PEOPLEPC INC.
SERIES B
PREFERRED STOCK PURCHASE AGREEMENT
DECEMBER 17, 2001
SERIES B PREFERRED STOCK
PURCHASE AGREEMENT
This Series B Preferred Stock Purchase Agreement (the "AGREEMENT") is
entered into as of this 17th day of December, 2001, by and among PEOPLEPC Inc.,
a Delaware corporation (the "COMPANY"), and each of those entities, severally
and not jointly, whose names are set forth on the Schedule of Purchasers
attached hereto as Exhibit A (which entities are hereinafter collectively
referred to as "PURCHASERS" and each individually as a "PURCHASER").
Terms defined in the text of this Agreement shall have the meanings
there set forth herein. Other capitalized terms shall have the meaning set forth
in the Definitions Addendum, which is attached and incorporated herein.
RECITALS
WHEREAS, the Company has authorized the sale and issuance of an
aggregate of 6,400,000 shares of its Series B Preferred Stock, par value $0.0001
per share (the "SHARES");
WHEREAS, Purchasers desire to purchase the Shares on the terms and
conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Shares to Purchasers
on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, the parties hereto agree as follows:
SECTION 1. AGREEMENT TO SELL AND PURCHASE
1.1 AUTHORIZATION OF SHARES. On or prior to the Closing Date (as
defined in Section 2 below), the Company shall have duly authorized the sale and
issuance to Purchasers of the Shares. The Shares shall have the rights,
preferences, privileges and restrictions set forth in the Certificate of
Designations of the Company, in the form attached hereto as Exhibit B (the
"CERTIFICATE"). The Company has, or before the Closing Date will have, adopted
and filed with the Secretary of State of the State of Delaware the Certificate
and will have taken all necessary corporate action for the purpose of
authorizing the issuance and sale of the Shares pursuant hereto.
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1.2 SALE AND PURCHASE. Subject to the terms and conditions hereof, at
the Closing (as hereinafter defined), the Company hereby agrees to issue and
sell to each Purchaser, and each Purchaser, severally and not jointly, agrees to
purchase from the Company, the number of Shares to be purchased by such
Purchaser at the Closing as set forth opposite such Purchaser's name in Exhibit
A, at a purchase price per Share equal to $5.00.
SECTION 2. CLOSING, DELIVERY AND PAYMENT
2.1 CLOSING. The consummation of each sale and purchase of the Shares
under this Agreement (each a "CLOSING") shall take place at the offices of
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx
00000-0000. Subject to the fulfillment or waiver of the conditions set forth
herein, the earliest Closing (the "FIRST CLOSING") shall occur on the date
hereof and any additional Closing may occur only with the prior written approval
of SOFTBANK in its sole discretion (each an "ADDITIONAL CLOSING") (the date for
either the First Closing or any Additional Closing being herein referred to as
the "CLOSING DATE").
2.2 DELIVERY. At each Closing, subject to the terms and conditions
hereof, the Company will deliver to each Purchaser stock certificates issued in
such Purchaser's name representing the number of Shares to be purchased at such
Closing by such Purchaser as specified in Exhibit A, against payment of the
purchase price therefor by wire transfer of immediately available funds to the
Company's account (for credit to account number 00000-00000 at Bank of America,
ABA number 000000000 or such other bank account of the Company designated by the
Company in writing no later than the second Business Day immediately preceding
the date for the Closing) or to a designee of the Company.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Schedule of Exceptions delivered to the
Purchasers by the Company at the First Closing and each Additional Closing, the
Company hereby represents and warrants to each Purchaser as follows:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of the Company
and each of its Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the State of its incorporation. Each of
the Company and each of its Subsidiaries has all requisite corporate power and
authority to own and operate its properties
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and assets, to carry on its business as currently conducted and as currently
proposed to be conducted and, in the case of the Company, to execute and deliver
this Agreement and the Registration Rights Agreement, in the form attached
hereto as Exhibit C (the "REGISTRATION RIGHTS AGREEMENT"), to issue and sell the
Shares and to carry out the provisions of this Agreement, the Registration
Rights Agreement, and the Certificate. Each of the Company and each of its
Subsidiaries is duly qualified and is authorized to do business and is in good
standing as a foreign corporation in all jurisdictions in which the nature of
its activities and of its properties (both owned and leased) make such
qualifications necessary, except for those jurisdictions in which failure to do
so would not have a Material Adverse Effect. The Company owns all of the
outstanding shares of capital stock of each of its Subsidiaries free of any Lien
other than liens for current taxes not yet due. The Company is not a participant
in any joint venture, partnership or similar arrangement. The Company has made
available to the Purchasers upon request true, correct and complete copies of
the Company's Certificate of Incorporation and Bylaws, each as amended to date
and presently in effect.
3.2 CAPITALIZATION; VOTING RIGHTS. The authorized capital stock of the
Company, consists of (a) 500,000,000 shares of the Company's Common Stock, par
value $0.001 per share (the "COMMON STOCK"), 114,002,422 shares of which are
issued and outstanding, 13,354,869 shares of which are currently reserved for
issuance pursuant to outstanding option agreements, and (b) 50,000,000 shares of
Preferred Stock, par value $0.0001 per share (the "PREFERRED STOCK"), 6,400,000
of which are designated Series B Preferred Stock, none of which are issued and
outstanding. All issued and outstanding shares of the Common Stock (i) have been
duly authorized and validly issued, and (ii) are fully paid and nonassessable.
The rights, preferences, privileges and restrictions of the Shares, upon the
Closing, will be as stated in the Certificate. Except as may be granted pursuant
to this Agreement and except as set forth above, there are no outstanding
options, warrants, puts, calls, rights (including conversion or preemptive
rights and rights of first refusal), proxy or stockholder agreements, or
agreements of any kind for the purchase or acquisition from, sale to or
exchange, with the Company or any of its Subsidiaries of any shares of any class
or series of capital stock of the Company or any of its Subsidiaries or other
restrictions on the incidents of ownership or transfer of any such shares of
capital stock created by: (i) the charter documents of the Company or any of its
Subsidiaries, (ii) any agreement to which the Company or any of
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its Subsidiaries is a party, by which any of them is bound or of which any of
them has Knowledge, or, (iii) to the Company's Knowledge, any statute (other
than Federal and state securities laws). The Shares have been duly authorized
and, when issued in compliance with the provisions of this Agreement and the
Certificate, will be validly issued (including, without limitation, issued in
compliance with applicable state and federal securities laws, assuming the
accuracy of Purchasers' representations in Section 4 hereof), fully paid and
nonassessable and will be free of any Liens (other than Liens created by
Purchasers); provided, however, that the Shares may be subject to restrictions
on transfer under state and/or federal securities laws as set forth herein or as
otherwise required by such laws at the time transfer is proposed.
3.3 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on the
part of the Company, its officers, directors and stockholders necessary for the
due authorization, execution and delivery of this Agreement and the Registration
Rights Agreement, the performance of all obligations of the Company hereunder
and thereunder and the authorization, sale, issuance and delivery of the Shares
pursuant hereto has been taken. This Agreement and the Registration Rights
Agreement, when executed and delivered, will be valid and binding obligations of
the Company enforceable against the Company, in accordance with their terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights; (ii) as limited by general principles of equity that restrict
the availability of specific performance, injunctive relief or other equitable
remedies; and (iii) to the extent that the enforceability of the indemnification
provisions of the Registration Rights Agreement may be limited by applicable
federal and state securities laws. The sale of the Shares are not and will not
be subject to any preemptive rights or rights of first refusal that have not
been properly waived or complied with.
3.4 FINANCIAL STATEMENTS; REPORTS; PROXY STATEMENT. (a) A true and
complete copy of each annual, quarterly and other report, and definitive proxy
statement filed by the Company with the SEC since December 31, 2000 (the
"REPORTS") is available on the Web site maintained by the SEC at
xxxx://xxx.xxx.xxx. As of their respective filing dates, the Reports complied in
all material respects with the requirements of the Exchange Act, and the rules
and regulations of the SEC promulgated thereunder applicable to such Reports,
and none of
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the Reports contained on their filing dates any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except to the extent corrected by
subsequently filed Reports filed prior to the date hereof. The financial
statements of the Company, including the notes thereto, included in the Reports
comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP consistently applied
(except as may be indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) and present fairly the
consolidated financial position of the Company at the dates thereof and of its
consolidated results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal, recurring audit
adjustments). There are no material Liabilities of the Company or any of its
Subsidiaries not reflected in the financial statements of the Company, including
the notes thereto, included in the Reports.
(b) The Proxy Statement (as defined in Section 5.1) shall not, on the
date the Proxy Statement (including any amendment or supplement thereto) is
first mailed to stockholders, or at the time of the Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. The Proxy Statement shall comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
thereunder.
3.5 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Reports,
since September 30, 2001 (the "DETERMINATION DATE") there has not been (i) any
Material Adverse Change or any development or combination of developments of
which management of the Company or any of its Subsidiaries has Knowledge that,
individually or in the aggregate, has had or is reasonably likely to result in a
Material Adverse Change; (ii) any material damage, destruction or other casualty
loss with respect to any material asset or property owned, leased or otherwise
used by the Company or any of its Subsidiaries, whether or not covered by
insurance; (iii) any change by the Company in accounting principles, practices
or methods; or (iv) any declaration, setting aside or payment of any dividend or
other distribution
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in cash, stock or property in respect of the capital stock of the Company. Since
the Determination Date, except as disclosed in the Reports, there has not been
any material increase in the compensation payable or that could become payable
by the Company or any of its Subsidiaries to executive officers or any amendment
of any of the Company's Compensation and Benefit Plans.
3.6 OBLIGATIONS TO RELATED PARTIES. There are no material obligations
of the Company or any of its Subsidiaries to officers, directors, stockholders,
or employees of the Company or any of its Subsidiaries other than (a) for
payment of salary for services rendered, (b) reimbursement for reasonable
expenses incurred on behalf of the Company or any of its Subsidiaries and (c)
for other standard employee benefits made generally available to all employees
(including stock option agreements outstanding under any stock option plan
approved by the Board of Directors of the Company (the "BOARD") or the relevant
Subsidiary). No officer or director or, to the Company's Knowledge, any member
of their immediate families, is indebted to the Company or any of its
Subsidiaries or has any direct ownership interest in any firm or corporation
with which the Company or any of its Subsidiaries is affiliated, or any company
that competes with the Company or any of its Subsidiaries, in each case other
than ownership of less than 2% of the outstanding stock of publicly traded
companies. No such officer or director, or, to the Company's Knowledge, any
member of their immediate families, is, directly or indirectly, interested in
any material contract with the Company or any of its Subsidiaries. Neither the
Company nor any of its Subsidiaries is a guarantor or indemnitor of any
indebtedness of any other Person.
3.7 PATENTS AND TRADEMARKS. Each of the Company and each of its
Subsidiaries owns or possesses sufficient legal rights to all trademarks,
service marks, trade names, copyrights, trade secrets, and, to the Company's
Knowledge, information and other proprietary rights, patents and processes
necessary for its business as now conducted, without any infringement known to
it of the rights of others. The Company is not a party to any material
outstanding options, licenses or agreements of any kind relating to the
foregoing, other than such licenses to the Company or its Subsidiaries (i)
arising from the purchase by any of them of "off the shelf" standard products or
(ii) that are not material to the business now conducted by the Company or any
of its Subsidiaries. Neither the Company nor any of its Subsidiaries has
received any written
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communications alleging that the Company or any of its Subsidiaries has violated
or, by conducting its business as currently proposed, would violate any of the
patents, trademarks, service marks, trade names, copyrights or trade secrets or
other proprietary rights of any other Person. Neither the Company nor any of its
Subsidiaries is aware that any of its Key Employees is obligated under any
contract (including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with their duties to the Company or
any of its Subsidiaries. The conduct of the Company's and each of its
Subsidiary's business as currently conducted, does not, to the Knowledge of the
Company or any of its Subsidiaries, conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any employee is now obligated. Neither the
Company nor any of its Subsidiaries believes it is or will be necessary to
utilize any inventions, trade secrets or proprietary information developed or
acquired by any of its employees in the conduct of the Company's or any of its
Subsidiary's business prior to their employment by the Company or any of its
Subsidiaries, except for inventions, trade secrets or proprietary information
that have been assigned to the Company or any of its Subsidiaries.
3.8 COMPLIANCE WITH OTHER INSTRUMENTS AND LAWS; CONSENTS; PERMITS.
Neither the Company nor any of its Subsidiaries is in violation or default of
any term of its Certificate of Incorporation or Bylaws, or of any provision of
any mortgage, indenture, contract, agreement, instrument or contract to which it
is party or by which it or any of its property is bound or of any judgment,
decree, order, writ, statute, rule or regulation applicable to the Company or
any of its Subsidiaries or their properties except for such violations or
defaults which, individually or in the aggregate, would not have a Material
Adverse Effect. The execution, delivery, and performance of and compliance with
this Agreement and the Registration Rights Agreement, and the issuance and sale
of the Shares pursuant hereto, will not, with or without the passage of time or
giving of notice, result in any violation or default by the Company or any of
its Subsidiaries of any term of its Certificate of Incorporation or Bylaws, or
of any provision of any material agreement to which the Company or any of its
Subsidiaries is party or by which the Company or any of its Subsidiaries or any
of their respective property is bound or of any judgment, decree, order, writ,
statute rule or regulation applicable to the Company, any of its Subsidiaries or
their
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properties, or result in the creation of any Lien upon any of the material
properties or assets of the Company or any of its Subsidiaries, or result in the
acceleration or modification of, or create in any party the right to accelerate,
terminate, modify or cancel, or create in any party additional or different
material rights or duties pursuant to, or require any notice under, any material
agreement to which the Company or any of its Subsidiaries is a party or by which
the Company or any of its Subsidiaries is bound. No orders, permissions,
consents, approvals or authorizations of any Governmental Entity is required to
be obtained by the Company or any of its Subsidiaries and no application,
notification, request, registration or declaration is required to be filed with
any Governmental Entity by the Company or any of its Subsidiaries in connection
with the execution and delivery of this Agreement and the offer, issuance, sale
and delivery of the Shares, or the other transactions to be consummated at the
Closing, as contemplated in this Agreement other than (i) the filing of the
Certificate in the office of the Secretary of State of the State of Delaware
prior to the Closing, (ii) the qualification (or taking of such action as may be
necessary to secure an exemption from qualification, if available) of the offer
and sale of the Shares under the Securities Act and applicable Blue Sky laws and
(iii) items which the failure by the Company to so obtain or file will not have
a Material Adverse Effect. The Company has all franchises, permits, licenses and
any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect and can obtain, without
undue burden or expense, any similar authority necessary for the conduct of its
business as currently proposed to be conducted.
3.9 LITIGATION. To the Knowledge of the Company or any of its
Subsidiaries, there is no action, suit, proceeding or investigation pending or
currently threatened against the Company or any of its Subsidiaries that
questions the validity of this Agreement, the Registration Rights Agreement or
the Certificate or the right of the Company to enter into any of such
agreements, to issue the Shares with the terms specified in the Certificate or
to consummate the transactions contemplated hereby or thereby, or which, if
determined adversely to the Company, would be reasonably likely to result,
either individually or in the aggregate, in any Material Adverse Effect to the
Company or any of its Subsidiaries, nor is the Company or any of its
Subsidiaries aware that there is any basis for the foregoing. Neither the
Company nor any of its Subsidiaries is a
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party or subject to the provisions of any order, writ, injunction, judgment or
decree of any court or other Governmental Entity.
3.10 TAX RETURNS AND PAYMENTS. The Company and each of its Subsidiaries
has timely filed all tax returns (federal, state, local and foreign) required to
be filed by it. All Taxes shown to be due and payable on such returns, any
assessments imposed, and all other Taxes due and payable by the Company or any
of its Subsidiaries have been paid or will be paid prior to the time they become
delinquent. Neither the Company nor any of its Subsidiaries has been advised (i)
that any of its returns, federal, state, foreign or other, have been or are
being audited as of the date hereof, or (ii) of any deficiency in assessment or
proposed adjustment to its federal, state, foreign or other Taxes. There exists
no liability for any Tax or potential Tax to be imposed upon the properties or
assets of the Company or any of its Subsidiaries as of the date of this
Agreement that is not adequately provided for.
3.11 EMPLOYEES. To the Knowledge of the Company and its Subsidiaries,
no Key Employee of the Company or any of its Subsidiaries, nor any consultant
with whom the Company or any of its Subsidiaries has contracted, is in violation
of any term of any employment contract, proprietary information agreement or any
other agreement relating to the right of any such individual to be employed by,
or to contract with, the Company or any of its Subsidiaries; and to the
Knowledge of the Company and each of its Subsidiaries the continued employment
by the Company and each of its Subsidiaries of their present employees, and the
performance of the contracts of the Company and each of its Subsidiaries with
its independent contractors, will not result in any such violation except for
such violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has received any notice alleging that any such violation has
occurred. No employee of the Company or any of its Subsidiaries has been granted
the right to continued employment by the Company or any of its Subsidiaries or
to any material compensation following termination of employment with the
Company. No officer or Key Employee has communicated to the Company his or her
intention to terminate his or her employment with the Company or any of its
Subsidiaries, nor does the Company or any of its Subsidiaries have a present
intention to terminate the employment of any officer or Key Employee.
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3.12 REGISTRATION RIGHTS. Except as required pursuant to the
Registration Rights Agreement, the Company is not under any obligation, and has
not granted any rights, to register any of the Company's securities under the
Securities Act of 1933, as amended (the "SECURITIES ACT").
3.13 OFFERING VALID. Assuming the accuracy of the representations and
warranties of the Purchasers contained in Section 4 hereof, the offer, sale and
issuance of the Shares will be exempt from the registration requirements of the
Securities Act, and will have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit or qualification
requirements of all applicable state securities laws. Neither the Company nor
any agent on its behalf has solicited or will solicit any offers to sell or has
offered to sell or will offer to sell all or any part of the Shares to any
person or persons so as to bring the sale of such Shares by the Company within
the registration provisions of the Securities Act or the registration or
qualification provisions of any state securities laws.
3.14 TAKEOVER STATUTES. Section 203 of the Delaware General Corporation
Law, as amended (the "DGCL") does not require the Company to solicit the
approval of the stockholders of the Company for the issuance of the Shares, the
shares of the Common Stock issuable upon conversion of the Shares or the other
transactions contemplated by this Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser, severally and not jointly, hereby represents and
warrants to the Company as follows:
4.1 REQUISITE POWER AND AUTHORITY. Such Purchaser has all necessary
power and authority under its organizational documents and all applicable
provisions of law to execute and deliver this Agreement and the Registration
Rights Agreement and to carry out its obligations hereunder and thereunder. All
actions on the part of such Purchaser required for the due and lawful
authorization, execution and delivery of this Agreement and the Registration
Rights Agreement and the performance of such Purchaser's obligations hereunder
and thereunder have been taken. This Agreement has been, and upon its execution
and delivery the Registration Rights Agreement will be, duly executed and
delivered by such Purchaser, and this Agreement is, and upon such execution and
delivery the Registration Rights Agreement, will be, valid and binding
obligations of such Purchaser, enforceable against such Purchaser in accordance
with
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their terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights; (ii) as limited by general principles of
equity that restrict the availability of specific performance, injunctive relief
or other equitable remedies; and (iii) to the extent that the enforceability of
the indemnification provisions of the Registration Rights Agreement may be
limited by applicable federal and state securities laws.
4.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. Such Purchaser is acquiring the
Shares for its own account, not as a nominee or agent, for investment and not
with a view to the resale or distribution of any part thereof.
4.3 INVESTMENT EXPERIENCE. Such Purchaser is an "accredited investor"
as defined in Rule 501(a) under the Securities Act. Such Purchaser believes it
has acquired sufficient information about the Company and its Subsidiaries to
reach an informed decision to purchase the Shares. Such Purchaser has such
business and financial experience as are required to give it the capacity to
protect its own interests in connection with the purchase of the Shares.
4.4 RESTRICTED SECURITIES. Such Purchaser understands that the Shares
are being offered in a transaction not involving any public offering within the
meaning of the Securities Act, that such Shares have not been registered under
the Securities Act and that it may not resell, pledge or otherwise transfer any
such Shares except pursuant to an effective registration statement under the
Securities Act or pursuant to an exemption from registration.
4.5 LEGENDS. Such Purchaser understands that the Shares and any
securities issued in respect thereof or exchange therefor, shall bear the
following legend until such time, if any, as (A) the Shares or such securities
(i) are sold in compliance with Rule 144 under the Securities Act (or a
comparable successor provisions) or pursuant to an effective registration
statement under the Securities Act or (ii) may be resold pursuant to Rule 144(k)
under the Securities Act (or a comparable successor provision), or (B) the
Company receives an opinion of counsel reasonably acceptable to it to the effect
that such legend may be removed:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR
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OTHERWISE TRANSFERRED EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR AN EXEMPTION FROM REGISTRATION AND (B) IN ACCORDANCE
WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES."
4.6 TAX LIABILITY. Such Purchaser has reviewed with its own tax
advisors the tax consequences of the transactions contemplated by this
Agreement. Such Purchaser relies solely on such advisors and not on any
statements or representations of the Company or any of the Company's agents with
respect to such tax consequences. Such Purchaser understands that it, and not
the Company, shall be responsible for its own tax liability that may arise as a
result of the transactions contemplated by this Agreement or the Registration
Rights Agreement.
SECTION 5. COVENANTS
5.1 MEETINGS OF THE COMPANY'S STOCKHOLDERS. The Company shall take all
action necessary in accordance with applicable laws and its Certificate of
Incorporation and By-Laws to convene a meeting (the "STOCKHOLDERS Meeting") of
holders of its shares of Common Stock as promptly as practicable to consider and
vote upon the approval of the issuance of the shares of Common Stock issuable
upon conversion of the Shares. In connection therewith, the Company shall, no
later than 30 calendar days following the Closing Date, file with the SEC a
proxy statement (the "PROXY STATEMENT") soliciting proxies to be voted in
approval of such issuance at the Stockholders Meeting. Subject to their
fiduciary duties under applicable law, the Board shall recommend such approval,
and the Company shall take all lawful action to solicit such approval. The Proxy
Statement shall not be filed, and no amendment or supplement to the Proxy
Statement shall be made by the Company, without prior consultation with SOFTBANK
and its counsel (it being understood that the consent of SOFTBANK and its
counsel shall not be required).
5.2 FURTHER ASSURANCES. The Company and the Purchasers shall use their
respective reasonable efforts at any time and from time to time prior to, at and
after the Closing Date to execute and deliver to the applicable parties such
further documents and instruments and to take all such further actions as such
other parties to this Agreement reasonably may request to consummate the
transactions contemplated by this Agreement, the Certificate and the
Registration Rights Agreement.
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5.3 STANDSTILL. Following the Closing Date and until the first
anniversary of the Closing Date, without the prior approval of a majority of the
independent members of the Board, each of the Purchasers and any entity of which
each Purchaser owns 80% or more of its outstanding capital stock shall not, nor
shall any Purchaser take the initiative to affirmatively request that (i) any
entities of which such Purchaser owns indirectly 80% or more of its outstanding
capital stock or (ii) any of its Affiliates, purchase or otherwise acquire any
shares of Common Stock if the effect of such acquisition would be to increase
the number of shares of Common Stock Beneficially Owned by any one of the
foregoing to greater than the percentage of shares of Common Stock Beneficially
Owned immediately following the Closing (assuming the conversion of the Shares);
provided, however, that nothing in this Section 5.4 shall prevent or restrict
each of the Purchasers from acquiring shares of Common Stock if such acquisition
is pursuant to the rights set forth in Section 7 of the Certificate.
5.4 EMPLOYEE STOCK OPTIONS. Each of the Company and each of the
Purchasers acknowledges and agrees that it is the intention of the parties that
the Company will reserve a certain number of shares of Common Stock for the
compensation of employees and management of the Company (together with (i)
shares of Common Stock issuable upon the exercise of options and (ii) shares of
restricted stock of the Company granted to employees of the Company, in each of
clause (i) and (ii), calculated as of the time such shares are reserved, the
"OPTION POOL"). Such number of shares in the Option Pool shall be equal to 20%
of the sum of (i) the aggregate number of outstanding shares of Common Stock
immediately following the Closing, (ii) the aggregate number of shares of Common
Stock issuable upon conversion of the Shares, and (iii) the aggregate number of
shares of Common Stock included in, or reserved for issuance pursuant to, the
Option Pool.
5.5 REVERSE STOCK SPLIT. Each of the Company and each of the Purchasers
acknowledges and agrees that it is the intention of the parties that, after the
Closing Date, the Board will consider whether it would be appropriate to approve
a reverse split of the Common Stock, if required to maintain the listing of the
Common Stock on The Nasdaq National Market.
5.6 LOCK-UP AGREEMENT. Each Purchaser hereby agrees that from the
Closing Date and until 180 days after the Closing Date, such Purchaser will not
offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, any Shares or securities convertible into or exchangeable or
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exercisable for any such Shares or enter into any swap, hedge or other
arrangement that transfers, in whole or in part, any of the economic
consequences of ownership of the Shares, whether any such aforementioned
transaction is to be settled by delivery of the Shares or such other securities,
in cash or otherwise, or publicly disclose the intention to make any such offer,
sale, pledge or disposition, or to enter into any such transaction, swap, hedge
or other arrangement, without, in each case, the prior written consent of the
Company; provided, however, in no event shall this Section 5.6 have any force or
effect unless and until each director and officer of the Company and each Key
Employee (together with each director and officer of the Company and each
transferee of such director, officer, and Key Employee, a "Restricted
Stockholder") has duly executed and delivered to the Company an agreement with
respect to the capital stock of the Company held by such directors, officer and
Key Employees substantially similar to this Section 5.6; provided, further, that
if the Company at any time during the duration of this Section 5.6 consents to
the release of any shares of capital stock held by a Restricted Stockholder from
the restrictions in such agreement, the Company shall concurrently release the
same percentage of each Purchaser's Shares from the corresponding restrictions
set forth in this Section 5.6, and: (i) in the event that more than one
Restricted Stockholder is released from such restrictions, the percentage of
each Purchaser's Shares subject to release shall be the largest percentage of
shares released as to any Restricted Stockholder, and (ii) the Company shall, at
least two Business Days prior to such release, provide written notice to each
Purchaser of such release. A transfer of Shares may be made to any transferee
that (a) is a direct or indirect subsidiary, parent, general partner, limited
partner, retired partner, member or retired member of a Purchaser or is an
affiliate of such Purchaser, including, any partnership or other entity of which
any affiliate of such Purchaser is a general partner or over which such
Purchaser has investment discretion, or any employee of the foregoing or (b) is
a family member of any Purchaser or transferee referred to in clause (a) of this
Section 5.6 or trust for the benefit of an individual Purchaser or transferee
referred to in clause (a) of this Section 5.6; provided, however, that in either
such case, any such transferee agrees to be bound in writing by the terms of
this Section 5.6.
5.7 NO GENERAL SOLICITATION. The Company has not engaged in and will
not, subsequent to the date hereof and for so long as the Company may sell
shares pursuant to this Agreement, engage in a general solicitation or public
15
announcement of any kind relating (directly or indirectly) to the transactions
contemplated by this Agreement, that does not comply with the requirements of
Rule 135c of the Securities Act of 1933, as amended.
SECTION 6. CONDITIONS TO CLOSING
6.1 CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE CLOSING. Each
Purchaser's obligation to purchase the Shares at the First Closing and each
Additional Closing are subject to the satisfaction, on or prior to the Closing
Date, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by the Company in Section 3 hereof shall be true and correct in all
material respects (except that such representations and warranties that contain
materiality qualifiers shall be true in all respects) as of the date of this
Agreement and as of the Closing Date, except to the extent such representations
and warranties specifically speak as to an earlier date, in which case they
shall be true and correct as of such earlier date.
(b) PERFORMANCE OF OBLIGATIONS. The Company shall have performed and
complied in all material respects with all agreements and obligations herein
required to be performed or complied with by the Company on or before the
Closing Date.
(c) LEGAL INVESTMENT; ORDERS. The sale and issuance of the Shares to be
issued and sold on the Closing Date shall be legally permitted by all laws and
regulations to which Purchasers and the Company are subject. No court or other
Governmental Entity of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, law, ordinance, rule, regulation,
judgment, decree, injunction or other order (whether temporary, preliminary or
permanent) that is in effect and restrains, enjoins or otherwise prohibits
consummation of the issuance of the Shares or any of the other transactions
contemplated by this Agreement or the Registration Rights Agreement
(collectively, an "ORDER"), and no Governmental Entity shall have instituted any
proceeding or threatened in writing to institute any proceeding seeking any such
Order.
(d) CONSENTS, PERMITS, AND WAIVERS. The Company shall have obtained any
and all consents, permits and waivers necessary or appropriate for consummation
by it of the transactions contemplated by this Agreement and the Registration
Rights Agreement.
16
(e) FILING OF CERTIFICATE. The Certificate shall have been filed with
the Secretary of State of the State of Delaware.
(f) REGISTRATION RIGHTS AGREEMENT. A Registration Rights Agreement,
substantially in the form attached hereto as Exhibit C, shall have been executed
and delivered by the Company and the other Purchasers.
(g) VOTING AGREEMENT. The holders of a majority of the issued and
outstanding Common Stock, calculated as of the Closing Date, shall have entered
into the Voting Agreement, in favor of the Purchasers, in the form attached
hereto as Exhibit D.
(h) COMPLIANCE CERTIFICATE. If the Closing Date is other than the date
hereof, the Chief Executive Officer of the Company shall deliver to the
Purchasers at such Closing a certificate, dated the Closing Date, certifying
that the conditions specified in Sections 6.1(a),(b),(c) and (d) have been
fulfilled. On each Closing Date, the General Counsel of the Company shall
deliver to the Purchasers at such Closing a certificate, dated the Closing Date,
certifying the material contracts to which the Company is a party or by which it
is bound.
(i) LEGAL OPINION. The Purchasers shall have received from outside
legal counsel to the Company an opinion addressed to them, dated as of the
Closing Date, in the form of Exhibit E.
(j) DOCUMENTS. All documents and instruments incident to the
transactions contemplated hereby shall be reasonably satisfactory in substance
and form to the Purchasers and their counsel.
6.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's obligation
to issue and sell the Shares at the First Closing and each Additional Closing is
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties made by the Purchasers in Section 4 hereof shall be true and correct
as of the Closing Date.
(b) PERFORMANCE OF OBLIGATIONS. Purchasers shall have performed and
complied in all material respects with
17
all agreements and obligations herein required to be performed or complied with
by Purchasers on or before the Closing Date.
(c) LEGAL INVESTMENT; ORDERS. The sale and issuance of the Shares shall
be legally permitted by all laws and regulations to which Purchasers and the
Company are subject. No court or other Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
Order, and no Governmental Entity or any other Person shall have instituted any
proceeding or threatened to institute any proceeding seeking any such Order.
(d) REGISTRATION RIGHTS AGREEMENT. A Registration Rights Agreement,
substantially in the form attached hereto as Exhibit C, shall have been executed
and delivered by the Purchasers.
(e) VOTING AGREEMENT. The holders of a majority of the issued and
outstanding Common Stock, calculated as of the Closing Date, shall have entered
into the Voting Agreement, in favor of the Purchasers, in the form attached
hereto as Exhibit D.
SECTION 7. REMEDIES
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the parties contained in this Agreement shall
survive the Closing hereunder and continue in full force and effect until the
second anniversary of the Closing Date.
(b) INDEMNIFICATION. In the event the Company breaches (or in the event
any third party alleges facts that, if true, would mean the Company has
breached) any of its representations, warranties or covenants contained herein,
then the Company agrees to indemnify each Purchaser from and against the
entirety of any Adverse Consequences such Purchaser may suffer through and after
the date of the claim for indemnification as a result of a claim by any third
party (a "THIRD PARTY CLAIM") resulting from, arising out of, relating to, in
the nature of or caused by the breach (or the alleged breach).
(c) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any Purchaser (the
"INDEMNIFIED Party") with respect to any Third Party Claim which may give rise
to a claim for indemnification
18
against the Company (the "INDEMNIFYING PARTY") under this Section 7, then the
Indemnified Party shall promptly notify the Indemnifying Party thereof in
writing; provided, however, that no delay on the part of the Indemnified Party
in notifying the Indemnifying Party shall relieve the Indemnifying Party from
any obligation hereunder unless (and then solely to the extent) the Indemnifying
Party thereby is prejudiced.
(ii) The Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
satisfactory to the Indemnified Party so long as (A) the Indemnifying Party
notifies the Indemnified Party in writing within 15 days after the Indemnified
Party has given notice of the Third Party Claim that the Indemnifying Party will
indemnify the Indemnified Party from and against the entirety of any Adverse
Consequences the Indemnified Party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third Party Claim, (B) the
Indemnifying Party provides the Indemnified Party with evidence acceptable to
the Indemnified Party that the Indemnifying Party will have the financial
resources to defend against the Third Party Claim and fulfill its
indemnification obligations hereunder, (C) the Third Party Claim involves only
money damages and does not seek an injunction or other equitable relief, (D)
settlement of, or an adverse judgment with respect to, the Third Party Claim is
not, in the good faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice adverse to the continuing business interests of
the Indemnified Party, and (E) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting the defense
of the Third Party Claim in accordance with Section 7(c)(ii) above, (A) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim, (B) the Indemnified
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld, and (C)
the Indemnifying Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnified Party, which consent shall not be
unreasonably withheld.
(iv) In the event any of the conditions in Section 7(c)(ii) above
is or becomes unsatisfied, (A) the Indemnified Party may defend against, and
consent to the entry
19
of any judgment or enter into any settlement with respect to, the Third Party
Claim in any manner it may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, any Indemnifying Party in connection
therewith), (B) the Indemnifying Party will reimburse the Indemnified Party
promptly and periodically for the costs of defending against the Third Party
Claim (including reasonable attorneys' fees and expenses), and (C) the
Indemnifying Party will remain responsible for any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating to, in the
nature of, or caused by the Third Party Claim to the fullest extent provided in
this Section 7.
(d) OTHER INDEMNIFICATION PROVISIONS. The foregoing
indemnification provisions are in addition to, and not in derogation of, any
statutory, equitable, or common law remedy any party may have with respect to
the transactions contemplated by this Agreement and any rights any party may
have under any other agreement, document or instrument, including, without
limitation, the Registration Rights Agreement.
SECTION 8. MISCELLANEOUS
8.1 GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of Delaware without regard to principles of conflict of
laws.
8.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the rights and obligations hereunder may not be assigned or delegated by
the Purchasers or the Company without the prior written consent of the other;
provided, however, that the Purchasers may assign their rights and delegate
their obligations hereunder, in whole or in part (including, without limitation,
the right to purchase any or all of the Shares and the obligation to pay all or
a part of the purchase price for the Shares), to any affiliates of Purchaser,
including, without limitation, any other partnership or other entity of which
any direct or indirect subsidiary of such Purchaser or any affiliate thereof is
a general partner or has investment discretion, or any employees of any of the
foregoing subject to applicable securities laws; provided, further, that any
such assignee that acquires any Shares shall, as a condition to acquiring such
Shares, agree to be bound by the provisions of any agreement applicable to the
Shares. The provisions hereof shall inure to the benefit of, and be binding
upon, the successors and permitted assigns of the parties hereto.
20
8.3 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules
hereto, the Registration Rights Agreement, the Certificate and the other
documents delivered pursuant hereto constitute the full and entire understanding
and agreement between the parties with regard to the subject matter hereof and
thereof.
8.4 SEVERABILITY. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
8.5 AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only upon the
written consent of the Company and holders of at least a majority of the Shares
as of the date of such amendment.
(b) The obligations of the Company and the rights of the holders
of the Shares under this Agreement may be waived only with the written consent
of the holders of at least a majority of the Shares as of the date of such
waiver.
8.6 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party upon any breach,
default or noncompliance by another party under this Agreement, the Registration
Rights Agreement or the Certificate shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach, default or
noncompliance thereafter occurring. It is further agreed that any waiver,
permit, consent or approval of any kind of character on any Purchaser's part of
any breach, default or noncompliance under this Agreement, the Registration
Rights Agreement or the Certificate or any waiver on such party's part of any
provisions or conditions of this Agreement, the Registration Rights Agreement or
the Certificate must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, under this Agreement, the
Registration Rights Agreement or the Certificate, by law or otherwise afforded
to any party shall be cumulative and not alternative.
8.7 NOTICES. All notices, requests, demands or other communications
which are required or may be given pursuant to the terms of this Agreement shall
be in writing and shall be deemed to have been duly given: (i) on the date of
delivery if personally delivered by hand, (ii) upon the third day after such
notice is (a) deposited in the United States mail, if mailed by
21
registered or certified mail, postage prepaid, return receipt requested, or (b)
sent by a nationally recognized overnight express courier, or (iii) by facsimile
upon written confirmation (other than the automatic confirmation that is
received from the recipient's facsimile machine) of receipt by the recipient of
such notice:
If to any Purchaser: To the address or facsimile
number of such Purchaser
specified on the signature
pages hereof.
With a copy to: Xxxxxxxx & Xxxxxxxx
0000 Xxxxxxxxxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to the Company: PeoplePC Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Telephone No.:
Facsimile No.: (000) 000-0000
With a copy to: Xxxxxx Xxxxxxx, Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxxxx
Xxx X. Xxxxxxxx
Telephone No: (000) 000-0000
Facsimile No: (000) 000-0000
Such addresses may be changed, from time to time, by means of a notice given in
the manner provided in this Section 8.7.
8.8 TITLES AND SUBTITLES. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
8.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
8.10 BROKER'S FEES. Each party hereto represents and warrants that no
agent, broker, investment banker, person or
22
firm acting on behalf of or under the authority of such party hereto is or will
be entitled to any broker's or finder's fee or any other commission in
connection with the transactions contemplated herein to be paid by any other
party hereto. Each party hereto further agrees to indemnify each other party for
any claims, losses or expenses incurred by such other party as a result of the
representation in this Section 8.10 being untrue.
8.11 EXPENSES. The Company and each of the Purchasers shall pay all
costs and expenses that it incurs with respect to the negotiation, execution,
delivery and performance of this Agreement and all of the transactions
contemplated herein; provided, however, that if the Purchasers consummate the
purchase of the Shares, the Company shall reimburse the reasonable legal fees
and expenses of counsel to SOFTBANK and any other expenses incurred by SOFTBANK
incurred in connection with the negotiation, preparation, execution, delivery
and performance of this Agreement and all of the transactions contemplated
hereby.
8.12 ATTORNEY'S FEES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
8.13 CONFIDENTIALITY. Each party hereto agrees that any confidential
information, knowledge or data concerning or relating to the business or
financial affairs of the other parties to which such party has been or shall
become privy by reason of this Agreement, discussions or negotiations relating
to this Agreement, the performance of its obligations hereunder or the ownership
of the Shares purchased hereunder shall be governed by the terms of the
Nondisclosure Agreement in the form attached hereto as Exhibit F by and between
the Company and each of the Purchasers.
23
IN WITNESS WHEREOF, the parties hereto have executed this SERIES B
PREFERRED STOCK PURCHASE AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY:
PEOPLEPC INC.
By: /s/ Xxxx Xxxxx
-----------------------------------------
Name: Xxxx Xxxxx
Title: Chairman & CEO
PURCHASERS:
SOFTBANK CAPITAL PARTNERS LP
By: SOFTBANK Capital Partners LLC
Its General Partner
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Administrative Member
SOFTBANK CAPITAL LP
By: SOFTBANK Capital Partners LLC
Its General Partner
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Administrative Member
SOFTBANK CAPITAL ADVISORS FUND LP
By: SOFTBANK Capital Partners LLC
Its General Partner
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Administrative Member
24
[SIGNATURE PAGE TO PEOPLEPC SERIES B PREFERRED
STOCK PURCHASE AGREEMENT]
SOFTBANK TECHNOLOGY VENTURES IV LP
By: SOFTBANK Technology Ventures IV LLC
By: /s/ Xxxxxxx X. Xxxx
----------------------------------------
Name: Xxxxxxx X. Xxxx
Title:
-----------------------------------
SOFTBANK TECHNOLOGY ADVISORS FUND LP
By: SOFTBANK Technology Ventures IV LLC
By: /s/ Xxxxxxx X. Xxxx
----------------------------------------
Name: Xxxxxxx X. Xxxx
Title:
-----------------------------------
25
[SIGNATURE PAGE TO PEOPLEPC SERIES B PREFERRED
STOCK PURCHASE AGREEMENT]
XXXX XXXXXX
/s/ Xxxx Xxxxxx
-------------------------------------------
XXXXX XXXXXX
/s/ Xxxxx Xxxxxx
-------------------------------------------
26
[SIGNATURE PAGE TO PEOPLEPC SERIES B PREFERRED
STOCK PURCHASE AGREEMENT]
CMS TECH CO-INVESTMENT SUBPARTNERSHIP
By:
-----------------------------------------
Authorized Representative
27
[SIGNATURE PAGE TO PEOPLEPC SERIES B PREFERRED
STOCK PURCHASE AGREEMENT]
BIB INVESTMENT PARTNERS
By:
-----------------------------------------
Xxx Xxxxx, Partner
28
4
DEFINITIONS ADDENDUM
This Definitions Addendum is an attachment to and part of that certain
Series B Preferred Stock Purchase Agreement (the "PURCHASE AGREEMENT") dated as
of December 17, 2001 between PEOPLEPC INC. and the purchasers named therein.
Except as otherwise stated in the Purchase Agreement, the following terms shall
have the following meanings:
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses,
including any damages, of whatever nature, resulting from a Third Party Claim.
"AFFILIATE" means, with respect to a specified person or entity, a
person or entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the person or entity specified.
"BENEFICIALLY OWNED" means, with respect to any Person in connection
with shares of Common Stock, all shares of Common Stock of which such Person is
the beneficial owner within the meaning of Rule 13d-3 under the Exchange Act.
"BUSINESS DAY" means any day other than (i) a Saturday, Sunday or legal
holiday, or (ii) a day on which commercial banks in San Francisco, California or
New York City, New York are authorized or required by law or executive order to
close.
"BUSINESS PLAN" shall mean the business plan of the Company, dated as
of December 13, 2001, previously delivered by the Company to the Purchasers.
"COMPENSATION AND BENEFIT PLAN" means any bonus, deferred compensation,
pension, retirement, profit-sharing, thrift, savings, employee stock ownership,
stock bonus, stock purchase, restricted stock, stock option, employment,
termination, severance, compensation, medical, health or other plan, agreement,
policy or arrangement that covers employees, directors, former employees or
former directors of the Company or its Subsidiaries.
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
1
"GAAP" or "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means generally
accepted accounting principles as in effect from time to time in the United
States.
"GOVERNMENTAL ENTITY" means any governmental or regulatory authority,
agency, commission, body, court, tribunal or other governmental entity or
authority.
"KEY EMPLOYEE" shall mean Xxxx Xxxxx, Xxx Xxxxxx, Xxxx Xxxxxxxx,
Xxxxxxx Xxxxxx, Xxx Xxxxxx, Xxxxx Xxxxxxxx and Xxxxx Waxmart.
"KNOWLEDGE" or words or phrases of similar import means the actual
knowledge, after reasonable investigation, of any director or executive officer
of the Company.
"LIABILITY" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due).
"LIEN" or "LIENS" means, with respect to any Person, any security
interest, pledge, mortgage, charge, option, assignment, hypothecation,
encumbrance, attachment, garnishment, sequestration, forfeiture, execution or
other voluntary or involuntary lien upon or affecting the revenues of such
Person or any real or personal property in which such Person has or hereafter
acquires any interest.
"MATERIAL ADVERSE CHANGE" means a material adverse effect upon the
business, financial condition or results of operations of the Company and its
Subsidiaries (taken as a whole); provided, however, that none of the following
shall be deemed in themselves, either alone or in combination, to constitute,
and none of the following shall be taken into account in determining whether
there has been or will be, a Material Adverse Change:
(a) any adverse changes, events or effects resulting from conditions
affecting the industry in which the Company participates, the U.S.
economy as a whole or foreign economies in any locations where the
Company has material operations, sales, suppliers or customers, all to
the extent that such adverse changes, events or effects do not have a
disproportionate effect on the Company and its Subsidiaries, taken as
a whole;
2
(b) any material suspension or material limitation of trading in
securities generally on the Nasdaq National Market;
(c) any attack on, outbreak or escalation of hostilities or act of
terrorism involving the United States, any declaration of war by
Congress or any other national or international calamity or emergency;
(d) any adverse changes, events or effects resulting from the taking of
any action required by this Agreement;
(e) any incurrence by the Company and its Subsidiaries of expenses and
losses in the amounts, and at the times set forth in the Business
Plan.
"MATERIAL ADVERSE EFFECT" means a material adverse effect upon the
business, financial condition or results of operations of the Company and its
Subsidiaries (taken as a whole), or upon the validity or enforceability of this
Agreement, the Certificate, the Registration Rights Agreement or the Shares, or
upon the ability of the Company to perform its obligations hereunder or under
the Certificate or the Registration Rights Agreement, or upon the rights of the
Purchasers hereunder or thereunder.
"PERSON" means any individual, corporation (including not-for-profit),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, Governmental Entity or other entity of
any kind or nature.
"SEC" means the Securities and Exchange Commission or any successor
agency.
"SOFTBANK" means SOFTBANK Capital Partners LP, a Delaware limited
partnership.
"SUBSIDIARY" means, with respect to any Person, any entity, whether
incorporated or unincorporated, of which at least a majority of the securities
or ownership interests having by their terms ordinary voting power to elect a
majority of the board of directors or other Persons performing similar functions
is directly or indirectly owned or controlled by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries.
"TAXES" means for any Person any federal or state tax, assessment,
duty, levy, withholding liability, impost and other
3
charges of every nature whatsoever imposed by any Governmental Entity on such
Person or on any of its property or because of any, revenue, income, sales, use,
product, employee or franchise, and any interest or penalty with respect to any
of the foregoing.
4
EXHIBIT A
SCHEDULE OF PURCHASERS IN FIRST CLOSING
NAME AND ADDRESS SHARES
---------------- ------
SOFTBANK Capital Partners LP 1,799,928
SOFTBANK Capital LP 1,769,004
SOFTBANK Capital Advisors Fund LP 31,068
0000 Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Phone: (000) 000-0000
Fax: (000)000-0000
--------------------------------------------------------------------------------
SOFTBANK Technology Ventures IV LP 49,060
SOFTBANK Technology Advisors Fund LP 940
Attention: Xxxxxxx X. Xxxx
000 Xxxxxxxx Xxxxx Xxx, Xxxxx 000
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
--------------------------------------------------------------------------------
Xxxx Xxxxxx 600,000
--------------------------------------------------------------------------------
Xxxxx Xxxxxx 60,000
[ADDRESS TO COME]
CMS Tech Co-Investment Subpartnership 50,000
[ADDRESS TO COME]
BIB Investment Partners 15,000
[ADDRESS TO COME]
TOTAL: 4,375,000
A-1
EXHIBIT B
CERTIFICATE OF DESIGNATIONS
B-1
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
C-1
EXHIBIT D
VOTING AGREEMENT
D-1
EXHIBIT E
FORM OF OPINION OF OUTSIDE COUNSEL
E-1
EXHIBIT F
NONDISCLOSURE AGREEMENT
F-1
