EXHIBIT 10.4
SERIES B CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT
DATED FEBRUARY 18, 2000
BY AND AMONG
CORECHANGE, INC.
AND THE PERSONS LISTED ON THE SCHEDULE OF PURCHASERS HERETO
LIST OF DISCLOSURE SCHEDULES
Capitalization Schedule
Subsidiary Schedule
Restrictions Schedule
Financial Statements Schedule
Liabilities Schedule
Adverse Change Schedule
Developments Schedule
Assets Schedule
Taxes Schedule
Contracts Schedule
Intellectual Property Schedule
Litigation Schedule
Brokerage Schedule
Consents Schedule
Insurance Schedule
Employees Schedule
Employee Benefits Schedule
Compliance Schedule
Affiliated Transactions Schedule
Customers Schedule
LIST OF EXHIBITS
Exhibit A - Certificate of Amendment of Certificate of Incorporation
Exhibit B - Registration Agreement
Exhibit C - Amended and Restated Stockholders Agreement
Exhibit D - Opinion of Counsel
PURCHASE AGREEMENT
THIS SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (this
"AGREEMENT") is made as of February 18, 2000 by and among Corechange, Inc. a
Delaware corporation (the "COMPANY"), and the Persons listed on the SCHEDULE OF
PURCHASERS attached hereto (collectively referred to herein as the "FIRST
PURCHASERS" and individually as a "FIRST PURCHASER"). The First Purchasers and
any subsequent purchasers of shares of Series B Preferred who are made a party
to this Agreement pursuant to Section 1D hereof (the "SUBSEQUENT PURCHASERS")
are collectively referred to herein as the "PURCHASERS." Except as otherwise
indicated herein, capitalized terms used herein are defined in SECTION 6 hereof.
The parties hereto agree as follows:
SECTION 1. AUTHORIZATION AND CLOSING.
1A. AUTHORIZATION OF THE SERIES B PREFERRED. The Company shall
authorize the issuance and sale to the Purchasers of its Series B Convertible
Preferred Stock, par value $0.01 per share (the "SERIES B PREFERRED"), each
having the powers, rights and preferences set forth in the Certificate of
Amendment of Certificate of Incorporation attached hereto as EXHIBIT A.
1B. PURCHASE AND SALE OF THE SERIES B PREFERRED . At the Closing, the
Company shall sell to each Purchaser and, subject to the terms and conditions
set forth herein, each Purchaser shall purchase from the Company the number of
shares of Series B Preferred set forth opposite such Purchaser's name on the
SCHEDULE OF PURCHASERS attached hereto at a price of $5.837 per share. The sale
of the Series B Preferred shall constitute a separate sale hereunder as to each
such Purchaser.
1C. THE CLOSING. Each closing of the separate purchases and sales of
the Series B Preferred under this Agreement (the "CLOSING") shall take place at
the offices of Xxxxxxxx & Xxxxx or at such other place as may be mutually
agreeable to the Company and each Purchaser at such Closing. At each Closing,
the Company shall deliver to each Purchaser at such Closing stock certificates
evidencing the Series B Preferred to be purchased by such Purchaser, registered
in such Purchaser's name, bearing the legend set forth in SECTION 7D, upon
payment of the purchase price therefor by a cashier's or certified check, by
wire transfer of immediately available funds to the Company's account, by
cancellation of the principal amount outstanding under the Company's 8%
Convertible Subordinated Notes and the interest which may be accrued and owing
thereon as set forth opposite each Purchaser's name on the Schedule of
Purchasers. Each Purchaser purchasing shares of Series B Preferred through the
cancellation of the 8% Notes shall surrender the original copy of their
respective 8% Notes to the Company at the Closing (except where such 8% Notes
although purchased was never issued) in the aggregate amount set forth opposite
such Purchaser's name on the SCHEDULE OF PURCHASERS.
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1D. FIRST CLOSING. At the First Closing (as defined below), subject to
the terms and conditions of this Agreement, the Company will sell and issue to
each of the First Purchasers, and each of the First Purchasers will purchase the
number of shares of Series B Preferred set forth opposite such First Purchaser's
name on the Schedule of Purchasers for the purchase price of $5.837 per share.
The first closing of the sale and purchase of the Series B Preferred (the "FIRST
CLOSING") shall be held at 10:00 a.m. on February 18, 2000 or at such other time
and date as are mutually agreeable to the Company and the First Purchasers.
1E. SUBSEQUENT CLOSING. To the extent that at the First Closing the
Company does not sell and issue to the First Purchasers a total of 4,000,000
shares of Series B Preferred, the Company, may, but shall not be obligated to,
offer and sell up to a number of shares of Series B Preferred equal to the
difference between the number of shares of Series B Preferred sold and issued at
the First Closing and 4,000,000 shares (the "SUBSEQUENT SHARES") at a second
closing (the "SECOND CLOSING", and together with the First Closing, the
"CLOSINGS") to be held no later than April 15, 2000 at a price of $5.837 per
share. It shall be a condition to the consummation of the Second Closing that
the Subsequent Purchasers purchasing in such Second Closing shall become parties
to this Agreement by the execution and delivery of counterpart signature pages
in such form as may be acceptable to the Company and shall become subject to the
terms thereof.
SECTION 2. CONDITIONS OF EACH PURCHASER'S OBLIGATION AT THE CLOSING.
The obligation of each Purchaser to purchase and pay for the Series B Preferred
at the Closing is subject to the satisfaction (or waiver by such Purchaser) as
of such Closing of the following conditions:
2A. REPRESENTATIONS AND WARRANTIES; COVENANTS. The representations and
warranties contained in SECTION 5 hereof shall be true and correct in all
material respects at and as of the First Closing as though then made, except to
the extent of changes expressly contemplated herein resulting from the
transactions contemplated herein, and the Company shall have performed in all
material respects all of the covenants required to be performed by it hereunder
prior to the Closing.
2B. AMENDMENT OF CERTIFICATE OF INCORPORATION. The Company's
Certificate of Incorporation shall have been amended to include the provisions
set forth in EXHIBIT A hereto, shall be in full force and effect under the laws
of Delaware as of the Closing as so amended and shall not have been further
amended or modified.
2C. REGISTRATION AGREEMENT. The Company and the First Purchasers shall
have entered into a registration agreement in form and substance as set forth in
EXHIBIT B attached hereto (the "REGISTRATION AGREEMENT"), and the Registration
Agreement shall be in full force and effect as of the Closing.
2D. STOCKHOLDERS AGREEMENT. The Company, the First Purchasers, each
holder of Series A Preferred, and Xxx Xxxxxx shall have entered into a
stockholders agreement in form and substance set forth in EXHIBIT C attached
hereto (the "STOCKHOLDERS AGREEMENT") which amends, restates and supercedes
the Stockholders Agreement dated January 21, 1998 as amended, and the
Stockholders Agreement shall be in full force and effect as of the Closing.
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2E. SALE OF SERIES B PREFERRED TO EACH PURCHASER. The Company shall
have simultaneously sold to each Purchaser the Series B Preferred to be
purchased by such Purchaser hereunder at such Closing and shall have received
payment therefor in full.
2F. KEY-MAN LIFE INSURANCE. The Company shall have obtained a key-man
life insurance policy on the life of Xxx Xxxxxx, in the face amount of
$2,000,000, which policy shall be in full force and effect as of the First
Closing. Such insurance policy shall name the Company as beneficiary and shall
provide that such policy may not be canceled unless the insurance carrier gives
at least 30 days prior written notice of such cancellation to the Company's
Board of Directors.
2G. SECURITIES LAW COMPLIANCE. The Company shall have made all filings
under all applicable federal and state securities laws necessary to consummate
the issuance of the Series B Preferred pursuant to this Agreement in compliance
with such laws.
2H. OPINION OF THE COMPANY'S COUNSEL. Each Purchaser shall have
received from counsel for the Company, an opinion with respect to the matters
set forth in EXHIBIT D attached hereto, which shall be addressed to each
Purchaser, dated the date of the Closing.
2I. CLOSING DOCUMENTS. The Company shall have delivered to each
Purchaser all of the following documents:
i. a certificate signed by the Company's President or chief
financial officer, dated the date of the Closing, stating that the
conditions specified in SECTION 1 and SECTIONS 2A through 2H, inclusive,
have been fully satisfied;
ii. certified copies of (a) the resolutions duly adopted by the
Company's board of directors authorizing the execution, delivery and
performance of this Agreement, the Registration Agreement, the
Stockholders Agreement and each of the other agreements contemplated
hereby, the filing of the amendment to the Certificate of Incorporation
referred to in SECTION 2B, the issuance and sale of the Series B
Preferred, the reservation for issuance upon conversion of the Series B
Preferred shares of Common Stock and the consummation of all other
transactions contemplated by this Agreement, and (b) the resolutions
duly adopted by the Company's stockholders adopting the Certificate of
Amendment of Certificate of Incorporation referred to in SECTION 2B;
iii. certified copies of the Certificate of Incorporation referred
to in SECTION 2B and the Company's amended bylaws, each as in effect at
the Closing;
iv. copies of all third party and governmental consents, approvals
and filings required in connection with the consummation of the
transactions hereunder (including, without limitation, all blue sky law
filings and waivers of all preemptive rights and rights of first
refusal);
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v. for the Purchasers that are SBICs, duly completed and executed
XXX Xxxxx 000, 000 xxx 0000 (Xxxx X) and a written statement from the
Company regarding its intended use of proceeds from the financing; and
a list after giving effect to the transactions contemplated by this
Agreement of (a) the name of each of the Company's directors, (b) the
name and title of each of the Company's officers and (c) the name of
each of the Company's stockholders setting forth the number and Series
of shares held; and
vi. such other documents relating to the transactions contemplated
by this Agreement as the Purchasers' special counsel may reasonably
request.
2J. PROCEEDINGS. All corporate and other proceedings taken or required
to be taken by the Company in connection with the transactions contemplated
hereby to be consummated at or prior to the Closing and all documents incident
thereto shall be reasonably satisfactory in form and substance to Purchasers'
special counsel.
2K. WAIVER. Any condition specified in this SECTION 2 may be waived if
consented to by a Purchaser; provided that no such waiver shall be effective
against any Purchaser unless it is set forth in a writing executed by such
Purchaser.
2L. EXPENSES. At the Closing, the Company shall have reimbursed the
Purchasers for the fees and expenses of their special counsel as provided in
SECTION 7B hereof.
2M. COMPLIANCE WITH APPLICABLE LAWS. The purchase of Series B Preferred
by each Purchaser hereunder shall not be prohibited by any applicable law or
governmental rule or regulation and shall not subject such Purchaser to any
penalty, liability or, in such Purchaser's sole judgment, other onerous
commercially unreasonable condition under or pursuant to any applicable law or
governmental rule or regulation, and the purchase of the Series B Preferred by
each Purchaser hereunder shall be permitted by laws, rules and regulations of
the jurisdictions and governmental authorities and agencies to which such
Purchaser is subject.
SECTION 3. COVENANTS.
3A. FINANCIAL STATEMENTS AND OTHER INFORMATION. The Company shall
deliver to each Purchaser (so long as such Purchaser owns not less than 10% the
Underlying Common Stock owned by such Purchaser immediately after the Closing at
which such Purchaser purchased Series B Preferred, subject to adjustment for
stock splits, stock dividends, recapitalizations and similar events):
i. as soon as available but in any event within 30 days after the
end of each monthly accounting period in each fiscal year, unaudited
consolidating and consolidated statements of income and cash flows of
the Company and its Subsidiaries for such monthly
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period and for the period from the beginning of the fiscal year to the
end of such month, and unaudited consolidating and consolidated balance
sheets of the Company and its Subsidiaries as of the end of such monthly
period, setting forth in each case comparisons to the Company's annual
budget and to the corresponding period in the preceding fiscal year, and
all such statements shall be prepared in accordance with generally
accepted accounting principles, consistently applied, subject to the
absence of footnote disclosures and to normal year-end adjustments for
recurring accruals, and shall be certified by the Company's chief
financial officer;
ii. within 45 days after the end of each quarterly accounting
period in each fiscal year, an Officer's Certificate stating that the
Company is not aware of any Event of Noncompliance in existence or, if
any Event of Noncompliance exists, specifying the nature and period of
existence thereof and what actions the Company and its Subsidiaries have
taken and propose to take with respect thereto;
iii. within 120 days after the end of each fiscal year,
consolidating and consolidated statements of income and cash flows of
the Company and its Subsidiaries for such fiscal year, and consolidating
and consolidated balance sheets of the Company and its Subsidiaries as
of the end of such fiscal year, setting forth in each case comparisons
to the Company's annual budget and to the preceding fiscal year, all
prepared in accordance with generally accepted accounting principles,
consistently applied, and accompanied by (a) with respect to the
consolidated portions of such statements, an opinion of an independent
accounting firm of recognized national standing;
iv. prior to the beginning of each fiscal year, an annual budget
prepared on a monthly basis for the Company and its Subsidiaries for
such fiscal year (displaying anticipated statements of income and cash
flows and balance sheets), and promptly upon preparation thereof any
other significant budgets prepared by the Company and any revisions of
such annual or other budgets;
v. promptly (but in any event within five business days) after the
discovery of receipt of notice of any Event of Noncompliance, an
Officer's Certificate specifying the nature and period of existence
thereof and what actions the Company and its Subsidiaries have taken and
propose to take with respect thereto;
vi. within ten days after transmission thereof, copies of all
financial statements, proxy statements, reports and any other general
written communications which the Company sends to its stockholders
generally and copies of all registration statements and all regular,
special or periodic reports which it files, or any of its officers or
directors file with respect to the Company, with the Securities and
Exchange Commission or with any securities exchange on which any of its
securities are then listed, and copies of all press releases and other
statements made available generally by the Company to the public
concerning material developments in the Company's and its Subsidiaries'
businesses; and
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vii. with reasonable promptness, such other information and
financial data concerning the Company and its Subsidiaries as any Person
entitled to receive information under this SECTION 3A may reasonably
request.
Each of the financial statements and related documents referred to in
subparagraph (i) through (iii) shall be true and correct in all material
respects as of the dates and for the periods stated therein, subject in the case
of the unaudited financial statements to changes resulting from normal year-end
adjustments.
Notwithstanding the foregoing, the provisions of this SECTION 3A shall cease to
be effective so long as the Company (a) is subject to the periodic reporting
requirements of the Securities Exchange Act and continues to comply with such
requirements and (b) promptly provides to each Person otherwise entitled to
receive information pursuant to this SECTION 3A all reports and other materials
filed by the Company with the Securities and Exchange Commission pursuant to the
periodic reporting requirements of the Securities Exchange Act; provided that so
long as 10% of the Series B Preferred remains outstanding the Company shall
continue to deliver to each Purchaser the information specified in SECTIONS
3A(ii), 3A(iii) and 3A(v).
For purposes of SECTIONS 3A, 3B and 3C hereof, the term "PURCHASER" shall
include any direct or indirect partner or equity investor in a Purchaser who
received shares of Series B Preferred or Underlying Common Stock pursuant to a
distribution from or a liquidation of such Purchaser.
3B. INSPECTION OF PROPERTY. The Company shall permit any
representatives designated by any Purchaser (so long as such Purchaser holds any
at least 10% of the Underlying Common Stock acquired by such Purchaser at
Closing, subject to adjustment for stock splits, stock dividends,
recapitalizations and similar events) upon reasonable notice and during normal
business hours and at such other times as any such holder may reasonably
request, to (i) visit and inspect any of the properties of the Company and its
Subsidiaries, (ii) examine the corporate and financial records of the Company
and its Subsidiaries and make copies thereof or extracts therefrom and (iii)
discuss the affairs, finances and accounts of any such corporations with the
directors, officers, key employees and independent accountants of the Company
and its Subsidiaries. The presentation of an executed copy of this Agreement by
any Purchaser or any holder of Underlying Common Stock to the Company's
independent accountants shall constitute the Company's permission to its
independent accountants to participate in discussions with such Persons.
3C. RESTRICTIONS. The Company shall not, without the prior written
consent of the holders of a majority of the Underlying Common Stock then
outstanding:
i. pay any dividend or make any other distribution to the holders
of Common Stock;
ii. acquire all or substantially all of the assets of, or acquire a
controlling equity interest in, any other person or business entity;
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iii. directly or indirectly redeem, purchase or otherwise acquire,
or permit any Subsidiary to redeem, purchase or otherwise acquire, any
of the Company's or any Subsidiary's capital stock or other equity
securities (including, without limitation, warrants, options and other
rights to acquire such capital stock or other equity securities) other
than the Series A Preferred or Series B Preferred pursuant to the terms
of the Amended and Restated Certificate of Incorporation or directly or
indirectly redeem, purchase or make any payments with respect to any
stock appreciation rights, phantom stock plans or similar rights or
plans, except for repurchases of Common Stock from employees, directors,
officers, consultants and advisors of the Company and its Subsidiaries
upon the termination of employment, retention, or disability of such an
individual pursuant to arrangements approved by the Company's Board of
Directors;
iv. except as expressly contemplated by this Agreement, authorize,
issue or enter into any agreement providing for the issuance (contingent
or otherwise) of (a) any notes or debt securities containing equity
features (including, without limitation, any notes or debt securities
convertible into or exchangeable for capital stock or other equity
securities, issued in connection with the issuance of capital stock or
other equity securities or containing profit participation features),
that are senior to or pari passu with the Series B Preferred with
respect to the payment of dividends, redemptions or distributions upon
liquidation or otherwise; or (b) any capital stock or Equity
Equivalents, in either case which are senior to or pari passu with the
Series B Preferred with respect to the payment of dividends, redemptions
or distributions upon liquidation or otherwise or any shares of phantom
stock, stock appreciation rights or any similar instruments; or (c) any
other capital stock or equity securities (or any other securities
convertible into or exchangeable for any capital stock or other equity
securities), whether or not subordinated to the Series B Preferred,
other than as permitted under SECTION 3C(xv) or SECTION 3C(xvi) herein.
v. make, or permit any Subsidiary to make, any loans or advances
to, guarantees for the benefit of, or Investments in, any Person (other
than a Wholly-Owned Subsidiary established under the laws of a
jurisdiction of the United States or any of its territorial
possessions), except for (a) reasonable advances to employees in the
ordinary course of business, and (b) Investments having a stated
maturity no greater than one year from the date the Company makes such
Investment in (1) obligations of the United States government or any
agency thereof or obligations guaranteed by the United States
government, (2) certificates of deposit of commercial banks having
combined capital and surplus of at least $50 million or (3) commercial
paper with a rating of at least "PRIME-1" by Xxxxx'x Investors
Service, Inc.;
vi. merge or consolidate with any Person which results in the
Company's stockholders as of immediately prior to such merger or
consolidation (and without regard to any stockholders that acquired
shares in connection therewith or in contemplation thereof) owning less
than 50% of the merged entity by vote or permit any Subsidiary to merge
or consolidate with any Person (other than a Wholly Owned Subsidiary);
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vii. sell, lease, pledge or otherwise dispose of, or permit any
Subsidiary to sell, lease or otherwise dispose of, more than fifty
percent (50%) of the consolidated assets of the Company and its
Subsidiaries (computed on the basis of book value, determined in
accordance with generally accepted accounting principles consistently
applied, or fair market value, determined by the Company's board of
directors in its reasonable good faith judgment) in any transaction or
series of related transactions (other than sales of inventory in the
ordinary course of business);
viii. liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction (including, without
limitation, any reorganization into a limited liability company, a
partnership or any other non-corporate entity which is treated as a
partnership for federal income tax purposes);
ix. become subject to, or permit any of its Subsidiaries to become
subject to (including, without limitation, by way of amendment to or
modification of) any agreement or instrument which by its terms would
(under any circumstances) restrict the Company's right to perform the
provisions of this Agreement, the Registration Agreement, the
Stockholders Agreement, the Amended and Restated Certificate of
Incorporation or the Company's bylaws (including, without limitation,
provisions relating to the declaration and payment of dividends on and
the making of redemptions of the Series B Preferred, and conversions of
the Series B Preferred);
x. except as expressly contemplated by this Agreement, make any
amendment to the Certificate of Incorporation, as amended;
xi. create, incur, assume or suffer to exist, or permit any
Subsidiary to create, incur, assume or suffer to exist, Indebtedness in
excess of $3,000,000 in the aggregate;
xii. change the authorized size of its board of directors from
eight (8) members;
xiii. issue or sell any shares of the capital stock, or rights to
acquire shares of the capital stock, of any Subsidiary to any Person
other than the Company or a Wholly Owned Subsidiary;
xiv. register any shares of Common Stock pursuant to a public
offering not constituting a Qualified Public Offering (as defined in the
Company's Amended and Restated Certificate of Incorporation), or
register any Subsidiary's equity;
xv. issue or grant under the Company's stock incentive plan, stock
option plan, stock purchase plan, restricted stock plan, stock bonus
arrangement or other similar stock plan or agreement approved by the
Company's Board of Directors any option, warrant, Common Stock (other
than Common Stock sold by the Company prior to the date of this
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Agreement for full fair market value in an arms-length transaction) or
Equity Equivalent to any employee, officer, director, consultant or
advisor unless such issuance or grant: (i) provides cliff vesting after
one year (25%), with the remaining portion vested on a straight line
monthly basis over at least an additional three year period; (ii)
provides a right of first refusal in favor of the Company to repurchase
any Common Stock or Equity Equivalents derived from such issuance or
grant at a bona fide third party offer price; and (iii) restricts the
transfer and sale of such option, warrant, Common Stock or Equity
Equivalent (including any securities derived therefrom) for a period of
180 days following any initial public offering of the Company's equity
securities, as may be required by Company's underwriters; or
xvi. issue or grant to any employee, officer, director, consultant
or advisor under the Company's stock incentive plan, stock option plan,
stock purchase plan, restricted stock plan, stock bonus arrangement or
other similar stock plan or agreement approved by the Company's Board of
Directors any options, warrants, Common Stock (other than Common Stock
sold by the Company prior to the date of this Agreement for full fair
market value in an arms-length transaction) or Equity Equivalents that
in the aggregate with all pre-existing options, warrants, Common Stock
and Equivalents issued or granted at any time under such plans and
agreements exceed 20% of the Company's issued and outstanding Common
Stock (including any issued and outstanding convertible securities, on
an as-if converted basis).
3D. AFFIRMATIVE COVENANTS. The Company shall, and shall cause each
Subsidiary to, unless it has received the prior written consent of the holders
of a majority of the outstanding Underlying Common Stock:
i. at all times cause to be done all things necessary to maintain,
preserve and renew its corporate existence and all material licenses,
authorizations and permits that the Company believes, in its reasonable
discretion, necessary to the conduct of its businesses;
ii. maintain and keep its properties in good repair, working order
and condition, and from time to time make all repairs, renewals and
replacements that the Company believes, in its reasonable discretion, to
be necessary or desirable so that its businesses may be property and
advantageously conducted at all times;
iii. pay and discharge when due and payable all taxes, assessments
and governmental charges imposed upon its properties or upon the income
or profits therefrom (in each case before the same becomes delinquent
and before penalties accrue thereon) and all claims for labor, materials
or supplies which if unpaid would by law become a Lien upon any of its
property and would reasonably be expected to have a material adverse
effect upon the financial condition, operating results, assets,
operations or business prospects of the Company and its Subsidiaries
taken as a whole, unless and to the extent that the same are being
contested in good faith and by appropriate proceedings and adequate
reserves (as determined in accordance with generally accepted
accounting principles, consistently applied) have been established
on its books with respect thereto;
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iv. comply in all material respects with all other obligations
which it incurs pursuant to any contract or agreement, whether oral or
written, express or implied, as such obligations become due to the
extent to which the failure to so comply would reasonably be expected to
have a material adverse effect upon the financial condition, operating
results, assets, operations or business prospects of the Company and its
Subsidiaries taken as a whole, unless and to the extent that the same
are being contested in good faith and by appropriate proceedings and
adequate reserves (as determined in accordance with generally accepted
accounting principles, consistently applied) have been established on
its books with respect thereto or unless determined otherwise by vote of
the Board of Directors;
v. comply in all material respects with all applicable laws, rules
and regulations of all governmental authorities, the violation of which
would reasonably be expected to have a material adverse effect upon the
financial condition, operating results, assets, operations or business
prospects of the Company and its Subsidiaries taken as a whole;
vi. apply for and continue in force with good and responsible
insurance companies adequate insurance covering risks of such types and
in such amounts as are commercially reasonable for corporations of
similar size engaged in similar lines of business as determined by the
Board of Directors of the Company in its reasonable discretion;
vii. maintain the key-man life insurance policies referred to in
SECTION 2F hereof and maintain officers and directors liability
insurance coverage of at least $2,000,000;
viii. maintain proper books of record and account which present
fairly in all material respects its financial condition and results of
operations and make provisions on its financial statements for all such
proper reserves as in each case are required in accordance with
generally accepted accounting principles, consistently applied; and
ix. enter into and maintain nondisclosure, proprietary rights and
noncompete agreements with its key employees in accordance with the
Company's past practices.
3E. COMPLIANCE WITH AGREEMENTS. The Company shall perform and observe
in all material respects (i) all of its obligations to each holder of the Series
B Preferred and all of its obligations to each holder of the Underlying Common
Stock set forth in the Certificate of Amendment of Certificate of Incorporation
and the Company's bylaws, (ii) all of its obligations to each holder of
Registrable Securities set forth in the Registration Agreement, and (iii) all of
its obligations to each party under the Stockholders Agreement.
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3F. CURRENT PUBLIC INFORMATION. At all times after the Company has
filed a registration statement with the Securities and Exchange Commission
pursuant to the requirements of either the Securities Act or the Securities
Exchange Act, the Company shall use its best efforts to file all reports
required to be filed by it under the Securities Act and the Securities Exchange
Act and the rules and regulations adopted by the Securities and Exchange
Commission thereunder and shall take such further action as any holder or
holders of Restricted Securities may reasonably request, all to the extent
required to enable such holders to sell Restricted Securities pursuant to (i)
Rule 144 adopted by the Securities and Exchange Commission under the Securities
Act (as such rule may be amended from time to time) or any similar rule or
regulation hereafter adopted by the Securities and Exchange Commission or (ii) a
registration statement on Form S-2 or S-3 or any registration form hereafter
adopted by the Securities and Exchange Commission that replaces such Form S-2 or
S-3. Upon request, the Company shall deliver to any holder of Restricted
Securities a written statement as to whether it has complied with such
requirements.
3G. SBIC REGULATORY PROVISIONS.
i. Within 75 days after the Closing and each subsequent Financing
hereunder by each holder of Series B Preferred or Underlying Common
Stock which is an SBIC (an "SBIC HOLDER") and at the end of each quarter
thereafter until all of the proceeds from the Financing hereunder have
been used by the Company and its Subsidiaries, the Company shall deliver
to each SBIC Holder a written statement certified by the Company's
president or chief financial officer describing in reasonable detail the
use of the proceeds of the Financing hereunder by the Company and its
Subsidiaries. In addition to any other rights granted hereunder, the
Company shall grant each SBIC Holder and the United States Small
Business Administration (the "SBA") access to the Company's records for
the purpose of verifying the use of such proceeds.
ii. Promptly after the end of each fiscal year (but in any event
prior to February 28 of each year), the Company shall deliver to each
SBIC Holder a written assessment of the economic impact of the SBIC
Holder's investment in the Company, specifying the full-time equivalent
jobs created or retained in connection with the investment, the impact
of the investment on the businesses of the Company in terms of expanded
revenue and taxes and other economic benefits resulting from the
investment (including, but not limited to, technology development or
commercialization, minority business development, urban or rural
business development and expansion of exports).
iii. For purposes of this Section, the term "FINANCING" shall have
the meaning set forth in the SBIC Regulations.
3H. RESERVATION OF COMMON STOCK. The Company shall at all times reserve
and keep available out of its authorized but unissued shares of Common Stock,
solely for the purpose of issuance upon the conversion of the Series B
Preferred, a number of shares of Common Stock equal to the number of shares
thereof which are issuable upon conversion of all outstanding Series B
Preferred. All shares of Common Stock which are so issuable shall, when issued
pursuant to the
11
terms of and for the consideration contemplated by this Agreement, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges. The Company shall take all such actions as may be necessary to assure
that all such shares of Common Stock may be so issued without violation of any
applicable law or governmental regulation or any requirements of any domestic
securities exchange upon which shares of Common Stock may be listed (except for
official notice of issuance which shall be immediately transmitted by the
Company upon issuance).
3I. INTELLECTUAL PROPERTY RIGHTS. The Company shall, and shall cause
each Subsidiary to, possess and maintain all Intellectual Property Rights
material to the conduct of their respective businesses as the Company shall
determine in its reasonable discretion, and own all right, title and interest in
and to, or have a valid license for, all such Intellectual Property Rights.
Neither the Company nor any Subsidiary shall take any action, or fail to take
any action, that would result in the invalidity, abandonment, misuse or
unenforceability of such Intellectual Property Rights or which would infringe
upon or misappropriate any rights of other Persons.
3J. FIRST REFUSAL RIGHTS. If the Company authorizes the issuance or
sale of any shares of Common Stock or Equity Equivalents, the Company shall
first offer to sell to each holder of Underlying Common Stock a portion of such
stock or Equity Equivalents equal to the quotient determined by dividing (1) the
number of shares of Underlying Common Stock held by such holder immediately
prior to such issuance by (2) the sum of the total number of shares of
Underlying Common Stock immediately prior to such issuance and the number of
shares of Common Stock outstanding (including Common Stock reserved for
Preferred Stock, Series I Preferred Stock, Series II Preferred Stock and Series
III Preferred Stock) immediately prior to such issuance which are not shares of
Underlying Common Stock; provided, however, that the following issuances shall
be exempted from the Company's obligation to offer shares to such holder: (a)
issuance of Common Stock, options or Equity Equivalents to the Company's
employees, directors, officers, advisors and consultants to the extent
permissible under SECTIONS 3C(xv) and 3C(xvi), (b) issuance of Common Stock upon
the conversion of any Preferred Stock or upon the conversion of any other
presently outstanding convertible debt or other convertible securities of the
Company, (c) issuance of capital stock upon the exercise of any presently
outstanding warrants, (d) issuance of up to an additional 196,774 shares of
Common Stock to Cambridge Technology Partners, (e) issuance of up to 38,382
shares of Common Stock to Xxxxxxxx Xxxxxxxxx and Xxxxxxxx Xxxxxxxxxxx pursuant
to the Agreement dated June 30, 1997 between the corporation and them, (f)
issuance of up to 15,000 shares of Common Stock to Xxxxxx Partners pursuant to
an oral agreement between Xxxxxx Partners and the corporation, and (g) issuance
of up to 15,000 shares of Common Stock to strategic partners of the Company, (h)
issuance by way of a dividend or other distribution on shares of Preferred Stock
in accordance with the Amended and Restated Certificate of Incorporation, (i)
securities offered to the public pursuant to a registration statement filed
pursuant to the Securities Act, (j) sale of the Subsequent Shares pursuant to
this Agreement, and (k) the issuance of Common Stock or Equity Equivalents in
exchange for the capital stock of a third party in an arms length acquisition
transaction. Each holder of Underlying Common Stock shall be entitled to
purchase such stock or securities at the most favorable price and on the most
favorable terms as such stock or securities are to be offered to any other
Person. The purchase price for all stock and securities offered to the holders
of the Underlying Common Stock shall be payable on terms no less favorable to
such holders
12
than those offered to any other Person. The right of first refusal set forth in
this SECTION 3J is nonassignable, except that (I) such right is assignable in
connection with the transfer of the Series A Preferred or Series B Preferred
shares to any wholly-owned subsidiary or parent of, or to any corporation or
entity which is, within the meaning of the Securities Act, controlling,
controlled by or under common control with the holder of such Series B
Preferred, and (ii) such right is assignable in connection with the transfer of
Series B Preferred shares to the partners of the holder of such shares; provided
that the right of first refusal granted hereunder may not be assigned unless (A)
the transferee has certified to the Company that he or it is an "accredited
investor" within the meaning of Rule 501(a) under the Securities Act, (B) the
Company is given written notice by the transferee at the time of such transfer
stating the name and address of the transferee and identifying the securities
with respect to which such rights are being assigned, and (C) the transferee has
delivered to the Company a written instrument by which such transferee agrees to
be bound by the obligations imposed under this SECTION 3J to the same extent as
if such transferee were a party hereto.
i. In order to exercise its purchase rights hereunder, a holder of
Underlying Common Stock must within twenty (20) days after receipt of
written notice from the Company describing in reasonable detail the
stock or securities being offered, the purchase price thereof, the
payment terms and such holder's percentage allotment deliver a written
notice to the Company describing its election hereunder. If all of the
stock and securities offered to the holders of Underlying Common Stock
is not fully subscribed by such holders, the remaining stock and
securities shall be reoffered by the Company to the holders purchasing
their full allotment upon the terms set forth in this Section, except
that such holders must exercise their purchase rights within five days
after receipt of such reoffer.
ii. Upon the expiration of the offering periods described above,
the Company shall be entitled to sell such stock or securities which the
holders of Underlying Common Stock have not elected to purchase during
the ninety (90) days following such expiration on terms and conditions
no more favorable to the purchasers thereof than those offered to such
holders. Any stock or securities offered or sold by the Company after
such 90-day period must be reoffered to the holders of Underlying Common
Stock pursuant to the terms of this Section.
3K. REGULATORY COMPLIANCE COOPERATION. In the event that any Purchaser
determines that it has a Regulatory Problem (as defined below), such Purchaser
shall have the right to transfer (subject to compliance with applicable
securities laws and regulations) its Preferred Stock without regard to any
restrictions on transfer set forth in this Agreement or the Stockholders
Agreement (provided that the transferee agrees in writing to become a party to
this Agreement), and the Company shall take all such actions as are reasonably
requested by such Purchaser in order to (a) effectuate and facilitate any
transfer by such Purchaser of any securities of the Company then held by such
Purchaser to any Person designated by such Purchaser, (b) permit such Purchaser
(or any Affiliate of such Purchaser) to exchange all or any portion of the
Preferred Stock then held by such Purchaser on a share-for-share basis for
shares of a class of nonvoting preferred stock of the Company, which nonvoting
preferred stock shall be identical in all respects to such Preferred Stock,
except that such preferred stock shall be nonvoting and shall be convertible, at
such Purchaser's sole
13
discretion, into either Common Stock or the non-voting Common Stock described in
clause (c), below, on such terms as are requested by such Purchaser in light of
regulatory considerations then prevailing, (c) permit such Purchaser (or any
Affiliate of such Purchaser) to exchange all or any portion of the Common Stock
then held by such Purchaser on a share-for-share basis for shares of a class of
nonvoting common stock of the Company, which nonvoting common stock shall be
identical in all respects to such Common Stock, except that such common stock
shall be nonvoting and shall be convertible into Common Stock on such terms as
are requested by such Purchaser in light of regulatory considerations then
prevailing and (d) amend this Agreement, the Articles of Incorporation and other
related agreements to effectuate and reflect the foregoing. Such actions may
include, but shall not necessarily be limited to:
i. entering into such additional agreements as are requested by
such Purchaser to permit any Person(s) designated by such Purchaser to
exercise any voting power which is relinquished by such Purchaser upon
any exchange of Common Stock for nonvoting stock of the Company; and
ii. entering into such additional agreements, adopting such
amendments to the Articles of Incorporation and bylaws of the Company
and taking such additional actions as are reasonably requested by such
Purchaser in order to effectuate the intent of the foregoing.
For purposes of this Agreement, a "REGULATORY PROBLEM" means any set of
facts or circumstances wherein it has been asserted by any governmental
regulatory agency (or such Purchaser believes that there is a substantial risk
of such assertion) that such Purchaser and its Affiliates are not entitled to
hold, or exercise any significant right with respect to, the Preferred Stock or
the Common Stock.
3L. PUBLIC DISCLOSURES. The Company shall not, nor shall it permit any
Subsidiary to, disclose any Purchaser's name or identity as an investor in the
Company in any press release or other public announcement or in any document or
material filed with any governmental entity, without the prior written consent
of such Purchaser, unless such disclosure is required by applicable law or
governmental regulations or by order of a court of competent jurisdiction, in
which case prior to such disclosure Company shall provide to such Purchaser in
reasonable detail the proposed content of such disclosure and shall permit the
Purchaser to review and comment upon the form and substance of such disclosure.
3M. TERMINATION OF COVENANTS. The covenants of the Company contained in
this SECTION 3 shall terminate upon consummation by the Company of a Qualified
Public Offering (as defined in the Company's Amended and Restated Certificate of
Incorporation) provided, however, that the covenants contained in SECTIONS 3A
(to the extend specified therein), 3E, 3G and 3K shall survive with respect to a
Purchaser for so long as such Purchaser continues to own any Underlying Common
Stock, and the covenants contained in SECTION 3H shall survive with respect to a
Purchaser for so long as such Purchaser continues to own any Preferred Stock
purchased pursuant to this Agreement.
14
3N. OTHER COVENANTS SUPERCEDED. The covenants set forth in this SECTION
3 shall supercede (as of the First Closing) all of the Company's covenants set
forth Section 7 of the Purchase Agreement between the Company and HarbourVest
Venture Partners V - Direct Fund L.P. dated January 21, 1998, which covenants
shall be terminated as of the date hereof, and HVP as the Purchaser thereunder
shall have all the rights with respect to its Series A Preferred Stock as are
set forth in this SECTION 3.
SECTION 4. TRANSFER OF RESTRICTED SECURITIES.
4A. REQUIREMENTS FOR TRANSFER.
i. Restricted Securities shall not be sold or transferred unless
either (a) they first shall have been registered under the Securities
Act, or (b) the Company first shall have been furnished with an opinion
of legal counsel, reasonably satisfactory to the Company, to the effect
that such sale or transfer is exempt from the registration requirements
of the Securities Act.
ii. Notwithstanding the foregoing, no registration or opinion of
counsel shall be required for (a) a transfer by a Purchaser that is a
corporation to a Wholly-Owned Subsidiary of such corporation, a transfer
by a Purchaser that is a partnership to a partner of such partnership or
a retired partner of such partnership who retires after the date hereof,
or to the estate of any such partner or retired partner, or a transfer
by a Purchaser that is a limited liability company to a member of such
limited liability company or a retired member who resigns after the date
hereof or to the estate of any such member or retired member; provided
that the transferee in each of the foregoing cases shall first agree in
writing to be subject to the terms and conditions of this SECTION 4A to
the same extent as if it were the original Purchaser hereunder, or (b)a
transfer made in accordance with Rule 144 under the Securities Act.
4B. LEGEND. Each certificate representing Restricted Securities shall
bear a legend substantially in the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL SUCH SHARES ARE REGISTERED UNDER THE ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY IS OBTAINED TO THE EFFECT THAT
SUCH REGISTRATION IS NOT REQUIRED."
15
4C. LEGEND REMOVAL. If any Restricted Securities become eligible for
sale pursuant to Rule 144(k), the Company shall, upon the request of the holder
of such Restricted Securities, remove the legend set forth in SECTION 4B from
the certificates for such Restricted Securities.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
As a material inducement to the Purchasers to enter into this Agreement
and purchase the Series B Preferred hereunder, the Company hereby represents and
warrants that, except to the extent set forth on the Disclosure Schedules
attached hereto:
5A. ORGANIZATION, CORPORATE POWER AND LICENSES. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware and is qualified to do business in every jurisdiction in which its
ownership of property or conduct of business requires it to qualify and in which
the failure to so qualify would have a Material Adverse Effect. The Company
possesses all requisite corporate power and authority and all material licenses,
permits and authorizations necessary to own and operate its properties, to carry
on its businesses as now conducted and presently proposed to be conducted and to
carry out the transactions contemplated by this Agreement. The copies of the
Company's and each Subsidiary's charter documents and bylaws which have been
furnished to the Purchasers' special counsel reflect all amendments made thereto
at any time prior to the date of this Agreement and are correct and complete.
5B. CAPITAL STOCK AND RELATED MATTERS.
i. As of the Closing and immediately thereafter, the authorized
capital stock of the Company shall consist of (a) 413,965 shares of
Series I Preferred all of which shall be issued and outstanding, (b)
336,021 shares of Series II Preferred all of which shall be issued and
outstanding, (c) 215,000 shares of Series III Preferred of which 200,032
shares shall be issued and outstanding, (d) 2,884,598 shares of Series A
Preferred all of which shall be issued and outstanding, (e) 4,000,000
shares of Series B Preferred of which [3,033,878] shall be issued and
outstanding, and the remainder of which shall be reserved for future
issuances of Series B Preferred, and (f) 15,000,000 shares of Common
Stock, of which 4,097,171 shares shall be issued and outstanding,
7,849,584 shares shall be reserved for issuance upon conversion of the
Preferred Stock and 950,266 shares shall be reserved for issuance upon
exercise of all other Equity Equivalents. All of the issued and
outstanding shares of the Company's capital stock have been duly
authorized, are validly issued, fully paid, and nonassessable, and are
not subject to, nor were they issued in violation of, any preemptive
rights or rights of first refusal. As of the First Closing, neither the
Company nor any Subsidiary shall have outstanding any capital stock or
Equity Equivalents, nor shall the Company or any Subsidiary have
outstanding any rights or options to subscribe for or to purchase its
capital stock or Equity Equivalents or any oral or written agreement
related thereto, except for the Preferred Stock and except as set forth
on the attached "CAPITALIZATION SCHEDULE." The CAPITALIZATION SCHEDULE
accurately sets forth the following information with
16
respect to all outstanding Capital Stock and Equity Equivalents: the
holder thereof; the class of series and number of shares or Equity
Equivalents owned; and in the case of Equity Equivalents, the class or
series and number of shares of capital stock (or equivalent) obtainable
upon exercise thereof, the exercise price (or equivalent) thereof, and
the expiration date thereof. As of the First Closing, neither the
Company nor any Subsidiary shall be subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire
any shares of its capital stock or any Equity Equivalents, except as set
forth on the CAPITALIZATION SCHEDULE and except pursuant to the
Certificate of Incorporation.
ii. There are no statutory or, to the best of the Company's
knowledge, contractual stockholders preemptive rights, rights of refusal
or first offer or similar rights, or anti-dilution rights with respect
to the issuance of the Series B Preferred hereunder or the issuance of
the Common Stock upon the conversion of the Preferred Stock that have
not been waived prior to the First Closing. The Company has not violated
any applicable U.S. federal or state corporate or securities laws in
connection with the offer, sale or issuance of any of its capital stock,
and, based on the representations of the Purchasers set forth in SECTION
7D, the offer, sale and issuance of the Series B Preferred hereunder do
not require registration under the Securities Act or any applicable
state securities laws. To the best of the Company's knowledge, there are
no agreements between the Company's stockholders with respect to the
voting or transfer of the Company's capital stock or with respect to any
other aspect of the Company's affairs, except as set forth on the
CAPITALIZATION SCHEDULE.
5C. SUBSIDIARIES; INVESTMENTS. The attached "SUBSIDIARY SCHEDULE"
correctly sets forth the name of each Subsidiary, the jurisdiction of its
incorporation and the Persons owning the outstanding capital stock of such
Subsidiary. Each Subsidiary is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation to the extent
that such concepts exist in such jurisdictions, possesses all requisite
corporate power and authority and all material licenses, permits and
authorizations necessary to own its properties and to carry on its businesses as
now being conducted and as presently proposed to be conducted and is qualified
to do business in every jurisdiction in which its ownership of property or the
conduct of business requires it to qualify and in which the failure to be so
qualified would have a Material Adverse Effect. All of the outstanding shares of
capital stock of each Subsidiary are validly issued, full paid and
nonassessable, and all such shares are owned beneficially and of record by the
Company or another Subsidiary free and clear of any Lien and not subject to any
option or right to purchase any such shares. Except as set forth on the
SUBSIDIARY SCHEDULE, neither the Company nor any Subsidiary owns or holds the
right to acquire any shares of stock or any other security or interest in any
other Person (other than another Subsidiary).
5D. AUTHORIZATION; NO BREACH. The execution, delivery and performance
of this Agreement, the Registration Agreement, the Stockholders Agreement and
all other agreements contemplated hereby to which the Company is a party, the
filing of the amendment of the Certificate of Incorporation (collectively, the
"RELEVANT DOCUMENTS") have been duly authorized by the Company. The Relevant
Documents to which the Company is a party each constitutes a valid and binding
obligation of the Company, enforceable in accordance with its terms. The
execution and
17
delivery by the Company of the Relevant Documents, the offering, sale and
issuance of the Series B Preferred hereunder, the issuance of the Common Stock
upon conversion of the Series B Preferred, the filing of the amendment of the
Certificate of Incorporation and the fulfillment of and compliance with the
respective terms hereof and thereof by the Company, do not and shall not (i)
conflict with or result in a breach of the terms, conditions or provisions of,
(ii) constitute a default under, (iii) result in the creation of any lien,
security interest, charge or encumbrance upon the Company's or any Subsidiary's
capital stock or assets pursuant to, (iv) give any third party the right to
modify, terminate or accelerate any obligation under, (v) result in a violation
of, or (vi) require any authorization, consent, approval, exemption or other
action by or notice or declaration to, or filing with, any court or
administrative or governmental body or agency pursuant to, or the charter or
bylaws of the Company or any Subsidiary, or any law, statute, rule or regulation
to which the Company or any Subsidiary is subject, or any agreement, instrument,
order, judgment or decree to which the Company or any Subsidiary is subject
(except for filings required under the Securities Act and state blue sky laws)
which event would have a Material Adverse Effect. Except as set forth on the
attached "RESTRICTIONS SCHEDULE," none of the Subsidiaries are subject to any
restrictions upon making loans or advances or paying dividends to, transferring
property to, or repaying any Indebtedness owed to, the Company or another
Subsidiary.
5E. FINANCIAL STATEMENTS. Attached hereto as the "FINANCIAL STATEMENTS
SCHEDULE" are (x) the consolidated balance sheets of the Company and its
Subsidiaries as of December 31, 1997 and 1998, and the related statements of
income and cash flows (or the equivalent) for the respective twelve-month
periods then ended, and (y) the unaudited consolidated balance sheet of the
Company and its Subsidiaries as of December 31, 1999 (the "LATEST BALANCE
SHEET"), and the related statements of income and cash flows (or the equivalent)
for the 12-month period then ended. Each of the foregoing financial statements
(including in all cases the notes thereto, if any) is accurate and complete in
all material respects, is consistent with the books and records of the Company
(which, in turn, are accurate and complete in all material respects) and has
been prepared in accordance with generally accepted accounting principles,
consistently applied, subject in the case of the unaudited financial statements
to the absence of footnote disclosure and changes resulting from normal year-end
adjustments none of which would have a Material Adverse Effect.
5F. ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on the
attached "LIABILITIES SCHEDULE", to the Company's knowledge the Company and its
Subsidiaries do not have any material obligation or liability (whether accrued,
absolute, contingent, unliquidated or otherwise, whether due or to become due
and regardless of when asserted) arising out of transactions entered into at or
prior to the Closing, or any action or inaction at or prior to the Closing, or
any state of facts existing at or prior to the Closing other than: (i)
liabilities set forth on the Latest Balance Sheet (including any notes thereto),
(ii) liabilities and obligations which have arisen after the date of the Latest
Balance Sheet in the ordinary course of business (none of which is a liability
resulting from breach of contract, breach of warranty, tort, infringement, claim
or lawsuit), (iii) other liabilities and obligations expressly disclosed in the
other Schedules to this Agreement, and (iv) liabilities incurred in the ordinary
course of business that were not required to be disclosed on the latest balance
sheet of the Company or its Subsidiaries in accordance with GAAP.
18
5G. NO MATERIAL ADVERSE CHANGE. Except as set forth on the attached
"ADVERSE CHANGE SCHEDULE", since the date of the Latest Balance Sheet, there has
been no material adverse change in the financial condition, operating results,
assets, operations, business prospects, employee relations or customer or
supplier relations of the Company and its Subsidiaries taken as a whole.
5H. ABSENCE OF CERTAIN DEVELOPMENTS. Except as expressly contemplated
by this Agreement or as set forth on the attached "DEVELOPMENTS SCHEDULE", since
the date of the Latest Balance Sheet, neither the Company nor any Subsidiary
have
i. issued any notes, bonds or other debt securities or any capital
stock or other equity securities or any securities convertible,
exchangeable or exercisable into any capital stock or other equity
securities other than options under the Company's stock inventive plan
and shares issued upon the exercise of such options;
ii. discharged or satisfied any material Lien or paid any material
obligation or liability, other than current liabilities paid in the
ordinary course of business;
iii. declared or made any payment or distribution of cash or other
property to its stockholders with respect to its capital stock or other
equity securities or purchased or redeemed any shares of its capital
stock or other equity securities (including, without limitation, any
warrants, options or other rights to acquire its capital stock or other
equity securities), other than repurchases of stock from former
employees, directors, officers, consultants and advisers pursuant to the
terms of stock restriction agreements to which the Company is a party;
iv. mortgaged or pledged any of its properties or assets or
subjected them to any material Lien, except Liens for current property
taxes not yet due and payable;
v. sold, assigned or transferred any of its tangible assets, except
in the ordinary course of business, or canceled any material debts or
claims;
vi. sold, assigned or transferred any patents or patent
applications, trademarks, service marks, trade names, corporate names,
copyrights or copyright registrations, trade secrets or other intangible
assets, or disclosed any material proprietary confidential information
to any Person other than newly hired employees of the Company other than
pursuant to a confidentiality agreement;
vii. suffered any material extraordinary losses or waived any
rights of material value, whether or not in the ordinary course of
business or consistent with past practice;
viii. made capital expenditures or commitments therefor that
individually are in excess of $50,000 or in the aggregate are in excess
of $500,000.
19
ix. made any loans or advances to, guarantees for the benefit of,
or any Investments in, any Persons in excess of $10,000 in the aggregate
other than advances to the Company's employees made in the ordinary
course of the Company's business;
x. suffered any damage, destruction or casualty loss exceeding in
the aggregate $150,000, whether or not covered by insurance; or
xi. made any Investment in or taken steps to incorporate any
Subsidiary.
Neither the Company nor any Subsidiary has at any time made any
payments for political contributions or made any bribes, kickback payments or
other illegal payments.
5I. ASSETS. Except as set forth on the attached "ASSETS SCHEDULE," the
Company and each Subsidiary have good and marketable title to, or a valid
leasehold interest in, the properties and assets used by them, located on their
premises or shown on the Latest Balance Sheet or acquired thereafter, free and
clear of all Liens, except for properties and assets disposed of in the ordinary
course of business since the date of the Latest Balance Sheet and except for
Liens disclosed on the Latest Balance Sheet (including any notes thereto) and
Liens for current property taxes not yet due and payable. Except as described on
the ASSETS SCHEDULE, the Company's and each Subsidiary's buildings, equipment
and other tangible assets are in good operating condition in all material
respects and are fit for use in the ordinary course of business. The Company and
each Subsidiary own, or have a valid leasehold interest in, all assets necessary
for the conduct of their respective businesses as presently conducted and as
presently proposed to be conducted.
5J. TAX MATTERS.
i. Except as set forth on the attached "TAXES SCHEDULE": the
Company, each Subsidiary and each Affiliated Group have filed all Tax
Returns which they are required to file under applicable laws and
regulations except to the extent that the failure to file would not have
a Material Adverse Effect; all such Tax Returns are complete and correct
in all material respects and have been prepared in compliance with all
applicable laws and regulations in all material respects; the Company,
each Subsidiary and to the Company`s knowledge each Affiliated Group in
all material respects have paid all Taxes due and owing by them (whether
or not such Taxes are required to be shown on a Tax Return) and have
withheld and paid over to the appropriate taxing authority all Taxes
which they are required to withhold from amounts paid or owing to any
employee, stockholder, creditor or other third party; neither the
Company, any Subsidiary nor any Affiliated Group has waived any statute
of limitations with respect to any material Taxes or agreed to any
extension of time with respect to any material Tax assessment or
deficiency; the accrual for Taxes on the Latest Balance Sheet would be
adequate to pay all Tax liabilities of the Company and its Subsidiaries
if their current tax year were treated as ending on the date of the
Latest Balance Sheet (excluding any amount recorded which is
attributable solely to timing differences between book and Tax income);
since the date of the Latest Balance Sheet, the Company and
20
its Subsidiaries have not incurred any material liability for Taxes
other than in the ordinary course of business; the assessment of any
additional Taxes for periods for which Tax Returns have been filed by
the Company, each Subsidiary and each Affiliated Group is not expected
to exceed the recorded liability therefor on the Latest Balance Sheet in
any material respect (excluding any amount recorded which is
attributable solely to timing differences between book and Tax income);
the federal income Tax Returns of the Company and its Subsidiaries have
been audited and closed for all tax years through 1998; no foreign,
federal, state or local tax audits or administrative or judicial
proceedings are pending or being conducted with respect to the Company,
any Subsidiary or any Affiliated Group, no information related to Tax
matters has been requested by any foreign, federal, state or local
taxing authority and no written notice indicating an intent to open an
audit or other review has been received by the Company from any foreign,
federal, state or local taxing authority; and to the Company's knowledge
there are no material unresolved questions or claims concerning the
Company's, any Subsidiary's or any Affiliated Group Tax liability.
ii. Neither the Company nor any of its Subsidiaries has made an
election under Section 341(f) of the Code. Neither the Company nor any
Subsidiary is liable for the Taxes of another Person that is not a
Subsidiary in a material amount under (a) Treas. Reg. Section 1.1502-6
(or comparable provisions of state, local or foreign law), (b) as a
transferee or successor, (c) by contract or indemnity or (d) otherwise.
Neither the Company nor any Subsidiary is a party to any tax sharing
agreement. The Company, each Subsidiary and each Affiliated Group have
disclosed on their federal income Tax Returns any position taken for
which substantial authority (within the meaning of IRC Section
6662(d)(2)(B)(i)) did not exist at the time the return was filed.
Neither the Company nor any Subsidiary has made any payments, is
obligated to make payments or is a party to an agreement that could
obligate it to make any payments that would not be deductible under IRC
Section 280G.
iii. "TAX" or "TAXES" means federal, state, county, local, foreign
or other income, gross receipts, ad valorem, franchise, profits, sales
or use, transfer, registration, excise, utility, environmental,
communications, real or personal property, capital stock, license,
payroll, wage or other withholding, employment, social security,
severance, stamp, occupation, alternative or add-on minimum, estimated
and other taxes of any kind whatsoever (including, without limitation,
deficiencies, penalties, additions to tax, and interest attributable
thereto) whether disputed or not. "TAX RETURN" means any return,
information report or filing with respect to Taxes, including any
schedules attached thereto and including any amendment thereof.
"AFFILIATED GROUP" means any affiliated group as defined in IRC
Section 1504 that has filed a consolidated return for federal income
tax purposes (or any similar group under state, local or foreign law)
for a period during which any of the Company or any of its
Subsidiaries was a member.
21
5K. CONTRACTS AND COMMITMENTS. Except as expressly contemplated by this
Agreement or as set forth on the attached "CONTRACTS SCHEDULE" or the attached
"EMPLOYEE BENEFITS SCHEDULE", neither the Company nor any Subsidiary is a party
to or bound by any written or oral:
i. pension, profit sharing, stock option, employee stock purchase
or other plan or arrangement providing for deferred or other
compensation to employees or any other employee benefit plan or
arrangement, or any collective bargaining agreement or any other
contract with any labor union, or severance agreements, programs,
policies or arrangements;
ii. contract for the employment of any officer, individual employee
or other Person on a full-time, part-time, consulting or other basis
providing annual compensation in excess of $100,000 or contract relating
to loans to officers, directors or Affiliates;
iii. contract under which the Company or Subsidiary has advanced or
loaned any other Person amounts in the aggregate exceeding $100,000;
iv. agreement or indenture relating to borrowed money or other
Indebtedness or the mortgaging, pledging or otherwise placing a Lien on
any material asset or material group of assets of the Company and its
Subsidiaries;
v. guarantee of any obligation (other than by the Company of a
Wholly-Owned Subsidiary's debts or a guarantee by a Subsidiary of the
Company's debts or another Subsidiary's debts);
vi. lease or agreement under which the Company or any Subsidiary is
lessee of or holds or operates any property, real or personal, owned by
any other party, except for any lease of real or personal property under
which the aggregate annual rental payments do not exceed $15,000;
vii. lease or agreement under which the Company or any Subsidiary
is lessor of or permits any third party to hold or operate any property,
real or personal, owned or controlled by the Company or any Subsidiary;
viii. contract or group of related contracts with the same party or
group of affiliated parties the performance of which involves
consideration in excess of $100,000 in any 12-month period or that if
terminated would be likely to have a Material Adverse Effect;
ix. assignment, license, indemnification or agreement with respect
to any intangible property (including, without limitation, any
Intellectual Property) other than invention rights and confidentiality
agreements entered into by the Company in the ordinary course of
business to protect the Company's intellectual property;
x. warranty agreement with respect to its services rendered or its
products sold or leased;
22
xi. agreement under which it has granted any Person any
registration rights (including, without limitation, demand and piggyback
registration rights);
xii. agreement with a term of more than six months which is not
terminable by the Company or any Subsidiary upon less than 90 days
notice without penalty;
xiii. contract or agreement prohibiting it from freely engaging in
any business or competing anywhere in the world; or
xiv. any other agreement which is material to its operations and
business prospects or involves a consideration in excess of $100,000.
All of the contracts, agreements and instruments set forth on the
CONTRACTS SCHEDULE are valid, binding and enforceable against the Company and
each other party thereto in accordance with the respective terms of such
contracts, agreements and instruments. The Company and each Subsidiary have
performed all material obligations required to be performed by them under the
contracts, agreements and instruments listed on the CONTRACTS SCHEDULE and are
not in default in any material respect under or in breach in any material
respect of nor in receipt of any claim of default or breach in any material
respect under any material contract, agreement or instrument listed on the
CONTRACTS SCHEDULE; to the Company's knowledge, no event has occurred which with
the passage of time or the giving of notice or both would result in a default,
breach or event of noncompliance in any material respect by the Company or any
Subsidiary under any material contract, agreement or instrument listed on the
CONTRACTS SCHEDULE; neither the Company nor any Subsidiary has any present
expectation or intention of not fully performing all such obligations; neither
the Company nor any Subsidiary has knowledge of any breach or anticipated breach
by the other parties to any material contract, agreement, instrument or
commitment to which the Company is a party.
The Purchasers' special counsel has been supplied with a true and
correct copy of each of the written instruments, plans, contracts and agreements
and an accurate description of each of the oral arrangements, contracts and
agreements which are referred to on the CONTRACTS SCHEDULE, together with all
amendments, waivers or other changes thereto.
5L. INTELLECTUAL PROPERTY RIGHTS.
i. The attached "INTELLECTUAL PROPERTY SCHEDULE" contains a
complete and accurate list of all (a) patented or registered
Intellectual Property Rights owned or used by the Company or any
Subsidiary, (b) pending patent applications and applications for
registrations of other Intellectual Property Rights filed by the Company
or any Subsidiary, (c) material unregistered trade names and corporate
names owned or used by the Company or any Subsidiary and (d) material
unregistered trademarks, service marks, copyrights, mask works owned or
used by the Company or any Subsidiary. The INTELLECTUAL PROPERTY
SCHEDULE also contains a complete and accurate list of all licenses and
other rights granted by the Company or any Subsidiary to any third party
with respect to any material Intellectual Property Rights and all
licenses and other rights granted by any third party to the Company
23
or any Subsidiary with respect to any material Intellectual Property
Rights, in each case identifying the subject Intellectual Property
Rights. Except as set forth on the INTELLECTUAL PROPERTY SCHEDULE, the
Company or one of its Subsidiaries owns all right, title and interest
to, or has the right to use pursuant to a valid license, all
Intellectual Property Rights necessary for the operation of the
businesses of the Company and its Subsidiaries as presently conducted
(including without limitation all rights set forth on the Intellectual
Property Schedule). No loss or expiration of any Intellectual Property
Rights set forth on the Intellectual Property Schedule is, to the best
of the Company's knowledge, threatened, pending or reasonably
foreseeable other than any expiration of such rights in accordance with
their terms that would not have a Material Adverse Effect. The Company
and its Subsidiaries have taken all commercially reasonable actions to
maintain and protect the Intellectual Property Rights that they own. To
the best of the Company's knowledge, the owners of any Intellectual
Property Rights licensed to the Company or any Subsidiary have taken all
necessary and desirable actions to maintain and protect the Intellectual
Property Rights which are subject to such licenses.
ii. Except as set forth on the INTELLECTUAL PROPERTY SCHEDULE, (a)
there have been no claims made against the Company or any Subsidiary
asserting the invalidity, misuse or unenforceability of any of such
Intellectual Property Rights, and the Company is not aware of any valid
grounds for the same which are reasonably likely to result in such a
claim being made, (b) neither the Company nor any Subsidiary has
received any notices of, and is not aware of any facts which indicate a
likelihood of, any infringement or misappropriation by, or conflict
with, any third party with respect to such Intellectual Property Rights
(including, without limitation, any demand or request that the Company
or any Subsidiary license any rights from a third party), (c) the
conduct of the Company's and each Subsidiary's business has not
infringed, misappropriated or conflicted with and does not infringe,
misappropriate or conflict with any Intellectual Property Rights of
other Persons, nor would any future conduct as presently contemplated
infringe, misappropriate or conflict in any material respect with any
Intellectual Property Rights of other Persons and (d) to the best of the
Company's knowledge, the material Intellectual Property Rights owned by
or licensed to the Company or any Subsidiary have not been infringed,
misappropriated or conflicted by other Persons. Except as set forth in
the INTELLECTUAL PROPERTY SCHEDULE, the transactions contemplated by
this Agreement shall have no material adverse effect on the Company's or
any Subsidiary's right, title and interest in and to the Intellectual
Property Rights listed on the INTELLECTUAL PROPERTY SCHEDULE.
5M. LITIGATION, ETC. Except as set forth on the attached "LITIGATION
SCHEDULE", there are no actions, suits, proceedings, orders, investigations or
claims pending or, to the best of the Company's knowledge, threatened against
the Company or any Subsidiary (or to the best of the Company's knowledge,
pending or threatened against or affecting any of the officers, directors or
employees of the Company and its Subsidiaries with respect to their businesses
or proposed business activities), or pending or threatened by the Company or any
Subsidiary against any third party, at law or in equity, or before or by any
governmental department, commission, board, bureau, agency or instrumentality
(including, without limitation, any actions, suit, proceedings or investigations
with
24
respect to the transactions contemplated by this Agreement); nor has there been
any such actions, suits, proceeds, order, investigations or claims against or to
the Company's knowledge affecting the Company or any Subsidiary; neither the
Company nor any Subsidiary is subject to any arbitration proceedings under
collective bargaining agreements or otherwise or, to the best of the Company's
knowledge, any governmental investigations or inquiries; and the Company is not
aware of any valid grounds which are reasonably likely to result in any of the
foregoing. Neither the Company nor any Subsidiary is subject to any judgment,
order or decree of any court or other governmental agency, and neither the
Company nor any Subsidiary has received any opinion or memorandum or legal
advice from legal counsel to the effect that it is exposed, from a legal
standpoint, to any liability or disadvantage which may be material to its
business that would reasonably be expected to have, or be likely to have, a
Material Adverse Effect.
5N. BROKERAGE. Except as set forth on the attached "BROKERAGE
SCHEDULE", there are no claims for brokerage commissions, finders' fees or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement binding upon the Company or any
Subsidiary. The Company shall pay, and hold each Purchaser harmless against, any
liability, loss or expense (including, without limitation, reasonable attorneys'
fees and out-of-pocket expenses) arising in connection with any such claim.
5O. GOVERNMENTAL CONSENT, ETC. No permit, consent, approval or
authorization of, or declaration to or filing with, any governmental authority
is required in connection with the execution, delivery and performance by the
Company of this Agreement or the other agreements contemplated hereby, or the
consummation by the Company of any other transactions contemplated hereby or
thereby, except as set forth on the attached "CONSENTS SCHEDULE" and except as
expressly contemplated herein or in the exhibits hereto except for filings under
applicable securities laws.
5P. INSURANCE. The attached "INSURANCE SCHEDULE" contains a description
of each insurance policy maintained by the Company and its Subsidiaries with
respect to its properties, assets and businesses, and each such policy is in
full force and effect as of the Closing. Neither the Company nor any Subsidiary
is in default in any material respect to its obligations under any insurance
policy maintained by it, and neither the Company nor any Subsidiary has been
denied insurance coverage. The insurance coverage of the Company and its
Subsidiaries is customary for corporations of similar size engaged in similar
lines of business. Except as set forth on the INSURANCE SCHEDULE, the Company
and its Subsidiaries do not have any self-insurance or co-insurance programs,
and the reserves set forth on the Latest Balance Sheet are adequate to cover all
anticipated liabilities with respect to any such self-insurance or co-insurance
programs.
5Q. EMPLOYEES. The Company is not aware that any executive or key
employee of the Company or any Subsidiary or any group of employees of the
Company or any Subsidiary has any plans to terminate employment with the Company
or any Subsidiary. The Company and each Subsidiary have complied in all material
respects with all laws relating to the employment of labor (including, without
limitation, provisions thereof relating to wages, hours, equal opportunity,
collective bargaining and the payment of social security and other taxes), and
the Company is not aware that it or any Subsidiary has any material labor
relations problems (including, without
25
limitation, any union organization activities, threatened or actual strikes or
work stoppages or material grievances). Neither the Company, its Subsidiaries
nor, to the best of the Company's knowledge any of their employees is subject to
any noncompete, nondisclosure, confidentiality, employment, consulting or
similar agreements relating to, affecting or in conflict with the present or
proposed business activities of the Company and its Subsidiaries, except for
agreements between the Company and such employees.
5R. ERISA.
i. MULTIEMPLOYER PLANS. The Company does not have any obligation to
contribute to (or any other liability, including current or potential
withdrawal liability, with respect to) any "multiemployer plan" (as
defined in Section 3(37) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")).
ii. RETIREE WELFARE PLANS. The Company does not maintain or have
any obligation to contribute to (or any other liability with respect to)
any plan or arrangement whether or not terminated, which provides
medical, health, life insurance or other welfare-type benefits for
current or future retired or terminated employees (except for limited
continued medical benefit coverage required to be provided under Section
4980B of the IRC or as required under applicable state law).
iii. DEFINED BENEFIT PLANS. The Company does not maintain,
contribute to or have any liability under (or with respect to) any
employee plan that is a tax-qualified "defined benefit plan" (as defined
in Section 3(35) of ERISA), whether or not terminated.
iv. DEFINED CONTRIBUTION PLANS. The Company does not maintain,
contribute to or have any liability under (or with respect to) any
employee plan that is a tax-qualified "defined contribution plan" (as
defined in Section 3(34) of ERISA), whether or not terminated, other
than the Company's qualified 401(k) salary deferral plan (the "PROFIT
SHARING PLAN").
v. OTHER PLANS. Except as set forth in the "EMPLOYEE BENEFITS
SCHEDULE", the Company does not maintain, contribute to or have any
liability under (or with respect to) any plan or arrangement providing
benefits to current or former employees, including any bonus plan, plan
for deferred compensation, employee health or other welfare benefit plan
or other arrangement, whether or not terminated. Such plans and other
arrangements are referred to as the "OTHER PLANS".
vi. THE COMPANY. For purposes of this SECTION 5R, the term
"COMPANY" includes all organizations under common control with the
Company pursuant to Section 414(b) or (c) of the IRC.
vii. PAYMENTS AND ACCRUALS. With respect to the Profit Sharing Plan
and the Other Plans (the "PLANS"), all required or recommended (in
accordance with historical
26
practices) payments, premiums, contributions, reimbursements or accruals
for all periods (or partial periods) ending prior to or as of the
Closing shall have been made or properly accrued on the Latest Balance
Sheet. None of the Plans has any material unfunded liabilities which are
not reflected on the Latest Balance Sheet.
viii. COMPLIANCE. The Plans and all related trusts, insurance
contracts and funds have been maintained, funded and administered in
compliance in all material respects with the applicable provisions of
ERISA, the IRC and other applicable laws. Neither the Company nor any
trustee or administrator of any Plan has engaged in any transaction with
respect to the Plans which could subject the Company or any trustee or
administrator or the Plans, or any party dealing with any such Plan, nor
do the transactions contemplated by this Agreement constitute
transactions which could subject any such party, to either a civil
penalty assessed pursuant to Section 502(i) of ERISA or the tax or
penalty on prohibited transactions imposed by Section 4975 of the IRC.
No actions, suits or claims with respect to the assets of the Plans
(other than routine claims for benefits) are pending or threatened which
could result in or subject the Company to any liability, and there are
no circumstances which could give rise to or be expected to give rise to
any such actions, suits or claims.
ix. CORRECT COPIES. The Company has provided or made available to
the Purchasers counsel the Purchasers with true and complete copies of
all documents pursuant to which the Plans are maintained and
administered and the most recent annual reports (Form 5500 and
attachments) for the Plans.
5S. COMPLIANCE WITH LAWS. Neither the Company nor any Subsidiary has
violated any law or any governmental regulation or requirement which violation
has had or would reasonably be expected to have a Material Adverse Effect, and
neither the Company nor any Subsidiary has received notice of any such
violation. Neither the Company nor any Subsidiary is subject to, or has reason
to believe it may become subject to, any material liability (contingent or
otherwise) or material corrective or remedial obligation arising under any
federal, state, local or foreign law, rule or regulation (including the common
law) relating to or regulating health, safety, pollution or the protection of
the environment ("ENVIRONMENTAL LAWS"). Without limiting the generality of the
foregoing, (i) the Company and each Subsidiary have obtained all material
permits, licenses and authorizations required under, and have complied in all
material respects with, all Environmental Laws, (ii) no notice has been received
by the Company or any Subsidiary regarding any material violation of, or any
claim, liability or material corrective or remedial obligation under, any
Environmental Laws and (iii) to the Company's knowledge, no facts or
circumstances exist with respect to the past or present operations or facilities
of the Company or any Subsidiary which would give rise to a material liability
or material corrective or remedial obligation under any Environmental Laws.
5T. AFFILIATED TRANSACTIONS. Except as set forth on the attached
"AFFILIATED TRANSACTIONS SCHEDULE," no officer, director, employee, stockholder
or Affiliate of the Company or any Subsidiary or any individual related by
blood, marriage or adoption to any such individual or any entity in which any
such Person or individual owns any beneficial interest, is a party to any
27
agreement, contract, commitment or transaction with the Company or any
Subsidiary or has any material interest in any material property used by the
Company or any Subsidiary other than employment arrangements entered into in the
ordinary course of the Company's or Subsidiary's business.
5U. CLOSING DATE. The representations and warranties of the Company
contained in this SECTION 5 and elsewhere in this Agreement and all information
contained in any exhibit, schedule or attachment hereto or in any certificate or
other writing delivered by, or on behalf of, the Company to any Purchaser shall
be true and correct in all material respects on the date of the Closing as
though then made, except as affected by the transactions expressly contemplated
by this Agreement and except as expressly disclosed in writing to the Purchasers
by the Company prior to the Closing.
5V. CUSTOMERS AND SUPPLIERS.
i. The attached "CUSTOMER SCHEDULE" lists the 10 largest customers
of the Company (on a consolidated basis) for each of the two most recent
fiscal years and sets forth opposite the name of each such customer the
percentage of consolidated net sales attributable to such customer. The
CUSTOMER SCHEDULE also lists any additional current customers which the
Company anticipates shall be among the 10 largest customers for the
current fiscal year.
ii. Since the date of the Latest Balance Sheet, no material
supplier of the Company or any Subsidiary has indicated that it shall
stop, or materially decrease the rate of, supplying materials, products
or services to the Company or any Subsidiary, and no customer listed on
the CUSTOMER SCHEDULE has indicated that it shall stop, or materially
decrease the rate of, buying materials, products or services from the
Company or any Subsidiary.
5W. SMALL BUSINESS MATTERS. The Company acknowledges that ABN AMRO is a
federally licensed SBIC under the SBIC Act. The information regarding the
Company and its affiliates in SBA Form 480, Form 652 and Parts A and B of Form
1031 delivered by the Company at the Closing is accurate in all material
respects. Neither the Company nor any Subsidiary presently engages in, or shall
hereafter engage in, any activities, nor shall the Company or any Subsidiary use
the proceeds of the Financing directly or indirectly for any purpose, for which
an SBIC is prohibited from providing funds by SBIC Regulations (including 13 CFR
Section 107.720).] [TBD]
5X. CENTURY DATE COMPLIANCE. The Company has conducted reasonable and
prudent investigations with respect to its computer software, computer firmware,
computer hardware (whether general or special purpose), and other similar or
related items of automated, computerized or software systems that are material
to the conduct of the Company's business, and based upon such investigations the
Company is not aware that any such systems are or are likely to malfunction,
cease to function, generate incorrect data or produce incorrect results (any of
the foregoing a "DATE FAILURE") when processing, providing or receiving (x)
date-related data into and between the twentieth and twenty-first centuries or
(y) date-related data in connection with any valid date in the
28
twentieth and twenty-first centuries (collectively, "YEAR 2000 DATA"). To the
best of the Company's knowledge, after conducting reasonable and prudent
investigations therefor, the products and services sold, licensed, rendered, or
otherwise provided by the Company in the conduct of its business, including but
not limited to the Company's proprietary software and databases, will not suffer
any Date Failure when processing, providing or receiving any Year 2000 Data
(other than any Date Failure caused by the products of others (including
hardware, software, firmware, applications and databases) used in combination
with the products supplied by the Company), and to the Company's knowledge the
Company is not subject to any claims or liabilities arising from any Date
Failure. Except as set forth on Schedule 5Y, the Company has not made any other
representations or warranties regarding the ability of any product or service
sold or licensed by the Company in the conduct of its business to operate
without a Date Failure when processing, providing or receiving Year 2000 Data.
SECTION 6. DEFINITIONS.
6A. DEFINITIONS. For the purposes of this Agreement, the following
terms have the meanings set forth below:
"ABN AMRO" means ABN AMRO Capital (USA), Inc.
"AFFILIATE" of any particular Person means any other Person
controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities, contract or otherwise.
"AMENDED AND RESTATED CERTIFICATE OF INCORPORATION" means the Company's
Amended and Restated Certificate of Incorporation set forth on EXHIBIT A hereto.
"EVENT OF NONCOMPLIANCE" has the meaning set forth in the Amended and
Restated Certificate of Incorporation.
"EQUITY EQUIVALENTS" means in respect of any Person (i) any securities,
instruments or rights which are convertible into or exercisable or exchangeable
for any equity securities of such Person, (ii) any phantom equity, equity
appreciate or similar rights which permit the holder thereof to participate in
the residual equity value of, or appreciation in, such Person, (iii) any
securities, instruments or rights which permit the holder thereof, under any
circumstances, to vote for the election of members of such Person's governing
body, and (iv) any securities, instruments or rights which are, directly or
indirectly, convertible into or exercisable or exchangeable for any of the
securities, instruments or rights described in clauses (i), (ii) or (iii) above.
"INDEBTEDNESS" means at a particular time, without duplication, (i) any
indebtedness for borrowed money or issued in substitution for or exchange of
indebtedness for borrowed money, (ii) any indebtedness evidenced by any note,
bond, debenture or other debt security, (iii) any commitment by which a Person
assures a creditor against loss (including, without limitation,
29
contingent reimbursement obligations with respect to letters of credit), (iv)
any indebtedness guaranteed in any manner by a Person (including, without
limitation, guarantees in the form of an agreement to repurchase or reimburse),
(v) any obligations under capitalized leases (determined in accordance with
GAAP) with respect to which a Person is liable, contingently or otherwise, as
obligor, guarantor or otherwise, or with respect to which obligations a Person
assures a creditor against loss, and (vi) any indebtedness secured by a Lien on
a Person's assets.
"INTELLECTUAL PROPERTY RIGHTS" means all (i) patents, patent
applications, patent disclosures and inventions, (ii) trademarks, service marks,
trade dress, trade names, logos and corporate names and registrations and
applications for registration thereof together with all of the goodwill
associated therewith, (iii) copyrights (registered or unregistered) and
copyrightable works and registrations and applications for registration thereof,
(iv) mask works and registrations and applications for registration thereof, (v)
trade secrets and other confidential information (including, without limitation,
ideas, formulas, compositions, inventions (whether patentable or unpatentable
and whether or not reduced to practice), know-how, manufacturing and production
processes and techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data, copyrightable works,
financial and marketing plans and customer and supplier lists and information),
(vi) other intellectual property rights and (vii) copies and tangible
embodiments thereof (in whatever form or medium).
"INVESTMENT" as applied to any Person means (i) any direct or indirect
purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or ownership interest (including partnership
interests and joint venture interests) of any other Person and (ii) any capital
contribution by such Person to any other Person.
"IRC" means the Internal Revenue Code of 1986, as amended, and any
reference to any particular IRC section shall be interpreted to include any
revision of or successor to that section regardless of how numbered or
classified.
"IRS" means the United States Internal Revenue Service.
"KNOWLEDGE" and "AWARE" mean and include (i) the actual knowledge or
awareness of the Company and its Subsidiaries (which shall include the actual
knowledge and awareness of the officers, directors and key employees of the
Company and its Subsidiaries and the general managers of each facility of the
Company and its Subsidiaries) and (ii) the knowledge or awareness of facts that
may be reasonably imputed to the Company. Without limiting the generality of the
forgoing, the knowledge or awareness of Xxx Xxxxxx, Xxxxxx Xxxxxx, Xxxx
Xxxxxxxx, Xxxxxxx Xxxxxxxxx and Xxxxx Xxxxxx shall be imputed to the Company.
"LIENS" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, without limitation, any conditional sale
or other title retention agreement or lease in the nature thereof), any sale of
receivables with recourse against the Company, any Subsidiary or any Affiliate,
any filing or agreement to file a financing statement as debtor under the
Uniform Commercial Code or any similar statute other than to reflect ownership
by a third party of
30
property leased to the Company or any Subsidiaries under a lease which is not in
the nature of a conditional sale or title retention agreement, or any
subordination arrangement in favor of another Person (other than any
subordination arising in the ordinary course of business).
"MATERIAL ADVERSE EFFECT" means an event that, alone or in the
aggregate with other events, is materially adverse to the financial condition,
operating results, assets, or operations of the Company and its Subsidiaries
taken as a whole.
"OFFICER'S CERTIFICATE" means a certificate signed by the Company's
President or its chief financial officer.
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"PREFERRED STOCK" means the Series A Preferred Stock as described in
the Company's Amended and Restated Certificate of Incorporation, together with
the Series B Preferred.
"RESTRICTED SECURITIES" means (i) the Series B Preferred issued
hereunder, (ii) the Common Stock issued upon conversion of the Series B
Preferred and (iii) any securities issued with respect to the securities
referred to in clauses (i) or (ii) above by way of a stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. As to any particular Restricted
Securities, such securities shall cease to be Restricted Securities when they
have (a) been effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering them, or (b) been
distributed to the public through a broker, dealer or market maker pursuant to
Rule 144 (or any similar provision then in force) under the Securities Act or
become eligible for sale pursuant to Rule 144(k) (or any similar provision then
in force) under the Securities Act or (c) been otherwise transferred and new
certificates for them not bearing the Securities Act legend set forth in SECTION
4B have been delivered by the Company in accordance with SECTION 4C.
"SBIC" means a small business investment company licensed under the
Small Business Investment Act of 1958, as amended.
"SBIC REGULATIONS" means the Small Business Investment Company Act of
1958, as amended, and the regulations issued by the Small Business
Administration thereunder, 13 CFR 107 and 121, as amended.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
"SECURITIES AND EXCHANGE COMMISSION" includes any governmental body or
agency succeeding to the functions thereof.
31
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any similar federal law then in force.
"SERIES A PREFERRED" means the Series A Preferred Stock as described in
the Amended and Restated Certificate of Incorporation.
"SUBSIDIARY" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the units, membership interests, partnership interests or other similar
ownership interest thereof is at the time owned or controlled, directly or
indirectly, by any Person or one or more Subsidiaries of that Person or a
combination thereof. For purposes hereof, a Person or Persons shall be deemed to
have a majority ownership interest in a limited liability company, partnership,
association or other business entity if such Person or Persons shall be
allocated a majority of limited liability company, partnership, association or
other business entity gains or losses or shall be or control any manager,
managing member or general partner of, or has the power to elect a majority of
the members of governing body of, such limited liability company, partnership,
association or other business entity.
"TREASURY REGULATIONS" means the United States Treasury Regulations
promulgated under the IRC, and any reference to any particular Treasury
Regulation section shall be interpreted to include any final or temporary
revision of or successor to that section regardless of how numbered or
classified.
"UNDERLYING COMMON STOCK" means (i) the Common Stock issued or issuable
upon conversion of the Series B Preferred, and (ii) any Common Stock issued or
issuable with respect to the securities referred to in clause (i) above by way
of stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. For purposes of
this Agreement, any Person who holds Series B Preferred shall be deemed to be
the holder of the Underlying Common Stock obtainable upon conversion of the
Series B Preferred Stock in connection with the transfer thereof or otherwise,
and regardless of any restriction or limitation on the conversion of the Series
B Preferred. As to any particular shares of Underlying Common Stock, such shares
shall cease to be Underlying Common Stock when they have been (a) effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering them, (b) distributed to the public through a
broker, dealer or market maker pursuant to Rule 144 under the Securities Act (or
any similar provision then in force) or (c) repurchased by the Company or any
Subsidiary.
"WHOLLY-OWNED SUBSIDIARY" means, with respect to any Person, a
Subsidiary of which all of the outstanding capital stock or other ownership
interests are owned by such Person or another Wholly-Owned Subsidiary of such
Person.
32
6B. OTHER DEFINITIONS. The terms set forth below are defined on the
following pages of the Agreement:
Affiliated Group..................21
Agreement..........................1
Closing............................1
Closings...........................2
Common Stock.......................1
Company............................1
Date Failure......................29
Environmental Laws................27
ERISA.............................25
Financing.........................12
First Closing......................2
First Purchasers...................1
Indemnified Liabilities...........38
Indemnities.......................38
Latest Balance Sheet..............18
Other Plans.......................26
Plans.............................26
Profit Sharing Plan...............26
Purchaser..........................1
Purchasers.........................1
Registration Agreement.............2
Relevant Documents................15
SBA...............................12
SBIC Holder.......................11
Second Closing.....................2
Stockholders Agreement.............2
Subsequent Purchasers..............1
Subsequent Shares..................2
Tax...............................19
Tax Return........................21
Taxes.............................21
Year 2000 Data....................29
33
SECTION 7. MISCELLANEOUS.
7A. DIRECTED SHARE PROGRAM. In the event of the Company's initial
public offering of equity securities more than one year from the Effective Date,
and to the extent permitted by applicable law, the Company shall use its best
efforts to establish, or cause the managing underwriter to establish, a directed
share program, consistent with applicable laws, rules and regulations
(including, without limitation, rules and regulations promulgated by the
Commission and the National Association of Securities Dealers, Inc.), pursuant
to which the Purchasers shall have the option to purchase up to fifteen percent
(15%) of the securities offered (the "DIRECTED SHARES") valued at the initial
offering price; provided that the lead underwriter may reduce or eliminate
entirely such allocation if in such underwriter's judgment the initial public
offering may be adversely affected. The Purchasers shall have a right of
oversubscription with respect to the Directed Shares such that if any Purchaser
fails to purchase its pro rata portion of the Directed Shares, the other
Purchasers shall, among them, have the right to purchase up to the balance of
the Directed Shares not so purchased. If, as a result thereof, such
oversubscriptions exceed the total number of Directed Shares available in
respect of such oversubscription privilege, the oversubscribing Purchasers shall
be reduced with respect to their oversubscriptions on a pro rata basis or as
they may otherwise agree among themselves.
7B. EXPENSES. The Company shall pay, and hold each Purchaser and all
holders of Series B Preferred and Underlying Common Stock harmless against
liability for the payment of (i) the reasonable fees and expenses of Purchasers'
counsel, not to exceed $75,000, arising in connection with the negotiation and
execution of this Agreement and the consummation of the transactions
contemplated by this Agreement which shall be payable at the Closing or, if the
Closing does not occur, payable upon demand, and (ii) stamp and other taxes
which may be payable in respect of the execution and delivery of this Agreement
or the issuance, delivery or acquisition of any shares of Series B Preferred or
any shares of Common Stock issuable upon conversion of the Series B Preferred.
7C. REMEDIES. Each holder of Series B Preferred and Underlying Common
Stock shall have all rights and remedies set forth in this Agreement and the
other Relevant Documents, and all rights and remedies which such holders have
been granted at any time under any other agreement or contract and all of the
rights which such holders have under any law. Any Person having any rights under
any provision of this Agreement shall be entitled to enforce such rights
specifically (without posting a bond or other security), to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law.
7D. PURCHASER'S INVESTMENT REPRESENTATIONS. Each Purchaser represents
and warrants to the Company and to each other Purchaser as follows:
i. The Purchaser is acquiring the Series B Preferred shares and
Underlying Common Stock for his own account, for investment and not with
a view to, or
34
for sale in connection with, any distribution thereof, nor with any
present intention of distribution or selling the same in violation of
applicable law; and the Purchaser has no present or contemplated
agreement, undertaking, arrangement, obligation, indebtedness or
commitment providing for such disposition.
ii. The Purchaser has the full power and authority to enter into
and to perform its obligations under this Agreement, the Registration
Agreement and the Stockholders Agreement in accordance with their
respective terms. If the Purchaser is a corporation, partnership or
trust, it represents that it has not been organized, reorganized or
recapitalized specifically for the purpose of investment in the Company.
The Purchaser has adequate net worth and means of providing for his or
its current needs and personal contingencies to sustain a complete loss
of his investment in the Company; and the Purchaser's overall commitment
to investments which are not readily marketable is not disproportionate
to his net worth and the Purchaser's investment in the Series B
Preferred shares and the Underlying Common Stock will not cause such
overall commitment to become excessive.
iii. The Purchaser has substantial knowledge and experience in
making investment decisions of this type, and is capable of evaluating
the merits and risks of this investment.
iv. The Purchaser is an "accredited investor" within the definition
set forth in Securities Act Rule 501(a).
v. If the Purchaser's principal address as set forth on the
signature page below is a location outside of the United States of
America and its territories, the Purchaser is executing this Agreement
outside of the United States and the Purchaser: (a) is not a U.S. person
(as defined in Securities Act Rule 902(k)) and is not acquiring the
Series B Preferred shares and the Underlying Common Stock for the
account or benefit of any U.S. person; (b) will resell the Series B
Preferred and Underlying Common Stock only in accordance with (A) the
provisions of Regulation S promulgated under the Securities Act
("REGULATION S"), (B) pursuant to an effective registration statement
under the Securities Act, or (C) pursuant to an available exemption from
registration under the Securities Act; and agrees not to engage in
hedging transactions unless in compliance with the Securities Act; and
(c) will not offer or sell the Series B Preferred shares or Underlying
Common Stock to a U.S. Person or to or for the account or benefit of a
U.S. Person, or engage in any hedging transactions, prior to the
expiration of the one year period after the Closing.
7E. TREATMENT OF THE SERIES B PREFERRED. The Company covenants and
agrees that (i) so long as federal income tax laws prohibit a deduction for
distributions made by the Company with respect to the Series B Preferred, it
shall treat all distributions paid by it out of current and accumulated earnings
and profits on the Series B Preferred as non-deductible dividends on all of its
tax returns to the extent consistent with applicable law and subject to the
reasonable advice of tax
35
counsel or the Company's independent accountants, and (ii) it shall treat the
Series B Preferred as preferred stock in all of its GAAP based financial
statements and other reports and shall treat all distributions paid by it on the
Series B Preferred as dividends on preferred stock in such statements and
reports.
7F. CONSENT TO AMENDMENTS. Except as otherwise expressly provided
herein, the provisions of this Agreement may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
holders of a majority of the Underlying Common Stock. No other course of dealing
between the Company and the holder of any Series B Preferred or Underlying
Common Stock or any delay in exercising any rights hereunder or under the other
Relevant Documents shall operate as a waiver of any rights of any such holders.
For purposes of SECTION 7F, shares of Series B Preferred or Underlying Common
Stock held by the Company or any Subsidiaries shall not be deemed to be
outstanding.
7G. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained herein or made in writing by any party in connection
herewith shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, regardless of any
investigation made by any Purchaser or on its behalf.
7H. SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not. In addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for any Purchaser's benefit as a
purchaser or holder of Series B Preferred or Underlying Common Stock are also
for the benefit of, and enforceable by, any subsequent holder of such Series B
Preferred or such Underlying Common Stock.
7I. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. Where any accounting
determination or calculation is required to be made under this Agreement or the
exhibits hereto, such determination or calculation (unless otherwise provided)
shall be made in accordance with generally accepted accounting principles,
consistently applied, except that if because of a change in generally accepted
accounting principles the Company would have to alter a previously utilized
accounting method or policy in order to remain in compliance with generally
accepted accounting principles, such determination or calculation shall continue
to be made in accordance with the Company's previous accounting methods and
policies.
7J. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
36
7K. COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts in the form attached hereto, any one of which need not
contain the signatures of more than one party, but all such counterparts taken
together shall constitute one and the same Agreement.
7L. DESCRIPTIVE HEADINGS; INTERPRETATION. The descriptive headings of
this Agreement are inserted for convenience only and do not constitute a
substantive part of this Agreement. The use of the word "including" in this
Agreement shall be by way of example rather than by limitation.
7M. GOVERNING LAW. The corporate law of the State of Delaware shall
govern all issues and questions concerning the relative rights and obligations
of the Company and its stockholders. All other issues and questions concerning
the construction, validity, enforcement and interpretation of this Agreement and
the exhibits and schedules hereto shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without giving effect to any
choice of law or conflict of law rules or provisions (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware.
7N. NOTICES. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable overnight courier service (charges
prepaid) or mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to each Purchaser at the address indicated on the
SCHEDULE OF PURCHASERS and to the Company and counsel for the Company and
Purchasers at the address indicated below:
Xxx Xxxxxx
President and CEO
Corechange, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000
with a copy to (which shall not constitute notice hereunder):
Xxxx and Xxxx
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telecopy No: (000) 000-0000
37
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxx
Telecopy No: (000) 000-0000
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
7O. UNDERSTANDING AMONG THE PURCHASERS. The determination of each
Purchaser to purchase the Series B Preferred pursuant to this Agreement has been
made by such Purchaser independent of any other Purchaser and independent of any
statements or opinions as to the advisability of such purchase or as to the
properties, business, prospects or condition (financial or otherwise) of the
Company and its Subsidiaries which may have been made or given by any other
Purchaser or by any agent or employee of any other Purchaser. In addition, it is
acknowledged by each of the other Purchasers that ABN AMRO has not acted as an
agent of such Purchaser in connection with making its investment hereunder and
that ABN AMRO shall not be acting as an agent of such Purchaser in connection
with monitoring its investment hereunder. Each Purchaser represents that there
are no claims for brokerage commissions, finders' fees or similar compensation
in connection with the transactions contemplated by this Agreement based on any
arrangement or agreement that is binding on such Purchaser, and each Purchaser
shall pay, and hold each other Purchaser and the Company harmless against, any
liability, loss or expense (including, without limitation, reasonable attorneys'
fees and out of pocket expenses) arising in connection with any such claim or
any other claim arising out of the failure of the acknowledgements and
understandings stated in this SECTION 7N.
7P. NO STRICT CONSTRUCTION. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.
38
7Q. ENVIRONMENTAL LIABILITIES. Without limiting the generality of the
representations and warranties set out in SECTION 5 above, the Company shall
defend, protect, indemnify and hold harmless each Purchaser and all other
Indemnitees from and against any and all actions, causes of action, suits,
losses, liabilities, damages, injuries, penalties, fees, costs, expenses and
claims of any and every kind whatsoever paid, incurred or suffered by, or
asserted against, each Purchaser or any other Indemnitee for, with respect to,
or as a direct or indirect result of, the past, present or future environmental
condition of any property owned, operated or used by the Company, any
Subsidiary, their predecessors or successors or of any offsite treatment,
storage or disposal location associated therewith, including, without
limitation, the presence on or under, or the escape, seepage, leakage, spillage,
discharge, emission, release, or threatened release into, onto or from, any such
property or location of any toxic, chemical or hazardous substance, material or
waste (including, without limitation, any losses, liabilities, damages,
injuries, penalties, fees, costs, expenses or claims asserted or arising under
the Comprehensive Environmental Response, Compensation and Liability Act, any
so-called "Superfund" or "Superlien" law, or any other federal, state, local or
foreign statute, law, ordinance, code, rule, regulation, order or decree
regulating, relating to or imposing liability or standards on conduct
concerning, any toxic, chemical or hazardous substance, material or waste),
regardless of whether caused by, or within the control of, the Company or any
Subsidiary.
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
CORECHANGE, INC.
By: /s/ XXX XXXXXX
Its: President / CEO
Date: Feb. 18, 2000
39
SCHEDULE OF PURCHASERS
------------------------------------------------------------------------
NO. OF SHARES OF TOTAL PURCHASE
NAMES AND ADDRESSES SERIES B PREFERRED PRICE FOR SERIES B
STOCK PREFERRED STOCK
40
Corechange, Inc.
Schedule of Series B Preferred Convertible Bridge Financing
Date of Interest till Daily Principal # of Series B
Name Amount Deposit 2/18/00 Interest + Interest Pref Shares
HarbourVest Partners LLC $ 500,000 11/2/99 $ 11,945.21$ 109.59 $ 511,945 87,707
Xxx Xxxxxx $ 250,000 11/2/99 $ 5,972.60 54.79 $ 255,973 43,853
Xxxxxxxx Xxxxxxxx $ 250,000 11/2/99 $ 5,972.60 54.79 $ 255,973 43,853
Breviksgruppen AB $ 100,000 12/29/99 $ 1,139.73 21.92 $ 101,140 17,327
Minvest AB $ 120,000 12/29/99 $ 1,367.67 26.30 $ 121,368 20,793
Xxxxxx Xxxxxxxxxx $ 25,000 12/29/99 $ 284.93 5.48 $ 25,285 4,332
Xxxxxxx Xxxxxx $ 13,000 12/29/99 $ 148.16 2.85 $ 13,148 2,253
Xxx Segenmark $ 120,000 12/29/99 $ 1,367.67 26.30 $ 121,368 20,793
Xxxx Xxxxxxxx $ 50,000 12/29/99 $ 569.86 10.96 $ 50,570 8,664
Jan Khilberg $ 120,000 12/29/99 $ 1,367.67 26.30 $ 121,368 20,793
Andreas Segenmark $ 120,000 12/29/99 $ 1,367.67 26.30 $ 121,368 20,793
Svensk Vininformation AB $ 50,000 12/29/99 $ 569.86 10.96 $ 50,570 8,664
X X Xxxxxxx Consulting AB $ 20,000 12/29/99 $ 227.95 4.38 $ 20,228 3,465
Xxxxx Xxxxxxxx $ 50,000 12/29/99 $ 569.86 10.96 $ 50,570 8,664
Rosebud Corporation $ 300,000 12/29/99 $ 3,419.18 65.75 $ 303,419 51,982
Xxxxxx Xxxxxxx $ 200,000 12/29/99 $ 2,279.45 43.84 $ 202,279 34,655
Svensk Vininformation AB $ 40,000 12/29/99 $ 455.89 8.77 $ 40,456 6,931
Andreas Strindholm $ 10,000 12/29/99 $ 113.97 2.19 $ 10,114 1,733
Per Sahlestrom $ 20,000 12/29/99 $ 227.95 4.38 $ 20,228 3,465
Xxx Xxxxxxx $ 18,000 12/29/99 $ 205.15 3.95 $ 18,205 3,119
Xxxxxx Xxxxxxx Marn $ 58,500 12/29/99 $ 666.74 12.82 $ 59,167 10,136
Xxxx Xxxxxxx Xxxx $ 58,500 12/29/99 $ 666.74 12.82 $ 59,167 10,136
Hans Bjurklint $ 35,000 12/29/99 $ 398.90 7.67 $ 35,399 6,065
Xxxxxx Xxxxxxxx $ 150,000 12/29/99 $ 1,709.59 32.88 $ 151,710 25,991
Xxxxxxx Xxxxxxxx $ 150,000 12/29/99 $ 1,709.59 32.88 $ 151,710 25,991
Xxxx Xxxxxx $ 100,000 12/29/99 $ 1,139.73 21.92 $ 101,140 17,327
Xxxxx xxx Xxxxxxxx $ 143,000 12/29/99 $ 1,629.81 31.34 $ 144,630 24,778
Xxxx Xxxxxxxxx $ 81,000 12/29/99 $ 923.18 17.75 $ 81,923 14,035
Xxxx Xxxxxxxx $ 115,000 12/29/99 $ 1,310.68 25.21 $ 116,311 19,926
Xxxxx Xxxxxx $ 20,000 1/27/00 $ 100.82 4.38 $ 20,101 3,444
Xxx Xxxxx $ 20,000 1/27/00 $ 100.82 4.38 $ 20,101 3,444
Xxxx Xxxxxx $ 15,000 1/27/00 $ 75.62 3.29 $ 15,076 2,583
Xxxxx & Partners $ 45,000 1/27/00 $ 226.85 9.86 $ 45,227 7,748
Xxxxxxx Xxxxxxxx $ 16,000 2/7/00 $ 42.08 3.51 $ 16,042 2,748
$ 3,383,000 $ 50,274 $ 741 $3,433,274 588,192
Direct Investors in the Series B
Harbourvest Capital $ 1,500,000 256,981
ABN AMRO Capital (USA), Inc. $ 4,000,000 685,284
Xxxxxxx.xxx $ 3,500,000 599,623
Xxxxxxx.xxx $ 5,000,000 856,604
Xxxxxx Xxxxxx $ 25,000 4,283
UK Private Investors
AIB Nominees $ 75,000 12,849
Marquis Limited $ 50,000 8,566
Xx. Xxxxxxxx Xxxxxxxx Xxxxxx $ 50,000 8,566
Xx. Xxxxxx Xxxxxx $ 25,000 4,283
Xx. Xxxxx Xxxxxx $ 32,000 5,482
Xx. Xxxxx XxxXxxxx $ 25,000 4,283
Xxx. Xxxxx XxXxxxx $ 25,000 4,283
Ms. Xxxxxxxx Xxxxxxx $ 43,750 7,495
Total Direct Series B Preferred I $14,350,750 2,458,583
Total Converted + Direct Investor $17,733,750 3,046,775
HarbourVest Partners LLC One Financial Center Boston
Xxx Xxxxxx 000 Xxxxxxxx Xx Xxxxxx
Xxxxxxxx Xxxxxxxx c/o Corechange Svenska, Stockholm
Breviksgruppen XX Xxxxxx Xxxxxxxxxx 0, 000 00 Xxxxxxxxx
Minvest AB Xxxxxxxx Xxxxxx, 000 00 Xxxxxxxxxxxx
Xxxxxx Xxxxxxxxxx Xxxxxxxxxxxx 00, 000 00 Xxxxxxxxx
Xxxxxxx Xxxxxx Xxxxxxxxxxxx 00, 000 00 Xxxxxxxxx
Xxx Segenmark Kistavagen 14, 192 67 Sollentuna
Xxxx Xxxxxxxx Bergsjoholm, 271 91 Ystad
Jan Khilberg Xxxxxxxxxxxxxxxx 00, 0 Xx, 000 00 Xxxxxxxxx
Andreas Segenmark Borgvagen 21, 192 55 Sollentuna
Svensk Vininformation AB Xxx 0000, 000 00 Xxxxxxxxx
X X Xxxxxxx Consulting AB Xxxxxxxxxxxxxxxx 00, 0 xx, 000 00 Xxxxxxxxx
Xxxxx Xxxxxxxx Xxxxxxxxxxxx 00, 000 00 Xxxxxxxxx
Rosebud Corporation X/X Xxxx Xxxx Xx Xxxxx, 00 00 Xxxxxx Xxxxx, Xxxxxx Xxxxxxxxxxx
Xxxxxx Xxxxxxx Sockenvagen 141, 132 46 Stockholm
Svensk Vininformation AB Xxx 0000, 000 00 Xxxxxxxxx
Andreas Strindholm Ballonggatan 21, 169 71 Solna
Per Sahlestrom Bromma Kyrkvag 448, 168 58 Bromma
Xxx Xxxxxxx Xxxxxxxxxxxxx 0, 000 00 Xxxxxxxxx
Xxxxxx Xxxxxxx Marn Xxxxxxxxxxxxx 00, 000 00 Xxxxxxxxx
Xxxx Xxxxxxx Xxxx Xxxxxxxxxxxxx 00, 000 00 Xxxxxxxxx
Hans Bjurklint Skapparp, 310 40 Harplinge
Xxxxxx xxxxxxxx Herrgardsgatan 2 A, 722 13 Vasteras
Xxxxxxx Xxxxxxxx Skeppsgatan 1, 721 32 Vasteras
Xxxx Xxxxxx Tornbrinken 6, 132 36 Saltsjo-Boo
Xxxxx xxx Xxxxxxxx Xxxxxx Xxxx, 000 Xx Xxxxxxxx, 00000 Al Cobendas(Mardrid)Spanien
Xxxx Xxxxxxxxx Kiviksgatan 13, 168 54 Bromma
Xxxx Xxxxxxxx Xxxxxxxxxxx 00, 000 00 Xxxxxxxxx
Xxxxx Xxxxxx Baltvagen 7, 191 33 Sollentuna
Xxx Xxxxx Skogsfrugrand 33, 167 62 Bromma
Xxxx Xxxxxx Xxxxxxxxxxx 00, 000 00 Xxxxxxxxx
Xxxxx & Partners Xxxxx & Partners, X X Xxx 000, 0000 Xxxxxx, Xxxxxxxxxxx
Xxxxxxx Xxxxxxxx Xxxxxxxxxxxxxxxx 00, 000 00 Xxxxxxxxx
DIRECT INVESTORS IN THE SERIES B
Harbourvest Capital Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxx, XX 00000
ABN AMRO Capital (USA), Inc. 000 Xxxxx XxXxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, XX 00000
Xxxxxxx.xxx Xxxxxx House, South Church Street, Grand Cayman, Cayman Island, British West Imdies
Xxxxxxx.xxx Xxxxxx House, South Church Street, Grand Cayman, Cayman Island, British West Imdies
Xxxxxx Xxxxxx 000 Xxxxx Xxxxxxxxx, XXX # 000, Xxxxx Xx, XX 00000
UK Private Investors
AIB Nominees AIB Nominees, Allied Irish Bank House, P.O. Box 468, Grenville Street, St.
Hellier, Jersey JE 8WT, Channel Islands
Marquis Limited Xx. Xxxx Xxxxxxxx, VP Cititrust Switzerland, 00 Xxx xx Xxxxx, XX XXXX 0000, XX-0000,
Xxxxxx 0, Xxxxxxxxxxx
Xx. Xxxxxxxx Xxxxxxxx Xxxxxx 00 Xxxx Xxxxxx, Xxxx Xxxxx, Xxxxxx, XX00, 0XX, XX
Xx. Xxxxxx Xxxxxx 00 Xxxxxxxxxxxx Xxx., Xxxxxxxxx, Xx. Xxxxxx, Xxxxxxx
Xx. Xxxxx Xxxxxx Treetops, 000 Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxx 00, Xxxxxxx
Xx. Xxxxx XxxXxxxx 0 Xxxxxxxxx Xxx, Xxxxxxxxx Xxxx, Xxxxxx 0, Xxxxxxx
Xxx. Xxxxx XxXxxxx Smurfit Print, 00 Xxxxxxx Xxxx, Xxxxxxxxx, Xxxxxx 0, Xxxxxxx
Ms. Xxxxxxxx Xxxxxxx 0 Xxxxxxx Xxxxxxx Xxxx, Xxxxxxxx, Xx. Xxxxxxxx, Xxxxxxx
Total Direct Series B Preferred I
Total Converted + Direct Investor
