STOCK PURCHASE AGREEMENT
by
and
between
USinternetworking, Inc.
and
Xxxxx Xxxxxx
-------------------------
Dated as of June 19, 1998
TABLE OF CONTENTS
PAGE
----
ARTICLE 1. DEFINITIONS ..................................................... 1
1.1. DEFINITIONS ............................................... 1
1.2. ACCOUNTING TERMS; FINANCIAL STATEMENTS .................... 4
1.3. KNOWLEDGE STANDARD ........................................ 4
1.4. Other Defined Terms ....................................... 4
ARTICLE 2. AUTHORIZATION OF PREFERRED SHARES; PURCHASE AND SALE OF
PREFERRED SHARES ............................................... 5
2.1. PREFERRED SHARES .......................................... 5
2.2. PURCHASE AND SALE OF PREFERRED SHARES ..................... 5
2.3. CLOSING ................................................... 5
2.4. FEES AND EXPENSES ......................................... 5
ARTICLE 3. CONDITIONS TO THE OBLIGATION OF XX. XXXXXX TO PURCHASE
THE PREFERRED SHARES ........................................... 6
3.1. REPRESENTATIONS AND WARRANTIES ............................ 6
3.2. COMPLIANCE WITH TERMS AND CONDITIONS OF THIS AGREEMENT .... 6
3.3. DELIVERY OF CERTIFICATES EVIDENCING THE SHARES ............ 6
3.4. [intentionally omitted] ................................... 6
3.5. SECRETARY'S CERTIFICATES .................................. 6
3.6. DOCUMENTS ................................................. 6
3.7. PURCHASE PERMITTED BY APPLICABLE LAWS ..................... 6
3.8. CONSENTS AND APPROVALS .................................... 7
3.9. CONSENT AND WAIVER ........................................ 7
3.10. JOINDER TO THE SHAREHOLDERS' AGREEMENT ................... 7
3.11. NO MATERIAL JUDGMENT OR ORDER ............................ 7
3.12. LEGAL OPINION ............................................ 7
ARTICLE 4. CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSE ............ 8
4.1. REPRESENTATIONS AND WARRANTIES ............................ 8
4.2. COMPLIANCE WITH THIS AGREEMENT ............................ 8
4.3. [intentionally omitted] ................................... 8
4.4. ISSUANCE PERMITTED BY APPLICABLE LAWS ..................... 8
4.5. PAYMENT OF PURCHASE PRICE ................................. 8
4.6. CONSENTS AND APPROVALS .................................... 8
i
4.7. CONSENT AND WAIVER ........................................ 8
4.8. JOINDER TO THE SHAREHOLDERS' AGREEMENT .................... 9
4.9. LEGAL OPINION ............................................. 9
4.10. NO MATERIAL JUDGMENT OR ORDER ............................ 9
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY ................... 9
5.1. CORPORATE EXISTENCE AND AUTHORITY ......................... 9
5.2. CORPORATE AUTHORIZATION; NO CONTRAVENTION ................. 9
5.3. GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENTS .......... 10
5.4. BINDING EFFECT ............................................ 10
5.5. CAPITALIZATION ............................................ 10
5.6. PRIVATE OFFERING .......................................... 11
5.7. LITIGATION ................................................ 11
5.8. FINANCIAL STATEMENTS ...................................... 11
5.9. TITLE AND CONDITION OF ASSETS ............................. 12
5.10. CONTRACTUAL OBLIGATIONS .................................. 12
5.11. TAX MATTERS .............................................. 12
5.12. SEVERANCE ARRANGEMENTS ................................... 12
5.13. INVESTMENT COMPANY/GOVERNMENT REGULATIONS ................ 12
5.14. BROKER'S, FINDER'S OR SIMILAR FEES ....................... 12
5.15. LABOR RELATIONS AND EMPLOYEE MATTERS ..................... 13
5.16. EMPLOYEE BENEFITS MATTERS ................................ 13
5.17. OUTSTANDING BORROWINGS ................................... 13
5.18. INSURANCE SCHEDULE ....................................... 13
5.19. SOLVENCY ................................................. 13
5.20. NO OTHER AGREEMENTS TO SELL THE ASSETS OR CAPITAL
STOCK OF THE COMPANY ................................... 13
5.21. KEY EMPLOYEES ............................................ 14
5.22. COMPLIANCE WITH LAW ...................................... 14
5.23. DISCLOSURE ............................................... 14
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER ................. 14
6.1. LOCATION OF PRINCIPAL OFFICE, QUALIFICATION AS AN
ACCREDITED INVESTOR ..................................... 14
6.2. TRANSFER RESTRICTIONS IMPOSED BY SECURITIES LAW ........... 15
6.3. BINDING EFFECT ............................................ 15
6.4. PURCHASE FOR OWN ACCOUNT .................................. 15
6.5. FINANCIAL CONDITION; SOPHISTICATION ....................... 16
6.6. RECEIPT OF INFORMATION .................................... 16
6.7. BROKER'S, FINDER'S OR SIMILAR FEES ........................ 16
6.8. GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENT ........... 16
6.9. LITIGATION ................................................ 16
ii
ARTICLE 7. COVENANTS OF THE COMPANY WITH RESPECT TO THE PERIOD
FOLLOWING THE CLOSING .......................................... 17
7.1. Reservation of Shares ..................................... 17
ARTICLE 8. INDEMNIFICATION ................................................. 17
8.1. Indemnification ........................................... 17
8.2. Notification .............................................. 18
ARTICLE 9. MISCELLANEOUS ................................................... 19
9.1. Survival of Representations and Warranties ................ 19
9.2. Notices ................................................... 19
9.3. Successors and Assigns .................................... 20
9.4. Amendment and Waiver ...................................... 20
9.5. Counterparts .............................................. 20
9.6. Headings .................................................. 21
9.7. Governing Law ............................................. 21
9.8. Jurisdiction .............................................. 21
9.9. Severability .............................................. 21
9.10. Rules of Construction .................................... 21
9.11. Entire Agreement ......................................... 21
9.12. Publicity ................................................ 22
9.13. Further Assurances ....................................... 22
9.14. Waiver of Jury Trial ..................................... 22
iii
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is entered into as of
this 19th day of June, 1998, by and between (i) USinternetworking, Inc., a
Delaware corporation (the "Company") and (ii) Xxxxx Xxxxxx.
RECITALS:
A. Upon the terms and subject to the conditions set forth in this
Agreement, the Company proposes to issue and sell shares of its Series A
Convertible Preferred Stock ("Series A Preferred Stock," as defined below) to
Xx. Xxxxxx.
B. Xx. Xxxxxx desires to purchase from the Company shares of the Series
A Preferred Stock as set forth on Schedule I hereto.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE 1.
DEFINITIONS
1.1. DEFINITIONS.
As used in this Agreement, and unless the context requires a different
meaning, the following terms have the meanings indicated:
"AFFILIATE" means, with respect to any specified Person, any Person
that, directly or indirectly, controls, is controlled by, or is under common
control with, such specified Person, whether by contract, through one or more
intermediaries, or otherwise.
"BUSINESS DAY" shall mean a day other than a Saturday or Sunday or any
federal holiday.
"COMMISSION" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act (as
defined below).
"COMMON STOCK" means the common stock, par value $.001 per share, of
the Company, or any other capital stock of the Company into which such stock is
reclassified or reconstituted.
"CONDITION OF THE COMPANY" means the assets, business, properties,
operations, financial condition or prospects of the Company.
"EMPLOYEE PLANS" means all benefits arrangements, pension plans or
welfare plans adopted by the Company for its employees.
"EMPLOYEE STOCK OPTION PLAN" means an employee stock option plan
adopted by the Compensation Committee of the Board of Directors of the Company
providing for the issuance to certain employees of the Company of options to
purchase a certain number of shares of Common Stock at a certain exercise price
per share. The total number of shares of Common Stock which may be issued under
such plan shall not exceed 6.5% of the total number of outstanding shares of
common stock calculated on a fully diluted basis, not including the options and
shares issuable or issued on exercise of options pursuant to the Employee Stock
Option Plan.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.
"GAAP" means United States generally accepted accounting principles, in
effect from time to time, consistently applied.
"GOVERNMENTAL AUTHORITY" means the government of any nation, state,
city, locality or other political subdivision of any thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"INDEBTEDNESS" means, as to any Person: (a) all obligations, whether or
not contingent, of such Person for borrowed money (including, without
limitation, reimbursement and all other obligations with respect to surety
bonds, letters of credit and bankers' acceptances, whether or not matured), (b)
all obligations of such Person evidenced by notes, bonds, debentures or similar
instruments, (c) all obligations of such Person representing the balance of
deferred purchase price of property or services, except trade accounts payable
and accrued commercial or trade liabilities arising in the ordinary course of
business, (d) all interest rate and currency swaps, caps, collars and similar
agreements or hedging devices under which payments are obligated to be made by
such Person, whether periodically or upon the happening of a contingency, (e)
all indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (f)
all obligations of such Person under leases which have been or should be, in
accordance with GAAP, recorded as capital leases, (g) all indebtedness secured
by any Lien (other than Liens in favor of lessors under leases other than leases
included in clause (0) on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall have been assumed
by that Person or is non-recourse to the credit of that Person, and (h) all
Indebtedness of any other Person referred to in clauses (a) through (F) above,
guaranteed, directly or indirectly, by that Person.
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"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or other security interest of
any kind or nature whatsoever (excluding preferred stock or equity related
preferences) including, without limitation, those created by, arising under or
evidenced by any conditional sale or other title retention agreement, the
interest of a lessor under a capital lease obligation, or any financing lease
having substantially the same economic effect as any of the foregoing.
"OUTSTANDING BORROWINGS" means all Indebtedness of the Company for
borrowed money (including, without limitation, reimbursement and all other
obligations with respect to surety bonds, letters of credit and bankers'
acceptances, whether or not matured).
"PERSON" means any individual, firm, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
Governmental Authority or other entity of any kind, and shall include any
successor (by merger or otherwise) of such entity.
"REQUIREMENTS OF LAW" means, as to any Person, the provisions of the
Certificate of Incorporation and By-laws or other organizational or governing
documents of such Person, and any law, treaty, rule, regulation, right,
privilege, qualification, license or franchise, order, judgment, or
determination of an arbitrator or a court or other Governmental Authority, in
each case, applicable or binding upon such Person or any of its property or to
which such Person or any of its property is subject or applicable to any or all
of the transactions contemplated by or referred to in the Transaction
Agreements.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"SERIES A PREFERRED STOCK" means the 8% Series A Convertible Preferred
Stock, par value $.0 1 per share, of the Company, or any other capital stock of
the Company into which such stock is reclassified or reconstituted.
"SHAREHOLDERS' AGREEMENT" means the Shareholders' Agreement, dated as
of May 28, 1998, by and among the Company and the Stockholders that are listed
as a party thereto and any Persons who become or became parties to the
Shareholders' Agreement whether pursuant to an amendment or otherwise.
"TRANSACTION AGREEMENTS" means this Agreement, the Joinder to the
Shareholders' Agreement (as defined in Section 3.10) and the Shareholders'
Agreement.
"TRANSACTION EXPENSES" means any and all reasonable out-of-pocket (i)
legal expenses incurred by Xx. Xxxxxx in connection with the negotiation and
preparation of the Transaction Agreements, the consummation of the transactions
contemplated thereby and preparation for any of the foregoing, including,
without limitation, travel expenses, reasonable fees, charges and disbursements
of counsel and any similar or related legal costs and legal expenses; and (ii)
other expenses incurred by Xx. Xxxxxx in connection with the negotiation and
preparation of this Agreement.
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1.2. ACCOUNTING TERMS: FINANCIAL STATEMENTS.
All accounting terms used herein not expressly defined in this
Agreement shall have the respective meanings given to them in accordance with
sound accounting practice. The term "sound accounting practice" shall mean such
accounting practice as, in the opinion of the independent certified public
accountants regularly retained by the Company conforms at the time to GAAP
applied on a consistent basis except for changes with which such accountants
concur.
1.3. KNOWLEDGE STANDARD.
When used herein, the phrase "to the knowledge or' any Person, "to the
best knowledge of' any Person or any similar phrase shall mean, (i) with respect
to any individual, the actual knowledge of such Person, (ii) with respect to any
corporation, the actual knowledge of the officers and directors of such
corporation and the knowledge of such facts that such persons should have in the
exercise of their duties after reasonable inquiry, and (iii) with respect to a
partnership, the actual knowledge of the officers and directors of the general
partner of such partnership and the knowledge of such facts that such persons
should have in the exercise of their duties after reasonable inquiry.
1.4. OTHER DEFINED TERMS.
The following terms shall have the meanings specified in the Sections
set forth below:
Term Section
---- -------
Actions 5.7
Certificate of Incorporation 2.1
Certificate 2.1
Certificate of Designation 2.1
Closing Date 2.2
Closing 2.3
Indemnified Party 8.2
Indemnifying Party 8.2
Liabilities 8.1
Preferred Shares 2.1
Purchase Price 2.2
Purchasing Indemnified Party 9.1
Purchasing Indemnifying Party 9.1
Selling Indemnified Party 9.1
Selling Indemnifying Party 9.1
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ARTICLE 2.
AUTHORIZATION OF PREFERRED SHARES;
PURCHASE AND SALE OF PREFERRED SHARES
2.1. PREFERRED SHARES.
The Board of Directors of the Company has authorized the issuance and
sale of 666.67 shares of the Series A Preferred Stock (the "Preferred Shares")
and has duly adopted resolutions establishing the rights, preferences,
privileges and restrictions of the Series A Preferred Stock. The Preferred
Shares will have the respective rights, preferences and privileges set forth in
the Company's Certificate of Incorporation, as amended (the "Certificate of
Incorporation") and the Certificate of Designations, Preferences, and Other
Special Rights of Preferred Stock and Qualifications, Limitations and
Restrictions Thereof filed on May 27, 1998 with respect thereto and amended on
July 2, 1998 (the "Certificate of Designation" and together with the Certificate
of Incorporation, the "Certificate").
2.2. PURCHASE AND SALE OF PREFERRED SHARES.
Upon the terms and subject to the conditions herein contained, on the
date hereof or any other date as agreed upon by the parties (the "Closing
Date"), the Company shall issue to Xx. Xxxxxx and Xx. Xxxxxx shall acquire from
the Company, 666.67 Preferred Shares. The purchase price of such Preferred
Shares, to be paid by Xx. Xxxxxx is Four Hundred Thousand Dollars ($400,000)
(the "Purchase Price").
2.3. CLOSING.
The closing of the sale to and purchase by Xx. Xxxxxx of the Preferred
Shares (the "Closing") shall occur at 11 o'clock A.M., local time on the Closing
Date at the offices of Xxxxxx & Xxxxxxx, 0000 Xxxxxxxxxxxx Xxxxxx, X.X.,
Xxxxxxxxxx, X.X. 00000, or such other location as the parties may agree. At the
Closing, (i) the Company shall deliver to Xx. Xxxxxx a certificate evidencing
the Preferred Shares being purchased by Xx. Xxxxxx, free and clear of any Liens
of any nature whatsoever, other than those created by the Certificate or the
Shareholders' Agreement, registered in Xx. Xxxxxx'x name, and (ii) Xx. Xxxxxx
shall deliver to the Company the Purchase Price, by cashier's or certified check
or wire transfer of immediately available funds.
2.4. FEES AND EXPENSES.
Concurrently with the Closing, the Company shall reimburse Xx. Xxxxxx
for the Transaction Expenses, which payment shall be made by wire transfer of
immediately available funds to an account or accounts designated by Xx. Xxxxxx.
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ARTICLE 3.
CONDITIONS TO THE OBLIGATION OF XX. XXXXXX
TO PURCHASE THE PREFERRED SHARES
The obligation of Xx. Xxxxxx to purchase the Preferred Shares, to pay
the Purchase Price therefor and to perform any of its obligations hereunder on
the Closing Date (unless otherwise specified) shall be subject to the
satisfaction of the following conditions on or before the Closing Date:
3.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company contained in Section
5 hereof shall be true and correct in all material respects as of the date
hereof.
3.2. COMPLIANCE WITH TERMS AND CONDITIONS OF THIS AGREEMENT.
The Company shall have performed and complied with all of the
agreements and conditions set forth herein that are required to be performed or
complied with by the Company on or before the date hereof.
3.3. DELIVERY OF CERTIFICATES EVIDENCING THE SHARES.
The Company shall have delivered to Xx. Xxxxxx the certificates
evidencing the Preferred Shares as set forth in Section 2.3.
3.4. [intentionally omitted]
3.5. SECRETARY'S CERTIFICATES.
Xx. Xxxxxx shall have received a certificate from the Company, dated as
of the Closing Date and signed by the Secretary or an Assistant Secretary of the
Company, certifying that the attached copies of the Certificate of
Incorporation, Certificate of Designation, By-laws of the Company, (all of which
will be in form and substance consistent with this Agreement) and resolutions of
the Board of Directors of the Company approving this transaction are all true,
complete and correct and remain unamended and in Xxxx force and effect.
3.6. DOCUMENTS.
Xx. Xxxxxx shall have received true, complete and correct copies of
such documents and such other information as they may have reasonably requested
in connection with or relating to the sale of the Preferred Shares and the
transactions required to be performed herein.
3.7. PURCHASE PERMITTED BY APPLICABLE LAWS.
The acquisition of and payment for the Preferred Shares to be acquired
by Xx. Xxxxxx hereunder and the consummation of this Agreement (a) shall not be
prohibited by any
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Requirements of Law, and (b) shall not conflict with or be prohibited by any
Contractual Obligation of the Company.
3.8. CONSENTS AND APPROVALS.
All consents, exemptions, authorizations, or other actions by, or
notices to, or filings with, Governmental Authorities and other Persons in
respect of all Requirements of Law and with respect to those material
Contractual Obligations of the Company necessary or required in connection with
the execution, delivery or performance (including, without limitation, the
issuance of the Preferred Shares and the issuance of the Common Stock upon
conversion of the Preferred Shares) by the Company shall have been obtained and
be in Xxxx force and effect and all waiting periods shall have lapsed without
extension or the imposition of any conditions or restrictions.
3.9. CONSENT AND WAIVER.
The shareholders that are parties to the Shareholders' Agreement and
the holders of at least two-thirds of the outstanding shares of Series A
Preferred Stock shall have duly executed and delivered to Xx. Xxxxxx the Consent
and Waiver substantially in the form attached as Exhibit A hereto.
3.10. JOINDER TO THE SHAREHOLDERS' AGREEMENT.
The shareholders that are parties to the Shareholders' Agreement shall
have duly executed and delivered to Xx. Xxxxxx the Joinder to the Shareholders'
Agreement substantially in the form attached as Exhibit B hereto.
3.11. NO MATERIAL JUDGMENT OR ORDER.
There shall not be any judgment or order of a court of competent
jurisdiction or any ruling of any Governmental Authority or any condition
imposed under any Requirement of Law which, in the reasonable judgment of Xx.
Xxxxxx, would (i) prohibit the purchase of the Preferred Shares hereunder, (ii)
subject Xx. Xxxxxx to any penalty if the Preferred Shares were to be purchased
hereunder, or (iii) question the validity or legality of the transactions
required to be performed under this Agreement.
3.12. LEGAL OPINION.
Xx. Xxxxxx shall have received an opinion of counsel for the Company in
the form attached as Exhibit C hereto.
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ARTICLE 4.
CONDITIONS TO THE OBLIGATION OF
THE COMPANY TO CLOSE
The obligation of the Company to issue and sell the Preferred Shares
and the other obligations of the Company hereunder, shall be subject to the
satisfaction of the following conditions on or before the Closing Date:
4.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of Xx. Xxxxxx contained in Section 6
hereof shall be true and correct in all material respects on and as of the
Closing Date as if made at and as of such date.
4.2. COMPLIANCE WITH THIS AGREEMENT.
Xx. Xxxxxx shall have performed and complied with all of the agreements
and conditions set forth herein that are required to be performed or complied
with by Xx. Xxxxxx on or before the Closing Date.
4.3. [intentionally omitted]
4.4. ISSUANCE PERMITTED BY APPLICABLE LAWS.
The issuance of the Preferred Shares to be issued by the Company
hereunder and the consummation of this Agreement (a) shall not be prohibited by
any Requirements of Law, and (b) shall not conflict with or be prohibited by any
Contractual Obligations of Xx. Xxxxxx.
4.5. PAYMENT OF PURCHASE PRICE.
Xx. Xxxxxx shall have tendered to the Company the Purchase Price as set
forth in Schedule I hereto.
4.6. CONSENTS AND APPROVALS.
All consents, exemptions, authorizations, or other actions by, or
notices to, or filings with, Governmental Authorities and other Persons in
respect of all Requirements of Law and with respect to those material
Contractual Obligations of Xx. Xxxxxx necessary or required in connection with
the execution, delivery or performance by Xx. Xxxxxx shall have been obtained
and be in Xxxx force and effect and all waiting periods shall have lapsed
without extension or imposition of any conditions or restrictions.
4.7. CONSENT AND WAIVER.
The Consent and Waiver substantially in the form set forth in Exhibit A
hereto shall have been executed and delivered by each of the shareholders that
are a party to the
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Shareholders' Agreement and by the holders of at least two-thirds of the
outstanding shares of Series A Preferred Stock.
4.8. JOINDER TO THE SHAREHOLDERS' AGREEMENT.
The Joinder to the Shareholders' Agreement substantially in the form
set forth in Exhibit B hereto shall have been executed and delivered by each of
the shareholders that are a party to the Shareholders' Agreement.
4.9. LEGAL OPINION.
The Company shall have received an opinion of counsel for Xx. Xxxxxx
containing the opinions set forth in Exhibit D hereto.
4.10. NO MATERIAL JUDGMENT OR ORDER.
There shall not be any judgment or order of a court of competent
jurisdiction or any ruling of any Governmental Authority or any condition
imposed under any Requirements of Law which, in the reasonable judgment of the
Company would (i) prohibit the sale of the Shares or the consummation of the
other transactions hereunder, (ii) subject the Company to any penalty if the
Shares were to be sold hereunder or (iii) question the validity or legality of
the transactions required to be performed under this Agreement.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to, and covenants with, Xx. Xxxxxx
as of the date hereof as follows:
5.1. CORPORATE EXISTENCE AND AUTHORITY.
The Company was incorporated on January 14, 1998 and (a) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, (b) has all requisite corporate power and authority to
own and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently, or is currently proposed to be,
engaged, and (c) has the corporate power and authority to execute, deliver and
perform its obligations under the Transaction Agreements to which it is or will
be a party.
5.2. CORPORATE AUTHORIZATION: NO CONTRAVENTION.
The execution, delivery and performance by the Company of the
Transaction Agreements to which it is or will be a party and the consummation of
the transactions contemplated hereby, including, without limitation, the
issuance of the Preferred Shares, (a) have been duly authorized by all necessary
corporate action, including, if required, stockholder action, (b) do not
conflict with or contravene the terms of the Certificate or the By-laws of the
Company, or any amendment thereof; and (c) will not violate, conflict with or
result in any material breach
-9-
or contravention of (i) any Contractual Obligation of the Company or (ii) any
Requirements of Law applicable to the Company.
5.3. GOVERNMENTAL AUTHORIZATION: THIRD PARTY CONSENTS.
No approval, consent, compliance, exemption, authorization, or other
action by, or notice to, or filing with, any Governmental Authority or any other
Person in respect of any applicable Requirements of Law in effect on the date
hereof, and no lapse of a waiting period under any applicable Requirements of
Law in effect on the date hereof, is necessary or required in connection with
the execution and delivery of the Transaction Agreements to which it is or will
be a party or the performance by the Company or enforcement against the Company
of any material obligation by the Company under the Transaction Agreements to
which it is or will be a party or the transactions to be performed thereunder.
5.4. BINDING EFFECT.
This Agreement has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency or other similar laws affecting
the enforcement of creditors' rights generally and by general principles of
equity relating to enforceability.
5.5. CAPITALIZATION.
On the Closing Date, the capital stock of the Company shall consist of
at least One Hundred Fifty Million (150,000,000) shares of Common Stock and One
Hundred Thousand (100,000) shares of preferred stock, with such shares including
the Preferred Shares. Of the 150,100,000 authorized shares of capital stock of
the Company, as of the date hereof, there is (i) 15 million shares of Common
Stock issued and outstanding; (ii) at least 5,000,000 shares of Common Stock
reserved for issuance pursuant to the Employee Stock Option Plan; (iii) 52,000
shares of Series A Preferred Stock issued and outstanding; and (iv) 108,600,000
Xxxxx diluted shares of Common Stock outstanding, assuming conversion of all of
the outstanding shares of Series A Preferred Stock mentioned in subsection (iii)
above, into 93,600,000 shares of Common Stock, but not including any shares
authorized pursuant to the Employee Stock Option Plan or otherwise. As of the
Closing Date, all outstanding shares of capital stock of the Company, including
the Preferred Shares, and the shares of Common Stock issuable upon conversion of
the Preferred Shares (when issued in accordance with the conversion terms
thereof), will be duly authorized and validly issued, Xxxxx paid, nonassessable
and free and clear of any Liens, preferential rights, priorities, claims,
options, charges or other encumbrances or restrictions other than those created
by the Certificate, the Bylaws, and the Shareholders' Agreement.
(a) Schedule 5.5 sets forth the name of each holder of the issued
and outstanding capital stock of the Company as of June 19, 1998, the number of
shares of such capital stock held beneficially or of record by each such holder
as of June 19, 1998, the name of each Person holding any options or other rights
to purchase any capital stock of the Company as
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of June 19, 1998 (except as may be permitted under the Shareholders' Agreement),
the number, class and series of shares of capital stock subject to each such
option or right as of June 19, 1998, and the exercise price of each such option
or right as of June 19, 1998. Except for the options under the Employee Stock
Option Plan and the Preferred Shares, there are no outstanding securities
convertible into or exchangeable for capital stock of the Company or options,
warrants or other rights to purchase or subscribe to capital stock of the
Company or contracts, commitments, agreements, understandings or arrangements of
any kind to which the Company or any holder is a party relating to the issuance
of any capital stock of the Company, any such convertible or exchangeable
securities or any such options, warrants or rights. The Company has no
subsidiaries.
(b) Except as set forth on Schedule 5.5 and as may be provided in
the Shareholders' Agreement as of June 19, 1998, no Person has any preemptive
rights, rights of first refusal, "tag along" rights, rights of co-sale or any
similar rights with respect to the issuance of the Preferred Shares contemplated
hereby or the issuance of any additional shares of stock by the Company.
Schedule 5.5 identifies all Persons holding any such rights as of June 19, 1998
and describes the material terms of all such rights.
5.6. PRIVATE OFFERING.
No form of general solicitation or general advertising was used by the
Company or its representatives in connection with the offer or sale of the
Preferred Shares. No registration of the Preferred Shares pursuant to the
provisions of the Securities Act or any state securities or "blue sky" laws will
be required by the offer, sale or issuance of the Preferred Shares pursuant to
this Agreement. The Company agrees that neither it, nor anyone authorized to act
on its behalf, will offer or sell the Preferred Shares or any other security so
as to require the registration of the Preferred Shares pursuant to the
provisions of the Securities Act or any state securities or "blue sky" laws,
unless such Preferred Shares are so registered.
5.7. LITIGATION.
As of June 19, 1998, the Company has not received any notice of any
governmental charge, complaint or action or court order, writ, injunction,
judgment or decree outstanding or any claim, suit, litigation, legal proceeding,
(collectively, "Actions") which if adversely determined would have a material
adverse effect on (i) the Company or the Condition of the Company or (ii) the
transactions required to be performed by the Company under this Agreement and,
to the Company's knowledge, there is no valid basis therefor, and no Action is
threatened against the Company.
5.8. FINANCIAL STATEMENTS.
The Company was incorporated on January 14, 1998. As of June 19, 1998,
it has no assets, except as described below, and has not prepared financial
statements. Schedule 5.8(a) sets forth all expenditures by or on behalf of the
Company since its formation through June 19, 1998 in excess of $25,000, in any
one case, or $250,000, in the aggregate. The Company's projections attached
hereto as Schedule 5.8(b) are as of June 19, 1998 and were prepared by the
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Company's management in good faith, are based on reasonable assumptions,
represent management's best estimates of the Company's predicted operations and
performance under its business plan and reflect actual subjective expectations
of the Company's management. The Company has no reason to believe that the
results reflected in such projections are not attainable.
5.9. TITLE AND CONDITION OF ASSETS.
As of June 19, 1998, the Company currently has no assets (other than
cash) except as listed on Schedule 5.10. As of June 19, 1998, the Company has a
valid and enforceable leasehold interest in its leases listed on Schedule 5.10
pursuant to the terms of the lease agreements and is not in default thereunder.
5.10. CONTRACTUAL OBLIGATIONS.
As of June 19, 1998, the Company has not entered into any contracts or
agreements or incurred any material liabilities, other than pursuant to this
Agreement, the Shareholders' Agreement and the agreements listed on Schedule
5.10.
5.11. TAX MATTERS.
The Company has duly filed all tax reports and returns required to be
filed by it, including all federal, state, local and foreign tax returns and
reports and paid all taxes due with respect thereto.
5.12. SEVERANCE ARRANGEMENTS.
Except as set forth on Schedule 5.12 as of June 19, 1998, the Company
has not entered into any severance or similar arrangement in respect of any
present or former employee of the Company that will result in any obligation
(absolute or contingent) of the Company to make any payment to such present or
former employee of the Company following termination of employment.
5.13. INVESTMENT COMPANY/GOVERNMENT REGULATIONS.
Immediately following the Closing, after giving effect to the
transactions contemplated by this Agreement and the Shareholders' Agreement
neither the Company nor any Person controlling, controlled by or under common
control with the Company will be an "investment company" within the meaning of
the Investment Company Act of 1940, as amended. The Company is not subject to
regulation under the Public Utility Holding Company Act of 1935, as amended, the
Federal Power Act, or any federal or state statute or regulation limiting its
ability to incur Indebtedness.
5.14. BROKER'S, FINDER'S OR SIMILAR FEES.
There are no brokerage commissions, finder's fees or similar fees or
commissions payable in connection with the transactions contemplated hereby
based on any agreement,
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arrangement or understanding with the Company or any officer, director,
shareholder, or Affiliate of the Company or any action taken by any such person.
5.15. LABOR RELATIONS AND EMPLOYEE MATTERS.
(a) The Company is not and has not engaged in any unfair labor
practice.
(b) Except as set forth on Schedule 5.10 as of June 19, 1998, the
Company is not a party to any employment agreement (other than "at will"
employment relationships), collective bargaining agreement or covenant not to
compete.
(c) No complaint under any statute or regulation relating to
employment has been filed against the Company.
5.16. EMPLOYEE BENEFITS MATTERS.
As of the date hereof, the Company had not adopted or implemented an
Employee Plan, except as described on Schedule 5.16.
5.17. OUTSTANDING BORROWINGS.
Schedule 5.17 lists the amount of all material Outstanding Borrowings
as of June 19, 1998 and the name of each lender thereof.
5.18. INSURANCE SCHEDULE.
Schedule 5.18 accurately summarizes all of the Company's insurance
policies or programs m effect as of June 19, 1998 and indicates the insurer's
name and policy number and also indicates any self-insurance program that is in
effect.
5.19. SOLVENCY.
The Company has not (i) made a general assignment for the benefit of
its creditors, (ii) filed any voluntary petition in bankruptcy or suffered the
filing of any involuntary petition in bankruptcy by its creditors, (iii)
suffered the appointment of a receiver to take possession of all or
substantially all of its assets or properties, (iv) suffered the attachment or
other judicial seizure of all or substantially all of its assets or (v) admitted
in writing its inability to pay its debts as they come due.
5.20. NO OTHER AGREEMENTS TO SELL THE ASSETS OR CAPITAL STOCK OF THE
COMPANY.
Other than as otherwise set forth in this Agreement, the Company has no
legal obligation, absolute or contingent, other than the obligations of the
Company under this Agreement or the Shareholders' Agreement, to any person or
firm to (i) sell any capital stock of the Company or, outside of the ordinary
course of business, assets, or effect any merger,
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consolidation or other reorganization of the Company or (ii) enter into any
agreement with respect to any of the foregoing.
5.21. KEY EMPLOYEES.
The performance by the Company's key employees of their duties for the
Company as contemplated by the Company's business plan will not violate any
provision of any agreement to which any of such persons or the Company is a
party, including any agreement with any former employer of any such person, or
give rise to any obligation or liability of the Company to any third party or
limit in any way the Company's ability to conduct its business. None of the
Company's key employees is engaged, directly or indirectly, or has any interest
(other than as a shareholder of a public company) in any entity which is engaged
in competition with the Company in its planned activities.
5.22. COMPLIANCE WITH LAW.
In its conduct of its business and affairs since its formation, the
Company has complied in all material respects with all applicable Requirements
of Law.
5.23. DISCLOSURE.
The Company has, to the best of its knowledge, Xxxxx responded to all
requests for information, and the Company has accurately answered all questions
from Xx. Xxxxxx concerning the Condition of the Company, and has not knowingly
withheld any facts relating thereto which it reasonably believes to be material
with respect to its Condition. No information in this Agreement or in any
Exhibit or Schedule attached to this Agreement, contains or will contain any
untrue statement of a material fact or when considered together with all such
information delivered to Xx. Xxxxxx omits to state any material fact. The
disclosures made in writing by the Company in connection with this Agreement
when read in the light of the circumstances when made and taken as a whole, did
not when made contain any untrue statement of a material fact.
ARTICLE 6.
REPRESENTATIONS AND
WARRANTIES OF XX. XXXXXX
Xx. Xxxxxx hereby represents and warrants to the Company as of the date
hereof as follows:
6.1. LOCATION OF PRINCIPAL OFFICE. QUALIFICATION AS AN ACCREDITED
INVESTOR.
The state in which Xx. Xxxxxx'x principal domicile is located is the
state set forth in Xx. Xxxxxx'x address on Schedule 2. Xx. Xxxxxx, by execution
of this Agreement hereby represents that it qualifies as an "accredited
investor" for purposes of Regulation D promulgated under the Securities Act. Xx.
Xxxxxx acknowledges that the Company has made available to Xx. Xxxxxx at a
reasonable time prior to the execution of this Agreement the opportunity to ask
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questions and receive answers concerning the terms and conditions of the sale of
securities contemplated by this Agreement and to obtain any additional
information (which the Company possesses or can acquire without unreasonable
effort or expense) as may be necessary to verify the accuracy of information
furnished to Xx. Xxxxxx.
6.2. TRANSFER RESTRICTIONS IMPOSED BY SECURITIES LAW.
Xx. Xxxxxx understands that the Preferred Shares have not been
registered under the Securities Act and applicable state securities laws, and,
therefore, cannot be resold unless they are subsequently registered under the
Securities Act and applicable state securities laws or unless an exemption from
such registration is available.
6.3. BINDING EFFECT.
This Agreement has been duly authorized by all necessary action on the
part of Xx. Xxxxxx, has been duly executed and delivered by Xx. Xxxxxx, and this
Agreement constitutes the legal, valid and binding obligation of Xx. Xxxxxx,
enforceable against him in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, or similar laws affecting
the enforcement of creditors' rights generally or by equitable principles
relating to enforceability.
6.4. PURCHASE FOR OWN ACCOUNT.
(a) The Preferred Shares, and the shares of Common Stock to be
issued upon conversion of the Preferred Shares, are being or will be acquired by
Xx. Xxxxxx for his own account and with no intention of distributing or
reselling such securities or any part thereof in any transaction that would be
in violation of the securities laws of the United States of America, or any
state, without prejudice, however, to the rights of Xx. Xxxxxx at all times to
sell or otherwise dispose of all or any part of the Preferred Shares or the
shares of Common Stock issuable upon conversion of the Preferred Shares under an
effective registration statement under the Securities Act, or under an exemption
from such registration available under the Securities Act, and subject,
nevertheless, to the disposition of Xx. Xxxxxx'x property being at all times
within Xx. Xxxxxx'x control. If Xx. Xxxxxx should in the future decide to
dispose of any of the Preferred Shares or the shares of Common Stock issuable
upon conversion of the Preferred Shares, Xx. Xxxxxx understands and agrees that
Xx. Xxxxxx may do so only in compliance with the Securities Act and applicable
state securities laws, as then in effect. Xx. Xxxxxx agrees to the imprinting,
so long as required by law, of a legend on certificates representing all of the
Preferred Shares or the shares of Common Stock to be issued upon conversion of
the Preferred Shares to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF
SUCH
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ACT OR SUCH LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS SET FORTH IN THE SHAREHOLDERS' AGREEMENT, DATED AS OF MAY
28, 1998, AS AMENDED. A COPY OF SUCH AGREEMENT MAY BE OBTAINED FROM THE COMPANY
UPON REQUEST."
(b) Xx. Xxxxxx'x representations in paragraph (a) above are
qualified to the extent that Xx. Xxxxxx may create an entity to which he may
seek to transfer some or all of his Preferred Shares. Xx. Xxxxxx acknowledges,
understands and agrees that such transfer (i) will be subject to the approval of
the Stockholders (as defined in the Shareholders' Agreement). (ii) will be
subject to the approval of the holders of at least two-thirds of the Series A
Preferred Stock; and (iii) must be in compliance with the Securities Act and
applicable state securities laws, as then in effect.
6.5. FINANCIAL CONDITION: SOPHISTICATION.
Xx. Xxxxxx'x financial condition is such that Xx. Xxxxxx is able to
bear the risk of holding the Preferred Shares for an indefinite period of time
and can bear the loss of his entire investment in the Preferred Shares. Xx.
Xxxxxx has such knowledge and experience in financial and business matters and
in making high risk investments of this type that he is capable of evaluating
the merits and risks of the purchase of the Preferred Shares and understands
that there may be no established market for the Company's capital stock.
6.6. RECEIPT OF INFORMATION.
Xx. Xxxxxx has been furnished access to the business records of the
Company and such additional information and documents as Xx. Xxxxxx has
requested and has been afforded an opportunity to ask questions of and receive
answers from representatives of the Company concerning the terms and conditions
of this Agreement, the purchase of the Preferred Shares, the prospective
operations, market potential, capitalization, financial conditions, and
prospects of the business to be conducted by the Company, and all other matters
deemed relevant by Xx. Xxxxxx.
6.7. BROKER'S, FINDER'S OR SIMILAR FEES.
There are no brokerage commissions, finder's fees or similar fees or
commissions payable in connection with the transactions contemplated hereby
based on any agreement, arrangement or understanding with Xx. Xxxxxx or any
action taken by Xx. Xxxxxx.
6.8. GOVERNMENTAL AUTHORIZATION: THIRD PARTY CONSENT.
No approval, consent, compliance, exemption, authorization, or other
action by, or notice to, or filing with, any Governmental Authority or any other
Person in respect of any Requirements of Law, and no lapse of a waiting period
under any Requirements of Law, is necessary or required in connection with the
execution, delivery or performance by Xx. Xxxxxx (including, without limitation,
the acquisition of the Preferred Shares) or enforcement against Xx. Xxxxxx of
the Transaction Agreements to which Xx. Xxxxxx is or will be a party or the
transactions contemplated thereby.
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6.9. LITIGATION.
No Actions are pending, or to the best knowledge of Xx. Xxxxxx,
threatened relating to or affecting the transactions required to be performed by
Xx. Xxxxxx under the Transaction Agreements to which Xx. Xxxxxx is or will be a
party.
ARTICLE 7.
COVENANTS OF THE COMPANY WITH RESPECT
TO THE PERIOD FOLLOWING THE CLOSING
Until all Preferred Shares are no longer outstanding due to conversion
or otherwise and until the payment by the Company of all other amounts due to
Xx. Xxxxxx under this Agreement or the related agreements referred to herein or
the Certificate, the Company hereby covenants and agrees with Xx. Xxxxxx as
follows:
7.1. RESERVATION OF SHARES.
The Company shall at all times reserve and keep available out of its
authorized Common Stock, solely for the purpose of issue or delivery upon
conversion of the Preferred Shares as provided in the Certificate, the maximum
number of shares of Common Stock that may be issuable or deliverable upon such
conversion. Such shares of Common Stock shall, when issued or delivered in
accordance with the provisions of the Certificate, be duly authorized, validly
issued and fully paid and non-assessable. The Company shall issue such Common
Stock in accordance with the provisions of the Certificate and shall otherwise
comply with the terms thereof.
ARTICLE 8.
INDEMNIFICATION
8.1. INDEMNIFICATION.
(a) In addition to all other sums due hereunder or provided for in
this Agreement, the Company (the "Selling Indemnifying Party") shall defend,
indemnify and hold harmless Xx. Xxxxxx, his agents, employees, and assigns (each
a "Purchasing Indemnified Party') to the earliest extent permitted by law from
and against any and all losses, costs, claims, damages, expenses (including
reasonable fees, disbursements and other charges of counsel, as limited by
Section 8.2 below) and other liabilities (collectively, "Liabilities") incurred
or suffered by any Purchasing Indemnified Party resulting from or arising out of
(i) any breach by any Selling Indemnifying Party of any representation or
warranty, covenant or agreement of the Selling Indemnifying Party in this
Agreement; provided, however, that no Selling Indemnifying Party shall be liable
under this Section 8.1 to any Purchasing Indemnified Party to the extent that it
is finally judicially determined that such Liabilities resulted primarily from
the material breach by such Purchasing Indemnified Party of any representation,
warranty, covenant or other agreement of such Purchasing Indemnified Party
contained in this Agreement or (ii) any material liability of the Company on the
Closing Date not disclosed in this Agreement.
-17-
(b) In addition to all other sums due hereunder or provided for in
this Agreement, Xx. Xxxxxx (the "Purchasing Indemnifying Party") shall defend,
indemnify and hold harmless the Company and its Affiliates and its officers,
directors, agents, employees, subsidiaries, partners and assigns (each a
"Selling Indemnified Party") to the fullest extent permitted by law from and
against any and all Liabilities incurred or suffered by such Selling Indemnified
Parties resulting from or arising out of any breach of any representation,
warranty, covenant or agreement of such Purchasing Indemnifying Party in this
Agreement; provided, however, that no Purchasing Indemnifying Party shall not be
liable under this Section 8.1 to a Selling Indemnified Party to the extent that
it is finally judicially determined that such Liabilities resulted primarily
from the material breach by such Selling Indemnified Party of any
representation, warranty, covenant or other agreement of such Selling
Indemnified Party contained in this Agreement.
(c) If and to the extent that any indemnification provided for in
this Agreement is unenforceable for any reason, the Indemnifying Parties (as
defined below) obligated to indemnify any Indemnified Party (as defined below)
shall make the maximum contribution to the payment and satisfaction of such
indemnified liability which shall be permissible under applicable laws. In
connection with the obligation of the Indemnifying Parties to indemnify for
expenses as set forth herein, the Indemnifying Parties further agree, upon
presentation of appropriate invoices containing reasonable detail, to reimburse
each Indemnified Party for all such expenses (including reasonable fees,
disbursements and other charges of counsel, as limited by Section 8.2 below) as
they are incurred by such Indemnified Party.
8.2. NOTIFICATION.
If any action or proceeding (including any governmental investigation
or inquiry) shall be brought or asserted against any party entitled to
indemnification pursuant to this Section 5 (an "Indemnified Party") in respect
of which indemnity may be sought from any party required to indemnify such
Indemnified Party (an "Indemnifying Party"), such Indemnified Party shall
promptly notify the Indemnifying Party in writing, and such Indemnifying Party
shall assume the defense thereof, including the employment of counsel selected
by such Indemnifying Party and reasonably satisfactory to such Indemnified Party
and the payment of all expenses; provided, however, that any failure to so
notify such Indemnifying Party shall not impair obligations hereunder except and
only to the extent that such failure results in actual prejudice to such
Indemnifying Party. Such Indemnified Party shall have the right to employ
separate counsel in any such action and to participate in the defense thereof,
but the fees and expenses of such counsel shall be the expense of such
Indemnified Party unless (a) such Indemnifying Party agreed to pay such fees and
expenses or (b) such Indemnifying Party shall have failed to assume the defense
of such action or proceeding or has failed to employ counsel reasonably
satisfactory to such Indemnified Party in any such action or proceeding or (c)
the named parties to any such action or proceeding (including any impleaded
parties) include both such Indemnified Party and such Indemnifying Party, and
such Indemnified Party shall have been advised by counsel that there may be one
or more legal defenses available to such Indemnified Party which are different
from or additional to those available to such Indemnifying Party (in which case,
such Indemnifying Party shall employ separate counsel at the expense of such
Indemnifying Party, it
-18-
being understood, however, that such Indemnifying Party shall not, in connection
with any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any time for such
Indemnified Party and any other Indemnified Parties). No Indemnifying Party
shall be liable for any settlement of any such action or proceeding effected
without its written consent (which shall not be withheld unreasonably), but if
settled with its written consent, or if there be a final judgment for the
plaintiff in any such action or proceeding, such Indemnifying Party agrees to
indemnify and hold harmless such Indemnified Party from and against any
Liabilities by reason of such settlement or judgment. No Indemnifying Party
shall agree to any settlement of any third party claim without the consent of
the Indemnified Party, which shall not be withheld if such settlement provides
only for the payment of money to be paid by the Indemnifying Party.
ARTICLE 9.
MISCELLANEOUS
9.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All of the representations and warranties made herein shall survive the
Closing for a period of twelve months.
9.2. NOTICES.
All notices, demands and other communications provided for or permitted
hereunder shall be made in writing and shall be by registered or certified
first-class mail, return receipt requested, courier service or personal delivery
or via facsimile:
(a) If to Xx. Xxxxxx:
Xxxxx Xxxxxx
0000 Xxxxx Xxxxxxxx Xxxxxxx
Xxxxx X
Xxxxxxxxxx, XX 00000
with a copy to:
Lanier, Ford, Xxxxxx & Xxxxx, P.C.
000 Xxxx Xxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxx
(b) if to the Company:
USinternetworking, Inc.
l75 Xxxxxxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxxxx X. XxXxxxxx
with a copy to:
Xxxxxx & Xxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, XX.
Xxxxx 0000
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
All such notices and communications shall be deemed to have been duly
given: when delivered by band, if personally delivered; when delivered by
courier, if delivered by commercial overnight courier service; if delivered by
facsimile, upon confirmation of such transmission; and five business days after
being deposited in the mail, postage prepaid, if mailed.
9.3. SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon the
successors and permitted assigns of the parties hereto. This Agreement may be
assigned by Xx. Xxxxxx to any permitted transferee of all or part of the
Preferred Shares or the Common Stock issued upon conversion thereof. The Company
may not assign any of its fights under this Agreement without the written
consent of Xx. Xxxxxx. Except as provided in this Section 9.3, no Person other
than the parties hereto and their successors and permitted assigns is intended
to be a beneficiary of any of the Transaction Agreements.
9.4. AMENDMENT AND WAIVER.
(a) No failure or delay on the part of the Company or Xx. Xxxxxx
in exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company or
Xx. Xxxxxx at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by any party from the terms of any provision of
this Agreement, shall be effective (i) only if it is made or given in writing
and signed by the Company (if applicable) and Xx. Xxxxxx, and (ii) only in the
specific instance and for the specific purpose for which made or given. Except
where notice is specifically required by this Agreement, no notice to or demand
on any party in any case shall entitle any party hereto to any other or further
notice or demand in similar or other circumstances.
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9.5. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
9.6. HEADINGS.
The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
9.7. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Maryland, without regard to the principles of conflicts
of law of such state.
9.8. JURISDICTION.
Each party to this Agreement hereby irrevocably agrees that any legal
action or proceeding arising out of or relating to this Agreement or any
agreements or transactions contemplated hereby may be brought in the courts of
the State of Maryland or of the United States of America for the District of
Maryland and hereby expressly submits to the personal jurisdiction and venue of
such courts for the purposes thereof and expressly waives any claim of improper
venue and any claim that such courts are an inconvenient forum. Each party
hereby irrevocably consents to the service of process of any of the
aforementioned courts in any such suit, action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the address
set forth in Section 9.2, such service to become effective 10 days after such
mailing.
9.9. SEVERABILITY.
If any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
9.10 RULES OF CONSTRUCTION.
Unless the context otherwise requires, "or" is not exclusive, and
references to sections or subsection refer to sections or subsections of this
Agreement.
9.11. ENTIRE AGREEMENT.
This Agreement, together with the exhibits and schedules hereto and the
other related agreements referred to herein, is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and
-21-
understanding of the parties hereto in respect of the subject matter contained
herein and therein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein or therein. This
Agreement, together with the exhibits and schedules hereto, and the other
related agreements referred to herein supersede all prior agreements and
understandings between the parties with respect to such subject matter.
9.12. PUBLICITY.
Except as may be required by applicable law, none of the parties hereto
shall issue a publicity release or announcement or otherwise make any public
disclosure concerning this Agreement or the transactions contemplated hereby,
without prior approval by the other parties hereto, provided that Xx. Xxxxxx may
nonetheless communicate with their partners concerning such transactions and
investment in the Company and may publish a "tombstone" in the customary form
with respect to its investment. If any announcement is required by law to be
made by any party hereto, prior to making such announcement such party will
deliver a draft of such announcement to the other parties and shall give the
other parties an opportunity to comment thereon.
9.13. FURTHER ASSURANCES.
Each of the parties shall execute such documents and perform such
further acts (including, without limitation, obtaining any consents, exemptions,
authorizations, or other actions by, or giving any notices to, or making any
filings with, any Governmental Authority or any other Person) as may be
reasonably required or desirable to carry out or to perform the provisions of
this Agreement.
9.14. WAIVER OF JURY TRIAL.
EACH PARTY HERETO HEREBY WAIVES. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed and delivered by their respective officers hereunto duly
authorized as of the date first above written.
USINTERNETWORKING, INC.
By: /s/ XXXXXXXXXXX X. XxXXXXXX
---------------------------------------
Name: XXXXXXXXXXX X. XxXXXXXX
--------------------------------------
Title: CHANCELLOR CHIEF EXECUTIVE OFFICER
-------------------------------------
Xxxxx Xxxxxx
-------------------------------------------
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective officers hereunto duly authorized as
of the date first above written.
USINTERNETWORKING, INC.
By:
---------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Xxxxx Xxxxxx
/s/ Xxxxx Xxxxxx
-------------------------------------------
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