NETSAT EXPRESS, INC.
COMMON STOCK PURCHASE AGREEMENT
AUGUST 11, 1999
TABLE OF CONTENTS
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1. Purchase and Sale of Stock...................................................1
1.1. Sale and Issuance of Common Stock...................................1
1.2. Closing.............................................................1
2. Representations and Warranties of the Company................................1
2.1. Organization, Good Standing and Qualification.......................1
2.2. Capitalization and Voting Rights....................................1
2.3. Subsidiaries........................................................2
2.4. Authorization.......................................................2
2.5. Valid Issuance of Common Stock and Series A Preferred Stock.........3
2.6. Governmental Consents...............................................3
2.7. Offering............................................................3
2.8. Litigation..........................................................3
2.9. Compliance with Other Instruments...................................4
2.10. Agreements; Action..................................................4
2.11. Related-Party Transactions..........................................5
2.12. Financial Statements................................................5
2.13. Changes.............................................................5
2.14. Tax Returns.........................................................6
2.15. Permits.............................................................7
2.16. Environmental and Safety Laws.......................................7
2.17. Disclosure..........................................................7
2.18. Business Plan.......................................................7
2.19. Registration Rights.................................................8
2.20. Corporate Documents; Minute Books...................................8
2.21. Title to Property and Assets........................................8
2.22. Insurance...........................................................8
2.23. Employee Benefit Plans..............................................8
2.24. Labor Agreements and Actions........................................8
2.25. Status of Intellectual Property.....................................9
3. Representations and Warranties of Investor...................................9
3.1. Authorization.......................................................9
3.2. Purchase Entirely for Own Account..................................10
3.3. Disclosure of Information..........................................10
3.4. Investment Experience..............................................10
3.5. Accredited Investor................................................10
3.6. Restricted Securities..............................................10
3.7. Further Limitations on Disposition.................................10
3.8. Legends............................................................11
3.9. Tax Advisors.......................................................11
3.10. Investor Counsel...................................................11
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4. Conditions of Investor's Obligations at Closing.............................11
4.1. Representations and Warranties.....................................12
4.2. Performance........................................................12
4.3. Compliance Certificate.............................................12
4.4. Qualifications.....................................................12
4.5. Proceedings and Documents..........................................12
4.6. Opinion of Company Counsel.........................................12
4.7. Investors'Rights Agreement.........................................12
4.8. Technology Agreement...............................................12
4.9. Contribution Agreement.............................................12
4.10. Stockholders Agreement.............................................12
5. Conditions of the Company's Obligations at Closing..........................13
5.1. Representations and Warranties.....................................13
5.2. Payment of Purchase Price..........................................13
5.3. Qualifications.....................................................13
5.4. Investors'Rights Agreement.........................................13
5.5. Technology Agreement...............................................13
5.6. Stockholders Agreement.............................................13
6. Miscellaneous...............................................................13
6.1. Survival...........................................................13
6.2. Successors and Assigns.............................................13
6.3. Governing Law......................................................13
6.4. Titles and Subtitles...............................................13
6.5. Notices............................................................14
6.6. Finder's Fee.......................................................14
6.7. Expenses...........................................................14
6.8. Amendments and Waivers.............................................14
6.9. Severability.......................................................14
6.10. Entire Agreement...................................................15
6.11. Counterparts.......................................................15
SCHEDULE A Schedule of Exceptions
EXHIBIT A Amended and Restated Certificate of Incorporation
EXHIBIT B List of Stockholders
EXHIBIT C Investors' Rights Agreement
EXHIBIT D Opinion of Counsel for the Company
EXHIBIT E Technology Agreement
EXHIBIT F Stockholders Agreement
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COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is made on the
11th day of August, 1999, by and between NetSat Express, Inc., a Delaware
corporation (the "Company"), and Globix Corporation, a Delaware corporation
("Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
1.1. Sale and Issuance of Common Stock.
(a) The Company shall adopt and file with the Secretary of State of
Delaware on or before the Closing (as defined below) the Amended and Restated
Certificate of Incorporation in the form attached hereto as Exhibit A (the
"Restated Certificate").
(b) Subject to the terms and conditions of this Agreement, Investor
agrees to purchase at the Closing and the Company agrees to sell and issue to
Investor at the Closing 1,000,000 shares of the Company's Common Stock for a
purchase price of $5,000,000.
1.2. Closing. The purchase and sale of the Common Stock shall take
place at the offices of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, 0000 Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 at 11:00 a.m., on August 11, 1999 or at such other time and
place as the Company and Investor mutually agree upon orally or in writing
(which time and place are designated as the "Closing"). At the Closing the
Company shall deliver to Investor a certificate representing the Common Stock
that Investor is purchasing against payment of the purchase price therefor by
wire transfer.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to Investor that, except as set forth on a Schedule of
Exceptions (the "Schedule of Exceptions") furnished Investor and counsel for
Investor prior to execution hereof and attached hereto as Schedule A, which
exceptions shall be deemed to be representations and warranties as if made
hereunder:
2.1. Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own its properties and assets and to carry on it business as now conducted and
as presently 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 and Voting Rights. The authorized capital of the
Company consists of:
(a) Preferred Stock. 4,000,000 shares of Preferred Stock, par value
$.001 (the "Preferred Stock"), of which 1,000,000 shares have been designated
Series A Participating Preferred Stock (the "Series A Preferred Stock") and all
of which will be sold pursuant to the Series A Preferred Stock Purchase
Agreement (the "Preferred Stock Agreement") by and among
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the Company and the parties thereto (to be executed and closed simultaneously
with the Closing). The rights, privileges and preferences of the Series A
Preferred Stock are stated in the Restated Certificate.
(b) Common Stock. 26,000,000 shares of common stock, par value $.001
("Common Stock"), of which 6,000,000 shares are issued and outstanding.
(c) The outstanding shares of Common Stock are owned by the
stockholders and in the numbers specified in Exhibit B hereto.
(d) The outstanding shares of Common Stock are all duly and validly
authorized and issued, fully paid and nonassessable, and were issued in
compliance with all applicable state and federal laws concerning the issuance of
securities.
(e) Except for (i) the conversion privileges of the Series A Preferred
Stock to be issued under the Preferred Stock Agreement, (ii) dividends payable
on the Series A Preferred Stock pursuant to the Restated Certificate, and (iii)
currently outstanding options to purchase 877,536 shares of Common Stock granted
to employees or consultants pursuant to the Company's 1999 Stock Incentive Plan
(the "Option Plan"), there are not outstanding any options, warrants, rights
(including conversion or preemptive rights) or agreements for the purchase or
acquisition from the Company of any shares of its capital stock. In addition to
the aforementioned options, the Company has reserved an additional 1,102,464
shares of its Common Stock for purchase upon exercise of options to be granted
in the future under the Option Plan. Except as set forth in the Investors'
Rights Agreement (as defined below) and the Stockholders Agreement (as defined
below), the Company is not a party or subject to any agreement or understanding,
and, to the Company's knowledge, there is no agreement or understanding between
any persons and/or entities, which affects or relates to the voting or giving of
written consents with respect to any security or by a director of the Company.
2.3. Subsidiaries. The Company does not presently own or control,
directly or indirectly, any interest in any other corporation, association, or
other business entity. The Company is not a participant in any joint venture,
partnership, or similar arrangement.
2.4. Authorization. All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement, the Investors' Rights Agreement dated
the date hereof, by and among the Company and the signatories thereto, the form
of which is attached hereto as Exhibit C (the "Investors' Rights Agreement"),
the Stockholders Agreement dated the date hereof, by and among the Company and
the signatories thereto, the form of which is attached hereto as Exhibit F (the
"Stockholders Agreement"), the Preferred Stock Agreement, and the Technology
Agreement dated the date hereof, by and between the Company and the Investor,
the form of which is attached hereto as Exhibit E, the performance of all
obligations of the Company hereunder and thereunder, and the authorization (or
reservation for issuance), sale and issuance of the Common Stock being sold
hereunder, the Series A Preferred Stock being sold under the Preferred Stock
Agreement and the Common Stock issuable upon conversion of the Series A
Preferred Stock has been taken or will be taken prior to or simultaneously with
the Closing. This Agreement and the Investors' Rights Agreement constitute valid
and legally binding obligations of the Company,
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enforceable in accordance with their respective terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally, (ii)
as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies, and (iii) to the extent the
indemnification provisions contained in the Investors' Rights Agreement may be
limited by applicable federal or state securities laws.
2.5. Valid Issuance of Common Stock and Series A Preferred Stock. The
Common Stock that is being purchased by Investor hereunder, when issued, sold
and delivered in accordance with the terms of this Agreement for the
consideration expressed herein, will be duly and validly issued, fully paid and
nonassessable and will be free of restrictions on transfer, other than
restrictions on transfer under this Agreement and the Investors' Rights
Agreement and under applicable state and federal securities laws. The Series A
Preferred Stock that is being purchased by parties under the Preferred Stock
Agreement, when issued, sold and delivered in accordance with the terms of the
Preferred Stock Agreement for the consideration expressed therein, will be duly
and validly issued, fully paid and nonassessable and will be free of
restrictions on transfer, other than restrictions on transfer under the
Preferred Stock Agreement and the Investors' Rights Agreement and under
applicable state and federal securities laws. The Common Stock issuable upon
conversion of the Series A Preferred Stock purchased under the Preferred Stock
Agreement has been duly and validly reserved for issuance and, upon issuance in
accordance with the terms of the Restated Certificate, will be validly issued,
fully paid and nonassessable and will be free of restrictions on transfer under
the Preferred Stock Agreement and the Investors' Rights Agreement and under
applicable state and federal securities law.
2.6. Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement or the Preferred Stock Agreement, except for
filings required pursuant to applicable federal and state securities laws and
blue sky laws, which filings will be effected within the required statutory
period.
2.7. Offering. Subject in part to the truth and accuracy of Investor's
representations set forth in Section 3 of this Agreement, the offer, sale and
issuance of the Common Stock as contemplated by this Agreement are exempt from
the registration requirements of the Securities Act of 1933, as amended (the
"Act"), and the qualification or registration requirements of the applicable
blue sky laws. Neither the Company nor any authorized agent acting on its behalf
will take any action hereafter that would cause the loss of such exemptions.
2.8. Litigation. There is no action, suit, proceeding or investigation
pending, or to the Company's knowledge, currently threatened against the Company
that questions the validity of this Agreement or the Preferred Stock Agreement
or the right of the Company to enter into such agreements or to consummate the
transactions contemplated hereby or thereby, or that might result, either
individually or in the aggregate, in any material adverse changes in the
business, assets or condition of the Company, financially or otherwise, or any
change in the current equity ownership of the Company. There is no material
action, suit, proceeding, claim, arbitration or investigation ("Action") pending
(or, to the Company's knowledge, currently
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threatened) against the Company, its activities, properties or assets or, to the
Company's knowledge, against any officer, director or employee of the Company in
connection with such officer's, director's or employee's relationship with, or
actions taken on behalf of, the Company. The Company is not 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 currently pending or that the Company
intends to initiate.
2.9. Compliance with Other Instruments. The Company is not in violation
of any provision of its Restated Certificate or Bylaws nor, to its knowledge, of
any instrument, judgment, order, writ, decree or contract, statute, rule or
regulation ("Instruments") to which the Company is subject, except for any
violation of an Instrument that individually or in the aggregate would not have
a material adverse effect on the condition, financial or otherwise, or
operations of the Company. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby 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 the Restated
Certificate, Bylaws or any Instrument or an event that results in the creation
of any lien, charge or encumbrance upon any assets of the Company or the
suspension, revocation, impairment, forfeiture or nonrenewal of any material
permit, license, authorization or approval applicable to the Company, its
business or operations or any of its assets or properties.
2.10. Agreements; Action. (a) Except for agreements explicitly
contemplated hereby and except as set forth on the Schedule of Exceptions, there
are no agreements, understandings or proposed transactions between the Company
and any of its officers, directors, affiliates or any affiliate thereof.
(b) Except as set forth on the Schedule of Exceptions, there are no
agreements, understandings, instruments, contracts, proposed transactions,
judgments, orders, writs or decrees to which the Company is a party or by which
it is bound that may involve (i) obligations (contingent or otherwise) of, or
payments to the Company, in excess of $50,000, other than obligations of, or
payments to, the Company arising from purchase or sale agreements entered into
in the ordinary course of business, (ii) the license of any patent, copyright,
trade secret or other proprietary right to or from the Company, other than
licenses arising from the purchase of "off the shelf" or other standard
products, (iii) provisions restricting or affecting the development, manufacture
or distribution of the Company's products or services, or (iv) indemnification
by the Company with respect to infringements of proprietary rights, other than
indemnification obligations arising from purchase or sale agreements entered
into in the ordinary course of business.
(c) Except as set forth on the Schedule of Exceptions, 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) incurred
any indebtedness for money borrowed or any other liabilities individually in
excess of $100,000 or, in the case of indebtedness and/or liabilities
individually less than $100,000, in excess of $200,000 in the aggregate, (iii)
made any loans or advances to any person, other than ordinary advances for
travel expenses, or (iv) sold, exchanged or otherwise disposed of any of its
assets or rights, other than for the purpose of the sale of its services in the
ordinary course of business.
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(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
2.11. Related-Party Transactions. No employee, officer or director of
the Company or member of his or her immediate family is indebted to the Company,
nor is the Company indebted (or committed to make loans or extend or guarantee
credit) to any of them. Except as set forth on the Schedule of Exceptions, to
the best of the Company's knowledge, none of such persons has any direct or
indirect ownership interest in any firm or corporation with which the Company is
affiliated or with which the Company has a business relationship, or any firm or
corporation that competes with the Company, except that employees, officers or
directors of the Company and members of their immediate families may own up to
5% of the stock in publicly traded companies that may compete with the Company.
No member of the immediate family of any officer or director of the Company is
directly or indirectly interested in any material contract with the Company.
2.12. Financial Statements. The Company has delivered to Investor its
audited financial statements (balance sheet and statement of operations,
statement of stockholders' equity and statement of cash flows, including notes
thereto) at June 30, 1999 and 1998, and for the fiscal years then ended (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 and with each other. The Financial
Statements fairly present the financial condition and operating results of the
Company as of the dates, and for the periods, indicated therein. Except as set
forth in the Financial Statements, the Company has no material liabilities,
contingent or otherwise, other than (i) liabilities incurred in the ordinary
course of business subsequent to June 30, 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.
Except as disclosed in the Financial Statements, the Company is not a guarantor
or indemnitor of any indebtedness of any other person, firm or corporation. The
Company maintains and will continue to maintain a standard system of accounting
established and administered in accordance with generally accepted accounting
principles.
2.13. Changes. Since June 30, 1999 there has not been:
(a) except as set forth on the Schedule of Exceptions, any change in
the assets, liabilities, financial condition or operating results of the Company
from that reflected in the Financial Statements, except changes in the ordinary
course of business that have not been, in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties, financial
condition, operating results or business of the Company;
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(c) any waiver by the Company of a valuable right or of a material debt
owed to it;
(d) except as set forth on the Schedule of Exceptions, any satisfaction
or discharge of any lien, claim or encumbrance or payment of any obligation by
the Company, except in the ordinary course of business and that is not material
to the assets, properties, financial condition, operating results or business of
the Company;
(e) any material change or amendment to a material contract or
arrangement by which the Company or any of its assets or properties is bound or
subject, except as set forth on the Schedule of Exceptions;
(f) any material change in any compensation arrangement or agreement
with any employee; or
(g) any agreement or commitment by the Company to do any of the things
described in this Section 2.13.
2.14. Tax Returns. (a) The Company has filed or caused to be filed, or
has properly filed extensions for, all tax returns, reports, forms and other
such documents ("Tax Returns") that are required to be filed and has paid or
caused to be paid all Taxes as shown on said returns and on all material
assessments received by it to the extent that such Taxes have become due, except
Taxes the validity or amount of which is being contested in good faith by
appropriate proceedings and with respect to which adequate reserves, in
accordance with generally accepted accounting principles in effect from time to
time ("GAAP"), have been set aside. Such Tax Returns are true and correct in all
material respects. The Company has paid or caused to be paid, or has established
reserves in accordance with GAAP for all Tax liabilities applicable to the
Company for all fiscal years that have not been examined and reported on by the
taxing authorities (or closed by applicable statutes). Except as disclosed in
the Schedule of Exceptions, no additional Tax assessment against the Company has
been heretofore proposed by any Governmental Authority and remains outstanding
for which provision has not been made on its balance sheet. Except as set forth
on the Schedule of Exceptions, no waivers of the statute of limitation or
extension of time within which to assess any Tax have been affirmatively granted
by the Company. The Schedule of Exceptions sets forth the tax year through which
United States federal income tax returns of the Company have been examined and
closed.
(b) Except as set forth on the Schedule of Exceptions, with respect to
all Tax Returns of the Company, (i) no audit is in progress and no extension of
time is in force with respect to any date on which any Tax Return was or is to
be filed and no waiver or agreement is in force for the extension of time for
the assessment or payment of any Tax; and (ii) to our knowledge, there is no
unassessed deficiency proposed or threatened against the Company.
(c) Except as set forth on the Schedule of Exceptions, the Company has
not agreed to make any adjustments under section 481 of the Code that would
survive the Closing by reason of a change of accounting method or otherwise
prior to Closing.
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(d) None of the respective assets of the Company is required to be
treated as being owned by any Person, other than the Company, pursuant to the
"safe harbor" leasing provisions of Section 168(f)(8) of the Code.
As used in this Agreement, "Tax" or "Taxes" means any federal, state,
county, local, foreign and other taxes (including, without limitation, income,
profits, premium, estimated, excise, sales, use, occupancy, gross receipts,
franchise, ad valorem, severance, capital levy, production, transfer,
withholding, employment, unemployment compensation, payroll and property taxes,
import duties and other governmental charges and assessments), whether or not
measured in whole or in part by net income, and including deficiencies,
interest, additions to tax or interest, and penalties with respect thereto, and
including expenses associated with contesting any proposed adjustments related
to any of the foregoing.
As used in this Agreement, "Governmental Authority" means the
government of any nation, state or other political subdivision thereof, any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
2.15. Permits. The Company has all franchises, permits, licenses and
any similar authority necessary for the conduct of its business, the lack of
which could materially and adversely affect the business, properties or
financial condition of the Company. The Company is not in default in any
material respect under any of such franchises, permits, licenses or other
similar authority.
2.16. Environmental and Safety Laws. 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 in order to comply with any such existing statute, law
or regulation.
2.17. Disclosure. The Company has fully provided Investor with all the
information that Investor has requested for deciding whether to purchase the
Common Stock. Neither this Agreement (including all the exhibits and schedules
hereto) nor any other statements or certificates made or delivered in connection
herewith contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements herein or therein not misleading
in light of the circumstances under which they were made.
2.18. Business Plan. The Business Plan dated July 1999, previously
delivered to Investor has been prepared in good faith by the Company and does
not contain any untrue statement of a material fact nor does it omit to state a
material fact necessary to make the statements made therein not misleading,
except that with respect to projections contained in the Business Plan, the
Company represents only that such projections were prepared in good faith and
that the Company reasonably believes there is a reasonable basis for such
projections. There has been no material adverse change in the assets, business,
properties or financial or other condition of the Company since July 1, 1999
that would cause the Business Plan to no longer be valid.
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2.19. Registration Rights. Except as provided in the Investors' Rights
Agreement, the Company has not granted or agreed to grant any registration
rights, including piggyback rights, to any person or entity.
2.20. Corporate Documents; Minute Books. Except for amendments
necessary to satisfy representations and warranties or conditions contained
herein (the forms of which amendments have been approved by Investor), the
Restated Certificate and Bylaws of the Company are in the form previously
provided to counsel for Investor. The minute books of the Company provided to
Investor contain a complete summary of all meetings of directors and
stockholders since the time of incorporation and reflect all transactions
referred to in such minutes accurately in all material respects.
2.21. Title to Property and Assets. The property and assets the Company
owns are owned by the Company free and clear of all mortgages, liens, loans and
encumbrances, except (i) as reflected in the Financial Statements, (ii) for
statutory liens for the payment of current taxes that are not yet delinquent,
and (iii) for liens, encumbrances and security interests that arise in the
ordinary course of business and minor defects in title, none of which,
individually or in the aggregate, 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 material compliance with such leases and, to its
knowledge, holds a valid leasehold interest free of any liens, claims or
encumbrances, subject to clauses (i)-(iii).
2.22. Insurance. The Company has fire and casualty insurance policies
with such coverages in amounts (subject to reasonable deductibles) customary for
companies similarly situated.
2.23. Employee Benefit Plans. Except as set forth on the Schedule of
Exceptions, the Company does not have any Employee Benefit Plan as defined in
the Employee Retirement Income Security Act of 1974.
2.24. Labor Agreements and Actions. The Company is not 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 with
any labor union, and no labor union has requested or, to the Company's
knowledge, has sought to represent any of the employees, representatives or
agents of the Company. There is no strike or other labor dispute involving the
Company pending, or to the Company's knowledge, threatened, that could have a
material adverse effect on the assets, properties, financial condition,
operating results or business of the Company, nor is the Company aware of any
labor organization activity involving its employees. 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 of the foregoing. The employment of
each officer and employee of the Company is terminable at the will of the
Company. The Company is not a party to or bound by any currently effective
employment contract, deferred compensation agreement, bonus plan, incentive
plan, profit sharing plan, retirement agreement or other employee compensation
agreement. To its knowledge, the Company has complied in all material respects
with all applicable state and federal equal employment opportunity and other
laws related to employment.
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2.25. Status of Intellectual Property.
(a) To the Company's knowledge, the Company owns or has sufficient
licenses to use all of the material patents, patent applications, registered
trademarks, trademark applications, copyright registrations and applications
therefor which are necessary for the conduct of the business. Except as set
forth on the Schedule of Exceptions:
(i) The patents owned by the Company and patent applications
(collectively, "Patent Rights") are owned by the Company free and clear of all
mortgages, liens, charges or encumbrances whatsoever. No licenses have been
granted with respect to the Patent Rights and the Company has not received
written notice from any third party claiming that its practice of the inventions
covered by the Patent Rights or the patents or patents application licensed to
the Company would infringe the patent rights of such third party.
(ii) The copyright registrations and pending applications owned
by the Company are owned by the Company free and clear of all mortgages, liens,
charges or encumbrances whatsoever. Except for licenses granted to end users in
accordance with the Company's standard terms, no licenses have been granted with
respect to any of the Company's copyrighted material and the Company has not
received written notice from any third party claiming that any of its activities
in the conduct of its business as presently conducted infringe the copyrights of
such third party.
(iii) The trademark registrations and pending applications owned
by the Company are owned by the Company free and clear of all mortgages, liens,
charges or encumbrances whatsoever. No licenses have been granted with respect
to any of such trademarks or applications and the Company has not received
notice from any third party claiming that any of its activities in the conduct
of its business as presently conducted infringe the trademarks, trade names or
trade dress of such third party.
(b) Except as set forth on the Schedule of Exceptions, all technical
information and know-how in possession of the Company relating to the design or
manufacture of products sold, and services performed, by it, including without
limitation methods of manufacture, lab journals, manufacturing, engineering and
other drawings, design and engineering specifications and similar items
recording or evidencing such information is owned by the Company free and clear
of all mortgages, liens, charges or encumbrances whatsoever.
3. Representations and Warranties of Investor. Investor hereby
represents, warrants and covenants that:
3.1. Authorization. Investor has full power and authority to enter into
this Agreement, the Investors' Rights Agreement and the Stockholders Agreement,
and each such agreement constitutes its valid and legally binding obligation,
enforceable in accordance with its terms except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies, and (iii) to the extent the indemnification
provisions contained in the Investors' Rights Agreement may be limited by
applicable federal or state securities laws.
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3.2. Purchase Entirely for Own Account. This Agreement is made with
Investor in reliance upon Investor's representation to the Company, which by
Investor's execution of this Agreement Investor hereby confirms, that the Common
Stock to be received by Investor will be acquired for investment for Investor's
own account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that Investor has no present intention of
selling, granting any participation in or otherwise distributing the same. By
executing this Agreement, Investor further represents that Investor does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participation to such person or to any third person,
with respect to any Common Stock.
3.3. Disclosure of Information. Investor has received all the
information it has requested in deciding whether to purchase the Common Stock.
Investor further represents that it has had an opportunity to ask questions and
receive answers from the Company regarding the terms and conditions of the
offering of the Common Stock and the business, properties, prospects and
financial condition of the Company. 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 Investor to rely thereon.
3.4. Investment Experience. Investor has invested in securities of
companies in the development stage and acknowledges that it is able to fend for
itself, can bear the economic risk of its investment, and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Common Stock. Investor also represents
it has not been organized for the purpose of acquiring the Common Stock.
3.5. Accredited Investor. Investor is an "accredited investor" within
the meaning of Securities and Exchange Commission ("SEC") Rule 501 of Regulation
D, as presently in effect.
3.6. Restricted Securities. Investor understands that the Common Stock
it is purchasing is 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 Common Stock may be resold without registration
under the Act only in certain limited circumstances. In the absence of an
effective registration statement covering the Common Stock or an available
exemption from registration under the Act, the Common Stock must be held
indefinitely. In this connection, Investor represents that it is familiar with
SEC Rule 144, as presently in effect, and understands the resale limitations
imposed thereby and by the Act, including without limitation the Rule 144
condition that current information about the Company be available to the public.
Such information is not now available and the Company has no present plans to
make such information available.
3.7. Further Limitations on Disposition. Without in any way limiting
the representations set forth above, Investor further agrees not to make any
disposition of all or any portion of the Common Stock unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 3 and the Investors' Rights Agreement, and:
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(a) There is then in effect a registration statement under the Act
covering such proposed disposition and such disposition is made in accordance
with such registration statement; or
(b) (i) Investor shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and (ii) if requested by
the Company, Investor shall have furnished the Company with an opinion of
counsel, reasonably satisfactory to the Company that such disposition will not
require registration of such shares under the Act. It is agreed that the Company
will not require opinions of counsel for transactions made pursuant to Rule 144
except in unusual circumstances.
(c) Notwithstanding the provisions of subsections (a) and (b) above, no
such registration statement or opinion of counsel shall be necessary for a
transfer by Investor that is a corporation to a wholly owned subsidiary of such
corporation if the transferee agrees in writing to be subject to the terms
hereof to the same extent as if it were an original Investor hereunder.
3.8. Legends. It is understood that the certificates evidencing the
Common Stock 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 or unless sold pursuant to Rule
144 of such Act."
(b) Any legend required by the applicable blue sky laws.
3.9. Tax Advisors. Investor has reviewed with Investor's own tax
advisors the federal, state and local tax consequences of this investment, where
applicable, and the transactions contemplated by this Agreement. Investor is
relying solely on such advisors and not on any statements or representations of
the Company or any of its agents and understands that Investor (and not the
Company) shall be responsible for Investor's own tax liability that may arise as
a result of this investment or the transactions contemplated by this Agreement.
3.10. Investor Counsel. Investor acknowledges that Investor has had the
opportunity to review this Agreement, the exhibits and the schedules attached
hereto and the transactions contemplated by this Agreement with Investor's own
legal counsel. Investor is relying solely on Investor's legal counsel and not on
any statements or representations of the Company or any of the Company's agents,
including Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, for legal advice with respect to this
investment or the transactions contemplated by this Agreement.
4. Conditions of Investor's Obligations at Closing. The obligations of
Investor under subsection 1.1(b) of this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions, the
waiver of which shall not be effective against any Investor who does not consent
thereto:
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4.1. Representations and Warranties. The representations and warranties
of the Company contained in Section 2 shall be true on and as of the Closing
with the same effect as though such representations and warranties had been made
on and as of the date of such 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,
including, without limitation, adoption and filing with the Secretary of State
of the State of Delaware of the Restated Certificate.
4.3. Compliance Certificate. The Chief Executive Officer of the Company
shall deliver to Investor at the Closing a certificate stating that the
conditions specified in Sections 4.1 and 4.2 have been fulfilled. The Secretary
of the Company shall deliver to Investor at the Closing a certificate as to the
resolutions of the Board of Directors of the Company authorizing the execution,
delivery and performance of this Agreement and the Preferred Purchase Agreement
and each exhibit hereto and thereto to which it is a signatory and the
consummation of the transactions contemplated herein and therein.
4.4. 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
Common Stock pursuant to this Agreement shall be duly obtained and effective as
of the Closing.
4.5. Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to
Investor's counsel, and they shall have received all such counterpart original
and certified or other copies of such documents as they may reasonably request.
4.6. Opinion of Company Counsel. Investor shall have received from
Xxxxxxx, Phleger & Xxxxxxxx LLP, counsel for the Company, an opinion, dated as
of the Closing, in the form attached hereto as Exhibit D.
4.7. Investors' Rights Agreement. The Company and Investor shall have
entered into the Investors' Rights Agreement in the form attached as Exhibit C.
4.8. Technology Agreement. The Company and Investor shall have entered
into a Technology Agreement in the form attached hereto as Exhibit E.
4.9. Contribution Agreement. The Company and Globecomm Systems Inc.
shall have entered into the Contribution Agreement and such agreement shall be
in full force and effect.
4.10. Stockholders Agreement. The Company and Investor shall have
entered into a Stockholders Agreement in the form attached hereto as Exhibit F.
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5. Conditions of the Company's Obligations at Closing. The obligations
of the Company to Investor under this Agreement are subject to the fulfillment
on or before the Closing of each of the following conditions by Investor:
5.1. Representations and Warranties. The representations and warranties
of Investor contained in Section 3 shall be true on and as of the Closing with
the same effect as though such representations and warranties had been made on
and as of the Closing.
5.2. Payment of Purchase Price. Investor shall have delivered the
purchase price specified in Section 1.1(b).
5.3. 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
Common Stock pursuant to this Agreement shall be duly obtained and effective as
of the Closing.
5.4. Investors' Rights Agreement. The Company and Investor shall have
entered into the Investors' Rights Agreement in the form attached as Exhibit C.
5.5. Technology Agreement. The Company and Investor shall have entered
into a Technology Agreement in the form attached hereto as Exhibit E.
5.6. Stockholders Agreement. The Company and Investor shall have
entered into a Stockholders Agreement in the form attached hereto as Exhibit F.
6. Miscellaneous.
6.1. Survival. The warranties, representations and covenants of the
Company and Investors contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the Closing for a
period of one year and shall in no way be affected by any investigation of the
subject matter thereof made by or on behalf of Investor or the Company.
6.2. Successors and Assigns. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of the Common Stock). 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.
6.3. Governing Law. This Agreement shall be governed by and construed
under the laws of the State of New York as applied to agreements among New York
residents entered into and to be performed entirely within New York.
6.4. 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.
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6.5. Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the address
as set forth on the signature page hereof or at such other address as such party
may designate by ten days advance written notice to the other parties hereto. A
copy of any notice sent to the Company shall be sent to Xxxx Xxxxxxx Xxxxxx,
Esq., Xxxxxxx, Phleger & Xxxxxxxx LLP, 0000 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000. A copy of any notice sent to the Investor shall be sent to Xxxxxx X.
Xxxxxxxx, Esq., Xxxxxxx Xxxxx Xxxxxxx Xxxxx & Xxxxxx LLP, Xxx Xxxxxxxxxxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
6.6. Finder's Fee. Except as set forth on the Schedule of Exceptions,
each party represents that it neither is nor will be obligated for any finders'
fee or commission in connection with this transaction. Investor agrees to
indemnify and to hold harmless the Company from any liability for any commission
or compensation in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for which Investor or
any of its officers, partners, employees or representatives is responsible. The
Company agrees to indemnify and hold harmless Investor from any liability for
any commission or compensation in the nature of a finders' 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.
6.7. Expenses. Irrespective of whether the Closing is effected, the
Company and Investor shall pay all costs and expenses that such party incurs
with respect to the negotiation, execution, delivery and performance of this
Agreement; provided that if the Closing is effected, the Company shall pay the
reasonable fees and expenses of one special counsel to Investor, not to exceed
$25,000.00. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the Investors' Rights Agreement, the
Stockholders Agreement or the Restated Certificate, the prevailing party shall
be entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
6.8. Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and Investor. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon Investor, each
future holder of all such Common Stock and the Company.
6.9. Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
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6.10. Entire Agreement. This Agreement and the documents referred to
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or therein.
6.11. 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.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
NetSat Express, Inc.
By: /s/: Xxxxxxx X. Xxxxxx
------------------------------
Xxxxxxx X. Xxxxxx,
Chief Executive Officer
Address: 00 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
GLOBIX CORPORATION
By: /s/ Xxxx Xxxx, President
------------------------------
Address: 000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
