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EXHIBIT 10.25
EXECUTION COPY
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SECURITIES PURCHASE AGREEMENT
Among
DIGITAL COMMERCE CORPORATION,
WESTON PRESIDIO CAPITAL III, L.P.,
HIGHLAND CAPITAL PARTNERS V LIMITED PARTNERSHIP
AND CERTAIN OTHER INVESTORS
SERIES D PREFERRED STOCK
As of March 13, 2000
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TABLE OF CONTENTS
1. DEFINITIONS..................................................................1
2. SALE AND PURCHASE OF SECURITIES..............................................7
2.1. Investor Securities.................................................7
2.2. Agreement to Sell and Purchase......................................8
2.3. Closing.............................................................8
2.5. Use of Proceeds.....................................................8
3. CONDITIONS TO PURCHASE.......................................................8
3.1. Investor Agreements.................................................9
3.2. Investor Securities.................................................9
3.3. Legal Opinion.......................................................9
3.4. Representations and Warranties; Officer's Certificate...............9
3.5. Key Executive Insurance.............................................9
3.6. Legality; Governmental Authorization................................9
3.7. Amendment of Certificate of Incorporation; Series B and C Notes....10
3.8. General............................................................10
4. CONDITIONS TO COMPANY'S OBLIGATIONS.........................................10
4.1. Representations and Warranties.....................................10
4.2. Legality, Governmental Authorization...............................10
5. REPRESENTATIONS AND WARRANTIES..............................................10
5.1. Material Agreements................................................10
5.2. Organization and Subsidiaries; Business............................11
5.2.1. The Company................................................11
5.2.2. Subsidiaries...............................................12
5.3. Capitalization.....................................................12
5.3.1. Capital Stock of the Company...............................12
5.3.2. Options, etc...............................................12
5.3.3. Capital Stock of the Subsidiaries..........................12
5.3.4. Subsidiary Options, etc....................................12
5.4. Reports, Financial Statements and Other Documents..................13
5.5. Changes in Condition...............................................13
5.5.1. Material Adverse Effect....................................13
5.5.2. Extraordinary Transactions, etc............................13
5.6. Solvency...........................................................14
5.7. Taxes..............................................................14
5.8. Contractual Obligations, etc.......................................14
5.8.1. Certain Contracts..........................................14
5.8.2. Nature of Contracts........................................15
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5.8.3. Charter or By-Laws.........................................15
5.8.4. Insurance..................................................15
5.8.5. Transactions with Affiliates...............................16
5.9. Litigation.........................................................16
5.10. Violation of Other Instruments.....................................16
5.11. Consents...........................................................16
5.12. Operations in Conformity With Law, etc.............................16
5.13. Environmental Matters..............................................17
5.14. ERISA Matters......................................................18
5.15. Intellectual Property..............................................18
5.16. Labor Relations....................................................18
5.17. Filings, Broker's Fees, etc........................................19
5.18. Governmental Regulation............................................19
5.19. Margin Stock.......................................................19
5.20. Real Property Holding Corporation..................................19
5.21. Disclosure.........................................................19
6. GENERAL COVENANTS...........................................................19
6.1. Covenants Relating to the Company's Board of Directors.............19
6.1.1. Board of Directors.........................................19
6.1.2. Directors Expenses.........................................19
6.1.3. Indemnity..................................................20
6.2. Information and Reports to be Furnished............................20
6.2.1. Annual Statements..........................................20
6.2.2. Quarterly Reports..........................................20
6.2.3. Monthly Reports............................................20
6.2.4. Annual Budgets.............................................21
6.2.5. Officers' Certificates.....................................21
6.2.6. Notice of Litigation, Defaults, etc........................21
6.2.7. Notices under Material Agreements..........................21
6.2.8. Information Provided to Stockholders.......................21
6.2.9. Other Information..........................................22
6.2.10. Interview and Advisory Rights..............................22
6.2.11. Annual Meeting.............................................22
6.3. Merger, Consolidation and Sale of Assets...........................22
6.4. Stock Issuance, etc................................................23
6.5. Transactions with Affiliates.......................................23
6.6. Closing Costs......................................................23
6.7. Subsidiaries Closures and Spin-offs................................23
6.7.1. Xxxxxx.xxx.................................................23
6.7.2. XxxxXxxxx.xxx, LLC.........................................24
6.7.3. Xxxxxxxxxx.xxx, Inc........................................24
6.7.4. Specific Enforcement.......................................24
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6.8. Series A Notes Conversion..........................................24
6.9. Employee Nondisclosure Agreements..................................24
7. INVESTOR REPRESENTATIONS; RESTRICTIONS ON TRANSFER..........................25
7.1. Representations and Warranties of the Investors....................25
7.2. Home Office Payment................................................25
7.3. Replacement of Lost Securities.....................................25
7.4. Transfer, Exchange and Conversion of Investor Securities...........26
7.5. Restrictions on Transfer...........................................26
7.5.1. Restrictive Legend..........................................26
7.5.2. Notice of Proposed Transfer; Opinions of Counsel............27
7.5.3. Termination of Restrictions.................................27
8. EXPENSES, ETC...............................................................27
8.1. Expenses...........................................................27
8.2. Mutual Indemnification.............................................28
8.3. Survival...........................................................28
9. NOTICES.....................................................................28
10. CONFIDENTIALITY.............................................................29
11. AMENDMENTS AND WAIVERS......................................................29
12. SURVIVAL AND TERMINATION OF COVENANTS.......................................29
13. SERVICE OF PROCESS..........................................................29
14. WAIVER OF JURY TRIAL........................................................30
15. GENERAL.....................................................................30
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TABLE OF EXHIBITS
1 Investors, Preferred Stock and Purchase Price
2.1 Certificate of Designation
3.3 Opinion of Counsel to the Company
3.7A Amendment to Certificate of Incorporation
3.7B Amendments to Certificates of Designation
DISCLOSURE LETTER
5.1.1 Stock Option Plans
5.1.2 Employees Executing Non-Competes
5.2.2 Subsidiaries
5.3.1 Capitalization and Stock Ownership
5.3.2 Options
5.3.3 Capital Stock of Subsidiaries
5.3.4 Subsidiary Options, etc.
5.4 Pro Forma Balance Sheet
5.5.2 Extraordinary Transactions
5.7 Taxes
5.8 Contracts, etc.
5.9 Litigation
5.11 Consents
5.13 Hazardous Waste Sites
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5.14 Employee Benefit Plans
5.17 Broker's Fees
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SECURITIES PURCHASE AGREEMENT
Series D Preferred Stock
This Agreement, dated as of March 13, 2000, is among Digital Commerce
Corporation, a Delaware corporation (the "Company"), Weston Presidio Capital
III, L.P., a Delaware limited partnership, Highland Capital Partners V Limited
Partnership, a Delaware limited partnership, and the other Investors set forth
in Exhibit 1 hereto. The parties agree as follows:
1. DEFINITIONS. Certain capitalized terms are used in this Agreement as
specifically defined below in this Section 1. Except as the context otherwise
explicitly requires, (a) the capitalized term "Section" refers to sections of
this Agreement, (b) the capitalized term "Exhibit" refers to exhibits to this
Agreement, (c) references to a particular Section include all subsections
thereof, (d) the word "including" shall be construed as "including without
limitation", (e) accounting terms not otherwise defined herein have the meaning
provided under GAAP, (f) references to a particular statute or regulation
include all rules and regulations thereunder and any successor statute,
regulation or rules, in each case as from time to time in effect and (g)
references to a particular Person include such Person's successors and assigns
to the extent not prohibited by this Agreement and the other Investor
Agreements. References to "the date hereof" mean the date first set forth above.
1.1. "Adjustment Date" is defined in Section 6.7.3.
1.2. "Affiliate" means any Person directly or indirectly
controlling, controlled by or under direct or indirect common control with the
Company (or other specified Person) and shall include (a) any Person who is an
executive officer, director or beneficial holder of at least 10% of the
outstanding capital stock of the Company (or other specified Person), (b) any
Person of which the Company (or other specified Person) or an Affiliate (as
defined in clause (a) above) of the Company (or other specified Person) shall,
directly or indirectly, either beneficially own at least 10% of the outstanding
equity securities or constitute at least a 10% participant, and (c) in the case
of a specified Person who is an individual, Members of the Immediate Family of
such Person; provided, however, that the Investors shall not be Affiliates of
the Company for purposes of this Agreement.
1.3. "Balance Sheet" is defined in Section 5.4.
1.4. "Balance Sheet Date" is defined in Section 5.4.
1.5. "Board" shall mean the Board of Directors of the Company.
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1.6. "By-laws" means all written rules, regulations, procedures and
by-laws and all other similar documents, relating to the management, governance
or internal regulation of a Person other than an individual, each as from time
to time amended or modified.
1.7. "Certificate of Designation" is defined in Section 2.1.
1.8. "Charter" means the articles of organization, certificate of
incorporation, statute, constitution, joint venture or partnership agreement,
management agreement or other charter of any Person other than an individual,
each as from time to time amended or modified.
1.9. "Closings" is defined in Section 2.4.
1.10. "Closing Costs" means the sum of expenses recognized in the
Company's fiscal periods ending after the Balance Sheet Date for amortization of
transaction expenses, including investment banker's fees and legal fees and
expenses relating to the financings contemplated by the Investor Agreements and
the transactions contemplated by the Material Agreements.
1.11. "Closing Dates" is defined in Section 2.4.
1.12. "Code" means the federal Internal Revenue Code of 1986.
1.13. "Common Stock" means the common stock, $0.01 par value, of the
Company.
1.14. "Company" is defined in the Preamble.
1.15. "Company Indemnitees" is defined in Section 8.2.2.
1.16. "Consolidated", when used with reference to any term, means
that term as applied to the accounts of the Company or other indicated Person
and each of its respective Subsidiaries, consolidated or combined in accordance
with GAAP after eliminating all inter-company items and with appropriate
deductions for minority interests in Subsidiaries.
1.17. "Contractual Obligation" means, with respect to any Person,
any contracts, agreements, deeds, mortgages, leases, licenses, other
instruments, commitments, undertakings, arrangements or understandings, written
or oral, or other documents, including any Charter or By-law provisions and any
document or instrument evidencing indebtedness, to which any such Person is a
party or otherwise subject to or bound by or to which any asset of any such
Person is subject.
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1.18. "Disclosure Letter" means the letter provided by the Company
to the Investors which sets forth certain exceptions to the representations and
warranties set forth in Section 5.
1.19. "Distribution" means (a) the declaration or payment of any
dividend on or in respect of any shares of any class of capital stock of the
Company, any of its Subsidiaries or other specified Person, other than dividends
payable solely in shares of the common stock of the payor; (b) the purchase,
redemption or other retirement of any shares of any class of capital stock of
the Company, any of its Subsidiaries or other specified Person directly, or
indirectly through a Subsidiary or otherwise; or (c) any other distribution on
or in respect of any shares of any class of capital stock of the Company, any of
its Subsidiaries or other specified Person.
1.20. "Employee Benefit Plan" means each "employee benefit plan" as
defined in section 3(3) of ERISA, maintained or contributed to by the Company or
any member of an ERISA Group in which the Company is a member, or in which the
Company or any member of an ERISA Group in which the Company is a member
participates or participated and which provides benefits to employees of the
Company or their spouses or covered dependents or with respect to which the
Company has or may have a material liability, including (i) any such plans that
are "employee welfare plans" as defined in section 3(1) of ERISA and (ii) any
such plans that are "employee pension benefit plans" as defined in section 3(2)
of ERISA.
1.21. "Environmental Laws" means all applicable federal, state or
local statutes, laws, ordinances, codes, rules, regulations and guidelines
(including consent decrees and administrative orders) relating to public health
and safety and protection of the environment.
1.22. "ERISA" means the federal Employee Retirement Income Security
Act of 1974.
1.23. "ERISA Group", with respect to any entity, means any Person
which is a member of the same "controlled group" or under "common control",
within the meaning of section 414(b) or (c) of the Code or section 4001(b)(1) of
ERISA, with such entity.
1.24. "Exchange Act" means the federal Securities Exchange Act of
1934.
1.25. "GAAP" means generally accepted accounting principles,
promulgated by the Financial Accounting Standards Board as in effect from time
to time, applied on a basis consistent with that used in preparation of the
financial statements referred to in Section 4.4.
1.26. "Hazardous Material" is defined in Section 5.13.
1.27. "Highland" means Highland Capital Partners V Limited
Partnership, a Delaware limited partnership, Highland Capital Partners V-B
Limited Partnership, a Delaware
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limited partnership, and Highland Entrepreneurs' Fund V Limited Partnership, a
Delaware limited partnership.
1.28. "Highland Holders" means holders of Investor Securities
originally issued to Highland or issued upon conversion, exercise, transfer or
exchange of Investor Securities originally issued to Highland.
1.29. "Initial Closing" is defined in Section 2.3
1.30. "Initial Closing Date" is defined in Section 2.3
1.31. "Intellectual Property" means all patents and patent rights,
trademarks and trademark rights, trade names and trade name rights, service
marks and service xxxx rights, service names and service name rights, brand
names, inventions, processes, formulae, copyrights and copyright rights, trade
dress, business and product names, logos, slogans, trade secrets, industrial
models, designs, methodologies, data bases and computer programs (including all
source codes) and related documentation, technical information, manufacturing,
engineering and technical drawings, know-how and all pending applications for
and registration of patents, trademarks, service marks and copyrights.
1.32. "Investment" means, with respect to any entity or business,
(a) the acquisition for value of any share of capital stock, evidence of
Indebtedness or other security issued issued by such entity or business, (b) any
loan, advance, or extension of credit to, or contribution to the capital of, or
on behalf of such en or business, (c) any purchase or commitment to purchase
assets on behalf of such entity or business, (d) payment of any expenses,
obligations or liabilities on behalf of such entity or business whether or not
incurred in the ordinary course of business (including the payment of
obligations under leases and contracts to the extent the benefits of such leases
or contracts are enjoyed by such entity or business and (e) salaries and
benefits of and other expenses relating to employees performing services on
behalf of such entity or business, including benefits and advances to employees
for travel expenses, drawing accounts and similar expenditures.
1.33. "Investor Agreements" means this Agreement, the Certificate of
Designation, the Stockholders Agreement, the Registration Rights Agreement, any
other agreement or instrument entered into between the Company and the Investors
in connection with the transactions contemplated hereby and any amendment or
modification to any of the foregoing.
1.34. "Investor Indemnitees" is defined in Section 8.2.1.
1.35. "Investor Securities" is defined in Section 2.1.
1.36. "Investors" means the holders of Investor Securities, the
original holders of which are listed in Exhibit 1.
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1.37. "IPO" means the initial closing of the first registered,
underwritten public offering of equity securities of the Company on Form S-1 or
any successor form.
1.38. "Legal Requirement" means any federal, state, local or foreign
law, statute, ordinance, code, order, rule, regulation or any final order,
judgment or decree of any court, arbitrator, tribunal or governmental authority,
or any license, franchise, permit or similar right granted under any of the
foregoing.
1.39. "Lien" means (a) any mortgage, pledge, lien, charge, security
interest or other similar encumbrance upon any property or assets of any
character, or upon the income or profits therefrom; or (b) any conditional sale
or other title retention agreement or similar arrangement (including a
capitalized lease); or (c) any sale, assignment, pledge or other transfer for
security of any accounts, general intangibles or chattel paper, with or without
recourse.
1.40. "Margin Stock" means "margin stock" within the meaning of any
regulation, interpretation or ruling of the Board of Governors of the Federal
Reserve System, all as from time to time in effect.
1.41. "Material Adverse Effect" means a material adverse effect upon
the business, assets, financial condition, income or prospects of the Company
and its Subsidiaries on a Consolidated basis.
1.42. "Material Agreements" is defined in Section 5.1.
1.43. "Members of the Immediate Family," as applied to any
individual, means each parent, spouse, child, brother, sister or the spouse of a
child, brother or sister of the individual, and each trust or family limited
partnership created for the benefit of one or more of such persons.
1.44. "Pension Plan" means each pension plan (as defined in section
3(2) of ERISA) established or maintained, or to which contributions are or were
made, by the Company or any of its Subsidiaries or former Subsidiaries, or any
Person which is a member of the same ERISA Group with any of the foregoing.
1.45. "Person" means an individual, partnership, corporation,
company, association, trust, joint venture, unincorporated organization,
business trust, limited liability company and any governmental department or
agency or political subdivision.
1.46. "Powertrust Adjustment Event" is defined in Section 6.7.3.
1.47. "Preferred Director" is defined in Section 4 of the
Stockholders Agreement.
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1.48. "Preferred Stock" means the Series B Preferred Stock, the
Series C Preferred Stock and the Series D Preferred Stock.
1.49. "Principal Holder" means each original holder of Series D
Preferred Stock set forth on Exhibit 1 (and their Affiliates) so long as it
holds Investor Securities having an aggregate initial purchase price of at least
$6,000,000 and, for purposes only of Section 6.1.1, SAP Investments, Inc. so
long as it holds any Investor Securities.
1.50. "Qualified Public Offering" is defined in section 7.2 of the
Certificate of Designation.
1.51. "Registration Rights Agreement" is defined in Section 3.1.
1.52. "Required Holders" means the holders at the relevant time
(excluding the Company or any of its Subsidiaries) of at least a majority of the
voting power of all classes and types of Investor Securities (calculated to give
pro forma effect to the conversion of all Series D Preferred Stock), voting
together as a single class.
1.53. "Remedy Event" is defined in section 7 of the Certificate of
Designation.
1.54. "Second Closing" is defined in Section 2.4
1.55. "Second Closing Date" is defined in Section 2.4.
1.56. "Securities Act" means the federal Securities Act of 1933.
1.57. "Series B Preferred Stock" means the Series B Convertible
Preferred Stock, par value $0.01 per share of the Company.
1.58. "Series C Preferred Stock" means the Series C Convertible
Preferred Stock, par value $0.01 per share, of the Company.
1.59. "Series D Preferred Stock" means the Series D Redeemable
Convertible Preferred Stock, par value $0.01 per share, of the Company.
1.60. "Spin-Off" means with respect to any entity or business, the
distribution to the holders of capital stock of the Company of the equity
interests of such entity or assets comprising such business such that,
immediately after such distribution, such entity or business (or the assets and
liabilities relating thereto) would not be required to be disclosed on a balance
sheet of the Company in any manner (whether prepared on a consolidated basis or
otherwise) and the Company shall have no obligation to make any Investment in or
have any other obligation or liability with respect to, such entity or business
on or after the date of such Spin-Off, including payment of salaries and
benefits of employees performing services on behalf of such entity or
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business, obligations under contracts relating to or benefitting such entity or
business (e.g., payment of rent for office space or other real estate used by
such entity or business, and any trade payables or other current liabilities in
respect of goods, services or assets benefitting such entity or business, but
specifically excluding and permitting an administrative services agreement and
tax allocation agreement in customary form on arm's length terms approved by the
Board of Directors of the Company, including the Preferred Directors whose
approval will not be unreasonably withheld.
1.61. "Stockholders Agreement" is defined in Section 3.1.
1.62. "Stockholders' Equity" means, at any date, stockholders'
equity of the Company and its Subsidiaries determined in accordance with GAAP on
a Consolidated basis, excluding the effect of any foreign currency translation
adjustments.
1.63. "Stock Option Plans" is defined in Section 5.1.1.
1.64. "Subsidiary" means any Person of which the Company or other
specified Person now or hereafter shall at the time (a) own directly or
indirectly through a Subsidiary at least 50% of the outstanding capital stock
(or other shares of beneficial interest) entitled to vote generally or (b)
constitute a general partner.
1.65. "Welfare Plan" means each welfare plan as defined in section
3(1) of ERISA established or maintained, or to which any contributions are or
were made, by the Company or any of its Subsidiaries or any Person which is a
member of the same ERISA Group with any of the foregoing.
1.66. "WPC" means Weston Presidio Capital III, L.P., a Delaware
limited partnership, and Weston Presidio Entrepreneur Fund, L.P., a Delaware
limited partnership.
1.67. "WPC Holders" means holders of Investor Securities originally
issued to WPC or Investor Securities issued upon conversion, exercise, transfer
or exchange of Investor Securities originally issued to WPC.
2. SALE AND PURCHASE OF SECURITIES.
2.1. Investor Securities. The Series D Preferred Stock being
purchased by the Investors hereunder, together with any securities issued with
respect thereto, upon exercise, conversion or transfer thereof or in exchange
therefor, including the Common Stock issuable upon conversion of the Series D
Preferred Stock, are collectively referred to as "Investor Securities";
provided, however, that once any such securities have been sold in a public
offering or pursuant to Rule 144 promulgated under the Securities Act, they
shall cease to be Investor Securities for all purposes of this Agreement. The
powers, preferences and rights of the Series D Preferred Stock are set forth in
the Company's Charter as amended through the date hereof,
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including the Certificate of Designation, Preferences and Rights for the Series
D Preferred Stock in the form set forth in Exhibit 2.1 (the "Certificate of
Designation").
2.2. Agreement to Sell and Purchase. In reliance on the Investors'
representations and warranties contained in Section 7, and subject to all of the
terms and conditions hereof, the Company agrees to issue and sell to the
Investors and, subject to all of the terms and conditions hereof and in reliance
on the representations and warranties of the Company set forth or referred to
herein, the Investors severally, and not jointly or jointly and severally, agree
to purchase at the Closing the Investor Securities specified in Exhibit 1 for
each Investor at the purchase price, payable by wire transfer of immediately
available funds, so specified in such Exhibit. The Company shall have the right
to terminate this Agreement at the Closing without recourse or liability if the
total purchase price set forth in Exhibit 1 is not delivered at the Closing for
any reason.
2.3. Closing. The initial closing of the purchase and sale of
Investor Securities (the "Initial Closing") shall take place in Reston, Virginia
at the offices of Digital Commerce Corporation on March 13, 2000 (the "Initial
Closing Date") or at such other place and on such other date as the Company and
the Investors may agree upon. At the Initial Closing, the Company will deliver
to the Investors certificates evidencing the respective Investor Securities set
forth in Exhibit 1 for the Initial Closing against payment of the purchase price
therefor.
2.4. Second Closing. The second closing of the purchase and sale of
Investor Securities (the "Second Closing") shall take place in Boston,
Massachusetts at the offices of Ropes & Xxxx on or after March 22, 2000 (the
"Second Closing Date") or at such other time and place as the Company and the
Investors in the Second Closing may agree upon. At the Second Closing, the
Company will deliver to the Investors certificates evidencing the respective
Investor Securities set forth in Exhibit 1 for the Second Closing against
payment of the purchase price therefor (it being understood that the amount of
Investors Securities to be purchased at the Second Closing shall be either
$18,000,000 in the event CMGI, Inc. purchases Investor Securities at the Second
Closing or $3,500,000 in the event CMGI, Inc. does not purchase Investor
Securities at the Second Closing). The Initial Closing and the Second Closing
are referred to collectively as the "Closings" and the Initial Closing Date and
the Second Closing Date are referred to collectively as the "Closing Dates."
2.5. Use of Proceeds. The Company covenants that it will apply the
cash proceeds from the sale of the Investor Securities solely for the following
lawful purposes: (a) transaction costs and (b) working capital and capital
expenditures as provided for in the Company's business plan, approved from time
to time by the Board. No portion of such proceeds will be used to acquire or
maintain Margin Stock.
3. CONDITIONS TO PURCHASE. The Investors' several obligations to purchase
the Investor Securities pursuant to this Agreement on the Closing Date are
subject to the satisfaction, on or prior to each Closing Date, of the following
conditions:
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3.1. Investor Agreements. The Company and its stockholders (other
than the Investors) party thereto shall have duly authorized, executed and
delivered to the Investors the following agreements:
(a) Stockholders Agreement dated as of the Initial Closing
Date among the Company, the Investors and certain other stockholders of
the Company (as from time to time in effect, the "Stockholders
Agreement").
(b) Registration Rights Agreement dated as of the Initial
Closing Date among the Company, the Investors and certain other
stockholders of the Company (as from time to time in effect, the
"Registration Rights Agreement").
3.2. Investor Securities. The Company shall have issued to the
Investors shown on Exhibit 1 the number of shares of Series D Preferred Stock
shown opposite their names in Exhibit 1 for the aggregate consideration as shown
in Exhibit 1.
3.3. Legal Opinion. On each Closing Date, the Investors shall have
received from Xxxxxxxx Xxxxxxxx & Xxxxxx P.C., counsel to the Company and its
Subsidiaries, their opinion in substantially the form of Exhibit 3.3.
3.4. Representations and Warranties; Officer's Certificate. The
representations and warranties of the Company contained herein shall be true and
correct on and as of each Closing Date with the same force and effect as though
originally made on and as of such Closing Date; between the Balance Sheet Date
and the Closing Date, no Material Adverse Effect shall have occurred (in the
judgment of the Required Holders); the Company shall have performed all
obligations required to be performed by it under the Investor Agreements and the
Material Agreements; and the Investors shall have received on such Closing Date
a certificate to these effects signed by the President or Chief Financial
Officer of the Company.
3.5. Key Executive Insurance. The Company will have in full force
and effect as the owner thereof on each Closing Date a key executive life
insurance policy with a financially sound and reputable insurer in the aggregate
amount of $3,000,000 covering the life of Xxxx Xxxxxx, the proceeds of which
shall be payable to the Company. Such policy shall not be cancelable without at
least 30 days' written notice from the insurer to WPC.
3.6. Legality; Governmental Authorization. The purchase of the
Investor Securities shall not be prohibited by any law or governmental order or
regulation, and shall not subject the Investors to any penalty or tax (other
than a penalty or tax that has been reimbursed by the Company). All necessary
consents, approvals, licenses, permits, orders and authorizations of, or
registrations, declarations or filings with, any governmental or administrative
agency or of any other Person, if any, with respect to any of the transactions
contemplated by this Agreement
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or the other Investor Agreements, the absence of which could have a Material
Adverse Effect, shall have been duly obtained or made and shall be in full force
and effect.
3.7. Amendment of Certificate of Incorporation; Series B and C Notes.
The Certificate of Incorporation of the Company shall have been amended as
provided for in Exhibit 3.7A and all issued and outstanding Series B and C Notes
shall have been paid in full or shall have been converted into Series B
Preferred Stock or Series C Preferred Stock, as applicable, having the powers,
rights and preference set forth in the amended Certificate of Designation
attached hereto as Exhibit 3.7B.
3.8. General. All instruments and legal and corporate proceedings in
connection with the transactions contemplated by this Agreement, the other
Investor Agreements and the Material Agreements shall be reasonably satisfactory
in form and substance to the Required Holders, and the Investors shall have
received copies of all documents, including records of corporate proceedings and
officers certificates, which the Required Holders may have reasonably requested
in connection therewith.
4. CONDITIONS TO COMPANY'S OBLIGATIONS. The Company's obligations pursuant
to this Agreement on each Closing Date are subject to the satisfaction, on or
prior to such Closing Date, of the following conditions:
4.1. Representations and Warranties. The representations and warranties
of each of the Investors contained herein shall be true and correct on and as of
such Closing Date with the same force and effect as though originally made on
and as of such Closing Date; and each of the Investors shall have performed all
obligations required to be performed by each of them under the Investor
Agreements.
4.2. Legality, Governmental Authorization. The purchase of the Investor
Securities shall not be prohibited by any law or governmental order or
regulation applicable to the Investors. The Investors shall have obtained or
made all necessary consents, approvals, licenses, permits, orders and
authorizations of, or registrations, declarations or filings with, any
governmental or administrative agency or of any other Person, if any, with
respect to any of the transactions contemplated by this Agreement or the other
Investor Agreements.
5. REPRESENTATIONS AND WARRANTIES. In order to induce the Investors to
enter into this Agreement and to purchase the Investor Securities hereunder, the
Company represents and warrants to the Investors as follows:
5.1. Material Agreements. The Company has furnished to the
Investors correct and complete copies of the documents listed below, all of
which have been executed on or prior to the date hereof and any amendments
thereto, modifications thereof or waivers granted thereunder. The documents
listed below are referred to collectively as the "Material Agreements".
References to any of the Material Agreements mean the Material Agreements in
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the form so furnished to the Investors, without regard to any amendment,
modification, waiver or termination of such document which is made or otherwise
becomes effective after the date hereof, and shall include other documents,
exhibits and schedules which are attached thereto or incorporated therein by
reference:
5.1.1. The Executive Retention Plan, the 1998 Stock Option
Plan, the 1996 Stock Option Plan and the related forms of stock option
agreements in substantially the forms attached to Section 5.1.1 of the
Disclosure Letter (the "Stock Option Plans"), indicating the allocation
of a total of 6,477,847 shares of Common Stock to be reserved for
options to be granted to outside directors, directors selected by the
Company's management (which directors are not also employees or
officers of the Company), officers, executives or other employees
approved by the Board of Directors.
5.1.2. Employment Agreements and non-competition agreements
dated on or about the date hereof between the Company and each of the
employees listed on Section 5.1.2 of the Disclosure Letter of this
Agreement.
Other than customary subscription agreements with respect to the
issuance of shares of Common Stock to the stockholders listed in Section 5.3.1
of the Disclosure Letter or as otherwise set forth in Section 5.3.1 of the
Disclosure Letter, neither the Company nor any of its Subsidiaries is a party to
or bound by any agreement or understanding affecting the capital stock of the
Company or its Subsidiaries or the voting thereof which is not a Material
Agreement or an Investor Agreement or specifically contemplated by or referred
to in the Material Agreements or the Investor Agreements.
5.2. Organization and Subsidiaries; Business.
5.2.1. The Company. The Company is a duly organized and
validly existing corporation in good standing under the laws of
Delaware. The Company has all necessary corporate power and authority
to enter into and perform this Agreement and the other Investor
Agreements and Material Agreements to which it is party, to issue and
sell the Investor Securities to be issued and sold by it hereunder, and
to carry on the businesses now conducted or presently proposed to be
conducted by it. The Company has taken all corporate action necessary
to authorize the Investor Agreements and Material Agreements to which
it is party and the issuance of the Investor Securities to be issued
and sold by it hereunder. The Investor Agreements and Material
Agreements to which the Company is party and the Investor Securities to
be issued and sold by the Company hereunder have been duly executed and
delivered by the Company and are the legal, valid and binding
obligations of the Company, enforceable in accordance with their
respective terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally, and
(ii) as
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limited by equitable principles which may affect the availability of
specific performance, injunctive relief or other equitable remedies.
5.2.2. Subsidiaries. The Company does not own or control,
directly or indirectly, or have an interest in, any other corporation,
partnership, association or business entity, except for the
corporations, limited liability companies, partnerships or joint
ventures described in Section 5.2.2 of the Disclosure Letter.
5.3. Capitalization.
5.3.1. Capital Stock of the Company. The authorized capital
stock of the Company is set forth in Section 5.3.1 of the Disclosure
Letter. On the Closing Date, after giving effect to the issuance of the
Investor Securities and the consummation of the transactions
contemplated by the Investor Agreements, the Company will have no
outstanding capital stock except for the shares of Common Stock and
Preferred Stock owned beneficially and of record as set forth in
Section 5.3.1 of the Disclosure Letter, all of which will be validly
issued, fully paid, nonassessable and, to the best knowledge of the
Company, subject to no lien or restriction on transfer, except
restrictions on transfer imposed by the Investor Agreements and
applicable securities laws or as otherwise set forth in Section 5.3.1
of the Disclosure Letter.
5.3.2. Options, etc. Other than as set forth in Section 5.3.2
of the Disclosure Letter, or in the Investor Agreements or Material
Agreements, the Company does not have outstanding (a) any rights
(either preemptive or otherwise) or options to subscribe for or
purchase, or any warrants or other agreements providing for or
requiring the issuance of, any capital stock or any securities
convertible into or exchangeable for its capital stock, (b) any
obligation to repurchase or otherwise acquire or retire any of its
capital stock, any securities convertible into or exchangeable for its
capital stock or any rights, options or warrants with respect thereto,
(c) any rights to require the Company to register the offering of any
of its securities under the Securities Act or (d) any restrictions on
voting any of the Company's securities.
5.3.3. Capital Stock of the Subsidiaries. The authorized
capital stock of each Subsidiary of the Company is set forth in Section
5.3.3 of the Disclosure Letter. Except as set forth in Section 5.3.3 of
the Disclosure Letter, each such Subsidiary has no outstanding capital
stock except for shares of capital stock owned beneficially and of
record by the Company, all of which will be validly issued, fully paid,
nonassessable and subject to no lien or restriction on transfer, except
restrictions on transfer imposed by the Investor Agreements, the
Material Agreements and applicable securities laws and Liens.
5.3.4. Subsidiary Options, etc. Except as set forth in Section
5.3.4 of the Disclosure Letter, none of the Company's Subsidiaries has
outstanding (a) any rights
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(either preemptive or otherwise) or options to subscribe for or
purchase, or any warrants or other agreements providing for or
requiring the issuance of, any capital stock or any securities
convertible into or exchangeable for its capital stock, (b) any
obligation to repurchase or otherwise acquire or retire any of its
capital stock, any securities convertible into or exchangeable for its
capital stock or any rights, options or warrants with respect thereto,
(c) any rights to require the Subsidiary to register the offering of
any of its securities under the Securities Act or (d) any restrictions
on voting any of the Subsidiary's securities.
5.4. Reports, Financial Statements and Other Documents. The
Investors have been furnished with complete and correct copies of the following:
(a) Unaudited Consolidated balance sheet (the "Balance Sheet")
of the Company and its Subsidiaries as of December 31, 1999 (the
"Balance Sheet Date"), together with the related statements of income,
cash flows and stockholders' equity for the year then ended.
(b) Unaudited Consolidated balance sheet of the Company and
its Subsidiaries as of January 31, 2000, together with the related
statement of income for the one-month period then ended.
The financial statements referred to in clauses (a) and (b) above have
been prepared in accordance with GAAP and fairly present the financial condition
of the Company and its Subsidiaries at the dates thereof and the results of
their operations for the periods covered thereby, subject to normal year-end
adjustments and the addition of footnotes in the case of the financial
statements referred to in clause (b) above. Except as set forth in Section 5.4
of the Disclosure Letter, neither the Company nor any of its Subsidiaries has
any material liabilities, contingent or otherwise, which are not referred to in
the Balance Sheet.
5.5. Changes in Condition. Since the Balance Sheet Date:
5.5.1. Material Adverse Effect. No Material Adverse Effect has
occurred.
5.5.2. Extraordinary Transactions, etc. Except as set forth in
Section 5.5.2 of the Disclosure Letter, neither the Company nor any of
its Subsidiaries has (a) declared any dividend or other distribution on
any shares of its capital stock, (b) made any payment (other than
compensation of its directors, officers and employees at rates in
effect prior to the Balance Sheet Date or for bonuses accrued in
accordance with normal practice prior to the Balance Sheet Date) to
any of its Affiliates, (c) increased the compensation, including
bonuses and benefits, payable or to be payable to any of its
directors, officers, employees or Affiliates by more than 10%, or (d)
entered into any Contractual Obligation, or entered into or performed
any other transaction, not in
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the ordinary and usual course of business and consistent with
past practice, other than as specifically contemplated by this
Agreement.
5.6. Solvency. After giving effect to the financing contemplated
hereby, the Company is solvent (within the meaning contemplated by section 548
of Title 11 of the United States Code and any similar state statutes which may
be applicable).
5.7. Taxes. Except as set forth in Section 5.7 of the Disclosure
Letter, since March 1, 1995, each of the Company and its Subsidiaries has filed
all material tax returns and other tax information which are required to be
filed by it and has paid, or made adequate provision for the payment of, all
taxes which have or may become due pursuant to such returns or information or to
any assessment received by it. Neither the Company nor any of its Subsidiaries
has knowledge of any material additional assessments or any basis therefor. The
Company reasonably believes that the charges, accruals and reserves on the
Balance Sheet in respect of taxes or other governmental charges are adequate.
5.8. Contractual Obligations, etc.
5.8.1. Certain Contracts. Section 5.8 of the Disclosure Letter
contains, together with a reference to the subparagraph pursuant to
which each item is being disclosed, a correct and complete list of all
material Contractual Obligations of the Company and its Subsidiaries of
the types described below:
(a) All collective bargaining agreements; all
employment, profit sharing, profit participation, deferred
compensation, bonus, stock option, stock purchase, pension,
retainer, consulting, retirement, welfare or incentive plans
or agreements; and all plans, agreements or practices which
constitute "fringe benefits" to any of the employees of the
Company or its Subsidiaries, including vacation programs, sick
leave programs, group medical insurance, group life insurance,
disability insurance and related benefits.
(b) All Contractual Obligations under which the
Company or its Subsidiaries are restricted from carrying on
any business, venture or other activities anywhere in the
world.
(c) All Contractual Obligations (including options)
to sell or lease (as lessor) any of the properties or assets
of the Company or its Subsidiaries except in the ordinary
course of business.
(d) All Contractual Obligations pursuant to which the
Company or its Subsidiaries guarantees any liability of any
Person, or pursuant to which any Person guarantees any
liability of the Company or its Subsidiaries.
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(e) All Contractual Obligations with any Affiliate of
the Company or its Subsidiaries.
(f) All Contractual Obligations constituting license
agreements.
(g) All Contractual Obligations under which the
Company or any of its Subsidiaries leases real property or is
obligated to lease or purchase real property.
(h) All Contractual Obligations of the Company or any
of its Subsidiaries relating to the borrowing of money or to
the mortgaging or pledging of, or otherwise placing a lien on,
any asset of the Company or any of its Subsidiaries (except
liens imposed by operation of law in favor of landlords,
suppliers, mechanics or others who provide services to the
Company).
(i) All Contractual Obligations pursuant to which the
Company or any of its Subsidiaries is committed to acquire a
business or the stock (or other equity interests) of any
Person or to merge or consolidate with any Person.
5.8.2. Nature of Contracts. All of the material Contractual
Obligations of the Company and its Subsidiaries at the Closing are
enforceable against the Company and, to its knowledge, the other
parties thereto in accordance with their terms, except for Contractual
Obligations the failure of which to be so enforceable has not resulted
in and will not result in a Material Adverse Effect. To the Company's
knowledge, neither the Company nor any of its Subsidiaries is now in
default under, nor are there any liabilities arising from any breach or
default by any Person prior to the date hereof of, any provision of any
such Contractual Obligation other than breaches or defaults which,
individually or in the aggregate, have not resulted, and are not
reasonably likely to result, in a Material Adverse Effect.
5.8.3. Charter or By-Laws. Neither the Company nor any of its
Subsidiaries is in violation of, or in default under, any provision of
its Charter or By-Laws, other than violations or breaches which,
individually or in the aggregate, have not resulted in and will not
result in a Material Adverse Effect and the Investors have been
furnished with copies of such Charter and By-Laws.
5.8.4. Insurance. Each of the Company and its Subsidiaries has
insurance policies in full force and effect, written by reputable
insurers licensed to write insurance in the states in which the Company
and its Subsidiaries conduct their business, which insurance contracts
provide for coverages which are customary in their respective
businesses as to amount and scope.
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5.8.5. Transactions with Affiliates. Other than as set forth
in Section 5.8 of the Disclosure Letter, no Affiliate of the Company or
its Subsidiaries is a competitor, customer or supplier of, or is party
to any material Contractual Obligation with, the Company or any of its
Subsidiaries.
5.9. Litigation. Except as set forth in Section 5.9 of the
Disclosure Letter, no litigation or proceeding before, or investigation by, any
foreign, federal, state or municipal board or other governmental or
administrative agency or any arbitrator, is pending or to the knowledge of the
Company threatened (or to the knowledge of the Company does any basis exist
therefor), against the Company or its Subsidiaries or, to the Company's
knowledge, any officer of the Company or its Subsidiaries, which in the
aggregate could result in any material liability or which may otherwise result
in a Material Adverse Effect, or which seeks rescission of, seeks to enjoin the
consummation of, or which questions the validity of, this Agreement or any other
Investor Agreement or any of the transactions contemplated hereby or thereby.
Neither the Company nor its Subsidiaries has been charged, nor to the Company's
knowledge is it threatened to be charged, with infringement of any trademark,
trade name, service xxxx, copyright, patent, patent right or other proprietary
right of any Person.
5.10. Violation of Other Instruments. Neither the execution and
delivery of this Agreement or any other Investor Agreement by the Company or its
Subsidiaries party thereto, nor the consummation of any of the transactions
contemplated hereby or thereby, will (a) constitute a breach of or a default
under any Contractual Obligation of the Company or any of its Subsidiaries or,
to the actual knowledge of the Company's Chief Executive Officer and Chief
Financial Officer, any officer of the Company or its Subsidiaries, (b) result in
acceleration in the time for performance of any obligation of the Company or any
of its Subsidiaries under any such Contractual Obligation, (c) result in the
creation of any Lien upon any asset of the Company or any of its Subsidiaries,
(d) require any consent, waiver or amendment to any such Contractual Obligation
that has not been obtained, (e) give rise to any severance payment, right of
termination, securities repurchase right or other right under any such
Contractual Obligation, or (f) violate or give rise to a default under any Legal
Requirement, except for events or conditions described in clauses (a) through
(f) above which will not in the aggregate be reasonably likely to result in a
Material Adverse Effect.
5.11. Consents. No approval, consent, authorization or other order
of, and no declaration, filing, registration, qualification or recording with,
any governmental authority or any other Person is required to be made by or on
behalf of the Company or any of its Subsidiaries in connection with the
execution, delivery or performance of this Agreement or any other Investor
Agreement, or any of the transactions contemplated hereby or thereby, other than
filings described in Section 5.11 of the Disclosure Letter.
5.12. Operations in Conformity With Law, etc. The operations of the
Company and its Subsidiaries as now conducted are not in violation of, nor is
the Company or any of its
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Subsidiaries in default under, any Legal Requirements presently in effect,
except for such violations and defaults as do not and will not, in the
aggregate, have a Material Adverse Effect. The Company has received no notice of
any such violation or default and has no knowledge of any basis on which the
operations of the Company or its Subsidiaries, when conducted as currently
proposed to be conducted after the Closing Date, would be held so as to violate
or to give rise to any such violation or default. The Company and its
Subsidiaries have all franchises, licenses, permits or other authority presently
necessary for the conduct of their business as now conducted, except where the
failure to obtain such franchises, licenses, permits or authority has not had
nor would be reasonably likely to result in a Material Adverse Effect. Based on
the facts presently known to the Company, all future expenditures on the part of
the Company or its Subsidiaries required to meet the provisions of any presently
existing Legal Requirement (including Legal Requirements relating to employment
practices or to occupational or health standards or to environmental
considerations) will not, in the aggregate, have a Material Adverse Effect.
5.13. Environmental Matters. Each of the Company and its
Subsidiaries is in compliance in all material respects with all applicable
published rules and regulations of the United States Environmental Protection
Agency and similar agencies in states in which the Company or its Subsidiaries
conducts its business. No suit, claim, action or proceeding is now pending
before any court, governmental agency or board or other forum or threatened by
any Person for, and the Company and its Subsidiaries have received no written
correspondence from any federal, state or local governmental authority with
respect to, (a) noncompliance by the Company or its Subsidiaries with any
environmental law, rule or regulation, (b) personal injury, wrongful death or
other tortious conduct relating to materials, commodities or products used,
sold, transferred or manufactured by the Company or its Subsidiaries (including
products containing or incorporating asbestos, lead or other hazardous
materials) or (c) the release into the environment by the Company or its
Subsidiaries of any pollutant, toxic or hazardous material or waste (including
any "hazardous substance" or "pollutant" or "contaminant" as defined in section
101(14) of the Comprehensive Environmental Response, Compensation and Liability
Act, as amended) (collectively, "Hazardous Material") generated by the Company
or its Subsidiaries whether or not occurring at or on a site owned, leased or
operated by the Company or its Subsidiaries. Section 5.13 of the Disclosure
Letter lists all waste disposal or dump sites, if any, at which any material
amount of Hazardous Material generated by either the Company or its Subsidiaries
have been disposed of or finally came to be located or lists the hauler who has
taken such Hazardous Material from the Company for disposal, indicates all such
sites which have been included (including as a potential or suspect site) in any
published federal, state or local "superfund" or other list of hazardous or
toxic waste sites and lists any material amount of Hazardous Material present at
the Company's or any of its Subsidiaries' facilities. To the Company's
knowledge, but without having conducted special boring or drilling, no material
amount of Hazardous Material is present in any real property currently or
formerly owned or leased by it or its Subsidiaries.
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5.14. ERISA Matters. Section 5.14 of the Disclosure Letter sets
forth a complete list of all Employee Benefit Plans and all Welfare Plans
applicable to the Company's and its Subsidiaries' employees. To the knowledge of
the Company, each Employee Benefit Plan and Welfare Plan has been administered
in substantial compliance with its terms and all applicable laws, including, the
Code and ERISA, to the extent that failure to do so would have a Material
Adverse Effect. The Company and its Subsidiaries have no obligation under any
Welfare Plan to provide for the continuation of benefits (other than disability
payments and medical benefits incurred for illness arising in the course of
employment) for more than one year after retirement or other termination of
employment, except as may be required pursuant to Code section 4980B regarding
continuation coverage of health insurance or other similar laws regarding such
continuation coverage. No "reportable events" within the meaning of section 4043
of ERISA have occurred with respect to any Employee Benefit Plan. No Pension
Plan is a "multiemployer plan" as defined in ERISA. The present value of
benefits liabilities as described in Title IV of ERISA of Employee Benefit Plans
does not exceed the current value of such Employee Benefit Plans assets
allocable to such benefits liabilities by more than $100,000, determined using
actuarial methods and assumptions consistently applied in the ongoing
administration of each such Employee Benefit Plan.
5.15. Intellectual Property. Except as set forth in Section 5.15 of
the Disclosure Letter, all protectable Intellectual Property rights of the
Company which are, individually or in the aggregate, material to the Company and
its Subsidiaries are valid and subsisting and are in full force and effect and
enforceable. Except as set forth in Section 5.15 of the Disclosure Letter,
neither the Company nor its Subsidiaries is party to or bound by any order,
judgment, decree or stipulation which materially restricts the use or licenses
of any Intellectual Property. Except as set forth in Section 5.15 of the
Disclosure Letter, neither the Company nor its Subsidiaries has entered into any
material agreement to indemnify any other person or entity against any charge of
infringement of any patent, trademark, trade name, service xxxx, copyright or
trade secret. Except as set forth in Section 5.15 of the Disclosure Letter,
neither the Company nor its Subsidiaries is in breach of any license agreement,
except for such breaches as have not had and could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. To the
knowledge of the Company, the conduct of the business of the Company and its
Subsidiaries as presently conducted and as proposed to be conducted does not,
and will not, conflict with or infringe upon any Intellectual Property rights of
any other person.
5.16. Labor Relations. None of the employees of the Company or any
of its Subsidiaries is presently represented by a labor union, and, to the
Company's Knowledge, no petition has been filed or proceedings instituted by any
employee or group of employees with any labor relations board seeking
recognition of a bargaining representative. No controversies or disputes are
pending between the Company or any of its Subsidiaries and any of its employees,
except for such controversies and disputes as do not and will not, in the
aggregate, have a Material Adverse Effect.
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5.17. Filings, Broker's Fees, etc. Except as set forth in Section
5.17 of the Disclosure Letter, neither the Company nor any of its Subsidiaries
is obligated to pay any broker's fee, finder's fee, investment banker's fee or
other similar transaction fee in connection with any Investor Agreement or the
transactions contemplated hereby or thereby.
5.18. Governmental Regulation. Neither the Company nor its
Subsidiaries is subject to regulation under the Investment Company Act of 1940,
or subject to any statute or regulation which regulates the incurring of
indebtedness by the Company for borrowed money.
5.19. Margin Stock. Neither the Company nor its Subsidiaries owns
any Margin Stock.
5.20. Real Property Holding Corporation. Neither the Company nor its
Subsidiaries is a "United States real property holding corporation," as defined
in section 897(c)(2) of the Code and Treasury Regulation section 1.897-2(b).
5.21. Disclosure. To the best knowledge of the Company, neither this
Agreement, nor any agreement, certificate, statement or document furnished in
writing by or on behalf of the Company to the Investors in connection herewith
or therewith (other than the Company's Private Placement Memorandum, dated 1999)
contains any untrue statement of material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading in any material respect. To the best knowledge of the Company, the
Company's Private Placement Memorandum, dated 1999, as of the date of such
preparation, does not contain any untrue statement of material fact or omit to
state a material fact necessary in order to make the statements contained
therein not misleading in any material respect.
6. GENERAL COVENANTS. The Company covenants that, until the closing of a
Qualified Public Offering it will comply, and will cause each of its
Subsidiaries to comply, with the following provisions:
6.1. Covenants Relating to the Company's Board of Directors.
6.1.1. Board of Directors. The Board of Directors of the
Company (a) shall meet at least once each fiscal quarter and each
Principal Holder shall be notified at least 10 days in advance of such
meetings of the Board of Directors and each Principal Holder (other
than any such Principal Holder whom the Company has reasonably
determined at the time of any such meeting is a competitor of the
Company) shall have the right to have a representative attend all such
meetings in a nonvoting observer capacity, and (b) shall establish and
maintain an Audit Committee and a Compensation Committee, each of which
committees shall include as a member a Preferred Director.
6.1.2. Directors Expenses. The Company will pay all direct
out-of-pocket expenses reasonably incurred by any Preferred Director in
attending each meeting of
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the Board of Directors, or any committee thereof. All director fees and
incentives for directors who are not also employees or officers of the
Company shall be payable at the same rate.
6.1.3. Indemnity. The Company and each of its Subsidiaries
will adopt and maintain in their respective Charter or Bylaws
provisions indemnifying the directors of each such Person to the
fullest extent permitted by applicable law.
6.2. Information and Reports to be Furnished. The Company and its
Subsidiaries will maintain a system of accounting in which correct and complete
entries will be made of all dealings and transactions in relation to their
business and affairs in accordance with GAAP. Until a Qualified Public Offering
occurs (except as otherwise provided below), the Company will furnish the
following information to each holder of shares of Investor Securities holding
Investor Securities with an aggregate original purchase price of at least $2
million; provided, however, that the Company shall not be obligated to provide
to any such Principal Holder whom the Board reasonably determines is a
competitor of the Company any competitively sensitive information provided the
Company provides such Holder with written notice describing the nature of the
information not being disclosed:
6.2.1. Annual Statements. As soon as available, and in any
event within 120 days after the end of each fiscal year of the Company,
the audited Consolidated balance sheet of the Company and its
Subsidiaries as of the end of such fiscal year and the audited
Consolidated statements of income, stockholders' equity and cash flows
for such year of the Company and its Subsidiaries, together with the
consolidated figures for the preceding fiscal year, if any (all in
reasonable detail) such statements being accompanied by the reports
thereon of independent certified public accountants to the effect that
such consolidated financial statements have been prepared in accordance
with GAAP and present fairly in all material respects the financial
position of the Company and its Subsidiaries as of the dates specified
and the results of their operations and cash flows with respect to the
periods specified.
6.2.2. Quarterly Reports. As soon as available, and in any
event within 45 days after the end of each of the first three fiscal
quarters in each fiscal year of the Company, the unaudited Consolidated
balance sheets of the Company and its Subsidiaries as of the end of
such quarter and the Consolidated statements of income, stockholders'
equity and cash flows for such quarter and the portion of the fiscal
year then ended of the Company and its Subsidiaries, together with
comparative Consolidated figures for the corresponding periods of the
preceding fiscal year (all in reasonable detail).
6.2.3. Monthly Reports. As soon as practicable, and in any
event within 45 days after the end of each calendar month, the
financial statements of the Company
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and its Subsidiaries as of the end of such month in the form
customarily prepared by management for internal use.
6.2.4. Annual Budgets. Not later than the end of each fiscal
year of the Company a proposed month by month operating and capital
budget for the following fiscal year of the Company, including a
monthly balance sheet, projected cash flows, and a monthly profit and
loss statement.
6.2.5. Officers' Certificates. Together with delivery of
financial statements of the Company and its Subsidiaries pursuant to
Sections 6.2.1 and 6.2.2 above as of the end of each fiscal quarter of
the Company, a certificate of the Chief Executive Officer or the Chief
Financial Officer of the Company, that such statements have been
prepared in accordance with GAAP and present fairly in all material
respects the Consolidated financial position of the Company and its
Subsidiaries as of the dates specified and the Consolidated results of
their operations and cash flows with respect to the periods specified
(subject in the case of interim financial statements only to normal
year-end audit adjustments and the addition of footnotes).
6.2.6. Notice of Litigation, Defaults, etc. The Company will
promptly, and in any event within 10 days after the Company has
knowledge of such event, give written notice to each Principal Holder
of (a) any litigation or any administrative proceeding to which it or
any of its Subsidiaries may hereafter become a party which after giving
effect to applicable insurance is reasonably likely to result in a
charge against income in excess of $25,000, (b) any resignation of or
other change in executive management of the Company or any serious
illness of any member of such executive management, and (c) any offers
to purchase a majority (or greater) interest in the Company (whether by
means of purchase of securities or assets or otherwise). The Company
will promptly, and in any event within three days after any executive
officer of the Company or any of its Subsidiaries obtains knowledge of
any Remedy Event or material default by the Company under this
Agreement, any other Investor Agreement or any other Contractual
Obligation, furnish notice to each Principal Holder specifying the
nature of such Remedy Event or material default and stating the action
the Company has taken or proposes to take with respect thereto.
Promptly after the receipt thereof, the Company will furnish to each
Principal Holder copies of any reports as to inadequacies in accounting
controls submitted by independent accountants.
6.2.7. Notices under Material Agreements. Prior to an IPO, the
Company will furnish to the Principal Holders copies of all amendments,
modifications, notices of defaults, waivers and consents given to it or
to any of its Subsidiaries pursuant to any Material Agreement.
6.2.8. Information Provided to Stockholders. To the extent not
previously provided, within 10 days after its release to stockholders,
the Company will furnish the
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28
holders of Investor Securities with copies of all information, proxy
statements, notices, reports and other stockholder material mailed to
stockholders.
6.2.9. Other Information. From time to time prior to an IPO,
upon the reasonable request of any authorized officer of any Principal
Holder, the Company will furnish to any such authorized officer such
information regarding the business, assets or financial condition of
the Company and its Subsidiaries as such officer may reasonably
request. Each such officer shall have the right during normal business
hours at reasonable intervals and upon reasonable notice to examine the
books and records of the Company and its Subsidiaries, to make copies
and notes therefrom, and to make an independent examination of the
books and records of the Company and its Subsidiaries at the expense of
such Principal Holder and in a manner that does not interfere with the
business operations of the Company and its Subsidiaries. The Principal
Holders shall coordinate any visits under this Section 6.2.9 through
the Company's Chief Financial Officer so as to minimize the number of
separate visits by the respective Principal Holders.
6.2.10. Interview and Advisory Rights. For the purpose of
conducting independent investigations pursuant to Section 6.2.9, prior
to an IPO the Company shall make available to an authorized officer of
any Principal Holder upon reasonable notice and at reasonable times,
but no more often than quarterly, (a) the Chief Financial Officer or
the Chief Executive Officer of the Company, and (b) any other officers,
accountants and internal control personnel of the Company. The Company
shall use reasonable efforts to make available any directors of the
Company who are not officers. In addition, prior to an IPO the
Principal Holders shall be permitted to consult with and advise
management of the Company on significant business issues, including
proposed annual operating plans. The Principal Holders shall coordinate
any visits under this Section 6.2.10 through the Company's Chief
Financial Officer so as to minimize the number of separate visits by
the respective Principal Holders.
6.2.11. Annual Meeting. Within 90 days after the Company's
annual financial statements are required to be furnished in accordance
with Section 6.2.1 and on not less than 10 days prior written notice,
the Company will hold an annual meeting for the benefit of its
stockholders, including the holders of Investor Securities. At such
annual meeting the principal executive, financial and operations
officers of the Company and its Subsidiaries will present a review of,
and will discuss with those in attendance, in reasonable detail, the
general affairs, management, financial condition, results of operations
and business prospects of the Company and its Subsidiaries.
6.3. Merger, Consolidation and Sale of Assets. Without the consent
of the Required Holders, neither the Company nor any of its Subsidiaries will
become a party to or authorize any merger or consolidation, or sell, lease,
sublease or otherwise transfer or dispose of
-22-
29
all or substantially all of its assets, or enter into an agreement therefor, or
enter into or authorize any liquidation, dissolution or recapitalization, except
for:
6.3.1. The merger of a wholly owned Subsidiary of the Company
into the Company or another wholly owned Subsidiary of the Company.
6.3.2. Sales of inventory in the normal course of business.
6.3.3. Other transactions receiving the prior written approval
of the Required Investors.
For purposes of this Section "all or substantially all of if its
assets" shall mean assets having an aggregate fair market value of at least 50%
of the total assets of the Company and its Subsidiaries as of the Balance Sheet
Date or more which are sold, leased, subleased, transferred or disposed of after
the date hereof.
6.4. Stock Issuance, etc. Except with the prior written consent of
the Required Holders, neither the Company nor any Subsidiary will (a) issue,
sell, give away, transfer, assign or otherwise dispose of, (b) grant any rights
(either preemptive or other) or options to subscribe for or purchase, or (c)
enter into any agreements or issue any warrant providing for the issuance of any
of the capital stock of the Company or any stock or securities convertible into
or exchangeable for any of the capital stock of the Company having rights,
privileges and preferences pari passu or senior to the Series D Preferred Stock,
other than as specifically contemplated by the Investor Agreements or the
Material Agreements.
6.5. Transactions with Affiliates. Except for transactions
expressly contemplated by the Investor Agreements or with respect to
transactions to which the Required Holders have given their prior written
consent, neither the Company nor any of its Subsidiaries shall effect any
transaction with any Affiliate or any Member of the Immediate Family of such
Affiliate other than the Company or any wholly owned subsidiary of the
Company (except on terms no less favorable to the Company or any of its
Subsidiaries than it could obtain in an arm's-length transaction with an
unrelated party).
6.6. Closing Costs. The fee paid to Prudential Securities in
connection with the transactions contemplated by this Agreement shall not exceed
the amount calculated in accordance with the letter agreement between the
Company and Prudential Securities referred to in the Disclosure Letter and as
previously furnished to the Investors.
6.7. Subsidiaries Closures and Spin-offs.
6.7.1. Xxxxxx.xxx. Prior to the earlier of (a) May 15, 2000 or
(b) a Qualified Public Offering, the Company shall have discontinued
its Xxxxxx.xxx operations and moved all Xxxxxx.xxx personnel to its
other operations. From March 1, 2000 to the
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xxxxxxx xx (x) Xxx 00, 0000 xx (x) a Qualified Public Offering, the
Company shall invest no more than $50,000 in its Xxxxxx.xxx operations,
whether to fund operations or otherwise.
6.7.2. XxxxXxxxx.xxx, LLC. From March 1, 2000 to the earlier
of (a) May 15, 2000 or (b) a Qualified Public Offering, the Company
shall invest no more than $225,000 in its XxxxXxxxx.xxx, LLC
Subsidiary. Thereafter, the Company and its Subsidiaries shall make no
further investments in XxxxXxxxx.xxx, LLC and shall not contribute any
employee services, office space, equipment, intellectual property or
any other assets to XxxxXxxxx.xxx, LLC.
6.7.3. Xxxxxxxxxx.xxx, Inc. On or prior to the earlier of (a)
June 30, 2000 or (b) a Qualified Public Offering (the "Adjustment
Date"), the Company shall Spin- Off its Xxxxxxxxxx.xxx, Inc. Subsidiary
to its stockholders (including the Investors in respect of the Investor
Securities) on terms reasonably satisfactory to the Required Holders.
Prior to the Adjustment Date, the Company may make Investments in such
Subsidiary up to an aggregate of $1,800,000 between March 1, 2000 and
the Adjustment Date. If the Company has not accomplished the Spin-Off
of Xxxxxxxxxx.xxx, Inc. on or prior to the Adjustment Date or the
Company has made Investments in Xxxxxxxxxx.xxx, Inc. in excess of the
amount provided in the previous sentence (a "Powertrust Adjustment
Event"), then the Conversion Price shall be adjusted on the Adjustment
Date as provided for in section 7.4.2 of the Certificate of
Designation. Notwithstanding the foregoing adjustment, the Company
shall remain obligated to immediately Spin-Off Xxxxxxxxxx.xxx, Inc. and
in no event shall the Company make any further Investments in
Xxxxxxxxxx.xxx, Inc. after the Adjustment Date.
6.7.4. Specific Enforcement. Without limiting any other rights
under this Agreement or otherwise, the Investors shall have the right
to specifically enforce their rights under this Section 6.7.
6.8. Series A Notes Conversion. Prior to April 30, 2000 the Company
shall have repaid its outstanding Series A Notes in an aggregate principal
amount not to exceed $240,000 and shall convert or exchange any remaining
outstanding Series A Notes into Common Stock.
6.9. Employee Nondisclosure Agreements. From and after April 30,
2000 all employees of the Company shall be subject to nondisclosure, proprietary
information, inventions and nonsolicitation agreements in favor of the Company.
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7. INVESTOR REPRESENTATIONS; RESTRICTIONS ON TRANSFER.
7.1. Representations and Warranties of the Investors. In order to
induce the Company to enter into this Agreement and to sell the Investor
Securities hereunder, each of the Investors severally represents and warrants to
the Company that:
(a) It is an "accredited investor" for purposes of Regulation
D under the Securities Act and it is acquiring the Investor Securities
at the Closing for investment for its own account, and not with a view
to selling or otherwise distributing the Investor Securities in
violation of the Securities Act; provided, however, that nothing shall
prevent the Investors from transferring the Investor Securities in
compliance with this Section 7.
(b) It has sufficient knowledge and experience in investing in
companies similar to the Company in terms of the Company's stage of
development so as to be able to evaluate the risks and merits of its
investment in the Company and it is able financially to bear the risks
thereof.
(c) It has had an opportunity to discuss the Company's
business, management and financial affairs with the Company's
management and has received (or had made available to it) any financial
and business documents requested by it.
(d) It understands that (i) the Investor Securities purchased
by it have not been registered under the Securities Act by reason of
their issuance in a transaction exempt from the registration
requirements of the Securities Act pursuant to section 4(2) thereof or
Rules 505 or 506 under the Securities Act, (ii) such Investor
Securities must be held indefinitely unless a subsequent disposition
thereof is registered under the Securities Act or is exempt from such
registration, (iii) such Investor Securities will bear a legend to such
effect and (iv) the Company will make a notation on its transfer books
to such effect.
(e) It has no contract, arrangement or understanding with any
broker, finder or similar agent with respect to the transactions
contemplated by this Agreement.
7.2. Home Office Payment. All payments made in respect of the
Investor Securities held by the Investors shall be paid by Company check or
wired to the address shown on Exhibit 1, accompanied by sufficient information
to identify the source and application thereof or by such other method or at
such other address as the Investors shall have from time to time given timely
notice of to the Company.
7.3. Replacement of Lost Securities. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any Investor Security and, in the case of any such loss, theft or
destruction, upon delivery of an indemnity bond in such reasonable amount as the
Company may determine (or, in the case of a security held by any Investor or any
institutional holder meeting the definition of qualified institutional buyer
under
-25-
32
Rule 144A promulgated under the Securities Act or by such Investor's or such
institutional holder's nominee, of an unsecured indemnity agreement from such
Investor or such other holder reasonably satisfactory to the Company) or, in the
case of any such mutilation, upon the surrender of the Investor Security for
cancellation to the Company at its principal office, the Company at its expense
will execute and deliver in lieu thereof a new security of like tenor. Any
Investor Security in lieu of which any such new security has been so executed
and delivered by the Company shall not be deemed to be outstanding for any
purpose.
7.4. Transfer, Exchange and Conversion of Investor Securities. The
Company shall keep at its principal office a register in which shall be entered
the names and addresses of the holders of the capital stock and other Investor
Securities of the Company and particulars of the respective shares of Common
Stock, Preferred Stock (including the classes thereof) and other Investor
Securities held by them and of all transfers, exchanges, conversions and
redemptions of such securities. Upon surrender at such office or such other
place as shall be duly specified by the Company of any certificate representing
shares of capital stock or instrument evidencing any other Investor Securities
for exchange, conversion or (subject to compliance with the applicable
provisions of this Agreement, including the conditions set forth in Section 7.5)
transfer, the Company shall as appropriate issue, at its expense, one or more
new certificates or instruments in such denomination or denominations as may be
requested, and registered as such holder may request. Any certificate
representing shares of capital stock or instrument evidencing any other Investor
Securities surrendered for transfer shall be duly endorsed, or accompanied by a
written instrument of transfer duly executed by the holder of such certificate
or instruments or an attorney duly authorized in writing.
7.5. Restrictions on Transfer. Investor Securities shall be
transferable only upon satisfaction of the applicable conditions specified in
this Section 7.5 or unless sold in an
offering registered under the Securities Act or pursuant to an exemption from
the registration requirements of the Securities Act.
7.5.1. Restrictive Legend. Except as otherwise permitted by
Section 7.5.3, each certificate or instrument representing Investor
Securities shall bear a legend in substantially the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or
under the securities laws of any state, and may not be sold,
or otherwise transferred, in the absence of such registration
or an exemption therefrom under such Act and under any such
applicable state laws. In addition, the shares represented by
this certificate are subject to restrictions on transfer
contained in a Securities Purchase Agreement dated as of March
13, 2000, a copy of which is available at the issuer's office
and will be furnished free of charge to the holder hereof."
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33
7.5.2. Notice of Proposed Transfer; Opinions of Counsel. Prior
to any transfer of any Investor Securities other than pursuant to an
effective registration statement under the Securities Act, the holder
thereof will give written notice to the Company of such holder's
intention to effect such transfer, describing in reasonable detail the
manner of the proposed transfer. If any such holder delivers to the
Company (a) an opinion of counsel in form and substance reasonably
acceptable to the Company addressed to the Company to the effect that
the proposed transfer may be effected without registration of such
Investor Securities under the Securities Act or applicable state
securities laws (or a certificate of an officer of such holder that the
transfer is being made to a wholly owned Subsidiary of the holder's
corporate parent) and (b) the written agreement of the proposed
transferee to be bound by all of the terms and conditions of this
Agreement (including this Section 7.5) applicable to the Investors,
such holder shall thereupon be entitled, within 10 days thereafter, to
transfer such Investor Securities in accordance with the terms of this
Agreement and the notice delivered by such holder to the Company. Each
certificate or instrument issued upon or in connection with such
transfer shall bear the restrictive legend set forth in Section 7.5.1,
in each case unless the restrictions on transfer provided for in
Section 7.5 shall have terminated as to such Investor Securities
pursuant to Section 7.5.3.
7.5.3. Termination of Restrictions. The restrictions imposed
by Sections 7.5.1 and 7.5.2 upon the transferability of Investor
Securities shall terminate as to any particular Investor Securities and
any securities issued in exchange therefor or upon transfer thereof
when, in the opinion of counsel reasonably acceptable to the Company,
such restrictions are no longer required in order to assure compliance
with the Securities Act. Whenever any of such restrictions shall
terminate as to any Investor Securities, the holder thereof shall be
entitled to receive from the Company, without expense, new certificates
or instruments not bearing the legend set forth in Section 7.5.1.
8. EXPENSES, ETC.
8.1. Expenses. If the Closing occurs, the Company hereby agrees to
pay (a) all reasonable out-of-pocket expenses incurred by the Investors in
connection with the transactions contemplated by this Agreement, including
without limitation travel expenses and the reasonable fees, expenses and
disbursements of the Investors' counsel and other advisers in connection with
the transactions contemplated by this Agreement, up to an aggregate of $75,000,
(b) all expenses incurred by any Investors in connection with any amendments or
waivers (whether or not the same become effective) hereof, and (c) all taxes
(other than taxes determined with respect to income), including any recording
fees and filing fees and documentary stamp and similar taxes, at any time
payable in respect of this Agreement, any other Investor Agreement or the
initial issuance of the Investor Securities. In the event (i) the Investors are
successful in a claim against the Company in connection with the enforcement in
good faith of any rights hereunder or under any other Investor Agreements, the
Company agrees to pay all expenses incurred by the Investors
-27-
34
in connection with such enforcement, and (ii) the Company is successful in a
claim initiated by the Investors against the Company in connection with the
enforcement in good faith of any rights hereunder or under any other Investor
Agreements, the Investors, severally, agree to pay all expenses incurred by the
Company in connection with such enforcement pro rata in accordance with the
relative number of Investor Securities held by each of them.
8.2. Mutual Indemnification.
8.2.1. The Company shall indemnify and hold the Investors and
each of the Investors' partners, stockholders, officers, directors,
employees, attorneys, accountants, consultants and agents
(collectively, the "Investor Indemnitees") free and harmless from and
against all actions, causes of action, suits, litigation, losses,
liabilities and damages, investigations or proceedings instituted by
any governmental agency or any other Person and expenses in connection
therewith, including reasonable attorneys' fees and disbursements,
incurred by any Investor Indemnitee as a result of, or arising out of,
or relating to any claim for brokerage, finders, investment banking or
similar fees incurred by the Company in connection with the
transactions contemplated by this Agreement.
8.2.2. The Investors shall indemnify and hold the Company and
each of the Company's partners, stockholders, officers, directors,
employees, attorneys, accountants, consultants and agents
(collectively, the "Company Indemnitees") free and harmless from and
against all actions, causes of action, suits, litigation, losses,
liabilities and damages, investigations or proceedings instituted by
any governmental agency or any other Person and expenses in connection
therewith, including reasonable attorneys' fees and disbursements,
incurred by any Company Indemnitee as a result of, or arising out of,
or relating to any claim for brokerage, finders, investment banking or
similar fees incurred by the Investors in connection with the
transactions contemplated by this Agreement.
8.3. Survival. The obligations of the Company under this Section 8
shall survive the redemption, conversion, repurchase or transfer of any or all
of the Investor Securities.
9. NOTICES. Any notice or other communication in connection with this
Agreement or the Investor Securities shall be deemed to be delivered if in
writing addressed as provided below and if either (a) actually delivered at such
address, (b) in the case of a letter, seven business days shall have elapsed
after the same shall have been deposited in the United States mails, postage
prepaid and registered or certified, return receipt requested or (c) transmitted
to any address outside of the United States, by telecopy and confirmed by
overnight or two-day courier:
If to the Company, to it at 00000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxx 00000, telecopy: (000) 000-0000, telephone: (000) 000-0000, or
at such other address as the Company shall have specified by notice actually
received by the Principal Holders.
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35
If to the Investors, to the Investors' respective addresses set forth
on Exhibit 1, or at such other address as the Investors shall have specified by
notice actually received by the Company, in each case with a copy to WPC and
Highland.
If to any other holder of record of any Investor Security, to it at its
address set forth in the securities registers of the Company.
10. CONFIDENTIALITY. Each Investor will maintain the confidential nature of
information obtained from the Company concerning the Company and its
Subsidiaries and, except as contemplated by this Agreement, will not disclose or
use such information, provided, however, that such Investor shall not be
precluded from making disclosure regarding such information: (a) to counsel for
WPC, Highland or any such Investor, accountants or other professional advisors
on a need-to-know basis, (b) to any other Investor, (c) as required by law or
applicable regulation, (d) to any permitted assignee of any Investor Securities
after notice to the Company so long as such permitted assignee has agreed to be
bound by this Section 10 or (e) to the extent such information has become
publicly available other than as a result of the violation of this Section 10;
provided, further, that in no event may any Investor disclose any such
information which is competitively sensitive to any competitor of the Company.
11. AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively) only with
the written consent of the Required Holders. Any amendment or waiver effected in
accordance with this Section 10 shall be binding upon each holder of any
Investor Securities and the Company and each of its Subsidiaries.
12. SURVIVAL AND TERMINATION OF COVENANTS. All covenants, agreements,
representations and warranties made herein or in any closing certificate or
other certificate or written report delivered to the Investors pursuant to an
express requirement hereof shall be deemed to have been material and relied on
by the Investors, notwithstanding any investigation made by the Investors or on
the Investors' behalf, shall survive the execution and delivery to the Investors
hereof of the Investor Securities and shall terminate upon the closing of a
Qualified Public Offering.
13. SERVICE OF PROCESS. Each of the Company and the Investors (a)
irrevocably submits to the non-exclusive jurisdiction of the state courts of The
State of Delaware and to the non-exclusive jurisdiction of the United States
District Court for the District of Delaware, for the purpose of any suit, action
or other proceeding arising out of or based upon this Agreement, any other
Investor Agreement or the subject matter hereof or thereof brought by any party
hereto or such party's successors or assigns, and (b) waives to the extent not
prohibited by law that cannot be waived, and agrees not to assert, by way of
motion, as a defense, or otherwise, in any such proceeding, any claim that it is
not subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that any such
-29-
36
proceeding brought in one of the above-named courts is improper, or that this
Agreement or the Investor Securities, or the subject matter hereof or thereof,
may not be enforced in or by such court.
14. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
WHICH CANNOT BE WAIVED, THE INVESTORS AND THE COMPANY HEREBY WAIVE, AND COVENANT
THAT NEITHER THE COMPANY NOR THE INVESTORS WILL ASSERT, ANY RIGHT TO TRIAL BY
JURY ON ANY ISSUE IN ANY PROCEEDING, WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE, IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
ARISING OUT OF OR BASED UPON THIS AGREEMENT, ANY OTHER INVESTOR AGREEMENT OR THE
SUBJECT MATTER HEREOF OR THEREOF OR IN ANY WAY CONNECTED WITH, RELATED OR
INCIDENTAL TO THE DEALINGS OF THE INVESTORS AND THE COMPANY HEREUNDER OR
THEREUNDER, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER
IN TORT OR CONTRACT OR OTHERWISE. The Company acknowledges that it has been
informed by WPC and Highland that the provisions of this Section 14 constitute a
material inducement upon which the Investors are relying and will rely in
entering into this Agreement and purchasing the Investor Securities pursuant
hereto. Any Investor or the Company may file
an original counterpart or a copy of this Section 14 with any court as written
evidence of the consent of the Investors and the Company to the waiver of its
right to trial by jury.
15. GENERAL. If any provision of this Agreement is determined to be invalid
or unenforceable, it will be deemed to be modified to the minimum extent
necessary to be valid and enforceable. If it cannot be so modified, it will be
deleted and the deletion will not affect the validity or enforceability of any
other provision unless, as a result, the rights of any party are materially
diminished or the obligations and burdens of any party are materially increased
so as to be unjust or inequitable. The headings in this Agreement are for
convenience of reference only and shall not alter or otherwise affect the
meaning hereof. This Agreement, the other Investor Agreements and the other
items referred to herein or therein constitute the entire understanding of the
parties hereto with respect to the subject matter hereof and thereof and
supersede all present and prior agreements, whether written or oral. This
Agreement is intended to take effect as a sealed instrument and may be executed
in any number of counterparts which together shall constitute one instrument and
shall be governed by and construed in accordance with the laws (other than the
conflict of laws rules) of The State of Delaware, and shall bind and inure to
the benefit of the parties hereto and their respective successors and assigns.
Whether or not any express assignment has been made of this Agreement,
provisions of this Agreement that are for the Investors' benefit as the holder
of any Investor Securities are also for the benefit of, and enforceable by, all
subsequent holders of Investor Securities.
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37
The undersigned have executed this Agreement under seal as of the date
first above written.
DIGITAL COMMERCE CORPORATION
By /s/ Xxxx Xxxxxx
----------------------------
Title: President
WESTON PRESIDIO CAPITAL III, L.P.
By: WESTON PRESIDIO CAPITAL
MANAGEMENT III, L.P., its General Partner
By: /s/ Xxxxx X. xxx Xxxxxxxxx
--------------------------------------
General Partner
WESTON PRESIDIO ENTREPRENEUR FUND, L.P.
By: WESTON PRESIDIO CAPITAL
MANAGEMENT III, L.P., its General Partner
By: /s/ Xxxxx X. xxx Xxxxxxxxx
--------------------------------------
General Partner
HIGHLAND CAPITAL PARTNERS V LIMITED
PARTNERSHIP
By: HIGHLAND MANAGEMENT PARTNERS V
LIMITED PARTNERSHIP, its General Partner
By: HIGHLAND MANAGEMENT PARTNERS V,
INC., its General Partner
By: /s/ Illegible
--------------------------------------
Authorized Officer
-31-
38
HIGHLAND CAPITAL PARTNERS V-B LIMITED
PARTNERSHIP
By: HIGHLAND MANAGEMENT PARTNERS V
LIMITED PARTNERSHIP, its General Partner
By: HIGHLAND MANAGEMENT PARTNERS V,
INC., its General Partner
By: /s/ Illegible
----------------------------------------
Authorized Officer
HIGHLAND ENTREPRENEURS' FUND V
LIMITED PARTNERSHIP
By: HEF V LIMITED PARTNERSHIP, its General
Partner
By: HIGHLAND MANAGEMENT PARTNERS V,
INC., its General Partner
By: /s/ Illegible
----------------------------------------
Authorized Officer
eSENTINEL VENTURE CAPITAL, L.L.C.
By: SENTINEL CAPITAL PARTNERS, L.P., its
member
By: SENTINEL PARTNERS, L.P., its general
partner
By: SENTINEL PARTNERS, INC., its general
partner
By: /s/ Illegible
-------------------------------------------
Name:
Title:
-00-
00
xXXXXXXXX XXXXXXX XXXXXXX XX, X.X.X.
By: SENTINEL CAPITAL PARTNERS II, L.P., its
member
By: SENTINEL PARTNERS II, L.P., its general
partner
By: SENTINEL PARTNERS II, INC., its general
partner
By: /s/ Illegible
---------------------------------------
Name:
Title:
XXXXX X. XXXXXXXXXX
/s/ Xxxxx X. Xxxxxxxxxx
------------------------------------
XXXXXXX X. XXXXX
/s/ Xxxxxxx X. Xxxxx
------------------------------------
SAP INVESTMENTS, INC.
By /s/ Xxxxx X. XxXxx
---------------------------------
Name: Xxxxx X. XxXxx
Title: Chief Executive Officer
XXXX XXXXXXX
/s/ Xxxx Xxxxxxx
------------------------------------
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40
THE ROMAN ARCH FUND L.P.
By: /s/ Xxxxxx Xxxxxxx
---------------------------------------------
Xxxxxx Xxxxxxx, its E.V.P.
THE ROMAN ARCH FUND II L.P.
By: /s/ Xxxxxx Xxxxxxx
---------------------------------------------
Xxxxxx Xxxxxxx, its E.V.P.
-34-
41
XXXXXXX CAPITAL CORP.
By: Xxxxxx Xxxxxxx
---------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: President
-35-
42
RRE VENTURES II L.P.
By: Xxxxxx X. Xxxxxxx
------------------------------------------
Xxxxxx X. Xxxxxxx, its General Partner
RRE VENTURES FUND II L.P.
By: Xxxxxx X. Xxxxxxx
------------------------------------------
Xxxxxx X. Xxxxxxx, its General Partner
-36-
43
EXHIBIT 1 TO SECURITIES
PURCHASE AGREEMENT
Investors
Number of Shares
Name and Address of Series D Preferred Stock Purchase Price
---------------- --------------------------- --------------
Weston Presidio Capital III, L.P. 2,448,907 $14,288,637.67
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Weston Presidio Entrepreneur Fund, L.P. 121,902 $ 711,261.60
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Highland Capital Partners V 1,814,991 $10,589,927.99
Limited Partnership
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Highland Capital Partners V-B 467,887 $ 2,729,980.28
Limited Partnership
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Highland Entrepreneurs' Fund V 287,931 $ 1,679,991.01
Limited Partnership
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
-00-
00
xXxxxxxxx Xxxxxxx Xxxxxxx, X.X.X. 51,373 $ 299,746.04
000 Xxxxx Xxxxxx -- 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
eSentinel Venture Capital II, L.L.C. 856,945 $ 5,000,016.99
000 Xxxxx Xxxxxx -- 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Xxxxxxx X. Xxxxx 17,156 $ 100,100.11
First Century Partners
00 Xxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Xxxxx X. Xxxxxxxxxx 17,156 $ 100,100.11
X.X. Xxxxxxxxxx & Co., Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
SAP Investments, Inc. 856,937 $ 4,999,970.31
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Xxxx Xxxxxxx 514,162 $ 2,999,981.02
Shaker Investments
000 Xxxx Xxxxxx - Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
The Roman Arch Fund L.P. 64,270 $ 374,996.17
Xxx Xxx Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
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45
Roman Arch Funds 64,270 $ 374,996.17
Xxx Xxx Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Xxxxxxx Capital Corp. 42,847 $ 249,999.39
0000 Xxxxxx xx xxx Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
RRE Ventures II L.P. 434,182 $ 2,533,321.72
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
RRE Ventures Fund II L.P. 79,980 $ 466,659.31
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Individual Investors 569,006 $ 3,319,979.31
--------- ---------------
Total 8,709,902 $ 50,819,665.21
--------- ---------------
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