EXHIBIT 10.10
INVESTMENT AGREEMENT
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(Series D Preferred Stock)
THIS IS AN INVESTMENT AGREEMENT (this "Agreement") made and dated as of
February 1, 1999 by and:
among: GREENWICH TECHNOLOGY PARTNERS, INC., a Delaware corporation (the
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"Corporation");
and: those parties identified on the "Schedule of Investors" attached to this
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Agreement as Exhibit A (collectively, the "Series D Investors").
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The Corporation and the Series D Investors agree as follows:
1. DEFINITIONS. As used in this Agreement, each of the following
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terms means:
"Affiliate": With respect to any particular Person, any other Person
directly or indirectly, controlling, controlled by or under common control with
such Person.
"Books and Records": The books and records of the Corporation.
"Business": The computer networking and related consulting business
conducted by the Corporation.
"Environmental Laws": All Laws governing the use, storage, shipment,
handling, disposal, discharge, release, cleanup, reporting, labeling, warning,
workplace disclosure or monitoring of Hazardous Materials, or otherwise relating
to environmental pollution or environmental protection, including, as may be
applicable to environmental matters, the common law respecting nuisance,
trespass, tortious liability and strict liability.
"Financial Statements": The Corporation's unaudited balance sheet as
at December 31, 1998 and the related statements of income, retained earnings and
changes in financial position for such fiscal year.
"Hazardous Materials": All substances, in whatever form or
concentration, which are classified as hazardous, toxic or dangerous or as
pollutants or contaminants under any Environmental Laws. "Hazardous Materials"
specifically include gasoline, oil and other petroleum products, their fractions
and their constituent and residual compounds and by-products, and radon,
asbestos, lead-based paint, ureaformaldehyde and PCB's. Where under applicable
Environmental Laws a jurisdiction exercises the authority to establish stricter
requirements regarding Hazardous Materials or to define Hazardous Materials more
inclusively, the stricter requirements and more inclusive definitions shall
apply with respect to the operations of the Business
which are located or conducted within such jurisdictions or which are otherwise
subject to its authority.
"Initial Public Offering": As defined in Section 6.4.
"Laws": All material laws, statutes, ordinances, rules, regulations
and other requirements having the force of law promulgated by any governmental
authority, commission, agency or body which are applicable to the Corporation or
the Business, in each case whether local, state, territorial, or federal.
"Liabilities": All liabilities or obligations of the Corporation of
any kind or description, whether accrued, absolute, contingent or otherwise.
"Liens": All liens, security interests, pledges, mortgages,
encumbrances, claims, charges, agreements and rights of others of any nature
whatsoever.
"Losses": Any loss, claim, liability, penalty, damage, cost or
expense, whether direct or indirect, special or consequential, including
reasonable attorneys' fees.
"Order": Any order, writ, decree, ruling, award, injunction or other
directive or requirement having the force of law issued by any court, tribunal,
administrative agency, other governmental authority, or arbitrator, in each case
whether local, state, territorial or federal which is applicable to the
Corporation.
"Person": Any natural person, corporation, partnership (general,
limited or otherwise), limited liability company, trust, association, joint
venture, governmental body or agency or other entity having legal status of any
kind.
"Preferred Shareholders": As defined in Section 2.2.
"Preferred Shares": All outstanding Series A Shares, Series B Shares,
Series C Shares and Series D Shares.
"Proceeding": Any litigation, lawsuit, arbitration, mediation,
grievance, hearing, investigation or other legal, administrative, governmental
or private party proceeding or enforcement action.
"Registration Rights Agreement": As defined in Section 2.3.
"Series A Shares": Share of Series A Preferred Stock having the
rights, preferences, privileges, restrictions and other matters set forth in the
Second Amended and Restated Certificate of Incorporation of the Corporation.
"Series B Shares": Shares of Series B Preferred Stock having the
rights, preferences, privileges, restrictions and other matters set forth in the
Second Amended and Restated Certificate of Incorporation of the Corporation.
"Series C Shares": Shares of Series C Preferred Stock having the
rights, preferences, privileges, restrictions and other matters set forth in the
Second Amended and Restated Certificate of Incorporation of the Corporation.
"Series D Shares": Shares of Series D Participating Preferred Stock
having the rights, preferences, privileges, restrictions and other matters set
forth in the Second Amended and Restated Certificate of Incorporation of the
Corporation.
"Shareholders' Agreement": As defined in Section 2.2.
2. PURPOSE AND BACKGROUND.
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2.1. Sale of Series D Shares. The Corporation desires to sell to the
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Series D Investors an aggregate of 5,213,675 Series D Shares, and the Series D
Investors desire to purchase such Series D Shares from the Corporation in the
amounts and for aggregate purchase prices as set forth on the Schedule of
Investors attached hereto as Exhibit A, all on the terms and conditions set
forth in this Agreement.
2.2. Shareholders Agreement. Concurrently with this Agreement, the
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Corporation, the Series D Investors and the holders of the Corporation's Series
A Shares, Series B Shares and Series C Shares (such holders of Series A Shares,
Series B Shares, Series C Shares and Series D Shares, collectively, after giving
effect to the transactions contemplated by this Agreement, the "Preferred
Shareholders") are entering into an Amended and Restated Shareholders' Agreement
(the "Shareholders' Agreement") setting forth, among other matters, certain
restrictions on disposition of, and options to purchase or sell, the Preferred
Shareholders' respective shares of the Corporation's Preferred Stock.
2.3. Registration Rights Agreement. Concurrently with this
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Agreement, the Corporation and the Series D Investors are entering into a
Registration Rights Agreement (the "Registration Rights Agreement") setting
forth, among other matters, certain obligations of the Corporation to register
the Series D Shares pursuant to the Securities Act of 1933, as amended (the
"Securities Act").
2.4 Sale of Warrants. In addition to the sale and issuance of the
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Series D Shares pursuant to Section 2.1 hereof, the Corporation desires to sell
to VantagePoint Communications Partners, LP and VantagePoint Venture Partners
1996 (collectively, "VantagePoint") Warrants in the form attached hereto as
Exhibit B (the "Warrants") to purchase an aggregate of 4,273,504 Series D Shares
(the "Warrant Shares")and in the amounts as set forth on Exhibit A, and
VantagePoint desires to purchase such Warrants from the Corporation in the
amounts as set forth on Exhibit A, all on the terms and conditions set forth in
this Agreement.
3. PURCHASE AND SALE OF SHARES AND WARRANTS; USE OF PROCEEDS.
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Subject to the terms and conditions contained in this Agreement:
3.1. Purchase of Series D Shares. The Corporation hereby sells and
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issues to the Series D Investors, and the Series D Investors hereby purchase
from the Corporation, the number of Series D Shares set forth opposite their
respective names on Schedule of Investors attached hereto as Exhibit A, free and
clear of all Liens, for the respective purchase prices set forth opposite their
names on such Schedule of Investors, and which applicable purchase prices will
be paid by each Series D Investor on or before the date of this Agreement.
3.2 Purchase of the Warrants. The Corporation hereby sells and
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issues to VantagePoint, and VantagePoint hereby purchases from the Corporation,
the Warrants, free and clear of all Liens, for an aggregate purchase price of
$1000.00, which is being paid concurrently with this Agreement and which the
parties hereto agree is the fair value of the Warrants on the date hereof.
3.3. Use of Proceeds. The Corporation shall use the proceeds from
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the sale of the Series D Shares and Warrants for working capital and general
corporate purposes, including the payment of legal fees and expenses of certain
Series D Investors as provided in section 10.6 and the potential purchase of
shares of Common Stock of the Corporation from a former shareholder of the
Corporation as described more fully in the Schedule of Exceptions attached
hereto as Exhibit C.
4. THE CORPORATION'S REPRESENTATIONS AND WARRANTIES. Except as set
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forth in the Schedule of Exceptions, attached hereto as Exhibit C, the
Corporation makes the following representations and warranties to the Series D
Investors:
4.1. Organization and Authority. The Corporation is a corporation
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duly organized, validly existing and in good standing under the Laws of
Delaware. The Corporation has full corporate power and authority to own its
assets and to carry on the Business as presently conducted. The Corporation is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where the failure to so qualify would have a material
adverse effect on the Corporation's business, properties or financial condition.
The Corporation has no subsidiaries and owns no capital stock or other equity
interests in any Person. The execution, delivery and performance of this
Agreement, the Shareholders' Agreement and the Registration Rights Agreement
have been duly authorized by the Corporation's Board of Directors and
shareholders, and no further corporate or other action is required on the part
of the Corporation in order to authorize this Agreement, the Shareholders'
Agreement or the Registration Rights Agreement or the transactions contemplated
hereby or thereby, including, without limitation, the issuance of the Series D
Shares to the Series D Investors, as set forth on the Schedule of Investors, the
issuance of the shares of Common Stock upon conversion of the Series D Shares,
the issuance of the Warrants to VantagePoint and the issuance of the Warrant
Shares upon exercise of the Warrants. Each of this Agreement, the Shareholders'
Agreement and the Registration Rights Agreement is the legal, valid and binding
obligation of the Corporation, duly enforceable against the Corporation in
accordance with its terms.
4.2. Capitalization. The Corporation's authorized capital stock
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consists solely of 53,326,876 shares, 30,000,000 of which have been designated
common stock, par value $.01 per share (the "Common Stock"), of which 377,000
shares are issued and outstanding, and 23,326,876 of which have been designated
preferred stock, par value $.01 per share (the "Preferred Stock"). 4,100,000 of
the authorized shares of Preferred Stock are designated as "Series A Preferred
Stock", all of which are issued and outstanding, 5,533,031 of the authorized
shares of Preferred Stock are designated as "Series B Preferred Stock", all of
which are issued and outstanding, 4,206,666 of the authorized shares of
Preferred Stock are designated as "Series C Preferred Stock", all of which are
issued and outstanding, and 9,487,179 of the authorized shares of Preferred
Stock are designated as "Series D Participating Preferred Stock", none of which
are issued and outstanding prior to the date hereof. As of the date hereof,
3,500,000 of the Corporation's authorized but unissued shares of Common Stock
have been reserved for issuance under the Corporation's 1997 Option Plan (the
"1997 Plan"), of which options to purchase 2,007,525 shares of Common Stock are
currently outstanding. A total of 23,326,876 of the Corporation's authorized
but unissued shares of Common Stock have been reserved for issuance upon
conversion of the authorized Series A Shares, Series B Shares, Series C Shares
and Series D Shares, whether or not currently issued and outstanding. A total
of 4,273,504 of the Corporation's authorized but unissued Series D Shares have
been reserved for issuance upon exercise of the Warrants. Except as provided
above, the Corporation has no other shares of capital stock reserved for
issuance, and no outstanding options, warrants, rights, calls or commitments
related to its shares of capital stock or any outstanding securities or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire from the Corporation, any shares of capital stock.
There are no preemptive or other subscription rights with respect to any shares
of capital stock. All of the shares of capital stock which are issued and
outstanding have been duly authorized and validly issued and are fully paid and
are nonassessable. The Series D Shares to be issued to the Series D Investors
pursuant to this Agreement, the Warrants to be issued to VantagePoint pursuant
to this Agreement and the Warrant Shares to be issued to VantagePoint pursuant
to the Warrants have been duly authorized and when issued in accordance with
this Agreement or the Warrants, as applicable, will be validly issued, fully
paid and nonassessable. All securities issued by the Corporation prior to the
date of this Agreement have been issued in compliance with all applicable
securities laws or pursuant to a valid exemption therefrom.
4.3. No Conflict or Violation. Neither the execution of this
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Agreement, the Shareholders' Agreement or the Registration Rights Agreement by
the Corporation nor the performance by the Corporation of the transactions
contemplated by this Agreement, the Shareholders' Agreement or the Registration
Rights Agreement, including without limitation, the issuance of the Series D
Shares to the Series D Investors, the issuance of the Warrants to VantagePoint,
the issuance of the Common Stock upon conversion of the Series D Shares and the
issuance of the Series D Shares upon exercise of the Warrants, will result in:
(i) a violation of or conflict with the Corporation's Second Amended and
Restated Certificate of Incorporation or bylaws; (ii) a violation of any Laws
or any Order to which the Corporation is subject: (iii) the imposition of any
material Lien against the Corporation's assets; or (iv) a material breach or
default under any mortgage, indenture, deed of trust, real property or personal
property lease, license, material contract, or other agreement.
4.4. Financial Statements. The Financial Statements present fairly
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the financial condition and results of operations of the Corporation of and for
the periods covered by the Financial Statements, subject only to ordinary course
adjustments for normal, recurring accruals resulting from the year-end audit.
4.5. Absence of Certain Changes or Events. Since December 31, 1998,
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the Corporation has operated only in the ordinary course and there has been no:
(i) material adverse change in the business, financial condition or results of
operations of the Corporation, (ii) damage, destruction or loss (whether or not
covered by insurance) involving any of the Corporation's assets; (iii) sale or
lease or other disposition of any of the Corporation's assets, except for
dispositions in the ordinary course; (iv) declaration or payment of any dividend
or distribution on any shares of its capital stock or other equity interests;
(v) repurchase or other acquisition of any shares of its capital stock or other
equity interests or any outstanding securities convertible into shares of
capital stock or of any option, warrant, right, call or commitment relating to
shares of capital stock or other equity interests or any outstanding securities
convertible into shares of capital stock, or, any grant to any Person of any
right to subscribe for or acquire from it, any shares of capital stock or other
equity interests; (vi) the granting or creation by the Corporation of any
material Lien affecting any of the Corporation's assets; or (vii) to the
Corporation's best knowledge, any transaction by the Corporation outside the
ordinary course of business.
4.6. Consents and Approvals. Other than consents obtained prior to
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the Closing, the execution, delivery and performance by the Corporation of this
Agreement, the Shareholders' Agreement or the Registration Rights Agreement and
the transactions contemplated hereby or thereby, including without limitation,
the issuance of the Series D Shares to the Series D Investors, the issuance of
the Warrants to VantagePoint, the issuance of the Common Stock upon conversion
of the Series D Shares and the issuance of the Series D Shares upon exercise of
the Warrants, do not require the consent, approval or authorization of, or any
declaration, filing, registration or notice with or to any governmental or
regulatory authority, or any other Person, except where the failure to obtain
such consent would not have a material adverse effect on the Corporation.
4.7. Material Agreements. Schedule 4.7 of the Schedule of Exceptions
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contains a complete and correct list, as of the date of this Agreement, of all
material agreements, contracts, commitments, undertakings and other obligations,
whether written or oral, involving the Corporation or otherwise relating to the
Business, which shall include but are not limited to agreements which entail a
commitment of $50,000 or more. True and complete copies of all written
agreements, contracts and
commitments listed in Schedule 4.7 of the Schedule of Exceptions, including all
amendments, have been made available to the Series D Investors.
4.8. Absence of Litigation. There is no material Proceeding which is
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either pending or, to the Corporation's best knowledge, threatened against the
Corporation or otherwise involving its assets or the Business, and there are no
outstanding Orders against the Corporation or with respect to the Business or
the Corporation's assets.
4.9. Compliance with Laws. The Corporation is currently in
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compliance and has in the past complied, in each case in all material respects,
with the Laws applicable to the Corporation, except where the failure to do so
would not have a material adverse effect on the Corporation. The Corporation
has not received notice of violation or alleged violation of any Laws relating
to the conduct of the Business which has not been rectified or which remains
outstanding.
4.10. Accounts Receivable. All accounts receivable reflected on the
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Financial Statements and all accounts receivable of the Business that have
arisen since the date of the Financial Statements derive from bona fide
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transactions in the ordinary course of the Business and are payable on ordinary
terms, less adequate reserves for doubtful accounts as reflected in the Books
and Records. No person has asserted or threatened to assert any counterclaims
or offsetting claims or defenses to collection of the Corporation's accounts
receivable. The Books and Records as of the date of this Agreement reflect an
accurate aging of all accounts receivable. The Corporation is not aware that
any of the accounts receivables as of the date of this Agreement are
uncollectible or are likely to be uncollectible in the ordinary course within 60
days after origination.
4.11. Intellectual Property. Schedule 4.11 of the Schedule of
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Exceptions contains a true and complete listing, as they relate to or are used
in the Business, of all: (i) trademark registrations and applications in the
United States, any state or any other jurisdiction; (ii) common law or
unregistered trademarks; (iii) tradenames, (iv) patents and patent applications;
(v) registered copyrights; and (vi) technical know-how, license or similar
agreements to which the Corporation with respect to the Business is party, or
from which the Business otherwise benefits (collectively, the "Intellectual
Property"). No proceedings are pending or, to the Corporation's best knowledge,
threatened, which challenge the validity of the Corporation's ownership or use
of the Intellectual Property. All licensing and similar agreements relating to
the Intellectual Property are listed on Schedule 4.11 of the Schedule of
Exceptions and are in full force and effect, and there is no default by the
Corporation or any other party to such agreements. The Corporation has not
received notice of conflict with the asserted rights of other Persons. To its
best knowledge, the Corporation is not infringing any patents, trademarks or
copyrights and is not misappropriating or violating trade secrets or other
proprietary rights of any other Persons. All executive officers of the
Corporation have executed an agreement containing an assignment of inventions
provision, a form of which has been provided to counsel for the Series D
Investors.
4.12. Environmental Matters. The Corporation is in compliance with
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applicable Environmental Laws. To the Corporation's best knowledge, there is no
past or existing event, condition, circumstance or practice or procedure
involving or relating to Hazardous Materials or other environmental matters
which might interfere with or adversely affect the conduct of the Business as
now being conducted, or which would require disclosure, reporting, monitoring,
cleanup, remediation or other action on the part of the Corporation or at the
Corporation's expense, or which might result in the Corporation's being in
violation of or in noncompliance with Environmental Laws.
4.13. Employees. Employees of the Business are employed "at will",
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and, except as otherwise provided in this Agreement, the employment of each
employee may be terminated at any time, without obligation to pay severance or
other payments or benefits. None of the Corporation's employees are represented
by any labor union or other organization and, there have been no attempts by or
on behalf of the Corporation's employees to be represented by a labor union.
There are no controversies pending or, to the Corporation's best knowledge,
threatened between the Corporation and its employees or consultants, present or
former. The Corporation considers its relations with employees to be good.
Schedule 4.13 of the Schedule of Exceptions also contains a complete and correct
list, as of the date of this Agreement, of all bonus, deferred compensation,
severance, pension, profit-sharing, retirement, insurance, stock purchase, stock
option and other fringe benefit plans, written or otherwise, maintained or
sponsored by the Corporation or any of its Affiliates in which employees or
former employees of the Business are eligible to participate.
4.14. Undisclosed Liabilities. To the Corporation's best knowledge,
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neither the Corporation nor the Business is liable for or subject to any
material Liabilities, except material Liabilities adequately and specifically
disclosed or reserved for in the Financial Statements or, if incurred subsequent
to the date of the Corporation's balance sheet included in the Financial
Statements, disclosed and adequately reserved for in the Books and Records.
4.15. Books of Accounts; Returns and Reports; Taxes. The Corporation
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has paid in full all taxes which were due and payable to date, and the Books and
Records reflect appropriate accruals and reserves for taxes in respect of
current periods which are not yet due and payable. The Corporation has duly and
timely filed all tax returns required to have been filed to date in all
applicable jurisdictions with respect to the Business or otherwise, except where
the failure to so file would not have a material adverse effect on the
Corporation. The Corporation has made all deposits required with respect to
withholding taxes for employees of the Business.
4.16. Transactions With Affiliates. The Corporation has no
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outstanding contract, agreement or other arrangement with an Affiliate of the
Corporation with respect to the Business, and none of the Corporation's assets
is owned by or leased, licensed or otherwise used by the Corporation under grant
from any of such Affiliate. There are currently no outstanding shareholder
notes or obligations to related parties of the Corporation.
4.17. Broker's or Finder's Fees. No broker, finder or other Person
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acting in a similar capacity has acted directly or indirectly for the
Corporation in connection with this Agreement or the transactions contemplated
by this Agreement.
4.18. No Misleading Statements. The Corporation has provided or made
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available to the Series D Investors all of the information which the Series D
Investors have requested in connection with the execution of this Agreement and
the offer and sale of the Series D Shares and the Warrants. To the
Corporation's knowledge, none of this Agreement, the Shareholders' Agreement,
the Registration Rights Agreement or any certificate furnished to the Series D
Investors in connection herewith (when read together) contain any untrue
statement of material fact or omit to state any material fact necessary to make
the statements contained herein or therein not misleading in any material
respect.
5. REPRESENTATIONS AND WARRANTIES OF THE SERIES D INVESTORS. Each of
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the Series D Investors makes the following representations and warranties to the
Corporation, severally and not jointly, and each with respect only to itself or
himself:
5.1. Organization and Authority. Such Series D Investor, if not a
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natural person, is duly organized, validly existing and in good standing under
the laws of its jurisdiction of formation. Such Series D Investor has full
power and authority to enter into this Agreement and to perform its or his
obligations under this Agreement. The signing, delivery and performance of this
Agreement, the Shareholders' Agreement and the Registration Rights Agreement by
such Series D Investor have been duly authorized by all necessary action on the
part of such Series D Investor, and no further action is required on the part of
such Series D Investor in order to authorize this Agreement, the Shareholders'
Agreement, the Registration Rights Agreement or the transactions contemplated
hereby or thereby. Each of this Agreement, the Shareholders' Agreement and the
Registration Rights Agreement constitute the legal, valid and binding obligation
of such Series D Investor, duly enforceable against such Series D Investor in
accordance with its terms.
5.2. No Conflict or Violation. Neither the execution and delivery of
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this Agreement, the Shareholders' Agreement or the Registration Rights Agreement
by such Series D Investor nor the performance by such Series D Investor of the
transactions contemplated hereby or thereby will result in: (i) a violation of
or conflict with the governing documents of such Series D Investor, if not a
natural person; (ii) a violation of any Laws or any Order to which such Series D
Investor is subject; or (iii) a breach or default under any mortgage, indenture,
deed of trust, real property or personal property lease, license, contract or
other agreement to which such Series D Investor is subject.
5.3. Consents and Approvals. The execution, delivery and performance
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by such Series D Investor of this Agreement, the Shareholders' Agreement and the
Registration Rights Agreement and the transactions contemplated hereby and
thereby do not require the consent, approval or authorization of, or any
declaration, filing,
registration or notice with or to any governmental or regulatory or any other
Person other than such consents or approvals which have been obtained prior to
the date of this Agreement.
5.4. Purchase for Investment. (a) The Series D Investor has
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substantial experience in evaluating and investing in private placement
transactions of securities in companies similar to the Corporation such that the
Series D Investor is capable of evaluating the merits and risks of its
investment in the Corporation and has the capacity to protect its own interests.
The Series D Investor is an "accredited investor" as that term is defined in
Rule 501 promulgated under the Securities Act.
(b) The Series D Investor is acquiring the Series D Shares and, as
applicable, the Warrants for investment, for the Series D Investor's own
account, not as a nominee or agent, and not with the view to, or for resale in
connection with, any distribution thereof. The Series D Investor understands
that the Series D Shares, Common Stock issuable upon conversion thereof, the
Warrants and the Warrant Shares have not been, and will not be when issued,
registered under the Securities Act and are being issued pursuant to a specific
exemption from the registration provisions of the Securities Act, the
availability of which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of the representations as expressed
herein.
(c) The Series D Investor acknowledges that the Series D Shares, the
Common Stock issuable upon conversion thereof, the Warrants and the Warrant
Shares must be held indefinitely unless subsequently registered under the
Securities Act or unless an exemption from such registration is available. The
Series D Investor is aware of the provisions of Rule 144 promulgated under the
Securities Act which permit limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, which may include,
among other things, the existence of a public market for the shares, the
availability of certain current public information about the Corporation, the
resale occurring not less than one year after a party has purchased and paid for
the security to be sold, the sale being effected through a "broker's
transaction" or in transactions directly with a "market marker" and the number
of shares being sold during any three-month period not exceeding specified
limitations.
(d) The Series D Investor understands that no public market now exits,
and that a market may never exist, for any of the securities issued by the
Corporation.
5.5. Broker's or Finder's Fees. No broker, finder or other Persons
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acting in a similar capacity has acted directly or indirectly for such Series D
Investor in connection with this Agreement and the transactions contemplated
hereby.
6. POST-CLOSING COVENANTS OF THE CORPORATION.
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6.1. Insurance. The Corporation shall keep in full force and effect,
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and shall pay all premiums on, a term life insurance policy on the life of
Xxxxxx Xxxxxxxx
in the amount of $5,000,000 as to which the Corporation shall be the owner and
the beneficiary. The Corporation shall keep in full force and effect, and shall
pay all premiums on, a Directors and Officers liability insurance policy in the
amount of at least $1,000,000 as to which the Corporation shall be the owner and
the beneficiary. The Corporation shall increase such amount to at least
$5,000,000 prior to the Corporation's Initial Public Offering.
6.2. Financial Information. The Corporation shall furnish the
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following financial statements to the Series D Investors.
6.2.1. As soon as practicable and in any event within 120 days
after the end of each fiscal year of the Corporation, the balance sheet of the
Corporation as at the end of such fiscal year and the related statements of
income, retained earnings and changes in financial position for such fiscal
year, setting forth in each case in comparative form (for each year other than
the first fiscal year) corresponding figures from the preceding annual audit,
prepared in accordance with generally accepted accounting principles
consistently applied and certified by independent public accountants selected by
the Corporation and reasonably satisfactory to the Series D Investors; and
6.2.2. As soon as practicable and in any event within 45 days
after the end of each of the first three quarters in each fiscal year of the
Corporation, the balance sheet of the Corporation as at the end of such
quarterly period and the related statements of income, retained earnings and
changes in financial position for such quarterly period and for the elapsed
portion of the fiscal year ended with the last day of such quarterly period, and
in each case setting forth comparative figures for the related periods in the
prior fiscal year, all of which shall be prepared in accordance with generally
accepted accounting principles, consistently applied, subject to normal year-end
audit adjustments.
6.3. Right of First Offer.
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6.3.1. The Corporation hereby grants to each Series D Investor
the right of first offer to purchase such Series D Investor's pro rata share
("Pro Rata Share") of New Securities (as defined in Section 6.3.2) that the
Corporation may, from time to time, propose to sell and issue. Such Series D
Investor's Pro Rata Share, for purposes of this right of first offer, is the
ratio that the number of shares of Common Stock (assuming conversion of all
Preferred Stock and other securities convertible into Common Stock or Preferred
Stock including, without limitation, options or warrants to acquire Common Stock
or Preferred Stock) held by such Series D Investor bears to the total number of
shares of Common Stock outstanding immediately prior to the time of issuance of
such New Securities (assuming conversion into Common Stock of all outstanding
Preferred Stock and any other securities convertible into Common Stock or
Preferred Stock including, without limitation, options or warrants to acquire
Common Stock or Preferred Stock). This right of first offer shall be subject to
the following provisions of this Section 6.3:
6.3.2. "New Securities" shall mean any Common Stock or any
Preferred Stock of the Corporation, whether or not now authorized, and any
rights, options, or warrants to purchase said Common Stock or Preferred Stock,
and securities of any type whatsoever that are, or may become, convertible into
or exchangeable for Common Stock or Preferred Stock; provided, however, that
"New Securities" does not include (i) securities issuable upon exercise of the
Warrants or upon conversion of or with respect to the outstanding Preferred
Stock or Warrant Shares or upon conversion of or with respect to any other
Preferred Stock issued after the date of this Agreement and to which the Series
D Investors have either exercised or affirmatively waived in writing their
rights of first offer as set forth in this Section 6.3; (ii) securities offered
to the public pursuant to a registration statement filed under the Securities
Act in connection with the Corporation's Initial Public Offering or relating to
any employee benefit plan on Form S-8 or any corporate reorganization on Form S-
4; (iii) securities issued in connection with the acquisition of another
unaffiliated corporation by the Corporation by merger, purchase of substantially
all of the assets, or other reorganization whereby the Corporation owns not less
than 50% of the voting power of the surviving corporation; (iv) shares of the
Corporation's Common Stock (or related options or warrants) issued to employees,
officers, directors, consultants, or other persons performing services for the
Corporation pursuant to any stock offering, plan, or arrangement approved by the
Board of Directors of the Corporation; (v) securities issued pursuant to or in
connection with any corporate partnership, joint venture or licensing
arrangement with a non-affiliate or in connection with an unaffiliated equipment
lease financing or bank debt into which the Corporation may enter; (vi) shares
of the Corporation's Common Stock or Preferred Stock issued in connection with
any stock split, stock dividend, or recapitalization by the Corporation; or
(vii) securities issued upon exercise or conversion of any New Securities.
6.3.3. (a) In the event that the Corporation proposes to issue
New Securities, it shall give each Series D Investor written notice (the "First
Notice") of its intention, describing the type of New Securities, the price, and
the general terms upon which the Corporation proposes to issue the same. Within
20 days after receipt of the First Notice, the Series D Investor shall give the
Corporation written notice (the "Investor Notice") of its intention to purchase
or obtain, at the price and on the terms specified in the Notice, a number of
shares equal to or less than its Pro Rata Share of the New Securities. The
Investor Notice shall be deemed a binding offer to purchase the number of New
Securities set forth therein. In addition, the Investor Notice shall state
whether the Series D Investor wishes to purchase more than its Pro Rata Share of
the New Securities. The Corporation shall promptly give written notice to each
Series D Investor that purchases its Pro Rata Share of the New Securities (a
"Fully-Exercising Investor") of the amount of New Securities, if any, that other
Series D Investors do not elect to purchase in response to the First Notice (the
"Second Notice"). Each Fully Exercising Series D Investor shall notify the
Corporation within 10 days of receipt of the Second Notice if it would like to
purchase any of the unsubscribed shares and indicate the maximum number of
unsubscribed shares it would like to purchase. The Corporation shall inform the
Fully-Exercising Investor of the total number of unsubscribed shares
available and provide the Fully-Exercising Investor with an allocation of the
unsubscribed shares based on the number of shares of Common Stock (assuming
conversion of all Preferred Stock into Common Stock) held by each Fully
Exercising Investor.
(b) To the extent that the Investors fail to exercise in
full the right of first offer as provided in Section 6.3.3(a) hereof, the
Corporation shall have 90 days thereafter to sell (or enter into an agreement
pursuant to which the sale of New Securities covered thereby shall be closed, if
at all, within 90 days after execution of such agreement) the New Securities to
which the Series D Investors' rights were not exercised, at a price and upon
general terms no more favorable to the purchasers thereof than specified in the
First Notice. In the event the Corporation has not sold the New Securities
within said 90-day period (or sold and issued New Securities in accordance with
the foregoing within 90 days from the date of said agreement), the Corporation
shall not thereafter issue or sell any New Securities, without first offering
such securities to the Series D Investors in the manner provided above.
(c) A Series D Investor's failure to exercise this right
of first offer on any issuance of New Securities shall not adversely affect the
Investor's right of first offer to purchase subsequent issuances of New
Securities.
6.3.4. The right of first offer granted under this Section 6.3
is nonassignable except to an Affiliate of the Series D Investor.
6.4. Termination of Covenants. The covenants set forth in Sections
------------------------
6.2 and 6.3 shall terminate and be of no further force or effect as to each of
the Series D Investors upon the earlier to occur of: (i) the time at which such
Series D Investor owns less than 50% of the Series D Shares and, if applicable,
Warrant Shares, purchased by and issued to such Series D Investor pursuant to
this Agreement or upon exercise of the Warrants, and (ii) the closing of a
firmly underwritten public offering pursuant to an effective registration
statement under the Securities Act, covering the offer and sale of Common Stock
for the account of the Corporation in which the price per share (as adjusted for
combinations, stock dividends, subdivisions or split-ups) is at least $7.00 and
the net cash proceeds to the Corporation (after payment of underwriting
discounts, commissions and fees) are at least $30,000,000 (the "Initial Public
Offering").
6.5. Participation in an Initial Public Offering. In the event of an
-------------------------------------------
Initial Public Offering, VantagePoint (or an "Affiliate" thereof as defined in
Rule 501 promulgated under the Securities Act) shall have the right to purchase
in such offering in the aggregate up to a number of shares of Common Stock equal
to $5,000,000 divided by the price per share of the Corporation's Common Stock
at the Initial Public Offering. Such shares allocated to VantagePoint shall not
be subject to any underwriting discounts, commission or fees. Notwithstanding
the foregoing, the allocation of the shares to VantagePoint under this Section
6.5, shall in all cases be subject to compliance with all applicable rules and
regulations of, and, if necessary, approval by, the Securities and
Exchange Commission and National Association of Securities Dealers and any other
law, rule or regulation applicable to the Corporation at such time.
6.6. Committees of the Board of Directors. The Board of Directors of
------------------------------------
the Corporation shall establish audit and compensation committees and shall
delegate to such committees those duties and powers as are customarily performed
by committees of such type and the director elected by the holders of the Series
D Shares shall be elected or designated chairperson of the compensation
committee.
6.7. Assignment of Inventions. The Corporation shall use its best
------------------------
efforts to obtain from each employee of the Corporation hired after the date
hereof an agreement executed by such employee containing provisions regarding
assignment of inventions in form and substance similar to the provisions
contained in the agreements signed by current employees of the Corporation.
7. CLOSING DELIVERIES
------------------
7.1. Closing. The closing of the transactions contemplated by this
-------
Agreement (the "Closing") shall take place concurrently with the signing and
delivery of this Agreement.
7.2. The Corporation's Closing Deliveries. The Series D Investor's
------------------------------------
obligations to purchase the Series D Shares and VantagePoint's obligation to
purchase the Warrants at the Closing are subject to the fulfillment by the
Corporation or waiver by the affected Series D Investor of the following
conditions:
7.2.1. The representations and warranties made by the
Corporation in Section 4 hereof shall be true and correct as of the Closing.
7.2.2. All covenants, agreements and conditions contained in
this Agreement to be performed by the Corporation on or prior to the Closing
shall have been performed or complied with unless waived in writing by the
Series D Investor.
7.2.3. The Corporation shall have obtained all necessary state
securities law permits and qualifications, or have the availability of
exemptions therefrom, required by any state for the offer and sale of Series D
Shares and the Common Stock issuable upon conversion of the Series D Shares, the
Warrants and the Warrant Shares.
7.2.4. The Second Amended and Restated Certificate of
Incorporation of the Corporation shall have been filed with the Secretary of
State of the State of Delaware.
7.2.5 The Corporation shall deliver a certificate executed by
the Chief Executive Officer of the Corporation, dated as of the Closing,
certifying that the
conditions specified in Sections 7.2.1, 7.2.2 and 7.2.4 of this Agreement have
been fulfilled.
7.2.6. The Corporation shall deliver a certificate dated as of
the date of the Closing, of the secretary of the Corporation certifying as to
(i) the certificate of incorporation and bylaws of the Corporation; and (ii)
resolutions of the Board of Directors and the shareholders of the Corporation
authorizing the execution, delivery and performance of this Agreement, all
documents contemplated by this Agreement and the transactions contemplated by
this Agreement.
7.2.7. The Corporation shall deliver certificates of "good
standing" of the Corporation from the Secretaries of State of the States of
Delaware, Connecticut, New York, New Jersey and the Commonwealth of
Massachusetts.
7.2.8. The Corporation shall deliver stock certificates issued
to the Series D Investors for the number of Series D Shares set forth on The
Schedule of Investors.
7.2.9. The Corporation shall deliver the Warrants issued to
VantagePoint as set forth on the Schedule of Investors.
7.2.10. The Corporation shall deliver the Shareholders'
Agreement signed on behalf of the Corporation and by or on behalf of the holders
of the Series A Shares, Series B Shares and Series C Shares.
7.2.11. The Corporation shall deliver the Registration Rights
Agreement signed on behalf of the Corporation.
7.2.12. The Corporation shall deliver an opinion of Xxxxx,
Xxxxxxx & Xxxxxxxxx, LLP, counsel to the Corporation in the form attached hereto
as Exhibit D.
---------
7.3. Closing Deliveries of the Series D Investors. The Corporation's
--------------------------------------------
obligations to sell and issue the Series D Shares and the Warrants at the
Closing are subject to the fulfillment by the Series D Investors or waiver by
Corporation of the following conditions:
7.3.1. The Series D Investors shall deliver to the Corporation
the sum set forth opposite its or his name in the Schedule of Investors, by wire
transfer, representing the purchase price of the Series D Shares to be issued
pursuant to this Agreement.
7.3.2. VantagePoint shall deliver to the Corporation the sum
set forth in Section 3.2, by wire transfer, representing the purchase price of
the Warrants to be issued pursuant to this Agreement.
7.3.3. Each Series D Investors shall deliver to the Corporation
the Shareholders' Agreement signed by such Series D Investor.
7.3.4. Each Series D Investor shall deliver to the Corporation
the Registration Rights Agreement signed by such Series D Investor.
8. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All covenants,
-----------------------------------------------------
representations and warranties in this Agreement or in any documents delivered
pursuant to this Agreement shall survive the Closing for a period of two (2)
years after the Closing.
9. INDEMNIFICATION.
---------------
9.1. Indemnification by the Corporation to the Series D Investors.
------------------------------------------------------------
The Corporation shall indemnify, defend and hold each of the Series D Investors,
the Affiliates of each Series D Investor, and their respective shareholders,
officers, directors, employees, assignees and successors, harmless against, and
shall reimburse each of the indemnified Persons on demand on account of, any
Losses which may be asserted against, imposed on or incurred by any of them as a
result of or arising out of or in any manner relating or attributable to any
inaccuracy in or breach of the representations, warranties or covenants on the
part of the Corporation in this Agreement or in any document delivered by the
Corporation pursuant to this Agreement.
9.2. Indemnification by the Series D Investors to the Corporation.
------------------------------------------------------------
Each Series D Investor, severally and not jointly, shall indemnify, defend and
hold the Corporation and the Corporation's officers, directors, employees,
assignees and successors harmless against, and shall reimburse such indemnified
Persons on demand on account of, any Losses which may be asserted against,
imposed on or incurred by any of them as a result of or arising out of or in any
manner relating or attributable to any inaccuracy in or breach of such Series D
Investor's representations or warranties in this Agreement or in any document
delivered by such Series D Investor pursuant to this Agreement; provided
however, such obligation shall not exceed the amount the purchase price paid by
such Series D Investor for the Series D Shares as set forth on the Schedule of
Investors and, as applicable, for the Warrants.
10. MISCELLANEOUS.
-------------
10.1. Notices. Notices given pursuant to this Agreement must be in
-------
writing. They shall be deemed to have been duly given: (i) upon delivery or
refusal to accept delivery, if hand-delivered; (ii) when transmitted, if sent by
fax with confirmed receipt, followed by a "hard" copy delivered by any other
method specified in this Section 10.1; or (iii) one (1) business day after being
deposited for next-day delivery with Federal Express or other national overnight
courier service. In each case, notice shall be addressed to the parties as
follows:
If to the Corporation:
---------------------
Greenwich Technology Partners, Inc.
00 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Fax: (000) 000-0000
If to the Series D Investors:
----------------------------
To the address of such Series D Investor as set forth
on the Schedule of Investors
or to such other place and with such other concurrent copies as the parties may
subsequently designate by written notice.
10.2. Amendment; Waiver. None of the provisions of this Agreement
-----------------
may be changed, modified, waived or canceled orally or otherwise except in
writing, signed by the Corporation and persons holding at least a majority of
the aggregate of (a) the then outstanding Series D Shares (assuming conversion
to Common Stock at the conversion rate then in effect) and (b) the then
outstanding shares of Common Stock into which the Series D Shares have been
converted, other than shares of Common Stock which have been sold to the public.
10.3. Binding Effect; Assignment. This Agreement is binding on the
--------------------------
Corporation, the Series D Investors and their respective successors in interest.
No party may assign his or its rights and obligations under this Agreement with
the prior written consent of the other parties. There are no third-party
beneficiaries of this Agreement, and any intention to afford any right or
benefit under this Agreement to any third party is specifically disclaimed.
10.4. Entire Agreement. This Agreement, including the exhibits
----------------
attached hereto, the Shareholders' Agreement and the Registration Rights
Agreement embody the entire understanding among the parties with respect to the
subject matter of this Agreement. There are no binding agreements or
understandings among the parties with respect to the transactions contemplated
by this Agreement other than as expressly set forth in this Agreement, the
Shareholders' Agreement or the Registration Rights Agreement.
10.5. Interpretation; Construction.
----------------------------
10.5.1. The terms of this Agreement have been fully negotiated
by the parties in consultation with counsel, and the wording of this Agreement
has been arrived at by all of them as a result of their joint discussions.
Accordingly, no provision of this Agreement shall be construed against a
particular party or in favor of another party
merely because of which party (or its representatives) drafted or supplied the
wording for such provision.
10.5.2. Except where otherwise noted in context, all references
to "Sections", "Exhibits" or "Schedules" shall be deemed to refer to the
sections or subsections, as appropriate, exhibits or schedules of this
Agreement.
10.5.3. Section headings appearing in this Agreement are
inserted solely as reference aids for the ease and convenience of the reader;
they shall not be deemed to modify, limit or define the scope or substance of
the provisions they introduce, nor shall they be used in construing the intent
or effect of such provisions.
10.5.4. Where the context requires: (i) use of the singular or
plural incorporates the other, and (ii) pronouns and modifiers in the masculine,
feminine or neuter gender shall be deemed to refer to or include the other
genders.
10.5.5. As used in this Agreement, the terms "include(s)" and
"including" mean "including but not limited to"; that is each case the example
or enumeration which follows the use of either term is illustrative but no
exclusive or exhaustive.
10.6. Expenses. The Corporation shall pay at the Closing (or
--------
reimburse such Series D Investor for, as the case may be) the reasonable out-of-
pocket fees and disbursements of such Series D Investor incurred in connection
with the negotiation and consummation of the transactions contemplated hereby,
including attorney fees incurred by a single counsel on behalf of the Series D
Investors, in an amount not expected to exceed $25,000.
10.7. Prevailing Party. In any Proceeding to enforce any provision
----------------
of this Agreement, the substantially prevailing party shall be entitled to
recover reasonable attorneys' fees and out-of-pocket expenses from the other
party, as determined by a court having jurisdiction.
10.8. Multiple Counterparts. This Agreement may be signed in one or
---------------------
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when each of the parties has signed and delivered a
counterpart to the other.
10.9. Further Assurances. The parties agree, upon request and for no
------------------
additional consideration, to sign, acknowledge and deliver any documents and to
do anything else which the other may reasonably request in order to carry out
more completely the purpose and intent of this Agreement consistent with its
terms.
10.10. Governing Law. This Agreement shall be governed by and
-------------
interpreted according to the Laws of Delaware, but without giving effect to any
Delaware choice of law provisions which might otherwise make the Laws of a
different jurisdiction govern or apply.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Corporation and the Series D Investors have
executed this Agreement as of the day and year first above written.
Greenwich Technology Partners, Inc.
By:_____________________________________
Name:
Title:
VantagePoint Communications
Partners, LP
By: VantagePoint Communications Associates, LLC
Its General Partner
By:_____________________________________
Name:
Title:
VantagePoint Venture Partners 1996, LP
By: VantagePoint Associates, LLC
Its General Partner
By:_____________________________________
Name:
Title:
By:_____________________________________
Name: Xxxxxx X. Xxxxx
FG - GTPD
By:_____________________________________
Name:
Title:
By:_____________________________________
Name: Xxxxxx Xxxxxxxxx
By:_____________________________________
Name: Xxxx Xxxxxx
By:_____________________________________
Name: Xxxx Xxxxxx
By:_____________________________________
Name: Xxxxxxx Xxxxxxxxxx
EXHIBIT A
---------
Schedule of Investors
---------------------
Aggregate Purchase
Name and Address Number of Series D Price for Series D
of Series D Investor Shares to be Purchased Shares
-------------------- ---------------------- ------
VantagePoint 2,849,002 $3,333,332.34
Communications
Partners, LP
VantagePoint Venture 1,424,502 $1,666,667.34
Partners 1996, LP
Xxxxxx X. Xxxxx 85,470 $ 99,999.90
FG - GTPD 747,863 $ 874,999.71
Xxxxxx Xxxxxxxxx 42,735 $ 49,999.95
Xxxx Xxxxxx 21,368 $ 25,000.56
Xxxx Xxxxxx 34,188 $ 39,999.96
Xxxxxxx Xxxxxxxxxx 8,547 $ 9,999.99
TOTAL: 5,213,675 $6,099,999.75
Warrant Schedule
----------------
Number of Warrants to be Aggregate Purchase Price
Name of Warrantholder Purchased for Warrants
--------------------- --------- ------------
VantagePoint Communications 2,849,002 $666.60
Partners, LP
VantagePoint Venture 1,424,502 $333.40
Partners 1996, LP
