EXHIBIT 4
To SCHEDULE 13D
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NOTE AND WARRANT PURCHASE AGREEMENT
among
CRITICAL PATH, INC.,
GENERAL ATLANTIC PARTNERS 74, L.P.,
GAPSTAR, LLC,
GAP COINVESTMENT PARTNERS II, L.P.,
GAPCO GMBH & CO. KG,
CAMPINA ENTERPRISES LIMITED,
AND
RICHMOND III, LLC
-------------------------------
Dated: December 29, 2004
-------------------------------
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS..........................................................1
1.1 Definitions................................................1
ARTICLE II PURCHASE AND SALE OF NOTES AND WARRANTS.............................9
2.1 Purchase and Sale of Notes and Warrants....................9
2.2 Filings....................................................9
2.3 Certificate of Determination...............................9
2.4 Closings; Deliveries.......................................9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................11
3.1 Corporate Existence and Power.............................11
3.2 Authorization; No Contravention...........................12
3.3 Governmental Authorization; Third Party Consents..........12
3.4 Binding Effect............................................12
3.5 Litigation................................................12
3.6 Compliance with Laws......................................13
3.7 Capitalization............................................13
3.8 No Default or Breach; Contractual Obligations.............14
3.9 Title to Properties.......................................15
3.10 Reports; Financial Statements.............................15
3.11 Taxes.....................................................15
3.12 No Material Adverse Change; Ordinary Course of Business...16
3.13 Private Offering..........................................16
3.14 Labor Relations...........................................16
3.15 Employee Benefit Plans....................................17
3.16 Liabilities...............................................18
3.17 Affiliate Transactions....................................18
3.18 Intellectual Property.....................................18
3.19 Privacy of Customer Information...........................20
3.20 Potential Conflicts of Interest...........................20
3.21 Trade Relations...........................................20
3.22 Outstanding Borrowing.....................................20
3.23 Broker's, Finder's or Similar Fees........................21
3.24 CCC Section...............................................21
3.25 Disclosure................................................21
3.26 Investments...............................................21
3.27 Xxxxxxxx-Xxxxx Compliance.................................21
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE INVESTORS....................22
4.1 Existence and Power.......................................22
4.2 Authorization; No Contravention...........................23
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4.3 Governmental Authorization; Third Party Consents..........23
4.4 Binding Effect............................................23
4.5 Purchase for Own Account..................................23
4.6 Restricted Securities.....................................24
4.7 Accredited Investor.......................................24
4.8 Experience................................................24
4.9 Access to Information.....................................24
4.10 General Solicitation......................................25
4.11 Reliance..................................................25
ARTICLE V CONDITIONS TO INITIAL CLOSING.......................................25
5.1 Conditions to Investors' Obligations......................25
5.2 Conditions to Company's Obligations.......................26
ARTICLE VI CONDITIONS TO SECOND CLOSING.......................................27
6.1 Conditions to Investors' Obligations......................27
6.2 Conditions to Company's Obligations.......................28
ARTICLE VII INDEMNIFICATION...................................................29
7.1 Indemnification...........................................29
7.2 Notification..............................................29
7.3 Contribution..............................................30
ARTICLE VIII COVENANTS........................................................31
8.1 Financial Statements and Other Information................31
8.2 FIRPTA Certificate........................................31
8.3 Reservation of Series F Preferred Stock and Common Stock..32
ARTICLE IX TERMINATION........................................................32
9.1 Termination...............................................32
ARTICLE X MISCELLANEOUS.......................................................33
10.1 Survival of Representations and Warranties................33
10.2 Notices...................................................33
10.3 Successors and Assigns; Third Party Beneficiaries.........35
10.4 Amendment and Waiver......................................35
10.5 Counterparts..............................................35
10.6 Richmond III Registration Rights..........................35
10.7 Coinvestor Sub-Group Board Seat...........................36
10.8 Observer Rights...........................................36
10.9 Certain Series F Preferred Stock Terms....................36
10.10 Headings..................................................37
10.11 Governing Law.............................................37
10.12 Severability..............................................37
10.13 Rules of Construction.....................................37
10.14 Entire Agreement..........................................37
10.15 Fees......................................................37
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10.16 Publicity; Confidentiality................................37
10.17 Further Assurances........................................38
EXHIBITS
A Form of Note
B Form of Warrant
C Articles of Incorporation
D By-laws
E Form of Series F Certificate of Determination
F Form of Paul, Hastings, Xxxxxxxx & Xxxxxx, LLP Opinion
SCHEDULES
2.1(a) Purchased Notes and Warrants at Initial Closing
2.1(b) Purchased Notes and Warrants at Second Closing
3.3 Governmental Authorization and Third Party Consents
3.5 Claims
3.7(a) Capitalization
3.10(a) SEC Reports
3.12 Material Adverse Changes
3.17 Affiliate Transactions
3.20 Conflicts of Interest
3.22 Indebtedness
3.26 Investments
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NOTE AND WARRANT PURCHASE AGREEMENT
NOTE AND WARRANT PURCHASE AGREEMENT, dated December 29, 2004 (this
"AGREEMENT"), among General Atlantic Partners 74, L.P., a Delaware limited
partnership, GapStar, LLC, a Delaware limited liability company, GAP
Coinvestment Partners II, L.P., a Delaware limited partnership, GAPCO GmbH & Co.
KG, a German limited partnership, Campina Enterprises Limited ("Campina"), and
Richmond III, LLC (collectively, the "INVESTORS") and Critical Path, Inc., a
California corporation (the "COMPANY"),
WHEREAS, upon the terms and conditions set forth in this
Agreement, the Company proposes to issue and sell to the Investors, at the
Initial Closing (as hereinafter defined), (i) senior notes, substantially in the
form attached hereto as EXHIBIT A (each a "NOTE" and, collectively, the "NOTES")
having an aggregate principal amount of eleven million dollars ($11,000,000),
allocated among each Investor in the principal amount set forth opposite such
Investor's name on SCHEDULE 2.1(A) hereto and (ii) warrants, substantially in
the form attached hereto as EXHIBIT B (each a "WARRANT" and, collectively, the
"WARRANTS") to purchase, subject to the terms and conditions thereof, the
aggregate number of shares of the Company's Series F Redeemable Convertible
Preferred Stock, $0.001 par value per share (the "SERIES F PREFERRED STOCK") set
forth opposite each Investor's name on SCHEDULE 2.1(A) hereto, at an exercise
price per share equal to $14.00 (the "WARRANT EXERCISE PRICE"); and
WHEREAS, upon the terms and conditions set forth in this
Agreement, the Company proposes to issue and sell to the Investors, at the
Second Closing, (i) Notes having an aggregate principal amount of seven million
dollars ($7,000,000), allocated among each Investor in the principal amount set
forth opposite such Investor's name on SCHEDULE 2.1(B) hereto and (ii) Warrants
to purchase, subject to the terms and conditions thereof, the aggregate number
of shares of Series F Preferred Stock set forth opposite each Investor's name on
SCHEDULE 2.1(B) hereto, at the Warrant Exercise Price.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"AFFILIATE" shall mean any Person who is an "affiliate" as
defined in RULE 12B-2 of the General Rules and Regulations under the Exchange
Act.
"AGREEMENT" means this Agreement as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"REGISTRATION RIGHTS AGREEMENT" means the Company's Third
Amended and Restated Registration Rights Agreement, dated as of March 9, 2004.
"AMENDMENT TO PREFERRED STOCK RIGHTS AGREEMENT" means an
amendment to the Company's Preferred Stock Rights Agreement to permit the
Investors to purchase the Warrants hereunder without causing such Investors to
become Acquiring Persons (as defined in the Preferred Stock Rights Agreement).
"ARTICLES OF INCORPORATION" means the Amended and Restated
Articles of Incorporation of the Company in effect on the Initial Closing Date
and attached hereto as EXHIBIT C.
"BOARD OF DIRECTORS" means the Board of Directors of the
Company.
"BUSINESS DAY" means any day other than a Saturday, Sunday or
other day on which commercial banks in the State of New York or the State of
California are authorized or required by law or executive order to close.
"BY-LAWS" means the by-laws of the Company in effect on the
Initial Closing Date and attached hereto as EXHIBIT D.
"CK PURCHASERS" means Campina Enterprises Limited, Cenwell
Limited, Great Affluent Limited, Dragonfield Limited and Lion Cosmos Limited and
their transferees.
"CLAIMS" has the meaning set forth in SECTION 3.5 of this
Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended, or
any successor statute thereto.
"COMMISSION" means the United States Securities and Exchange
Commission or any similar agency then having jurisdiction to enforce the
Securities Act and Exchange Act.
"COMMON STOCK" means the common stock of the Company, par
value $0.001 per share.
"COMMON STOCK WARRANT" or "COMMON STOCK WARRANTS," as the case
may be, means those certain warrants to purchase Common issued to General
Atlantic Entities pursuant to that certain Stock and Warrant Purchase and
Exchange Agreement, dated as of November 8, 2001.
"COMMONLY CONTROLLED ENTITY" means any entity which is under
common control with the Company within the meaning of Code SECTION 414(B), (C),
(M), (O) or (T).
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"COMMON SHARES" means the shares of Common Stock issuable on
conversion of the shares of Series F Preferred Stock.
"COMPANY" has the meaning set forth in the preamble to this
Agreement.
"COMPANY PLANS" has the meaning set forth in SECTION 3.15 of
this Agreement.
"CONDITION OF THE COMPANY" means the assets, business,
properties, operations or condition (financial or otherwise) of the Company and
its Subsidiaries, taken as a whole.
"CONTINGENT OBLIGATION" means, as applied to any Person, any
direct or indirect liability of that Person with respect to any Indebtedness,
lease, dividend, guaranty, letter of credit or other obligation, contractual or
otherwise (the "PRIMARY OBLIGATION") of another Person (the "PRIMARY OBLIGOR"),
whether or not contingent, (a) to purchase, repurchase or otherwise acquire such
primary obligations or any property constituting direct or indirect security
therefor, (b) to advance or provide funds (i) for the payment or discharge of
any such primary obligation, or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition of
the primary obligor, (c) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation, or
(d) otherwise to assure or hold harmless the owner of any such primary
obligation against loss or failure or inability to perform in respect thereof.
The amount of any Contingent Obligation shall be deemed to be an amount equal to
the stated or determinable amount of the primary obligation in respect of which
such Contingent Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof.
"CONTRACTUAL OBLIGATIONS" means, as to any Person, any
provision of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other instrument to
which such Person is a party or by which it or any of its property is bound.
"CONVERSION" has the meaning set forth in SECTION 2.1(A).
"CONVERSION NOTICE" has the meaning set forth in Section 2.5
of this Agreement.
"COPYRIGHTS" means any foreign or United States copyright
registrations and applications for registration thereof, and any non-registered
copyrights.
"ENVIRONMENTAL LAWS" means federal, state, local and foreign
laws, principles of common laws, civil laws, regulations, and codes, as well as
orders, decrees, judgments or injunctions, issued, promulgated, approved or
entered thereunder relating to pollution, protection of the environment or
public health and safety.
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"FINANCIAL STATEMENTS" has the meaning set forth in SECTION
3.10 of this Agreement.
"GAAP" means United States generally accepted accounting
principles in effect from time to time.
"GENERAL ATLANTIC ENTITIES" means General Atlantic Partners
74, L.P., a Delaware limited partnership, GAP Coinvestment Partners II, L.P., a
Delaware limited partnership, GapStar, LLC, a Delaware limited liability
company, and GAPCO GmbH & Co. KG, a German limited partnership.
"GOVERNMENTAL AUTHORITY" means the government of any nation,
state, city, locality 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.
"INDEBTEDNESS" means, as to any Person, (a) all obligations of
such Person for borrowed money (including, without limitation, reimbursement and
all other obligations with respect to surety bonds, letters of credit and
bankers' acceptances, whether or not matured), (b) all obligations of such
Person to pay the deferred purchase price of property or services, except trade
accounts payable and accrued commercial or trade liabilities arising in the
ordinary course of business, (c) all interest rate and currency swaps, caps,
collars and similar agreements or hedging devices under which payments are
obligated to be made by such Person, whether periodically or upon the happening
of a contingency, (d) all indebtedness created or arising under any conditional
sale or other title retention agreement with respect to property acquired by
such Person (even though the rights and remedies of the seller or Investor under
such agreement in the event of default are limited to repossession or sale of
such property), (e) all obligations of such Person under leases which have been
or should be, in accordance with GAAP, recorded as capital leases, (f) all
indebtedness secured by any Lien (other than Permitted Liens) on any property or
asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is non-recourse to the
credit of that Person, and (g) any Contingent Obligation of such Person.
"INDEMNIFIED PARTY" has the meaning set forth in SECTION 7.1
of this Agreement.
"INDEMNIFYING PARTY" has the meaning set forth in SECTION 7.1
of this Agreement.
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"INITIAL CLOSING" has the meaning set forth in SECTION 2.4(A)
of this Agreement.
"INITIAL CLOSING DATE" has the meaning set forth in SECTION
2.4(A) of this Agreement.
"INTELLECTUAL PROPERTY" has the meaning set forth in SECTION
3.18 of this Agreement.
"INTERNET ASSETS" means any Internet domain names and other
computer user identifiers and any rights in and to sites on the worldwide web,
including rights in and to any text, graphics, audio and video files and html or
other code incorporated in such sites.
"INVESTMENT" means (i) the acquisition (whether for cash,
property, services, assumption of Indebtedness, securities or otherwise) of
assets (other than equipment, inventory, supplies or other assets acquired in
the ordinary course of business of the Company), capital stock, bonds, notes,
debentures, partnership, joint venture or other ownership interests or other
securities of any Person, (ii) any deposit with, or advance, loan or other
extension of credit to, or on behalf of, any Person (other than deposits made in
connection with the purchase of equipment, inventory, services, leases, supplies
or other assets in the ordinary course of business of the Company), (iii) any
other capital contribution to or investment in such Person, including, without
limitation, any guaranty obligation incurred for the benefit of such Person. For
the sake of clarity, Investments shall include any transfer of property or
assets by the Company to any of its Subsidiaries or by any Subsidiary of the
Company to any other Subsidiary.
"IP AGREEMENTS" has the meaning set forth in SECTION
3.18(A)(III) of this Agreement.
"KNOWLEDGE" means the knowledge of the Company and Chief
Executive Officer, Chief Financial Officer, and Senior Vice President, General
Counsel of the Company (who are Xxxx X. Xxxxxx, Xxxxx Xxxxx and Xxxxxxx X.
Xxxxxxxx) after due inquiry.
"LIABILITIES" has the meaning set forth in SECTION 3.16 of
this Agreement.
"LIEN" means any mortgage, deed of trust, pledge,
hypothecation, assignment, encumbrance, lien (statutory or other) or preference,
priority, right or other security interest or preferential arrangement of any
kind or nature whatsoever (excluding preferred stock and equity related
preferences).
"LOSSES" has the meaning set forth in SECTION 7.1 of this
Agreement.
"MATERIAL CONTRACTUAL OBLIGATIONS" has the meaning set forth
in SECTION 3.8 of this Agreement.
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"NASD RULES" has the meaning set forth in SECTION 3.27(B).
"NASDAQ" means The Nasdaq Stock Market, Inc.
"NOTES" has the meaning set forth in the recitals to this
Agreement.
"ORDERS" has the meaning set forth in SECTION 3.2 of this
Agreement.
"PATENTS" means any foreign or United States patents and
patent applications, including any divisions, continuations,
continuations-in-part, substitutions or reissues thereof, whether or not patents
are issued on such applications and whether or not such applications are
modified, withdrawn or resubmitted.
"PERMITTED INVESTMENTS" means (i) Investments in cash or cash
equivalents, (ii) accounts receivable created, acquired or made in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms; (iii) Investments existing on the Initial Closing Date, and listed
on SCHEDULE 3.26 hereto, (iv) loans to employees, directors or officers of the
Company in connection with the award of convertible bonds or capital stock under
a stock incentive plan, stock option plan or other equity-based compensation
plan or arrangement, (v) other advances or loans to employees, directors,
officers or agents of the Company in the ordinary course of business not to
exceed $500,000 in the aggregate at any time outstanding; (vi) loans, advances
and Investments in or by foreign Subsidiaries; (vii) any acquisition for which
the prior written consent of the holders of a majority of the outstanding
principal amount of Notes issued by the Company pursuant to this Agreement has
been obtained, or (viii) other loans, advances and investments of a nature not
contemplated by the foregoing sections in an amount not to exceed $500,000 in
the aggregate at any time outstanding.
"PERMITTED LIENS" has the meaning set forth in the Note.
"PERSON" means any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, limited liability company, Governmental Authority or other entity of
any kind, and shall include any successor (by merger or otherwise) of such
entity.
"PLAN" means any employee benefit plan, arrangement, policy,
program, agreement or commitment (whether or not an employee plan within the
meaning of SECTION 3(3) of ERISA), including, without limitation, any
employment, consulting or deferred compensation agreement, executive
compensation, bonus, incentive, pension, profit-sharing, savings, retirement,
stock option, stock purchase or severance pay plan, any life, health, disability
or accident insurance plan, whether oral or written, whether or not subject to
ERISA, as to which the Company or any Commonly Controlled Entity has or in the
future could have any direct or indirect, actual or contingent liability.
"REQUIREMENTS OF LAW" means, as to any Person, any law
(including Environmental Laws), statute, treaty, rule, regulation, right,
privilege, qualification,
6
license or franchise or determination of an arbitrator or a court or other
Governmental Authority or stock exchange, in each case applicable or binding
upon such Person or any of its property or to which such Person or any of its
property is subject or pertaining to any or all of the transactions contemplated
or referred to herein.
"RETIREE WELFARE PLAN" means any welfare plan (as defined in
SECTION 3(1) of ERISA) that provides benefits to current or former employees
beyond their retirement or other termination of service (other than coverage
mandated by SECTION 4980A of the Code, commonly referred to as "COBRA," the cost
of which is fully paid by the current or former employee or his or her
dependents).
"RICHMOND III" means Richmonds III, LLC.
"XXXXXXXX-XXXXX ACT" has the meaning set forth in SECTION
3.27(A) of this Agreement.
"SEC REPORTS" has the meaning set forth in SECTION 3.10 of
this Agreement.
"SECURITIES" has the meaning set forth in SECTION 4.8 of this
Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
"SECOND CLOSING" has the meaning set forth in SECTION 2.4(B)
of this Agreement.
"SECOND CLOSING DATE" has the meaning set forth in SECTION
2.4(B) of this Agreement.
"SERIES D PREFERRED STOCK" means the Series D Cumulative
Redeemable Convertible Preferred Stock of the Company, par value $0.001 per
share.
"SERIES F CERTIFICATE OF DETERMINATION" means the Certificate
of Determination of Preferences of Series F Redeemable Convertible Preferred
Stock, substantially in the form attached hereto as EXHIBIT E.
"SERIES E PREFERRED STOCK" means the Series E Redeemable
Convertible Preferred Stock of the Company, par value $0.001 per share.
"SERIES F PREFERRED STOCK" has the meaning set forth in the
recitals to this Agreement.
"SOFTWARE" means any computer software programs, source code,
object code, data and documentation, including, without limitation, any computer
software programs that incorporate and run the Company's pricing models,
formulae and algorithms.
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"STOCK EQUIVALENTS" means any security or obligation which is
by its terms convertible into or exchangeable or exercisable for shares of
common stock or other capital stock of the Company, and any option, warrant or
other subscription or purchase right with respect to common stock or such other
capital stock.
"STOCK OPTION PLANS" means the Company's stock option plans
and employee purchase plans pursuant to which shares of restricted stock and
options to purchase shares of Common Stock are reserved and available for grant
to officers, directors, employees and consultants of the Company.
"STOCKHOLDERS AGREEMENT" means the Amended and Restated
Stockholders Agreement, dated as of November 26, 2003, by and among the Company
and the parties named therein.
"SUBSIDIARIES" means, as of the relevant date of
determination, with respect to any Person, a corporation or other Person of
which 50% or more of the voting power of the outstanding voting equity
securities or 50% or more of the outstanding economic equity interest is held,
directly or indirectly, by such Person. Unless otherwise qualified, or the
context otherwise requires, all references to a "SUBSIDIARY" or to
"SUBSIDIARIES" in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Company.
"TAXES" means any federal, state, provincial, county, local,
foreign and other taxes (including, without limitation, income, profits,
windfall profits, alternative, minimum, accumulated earnings, personal holding
company, capital stock, 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.
"TRADE SECRETS" means any trade secrets, research records,
processes, procedures, manufacturing formulae, technical know-how, technology,
blue prints, designs, plans, inventions (whether patentable and whether reduced
to practice), invention disclosures and improvements thereto.
"TRADEMARKS" means any foreign or United States trademarks,
service marks, trade dress, trade names, brand names, designs and logos,
corporate names, product or service identifiers, whether registered or
unregistered, and all registrations and applications for registration thereof.
"TRANSACTION DOCUMENTS" means, collectively, this Agreement,
the Notes, the Warrants, the Amendment to the Preferred Stock Rights Agreement
and the Waivers.
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"WAIVERS" means the waivers and consents, dated the date
hereof, executed by (i) the requisite holders of the Company's Series D
Preferred Stock and (ii) the requisite General Atlantic Entities, CK Purchasers
and Vectis CP Holdings, LLC, in each case to consent to and approve, to the
extent necessary, the transactions and agreements contemplated by the
Transaction Documents and to waive any rights they may have under that certain
Amended and Restated Stockholders Agreement, dated November 26, 2003.
"WARRANT" or "WARRANTS," as the case may be, has the meaning
set forth in the recitals to this Agreement.
"WARRANT EXERCISE PRICE" has the meaning set forth in the
recitals to this Agreement.
"WARRANT SHARES" means the shares of Series F Preferred Stock
issuable upon exercise of the Warrants.
ARTICLE II
PURCHASE AND SALE OF NOTES AND WARRANTS
2.1 PURCHASE AND SALE OF NOTES AND WARRANTS. Subject to the terms
and conditions of this Agreement, (a) on the Initial Closing Date, each of the
Investors, severally and not jointly, agrees to purchase, and the Company agrees
to sell and issue to each Investor, (i) a Note, in the aggregate principal
amount set forth opposite such Investor's name on SCHEDULE 2.1(A) hereto and
(ii) a Warrant to purchase the aggregate number of shares of Series F Preferred
Stock set forth opposite such Investor's name on SCHEDULE 2.1(A) hereto and (b)
on the Second Closing Date, each of the Investors, severally and not jointly,
agrees to purchase, and the Company agrees to sell and issue to each Investor,
(i) a Note, in the aggregate principal amount set forth opposite such Investor's
name on SCHEDULE 2.1(B) hereto and (ii) a Warrant to purchase the aggregate
number of shares of Series F Preferred Stock set forth opposite such Investor's
name on SCHEDULE 2.1(B) hereto. Each of the Notes shall be due and payable upon
the terms and conditions set forth in the Notes and herein. All payments by the
Company under the Notes of principal and interest shall be as set forth in the
Notes.
2.2 FILINGS. Upon the terms and conditions of this Agreement, on
the Initial Closing Date, the Company shall file with the Secretary of State of
the State of California the Series F Certificate of Determination.
2.3 CERTIFICATE OF DETERMINATION. The Series F Preferred Stock
shall have the preferences and rights set forth in the Series F Certificate of
Determination.
2.4 CLOSINGS; DELIVERIES.
(a) INITIAL CLOSING. Subject to the terms and conditions of this
Agreement, the initial purchase and sale of the Notes and Warrants contemplated
by
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Section 2.1(a) of this Agreement (the "INITIAL CLOSING") shall be held on
December 30, 2004 (the "INITIAL CLOSING DATE"), at the offices of Paul,
Hastings, Xxxxxxxx & Xxxxxx, LLP, 55 Second Street, San Francisco, California,
or at such other time and place as the Company and the Investors may mutually
agree. At the Initial Closing, signature pages transmitted by facsimile will be
acceptable, with originals to immediately follow.
(b) SECOND CLOSING. Subject to the terms and conditions of this
Agreement, the second purchase and sale of the Notes and Warrants contemplated
by Section 2.1(b) of this Agreement (the "SECOND CLOSING") shall be held on the
third Business Day after the last to occur of the satisfaction or waiver by the
Investors of the conditions set forth in Section 6.1 and the satisfaction or
waiver by the Company of the conditions set forth in Section 6.2 (the "SECOND
CLOSING DATE"), at the offices of Paul, Hastings, Xxxxxxxx & Xxxxxx, LLP, 55
Second Street, San Francisco, California, or at such other time and place as the
Company and the Investors may mutually agree. At the Second Closing, signature
pages transmitted by facsimile will be acceptable, with originals to immediately
follow.
(c) DELIVERIES BY THE COMPANY AT THE INITIAL CLOSING. At the
Initial Closing, subject to the terms and conditions hereof, the Company shall
execute and deliver to each Investor:
(i) a duly executed Note representing the aggregate
principal amount set forth opposite such Investor's name on SCHEDULE
2.1(A), a duly executed Warrant to purchase the aggregate number of shares
of Series F Preferred Stock set forth opposite such Investor's name on
SCHEDULE 2.1(A) and each of the other Transaction Documents to which the
Company is a party; and
(ii) such other documentation required to be provided by
the Company pursuant to SECTION 5.1.
(d) DELIVERIES BY EACH INVESTOR AT THE INITIAL CLOSING. At the
Initial Closing, subject to the terms and conditions hereof, each Investor
shall:
(i) execute and deliver to the Company each of the other
Transaction Documents to which it is a party; and
(ii) pay the aggregate purchase price for the Notes and
the Warrants to be purchased at the Initial Closing, by wire transfer, in
the aggregate amount set forth opposite such Investor's name on SCHEDULE
2.1(A) to the following account (the "Account"):
Silicon Valley Bank
0000 Xxxxxx Xx
Xxxxx Xxxxx, XX 00000
Tel: 000-000-0000
Account Name: Critical Path, Inc.
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000 Xxx Xxxxxxxxxxx 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Bank Acct: 3300229151
ABA: 000000000
SWIFT CODE: XXXXXX0X
(e) DELIVERIES BY THE COMPANY AT THE SECOND CLOSING. At the Second
Closing, subject to the terms and conditions hereof, the Company shall execute
and deliver to each Investor a duly executed Note representing the aggregate
principal amount set forth opposite such Investor's name on SCHEDULE 2.1(B), a
duly executed Warrant to purchase the aggregate number of shares of Series F
Preferred Stock set forth opposite such Investor's name on SCHEDULE 2.1(B) and
such documentation required to be provided by the Company pursuant to SECTION
6.1.
(f) DELIVERIES BY EACH INVESTOR AT THE SECOND CLOSING. At the
Second Closing, subject to the terms and conditions hereof, each Investor shall
pay the aggregate purchase price for the Notes and the Warrants to be purchased
at the Second Closing by wire transfer to the Account, in the aggregate amount
set forth opposite such Investor's name on SCHEDULE 2.1(B).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of the Investors
that, except as disclosed or incorporated by reference in the SEC Reports or the
Disclosure Schedules:
3.1 CORPORATE EXISTENCE AND POWER. The Company and each of its
Subsidiaries (a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation; (b) has all
requisite corporate power and authority to own and operate its property, to
lease the property it operates as lessee and to conduct the business in which it
is currently engaged; (c) is duly qualified as a foreign corporation, licensed
and in good standing under the laws of each jurisdiction in which its ownership,
lease or operation of property or the conduct of its business requires such
qualification, except where the failure to be so qualified could not reasonably
be expected to have a material adverse effect on the Condition of the Company
and (d) has the corporate power and authority to execute, deliver and perform
its obligations under this Agreement and each of the other Transaction
Documents. No jurisdiction, other than those referred to in clause (c) above,
has claimed, in writing or otherwise, that the Company or any of its
Subsidiaries is required to qualify as a foreign corporation or other entity
therein, and the Company or any of its Subsidiaries does not file any franchise,
11
income or other tax returns in any other jurisdiction based upon the ownership
or use of property therein or the derivation of income therefrom.
3.2 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
performance by the Company of this Agreement and each of the other Transaction
Documents and the transactions contemplated hereby and thereby (a) have been
duly authorized by all necessary corporate action of the Company; (b) do not
contravene the terms of the Articles of Incorporation or the By-laws; (c) do not
violate, conflict with or result in any breach, default or contravention of (or
with due notice or lapse of time or both would result in any breach, default or
contravention of), or the creation of any Lien under, any Contractual Obligation
of the Company or any of its Subsidiaries or any Requirement of Law applicable
to the Company or any of its Subsidiaries except such violations or conflicts
that would not reasonably be expected to have a material adverse effect on the
Condition of the Company; and (d) do not violate any judgment, injunction, writ,
award, decree or order of any nature (collectively, "ORDERS") of any
Governmental Authority against, or binding upon, the Company or any of its
Subsidiaries.
3.3 GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENTS. Except as
set forth in SCHEDULE 3.3, no approval, consent, compliance, exemption,
authorization or other action by, or notice to, or filing with, any Governmental
Authority or any other Person, and no lapse of a waiting period under a
Requirement of Law, is necessary or required in connection with the execution,
delivery or performance (including, without limitation, the sale, issuance and
delivery of the Warrants, the Warrant Shares or the Common Shares) by, or
enforcement against, the Company of this Agreement and the other Transaction
Documents or the transactions contemplated hereby and thereby, other than (a)
the notification to The NASDAQ National Market for the listing of the shares of
Common Shares and applicable blue-sky filings, (b) such as have already been
obtained or such exemptive filings as may be required under applicable
securities laws, and (c) such other filings as may be required following the
Initial Closing Date or the Second Closing Date under the Exchange Act.
3.4 BINDING EFFECT. This Agreement and each of the other
Transaction Documents to which the Company is a party have been duly executed
and delivered by the Company, and this Agreement and each of the other
Transaction Documents to which the Company is a party constitute the legal,
valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity relating to enforceability
(regardless of whether considered in a proceeding at law or in equity).
3.5 LITIGATION. Except as set forth on SCHEDULE 3.5, there are no
actions, suits, proceedings, claims, complaints, disputes, arbitrations or
investigations
12
(collectively, "CLAIMS") pending or, to the Knowledge of the Company,
threatened, at law, in equity, in arbitration or before any Governmental
Authority against the Company or any of its Subsidiaries that seeks in excess of
$50,000 in damages nor is the Company aware that there is any basis for any of
the foregoing. The foregoing includes, without limitation, Claims pending or, to
the Knowledge of the Company, threatened or any basis therefor known by the
Company involving the prior employment of any employee of the Company or any of
its Subsidiaries, their use in connection with the business of the Company or
any of its Subsidiaries of any information or techniques allegedly proprietary
to any of their former employers or their obligations under any agreements with
prior employers. No Order has been issued by any court or other Governmental
Authority against the Company or any of its Subsidiaries purporting to enjoin or
restrain the execution, delivery or performance of this Agreement or any of the
other Transaction Documents.
3.6 COMPLIANCE WITH LAWS. The Company and each of its Subsidiaries
is in compliance in all material respects with all Requirements of Law and all
Orders issued by any court or Governmental Authority against the Company in all
respects. To the Company's Knowledge, there are no Requirements of Law which
could reasonably be expected to prohibit or restrict the Company or any of its
Subsidiaries from, or otherwise materially adversely effect the Company or any
of its Subsidiaries in, conducting its business in any jurisdiction in which it
now conducts its business.
3.7 CAPITALIZATION.
(a) (i) As of the Initial Closing Date, the authorized
capital stock of the Company shall consist of (A) 200,000,000 shares of
Common Stock, of which 23,025,902 shares are outstanding, (B) one share of
Special Voting Stock, par value $0.001 per share, of the Company (C)
4,188,587 shares of Series D Preferred Stock, of which 4,102,355 shares are
outstanding, (E) 68,000,000 shares of Series E Preferred Stock, of which
55,894,801 shares are outstanding, (F) 450,000 shares of Series F Preferred
Stock, 385,710 of which shall be reserved for issuance upon exercise of the
Warrants, and (G) 2,286,412 shares of undesignated "blank check" preferred
stock. As of the date of this Agreement, the aggregate number of shares of
restricted stock and options to purchase shares of Common Stock which may
be issued under the Stock Option Plans are 18,745,440, of which 17,427,864
have been granted. The Company has reserved an adequate number of shares of
Common Stock for issuance upon conversion of the Series F Preferred Stock.
(ii) As of the Second Closing Date, the authorized
capital stock of the Company shall consist of (A) 200,000,000 shares of
Common Stock, (B) one share of Special Voting Stock, par value $0.001 per
share, of the Company, (C) 4,188,587 shares of Series D Preferred Stock, of
which 4,102,355 shares shall be outstanding, except that the number of
shares of Series D Preferred Stock outstanding may decrease due to the
conversion of such shares to Common Stock, (E) 68,000,000 shares of Series
E Preferred Stock, of which 55,894,801 shares shall be outstanding, (F)
450,000 of shares of Series F Preferred Stock,
13
385,710 of which shall be reserved for issuance upon exercise of the
Warrants, except that the number of shares of Series E Preferred Stock
outstanding may decrease due to the conversion of such shares to Common
Stock, and (G) 2,286,412 shares of undesignated BLANK CHECK" preferred
stock.
(iii) Except as set forth on SCHEDULE 3.7(A) and except
for the Warrants and the Common Stock Warrants, there are no options,
warrants, conversion privileges, subscription or purchase rights or other
rights presently outstanding to purchase or otherwise acquire (A) any
authorized but unissued, unauthorized or treasury shares of the Company's
capital stock, (B) any Stock Equivalents or (C) any other securities of the
Company and there are no commitments, contracts, agreements, arrangements
or understandings to which the Company is a party to issue any shares of
the Company's capital stock or any Stock Equivalents or other securities of
the Company.
(b) Effective as of not later than the Initial Closing Date and
the Second Closing Date, the Notes and Warrants to be issued at the First
Closing and the Second Closing, respectively, shall be duly authorized, and
assuming the accuracy of the representations and warranties of the Investors set
forth in ARTICLE IV of this Agreement, will be issued in compliance with the
registration and qualification requirements of all applicable federal, state and
foreign securities laws and will be free and clear of all other Liens.
(c) Effective as of not later than the Initial Closing Date and
the Second Closing Date, the Series F Preferred Stock issuable upon exercise of
the Warrants issued at the First Closing and the Warrants issued at the Second
Closing, respectively, and the shares of Common Stock issuable upon conversion
of such Series F Preferred Stock, respectively, shall in each case be duly
authorized and duly reserved for issuance, and when issued and delivered to the
Investors, will be validly issued, fully paid and non-assessable, not be subject
to any preemptive right or similar rights that have not been satisfied and
assuming the accuracy of the representations and warranties of the Investors set
forth in ARTICLE IV of this Agreement, will be issued in compliance with the
registration and qualification requirements of all applicable federal, state and
foreign securities laws and will be free and clear of all other Liens. None of
the issued and outstanding shares of Common Stock were issued in violation of
any preemptive rights.
3.8 NO DEFAULT OR BREACH; CONTRACTUAL OBLIGATIONS. All of the
Contractual Obligations to which the Company or any of its Subsidiaries is a
party, whether written or oral, which are required by the Exchange Act to be
disclosed in the SEC Reports (collectively, "MATERIAL CONTRACTUAL OBLIGATIONS")
are valid, subsisting, in full force and effect and binding upon the Company or
its Subsidiary, as the case may be, and the other parties thereto, and the
Company or its Subsidiary, as the case may be, has paid in full or accrued all
amounts due thereunder and has satisfied in full or provided for all of its
liabilities and obligations thereunder, except for such amounts as are being
contested by the Company in good faith. Neither the Company nor any of its
Subsidiaries has received notice of a default and is not in default under, or
with respect to, any Material Contractual Obligation nor, to the Knowledge of
the Company, does any
14
condition exist that with notice or lapse of time or both would constitute a
default thereunder. To the Knowledge of the Company, no other party to any such
Contractual Obligation is in default thereunder, nor does any condition exist
that with notice or lapse of time or both would constitute a default by such
other party thereunder.
3.9 TITLE TO PROPERTIES. The Company and each of its Subsidiaries
has good, record and marketable title in fee simple to, or holds interests as
lessee under leases in full force and effect in, all real property used in
connection with its business or otherwise owned or leased by it. The Company and
each of its Subsidiaries owns and has good, valid and marketable title to all of
its properties and assets used in its business or reflected as owned on the
Financial Statements, in each case free and clear of all Liens, except for
Permitted Liens, or that would required to be described in the notes to the
Financial Statements.
3.10 REPORTS; FINANCIAL XXXXXXXXXX.Xx of the respective dates of
their filing with the Commission, all reports, registration statements and other
filings, together with any amendments thereto, filed by the Company with the
Commission since June 30, 2000 (the "SEC REPORTS"), complied in all material
respects with the applicable requirements of the Securities Act, the Exchange
Act, and the rules and regulations of the Commission promulgated thereunder,
except as disclosed in the SEC Reports. The SEC Reports did not at the time they
were filed with the Commission, or will not at the time they are filed with the
Commission, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading. The Company has delivered or made available to the Investors
true and complete copies of, or will make available at each Investor's request
the SEC Reports and any exhibits thereto. Except as set forth in SCHEDULE
3.10(A), the Company is not aware of any issues raised by the Commission with
respect to any of the SEC Reports, other than those disclosed in the SEC
Reports.
(a) The consolidated financial statements (including, in each
case, any related schedules or notes thereto) contained in or incorporated by
reference in the SEC Reports and any such reports, registration statements and
other filings to be filed by the Company with the Commission prior to the
Initial Closing Date or the Second Closing Date, as the case may be (the
"FINANCIAL STATEMENTS"), (i) have been or will be prepared in accordance with
the published rules and regulations of the Commission and GAAP consistently
applied during the periods involved (except as may be indicated in the notes
thereto) and (ii) fairly present or will fairly present in all material respects
the consolidated financial position of the Company and its Subsidiaries as of
the respective dates thereof and the consolidated results of operations,
statements of stockholders' equity and cash flows for the periods indicated,
except that any unaudited interim financial statements were or will be subject
to normal and recurring year-end adjustments and may omit footnote disclosure as
permitted by regulations of the Commission.
3.11 TAXES. (a) The Company and each of its Subsidiaries has paid
all Taxes which have come due and are required to be paid by it through the date
hereof, and all deficiencies or other additions to Tax, interest and penalties
owed by it in connection
15
with any such Taxes, other than Taxes being disputed by the Company in good
faith for which adequate reserves have been made in accordance with GAAP; (b)
the Company and each of its Subsidiaries has timely filed or caused to be filed
all returns for Taxes that it is required to file on and through the date hereof
(including all applicable extensions), and all such Tax returns are accurate and
complete in all material respects; (c) with respect to all Tax returns of the
Company and each of its Subsidiaries, (i) there is no unassessed Tax deficiency
proposed or, to the Knowledge of the Company, threatened against the Company or
any of its Subsidiaries and (ii) no audit is in progress with respect to any
return for Taxes, no extension of time is in force with respect to any date on
which any return for Taxes 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; (d)
all provisions for Tax liabilities of the Company and each of its Subsidiaries
have been disclosed in the Financial Statements and made in accordance with GAAP
consistently applied, and all liabilities for Taxes of the Company and each of
its Subsidiaries attributable to periods prior to or ending on the Initial
Closing Date or the Second Closing Date, as the case may be, have been
adequately disclosed in the Financial Statements; and (e) there are no Liens for
Taxes on the assets of the Company or any of its Subsidiaries, other than
Permitted Liens.
3.12 NO MATERIAL ADVERSE CHANGE; ORDINARY COURSE OF BUSINESS.
Except as set forth on SCHEDULE 3.12, since December 31, 2003, (a) there has not
been any material adverse change in the Condition of the Company, (b) neither
the Company nor any of its Subsidiaries has participated in any transaction
material to the Condition of the Company, including, without limitation,
declaring or paying any dividend or declaring or making any distribution to its
stockholders except out of the earnings of the Company or its Subsidiary, as the
case may be, (c) neither the Company nor any of its Subsidiaries has entered
into any Material Contractual Obligation, other than in the ordinary course of
business and (d) there has not occurred a material change in the accounting
principles or practice of the Company or any of its Subsidiaries except as
required by reason of a change in GAAP.
3.13 PRIVATE OFFERING. Neither the Company nor any authorized
Person acting on its behalf has, in connection with the offer, sale, exchange or
issuance of the Notes, the Warrants, the Warrant Shares or the Common Shares,
engaged in (a) any form of general solicitation or general advertising (as those
terms are used within the meaning of RULE 502(C) under the Securities Act), (b)
any action involving a public offering within the meaning of SECTION 4(2) of the
Securities Act, or (c) any action that would require the registration under the
Securities Act of the offering, sale, exchange or issuance of the Notes, the
Warrants, the Series F Preferred Shares and the Common Shares pursuant to this
Agreement or that would violate applicable state securities or "blue sky" laws.
As used herein, the terms "offer" and "sale" have the meanings specified in
SECTION 2(3) of the Securities Act.
3.14 LABOR RELATIONS. Except as could not reasonably be expected to
have a material adverse effect on the Condition of the Company: (a) neither the
Company nor any of its Subsidiaries is engaged in any unfair labor practice; (b)
there is no strike, labor dispute, slowdown or stoppage pending or, to the
Knowledge of the
16
Company, threatened against the Company or any of its Subsidiaries; (c) neither
the Company nor any of its Subsidiaries is a party to any collective bargaining
agreement or contract; and (d) no union organizing activities are taking place.
To the Knowledge of the Company, no officer or key employee, or any group of key
employees, intends to terminate their employment with the Company or any of its
Subsidiaries. To the Knowledge of the Company, each of the officers and key
employees of the Company and each of its Subsidiaries spends all, or
substantially all, of his business time on the business of the Company or its
Subsidiary, as the case may be. To the Knowledge of the Company, none of the
employees of the Company or any of its Subsidiaries is resident in the United
States in violation of any Requirement of Law.
3.15 EMPLOYEE BENEFIT PLANS.
(a) The SEC Reports list or describe each Plan that the Company or
any of its Subsidiaries maintains or to which the Company or any of its
Subsidiaries contributes (the "COMPANY PLANS"). Neither the Company nor any of
its Subsidiaries has any liability under any Plans other than the Company Plans.
Except as described in or incorporated by reference in the SEC Reports, neither
the Company nor any Commonly Controlled Entity maintains or contributes to, or
has within the preceding six years maintained or contributed to, or may have any
liability with respect to any Plan subject to Title IV of ERISA or SECTION 412
of the Code or any "MULTIPLE EMPLOYER PLAN" within the meaning of the Code or
ERISA. Each Company Plan (and related trust, insurance contract or fund) has
been established and administered in accordance with its terms, and complies in
form and in operation with the applicable requirements of ERISA and the Code and
other applicable Requirements of Law. All contributions (including all employer
contributions and employee salary reduction contributions) which are due have
been paid to each Company Plan.
(b) No Claim with respect to the administration or the investment
of the assets of any Company Plan (other than routine claims for benefits) is
pending.
(c) Except as could not reasonably be expected to have a material
adverse effect on the Condition of the Company, each Company Plan that is
intended to be qualified under SECTION 401(A) of the Code is so qualified and
has been so qualified during the period since its adoption; each trust created
under any such Plan is exempt from tax under SECTION 501(A) of the Code and has
been so exempt since its creation.
(d) No Company Plan is a Retiree Welfare Plan.
(e) Neither the consummation of the transactions contemplated by
this Agreement nor any termination of employment following such transactions
will accelerate the time of the payment or vesting of, or increase the amount
of, compensation due to any employee or former employee whether or not such
payment would constitute an "EXCESS PARACHUTE PAYMENT" under SECTION 280G of the
Code.
(f) There are no unfunded obligations under any Company Plan which
are not fully reflected in the Financial Statements.
17
(g) Except as could not reasonably be expected to have a material
adverse effect on the Condition of the Company, the Company has no liability,
whether absolute or contingent, including any obligations under any Company
Plan, with respect to any misclassification of any person as an independent
contractor rather than as an employee.
3.16 LIABILITIES. Neither the Company nor any of its Subsidiaries
has any direct or indirect obligation or liability (the "LIABILITIES") which are
not fully reflected or reserved against in the Financial Statements, other than
Liabilities not exceeding $1,000,000 in the aggregate incurred since December
31, 2003 in the ordinary course of business. The Company has no Knowledge of any
circumstance, condition, event or arrangement that could reasonably be expected
to give rise hereafter to any Liabilities of the Company or any of its
Subsidiaries that, individually or in the aggregate, could have a material
adverse effect on the Condition of the Company.
3.17 AFFILIATE TRANSACTIONS. Except as set forth on SCHEDULE 3.17,
in the twelve (12) months preceding the date hereof, neither the Company nor any
of its Subsidiaries has sold, leased or otherwise transferred any property or
assets to, or purchased, leased or otherwise acquired any property or assets
from, or otherwise engaged in any other transactions with, any of its
Affiliates, except in (a) transactions that are at prices and on terms and
conditions not less favorable to the Company or such Subsidiary than could be
obtained on an arm's length basis from unrelated third parties, (b) transactions
exclusively between the Company and one or more of its Subsidiaries, or between
two or more Subsidiaries of the Company, and which do not involve any other
Affiliate and (c) transactions under the agreements listed on SCHEDULE 3.17
hereto.
3.18 INTELLECTUAL PROPERTY.
(a) (i) The Company and each of its Subsidiaries is the owner
of all, or has the license or right to use, sell and license all of, the
Copyrights, Patents, Trade Secrets, Trademarks, Internet Assets, Software
and other proprietary rights (collectively, "INTELLECTUAL PROPERTY") that
are used in connection with its business as presently conducted, free and
clear of all Liens, other than Permitted Liens.
(ii) None of the Intellectual Property is subject to any
outstanding Order, and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand is pending or, to the Knowledge of the
Company, threatened, which challenges the validity, enforceability, use or
ownership of the item.
(iii) The Company and each of its Subsidiaries has
substantially performed all obligations imposed upon it under all
Intellectual Property licenses, sublicenses, distributor agreements and
other agreements under which the Company or any of its Subsidiaries is
either a licensor, licensee or distributor, except such licenses,
sublicenses and other agreements relating to off-the-shelf
18
software which is commercially available on a retail basis and used solely
on the computers of the Company or its Subsidiaries (collectively, the "IP
AGREEMENTS"). The Company and each of its Subsidiaries is not, nor to the
Knowledge of the Company is any other party thereto, in breach of or
default thereunder in any respect, nor is there any event which with notice
or lapse of time or both would constitute a default thereunder. All of the
IP Agreements are valid, enforceable and in full force and effect, and will
continue to be so on identical terms immediately following the Initial
Closing and the Second Closing, as the case may be, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar
laws affecting the enforcement of creditors' rights generally and by
general principles of equity relating to enforceability (regardless of
whether considered in a proceeding at law or in equity).
(iv) None of the Intellectual Property currently sold or
licensed by the Company or any of its Subsidiaries to any Person or used by
or licensed to the Company or any of its Subsidiaries by any Person
infringes upon or otherwise violates any Intellectual Property rights of
others, except as could not reasonably be expected to have a material
adverse effect on the Condition of the Company.
(b) No litigation is pending and no Claim has been made against
the Company or any of its Subsidiaries or, to the Knowledge of the Company, is
threatened, contesting the right of the Company or any of its Subsidiaries to
sell or license to any Person or use the Intellectual Property presently sold or
licensed to such Person or used by the Company or any of its Subsidiaries. To
the Knowledge of the Company, no Person is infringing upon or otherwise
violating the Intellectual Property rights of the Company or any of its
Subsidiaries.
(c) No former employer of any employee of the Company or any of
its Subsidiaries has made a claim against the Company or any of its Subsidiaries
or, to the Knowledge of the Company, against any other Person, that such
employee or such consultant is utilizing Intellectual Property of such former
employer.
(d) To the Knowledge of the Company, none of the Trade Secrets,
wherever located, the value of which is contingent upon maintenance of
confidentiality thereof, has been disclosed to any Person other than employees,
representatives and agents of the Company or any of its Subsidiaries, except as
required pursuant to the filing of a patent application by the Company or any of
its Subsidiaries.
(e) It is not necessary for the business of the Company or any of
its Subsidiaries to use any Intellectual Property owned by any director,
officer, employee or consultant of the Company or any of its Subsidiaries (or
persons the Company or any of its Subsidiaries presently intends to hire). To
the Company's Knowledge, at no time during the conception or reduction to
practice of any of the Intellectual Property of the Company or any of its
Subsidiaries was any developer, inventor or other contributor to such
Intellectual Property operating under any grants from any Governmental Authority
or subject to any employment agreement, invention assignment, nondisclosure
agreement
19
or other Contractual Obligation with any Person that could materially adversely
affect the rights of the Company or any of its Subsidiaries to its Intellectual
Property.
3.19 PRIVACY OF CUSTOMER INFORMATION. Neither the Company nor any
of its Subsidiaries use any of the customer information it receives through its
website or otherwise in an unlawful manner, or in a manner violative of the
privacy policy of the Company or its Subsidiary, as the case may be, or the
privacy rights of its customers. Neither the Company nor any of its Subsidiaries
has collected any customer information through its website in an unlawful manner
or in violation of its privacy policy. The Company and each of its Subsidiaries
has adequate security measures in place to protect the customer information it
receives through its website and which it stores in its computer systems from
illegal use by third parties or use by third parties in a manner violative of
the rights of privacy of its customers. The Company and each of its Subsidiaries
represents to its customers that it assures complete security as to the customer
information it receives through its website.
3.20 POTENTIAL CONFLICTS OF INTEREST. Except as set forth on
SCHEDULE 3.20, no officer, director or stockholder beneficially owning more than
five percent (5%) of the outstanding shares of Common Stock, to the Knowledge of
the Company, no spouse of any such officer, director or stockholder, and, to the
Knowledge of the Company, no Affiliate of any of the foregoing (a) owns,
directly or indirectly, any interest in (excepting less than one percent (1%)
stock holdings for investment purposes in securities of publicly held and traded
companies), or is an officer, director, employee or consultant of, any Person
which is, or is engaged in business as, a competitor, lessor, lessee, supplier,
distributor, or customer of, or Investor to or borrower from, the Company or any
of its Subsidiaries; (b) owns, directly or indirectly, in whole or in part, any
tangible or intangible property that the Company or any of its Subsidiaries use,
in the conduct of business; or (c) has any cause of action or other claim
whatsoever against, or owes or has advanced any amount to, the Company or any of
its Subsidiaries, except for claims in the ordinary course of business such as
for accrued vacation pay, accrued benefits under employee benefit plans, and
similar matters and agreements existing on the date hereof.
3.21 TRADE RELATIONS. There exists no actual or, to the Knowledge
of the Company, threatened termination, cancellation or limitation of, or any
material adverse modification or change in, the business relationship of the
Company or any of its Subsidiaries, or the business of the Company or any of its
Subsidiaries, with any customer or supplier or any group of customers or
suppliers whose purchases or inventories provided to the business of the Company
or any of its Subsidiaries are individually or in the aggregate material to the
Condition of the Company.
3.22 OUTSTANDING BORROWING. SCHEDULE 3.22 sets forth the amount of
all Indebtedness of the Company and each of its Subsidiaries as of the date
hereof, the Liens
20
that relate to such Indebtedness and that encumber the Assets and the name of
each Investor thereof. No Indebtedness is entitled to any voting rights in any
matters voted upon by the holders of the Common Stock.
3.23 BROKER'S, FINDER'S OR SIMILAR FEES. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by the Company
or any of its Subsidiaries in connection with the transactions contemplated
hereby based on any agreement, arrangement or understanding with the Company or
any of its Subsidiaries or any action taken by any such Person.
3.24 CCC SECTION. The provisions of Section 1203 of the California
Corporations Code are not applicable to the transactions contemplated by this
Agreement or any of the Transaction Documents.
3.25 DISCLOSURE. This Agreement and the documents and certificates
furnished to the Investors by the Company do not contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which they were made, not misleading.
3.26 INVESTMENTS. As of the date hereof, except as set forth on
SCHEDULE 3.26 hereto, neither the Company nor any of its Subsidiaries has made
an Investment in any Person, other than a Permitted Investment.
3.27 XXXXXXXX-XXXXX COMPLIANCE.
(a) The financial statements of the Company, together with the
related schedules and notes, that are incorporated by reference in the
Registration Statement and the Prospectus filed with the Commission on December
24, 2003, as amended: (i) present fairly, in all material respects, the
financial position of the Company as of the dates indicated and the results of
operations and cash flows of the Company for the periods specified; (ii) have
been prepared in compliance with requirements of the Exchange Act and in
conformity with generally accepted accounting principles in the United States
applied on a consistent basis during the periods presented and the schedules
included in the Registration Statement present fairly, in all material respects,
the information required to be stated therein; and (iii) comply with the
antifraud provisions of the Federal securities laws. There are no financial
statements (historical or pro forma) that are required to be included in the
Registration Statement and the Prospectus that are not included as required by
the Securities Act. All non-GAAP financial measures included or incorporated by
reference in the Registration Statement or the Prospectus comply in all material
respects with the applicable requirements of the Xxxxxxxx-Xxxxx Act of 2002 (the
"XXXXXXXX-XXXXX ACT") and the rules and regulations promulgated by the
Commission thereunder.
(b) The Company's Board of Directors has validly appointed an
Audit Committee whose composition satisfies the requirements of Rule 4350A(d)(2)
of the Rules of the National Association of Securities Dealers, Inc. (the "NASD
RULES") and the
21
Board of Directors and/or the Audit Committee has adopted a charter that
satisfies the requirements of Rule 4350A(d)(1) of the NASD Rules.
(c) The Company has established and maintains disclosure controls
and procedures (as such term is defined in Rule 13a-15 and 15d-15 under the
Exchange Act). Such disclosure controls and procedures are designed to ensure
that material information relating to the Company is made known to the Company's
principal executive officer and principal financial officer by others within the
Company. As of the end of the Company's last completed fiscal quarter, such
disclosure controls and procedures were effective to perform the functions for
which they were established, and the Company will use commercially reasonable
efforts to ensure that the Company's disclosure controls and procedures remain
effective to perform the functions for which they were established. The
Company's auditors and the Audit Committee of the Board of Directors have been
advised of: (i) any significant deficiencies and material weaknesses in the
design or operation of internal controls over financial reporting which are
reasonably likely to adversely affect the Company's ability to record, process,
summarize, and report financial information; and (ii) any fraud, whether or not
material, that involves management or other employees who have a significant
role in the Company's internal controls over financial reporting. Since the date
of the most recent evaluation of such disclosure controls and procedures, there
have been no changes in internal controls over financial reporting that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting. The principal executive
officer and the principal financial officers of the Company have made all
certifications required by the Xxxxxxxx-Xxxxx Act and any related rules and
regulations promulgated by the Commission thereunder, and the statements
contained in any such certification are complete and correct. The Company is in
compliance in all material respects with all provisions of the Xxxxxxxx-Xxxxx
Act that are effective and applicable to the Company, except for the
requirements of the Xxxxxxxx-Xxxxx Act which are not yet required to be complied
with by the Company. The Company has established procedures to implement timely
additional rules and regulations applicable to the Company that may be
promulgated by the Commission pursuant to the Xxxxxxxx-Xxxxx Act.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each of the Investors hereby represents and warrants,
severally and not jointly, to the Company as follows:
4.1 EXISTENCE AND POWER. Such Investor (a) is a limited
partnership, corporation, partnership or limited liability company duly
organized and validly existing under the laws of the jurisdiction of its
formation and (b) has the requisite partnership, corporate or limited liability
company, as the case may be, power and authority to
22
execute, deliver and perform its obligations under this Agreement and each of
the other Transaction Documents to which it is a party.
4.2 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
performance by such Investor of this Agreement and each of the other Transaction
Documents to which it is a party and the transactions contemplated hereby and
thereby, (a) have been duly authorized by all necessary partnership, corporate
or limited liability company, as the case may be, action, (b) do not contravene
the terms of such Investor's organizational documents, or any amendment thereof,
(c) do not violate, conflict with or result in any breach or contravention of,
or the creation of any Lien under, any Contractual Obligation of such Investor
or any Requirement of Law applicable to such Investor, and (d) do not violate
any Orders of any Governmental Authority against, or binding upon, such
Investor.
4.3 GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENTS. Except for
the Stockholder Approval, no approval, consent, compliance, exemption,
authorization or other action by, or notice to, or filing with, any Governmental
Authority or any other Person, and no lapse of a waiting period under any
Requirement of Law, is necessary or required in connection with the execution,
delivery or performance by, or enforcement against, such Investor of this
Agreement and each of the other Transaction Documents to which it is a party or
the transactions contemplated hereby and thereby.
4.4 BINDING EFFECT. This Agreement and each of the other
Transaction Documents to which such Investor is a party, have been duly executed
and delivered by such Investor, and this Agreement and each of the other
Transaction Documents to which such Investor is a party, constitute the legal,
valid and binding obligations of such Investor, enforceable against it in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer,
moratorium or similar laws affecting the enforcement of creditors' rights
generally or by equitable principles relating to enforceability (regardless of
whether considered in a proceeding at law or in equity).
4.5 PURCHASE FOR OWN ACCOUNT. The Notes, the Warrants and the
Warrant Shares or Common Shares to be acquired by such Investor, respectively,
are being or will be acquired for its own account and with no intention of
distributing or reselling such Notes, Warrants, Warrant Shares or Common Shares
or any part thereof in any transaction that would be in violation of the
securities laws of the United States of America, any state of the United States
or any foreign jurisdiction, without prejudice, however, to the rights of such
Investor at all times to sell or otherwise dispose of all or any part of such
Notes, Warrants, Warrant Shares and Common Shares under an effective
registration statement under the Securities Act, or under an exemption from such
registration available under the Securities Act, and subject, nevertheless, to
the disposition of such Investor's property being at all times within its
control. If such Investor should in the future decide to dispose of any of such
Notes, Warrants, Warrant Shares or Common Shares, such Investor understands and
agrees that it may do so only in compliance with the Securities Act and
applicable state and foreign securities laws, as then in effect. Such Investor
agrees to the imprinting for so long as required by law, of a
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legend on certificates representing all of its Notes, Warrants, Warrant Shares
and Common Shares to the following effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY FOREIGN JURISDICTION. THE SECURITIES MAY NOT BE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE AND FOREIGN
SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
4.6 RESTRICTED SECURITIES. Such Investor understands that the
Notes, the Warrants, the Warrant Shares and Common Shares issuable upon exercise
of the Warrants and conversion of the Series F Preferred Stock (the
"SECURITIES") will not be registered at the time of their issuance under the
Securities Act for the reason that the sale provided for in this Agreement is
exempt pursuant to SECTION 4(2) of the Securities Act and that the reliance of
the Company on such exemption is predicated in part on such Investor's
representations set forth herein.
4.7 ACCREDITED INVESTOR. Such Investor is an "ACCREDITED INVESTOR"
within the meaning of RULE 501 of Regulation D under the Securities Act, as
presently in effect.
4.8 EXPERIENCE. Such Investor, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment. Such Investor is able to bear the economic risk of
an investment in the Securities and, at the present time, is able to afford a
complete loss of such investment.
4.9 ACCESS TO INFORMATION. Such Investor has reviewed the SEC
Reports and has been afforded: (a) the opportunity to ask such questions as it
has deemed necessary of, and to receive answers from, representatives of the
Company concerning the terms and conditions of the offering of the Securities
and the merits and risks of investing in the Securities; (b) access to publicly
available information about the Company and the Subsidiaries and the Condition
of the Company sufficient to enable it to evaluate its investment; and (c) the
opportunity to obtain such additional publicly
24
available information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an informed investment
decision with respect to the investment. Neither such inquiries nor any other
investigation conducted by or on behalf of such Investor or its representatives
or counsel shall modify, amend or affect such Investor's right to rely on the
truth, accuracy and completeness of the SEC Reports and the Company's
representations and warranties contained in the Transaction Documents.
4.10 GENERAL SOLICITATION. Such Investor is not purchasing the
Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement.
4.11 RELIANCE. Such Investor understands and acknowledges that: (a)
the Securities are being offered and sold to it without registration under the
Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (b) the availability of such exemption
depends in part on, and the Company will rely upon the accuracy and truthfulness
of, the foregoing representations and such Investor hereby consents to such
reliance.
ARTICLE V
CONDITIONS TO INITIAL CLOSING
5.1 CONDITIONS TO INVESTORS' OBLIGATIONS. Each of the Investors'
obligation to consummate the transactions contemplated by the Initial Closing
pursuant to this Agreement is subject to the fulfillment at or prior to the
Initial Closing of the following conditions, any of which may be waived in whole
or in part by such Investor:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Company in ARTICLE III hereof shall be true and correct
on the Initial Closing Date.
(b) PERFORMANCE. All covenants, agreements and conditions
contained in this Agreement to be performed by the Company on or prior to the
Initial Closing Date shall have been performed or complied with.
(c) COMPLIANCE CERTIFICATE. The Company shall have delivered to
the Investors a certificate of the Company, executed by the Chief Executive
Officer of the Company and dated as of the Initial Closing Date, certifying to
the fulfillment of the conditions specified in SECTION 5.1(A) and SECTION 5.1(B)
hereof.
25
(d) SECRETARY'S CERTIFICATE. The Company shall have delivered to
the Investors a certificate from the Company, in form and substance satisfactory
to the Investors, dated as of the Initial Closing Date and signed by the
Secretary or an Assistant Secretary of the Company, certifying (i) that the
Company is in good standing with the Secretary of State of the State of
California and (ii) that the attached copies of the Articles of Incorporation,
the By-laws, and resolutions of the Board of Directors of the Company approving
this Agreement and each of the Transaction Documents to which the Company is a
party and the transactions contemplated hereby and thereby, are all true,
complete and correct and remain unamended and in full force and effect.
(e) OPINION OF COUNSEL. The Company shall have caused the opinion
of Paul, Hastings, Xxxxxxxx & Xxxxxx, LLP, dated the Initial Closing Date,
relating to the transactions contemplated by the Initial Closing, substantially
in the form attached hereto as EXHIBIT F to be delivered to the Investors.
(f) TRANSACTION DOCUMENTS. The Company shall have executed and
delivered to the Investors each Transaction Document (other than this Agreement)
to which it is a party.
(g) COMPLIANCE WITH LAWS. The issuance of Notes and the Warrants
at the Initial Closing pursuant to this Agreement and the Warrant Shares and
Common Shares upon exercise of such Warrants and conversion of the Warrant
Shares, respectively, pursuant to the terms of such Warrants, the Series F
Certificate of Determination and this Agreement shall be legally permitted by
all Requirements of Law to which the Company is subject.
(h) QUALIFICATIONS. All authorizations, approvals, consents or
permits, if any, of any Person that are required in connection with the lawful
issuance and sale of the Notes and the Warrants at the Initial Closing pursuant
to this Agreement and the Warrant Shares and Common Shares upon exercise of such
Warrants and conversion of the Warrant Shares, respectively, pursuant to the
terms of such Warrants, the Series F Certificate of Determination and this
Agreement shall be duly obtained and effective as of the Initial Closing Date.
(i) CERTIFICATE OF DETERMINATION. The Company shall have duly
filed with the Secretary of State of the State of California the Series F
Certificate of Determination.
(j) DELIVERIES. Simultaneously with the Initial Closing, the
Company shall make the deliveries set forth in Section 2.4(c).
5.2 CONDITIONS TO COMPANY'S OBLIGATIONS. The Company's obligation
to consummate the transactions contemplated by the Initial Closing pursuant to
this Agreement is subject to the fulfillment at or prior to the Initial Closing
of the following conditions, any of which may be waived in whole or in part by
the Company:
26
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Investors in ARTICLE IV hereof shall be true and correct
on the Initial Closing Date.
(b) PERFORMANCE. All covenants, agreements and conditions
contained in this Agreement to be performed by the Investors on or prior to the
Initial Closing Date shall have been performed or complied with.
(c) DELIVERIES. Simultaneously with the Initial Closing, the
Investors shall make the deliveries set forth in Section 2.4(d).
ARTICLE VI
CONDITIONS TO SECOND CLOSING
6.1 CONDITIONS TO INVESTORS' OBLIGATIONS. Each of the Investors'
obligation to consummate the transactions contemplated by the Second Closing
pursuant to this Agreement is subject to the fulfillment at or prior to the
Second Closing of the following conditions, any of which may be waived in whole
or in part by such Investor:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Company in ARTICLE III hereof shall be true and correct
on the Second Closing Date.
(b) PERFORMANCE. All covenants, agreements and conditions
contained in this Agreement to be performed by the Company on or prior to the
Second Closing Date shall have been performed or complied with.
(c) COMPLIANCE CERTIFICATE. The Company shall have delivered to
the Investors a certificate of the Company, executed by the Chief Executive
Officer of the Company and dated as of the Second Closing Date, certifying to
the fulfillment of the conditions specified in SECTION 6.1(A) and SECTION 6.1(B)
hereof.
(d) SECRETARY'S CERTIFICATE. The Company shall have delivered to
the Investors a certificate from the Company, in form and substance satisfactory
to the Investors, dated as of the Second Closing Date and signed by the
Secretary or an Assistant Secretary of the Company, certifying (i) that the
Company is in good standing with the Secretary of State of the State of
California and (ii) that the attached copies of the Articles of Incorporation,
the By-laws, and resolutions of the Board of Directors of the Company approving
this Agreement and each of the Transaction Documents to which the Company is a
party and the transactions contemplated hereby and thereby, are all true,
complete and correct and remain unamended and in full force and effect.
(e) OPINION OF COUNSEL. The Company shall have caused the opinion
of Paul, Hastings, Xxxxxxxx & Xxxxxx, LLP, dated the Second Closing Date,
relating to the transactions contemplated by the Second Closing, substantially
in the form attached hereto as EXHIBIT F to be delivered to the Investors.
27
(f) COMPLIANCE WITH LAWS. The issuance of Notes and the Warrants
at the Second Closing pursuant to this Agreement and the Warrant Shares and
Common Shares upon exercise of such Warrants and conversion of the Warrant
Shares, respectively, pursuant to the terms of such Warrants, the Series F
Certificate of Determination and this Agreement shall be legally permitted by
all Requirements of Law to which the Company is subject.
(g) QUALIFICATIONS. All authorizations, approvals, consents or
permits, if any, of any Person that are required in connection with the lawful
issuance and sale of the Notes and the Warrants at the Second Closing pursuant
to this Agreement and the Warrant Shares and Common Shares upon exercise of such
Warrants and conversion of the Warrant Shares, respectively, pursuant to the
terms of such Warrants, the Series F Certificate of Determination and this
Agreement shall be duly obtained and effective as of the Second Closing Date.
(h) BOARD CONFIRMATION. The Company shall have sent written notice
to the Investors after March 1, 2005, but on or prior to March 31, 2005,
attaching a resolution or written consent approved by the non-interested members
of the Board of Directors that states that it is in the best interests of the
stockholders and creditors of the Company for the Company to borrow the
aggregate principal amounts set forth opposite the Investors' names on SCHEDULE
2.1(B).
(i) EVENT OF DEFAULT. There shall not be, or have been at any time
since the First Closing, an Event of Default (as defined in the Notes) under the
Notes issued to the Investors at the First Closing.
(j) DELIVERIES. Simultaneously with the Second Closing, the
Company shall make the deliveries set forth in Section 2.4(e).
6.2 CONDITIONS TO COMPANY'S OBLIGATIONS. The Company's obligation
to consummate the transactions contemplated by the Second Closing pursuant to
this Agreement is subject to the fulfillment at or prior to the Second Closing
of the following conditions, any of which may be waived in whole or in part by
the Company:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Investors in ARTICLE IV hereof shall be true and correct
on the Second Closing Date.
(b) PERFORMANCE. All covenants, agreements and conditions
contained in this Agreement to be performed by the Investors on or prior to the
Second Closing Date shall have been performed or complied with.
(c) DELIVERIES. Simultaneously with the Second Closing, the
Investors shall make the deliveries set forth in Section 2.4(f).
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ARTICLE VII
INDEMNIFICATION
7.1 INDEMNIFICATION. Except as otherwise provided in this ARTICLE
VII, the Company (the "INDEMNIFYING Party") agrees to indemnify, defend and hold
harmless each of the Investors and their Affiliates and their respective
officers, directors, agents, employees, subsidiaries, partners, members and
controlling persons (each, an "INDEMNIFIED PARTY") to the fullest extent
permitted by law from and against any and all losses, Claims, or written threats
thereof (including, without limitation, any Claim by a third party), damages,
expenses (including reasonable fees, disbursements and other charges of counsel
incurred by the Indemnified Party in any action between the Indemnifying Party
and the Indemnified Party or between the Indemnified Party and any third party
or otherwise) or other liabilities (collectively, "LOSSES") resulting from or
arising out of any breach of any representation or warranty, covenant or
agreement by the Company in the Transaction Documents. The amount of any payment
to any Indemnified Party herewith in respect of any Loss shall be of sufficient
amount to make such Indemnified Party whole for any diminution in value of the
Warrants, the Series F Preferred Stock, the Warrant Shares and/or Common Shares,
as applicable, directly caused by such breach. In connection with the obligation
of the Indemnifying Party to indemnify for expenses as set forth above, the
Indemnifying Party shall, upon presentation of appropriate invoices containing
reasonable detail, reimburse each Indemnified Party for all such expenses
(including reasonable fees, disbursements and other charges of counsel incurred
by the Indemnified Party in any action between the Indemnifying Party and the
Indemnified Party or between the Indemnified Party and any third party) as they
are incurred by such Indemnified Party; PROVIDED, HOWEVER, that if an
Indemnified Party is reimbursed under this ARTICLE VII for any expenses, such
reimbursement of expenses shall be refunded to the extent it is finally
judicially determined that the Losses in question resulted primarily from the
willful misconduct or gross negligence of such Indemnified Party.
7.2 NOTIFICATION. Each Indemnified Party under this ARTICLE VII
shall, promptly after the receipt of notice of the commencement of any Claim
against such Indemnified Party in respect of which indemnity may be sought from
the Indemnifying Party under this ARTICLE VII, notify the Indemnifying Party in
writing of the commencement thereof. The omission of any Indemnified Party to so
notify the Indemnifying Party of any such action shall not relieve the
Indemnifying Party from any liability which it may have to such Indemnified
Party (a) other than pursuant to this ARTICLE VII or (b) under this ARTICLE VII
unless, and only to the extent that, such omission results in the Indemnifying
Party's forfeiture of substantive rights or defenses. In case any such Claim
shall be brought against any Indemnified Party, and it shall notify the
Indemnifying Party of the commencement thereof, the Indemnifying Party shall be
entitled to assume the defense thereof at its own expense, with counsel
satisfactory to such Indemnified Party in its reasonable judgment; PROVIDED,
HOWEVER, that any Indemnified Party may, at its own expense, retain separate
counsel to participate in such defense at its own expense. Notwithstanding the
foregoing, in any Claim in which both the Indemnifying Party, on the one hand,
and an Indemnified Party, on the other hand,
29
are, or are reasonably likely to become, a party, such Indemnified Party shall
have the right to employ separate counsel and to control its own defense of such
Claim if, in the reasonable opinion of counsel to such Indemnified Party, either
(x) one or more defenses are available to the Indemnified Party that are not
available to the Indemnifying Party or (y) a conflict or potential conflict
exists between the Indemnifying Party, on the one hand, and such Indemnified
Party, on the other hand, that would make such separate representation
advisable; PROVIDED, HOWEVER, that the Indemnifying Party (i) shall not be
liable for the fees and expenses of more than one counsel to all Indemnified
Parties and (ii) shall reimburse the Indemnified Parties for all of such fees
and expenses of such counsel incurred in any action between the Indemnifying
Party and the Indemnified Parties or between the Indemnified Parties and any
third party, as such expenses are incurred; provided, however, that if an
Indemnified Party is reimbursed under this ARTICLE VII for any expenses, such
reimbursement of expenses shall be refunded to the extent it is finally
judicially determined that the Losses in question resulted primarily from the
willful misconduct or gross negligence of such Indemnified Party. The
Indemnifying Party agrees that it will not, without the prior written consent of
the Indemnified Party, settle, compromise or consent to the entry of any
judgment in any pending or threatened Claim relating to the matters contemplated
hereby (if any Indemnified Party is a party thereto or has been actually
threatened to be made a party thereto) unless such settlement, compromise or
consent includes an unconditional release of each Indemnified Party from all
liability arising or that may arise out of such Claim. The Indemnifying Party
shall not be liable for any settlement of any Claim effected against an
Indemnified Party without the Indemnifying Party's written consent, which
consent shall not be unreasonably withheld. The rights accorded to an
Indemnified Party hereunder shall be in addition to any rights that any
Indemnified Party may have at common law, by separate agreement or otherwise;
PROVIDED, HOWEVER, that notwithstanding the foregoing or anything to the
contrary contained in this Agreement, nothing in this ARTICLE VII shall restrict
or limit any rights that any Indemnified Party may have to seek equitable
relief.
7.3 CONTRIBUTION. If the indemnification provided for in this
ARTICLE VII from the Indemnifying Party is unavailable to an Indemnified Party
hereunder in respect of any Losses referred to herein, then the Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such Losses in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions which
resulted in such Losses, as well as any other relevant equitable considerations.
The relative faults of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action. The amount paid or payable by a party as a
result of the Losses referred to above shall be deemed to include, subject to
the limitations set forth in SECTION 7.1 and SECTION 7.2, any reasonable legal
or other fees, charges or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
30
ARTICLE VIII
COVENANTS
The Company hereby covenants and agrees with the Investors as
follows:
8.1 FINANCIAL STATEMENTS AND OTHER INFORMATION. If any time the
Company is not subject to the periodic disclosure obligations of the Exchange
Act, the Company shall deliver to each Investor, in form and substance
satisfactory to such Investor:
(a) as soon as available, but not later than ninety (90) days
after the end of each fiscal year of the Company, a copy of the audited
consolidated balance sheet of the Company and its Subsidiaries as of the end of
such fiscal year and the related statements of operations and cash flows for
such fiscal year, setting forth in each case in comparative form the figures for
the previous year, all in reasonable detail and accompanied by a management
summary and analysis of the operations of the Company for such fiscal year and
by the opinion of a nationally recognized independent certified public
accounting firm which report shall state without qualification that such
financial statements present fairly the financial condition as of such date and
results of operations and cash flows for the periods indicated in conformity
with GAAP applied on a consistent basis;
(b) as soon as available, but in any event not later than
forty-five (45) days after the end of each of the first three fiscal quarters of
each fiscal year, the unaudited consolidated balance sheet of the Company and
its Subsidiaries, and the related statements of operations and cash flows for
such quarter and for the period commencing on the first day of the fiscal year
and ending on the last day of such quarter, all certified by an appropriate
officer of the Company as presenting fairly the consolidated financial condition
as of such date and results of operations and cash flows for the periods
indicated in conformity with GAAP applied on a consistent basis, subject to
normal year-end adjustments and the absence of footnotes required by GAAP; and
(c) as soon as available, but in any event not later than ten (10)
days after the end of each month of each fiscal year, the unaudited consolidated
balance sheet of the Company and its Subsidiaries, and the related statements of
operations and cash flows for such month and for the period commencing on the
first day of the fiscal year and ending on the last day of such month, all
certified by an appropriate officer of the Company as presenting fairly the
consolidated financial condition as of such date and results of operations and
cash flows for the periods indicated in conformity with GAAP applied on a
consistent basis, subject to normal year-end adjustments and the absence of
footnotes required by GAAP.
8.2 FIRPTA CERTIFICATE. If requested by any of the Investors, as
promptly as practicable, but not later than five (5) days after the end of each
fiscal year of the Company, the Company shall deliver to such Investor, in form
and substance satisfactory to such Investor, a certificate signed by the Chief
Executive Officer of the
31
Company in customary form certifying that the Company is not a "foreign person"
within the meaning of Section 1445 of the Code.
8.3 RESERVATION OF SERIES F PREFERRED STOCK AND COMMON STOCK. The
Company shall at all times reserve and keep available out of its authorized
shares of Series F Preferred Stock, solely for the purpose of issue or delivery
upon exercise of the Warrants, as provided therein, the maximum number of shares
of Series F Preferred Stock that may be issuable or deliverable upon such
exercise. The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issue or delivery
upon conversion of the Series F Preferred Stock, as provided in the Series F
Certificate of Determination, the maximum number of shares of Common Stock that
may be issuable or deliverable upon such conversion. The Company shall issue
such shares of Series F Preferred Stock and Common Stock, in accordance with the
terms of the Warrants and Series F Certificate of Determination, as the case may
be, and otherwise comply with the terms hereof and thereof.
ARTICLE IX
TERMINATION
9.1 TERMINATION. Sections 2.4(b), 2.4(e) and 2.4(f) of this
Agreement and the obligation of the Investors to consummate the Second Closing
shall automatically terminate and be of no further force or effect:
(a) at any time on or prior to the Second Closing Date, by mutual
written consent of the Company and the Investors;
(b) at the election of the Company or the Investors by written
notice to the other parties hereto after 5:00 p.m., New York time, on March 31,
2005, if the Second Closing shall not have occurred through no fault of the
terminating party on or prior to such date, unless such date is extended by the
mutual written consent of the Company and the Investors;
(c) at the election of the Company or any of the non-defaulting
Investors, if there has been a material breach of any representation, warranty,
covenant or agreement on the part of either of the General Atlantic Entities or
Campina contained in this Agreement or the other Transaction Documents, which
breach has not been cured within ten (10) Business Days of notice to the
Investors of such breach; or
(d) at the election of any of the Investors, if there has been a
material breach of any representation, warranty, covenant or agreement on the
part of the Company contained in this Agreement or the other Transaction
Documents, which breach has not been cured within ten (10) Business Days notice
to the Company of such breach.
None of the parties hereto shall have any liability arising
out of a termination pursuant to this Section 9.1.
32
ARTICLE X
MISCELLANEOUS
10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties made herein shall survive the execution and
delivery of this Agreement until the date that is ninety (90) days after the
receipt by the Investors of audited financial statements of the Company for the
fiscal year ending December 31, 2004 (or, if such fiscal year changes and no
such audited consolidated financial statements are available, then the successor
fiscal year), except for (a) SECTIONS 3.1, 3.2, 3.4, 3.7, 3.13 and 3.23, which
representations and warranties shall survive until the third anniversary of the
Initial Closing Date, and (b) SECTION 3.11, which shall survive until the later
to occur of (i) the lapse of the statute of limitations with respect to the
assessment of any Tax to which such representation and warranty relates
(including any extensions or waivers thereof) and (ii) sixty (60) days after the
final administrative or judicial determination of the Taxes to which such
representation and warranty relates, and no claim with respect to SECTION 3.11
may be asserted thereafter with the exception of claims arising out of any fact,
circumstance, action or proceeding to which the party asserting such claim shall
have given notice to the other parties to this Agreement prior to the
termination of such period of reasonable belief that a tax liability will
subsequently arise therefrom.
10.2 NOTICES. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, telecopier,
courier service or personal delivery:
if to the Company:
Critical Path, Inc.
000 Xxx Xxxxxxxxxxx
Xxx Xxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Chief Financial Officer
with a copy to, which shall not constitute notice to the Company:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
00 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxxx, Esq.
33
if to the Investors:
if to any of the General Atlantic Entities:
c/o General Atlantic Service Corporation
0 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
Xxxxxx X. Xxxxxx
with a copy to, which shall not constitute notice:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxx, Esq.
if to Campina Enterprises Limited:
c/o 7th Floor
Xxxxxx Kong Center
0 Xxxxx'x Xxxx Xxxxxxx
Xxxx Xxxx
Telecopy: (000) 0000-0000
Attention: Xx. Xxxxxx Ip
(iv) if to Richmond III, LLC:
Richmond III, LLC
00000 Xxxxxxxxx Xxxx, Xxxxx 0
Xxxxx Xxxxxx, XX 00000
Telecopy: 000-000-0000
Attention: Xxxxx Xxxxxxx
All such notices, demands and other communications shall be
deemed to have been duly given when delivered by hand, if personally delivered;
when delivered by courier, if delivered by commercial courier service; five (5)
Business Days after being deposited in the mail, postage prepaid, if mailed; and
when receipt is mechanically acknowledged, if telecopied. Any party may by
notice given in accordance with this SECTION 10.2 designate another address or
Person for receipt of notices hereunder.
34
10.3 SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES. This
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of the parties hereto. Subject to applicable securities laws
and the terms and conditions thereof, the Investors may assign any of their
rights under this Agreement to any of their respective Affiliates. The Company
may not assign any of its rights under this Agreement without the written
consent of the Investors. Except as provided in ARTICLE VII, no Person other
than the parties hereto and their successors and permitted assigns is intended
to be a beneficiary of this Agreement.
10.4 AMENDMENT AND WAIVER.
(a) No failure or delay on the part of the Company or the
Investors in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Company or the Investors at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by the Company or the Investors from the terms of
any provision of this Agreement, shall be effective (i) only if it is made or
given in writing and signed by the Company and the Investors, and (ii) only in
the specific instance and for the specific purpose for which made or given.
Except where notice is specifically required by this Agreement, no notice to or
demand on the Company in any case shall entitle the Company to any other or
further notice or demand in similar or other circumstances.
(c) The Investors acknowledge and agree that notwithstanding the
terms and provisions of this Agreement and the Notes, no Investor shall be
entitled to take any action permitted to be taken by such Investor under this
Agreement or the Notes unless such Investor holds, together with its Affiliates,
Notes having an aggregate principal amount equal to at least 40% of the
aggregate principal amount of all of the Notes issued at the Initial Closing and
such Investor gives prompt written notice to the other Investors after such
exercise or exercises.
10.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
10.6 RICHMOND III REGISTRATION RIGHTS. If a request for Incidental
Registration (as defined in the Registration Rights Agreement) is made under the
Registration Rights Agreement, and to the extent permitted by the Registration
Rights Agreement, the Company agrees, upon the written request of Richmond III,
to include shares of common stock issuable upon conversion of shares of Series F
Preferred Stock
35
held by Richmond III in such Incidental Registration, as if Richmond III were a
Designated Holder. The rights and obligations (including provision relating to
registration expenses and indemnification and contribution) of a Designated
Holder under the Registration Rights Agreement shall apply equally to the
registration right granted to Richmond III under this Section to the extent
applicable to effect the registration rights hereunder.
10.7 COINVESTOR SUB-GROUP BOARD SEAT. The Company covenants and
agrees to cause the nomination of Xx. Xxxxxx Ip Tak Chuen, as the nominee of the
Coinvestor Sub-group (as defined in the Stockholders Agreement), to the
Company's Board of Directors at its next board meeting pursuant to its
obligation under Section 3.1(b) of the Stockholders Agreement. The Company
agrees to provide Xx. Xxxxxx Ip Xxx Xxxxx, so long as he is a member of the
Company's Board of Directors, copies of all materials which the Company provides
to its Board of Directors. Such materials shall be sent to Xx. Xxxxxx Ip Tak
Chuen at the same time that they are sent to the Company's Board of Directors.
10.8 OBSERVER RIGHTS. The Company covenants and agrees to allow one
individual designated by the Coinvestor Sub-group (who shall initially be Mr. Ma
Xxx Xxxx) and one individual designated by General Atlantic Partners 74, L.P.,
(on behalf of General Atlantic Stockholders) (each, an "Observer") to attend all
meetings of the Company's Board of Directors in a nonvoting capacity, and in
connection therewith, the Company shall give each Observer copies of all
materials which the Company provides to its Board of Directors, and such
materials shall be sent to the Observers at the same time that they are sent to
the Company's Board of Directors; provided, however, that the Company reserves
the right to exclude the Observers from access to any material or meeting or
portion thereof if the Company believes upon advice of counsel that such
exclusion is reasonably necessary to preserve the attorney-client privilege, to
protect highly confidential information or for other similar reasons. The
decision of the Board of Directors with respect to the privileged or
confidential nature of such information shall be final and binding. Notice of
meetings of the Company's Board of Directors to the director nominated by the
Coinvestor Sub-group and to the director nominated by the General Atlantic
Stockholders (as defined in the Stockholders Agreement) shall constitute notice
of such meetings to the Observers.
10.9 CERTAIN SERIES F PREFERRED STOCK TERMS. The Company and the
Investors agree as follows:
(a) The initial "Series F Conversion Price" (as defined in the
Series F Certificate of Determination) is $1.40, as adjusted pursuant to Section
7(c) of the Series F Certificate of Determination;
(b) The initial "Series F Price Per Share" (as defined in the
Series F Certificate of Determination) is $14.00 (subject to anti-dilution
adjustment for stock splits
36
of, combinations of and capital reorganizations with respect to the Series F
Preferred Stock); and
(c) The "Series F Closing Date" (as defined in the Series F
Certificate of Determination) is December 30, 2004.
10.10 HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
10.11 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to the principles of conflicts of law thereof.
10.12 SEVERABILITY. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
10.13 RULES OF CONSTRUCTION. Unless the context otherwise requires,
references to sections or subsections refer to sections or subsections of this
Agreement.
10.14 ENTIRE AGREEMENT. This Agreement, together with the exhibits
and schedules hereto, and the other Transaction Documents are intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein. There are no
restrictions, promises, representations, warranties or undertakings, other than
those set forth or referred to herein or therein. This Agreement, together with
the exhibits and schedules hereto, and the other Transaction Documents supersede
all prior agreements and understandings between the parties with respect to such
subject matter.
10.15 FEES. In the event that the Investors fail to consummate the
purchase of the Notes and the Warrants for any reason, the Company will not be
responsible for any out-of-pocket fees and expenses incurred by the Investors.
However, if the First Closing is consummated, the Company will reimburse the
Investors for all of their reasonable out-of-pocket fees and expenses incurred
in connection with the purchase of the Notes and Warrants, including fees and
reasonable disbursements of counsel.
10.16 PUBLICITY; CONFIDENTIALITY. Except as may be required by
applicable Requirements of Law, none of the parties hereto shall issue a
publicity release or public announcement or otherwise make any disclosure
concerning this Agreement, the transactions contemplated hereby, the Investors
or the business, technology and financial affairs of the Company, without prior
approval by the other parties hereto; PROVIDED, HOWEVER, that nothing in this
Agreement shall restrict any of the Investors from disclosing information (a)
that is already publicly available, (b) that was known to such
37
Investor on a non-confidential basis prior to its disclosure by the Company, (c)
that may be required or appropriate in response to any summons or subpoena or in
connection with any litigation, provided that such Investor will use reasonable
efforts to notify the Company in advance of such disclosure so as to permit the
Company to seek a protective order or otherwise contest such disclosure, and
such Investor will use reasonable efforts to cooperate, at the expense of the
Company, with the Company in pursuing any such protective order, (d) to the
extent that such Investor reasonably believes it appropriate in order to comply
with any Requirement of Law, (e) to such Investor's or the Company's officers,
directors, shareholders, advisors, employees, members, partners, controlling
persons, auditors or counsel or (f) to Persons from whom releases, consents or
approvals are required, or to whom notice is required to be provided, pursuant
to the transactions contemplated by the Transaction Documents. If any
announcement is required by any Requirement of Law to be made by any party
hereto, prior to making such announcement such party will deliver a draft of
such announcement to the other parties and shall give the other parties
reasonable opportunity to comment thereon; PROVIDED, HOWEVER, that the Investors
may file an amendment to their Schedule 13D and Forms 4 with the Commission
without either soliciting any comments from any of the other parties hereto or
delivering a copy of such filings to any of the other parties hereto, except as
required by law or regulation. Each of the Investors acknowledge that if such
Investor becomes aware of material non-public information, such Investor's
ability to trade in the Company's securities may be restricted.
10.17 FURTHER ASSURANCES. Each of the parties shall execute such
documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations or other actions by, or
giving any notices to, or making any filings with, any Governmental Authority or
any other Person) as may be reasonably required or desirable to carry out or to
perform the provisions of this Agreement.
[the remainder of this page intentionally left blank]
IN WITNESS WHEREOF, the undersigned have executed, or have caused to be
executed, this Note and Warrant Purchase Agreement on the date first written
above.
CRITICAL PATH, INC.,
a California corporation
By: /s/ Xxxxxxx Xxxxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Executive Vice President, General
Counsel and Secretary
Dated: December 29, 2004
SIGNATURE PAGE TO NOTE AND WARRANT PURCHASE AGREEMENT
GENERAL ATLANTIC PARTNERS 74, L.P.
By: GENERAL ATLANTIC PARTNERS, LLC,
its General Partner
By: /s/ Xxxxxxx Xxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxx
Title: A Managing Member
GAP COINVESTMENT PARTNERS II, L.P.
By: /s/ Xxxxxxx Xxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxx
Title: A General Partner
GAPSTAR, LLC
By: GENERAL ATLANTIC PARTNERS, LLC,
its Sole Member
By: /s/ Xxxxxxx Xxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxx
Title: A Managing Member
GAPCO GMBH & CO. KG
By: GAPCO MANAGEMENT GMBH, its General
Partner
By: /s/ Xxxxxxx Xxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Managing Director
SIGNATURE PAGE TO NOTE AND WARRANT PURCHASE AGREEMENT
CAMPINA ENTERPRISES LIMITED
By: /s/ Ma Xxx Xxxx
---------------------------------------
Name: Ma Xxx Xxxx
Title: Authorised Person
SIGNATURE PAGE TO NOTE AND WARRANT PURCHASE AGREEMENT
RICHMOND III, LLC
By: /s/ Xxxxx Xxxxxxx
---------------------------------------
Name: Xxxxx Xxxxxxx
Title: Managing Member
SIGNATURE PAGE TO NOTE AND WARRANT PURCHASE AGREEMENT
SCHEDULE 2.1(A)
INITIAL CLOSING
SHARES OF SERIES F PREFERRED
INVESTORS PURCHASE PRICE PRINCIPAL AMOUNT OF NOTE STOCK SUBJECT TO WARRANT
--------- -------------- ------------------------ ------------------------
General Atlantic Partners 74,
L.P. $4,146,663.81 $4,146,663.81 88,857
GapStar, LLC $321,256.48 $321,256.48 6,884
GAP Coinvestment Partners II,
L.P. $523,982.98 $523,982.98 11,228
GAPCO GmbH & Co. KG $8,096.73 $8,096.73 173
Campina Enterprises Limited $5,000,000 $5,000,000 107,142
Richmond III, LLC $1,000,000 $1,000,000 21,428
TOTAL: $11,000,000 $11,000,000 235,712
SCHEDULE 2.1(B)
SECOND CLOSING
SHARES OF SERIES F PREFERRED
INVESTORS PURCHASE PRICE PRINCIPAL AMOUNT OF NOTE STOCK SUBJECT TO WARRANT
--------- -------------- ------------------------ ------------------------
General Atlantic Partners 74,
L.P. $2,695,331.48 $2,695,331.48 57,758
GapStar, LLC $208,816.71 $208,816.71 4,474
GAP Coinvestment Partners II,
L.P. $340,588.94 $340,588.94 7,298
GAPCO GmbH & Co. KG $ 5,262.87 $ 5,262.87 112
Campina Enterprises Limited $3,250,000 $3,250,000 69,642
Richmond III, LLC $500,000 $500,000 10,714
TOTAL: $7,000,000 $7,000,000 149,998