Investors contained in Section 3 hereof, the offer, sale, and issuance of the
Series C Stock and the Conversion Shares will be exempt from the registration
requirements of the Securities Act of 1933, as amended (the "SECURITIES ACT"),
and will have been registered or qualified (or are exempt from registration and
qualification) under the registration, permit or qualification requirements of
all applicable state securities laws. Neither the Company nor any agent on its
behalf has solicited or will solicit any offers to sell or has offered to sell
or will offer to sell all or any part of the Series C Stock to any person or
persons so as to bring the sale of such Series C Stock by the Company within the
registration provisions of the Securities Act.
2.26 REAL PROPERTY HOLDING CORPORATION
The Company is not a real property holding corporation within the
meaning of Internal Revenue Code Section 897(c)(2) and any regulations
promulgated thereunder.
2.27 INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
None of Xxxxxx XxXxxxxxxx, Xxxxxx Xxxxx, Xxx Xxxxx or Xxx Xxxxxxxxx has
been subject and is not currently subject to any order, judgment or decree, not
subsequently revised, suspended or vacated, of any court or any governmental
agency that could materially adversely affect the business of the Company as
presently conducted or as proposed to be conducted.
3. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each Investor hereby represents and warrants that:
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3.1 AUTHORIZATION
All acts and conditions necessary for the authorization, execution,
delivery, and consummation by the Investor of this Agreement and the other
agreements and transactions contemplated herein have been, or will before the
Closing be, taken, performed, and obtained. This Agreement and the other
agreements contemplated herein constitute valid and legally binding obligations
of the Investor, enforceable in accordance with their terms, subject to (a) the
laws of bankruptcy and the laws affecting creditors' rights generally, (b) the
effect of public policy on the indemnification provisions of Section 2.9 of the
Investor Rights Agreement, and (c) the availability of equitable remedies. The
Investor has full power and authority to execute, deliver, and perform its
obligations under this Agreement and the other agreements contemplated herein
and to own the Series C Stock. The execution, delivery, and performance of this
Agreement and the other agreements contemplated herein and the consummation of
the transactions contemplated hereby and thereby (including the ownership of
Series C Stock) by the Investor does not violate any provision of, or constitute
a material breach of or default under, any term, condition or provision of any
agreement, indenture or other instrument to which the Investor is a party, or by
which it or its properties or assets are bound, or of any order, judgment or
decree against or binding upon the Investor.
3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT
The Series C Stock to be received by the Investor and the Conversion
Shares (collectively, the "SECURITIES") will be acquired for investment for the
Investor's own account and not with a view to the distribution of any part
thereof as such term is used under Section 2(11) of the Securities Act. The
Investor has no present intention of selling, granting any participation in, or
otherwise distributing the Securities in a manner contrary to the Securities
Act, or applicable state securities laws.
3.3 INVESTMENT EXPERIENCE
Each Investor is an investor in securities of companies in the
development stage, qualifies as an "accredited investor" as defined in Rule 501
of Regulation D promulgated by the SEC, and acknowledges that the Securities are
a speculative risk. Each Investor is able to fend for itself in the transactions
contemplated by this Agreement, can bear the economic risk of its investment
(including possible complete loss of such investment) for an indefinite period
of time, and has such knowledge and experience in financial or business matters
that it is capable of evaluating the merits and risks of the investment in the
Securities. Each Investor understands that the Securities have not been
registered under the Securities Act, or under the securities laws of any
jurisdiction, by reason of reliance upon certain exemptions, and that the
reliance of the Company on such exemptions is predicated upon the accuracy of
each Investor's representations and
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warranties in this Section 3. Notwithstanding the foregoing, to the extent an
Investor was formed for the purpose of acquiring such securities, such investor
represents that all members, shareholders or investors within such entity are
"accredited investors" as defined in Rule 501 of Regulation D.
3.4 RESTRICTED SECURITIES
Each Investor understands that the Securities are characterized as
"restricted securities" under the federal securities laws inasmuch as they are
being acquired from the Company in a transaction not involving a public offering
and that, under such laws and applicable regulations, such securities may be
transferred or resold without registration under the Securities Act only in
certain limited circumstances and in accordance with the terms and conditions
set forth in the legend described in Section 3.5. In this connection, the
Investor represents that it is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act.
3.5 LEGENDS
It is understood that the certificates evidencing the Securities may
bear one or all of the following legends:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE LAW, AND NO
INTEREST THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR
OTHERWISE TRANSFERRED UNLESS (i) THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION
INVOLVING SAID SECURITIES OR (ii) SUCH TRANSACTION IS EXEMPT FROM REGISTRATION.
AFTER MARCH 2002, THIS LEGEND WILL BE CANCELED, AND A CERTIFICATE FREE FROM SUCH
LEGEND ISSUED TO THE HOLDER HEREOF UPON COMPLIANCE WITH THE FOLLOWING
CONDITIONS: (a) SURRENDER OF THIS CERTIFICATE TO THIS CORPORATION IN THE MANNER
AND AT THE PLACE DESIGNATED FOR CANCELLATION, (b) A REPRESENTATION BY THE HOLDER
THAT IT HAS BENEFICIALLY HELD THE SECURITIES EVIDENCED BY THIS CERTIFICATE FOR
NOT LESS THAN TWO YEARS, AND THAT IT IS NOT, AND HAS NOT WITHIN THE PRECEDING 90
DAYS BEEN, AN AFFILIATE (AS THAT TERM IS DEFINED FOR PURPOSES OF RULE 144 UNDER
THE ACT OR ANY SUCCESSOR RULE) OF THIS CORPORATION, AND (c) AN UNDERTAKING THAT
IF AT ANY TIME THE HOLDER SHALL AGAIN BECOME AN AFFILIATE OR OTHERWISE CEASE TO
ENJOY FREE TRANSFERABILITY OF SUCH SECURITIES UNDER RULE 144 EITHER
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BY REASON OR CHANGE OF CIRCUMSTANCE OR AMENDMENT OF RULE 144, IT SHALL FORTHWITH
SURRENDER ANY UNLEGENDED CERTIFICATES(S) RECEIVED BY IT IN RESPECT OF THE
SECURITIES EVIDENCED BY THIS CERTIFICATE FOR IMPOSITION OF ANY APPROPRIATE
LEGEND.
THE COMPANY HAS COMMON STOCK AND PREFERRED STOCK AUTHORIZED. THE FULL STATEMENT
OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL
OR OTHER SPECIAL RIGHTS AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS
THEREOF (THE "STATEMENT OF RIGHTS AND PREFERENCES") OF THE SHARES OF EACH SUCH
SERIES OR CLASS OF STOCK IS SET FORTH IN THE ARTICLES OF INCORPORATION AND
CERTIFICATE OF DESIGNATION OF THE COMPANY, AS AT ANY TIME AMENDED, AND ANY
EFFECTIVE STATEMENT OF RELATIVE RIGHTS AND PREFERENCES OF PREFERRED STOCK, ON
FILE IN THE XXXXXX XX XXX XXXXXXXXX XX XXXXX XX XXX XXXXX XX XXXXXXXXXX. THE
COMPANY WILL FURNISH COPIES OF THE STATEMENT OF RIGHTS AND PREFERENCES TO THE
RECORD HOLDER OF THIS CERTIFICATE WITHOUT CHARGE UPON WRITTEN REQUEST TO THE
COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE.
3.6 RESIDENCY
For purposes of the application of state and international securities
laws, each Investor represents that it is a resident of the state or country
indicated on Schedule I hereto.
3.7 ACCESS TO INFORMATION
Each Investor has received and reviewed information about the Company,
and has had an opportunity to discuss the Company's business, management, and
financial affairs with its management and to review the Company's facilities.
Each Investor understands that these discussions, as well as any written
information issued by the Company, were intended to describe the aspects of the
Company's business and prospects that the Company considers material, but were
not necessarily exhaustive. The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 2 of this Agreement or
the right of the Investors to rely thereon.
4. CONDITIONS OF INVESTORS' OBLIGATIONS AT THE CLOSING
The obligations of the Investors under subsection 1.l(b) are subject to
the fulfillment at or before the Closing (unless otherwise specified) of each of
the following conditions, unless waived by the Investors:
14
4.1 REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Company contained in Section
2 shall be true in all material respects on and as of the Closing with the same
effect as though such representations and warranties had been made as of the
date of the Closing.
4.2 PERFORMANCE
The Company shall have performed and complied with all agreements,
obligations and conditions contained in this Agreement that are required to be
performed or complied with by it on or before the Closing.
4.3 COMPLIANCE CERTIFICATE
The President and Chief Executive Officer of the Company, on behalf of
the Company, shall deliver to the Investors at the Closing a certificate that
the conditions specified in Sections 4.1 and 4.2 have been fulfilled and stating
that there has been no material adverse change in the business, assets,
financial condition or operations of the Company from the date of this Agreement
to the time of the Closing.
4.4 QUALIFICATIONS
The offer and sale of the Securities to the Investors pursuant to this
Agreement shall be qualified or exempt from qualification under all applicable
federal and state securities laws.
4.5 PROCEEDINGS AND DOCUMENTS
All corporate and other proceedings in connection with the transactions
contemplated at the Closing and all documents incident thereto, including
evidence of filing the Certificate of Designation with the Secretary of State of
the State of Washington, shall be reasonably satisfactory in form and substance
to the Investors or their counsel, and the Investors or their counsel shall have
received all counterpart original and certified or other copies of such
documents as they may reasonably request.
4.6 INVESTOR RIGHTS AGREEMENT
The Company, the holders of Series A Stock and Series B Stock, and the
Investors shall have entered into a Second Amendment to Investor Rights
Agreement in the form attached hereto as EXHIBIT E (the "INVESTOR RIGHTS
AGREEMENT").
15
4.7 OPINION OF COMPANY COUNSEL
The Investors shall have received from Summit Law Group, PLLC, counsel
for the Company, an opinion, dated as of the Closing, in form and substance
satisfactory to the Investors, to the effect that:
(a) The Company is a corporation, validly existing under the
laws of the State of Washington, and the Company has the requisite corporate
power and corporate authority to conduct its business as now being conducted.
(b) The Company is qualified to do business in any state or
jurisdiction of the United States in which the failure to so qualify would have
a material adverse effect on its business or properties.
(c) The Company has the requisite corporate power and
corporate authority to execute, deliver, and perform this Agreement and the
Investor Rights Agreement, as amended. All corporate action necessary for the
authorization, execution and delivery by the Company of this Agreement and the
Investor Rights Agreement and the authorization, issuance, and delivery of the
Series C Stock being sold hereunder and the Conversion Shares has been taken,
and this Agreement and the Investor Rights Agreement have been duly and validly
authorized, executed, and delivered by the Company and constitute valid and
legally binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as enforceability may be limited or affected
by applicable laws relating to or affecting the enforcement of creditors' rights
and by equitable principles.
(d) The Series C Stock, when issued, sold, and delivered in
accordance with the terms hereof for the consideration expressed herein, will be
duly and validly issued, fully paid, and nonassessable. The Conversion Shares
have been duly and validly reserved for issuance and, upon issuance in
accordance with the terms of the Articles of Incorporation and Certificate of
Designation, will be duly and validly issued, fully paid, and nonassessable.
(e) The authorized capital stock of the Company consists of
the preferred stock, common stock and rights described in paragraphs (i), (ii)
and (iii) below:
(i) Preferred Stock
There are 10,000,000 shares of preferred stock authorized, 4,812,074 of
which have been designated as Series A Stock, all of which is outstanding,
1,552,655 of which have been
16
designated as Series B Stock, all of which is outstanding and 2,545,430 of which
have been designated as Series C Stock, none of which is outstanding.
(ii) Common Stock
As of Closing, there will be 200,000,000 shares of Common Stock
authorized, 26,879,000 shares of which are currently outstanding. Of the
authorized but unissued Common Stock, 9,624,148 shares are reserved for issuance
upon the conversion of the Series A Stock, 3,105,310 are reserved for issuance
upon the conversion of the Series B Stock and 2,545,430 will be reserved for
issuance upon conversion of the Series C Stock; 2,879,000 shares are reserved by
board action for issuance upon the exercise of warrants granted to certain
investors (the "First Round Investors"); and 8,421,128 shares are reserved for
issuance upon the exercise of stock options granted or to be granted under the
Company's stock option plan (the "OPTION PLAN"); provided, however, that this
number includes 331,550 shares that have reserved by board action for issuance
upon the exercise of warrants granted to Lucent Technologies f/k/a Ascend
Communications, Inc. ("Lucent"); and 307,974 shares that have been reserved by
board action for issuance upon the exercise of warrants granted to Pacific Crest
Securities Inc.
pursuant to an engagement letter executed March 16, 1999.
(iii) Rights
Except for the conversion privileges and right of first refusal of the
Series A Stock, Series B Stock and other rights, privileges and agreements
contemplated pursuant to this Agreement or as enumerated in subparagraph
(e)(ii), there are not outstanding any options, warrants, subscriptions, rights
(including conversion or preemptive rights or first refusal rights) agreements
for the purchase or acquisition from the Company or by the Company of any shares
of the Company's capital stock or securities convertible into its capital stock,
or, to such counsel's knowledge, any voting agreements with respect to the
Company's securities.
(f) The rights, privileges, and preferences of the preferred
stock generally and of the Series A, Series B and Series C Stock are as stated
in the Company's Articles of Incorporation, as amended, and the Certificate of
Designation.
(g) Based in part upon the representations of the Investors
and on the facts and circumstances contemplated by this Agreement, and except
that such counsel need give no opinion as to whether information provided to the
Investors was sufficient and assuming that the offer and sale of the Series C
Stock is a discrete transaction and not integrated with any other offering or
sale of securities by the Company, the offer and sale of the Series C Stock to
the Investors pursuant to the terms of this Agreement are exempt from the
registration requirements of Section 5 of the Securities Act.
17
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT THE CLOSING
The obligations of the Company to the Investors under this Agreement are
subject to the fulfillment on or before the Closing of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Investors contained in Section 3
shall be true in all material respects on and as of the Closing with the same
effect as though such representations and warranties had been made as of the
Closing.
5.2 PAYMENT OF PURCHASE PRICE
The Investors shall have delivered the purchase price specified in
subsection 1.1(b) to be delivered at the Closing, in the form of a bank check
payable to the Company's order or bank wire transfer to the Company's designated
account.
5.3 SECURITIES LAWS QUALIFICATION
The offer and sale to the Investors of the Securities shall be qualified or
exempt from qualification under all applicable federal and state securities
laws.
5.4 PERFORMANCE
The Investors shall have performed and complied with all agreements,
obligations, and conditions contained in this Agreement that are required to be
performed or complied with by it on or before the Closing.
6. MISCELLANEOUS
6.1 PRESS RELEASES
The Investors and the Company agree to consult with each other prior to
the dissemination of any press release or public communications concerning this
Agreement, the Investors' Rights Agreement or any ancillary agreement or the
transactions contemplated by this Agreement, the Investors' Rights Agreement or
any ancillary agreement.
18
6.2 USE OF PROCEEDS
The Company shall use the proceeds of the sale of the Series C Stock under
this Agreement as working capital to be used for the development of the Company.
6.3 SURVIVAL OF WARRANTIES
The warranties and representations contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing for a period of two years after Closing.
6.4 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.
Nothing in this Agreement express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement. The Company may not
assign or transfer any of its rights under the Agreement without the consent of
the majority of the Investors, which consent shall not be unreasonably withheld.
6.5 GOVERNING LAW
This Agreement shall be governed by and construed under the laws of the
State of Washington as applied to agreements among Washington residents entered
into and to be performed entirely within the State of Washington.
6.6 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
6.7 TITLES AND SUBTITLES
The titles and subtitles used in this Agreement are for convenience only
and are not to be considered in construing or interpreting this Agreement.
19
6.8 NOTICES
Any and all notices required or permitted to be given to a party pursuant
to the provisions of this Agreement will be in writing and will be effective and
deemed to provide such party sufficient notice under this Agreement on the
earliest of the following: (i) at the time of personal delivery, if delivery is
in person; (ii) at the time of transmission by facsimile, addressed to the other
party at its facsimile number specified herein (or hereafter modified by
subsequent notice to the parties hereto), with confirmation of receipt made by
both telephone and printed confirmation sheet verifying successful transmission
of the facsimile; (iii) one business day after deposit with an express overnight
courier for deliveries within a country, or two business days after such deposit
for international deliveries or (iv) three business days after deposit in mail
by certified mail (return receipt requested) or equivalent for deliveries within
a country.
All notices for international delivery will be sent by facsimile or by
express courier. Any party hereto (and such party's permitted assigns) may be
notice so given change its address for future notices hereunder. Notice shall
conclusively be deemed to have been given in the manner set forth above.
6.9 DUE DILIGENCE EXPENSES; ATTORNEYS' AND ACCOUNTANTS' FEES
The Company shall reimburse at the Closing the reasonable due diligence
costs, including legal and accounting fees and expenses, incurred by the
Investors in an amount not to exceed $15,000. If the parties fail to close the
transactions contemplated by this Agreement, each party shall be responsible for
its own expenses.
6.10 FINDER'S FEES
Each party represents that it neither is, nor will be, obligated for a
finder's fee or commission in connection with this transaction, except as
described in Section 6.1 of the Schedule of Exceptions to this Agreement. Each
Investor agrees, severally, but not jointly, to indemnify and hold the Company
harmless from any liability for any commission or compensation in the nature of
a finder's fee (and the costs and expenses of defending against such liability
or asserted liability) for which such Investor or any of its officers, partners,
employees or representatives is responsible. The Company agrees to indemnify and
hold the Investors harmless from any liability for any commission or
compensation in the nature of a finder's fee (and the costs and expenses of
defending against such liability or asserted liability) for which the Company or
any of its officers, employees or representatives is responsible.
20
6.11 AMENDMENTS AND WAIVERS
After the Closing, any term of this Agreement may be amended and the
observance of any term may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written
consent of the Company and the holders of a majority of the aggregate shares of
Series C Stock and/or the Conversion Shares (excluding shares of Common Stock
that are no longer "restricted securities" under the Securities Act). Any
amendment or waiver effected in accordance with this Section 6.10 shall be
binding upon each holder of any securities purchased under this Agreement at the
time outstanding (including securities into which such securities are
convertible), each future holder of any such securities, and the Company.
6.12 SEVERABILITY
If one or more provisions of this Agreement are held to be unenforceable
under applicable law, such provision shall be excluded from this Agreement, and
the balance of this Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
6.13 ENTIRE AGREEMENT
This Agreement, including the Exhibits attached hereto, and the other
documents delivered at the Closing constitute the full and entire understanding
and agreement between the parties with respect to the subject matter hereof and
supersede all prior agreements with respect to the subject matter hereof.
21
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
COMPANY:
FREEI NETWORKS, INC.
By: __________________________________
Xxx XxXxxxxxxx
President and Chief Executive Officer
000 X. 000xx Xxxxxx, Xxxxx 000
Xxxxxxx Xxx, Xxxxxxxxxx 00000
Fax (000) 000-0000
22
SERIES C INVESTORS:
EAGLE RIVER INVESTMENTS, LLC
BY:_________________________
PRINTED NAME:
TITLE:
SERIES C INVESTORS:
CEDAR GROVE INVESTMENTS, LLC
BY:_________________________
PRINTED NAME:
TITLE:
SERIES C INVESTORS:
CAPITAL RESEARCH AND MANAGEMENT
COMPANY, ON BEHALF OF NEW
ECONOMY FUND
By:_________________________
Printed Name: Xxxxxxx X. Xxxxxx
Title: Secretary
SERIES C INVESTORS: INFOSPACE VENTURE CAPITAL FUND
2000, LLC, BY XXXXXXXXX.XXX,
INC. AS ITS SOLE MEMBER
BY: ________________________
PRINTED NAME: ____________
TITLE: _________________________
SERIES C INVESTORS:
LAKESIDE I
By: ________________________
Printed Name: ____________
Title: ________________________
SERIES C INVESTORS:
DOLCE FREEI, L.L.C.
BY: ________________________
PRINTED NAME: ____________
TITLE: _________________________
SERIES C INVESTORS:
REMO INTERNATIONAL INC.
By: ________________________
Printed Name: ____________
Title: ________________________
SERIES C INVESTORS:
XXXXXX XXXX
--------------------------------
SERIES C INVESTORS:
PPC PARTNERS LLC
By: ________________________
Printed Name: ____________
Title: ________________________
SERIES C INVESTORS:
WASHINGTON MUTUAL
By: ________________________
Printed Name: Xxxxx X. Tall
Title: Vice Chair
SERIES C INVESTORS: INTERNET VENTURES LLC
BY:________________________
PRINTED NAME:
TITLE:
SERIES C INVESTORS: XXXXXXX PARTNERS, L.P.
BY: ________________________
PRINTED NAME:
TITLE:
SERIES C INVESTORS: CLEAR FIR PARTNERS, L.P.
By:________________________
Printed Name:
Title:
SERIES C INVESTORS: XXXX X. XXXXXX
________________________
SERIES C INVESTORS: CASCADE GROUP
By:________________________
Printed Name:
Title:
SERIES C INVESTORS: XXXX XXXXX
________________________
Freei Networks, Inc.
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
Dated
as of
March 7, 2000
TABLE OF CONTENTS
-----------------
PAGE
----
1. PURCHASE AND SALE OF STOCK..................................................................................1
1.1 SALE AND ISSUANCE OF SERIES C STOCK...................................................................1
1.2 CLOSING...............................................................................................1
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............................................................2
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION.........................................................2
2.2 CAPITALIZATION........................................................................................2
2.3 SUBSIDIARIES..........................................................................................3
2.4 AUTHORIZATION.........................................................................................3
2.5 VALID ISSUANCE OF PREFERRED AND COMMON STOCK..........................................................4
2.6 GOVERNMENTAL CONSENTS; COMPLIANCE WITH LAWS...........................................................4
2.7 LITIGATION............................................................................................4
2.8 INTELLECTUAL PROPERTY.................................................................................5
2.9 COMPLIANCE WITH OTHER INSTRUMENTS.....................................................................5
2.10 AGREEMENTS; ACTION....................................................................................6
2.11 DISCLOSURE............................................................................................6
2.12 REGISTRATION RIGHTS...................................................................................7
2.13 CORPORATE DOCUMENTS...................................................................................7
2.14 TITLE TO PROPERTY AND ASSETS; CONDITION OF ASSETS.....................................................7
2.15 LICENSES..............................................................................................7
2.16 FINANCIAL STATEMENTS..................................................................................7
2.18 CHANGES...............................................................................................8
2.19 EMPLOYEE BENEFIT PLANS................................................................................9
2.20 TAXES.................................................................................................9
2.21 MINUTES..............................................................................................10
2.22 BROKERS OR FINDERS...................................................................................10
2.23 EMPLOYEES............................................................................................10
2.24 ENVIRONMENTAL AND SAFETY LAWS........................................................................11
2.25 OFFERING VALID.......................................................................................11
2.26 REAL PROPERTY HOLDING CORPORATION....................................................................11
2.27 INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS.............................................................11
3. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.............................................................11
3.1 AUTHORIZATION........................................................................................12
3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT....................................................................12
3.3 INVESTMENT EXPERIENCE................................................................................12
3.4 RESTRICTED SECURITIES................................................................................13
3.5 LEGENDS..............................................................................................13
3.6 RESIDENCY............................................................................................14
3.7 ACCESS TO INFORMATION................................................................................14
4. CONDITIONS OF INVESTOR'S OBLIGATIONS AT THE CLOSING........................................................14
4.1 REPRESENTATIONS AND WARRANTIES.......................................................................15
4.2 PERFORMANCE..........................................................................................15
4.3 COMPLIANCE CERTIFICATE...............................................................................15
4.4 QUALIFICATIONS.......................................................................................15
4.5 PROCEEDINGS AND DOCUMENTS............................................................................15
4.6 INVESTOR RIGHTS AGREEMENT............................................................................15
4.7 OPINION OF COMPANY COUNSEL...........................................................................16
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT THE CLOSING.....................................................18
5.1 REPRESENTATIONS AND WARRANTIES.......................................................................18
5.2 PAYMENT OF PURCHASE PRICE............................................................................18
5.3 SECURITIES LAWS QUALIFICATION........................................................................18
5.4 PERFORMANCE..........................................................................................18
6. MISCELLANEOUS..............................................................................................18
6.1 PRESS RELEASES.......................................................................................18
6.2 USE OF PROCEEDS......................................................................................19
6.3 SURVIVAL OF WARRANTIES...............................................................................19
6.4 SUCCESSORS AND ASSIGNS...............................................................................19
6.5 GOVERNING LAW........................................................................................19
6.6 COUNTERPARTS.........................................................................................19
6.7 TITLES AND SUBTITLES.................................................................................19
6.8 NOTICES..............................................................................................19
6.9 DUE DILIGENCE EXPENSES; ATTORNEYS'AND ACCOUNTANTS'FEES...............................................20
6.10 FINDER'S FEES........................................................................................20
6.11 AMENDMENTS AND WAIVERS...............................................................................20
6.12 SEVERABILITY.........................................................................................21
6.13 ENTIRE AGREEMENT.....................................................................................21
EXHIBIT A - CERTIFICATE OF DESIGNATION
EXHIBIT B - SCHEDULE OF EXCEPTIONS
EXHIBIT C - ARTICLES OF INCORPORATION
EXHIBIT D - BYLAWS
EXHIBIT E - SECOND AMENDMENT TO INVESTOR RIGHTS AGREEMENT
SCHEDULE I
SCHEDULE I
Schedule of Investors
--------------------------------------------------------- ------------------------- ----------------------------------
NAME AND ADDRESS NUMBER OF SHARES PURCHASE PRICE
--------------------------------------------------------- ------------------------- ----------------------------------
Capital Research and Management Company, on behalf of 1,018,172 $20,000,000
the New Economy Fund, 34th Floor
000 Xx. Xxxx Xx.
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Ph: (000) 000-0000
Fax: (000) 000-0000
--------------------------------------------------------- ------------------------- ----------------------------------
InfoSpace Venture Capital Fund 2000, LLC 254,543 $5,000,000
00000 XX 00xx Xxxxxx
Xxxxxxx, XX 00000
--------------------------------------------------------- ------------------------- ----------------------------------
Lakeside I 279,997 $5,500,000
c/o Lakeside Capital Management, LLC
0000 00xx Xxx Xxxx
Xxxxxxx, XX 00000
000-000-0000 (voice)
000-000-0000 (fax)
--------------------------------------------------------- ------------------------- ----------------------------------
Washington Mutual, Inc. 203,634 $4,000,000
0000 Xxxxx Xxxxxx, Xxxxx 0000
XX 00000
Attn: Xxxxx X. Tall, Vice Chair
--------------------------------------------------------- ------------------------- ----------------------------------
Internet Ventures LLC 152,726 $3,000,000
--------------------------------------------------------- ------------------------- ----------------------------------
Dolce Freei, L.L.C. 101,818 $2,000,000
c/o Williams, Xxxxxxx & Xxxxx
Two Union Square
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000-0000
--------------------------------------------------------- ------------------------- ----------------------------------
Xxxxxx Xxxx 76,363 $1,500,000
c/o Freei Networks, Inc.
000 X. 000xx Xxxxxx #000
Xxxxxxx Xxx, Xxxxxxxxxx 00000
--------------------------------------------------------- ------------------------- ----------------------------------
Xxxxxxx Partners LP 66,945 $1,315,000
Xxxxxxx Investment Corp.
000 Xxxxxxxx Xxxxxxx
Xxxxx 0000
Xxxxxxx, Xx 00000
--------------------------------------------------------- ------------------------- ----------------------------------
Remo International Inc. 50,909 $1,000,000
X.X. Xxx 0000
Xxxx Xxxx
Xxxxxxx, Xxxxxxx Xxxxxx Xxxxxxx
--------------------------------------------------------- ------------------------- ----------------------------------
--------------------------------------------------------- ------------------------- ----------------------------------
xxxx.xxx Holdings Limited 50,909 $1,000,000
X.X. Xxx 0000
Xxxx Xxxx
Xxxxxxx, Xxxxxxx Xxxxxx Xxxxxxx
--------------------------------------------------------- ------------------------- ----------------------------------
Xxxx Xxxxx 25,454 $500,000
0000 00xx Xxx XX
Xxxxxx Xxxxx XX 00000
--------------------------------------------------------- ------------------------- ----------------------------------
PPC Partners LLC 25,454 $500,000
One Union Square
600 Union, Ste. 2901
Xxxxxxx, Xxxxxxxxxx 00000
--------------------------------------------------------- ------------------------- ----------------------------------
Clear Fir Partners, L.P. 7,636 $150,000
Xxxxxxx Investment Corp.
000 Xxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
--------------------------------------------------------- ------------------------- ----------------------------------
Xxxx X. Xxxxxx 1,273 $25,000
Xxxxxxx Investment Corp.
000 Xxxxxxxx Xxxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
--------------------------------------------------------- ------------------------- ----------------------------------
Cascade Group 509 $10,000
Xxxxxxx Investment Corp.
000 Xxxxxxxx Xxxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
--------------------------------------------------------- ------------------------- ----------------------------------
Cedar Grove Investments $200,000
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
(000) 000-0000 phone
(000) 000-0000 fax
--------------------------------------------------------- ------------------------- ----------------------------------
Xxxx Xxxxxxx $100,000
X/x Xxxxx Xxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
(000) 000-0000 (ph)
--------------------------------------------------------- ------------------------- ----------------------------------
Xxxxx Xxxxxxxx $50,000
X/x Xxxxx Xxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
(000) 000-0000 (ph)
--------------------------------------------------------- ------------------------- ----------------------------------
Spanish Caravan Investments, L.L.C. $250,000
0000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxx Xxxxxx
(000) 000 0000 (ph)
(000) 000 0000 (fax)
--------------------------------------------------------- ------------------------- ----------------------------------
--------------------------------------------------------- ------------------------- ----------------------------------
Xxxxxx Xxxxxxxx $200,000
X/x Xxxxx Xxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
(000) 000-0000 (ph)
--------------------------------------------------------- ------------------------- ----------------------------------
Art Xxxxxxxx $150,000
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
(000) 000-0000 (ph)
(000) 000-0000 (fax)
--------------------------------------------------------- ------------------------- ----------------------------------
Xxxxx Xxxxxxxxx $100,000
Nextel International, Inc.
0000 Xxxxxx Xxxxxx, #0000
Xxxxxxx, Xxxxxxxxxx 00000
(000) 000-0000 (ph)
(000) 000-0000 (fax)
--------------------------------------------------------- ------------------------- ----------------------------------
Xxxxx Xxxxxx $200,000
0000 Xxxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
--------------------------------------------------------- ------------------------- ----------------------------------
787, L.L.C. $250,000
0000 X.X 0xx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
(000) 000-0000 (ph)
(000) 000-0000 (fax)
Attn: Xxx Xxxxxxx
--------------------------------------------------------- ------------------------- ----------------------------------
Xxx Xxxx $1,000,000
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000
--------------------------------------------------------- ------------------------- ----------------------------------
Xxxxx X. Xxxxx $50,000
000 Xx. Xxxxxxx Xxx, X-000
Xxxxxxxxx, XX 00000
--------------------------------------------------------- ------------------------- ----------------------------------
Xxxxxx Xxxx Xxxxx $25,000
Xxxxxxxxx.xxx
00000 X.X. Xxxxxxxx Xxx, Xxxxx 000
Xxxxxxxx, XX 00000
--------------------------------------------------------- ------------------------- ----------------------------------
Xxxxxx X. Xxxxx $200,000
Xxxxx Capital Companies
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
(000) 000-0000 (ph)
(000) 000-0000 (fax)
--------------------------------------------------------- ------------------------- ----------------------------------
Xxxxxxx Xxxxxxx $50,000
000 Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
(000) 000-0000 (ph)
(000) 000-0000 (fax)
--------------------------------------------------------- ------------------------- ----------------------------------
--------------------------------------------------------- ------------------------- ----------------------------------
Xxx Xxxxxxxx $25,000
X/x Xxxxx Xxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
(000) 000-0000 (ph)
--------------------------------------------------------- ------------------------- ----------------------------------
Sugar Mountain Capital LLC $300,000
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx
(000) 000-0000 (ph)
(000) 000-0000 (fax)
--------------------------------------------------------- ------------------------- ----------------------------------
Xxxxxx Xxx $25,000
Xxxxx.xxx
000 X.X. 00xx
Xxxxxxx, Xxxxxxxxxx
--------------------------------------------------------- ------------------------- ----------------------------------
Xxxx Stock $25,000
c/o Omni Properties, Inc.
00000 Xxxxxxxxx Xxxxxxx Xxxxx
Xxxxxxx Xxx, XX 00000-0000
(000) 000-0000 (ph)
(000) 000-0000 (fax)
--------------------------------------------------------- ------------------------- ----------------------------------
Xxxxx xxx Xxxxxxxxxx $25,000
King County Courthouse
Room 1200
000 0xx Xxxxxx
Xxxxxxx, XX 00000-0000
(000) 000-0000 (ph)
(000) 000-0000 (fax)
--------------------------------------------------------- ------------------------- ----------------------------------
Xxxxx Xxxxxxx $50,000
00000 X.X. 00xx Xxxxx, Xxxxx X
Xxxxxxxx, XX 00000
(000) 000-0000 (ph)
(000) 000-0000 (fax)
--------------------------------------------------------- ------------------------- ----------------------------------
Xxxx Xxxxxxxxxx $1,000,000
X.X. Xxx 000
Xxxxxxxx, XX 00000
--------------------------------------------------------- ------------------------- ----------------------------------
Cameron Mhyrvold $600,000
--------------------------------------------------------- ------------------------- ----------------------------------
Xxx Xxxxxxxx $500,000
--------------------------------------------------------- ------------------------- ----------------------------------
Xxxx Xxxx $500,000
--------------------------------------------------------- ------------------------- ----------------------------------
Xxx Xxxxxxx $250,000
000 00xx Xxxxxx X.
Xxxxxxx, Xxxxxxxxxx 00000
--------------------------------------------------------- ------------------------- ----------------------------------
G. Xxxxxxxxxxx Xxxxxx $250,000
--------------------------------------------------------- ------------------------- ----------------------------------
--------------------------------------------------------- ------------------------- ----------------------------------
0000 Xxxxxxxxx Xxxxx Xxxx
Xxxxxx, Xxxxxxxxxx 00000
--------------------------------------------------------- ------------------------- ----------------------------------
Glentel, Inc. $1,000,000
Xxxxx 0000 0000 Xxxxxxxx Xxx.
Xxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Xxxxxx
--------------------------------------------------------- ------------------------- ----------------------------------
Xxxxxx X. Xxxxxxxx $20,000
Xxxxx 0000 0000 Xxxxxxxx Xxx.
Xxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Xxxxxx
--------------------------------------------------------- ------------------------- ----------------------------------
A. Xxxxx Xxxxxxxx $20,000
Xxxxx 0000 0000 Xxxxxxxx Xxx.
Xxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Xxxxxx
--------------------------------------------------------- ------------------------- ----------------------------------
Xxxxxx X. Xxxxxxx $20,000
Xxxxx 0000 0000 Xxxxxxxx Xxx.
Xxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Xxxxxx
--------------------------------------------------------- ------------------------- ----------------------------------
Xxxxx X. Xxxxxxxx $10,000
0000 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Xxxxxx
--------------------------------------------------------- ------------------------- ----------------------------------
Xxxxxxx Xxxxxx $10,000
Xxxxx 0000 0000 Xxxxxxxx Xxx.
Xxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Xxxxxx
--------------------------------------------------------- ------------------------- ----------------------------------
Xxxxxxxx/Xxxxx $75,000
0000 Xxxx Xxxxxx #000
Xxxxx Xxxxxx, XX 00000
(000) 000-0000 (ph)
--------------------------------------------------------- ------------------------- ----------------------------------
