Exhibit 9
VSOURCE, INC.
CONVERTIBLE SECURITIES EXCHANGE AGREEMENT
THIS CONVERTIBLE SECURITIES EXCHANGE AGREEMENT (this "AGREEMENT") is
made as of October 21, 2002 by and among the security holders set forth on
Exhibit A attached hereto (the "SECURITY HOLDERS") and Vsource, Inc., a company
organized under the laws of the State of Delaware (the "COMPANY").
WHEREAS, the Company has entered into a Series 4-A Convertible Preferred
Stock Purchase Agreement (the "PURCHASE AGREEMENT") dated as of October 21, 2002
with Capital International Asia CDPQ Inc. and Quilvest Asian Equity Ltd. (the
"INVESTORS"), pursuant to which the Investors have agreed, subject to the terms
and conditions set forth in the Purchase Agreement, to purchase certain shares
of Series 4-A Convertible Preferred Stock, par value U.S.$0.01 per share (the
"SERIES 4-A PREFERRED STOCK"), and Warrants of the Company;
WHEREAS, each of the Security Holders beneficially owns one or more of
the following which have been issued by the Company: Series 2-A Convertible
Preferred Stock, par value U.S.$0.01 per share (the "SERIES 2-A PREFERRED
STOCK"), Series 3-A Convertible Preferred Stock, par value U.S.$0.01 per share
(the "SERIES 3-A PREFERRED STOCK" and together with the Series 2-A Preferred
Stock, the "CONVERTIBLE SECURITIES"), Series A Convertible Notes, Series B-1
Exchangeable Notes (the Series A Convertible Notes and the Series B-1
Exchangeable Notes, collectively, the "NOTES") and Series B Warrants and Series
B-1 Warrants (the Series B Warrants and Series B-1 Warrants, collectively, the
"SERIES B WARRANTS"; the Convertible Securities, Notes and Series B Warrants are
sometimes herein referred to collectively as the "PREFERRED SECURITIES"); and
WHEREAS, Section 4.14 of the Purchase Agreement provides that it is a
condition to the First Closing (as defined in the Purchase Agreement) that the
Company and the Security Holders enter into this Agreement and effect: (i) an
exchange of all of the Convertible Securities and Series B Warrants held by the
Security Holders for shares of Series 4-A Preferred Stock and (ii) a conversion
of all of the Notes held by the Security Holders into shares of Series 3-A
Preferred Stock, and an immediate exchange of such Series 3-A Preferred Stock
for shares of Series 4-A Preferred Stock, subject to the terms and conditions
set forth herein;
NOW, THEREFORE, the parties hereby agree as follows:
1. Exchange of Preferred Securities for Shares of Series 4-A
Preferred Stock.
1.1 Exchange of Convertible Securities and Series B Warrants.
Upon the terms and subject to the conditions of this Agreement, each of the
Security Holders who beneficially owns Convertible Securities and/or Series B
Warrants, as set forth in Exhibit B hereto, shall fully and irrevocably assign,
transfer and convey to the Company all of such
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Convertible Securities and Series B Warrants, and the Company shall (i) take all
actions reasonably necessary to cancel such Convertible Securities and Series B
Warrants, including, without limitation, updating the Company's stock record
books to reflect such cancellation and making any necessary filings before any
governmental or regulatory agencies relating to such cancellation and (ii) issue
to each such Security Holder as full and complete consideration for such
cancellation the number of shares of Series 4-A Preferred Stock set forth beside
the Security Holder's name on Exhibit B hereto. The conversion ratio for the
Convertible Securities and Series B Warrants is as follows:
(a) One (1) share of Series 4-A Preferred Stock for each 480.01
shares of Series 2-A Preferred Stock being exchanged;
(b) One (1) share of Series 4-A Preferred Stock for each 11.83
shares of Series 3-A Preferred Stock being exchanged; and
(c) For the Series B Warrants, the Security Holders who own such
warrants shall be entitled to one (1) share of Series 4-A Preferred Stock for
each 100,000 shares of common stock of the Company, par value U.S.$0.01 per
share (the "COMMON STOCK"), which are issuable upon the exercise of the Series B
Warrants.
1.2 Exchange of Notes. (a) Upon the terms and subject to the
conditions of this Agreement, each of the Security Holders who beneficially owns
Series A Convertible Notes, as set forth in Exhibit B hereto, shall deliver a
duly executed Notice of Election (as defined in the Series A Convertible Notes)
to the Company and thereby irrevocably convert such notes (including all accrued
and unpaid interest payable thereon through the First Closing) into shares of
Series 3-A Preferred Stock in accordance with their terms.
(b) Upon the terms and subject to the conditions of this
Agreement, each of the Security Holders who beneficially owns Series B-1
Exchangeable Notes, as set forth in Exhibit B hereto, shall deliver a duly
executed Notice of Election (as defined in the Series B-1 Exchangeable Notes) to
the Company and thereby irrevocably exchange such notes (including all accrued
and unpaid interest payable thereon through the First Closing) for Series A
Convertible Notes in accordance with their terms. In addition, in conjunction
with the delivery of the Notice of the Election for the Series B-1 Exchangeable
Notes, each of the Security Holders who beneficially owned Series B-1
Exchangeable Notes shall deliver a duly executed Notice of Election with respect
to the Series A Convertible Notes they receive in the foregoing exchange and
thereby convert such notes into shares of Series 3-A Preferred Stock in
accordance with their terms.
(c) Immediately following the conversions and exchanges set
forth in Sections 1.2(a) and (b), such Security Holders shall exchange their
shares of Series 3-A Preferred Stock for shares of Series 4-A Preferred Stock in
accordance with Section 1.1.
1.3 Closing Deliveries by the Security Holders. The Security
Holders shall deliver or cause to be delivered to the Company in accordance with
Section 1.5:
(a) for Security Holders who are exchanging Series 2-A
Preferred Stock and/or Series 3-A Preferred Stock, share certificates evidencing
such shares with a duly
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executed instrument of transfer in favor of the Company, in the form attached
hereto as Exhibit C;
(b) for Security Holders converting and/or exchanging Notes
prior to exchanging Series 3-A Preferred Stock, the applicable duly executed
Notices of Election and the original copy of each Note; and
(c) for Security Holders exchanging Series B Warrants, a
duly executed instrument of transfer in favor of the Company, in the form
attached hereto as Exhibit D, and the original copy of each Warrant.
Notwithstanding the foregoing, a Security Holder shall not be
obligated to deliver the original copy of a Security to the Company if such
Security Holder executes and delivers to the Company a properly completed
Indemnity Agreement in the form attached hereto as Exhibit F. In any such case,
the Company shall not reissue such Security upon conversion or exchange pursuant
to this Agreement.
1.4 Closing Deliveries by the Company. The Company shall deliver
or cause to be delivered to each Security Holder at the Closing (as defined
below):
(a) a share certificate evidencing the shares of Series 4-A
Preferred Stock to be issued to such Security Holder, duly completed and
registered in the name of such Security Holder; and
(b) a cash payment for any fractional shares in accordance
with Section 1.6.
1.5 Timing of Deliveries; Closing. The stock certificates,
warrants, notes, Notices of Election and other deliverables of the Security
Holders to the Company described in Sections 1.3 and 1.4 (collectively, the
"SECURITY HOLDER DELIVERABLES") shall be provided to the Company at least five
Business Days prior to the date scheduled for the First Closing, but the Company
and the Security Holders hereby agree that the respective conversions and
exchanges of each Security Holder pursuant to Sections 1.1 and 1.2 (the
"CONVERSIONS AND EXCHANGES") shall not be deemed effective until the actual
consummation of the First Closing. The closing of the Conversions and Exchanges
is referred to herein as a "CLOSING" and shall take place at the offices of
Xxxxxxxx & Xxxxxxxx at 00/X, Xxxxxxxxxxxxx Xxxxxxxx, Xxxxx'x Xxxx Xxxxxxx, Xxxx
Xxxx or at such other place as the First Closing occurs pursuant to the terms of
the Purchase Agreement. In the event that, for whatever reason, the First
Closing and the Closing do not occur by October 31, 2002 or by such later date
as mutually agreed to in writing by the parties hereto, the Company shall
promptly return the relevant Security Holder Deliverables to each Security
Holder, and their respective interests in the Preferred Securities, and the
nature of the Preferred Securities, shall be deemed unaltered as if the Security
Holder Deliverables had not been so provided to the Company. In this Agreement,
"BUSINESS DAY" means any day except a Saturday, Sunday, a statutory public
holiday in Hong Kong or other day on which commercial banks in Hong Kong are
authorized or permitted by law to close.
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1.6 Fractional Shares. If an exchange of Preferred Securities by
a Security Holder into Series 4-A Preferred Stock would result in the issuance
of a fractional share, the Company shall pay to such Security Holder cash equal
to such fraction multiplied by U.S.$2,000, in lieu of any fractional share to
which the Holder would otherwise be entitled. Such cash payment will be made by
check or wire transfer on the date of the Closing. For the avoidance of doubt,
in no other circumstance shall the Company pay any cash to any Security Holder
pursuant to this Agreement or in connection with the transactions contemplated
by this Agreement.
2. Representations and Warranties of the Company. As used herein, (i)
any reference to any event, change or effect being "material" with respect to
the Company or any Subsidiary (as defined herein) means an event, change or
effect which is material in relation to the financial condition, properties,
business, operations, assets or results of operations of the Company and each
Subsidiary, taken as a whole, and (ii) the term "MATERIAL ADVERSE EFFECT" on the
Company means a material adverse effect on the financial condition, properties,
business, operations, assets, results of operations or prospects of the Company
and its Subsidiaries, taken as a whole. As of the Closing, the Company hereby
represents and warrants to, and covenants with, each Security Holder, except as
set forth on the Schedule of Exceptions attached as Schedule 1 (the "SCHEDULE OF
EXCEPTIONS"), which exceptions shall be deemed to be representations and
warranties as if made hereunder, as follows:
2.1 Organization and Standing. The Company has been duly
incorporated, is validly existing and in good standing under the laws of the
State of Delaware and has all necessary corporate power and authority to own,
lease and operate its properties and to conduct its business in the manner
presently conducted and to enter into and perform its obligations under this
Agreement, the Stockholders Agreement among the Company and the Security Holders
in the form attached hereto as Exhibit G (the "STOCKHOLDERS AGREEMENT"), the
Registration Rights Agreement among the Company and the Security Holders in the
form attached hereto as Exhibit H (the "REGISTRATION RIGHTS AGREEMENT") and the
Certificate of Designation. The Company and each of the Subsidiaries is duly
qualified as a foreign corporation to transact business and is in good standing
in each other jurisdiction in which such qualification is required, except where
the failure to so qualify or to be in good standing would not result in a
Material Adverse Effect. The Company is not required to register as an
"investment company" within the meaning of the Investment Company Act of 1940.
The Company has made available to the Security Holders a true, complete and
correct copy of the Company's certificate of incorporation, certificates of
designation and bylaws and the constitution documents of each Subsidiary, each
as amended to date (collectively, the "ORGANIZATIONAL DOCUMENTS"). The
Organizational Documents are in full force and effect.
2.2 Capitalization.
(a) Authorized Capital. The authorized capital of the
Company consists, or will consist immediately prior to the Closing, of:
(i) Preferred Stock. 5,000,000 shares of preferred
stock, par value U.S.$0.01 per share, of which (i) 2,802,000 shares have been
designated Series 1-A Convertible Preferred Stock, 1,436,055 of which are
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issued and outstanding, (ii) 1,672,328 shares have been designated Series 2-A
Convertible Preferred Stock, 1,127,867 of which are issued and outstanding,
(iii) 500,000 shares have been designated Series 3-A Convertible Preferred
Stock, none of which is issued and outstanding, and (iv) 25,000 shares have been
designated Series 4-A Preferred Stock, all of which may be sold pursuant to this
Agreement, the Purchase Agreement and the Offer (as defined in the Stockholders
Agreement). The rights, privileges and preferences of the Series 1-A Preferred
Stock, Series 2-A Preferred Stock and Series 3-A Preferred Stock are as stated
in the Organizational Documents, and the rights, privileges and preferences of
the Series 4-A Preferred Stock are as stated in the Certificate of Designation.
(ii) Common Stock. 500,000,000 shares of Common
Stock, of which 35,056,373 shares are issued and outstanding, and the full
number of shares of Common Stock that shall be deliverable upon the conversion,
in accordance with the Certificate of Designation, of all shares of Series 4-A
Preferred Stock that may be issued and outstanding from time to time have been
reserved to meet the obligations of the Company in respect of the shares of
common stock issuable upon the conversion of the Series 4-A Preferred Stock.
(b) Authorization. All issued and outstanding shares of
capital stock of the Company have been duly authorized and validly issued and
are fully paid and non-assessable; none of the outstanding shares of capital
stock of the Company have been issued in violation of the preemptive or other
similar rights of any person or in violation of any applicable securities laws
or regulations. Except as described in the Schedule of Exceptions or as
contemplated by this Agreement, immediately prior to the First Closing there are
no shares of capital stock or other securities of the Company or any Subsidiary
immediately prior to the First Closing (i) reserved for issuance or (ii) subject
to preemptive rights or any outstanding subscriptions, options, warrants, calls,
rights, convertible securities or other agreements or other instruments
outstanding or in effect giving any person the right to acquire any shares of
capital stock or other securities of the Company or any Subsidiary or any
commitments of any character relating to the issued or unissued capital stock or
other securities of the Company or any Subsidiary. Except as specified in the
Schedule of Exceptions or as contemplated by this Agreement, immediately prior
to the First Closing on the date hereof the Company does not have outstanding
any bonds, debentures, notes or other obligations the holders of which have the
right to vote (or which are convertible into or exercisable for securities
having the right to vote) with the stockholders of Company. The sale of the 4-A
Securities are not subject to any preemptive rights or rights of first refusal
and, when issued and delivered in compliance with the provisions of this
Agreement and/or the Certificate of Designation, the 4-A Securities will be duly
and validly issued, fully paid and nonassessable, and will be free of any Liens
(as defined below), encumbrances or restrictions on transfer; provided, however,
that (a) the 4-A Securities may be subject to restrictions on transfer under
applicable securities laws as set forth herein or as otherwise required by such
laws at the time a transfer is proposed, and (b) the 4-A Securities may only be
assigned in accordance with the Stockholders Agreement.
2.3 Authorization of Agreements. This Agreement, the Stockholders
Agreement and the Registration Rights Agreement have been duly authorized,
executed and delivered by the Company, and this Agreement, the Stockholders
Agreement and the Registration Rights Agreement constitute valid and legally
binding obligations of the Company, enforceable in accordance with their terms,
except (i) as limited by applicable bankruptcy,
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insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies, and (iii) to the extent the indemnification and contribution
provisions contained in this Agreement, the Stockholders Agreement and the
Registration Rights Agreement may be limited by applicable securities laws. The
Board of Directors of the Company has duly approved the Certificate of
Designation.
2.4 Absence of Defaults and Conflicts. Except as set forth in the
Schedule of Exceptions, the Company is not in violation or default of any
provision of its Organizational Documents or of any instrument, judgment, order,
writ, decree or contract to which it is a party or by which it is bound in
writing, or, to the best of its knowledge, of any provision of any statute, rule
or regulation which is, to the best of the Company's knowledge, applicable to
the Company, except for such violations or defaults which would not result in a
Material Adverse Effect. The execution, delivery and performance of this
Agreement, the Stockholders Agreement and the Registration Rights Agreement, and
the consummation of the transactions contemplated hereby and thereby will not
result in any such violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, either a default under any
such provision, instrument, judgment, order, writ, decree or contract or an
event that results in the creation of any lien, charge or encumbrance upon any
assets of the Company or the suspension, revocation, impairment, forfeiture or
nonrenewal of any permit, license, authorization or approval applicable to the
Company, its business or operations or any of its assets or properties, except
for such results which would not result in a Material Adverse Effect.
2.5 Absence of Proceedings. Except as described in the Company's
Amendment No. 2 to Annual Report on Form 10-K for the fiscal year ended January
31, 2002 (the "FORM 10-K"), Quarterly Reports on form 10-Q filed since the date
of the Form 10-K and any amendments thereto (the "FORM 10-QS") and Current
Reports on Form 8-K filed since the date of the Form 10-K (the "FORM 8-KS", and
together with the Form 10-K and the Form 10-Qs, the "PUBLIC FILINGS"), there is
no action, suit, proceeding, inquiry or investigation before or brought by any
court or governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against or affecting the Company or
any Subsidiary which might reasonably be expected individually or in the
aggregate to result in a Material Adverse Effect, or which might reasonably be
expected to materially and adversely affect the business, properties or assets
of the Company or any Subsidiary or the consummation of the transactions
contemplated in this Agreement, the Stockholders Agreement, the Registration
Rights Agreement or the Certificate of Designation or the performance by the
Company of its obligations hereunder.
2.6 Intellectual Property.
(a) Intellectual Property. The term "INTELLECTUAL
PROPERTY" means:
(i) trademark and service xxxx registrations and
applications (collectively, "MARKS");
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(ii) trade secrets of the Company, as defined in the
U.S. Uniform Trade Secrets Act (collectively, "TRADE SECRETS"); and
(iii) domain names and URL addresses for websites on
the Internet or the World Wide Web ("DOMAIN NAMES").
(b) Intellectual Property Necessary for the Company's
Business. To the knowledge of the Company, except as set forth in the Schedule
of Exceptions, the Company owns or has a right to use all the Intellectual
Property that is necessary for the operation of the business of the Company and
its Subsidiaries as it is currently conducted, subject only to such exceptions
and exclusions as in the aggregate are not material to the business, operations
or prospects of the Company. Except as set forth in the Schedule of Exceptions,
the Company has the right to use, without any payment to any third party in
excess of U.S.$50,000 per year, all of such Intellectual Property.
(c) Trademarks. To the knowledge of the Company,
(i) The Company and/or one or more of the
Subsidiaries is the owner, licensor or licensee of all right, title, and
interest in and to each of the Marks owned or licensed by the Company, free and
clear of all Liens, and other adverse claims.
(ii) No such Xxxx has been or is now involved in any
opposition, invalidation, or cancellation and no such action is threatened with
respect to any of such Marks.
(iii) There is no trademark or service xxxx
registration of any third party which potentially interferes with the use of
such Marks.
(iv) No such Xxxx is infringed or has been challenged
or threatened in any way by any other person, nor does any such Xxxx used by the
Company or any Subsidiary infringe or is alleged to infringe any trademark or
service xxxx of any third party.
(d) Trade Secrets. To the knowledge of the Company, the
Company and/or one or more of the Subsidiaries has a right to use all Trade
Secrets used in the conduct of the business of the Company. To the knowledge of
the Company, such Trade Secrets are not part of the public knowledge or
literature, and, to the knowledge of the Company, have not been used, divulged,
or appropriated for the benefit of any third party (other than the Company or
any Subsidiary or pursuant to a non-disclosure or license agreement). To the
knowledge of the Company, no such Trade Secret is subject to any adverse claim
or has been challenged or threatened in any way.
(e) Domain Names. To the knowledge of the Company, the
Company and/or one or more Subsidiaries is the owner of all right, title, and
interest in and to, or is licensed to use, all of the Domain Names used in the
conduct of the business of the Company and its Subsidiaries, free and clear of
all Liens. Such Domain Names are registered with
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Network Solutions or such other agency or company duly authorized by relevant
governmental entities to maintain such registry, and all fees due in respect of
such registration have been paid.
2.7 Subsidiaries. Except as set forth in the Schedule of
Exceptions, each subsidiary of the Company, meaning any entity in which the
Company, directly or indirectly, beneficially owns more than 50% of the equity
interest in, or the voting control of, such company (each, a "SUBSIDIARY"), is a
corporation validly existing and in good standing under the laws of its
jurisdiction of incorporation and has full corporate power and authority to own,
lease and operate its properties, conduct its business as and to the extent now
conducted. All of the outstanding shares of capital stock of each Subsidiary
have been duly authorized and validly issued, are fully paid and nonassessable,
and are owned, beneficially and of record, by the Company or Subsidiaries wholly
owned by the Company free and clear of all liens, charges, encumbrances,
options, rights of preemption and third party rights whatsoever (collectively,
"LIENS").
2.8 Liabilities. Except as set forth in the Schedule of
Exceptions and except for potential Liabilities referred to in the Public
Filings, neither the Company nor any Subsidiary has any debt, liability,
commitment or obligation of any kind, character or nature whatsoever, whether
known or unknown, xxxxxx or inchoate, secured or unsecured, accrued, fixed,
absolute, contingent or otherwise, and whether due or to become due
("LIABILITY") (and, to the knowledge of the Company, there is no basis for any
present or future action against it giving rise to any Liability) except for (i)
Liabilities or obligations reflected or reserved against the balance sheet
contained in the Financial Statements or the Interim Financial Statements (as
defined herein) and (ii) current Liabilities incurred in the ordinary course of
business not exceeding U.S.$9 million (none of which results from, arises out
of, relates to, is in the nature of, or was caused by any breach of contract,
breach of warranty, tort, infringement, or violation of Law) since the date
thereof.
2.9 Brokers. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried out by the Company
directly without the intervention of any person on behalf of the Company in such
manner as to give rise to any valid claim by any person against the Security
Holders (or any of them), the Company or any Subsidiary for a finder's fee,
brokerage commission or similar payment.
2.10 SEC Filings. Except as disclosed in the Schedule of
Exceptions, the Public Filings (including any financial statements or schedules
included therein) and each other filing of the Company under the U.S. Securities
Exchange Act of 1934, as amended (the "1934 ACT"), made since January 31, 2002
complied with the requirements of the 1933 Act, or the 1934 Act, as the case may
be, in all material respects. To the Company's knowledge, except as disclosed in
the Schedule of Exceptions, the Company is in compliance in all material
respects with (i) the 1933 Act, (ii) the 1934 Act, and (iii) all applicable
rules and regulations of the U.S. Securities and Exchange Commission under the
1933 Act and the 1934 Act.
2.11 Financial Statements. The restated audited consolidated
financial statements of the Company as of and for the years ended January 31,
2000, 2001 and 2002 and the audited consolidated financial statements of
NetCel360 Holdings Limited ("HOLDINGS") as of
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and for the year ended December 31, 2000 (collectively, the "FINANCIAL
STATEMENTS") and the unaudited consolidated financial statements of the Company
as of and for the three months ended April 30, 2002 and July 31, 2002
(collectively, the "INTERIM FINANCIAL STATEMENTS"), which have been made
available to the Security Holders, have been prepared in accordance with US
generally accepted accounting principles ("GAAP") applied on a basis consistent
throughout the periods indicated (except as may be indicated in the notes
thereto) and, except as set forth in the Schedule of Exceptions, present fairly
in all material respects the consolidated financial condition and consolidated
operating results of the Company or Holdings, as the case may be, of the dates
and during the periods indicated therein in conformance with GAAP, subject, in
the case of the Interim Financial Statements, to normal year-end adjustments,
consistent with past practices. Except as set forth in the Financial Statements,
the Interim Financial Statements, the Public Filings, the Schedule of
Exceptions, or arising in the ordinary course of business since July 31, 2002,
as of the date hereof none of the Company nor any Subsidiary has (A) incurred
any material liabilities of any nature (matured or unmatured, fixed or
contingent) or (B) made any material disposal of assets, suffered any loss or
material damage of any assets, waived any valuable rights, made any material
change in any material contract to which it is a party or declared or paid any
dividends.
2.12 Tax Returns, Payments and Elections. The Company has
filed all tax returns and reports as required by law. These returns and reports
are true and correct in all material respects. The Company has paid all taxes
and other assessments due, except those contested by it in good faith that are
listed in the Schedule of Exceptions, if any. The provision for taxes of the
Company as shown in the Financial Statements is adequate for taxes due or
accrued as of the date thereof. The Company has not elected pursuant to the
Internal Revenue Code of 1986, as amended (the "CODE"), to be treated as a
Subchapter S corporation or a collapsible corporation pursuant to Section
1362(a) or Section 341(f) of the Code.
2.13 Non-Competition Agreements. Neither the Company nor
any of its Subsidiaries is a party to any non-competition or other agreement or
subject to any duty which prohibits or limits the ability of the Company or any
Subsidiary (i) to engage in any line of business, (ii) to compete with any
person, (iii) to carry on or expand the nature or geographical scope of the
business of the Company or such Subsidiary anywhere in the world or (iv) to
disclose any confidential information in the possession of the Company or any
Subsidiary (any not otherwise generally available to the public), other than, in
the case of (iv) only, any contract for the sale or purchase of goods or
services or any non-disclosure agreement entered into in connection with the
possible or actual sale or purchase of goods or services in the ordinary course
of business, investments into or by the Company or in connection with the
proposed or actual formation or operation of any joint venture, partnership,
strategic alliance or similar arrangement that does not meet any other of the
criteria set forth in this Section 2.13.
2.14 Offering. Subject in part to the truth and accuracy of
each Security Holder's representations set forth in Section 3 of this Agreement,
the offer, sale and issuance of the 4-A Securities as contemplated by this
Agreement are exempt from the registration requirements of the 1933 Act and will
not result in a violation of the qualification or registration requirements of
the applicable U.S. state securities laws, and neither the Company nor any
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authorized agent acting on its behalf will take any action hereafter that would
cause the loss of such exemption.
2.15 Certain Payments. Since their incorporation or
organization, neither the Company nor any Subsidiary has, nor has any
representative of Company or any Subsidiary, or to the knowledge of the Company
or any other person associated with or acting for or on behalf of the Company or
any Subsidiary, directly or indirectly (a) made any contribution, gift, bribe,
rebate, payoff, influence payment, kickback, or other payment to any person,
private or public, regardless of form, whether in money, property, or services
(i) to obtain favorable treatment in securing business, (ii) to pay for
favorable treatment for business secured, or (iii) to obtain special concessions
or for special concessions already obtained, for or in respect of the Company or
any Subsidiary or (b) established or maintained any fund or asset that has not
been recorded in the books and records of the Company or any Subsidiary.
2.16 Government Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any U.S. federal, state or local governmental authority on the part
of the Company is required in connection with the consummation of the
transactions contemplated by this Agreement, except (i) the filing of the
Certificate of Designation with the Secretary of State of the State of Delaware;
and (ii) such other U.S. federal or state securities filings as may be
necessary, which filings will be timely effected after the Closing.
2.17 Compliance with Laws; Permits. The Company is not in
violation of any applicable statute, rule, regulation, order or restriction of
any domestic or foreign government or any instrumentality or agency thereof in
respect of the conduct of its business or the ownership of its properties which
violation would have a Material Adverse Effect. No governmental orders,
permissions, consents, approvals or authorizations are required to be obtained
and no registrations or declarations are required to be filed in connection with
the execution and delivery of this Agreement and the issuance of the 4-A
Securities, except such as has been duly and validly obtained or filed, or with
respect to any filing that must be made after the Closing, as will be filed in a
timely manner.
2.18 Absence of Stockholders Agreements. Except as set forth
in the Schedule of Exceptions, there are no agreements in effect between the
Company and any holders or class of holders of securities of the Company
relating to such securities.
2.19 Option Plans. Except as set forth in the Schedule of
Exceptions, the Company has no plan, arrangement, scheme or agreement for the
issuance of stock or options therefor to any of its employees, directors,
officers or consultants other than its Employee Stock Purchase Plan and its 2001
Stock Options/Stock Issuance Plan.
2.20 Maintenance of Insurance. The Company has maintained all
insurance policies required by applicable law and by contractual obligation,
including, without limitation, all insurance policies required to be kept in
place pursuant to the Master Services Agreement, dated November 16, 2001,
between Agilent Technologies Singapore (Sales) Ltd. and the Company's Cayman
subsidiary, Vsource (CI) Ltd. (the "CAYMAN SUBSIDIARY"), which has
10
subsequently been novated to the Company's Malaysian subsidiary, Vsource
(Malaysia) Sdn Bhd.
2.21 Gateway Contract. With respect to the Support Services
Agreement, dated October 24, 2001, among the Company, Gateway Japan Inc.
("GATEWAY") and the Cayman Subsidiary (the "GATEWAY CONTRACT"), the Company has
not materially failed to achieve the Service Levels (as such term is defined in
the Gateway Contract) from June 1, 2002 to September 30, 2002 to an extent that
would give Gateway the right to terminate the Gateway Contract pursuant to
section 3.2(e)(ii) thereof.
2.22 MSC Status. The Company's Subsidiary Vsource (Malaysia)
Sdn Bhd has been granted and retains full Multimedia Super Corridor status.
2.23 No Other Representations. Notwithstanding anything to
the contrary contained in this Agreement, it is the explicit intent of each
party hereto that the Company is not making any representation or warranty
whatsoever, express or implied, except those representations, and warranties
contained in this Agreement.
2.24 Reliance by Security Holders. The Company understands
that the representations, warranties, covenants and acknowledgements set forth
in this Section 2 constitute a material inducement to each Security Holder
entering into this Agreement.
3. Representations and Warranties of Each Security Holder. Each
Security Holder, severally but not jointly, represents and warrants to the
Company as of the date of the Closing that:
3.1 Authorization. Such Security Holder has full power and
authority to enter into this Agreement, and this Agreement constitutes its valid
and legally binding obligation, enforceable against it in accordance with its
terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other
equitable remedies.
3.2 Acquisition Entirely for Own Account. The Series 4-A
Preferred Stock and Common Stock issuable upon conversion thereof (collectively,
the "4-A SECURITIES") are being acquired for investment for such Security
Holder's own account not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that such Security Holder has no
present intention of selling, granting any participation in, or otherwise
distributing the same. The acquisition by each Security Holder of the 4-A
Securities shall constitute confirmation of the representation by each such
Security Holder that such Security Holder does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
4-A Securities.
3.3 Disclosure of Information. Such Security Holder believes
it has received all the information it considers necessary or appropriate for
deciding whether to engage in the Conversions and Exchanges and thereby acquire
the Series 4-A Preferred Stock. Such Security
11
Holder further represents that it has had an opportunity to ask questions and
receive answers from the Company regarding the terms and conditions of the
Conversions and Exchanges and the offering of the Series 4-A Preferred Stock and
the business, properties, prospects and financial condition of the Company. The
foregoing, however, does not limit or modify the representations and warranties
of the Company in Section 2 of this Agreement or the right of the Security
Holders to rely thereon. Such Security Holder further represents that it has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risk of the Conversions and Exchanges and
the acquisition of the Series 4-A Preferred Stock.
3.4 Accredited Security Holder; Non-U.S. Persons. If a
Security Holder is a United States resident or incorporated or organized under
the laws of the United States, such Security Holder is an "accredited investor"
within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D, as presently in effect. If a Security Holder is neither a United
States resident nor incorporated or organized under the laws of the United
States, such Security Holder (i) certifies that such Security Holder is not a
"U.S. person" within the meaning of SEC Rule 902 of Regulation S, as presently
in effect, and that such Security Holder is not acquiring the 4-A Securities for
the account or benefit of any such U.S. person, (ii) agrees to resell the 4-A
Securities only in accordance with the provisions of Regulation S, pursuant to
registration under the 1933 Act, or pursuant to an available exemption from
registration and agrees not to engage in hedging transactions with regard to
such 4-A Securities unless in compliance with the Securities Act of 1933, as
amended (the "1933 ACT"), (iii) agrees that any certificates for any 4-A
Securities issued to such Security Holder shall contain a legend to the effect
that transfer is prohibited except in accordance with the provisions of
Regulation S, pursuant to registration under the 1933 Act or pursuant to an
available exemption from registration and that hedging transactions involving
such 4-A Securities may not be conducted unless in compliance with the 1933 Act,
and (iv) agrees that the Company is hereby required to refuse to register any
transfer of any 4-A Securities issued to such Security Holder not made in
accordance with the provisions of Regulation S, pursuant to registration under
the 1933 Act, or pursuant to an available exemption from registration.
3.5 Restricted Securities. Such Security Holder understands
that the 4-A Securities it is acquiring are characterized as "restricted
securities" under the U.S. federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under such laws and applicable regulations such securities may be resold
without registration under the 1933 Act only in certain limited circumstances.
Such Security Holder has no immediate need for liquidity in connection with this
acquisition and does not anticipate that the Security Holder will be required to
sell his, her or its 4-A Securities in the foreseeable future.
3.6 Liens and Restrictions. The Preferred Securities, when
sold and delivered to the Company in accordance with the terms of this
Agreement, will be free of any liens and encumbrances and will be free of
restrictions on transfer other than restrictions under applicable state and
federal securities laws.
12
3.7 Series 4-A Preferred Stock. The rights, privileges and
preferences of the Series 4-A Preferred Stock are as stated in the Certificate
of Designation which is attached hereto as Exhibit E.
3.8 Legends. It is understood that the certificates
evidencing the 4-A Securities may bear the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT."
4. Conditions to Obligations of the Security Holders. The
obligations of each of the Security Holders to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment of the
following conditions:
4.1 The representations and warranties of the Company
contained in this Agreement shall be true and correct in all material respects
as of the Closing.
4.2 Each Security Holder (other than Xxxxxxx Xxxxx, Xxxxxx
Xxxxx and Xxxx Xxxxxxxxx) shall have received from Xxxxxxxx & Xxxxxxxx, counsel
for the Company, an opinion, dated as of the Closing, in substantially the form
attached hereto as Exhibit I.
4.3 The First Closing is consummated.
4.4 All obligations on the part of the Company that are to
be performed at or prior to the Closing have been performed.
5. Conditions to Obligations of the Company. The obligations of the
Company to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment of the following conditions:
5.1 The representations and warranties of each of the
Security Holders contained in this Agreement shall be true and correct in all
material respects as of the Closing.
5.2 The First Closing is consummated.
5.3 All obligations on the part of each of the Security
Holders that are to be performed at or prior to the Closing have been performed.
6. Miscellaneous.
13
6.1 Survival of Representations, Warranties and Covenants.
The warranties, representations and covenants of the Company and Security
Holders contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing and shall remain in
full force and effect for a period of two years following the Closing.
6.2 Successors and Assigns. Except as otherwise provided
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties
(including transferees of any Preferred Securities and 4-A Securities). Nothing
in this Agreement, express or implied, is intended to confer upon any party
other than the parties hereto or their respective successors and assigns any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
6.3 Governing Law; Venue. This Agreement is to be construed
in accordance with and governed by the internal laws of the State of New York
without giving effect to any choice of law rule that would cause the application
of the laws of any jurisdiction other than the internal laws of the State of New
York to the rights and duties of the parties. Any controversy or claim arising
out of or relating to this Agreement (including, without limitation, the
interpretation, performance, breach or termination thereof) will be settled by
arbitration in San Francisco, California, administered by the American
Arbitration Association ("AAA") in accordance with its then-current Commercial
Arbitration Rules except insofar as such rules conflict with this Section, and
judgment on the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. The arbitration will be conducted by three
arbitrators, one appointed by the party or parties commencing the proceeding,
one appointed by the party or parties in opposition, and the third by the two
arbitrators so appointed, provided that if such two arbitrators cannot agree on
a chairman, he shall be appointed by the AAA, and provided, further, that if the
dispute is such that one or more of the parties to the dispute believes that the
dispute is such that the disputing parties cannot fairly be divided into two
groups as above contemplated, such party may make application to the AAA and if
the AAA concurs in such conclusion, the AAA shall appoint the chairman of the
panel and the chairman shall appoint the other two members of the panel after
consultation with all of the parties to the dispute. All papers, documents,
evidence (whether written or oral) and other information and materials filed
with or presented to the arbitrators will be in the English language and will
constitute confidential information, and neither the parties nor the arbitrators
will disclose any such information or materials except as necessary in
connection with the arbitration or as required by applicable law. Any demand for
arbitration, requests for discovery and other notices in connection with the
arbitration may be served in the English language in accordance with the notice
provisions of this Agreement, and each party waives any right to any other form
of notice, other means of delivery or translation into any other language. The
parties will be entitled to discover all information and materials reasonably
necessary for a full understanding of any issues reasonably raised in the
arbitration. They may use all methods of discovery permitted under the U.S.
federal rules as applied in the Northern District of California, including,
without limitation, depositions, requests for admissions, interrogatories and
requests for production of documents. The time period for compliance will be set
by the arbitrators. The arbitrators will have the authority to award any remedy
or relief that a U.S. federal court could order or grant, including, without
limitation, monetary damages, injunctive or other equitable relief, and
sanctions for abuse or
14
frustration of the arbitration process, provided that the arbitrators shall not
have the authority to award punitive damages. The arbitrators will issue a
written explanation of the reasons for the award, and a full statement of the
facts found and rules of law applied in reaching their decision. Notwithstanding
the foregoing, each party will have the right to a preliminary injunction or
other interim relief, pending a final award by the arbitrators, in any court of
competent jurisdiction in connection with any arbitrable claim or controversy,
but only to the extent that such interim relief is intended to preserve the
respective legal positions of the parties pending a final award by the
arbitrators.
6.4 Acknowledgment; Waiver of Conflicts. Each Security
Holder acknowledges that: (a) it has read this Agreement; (b) it has been
represented in the preparation, negotiation and execution of this Agreement by
legal counsel of its own choice or has voluntarily declined to seek such
counsel; and (c) it understands the terms and consequences of this Agreement and
is fully aware of the legal and binding effect of this Agreement. Each Security
Holder understands that the Company has been represented in the preparation,
negotiation and execution of this Agreement by Xxxxxxxx & Xxxxxxxx, counsel to
the Company, and that Xxxxxxxx & Xxxxxxxx has not represented any Security
Holder or any stockholder, director or employee of the Company or any Security
Holder in the preparation, negotiation and execution of this Agreement.
6.5 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.6 Facsimile Signatures. Any signature page to this
Agreement or any amendment thereto delivered by fax machine or telecopy machine
shall be binding to the same extent as an original signature page. Any party who
delivers such a signature page agrees to later deliver an original counterpart
to any party requesting it.
6.7 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
6.8 Notices. Any notice or other communication required or
permitted to be delivered under this Agreement shall be in writing and shall be
deemed effectively given: (i) upon personal delivery to the party to be
notified; (ii) when sent by confirmed telex or facsimile if sent during normal
business hours of the recipient, if not, then on the next business day; (iii)
seven (7) days after having been sent by registered or certified air mail,
return receipt requested, postage prepaid; or (iv) three (3) days after deposit
with an internationally recognized express courier, specifying highest priority
delivery, with written verification of receipt, to the address or facsimile
number set forth beneath the name of each party below (or to such other address
or facsimile number as such party may designate by ten (10) days advance written
notice to the other party hereto). Each person making a communication hereunder
by facsimile shall promptly confirm by telephone to the person to whom such
communication was addressed each communication made by it by facsimile pursuant
hereto but the absence of such confirmation shall not affect the validity of any
such communication.
15
6.9 Expenses. Unless the Company otherwise agrees with a
party hereto in writing, irrespective of whether the Closing is effected, the
parties hereto shall each bear their own expenses in connection with the
negotiation, execution, delivery and performance of this Agreement.
6.10 Amendments and Waivers. Any term of this Agreement may
be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and holders of a
majority of the 4-A Securities issued or issuable pursuant to this Agreement;
provided, however, that the conversion and exchange ratios set forth in this
Agreement, including, without limitation, in Sections 1.1(a)-(d), Section 1.2
and Exhibit B attached hereto, may not be amended, waived or modified without
the unanimous written consent of the Company and the Security Holders. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each holder of any securities purchased under this Agreement at the time
outstanding (including securities into which such securities are convertible),
each future holder of all such securities, and the Company.
6.11 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
6.12 Further Assurances; Consents and Waivers. Each Security
Holder and the Company shall from time to time and at all times hereafter make,
do, execute, or cause or procure to be made, done and executed such further
acts, deeds, conveyances, consents, waivers and assurances without further
consideration, which may reasonably be required to effect the transactions
contemplated by this Agreement. Without limiting the foregoing, each Security
Holder hereby agrees that it shall be deemed to have provided any consents or
waivers, including consents or waivers requiring approval by more than one
Security Holder, regarding the Preferred Securities owned by such holder and its
rights thereunder which are necessary or appropriate to effectuate the
transactions contemplated by this Agreement and the other transactions
contemplated by the Purchase Agreement. Further, each Security Holder hereby
fully releases, relinquishes, and discharges the Company and its stockholders,
representatives, partners, agents, parents and subsidiary organisations,
affiliates, assigns and successors from all rights, claims and actions that each
Security Holder now has or may have after the date of this Agreement arising out
of or in connection with such Security Holder's rights under Article VIII of the
Acquisition Agreement by and among the Company and NetCel360 Holdings Limited
dated as of May 24, 2001, as amended as of June 22, 2001, and under Section
3.3(e) and Exhibit F of the Amended and Restated Bridge Loan Agreement by and
among XxxXxx000.xxx Ltd (now named Vsource (CI) Ltd), NetCel360 Sdn Bhd (now
named Vsource (Malaysia) Sdn Bhd), NetCel360 Holdings Limited and the Lenders
set forth therein, dated as of May 24, 2001, as amended as of June 22, 2001.
6.13 Taxes Generally. Each Security Holder has consulted with
tax advisors of its own choice regarding the tax consequences of the
transactions contemplated in this Agreement or has voluntarily declined to seek
such advisors. Further, except as specifically set
16
forth in Section 6.14 hereof, each Security Holder hereby acknowledges and
agrees that it shall bear its own tax liabilities arising out of or relating to
the transactions contemplated in this Agreement and that nothing contained
herein shall be construed as constituting tax advice, guidance or analysis by
the Company or its advisors regarding a Security Holder's individual tax status
or the tax consequences to it from engaging in those transactions
6.14 Reimbursement of Taxes. The Company agrees to reimburse
each US Holder for all U.S. Federal and California income and franchise taxes
(the "TAXES") required to be paid by the US Holder on any gain recognized on the
exchange of Series B Warrants for shares of Series 4-A Preferred Stock pursuant
to this Agreement. The amount of the reimbursement shall be an amount that,
after taking into account all current deductions in respect of Taxes on such
amount, shall be equal to the aggregate amount of additional Taxes payable by
the US Holder as a result of such gain and the reimbursement of Taxes hereunder;
provided, that the aggregate amount paid or payable by the Company to any US
Holder under this Section 6.14 shall not in any case exceed U.S.$70,000. The
amount of the reimbursement shall not include any interest, penalties or
additions to Taxes caused by any act or failure to act of the U.S. Holder. The
Company shall pay the reimbursement no later than 30 days after receipt of a
written demand letter from the US Holder that is accompanied by a signed
statement by the U.S. Holder's accountant explaining in reasonable detail the
basis for such computation. The Company may, in its sole discretion and at its
own expense, employ a nationally-known, independent accounting firm to verify
such computation after consultation with the US Holder's accountant. The results
of the verification procedure shall be final, binding and conclusive upon the
Company and the US Holder. A "US HOLDER" is any Security Holder that is: (1) an
individual citizen or resident of the United States; (2) a corporation,
partnership or other business organized under the laws of the United States or
any State thereof or the District of Columbia; (3) an estate the income of which
is subject to U.S. federal income tax without regard to its source; or (4) a
trust that is subject to the primary supervision of a U.S. court and the control
of one or more U.S. persons, or that has a valid election in effect under
applicable Treasury regulations to be treated as a U.S. person
6.15 Entire Agreement. This Agreement and the documents
referred to herein constitute the entire agreement among the parties with
respect to the subject matter hereof and no party shall be liable or bound to
any other party in any manner by any warranties, representations or covenants
except as specifically set forth herein or therein.
* * *
17
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY:
VSOURCE, INC.
By:
--------------------------------
Name: Xxxxxx Xxxxx
Title: Chief Financial Officer
Address: Vsource, Inc.
00000 Xxxx Xxxxxxxx Xxxxx,
Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
XXX
Attn: Chief Financial Officer
Facsimile: 0 (000) 000-0000
with a copy to:
Address: Vsource (Asia) Ltd
Xxxx 000, XXX Xxxxxx
000 Xxxxxxxxxx Xxxx, Xxxxxxx
Xxxx Xxxx
Attn: General Counsel
Facsimile: (000) 0000-0000
SIGNATURE PAGE TO CONVERTIBLE SECURITIES EXCHANGE AGREEMENT
SECURITY HOLDER:
----------------------------------
Xxxxxxx Xxxxx
Address: Xxxxxxx Xxxxx
Vsource, Inc.
00000 Xxxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
XXX
Facsimile: 0 (000) 000-0000
with a copy to:
Address: Vsource (Asia) Ltd
Xxxx 000, XXX Xxxxxx
000 Xxxxxxxxxx Xxxx, Xxxxxxx
Xxxx Xxxx
Attn: General Counsel
Facsimile: (000) 0000-0000
SIGNATURE PAGE TO CONVERTIBLE SECURITIES EXCHANGE AGREEMENT
SECURITY HOLDER:
----------------------------------
Xxxx Xxxxxxxxx
Address: Xxxx Xxxxxxxxx
Level 12, Menara HLA
Xx. 0, Xxxxx Xxx Xxxx
00000 Xxxxx Xxxxxx, Xxxxxxxx
Facsimile: (00) 0 0000-0000
with a copy to:
Address: Vsource (Asia) Ltd
Xxxx 000, XXX Xxxxxx
000 Xxxxxxxxxx Xxxx, Xxxxxxx
Xxxx Xxxx
Attn: General Counsel
Facsimile: (000) 0000-0000
SIGNATURE PAGE TO CONVERTIBLE SECURITIES EXCHANGE AGREEMENT
SECURITY HOLDER:
----------------------------------
Xxxxxx Xxxxx
Address: Xxxxxx Xxxxx
Vsource (Asia) Ltd
Xxxx 000, XXX Xxxxxx
000 Xxxxxxxxxx Xxxx, Xxxxxxx
Xxxx Xxxx
Facsimile: (000) 0000-0000
with a copy to General Counsel of Vsource at the same address
SIGNATURE PAGE TO CONVERTIBLE SECURITIES EXCHANGE AGREEMENT
SECURITY HOLDER:
MERCANTILE CAPITAL PARTNERS I, L.P.
By: Mercantile Capital Group, LLC, its general partner
By: Mercantile Capital Management Corp., its manager
By:
--------------------------------
Name: I. Xxxxxx Xxxxxxx
Title: Managing Director
ASIA INTERNET INVESTMENT GROUP I, LLC
By: Asia Investing Group, L.P., its managing member
By: Asia Investors Group, LLC, its general partner
By: Mercantile Asia Investors, L.P., its managing member
By: Mercantile Asia, LLC, its general partner
By:
-------------------------------------------
Name: I. Xxxxxx Xxxxxxx
Title: Managing Member
Address for the foregoing Investors: with a copy to:
0000 Xxxxxxx Xxxx Xxxxxxx Xxxxxx, Esq.
Xxxxxxxxxx, XX 00000 XXX Altheimer & Xxxx
Attn: I. Xxxxxx Xxxxxxx 00 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Facsimile: 0 (000) 000-0000
Facsimile: 0 (000) 000-0000
SIGNATURE PAGE TO CONVERTIBLE SECURITIES EXCHANGE AGREEMENT
SECURITY HOLDER:
BAPEF INVESTMENTS XII LTD.
By:
------------------------------------
Name:
-----------------------------------
Title: Director
Address: BAPEF Investments XII Ltd.
XX Xxx 000
13-15 Victoria Road
Xx. Xxxxx'x Xxxx
Xxxxxxxx XX0 0XX
Facsimile: (00) 0000 000 000
For the attention of : Xxxxxx Xxxxxx
with a copy to: Baring Private Equity Partners (Hong Kong) Ltd.
39th Floor
One International Finance Centre
0 Xxxxxxx Xxxx Xxxxxx
Xxxxxxx, Xxxx Xxxx
Facsimile: (000) 0000 0000
For the attention of: Xxxx Xxxxxx/Xxxxxx Xxxx/Xxxxxx Xxxx
with a copy to:
Address: Xxxxx Xxxxxx
Xxxxxx Xxxxxx White & XxXxxxxxx, LLP
Room 6308-6309, 00xx Xxxxx, Xxx Xxxxxx
00 Xxxxx'x Xxxx Xxxxxxx, Xxxx Xxxx
Facsimile: (000) 0000-0000
SIGNATURE PAGE TO CONVERTIBLE SECURITIES EXCHANGE AGREEMENT
EXHIBIT A
LIST OF SECURITY HOLDERS
1. Xxxxxxx Xxxxx
2. Xxxx Xxxxxxxxx
3. Xxxxxx Xxxxx
4. BAPEF Investments XII Ltd.
5. Mercantile Capital Partners I, L.P.
6. Asia Internet Investment Group I, LLC
EXHIBIT B
CONVERSION AND EXCHANGE TABLE
------------------------------------------------------------------------------------------------------------
1. 2. 3. 4.
NUMBER OF NUMBER OF NUMBER OF
SHARES OF NUMBER OF SHARES OF SHARES OF
NUMBER SERIES NUMBER SHARES OF NUMBER OF SERIES NUMBER OF SERIES
OF 4-A OF SERIES 4-A SHARES 4-A SHARES 4-A
SHARES RECEIVED SHARES RECEIVED ISSUABLE RECEIVED ISSUABLE RECEIVED
NAME OF OF IN OF IN - SERIES IN - SERIES IN
SECURITY SERIES EXCHANGE SERIES EXCHANGE B EXCHANGE B-1 EXCHANGE
HOLDER 2-A FOR XX. 0 0-X(0) XXX XX. 0 XXXXXXXX(0) XXX XX. 0 WARRANTS(3) FOR NO. 4
------------------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxx 0 0 21,855 1,847 3,843,750 38 2,013,145 20
------------------------------------------------------------------------------------------------------------
Xxxx
Xxxxxxxxx 0 0 23,849 2,015 2,562,500 25 1,342,100 13
------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx 0 0 4,541 383 0 0 0 0
------------------------------------------------------------------------------------------------------------
BAPEF
Investments
XII Ltd. 0 0 57,797 4,885 10,250,000 102 10,736,785 107
------------------------------------------------------------------------------------------------------------
Mercantile
Capital
Partners I,
L.P. 624,025 1,300 24,700 2,087 0 0 0 0
------------------------------------------------------------------------------------------------------------
Asia
Internet
Investment
Group I, LLC 0 0 4,185 353 0 0 0 0
------------------------------------------------------------------------------------------------------------
TOTALS: 624,025 1,300 136,927 11,570 16,656,250 165 14,092,030 140
------------------------------------------------------------------------------------------------------------
------------------------------------------
CASH PAYABLE
NAME OF FOR TOTAL # OF
SECURITY FRACTIONAL SERIES 4-A
HOLDER SHARES ISSUED
------------------------------------------
Xxxxxxx Xxxxx US$957.41 1,905
------------------------------------------
Xxxx
Xxxxxxxxx US$2,161.86 2,053
------------------------------------------
Xxxxxx Xxxxx US$1,709.21 383
------------------------------------------
BAPEF
Investments
XII Ltd. US$1,433.08 5,094
------------------------------------------
Mercantile
Capital
Partners I,
L.P. US$1,874.17 3,387
------------------------------------------
Asia
Internet
Investment
Group I, LLC US$1,523.25 353
------------------------------------------
TOTALS: US$9,658.98 13,175
------------------------------------------
-------------------
(1) After giving effect to: (i) the conversion of the Series A Convertible Notes
into shares of Series 3-A Preferred Stock and (ii) the exchange of the Series
B-1 Exchangeable Notes for Series A Convertible Notes and conversion of such
Series A Convertible Notes into shares of Series 3-A Preferred Stock.
(2) Represents the number of shares of Common Stock issuable upon the exercise
of the Series B Warrants.
(3) Represents the number of shares of Common Stock issuable upon the exercise
of the Series B-1 Warrants.
EXHIBIT C
INSTRUMENT OF TRANSFER FOR PREFERRED STOCK
VSOURCE, INC.
Incorporated in the State of Delaware, USA
I, ________________ of __________________________________ (the "Transferor"),
for the full and complete consideration of the issuance of ________ shares of
Series 4-A Convertible Preferred Stock and cash in the amount of U.S.$________,
do hereby irrevocably transfer to Vsource, Inc. of 00000 Xxxx Xxxxxxxx Xxxxx,
Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000 (the "Transferee"), _____ shares of
Series [2-A] [3-A] Convertible Preferred Stock, par value U.S.$0.01 per share,
represented by certificate number ___, each standing in the Transferor's name in
the books of the Transferee to hold unto the said Transferee and its
administrators or assigns.
Dated as of ____________________, 2002
Signed by the Transferor in the
presence of:
----------------------------------------------
Witness signature:
---------------------------------------------- -----------------------------------------
Transferor
Signed by the Transferee in the
presence of:
----------------------------------------------
Witness signature:
----------------------------------------------
-----------------------------------------
Transferee
EXHIBIT D
INSTRUMENT OF TRANSFER FOR SERIES B WARRANTS
VSOURCE, INC.
Incorporated in the State of Delaware, USA
I, ________________ of __________________________________ (the "Transferor"),
for the full and complete consideration of the issuance of ________ shares of
Series 4-A Convertible Preferred Stock and cash in the amount of U.S.$________,
do hereby irrevocably transfer to Vsource, Inc. of 00000 Xxxx Xxxxxxxx Xxxxx,
Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000 (the "Transferee"), that certain Series
[B] [B-1] Warrant issued by the Transferee dated ____________, which is
beneficially owned by the Transferor, to hold unto the said Transferee and its
administrators or assigns.
Dated as of ____________________, 2002
Signed by the Transferor in the
presence of:
----------------------------------------------
Witness signature:
---------------------------------------------- -----------------------------------------
Transferor
Signed by the Transferee in the
presence of:
----------------------------------------------
Witness signature:
---------------------------------------------- -----------------------------------------
Transferee
EXHIBIT F
INDEMNITY AGREEMENT
VSOURCE, INC.
LOST CERTIFICATE/NOTE/WARRANT
INDEMNITY AGREEMENT
This Indemnity Agreement (this "AGREEMENT") is entered into as of
_________ ___, 2002 by and between __________________ (the "SECURITY HOLDER")
and Vsource, Inc., a company organized under the laws of the State of Delaware
(the "COMPANY").
WHEREAS, the Security Holder beneficially owns one or more of the
following classes of securities which have been issued by the Company: Series
2-A Convertible Preferred Stock, Series 3-A Convertible Preferred Stock, Series
A Convertible Notes, Series B-1 Exchangeable Notes, Series B Warrants and/or
Series B-1 Warrants;
WHEREAS, the Company caused to be issued in the name of the Security
Holder, to evidence such ownership, the following certificate(s), note(s) and/or
warrant(s):
Number of Shares
Certificate Number (for shares and warrants) or
(for certificated Original Outstanding Class of Security and
shares) Principal Amount (for notes) Date of Issuance
------- ---------------------------- ----------------
---------------- ---------------- -------------------------
---------------- ---------------- -------------------------
---------------- ---------------- -------------------------
---------------- ---------------- -------------------------
WHEREAS, such certificate(s), note(s) and/or warrant(s) have, in some
manner unknown, become lost and are not now in the possession of the Security
Holder (collectively, the "LOST INSTRUMENT");
WHEREAS, the Security Holder is desirous of participating in the
relevant conversions and exchanges contemplated by that certain Convertible
Securities Exchange Agreement (the "Exchange Agreement") dated as of [ ], 2002
among the Company, the Security Holder and the
other holders of the Company's securities named therein without the physical
delivery of the Lost Instrument;
WHEREAS, if the conversions and exchanges contemplated by the Exchange
Agreement do not occur for whatever reason, the Security Holder is desirous that
the Company issue and deliver to it a replacement certificate(s), note(s) or
warrant(s) in lieu of the Lost Instrument (when so issued, collectively, a
"Replacement Instrument"); and
WHEREAS, in connection with the foregoing, the Company requires that the
Security Holder enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the Security Holder
and the Company agree as follows:
1. Representations and Warranties. The Security Holder hereby
represents and warrants to the Company as follows:
(a) proper searches have been made for the Lost Instrument
but the Security Holder is unable to locate it;
(b) the Lost Instrument is presumed lost, mislaid or
accidentally destroyed
(c) The Security Holder has not in any way pledged, sold or
otherwise disposed of the Lost Instrument.
2. Indemnity. The Security Holder and its assigns shall defend,
indemnify and hold harmless the Company and its officers, directors,
stockholders, affiliates, successors and stock transfer agent from and against
all actions, proceedings, claims and demands which may be brought or made
against the Company and its officers, directors, stockholders, affiliates,
successors and stock transfer agent and against all losses, damages, costs,
charges and expenses that such parties may in any way sustain, incur or become
liable for in consequence of or in connection with the Lost Instrument and, if
necessary, the issuance of the Replacement Instrument in lieu thereof.
3. Discovery of Lost Instrument. If and when the Lost Instrument is
discovered, the Security Holder shall immediately deliver the Lost Instrument to
the Company for cancellation and shall make no claims against the Company with
respect to such Lost Instrument.
4. Governing Law. This Agreement is to be construed in accordance
with and governed by the internal laws of the State of New York without giving
effect to any choice of law rule that would cause the application of the laws of
any jurisdiction other than the internal laws of the State of New York to the
rights and duties of the parties.
SECURITY HOLDER
By:_________________________
Name:
Title:
VSOURCE, INC.
By:_________________________
Name:
Title:
