▇▇▇▇▇▇▇▇.▇▇▇ INCORPORATED
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
This Series A Preferred Purchase Agreement dated as of October 18, 2000
is entered into by and among ▇▇▇▇▇▇▇▇.▇▇▇ Incorporated, a Delaware
corporation (the "Company") and the individuals and entities listed on
Exhibit A hereto (the "Purchasers").
Recitals
A. The Purchasers desire to acquire from the Company, and the
Company desires to issue and sell to the Purchasers, in the
manner and on the terms and conditions hereinafter set forth,
shares of Series A Preferred Stock.
B. In connection with the Purchasers' purchase of the Series A
Preferred Stock, the Company and the Purchasers desire to
establish certain rights and obligations among themselves.
In consideration of the mutual promises and covenants contained in this
Agreement and for other good and valuable consideration, the sufficiency and
receipt of which is hereby acknowledged, the parties hereto agree as follows:
1. Authorization and Sale of Shares.
1.1 Authorization. The Company has, or before the Initial Closing (as
defined in Section 2) will have, duly authorized the sale and issuance, pursuant
to the terms of this Agreement, of 16,536,049 shares of its Series A Preferred
Stock, $0.001 par value per share (the "Series A Preferred"), having the rights,
restrictions, privileges and preferences set forth in the Amended and Restated
Certificate of Incorporation attached hereto as Exhibit B (the "Restated
Charter"). The Company has, or before the Initial Closing (as defined in Section
2) will have, adopted and filed the Restated Charter with the Secretary of State
of the State of Delaware.
1.2 Sale of Shares. Subject to the terms and conditions of this Agreement,
at the Initial Closing (as defined in Section 2) and the Second Closing (as
defined in Section 2), the Company shall sell and issue to each of the
Purchasers, and each of the Purchasers shall purchase, the number of shares of
Series A Preferred set forth opposite such Purchaser's name on Exhibit A for the
purchase price of $3.19 per share (the "Purchase Price"). The shares of Series A
Preferred sold under this Agreement are referred to as the "Shares." The
Company's agreement
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with each of the Purchasers is a separate agreement, and the sale of Shares to
each of the Purchasers is a separate sale.
1.3 Use of Proceeds. The Company will use the proceeds from the sale of the
Shares for product development and other general corporate purposes.
2. The Closings. The initial closing (the "Initial Closing") of the sale and
purchase of the Shares under this Agreement shall take place at the offices of
▇▇▇▇ and ▇▇▇▇ LLP, ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 9:00 a.m. on
October 18, 2000, or at such other time, date and place as are mutually
agreeable to the Company and the Purchasers, but in no event later than November
30, 2000. The second closing of the sale and purchase of the Shares (the "Second
Closing") shall take place at the same location no later than one business day
following the satisfaction of the condition set forth in Section 6A. At each
closing, the Company shall deliver to each of the Purchasers a certificate for
the number of Shares being purchased at such closing by such Purchaser in
accordance with Exhibit A hereto, which certificates shall be registered in the
name of such Purchaser, against payment to the Company of the Purchase Price, by
wire transfer, check, cancellation of indebtedness or other method acceptable to
the Company. The date of the Initial Closing is hereinafter referred to as the
"Initial Closing Date."
3. Representations and Warranties of the Company. Except as disclosed by the
Company in Exhibit C hereto, the Company hereby represents and warrants to each
of the Purchasers that the statements contained in this Section 3 are true,
complete and correct. Exhibit C shall be arranged in subsections corresponding
to the numbered subsections contained in this Section 3, and the disclosures in
any subsection of Exhibit C shall qualify only the corresponding subsection of
this Section 3, unless it is clearly apparent from a reading of Exhibit C that
such disclosure also applies to such other subsection of this Section 3.
References to the "Company" in this Section 3 are deemed to include the business
of the Company as a wholly owned subsidiary of MicroStrategy Incorporated
("MSTR") as well as the business of the Company as a business unit of MSTR,
except where the context otherwise requires.
3.1 Organization and Standing. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full corporate power and authority to own or lease its properties and to
conduct its business as presently conducted and to enter into and perform this
Agreement and all other agreements required to be executed by the Company at or
prior to the Initial Closing pursuant to Section 5.3 (the "Ancillary
Agreements") and to carry out the transactions contemplated by this Agreement
and the Ancillary Agreements. The Company is duly qualified to do business as a
foreign corporation and is in good standing in the Commonwealth of Virginia and
in every other jurisdiction in which the failure so to qualify would have a
material adverse effect on the
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business, prospects, assets, liabilities or condition (financial or otherwise)
of the Company (a "Company Material Adverse Effect"). Exhibit C sets forth each
state in which the Company maintains an office, has employees or owns or leases
property. The Company has duly filed its Restated Charter and such Restated
Charter is in the proper form required by Delaware law.
3.2 Capitalization. The authorized capital stock of the Company
(immediately prior to the Initial Closing) consists of (i) 190,431,973 shares of
Class A Common Stock, $0.001 par value per share (the "Class A Common Stock"),
of which no shares are issued and outstanding and 17,200,000 shares have been
reserved for issuance pursuant to the 2000 Stock Option Plan of the Company,
(ii) 84,000,000 shares of Class B Common Stock, $0.001 par value per share (the
"Class B Common Stock," and collectively with the Class A Common Stock, "Common
Stock"), all of which are issued and outstanding, and (iii) 47,884,011 shares of
Series A Preferred Stock, $0.001 par value per share, none of which shares are
issued or outstanding immediately prior to the Initial Closing. All of the
issued and outstanding shares of Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable, and all of the rights,
privileges and preferences of such Common Stock are as stated in the Restated
Charter or as otherwise set forth in the Delaware General Corporation Law
statute. Except as provided in Exhibit C to this Agreement, (i) no subscription,
warrant, option, convertible security or other right (contingent or otherwise)
to purchase or acquire any shares of capital stock of the Company is authorized
or outstanding, (ii) the Company has no obligation (contingent or otherwise) to
issue any subscription, warrant, option, convertible security or other such
right or to issue or distribute to holders of any shares of its capital stock
any evidences of indebtedness or assets of the Company, (iii) the Company has no
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
any shares of its capital stock or any interest therein or to pay any dividend
or make any other distribution in respect thereof, and (iv) there are no
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to the Company. All of the issued and outstanding shares of capital
stock of the Company have been offered, issued and sold by the Company in
compliance with applicable federal and state securities laws.
3.3 Subsidiaries, Etc. Except as set forth on Exhibit C, the Company has no
subsidiaries and does not own or control, directly or indirectly, any shares of
capital stock of any other corporation or any interest in any partnership, joint
venture or other non-corporate business enterprise.
3.4 Securityholder Lists and Agreements. Attached as Exhibit D is a true
and complete list of the securityholders of the Company, showing the number of
shares of Common Stock or other securities of the Company held by each
securityholder immediately prior to the Initial Closing and, in the case of
options, warrants and other convertible securities, the exercise
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price thereof and the number and type of securities issuable thereunder. Except
as provided in Exhibit C to this Agreement, there are no agreements, written or
oral, between the Company and any holder of its securities, or, to the best of
the Company's knowledge, among any holders of its securities, relating to the
acquisition (including without limitation rights of first refusal, anti-dilution
or pre-emptive rights), transferability, redemption, disposition, registration
(including piggyback rights) under the Securities Act of 1933, as amended (the
"Securities Act"), or voting of the capital stock of the Company.
3.5 Issuance of Shares. The issuance, sale and delivery of the Shares in
accordance with this Agreement, and the issuance and delivery of the shares of
Class A Common Stock issuable upon conversion of the Shares, have been, or will
be on or prior to the Initial Closing, duly authorized by all necessary
corporate action on the part of the Company, and all such shares have been duly
reserved for issuance. The Shares when so issued, sold and delivered against
payment therefor in accordance with the provisions of this Agreement, and the
shares of Class A Common Stock issuable upon conversion of the Shares, when
issued upon such conversion, will be duly and validly issued, fully paid and
nonassessable and free of any Security Interest or preemptive right of any third
party.
3.6 Authority for Agreement; No Conflict. The execution, delivery and
performance by the Company of this Agreement and the Ancillary Agreements, and
the consummation by the Company of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary corporate action. This
Agreement has been, and the Ancillary Agreements when executed at the Initial
Closing will be, duly executed and delivered by the Company and constitute valid
and binding obligations of the Company enforceable in accordance with their
respective terms, subject as to enforcement of remedies to applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
generally the enforcement of creditors' rights and subject to a court's
discretionary authority with respect to the granting of a decree ordering
specific performance or other equitable remedies. The execution of and
performance of the transactions contemplated by this Agreement and the Ancillary
Agreements and compliance with their respective provisions by the Company will
not, and the transfer of the assets of the business now operated by the Company
from MSTR to the Company did not, (a) conflict with or violate any provision of
the Certificate of Incorporation or By-laws of the Company, (b) require on the
part of the Company any filing with, or any permit, authorization, consent or
approval of, any court, arbitrational tribunal, administrative agency or
commission or other governmental or regulatory authority or agency (each of the
foregoing is hereafter referred to as a "Governmental Entity"), (c) conflict
with, result in a breach of, constitute (with or without due notice or lapse of
time or both) a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify or cancel, or require any
notice, consent or waiver under, any contract, lease, sublease, license,
sublicense, franchise,
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permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest (as defined below) or other arrangement to which
the Company is a party or by which the Company is bound or to which its assets
are subject, other than any of the foregoing events listed in this clause (c)
which do not and will not, individually or in the aggregate, have a Company
Material Adverse Effect, (d) result in the imposition of any Security Interest
upon any assets of the Company or (e) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company or any of its
properties or assets. For purposes of this Agreement, "Security Interest" means
any mortgage, pledge, security interest, encumbrance, charge, or other lien
(whether arising by contract or by operation of law).
3.7 Governmental Consents. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
Governmental Entity is required on the part of the Company in connection with
the execution and delivery of this Agreement or the Ancillary Agreements, the
offer, issuance, sale and delivery of the Shares, the issuance and delivery of
the shares of Class A Common Stock issuable upon conversion of the Shares or the
other transactions to be consummated at the Initial Closing, as contemplated by
this Agreement and the Ancillary Agreements, except such filings as shall have
been made prior to and shall be effective on and as of the Initial Closing and
such filings required to be made after the Initial Closing under applicable
federal and state securities laws all of which filings are listed on Exhibit C.
Based on the representations made by each of the Purchasers in Section 4 of this
Agreement, the offer and sale of the Shares to each of the Purchasers will be in
compliance with applicable federal and state securities laws.
3.8 Litigation. Except as set forth on Exhibit C, there is no action, suit
or proceeding, or governmental inquiry or investigation, pending, or, to the
best of the Company's knowledge, any basis therefor or threat thereof, against
the Company, including, without limitation, such actions, suits, proceedings,
inquiries or investigations that question the validity of this Agreement or any
Ancillary Agreement or the right of the Company to enter into it, or that might
result, either individually or in the aggregate, in a Company Material Adverse
Effect, nor is there any litigation pending, or, to the best of the Company's
knowledge, any basis therefor or threat thereof, against the Company by reason
of the proposed activities of the Company or negotiations by the Company with
possible investors in the Company. The Company is not subject to any outstanding
judgement, order or decree.
3.9 Financial Statements. The Company has furnished to each of the
Purchasers a copy of the pro forma unaudited balance sheet (the "Balance Sheet")
of the Company at June 30, 2000 (the "Balance Sheet Date") and the related pro
forma unaudited statements of operations and cash flows for the period then
ended (collectively, the "Financial Statements"). Except as set forth on Exhibit
C, the Financial Statements were prepared from
5
books and records of the Company and present fairly the financial position of
the Company as of such date, and the results of operation for the period then
ended and have been prepared in accordance with GAAP and the pro forma
assumptions set forth in the Financial Statements, consistently applied.
3.10 Absence of Undisclosed Liabilities. To the Company's knowledge, the
Company does not have any liability (whether known or unknown and whether
absolute or contingent), except for (a) liabilities shown on the Balance Sheet,
(b) liabilities which have arisen since the Balance Sheet Date in the ordinary
course of business and which are similar in nature and amount to the liabilities
which arose during the comparable period of time in the immediately preceding
fiscal period and (c) contractual liabilities incurred in the ordinary course of
business which are not required by GAAP to be reflected on a balance sheet.
3.11 Taxes. The amount shown on the Balance Sheet as provision for taxes is
sufficient in all material respects for payment of all accrued and unpaid
federal, state, county, local and foreign taxes for the period then ended and
all prior periods. The Company has filed or has obtained presently effective
extensions with respect to all federal, state, county, local and foreign tax
returns which are required to be filed by it, such returns are true and correct
and all taxes shown thereon to be due have been timely paid with exceptions not
material to the Company. Federal income tax returns of the Company have not been
audited by the Internal Revenue Service, and no controversy with respect to
taxes of any type is pending or, to the best of the Company's knowledge,
threatened. The Company has withheld or collected from each payment made to its
employees the amount of all taxes required to be withheld or collected therefrom
and has paid all such amounts to the appropriate taxing authorities when due.
3.12 Property and Assets. Except as set forth on Exhibit C, the Company has
good title to, or a valid leasehold interest in, all of its properties and
assets free and clear of any and all Security Interests, including all
properties and assets reflected in the Balance Sheet, except those disposed of
since the date thereof in the ordinary course of business, except with respect
to such imperfections in title which do not and will not, individually or in the
aggregate, have a Company Material Adverse Effect. The properties and assets
(both tangible and intangible) of the Company (including, without limitation,
the assets and properties reflected on the Financial Statements) are in good
operating condition and repair (subject to normal wear and tear consistent with
the age of the properties or assets) and, together with the rights and
obligations of the Company under the intercompany agreements between the Company
and MSTR set forth on Section 3.12 of Exhibit C, are sufficient to conduct the
operations of the Company as currently conducted.
3.13 Intellectual Property.
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(a) To the Company's knowledge, the Company owns or has the valid right to
use all Intellectual Property (as defined below in this Section 3.13) necessary
to the operation of its business. For purposes of this Agreement, "Intellectual
Property" means all (i) patents and patent applications and all reissues,
continuations, divisions and re-examinations thereof, (ii) copyrights and
registrations thereof, (iii) mask works and registrations and applications for
registration thereof, (iv) computer software, data and documentation, (v) trade
secrets and confidential business information, whether patentable or
unpatentable and whether or not reduced to practice, know-how, manufacturing and
production processes and techniques, research and development information,
copyrightable works, financial, marketing and business data, pricing and cost
information, business and marketing plans and customer and supplier lists and
information, (vi) trademarks, service marks, trade names, domain names and
applications and registrations therefor and (vii) other proprietary rights
relating to any of the foregoing.
(b) To the Company's knowledge, none of the activities or business
conducted by the Company or proposed to be conducted by the Company infringes,
violates or constitutes a misappropriation of (or in the past infringed,
violated or constituted a misappropriation of) any Intellectual Property of any
other person or entity. The Company has not received any complaint, claim or
notice alleging any such infringement, violation or misappropriation, and to the
knowledge of the Company, there is no basis for any such complaint, claim or
notice.
(c) The Company has taken reasonable precautions (i) to protect its rights
in its Intellectual Property and (ii) to maintain the confidentiality of its
trade secrets, know-how and other confidential Intellectual Property, and to the
Company's knowledge, there have been no acts or omissions (other than those made
based on reasonable, good faith business decisions) by the officers, directors,
shareholders and employees of the Company the result of which would be to
materially compromise the rights of the Company to apply for or enforce
appropriate legal protection of the Company's Intellectual Property, including,
without limitation, entering into with each of its employees the Company's
standard form Proprietary Information and Inventions Agreement, in substantially
the form provided to each of the Purchasers. Exhibit C hereto sets forth a
complete and correct list of all United States and foreign patents and patent
applications, trade names, trademarks and service marks, trademark and service
▇▇▇▇ registrations, applications for trademark and service ▇▇▇▇ registrations,
copyright registrations and applications for copyright registrations, that form
a part of the Intellectual Property owned by the Company or, where not owned,
expressly licensed for use by the Company in the Business, and all licenses or
other agreements under which the Company obtained or licenses the right to use
Intellectual Property. Except as set forth on Exhibit C hereto, to the Company's
knowledge, the Company owns or licenses the entire right, title, and interest in
and to all Intellectual Property necessary to conduct its business as currently
7
conducted. To the knowledge of the Company, no other person or entity is
operating under or otherwise using the name "▇▇▇▇▇▇▇▇.▇▇▇" or any other
confusingly similar name. Except as set forth on Exhibit C, neither the Company
nor, to the Company's knowledge, any of the Company's officers or employees have
any agreement or arrangements with former employers of the Company's officers
and employees relating to the obligation of such officers and employees to
protect the confidential information or trade secrets of their respective former
employers, the assignment of inventions of the former employers, or the
officer's or employee's engagement in activities competitive with those of their
former employers. To the Company's knowledge, the activities of the Company's
officers and employees on behalf of the Company do not violate any agreements or
arrangements that any of them have with former employers.
3.14 Compliance. The Company has, in all material respects, complied with
all laws, regulations and orders applicable to its present and proposed business
and has all material permits and licenses required thereby. There is no term or
provision of any mortgage, indenture, contract, agreement or instrument to which
the Company is a party or by which it is bound, or of any provision of any state
or federal judgment, decree, order, statute, rule or regulation applicable to or
binding upon the Company, which materially adversely effects or, so far as the
Company may now foresee, in the future is reasonably likely to result in or have
a Company Material Adverse Effect. To the Company's knowledge, no employee of
the Company is in violation of any term of any contract or covenant (either with
the Company or with another entity) relating to employment, patents, assignment
of inventions, proprietary information disclosure, non-competition or
non-solicitation.
3.15 Changes in Circumstances. Except as set forth on Exhibit C hereto and
except for the transfer of the assets of the business now operated by the
Company from MSTR to the Company, since the Balance Sheet Date, the Company has
not: (i) sold, transferred, or otherwise disposed of any of its properties or
assets outside the ordinary course of its business; (ii) acquired any properties
or assets outside the ordinary course of its business; (iii) declared or paid
any dividend or made any other distribution to its shareholders or repurchased
any of its outstanding capital stock; (iv) made any loan or advance to any
Affiliate of the Company, other than customary advances for business expenses;
(v) sold, assigned or transferred any of its patents, trademarks, copyrights,
trade secrets or other intangible assets; (vi) materially changed any
compensation arrangement or agreement with any officer of the Company; (vii)
received notice of any impending resignation or termination of employment of any
key officer of the Company; (viii) received notice that there has been a loss
of, or material order cancellation by any major customer of the Company; (ix)
suffered any event which has resulted in, or could reasonably be expected to
result in, a Company Material Adverse Effect; (x) sustained any damage, loss, or
destruction of or to any of its assets or properties (whether or not covered by
insurance); (xi) experienced any labor trouble or any material change in its
personnel outside the
8
ordinary course of business or (xii) agreed to or obligated itself to take any
of the actions identified in clauses (i) through (xi) above.
3.16 Employee Matters. To the Company's knowledge, during the past three
years, no officer, director or employee of the Company has been investigated
for, arrested for, been part of a proceeding for, charged with, convicted of or
indicted for any crime, nor has any officer, director or employee of the Company
been engaged in any criminal activity. To the Company's knowledge, during the
past three years, no officer or director of the Company or member of the
Company's management team has declared bankruptcy or been an officer or director
of any other company or entity that has declared bankruptcy or been involved in
bankruptcy proceedings.
3.17 Employee Plans. Exhibit C sets forth all deferred compensation, profit
sharing, pension, retirement, stock option or purchase plan or other plan or
arrangement providing for employee benefits ("Employee Plans"). All material
obligations regarding any Employee Plans that are due to be satisfied on or
prior to the date of this Agreement have been satisfied and there are no
outstanding defaults or violations under any Employee Plans by the Company or,
to the knowledge of the Company, by any other party thereto. There are no
outstanding actions, suits, or claims relating to any Employee Plan or to the
assets thereof, except for the payment of benefits thereunder in the ordinary
course of administration as such payments come due. Except as set forth on
Exhibit C, no improvement to the benefits accrued under the Employee Plans have
been made or promised since December 31, 1999 and all Employee Plans are in
compliance with the terms thereof and applicable laws and regulations. The
Company is not a party to any collective bargaining agreements.
3.18 Books and Records. The minute books of the Company contain complete
and accurate records of all meetings and other corporate actions of its
stockholders and its Board of Directors and committees thereof. The stock ledger
of the Company is complete and accurate and reflects all issuances, transfers,
repurchases and cancellations of shares of capital stock of the Company.
3.19 Environmental Matters. The Company has complied in all material
respects with all applicable Environmental Laws (as defined below in this
Section 3.19). There is no pending or, to the knowledge of the Company,
threatened civil or criminal litigation, written notice of violation, formal
administrative proceeding, or investigation, inquiry or information request by
any Governmental Entity, relating to any Environmental Law involving the
Company. For purposes of this Agreement, "Environmental Law" means any federal,
state or local law, statute, rule or regulation or the common law relating to
the protection of human health or the environment, including without limitation
CERCLA (as defined below), the
9
Resource Conservation and Recovery Act of 1976, any statute, regulation or order
pertaining to (i) treatment, storage, disposal, generation and transportation of
industrial, toxic or hazardous materials or substances or solid or hazardous
waste; (ii) air, water and noise pollution; (iii) groundwater and soil
contamination; (iv) the release or threatened release into the environment of
industrial, toxic or hazardous materials or substances, or solid or hazardous
waste, including without limitation, emissions, discharges, injections, spills,
escapes or dumping of pollutants, contaminants, or chemicals; (v) the protection
of wild life, marine life and wetlands, including without limitation all
endangered and threatened species; (vi) storage tanks, vessels, abandoned or
discarded barrels, containers and other closed receptacles; (vii) health and
safety of employees and other persons; and (viii) manufacture, processing, use,
distribution, treatment, storage, disposal, transportation or handling of
pollutants, contaminants, toxic or hazardous materials or substances or oil or
petroleum products or solid or hazardous waste. As used in this Section 3.19,
the terms "release" and "environment" shall have the meaning set forth in the
federal Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLA").
3.20 Web Site. With respect to the web site located on the Internet at
▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇, which is constructed, owned and operated by the Company
in connection with the Company's business (the "Web Site"):
(a) The Company has obtained the required Universal Resource Locator ("URL")
under the ▇▇▇▇▇▇▇▇.▇▇▇ domain name and has applied for appropriate
trademark registrations for the URL.
(b) To the Company's knowledge, the hosting and/or maintenance providers with
whom the Company has entered into service contracts: (A) have adequate
computer resources and system redundancy to accommodate service outages;
(B) have capacity to accommodate anticipated increases in traffic levels to
the Web Site; and (C) will maintain and keep the Web Site operational
twenty-four (24) hours a day, seven (7) days a week (subject to periodic
interruptions for scheduled maintenance consistent in the industry). In
addition, the Company has retained control of the design and content of the
Web Site.
3.21 Contracts. Exhibit C hereto sets forth each contract, agreement,
undertaking, commitment (written or oral) or other instrument to which the
Company is a party or by which the Company or any of its assets are bound (each,
a "Contract") that is of a type described below:
(a) Any Contract with any supplier, representative, distributor or sales agent
which is not terminable without cost or penalty to the Company on 60 days'
or less notice;
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(b) Any Contract with any Governmental Authority;
(c) Any Contract involving payments or receipts in excess of $50,000;
(d) Any Contract containing a covenant not to compete or restricting in any
respect the Company's ability to transact business in any jurisdiction of
the United States or a foreign country;
(e) Any Contracts or other agreements containing Company indemnification
obligations;
(f) Any Contract with any affiliate of the Company;
(g) Any indenture, mortgage, loan or credit Contract under which the Company
has borrowed any money or issued any note, bond, indenture or other
evidence of indebtedness, or guaranteed indebtedness borrowed by others;
and
(h) Any other Contract material to the assets, properties, financial condition,
results of operations or business of the Company.
Each such Contract is a valid and binding obligation of the Company and is
in full force and effect. Except as expressly set forth on Exhibit C, the
Company has performed all of its obligations required to be performed though the
date hereof under the Contracts so listed or described and the Company is not in
breach or default in any material respect thereunder nor has any event or
circumstance occurred which, with notice or lapse of time or both, would
constitute any such breach or default. To the knowledge of the Company, none of
the other parties to such Contracts is in breach or default in any respect
thereunder nor has any event or circumstance occurred which, with notice or
lapse of time or both, would constitute any such breach or default.
3.22 Insurance Policies. Exhibit C lists all insurance policies maintained
by the Company or under which the Company is covered in respect of its
properties, assets, business or personnel as of the date hereof. Such insurance
policies are in full force and effect and the Company is not in default with
respect to the payment of any premium or compliance with any of the material
provisions contained in any such policy.
3.23 Suppliers. The Company has not received any notice that any of the
Company's current suppliers intend to cease doing business with the Company.
11
3.24 No Conflict of Interest. Except as set forth on Exhibit C, the Company
is not indebted, directly or indirectly, to any of its officers or directors or
to their respective spouses or children, in any amount whatsoever other than in
connection with expenses or advances of expenses incurred in the ordinary course
of business or relocation expenses of employees. None of the Company's
employees, officers or directors, nor any members of their immediate families
is, directly or indirectly, indebted to the Company. Except as a result of their
ownership interests in MSTR, to the Company's knowledge, none of such persons
has any direct or indirect ownership interest in any firm or corporation with
which the Company is affiliated or with which the Company has a business
relationship, or any firm or corporation that competes with the Company, except
that employees, officers, or directors of the Company and members of their
immediate families may own stock in publicly traded companies that may compete
with the Company. No member of the immediate family of any officer or director
of the Company is directly or indirectly interested in any material contract
with the Company.
4. Representations of the Purchasers. Each of the Purchasers severally
represents and warrants to the Company as follows:
4.1 Investment. Such Purchaser is acquiring the Shares, and the shares of
Common Stock into which the Shares may be converted, for his, her or its own
account for investment and not with a view to, or for sale in connection with,
any distribution thereof, nor with any present intention of distributing or
selling the same; and, except as contemplated by this Agreement and the Exhibits
hereto, such Purchaser has no present or contemplated agreement, undertaking,
arrangement, obligation, indebtedness or commitment providing for the
disposition thereof. Such Purchaser is an "accredited investor" as defined in
Rule 501(a) under the Securities Act.
4.2 Authority. Such Purchaser has full power and authority to enter into
and to perform this Agreement in accordance with its terms. Any Purchaser which
is a corporation, partnership or trust represents that it has not been
organized, reorganized or recapitalized specifically for the purpose of
investing in the Company.
4.3 Experience. Such Purchaser has received the opportunity from the
Company to ask questions and receive answers concerning the Company and the
representations of the Company in this Agreement. The officers of the Company
have made available to such Purchaser any and all written information which he,
she or it has requested and have answered to such Purchaser's satisfaction all
inquiries made by such Purchaser regarding the business of the Company and the
transactions contemplated by this Agreement. Such Purchaser has sufficient
knowledge and experience in finance and business that he, she or it is capable
of evaluating the
12
risks and merits of his, her or its investment in the Company and such Purchaser
is able financially to bear the risks thereof.
5. Conditions to the Obligations of the Purchasers With Respect to the Initial
Closing. The obligations of each of the Purchasers under Section 1.2 hereto with
respect to the Initial Closing, are subject to the fulfillment, or the waiver by
such Purchaser, of each of the following conditions on or before the Initial
Closing:
5.1 Accuracy of Representations and Warranties. Each representation and
warranty contained in Sections 3 shall be true on and as of the Initial Closing
Date with the same effect as though such representation and warranty had been
made on and as of that date.
5.2 Performance. The Company shall have performed and complied with all
agreements and conditions contained in this Agreement required to be performed
or complied with by the Company prior to or at the Initial Closing.
5.3 Ancillary Agreements.
(a) Stockholders' Voting Agreement. The Stockholders' Voting Agreement attached
hereto as Exhibit E (the "Stockholders' Voting Agreement") shall have been
executed and delivered by each of the Purchasers and by MicroStrategy
Incorporated ("MSTR"). All such action shall have been taken as may be
necessary to elect a Board of Directors of the Company, effective upon the
Initial Closing, in accordance with the Stockholders' Voting Agreement.
(b) Investor Rights Agreement. The Investor Rights Agreement attached hereto as
Exhibit F (the "Investor Rights Agreement") shall have been executed and
delivered by the Company, each of the Purchasers and MSTR.
(c) Memorandum of Understanding. The Binding Memorandum of attached hereto as
Exhibit G (the "Binding MOU") shall have been executed and delivered by the
Company, Aether Systems, Inc. and MSTR.
5.4 Certificates and Documents. The Company shall have delivered to special
counsel to the Purchasers:
(a) The Restated Charter certified by the Secretary of State of the State of
Delaware;
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(b) Certificates, as of the most recent practicable dates, as to the corporate
good standing of the Company issued by the Secretary of State of the State
of Delaware and the Secretary of the State of the Commonwealth of Virginia;
(c) By-laws of the Company, certified by its Secretary or Assistant Secretary
as of the Initial Closing Date;
(d) Resolutions of the Board of Directors of the Company, authorizing and
approving all matters in connection with this Agreement and the
transactions contemplated hereby, certified by the Secretary or Assistant
Secretary of the Company as of the Initial Closing Date;
(e) Certificates representing the Series A Preferred Stock being issued and
sold by the Company to the Purchasers pursuant to Section 1.2 hereof, duly
recorded on the books of the Company in the name of the Purchasers
purchasing such Series A Preferred Stock;
(f) A certificate of the Secretary of the Company, in form and substance
satisfactory to counsel for the Purchasers, certifying that attached
thereto are true and correct copies of (1) the By-laws of the Company, and
(2) resolutions duly and validly adopted by the Board of Directors of the
Company authorizing the execution and delivery of this Agreement and the
other Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby; and
(g) The legal opinion of ▇▇▇▇ and ▇▇▇▇ LLP, counsel to the Company, in the form
attached as Exhibit H.
5.5 Compliance Certificates. The Company shall have delivered to the
Purchasers a certificate, executed by an officer of the Company, dated the
Initial Closing Date, certifying to the fulfillment of the conditions specified
in Sections 5.1 and 5.2 of this Agreement.
5.6 Approvals. All pre-issuance registrations, qualifications, permits, and
approvals required, if any, under applicable state securities laws or otherwise
required for the lawful execution and delivery of this Agreement and performance
of the transactions hereunder, including without limitation, the offer, sale,
issuance, and delivery of the Series A Preferred Stock, will have been obtained.
5.7 Election of Representative. The Board of Directors of the Company will
have been elected in accordance with the Stockholders' Voting Agreement.
14
5.8 Other Matters. All corporate and other proceedings in connection with
the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be reasonably satisfactory in
substance and form to the Purchasers, and the Purchasers shall have received all
such counterpart originals or certified or other copies of such documents as
they may reasonably request.
6. Conditions to the Obligations of the Company with Respect to the First
Closing. The obligations of the Company under Section 1.2 of this Agreement with
respect to the First Closing are subject to fulfillment, or the waiver, of the
following condition on or before the Initial Closing:
6.1 Accuracy of Representations and Warranties. The representations and
warranties of the Purchasers contained in Section 4 shall be true on and as of
the Initial Closing Date with the same effect as though such representations and
warranties had been made on and as of that date.
6A. Condition to the Obligations of the Purchasers and the Company with
Respect to the Second Closing. The obligations of each Purchaser and the Company
under Section 1.2 of this Agreement with respect to the Second Closing are
subject to the fulfillment, or the waiver by such Purchaser and the Company, of
each of the following conditions on or before the Second Closing:
6A.1 HSR Compliance. The filing and waiting period requirements of the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, as such
requirements relate to the transactions contemplated by this Agreement, shall
have been satisfied.
6A.2 Material Adverse Effect. There shall not have occurred any event or
condition subsequent to the Initial Closing which has resulted in a Company
Material Adverse Effect; 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 Company Material Adverse Effect for purposes of this Section 6A.2:
(a) solely as a result of any failure by Company or MSTR to meet internal
projections or forecasts or published revenue or earnings predictions for any
period ending (or for which revenues or earnings are released) on or after the
date of this Agreement; (b) any adverse change, effect, event, occurrence, state
of facts or development attributable to conditions affecting the industries in
which Company participates, the U.S. economy as a whole or foreign economies in
any locations where Company or any of its affiliates have material operations or
sales; (c) any adverse change, effect, event, of occurrence, state of facts or
development resulting from or relating to compliance with the terms of, or the
taking of any action required by, this
15
Agreement; or (d) any adverse change, effect, event, occurrence, state of facts
or development arising from or relating to any change in accounting requirements
or principles.
6A.3 Accuracy of Representations and Warranties. The representations and
warranties of the Company contained in Sections 3.1, 3.2 (except with respect to
(a) options approved by the Board of Directors of the Company or a compensation
committee thereof, and (b) any rights of the Purchasers with respect to their
ownership of Series A Preferred Stock), 3.5, 3.6 and 3.7 shall be true on and as
of the date of the Second Closing with the same effect as though such
representations and warranties had been made on and as of that date.
7. Affirmative Covenants of the Company.
7.1 Inspection. The Company shall permit each Purchaser, or any authorized
representative thereof, to visit and inspect the properties of the Company,
including its corporate and financial records, and to discuss its business and
finances with officers of the Company, during normal business hours following
reasonable notice and as often as may be reasonably requested.
7.2 Financial Statements and Other Information. The Company shall deliver
to the Purchasers:
(a) within 90 days after the end of each fiscal year of the Company, an audited
balance sheet of the Company as at the end of such year and audited
statements of income and of cash flows of the Company for such year,
certified by certified public accountants of established national
reputation selected by the Company, and prepared in accordance with GAAP;
(b) within 45 days after the end of each fiscal quarter of the Company (other
than the fourth quarter), an unaudited balance sheet of the Company as at
the end of such quarter, and unaudited statements of income and of cash
flows of the Company for such fiscal quarter and for the current fiscal
year to the end of such fiscal quarter;
(c) within 30 days of the end of each month, and unaudited income statement and
a statement of cash flows and balance sheet for and as of the end of such
month in reasonable detail;
(d) within 30 days prior to the beginning of each fiscal year, the annual
budget and operating plans for such fiscal year (and as soon as available,
any subsequent revisions thereto); and
16
(e) such other information relating to the financial condition, business
prospects or corporate affairs of the Company as a Purchaser or any
assignee of a Purchaser may from time to time request.
7.3 Reservation of Common Stock. The Company shall reserve and maintain a
sufficient number of shares of Class A Common Stock for issuance upon conversion
of all of the outstanding Shares.
7.4 Further Assurances. The Company, at its expense, shall promptly execute
and deliver to the Purchasers upon reasonable request all such other and further
documents, agreements and instruments in compliance with or pursuant to its
covenants and agreements herein, and shall make any recordings, file any
notices, and obtain any consents as may be reasonably necessary or appropriate
in connection therewith.
7.5 Conflicting Agreements. The Company shall not enter into or become
subject to any Contract or instrument which by its terms would (under any
circumstances) prevent the Company from performing any of the provisions of this
Agreement or any other Ancillary Agreements.
7.6 Key Person Life Insurance. As soon as practical after the appointment
of a Chief Executive Officer and a Chief Financial Officer of the Company, the
Company shall obtain key person life insurance on such officers in the amounts
of $2,000,000 and $1,000,000, respectively. As soon as practical after the
Initial Closing, the Company shall obtain key person life insurance on ▇▇▇▇
▇▇▇▇, the Company's President, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, the Company's Chief
Technology Officer, in the amounts of $1,000,000 and $2,000,000, respectively.
7.7 Indebtedness. The Company shall not, without the prior written consent
of the Purchasers (i) incur, assume or suffer to exist any material indebtedness
except as approved by the Board of Directors of the Company, or prepay or make
any advance payment on any indebtedness of the Company (now or hereafter in
existence), except in accordance with the terms of such indebtedness or as
otherwise approved by the Board of Directors of the Company, or (ii) make any
loan or distribution to or assume any indebtedness from MSTR or any of its
affiliates, except as contemplated by the intercompany agreements between the
Company and MSTR set forth on Section 3.12 of Exhibit C.
7.8 Board of Director Meetings . The Company shall ensure that meetings of
its Board of Directors are held not less than quarterly, and subject to receipt
of expense reports containing such detail as the Company may reasonably request,
shall reimburse Directors for their reasonable travel expenses, including
without limitation, the cost of air fare and
17
any necessary meals and lodging, incurred in connection with attending meetings
of the Board of Directors or performing such other business as and if required
on behalf of the Company.
7.9 Maintenance of Corporate Existence. The Company shall preserve, renew
and keep in full force and effect its corporate existence and qualification
as necessary or desirable in the normal conduct of its business.
7.10 Conduct of Business. The Company shall conduct its business in the
business lines being conducted as of the date hereof, or reasonably related
thereto or supported thereby and will not materially change the nature of the
business without consent of the Board of Directors.
7.11 Proprietary Information Agreement. Each person now or hereafter
employed by the Company or any subsidiary with access to confidential
information will enter into the Company's standard form of Proprietary
Information and Invention Assignment Agreement, with such changes thereto as may
be approved by the Company's Board of Directors.
7.12 Termination of Covenants. The covenants of the Company contained in
Sections 7.1 through 7.9 shall terminate, and be of no further force or effect,
upon the earlier of (a) the closing of the Company's first firm-commitment
underwritten public offering of Common Stock pursuant to an effective
registration statement under the Securities Act, resulting in net proceeds to
the Company of at least $30,000,000, at a price to the public of at least $10.00
per share (as adjusted for stock splits, stock dividends, recapitalizations and
similar events), and (b) a merger or consolidation of the Company with or into
any other corporation or corporations in which the holders of the Company's
outstanding shares immediately before such merger or consolidation do not
immediately after such merger or consolidation, retain stock representing a
majority of the voting power of the surviving corporation of such merger or
consolidation or stock representing a majority of the voting power of a
corporation that wholly owns, directly or indirectly, the surviving corporation
of such merger or consolidation.
8. Transfer of Shares.
8.1 Restricted Shares. "Restricted Shares" means (i) the Shares, (ii) the
shares of Common Stock issued or issuable upon conversion of the Shares,
(iii) any shares of capital stock of the Company acquired by the Purchasers
pursuant to the Investor Rights Agreement, and (iv) any other shares of capital
stock of the Company issued in respect of such shares (as a result of stock
splits, stock dividends, reclassifications, recapitalizations, or similar
events); provided, however, that shares of Common Stock which are Restricted
Shares shall cease to be
18
Restricted Shares (x) upon any sale pursuant to a registration statement under
the Securities Act, Section 4(1) of the Securities Act or Rule 144 under the
Securities Act or (y) at such time as they become eligible for sale under Rule
144(k) under the Securities Act.
8.2 Requirements for Transfer.
(a) Restricted Shares shall not be sold or transferred unless either (i) they
first shall have been registered under the Securities Act, or (ii) the
Company first shall have been furnished with an opinion of legal counsel,
reasonably satisfactory to the Company, to the effect that such sale or
transfer is exempt from the registration requirements of the Securities
Act.
(b) Notwithstanding the foregoing, no registration or opinion of counsel shall
be required for (i) a transfer by a Purchaser which is a corporation to a
wholly owned subsidiary of such corporation, a transfer by a Purchaser
which is a partnership to a partner of such partnership or a retired
partner of such partnership who retires after the date hereof, or to the
estate of any such partner or retired partner, or a transfer by a Purchaser
which is a limited liability company to a member of such limited liability
company or a retired member who resigns after the date hereof or to the
estate of any such member or retired member; provided that the transferee
in each case agrees in writing to be subject to the terms of this Section 8
to the same extent as if it were the original Purchaser hereunder, or
(ii) a transfer made in accordance with Rule 144 under the Securities Act.
8.3 Legend. Each certificate representing Restricted Shares shall bear
a legend substantially in the following form:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933, as
amended, and may not be offered, sold or otherwise
transferred, pledged or hypothecated unless and until
such shares are registered under such Act or an
opinion of counsel satisfactory to the Company is
obtained to the effect that such registration is not
required."
The foregoing legend shall be removed from the certificates representing
any Restricted Shares, at the request of the holder thereof, at such time as
they become eligible for resale pursuant to Rule 144(k) under the Securities
Act.
9. Indemnification.
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9.1 Indemnification by the Company. Notwithstanding anything in this
Agreement to the contrary, but subject to the other provisions of this
Section 9, the Company shall indemnify, defend, and hold the Purchasers, the
Purchasers' directors, partners, officers and affiliates, and each of such
partners' and Affiliates' officers, directors, partners, employees,
representatives and affiliates, (collectively, the "Purchaser Indemnitees")
harmless from and against, and shall reimburse them for, any and all demands,
claims, losses, liabilities, damages, costs, and expenses whatsoever (including,
without limitation, any fines, penalties, reasonable fees and disbursements of
counsel incurred by the Purchaser Indemnitees in investigating or defending any
of the foregoing, and other reasonable expenses incurred investigating or
defending any of the foregoing or enforcing this Agreement) sustained or
incurred by a Purchaser Indemnitee resulting from or arising in connection with
any inaccuracy in or breach of any of the representations or warranties of the
Company set forth in this Agreement or the Schedules or Exhibits hereto;
provided, however, that the total liability of the Company under this Section 9
shall not exceed the aggregate Purchase Price paid by the Purchaser Indemnitees
pursuant to this Agreement.
9.2 Indemnification by the Purchasers. Notwithstanding anything in this
Agreement to the contrary, but subject to the other provisions of this Section
9, each of the Purchasers shall severally and not jointly indemnify, defend, and
hold the Company, the Company's directors, partners, officers and affiliates,
and each of such partners' and Affiliates' officers, directors, partners,
employees, representatives and affiliates, (collectively, the "Company
Indemnitees") harmless from and against, and shall reimburse them for, any and
all demands, claims, losses, liabilities, damages, costs, and expenses
whatsoever (including, without limitation, any fines, penalties, reasonable fees
and disbursements of counsel incurred by the Company Indemnitees in
investigating or defending any of the foregoing, and other reasonable expenses
incurred investigating or defending any of the foregoing or enforcing this
Agreement) sustained or incurred by a Company Indemnitee resulting from or
arising in connection with any inaccuracy in or breach of any of the
representations or warranties of such Purchaser set forth in this Agreement or
the Schedules or Exhibits hereto; provided, however, that the total liability of
such Purchaser under this Section 9 shall not exceed the aggregate Purchase
Price paid by such Purchaser pursuant to this Agreement.
9.3 Indemnification Notice. In the event that (i) an event occurs which
gives a person or entity a right to indemnification hereunder or (ii) any third
party claim is asserted against a person or entity with respect to which such
person or entity is entitled to indemnification hereunder, such person or entity
(the "Indemnified Party") shall, within 60 days of the later of the occurrence
of the event giving rise to the claim or the date that the indemnified party
learned of such claim (provided, however, that if a claim arises by virtue of
litigation, then in no event less than 10 days prior to the date in which an
appearance or answer is due,
whichever is earlier), notify the person or entity obligated to indemnify it
(the "Indemnifying Party") of such claim by delivery of a written notice
describing the claim and indicating the basis for indemnification hereunder. The
Indemnifying Party will have the right, upon written notice to the Indemnified
Party within 10 days after receipt from the Indemnified Party of notice of such
claim, to conduct at its expense the defense against such claim in its own name,
or if necessary in the name of the Indemnified Party. In the event that the
Indemnifying Party fails to give such notice, it will be deemed to have elected
not to conduct the defense of the subject claim, and in such event the
Indemnified Party will have the right to conduct such defense and, only with the
prior consent of the Indemnifying Party which will not be unreasonably withheld,
to compromise and settle the claim. In the event that the Indemnifying Party
does elect to conduct the defense of the subject claim, the Indemnified Party
shall cooperate with and make available to the Indemnifying Party such
assistance and materials as may be reasonably requested by it, all at the
expense of the Indemnifying Party and the Indemnified Party will have the right
at its expense to participate in the defense, provided that the Indemnified
Party will have the right to compromise and settle the claim only with the prior
written consent of the Indemnifying Party. Any settlement to which the
Indemnifying Party has consented in writing will conclusively be deemed to be an
obligation with respect to which the Indemnified Party is entitled to
indemnification hereunder.
10. Termination and Default.
The obligations of the Purchasers and the Company with respect to
consummating the Second Closing shall terminate in upon the occurrence of any of
the following events:
10.1 Mutual Consent. The obligations of the parties hereto to consummate
the Second Closing may be terminated by the mutual written consent of the
parties.
10.2 Order or Decree. The obligations of the parties hereto to consummate
the Second Closing may be terminated by any Purchaser or the Company if any
Governmental Authority shall have issued an order, decree, ruling or taken any
other action restraining, enjoining or otherwise prohibiting in any material
respects the transactions contemplated hereby and such order, decree, ruling or
other action shall have become final and nonappealable.
10.3 Outside Date. The obligations of the parties hereto to consummate the
Second Closing may be terminated by either party if (a) the Second Closing shall
not have occurred by December 31, 2000 (the "Outside Date"), or (b) if one or
more conditions to the other party's obligation to consummate the transactions
contemplated hereby cannot be satisfied by the Outside Date; provided, however,
that no party may exercise its rights under this Section 10 if such party is in
material breach or default under this Agreement.
20
10.4 Procedure Upon Termination. In the event of the termination of the
obligations of the parties hereto to consummate the Second Closing, written
notice thereof shall promptly be given to the other parties hereto and the
obligations of the parties hereto to consummate the Second Closing shall
terminate, all further obligations of the parties hereunder to satisfy the
conditions precedent to the Second Closing shall terminate, and the transactions
relating to the Second Closing shall be abandoned without further action by any
of the parties hereto.
10.5 Effect of Termination. Nothing in this Article X shall relieve any
party hereto of any liability for intentional or willful breach of this
Agreement, including willful failure to fulfill a condition or to perform a
covenant. The parties shall have no liability as a result of the failure of the
Second Closing to occur for any reason other than an intentional or willful
breach of this Agreement.
11. Miscellaneous.
11.1 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns. This Agreement, and the rights and obligations of each Purchaser
hereunder, may be assigned by such Purchaser to any person or entity to which at
least 1,000,000 Shares are transferred by such Purchaser, and such transferee
shall be deemed a "Purchaser" for purposes of this Agreement; provided that the
transferee provides written notice of such assignment to the Company. The
Company may not assign its rights under this Agreement.
11.2 Confidentiality. Each Purchaser agrees that he, she or it will keep
confidential and will not disclose, divulge or use for any purpose other than to
monitor his, her or its investment in the Company any confidential, proprietary
or secret information which such Purchaser may obtain from the Company pursuant
to financial statements, reports and other materials submitted by the Company to
such Purchaser pursuant to this Agreement, or pursuant to visitation or
inspection rights granted hereunder ("Confidential Information"), unless such
Confidential Information is known, or until such Confidential Information
becomes known, to the public (other than as a result of a breach of this Section
11.2 by such Purchaser); provided, however, that a Purchaser may disclose
Confidential Information (i) to its attorneys, accountants, consultants, and
other professionals to the extent necessary to obtain their services in
connection with monitoring its investment in the Company and to the extent that
such individuals agree to be bound by the provisions of this Section 11.2,
(ii) to any prospective purchaser of any Shares from such Purchaser as long as
such prospective purchaser agrees to be bound by the provisions of this Section
11.2, (iii) to any affiliate of such Purchaser or to a partner, stockholder or
subsidiary of such Purchaser, provided that such affiliate agrees in writing to
be bound by the provisions of
21
this Section 11.2, or (iv) as may otherwise be required by law, provided that
the Purchaser takes reasonable steps to minimize the extent of any such required
disclosure.
11.3 Survival of Representations and Warranties. All agreements,
representations and warranties contained herein shall survive the execution and
delivery of this Agreement and the Initial Closing of the transactions
contemplated hereby.
11.4 Expenses. The Company shall pay, at the Initial Closing, the
reasonable fees and disbursements of ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to the
Purchasers, in connection with the preparation of this Agreement; provided,
however, that in no event shall the Company be obligated to pay more than
$25,000 in the aggregate pursuant to this Section 11.4.
11.5 Brokers. The Company and each Purchaser (i) represents and warrants to
the other parties hereto that he, she or it has not retained a finder or broker
in connection with the transactions contemplated by this Agreement (other than
Friedman, Billings, ▇▇▇▇▇▇ & Co. Inc.), and (ii) will indemnify and save the
other parties harmless from and against any and all claims, liabilities or
obligations with respect to brokerage or finders' fees or commissions, or
consulting fees in connection with the transactions contemplated by this
Agreement asserted by any person on the basis of any statement or representation
alleged to have been made by such indemnifying party.
11.6 Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
11.7 Specific Performance. In addition to any and all other remedies that
may be available at law in the event of any breach of this Agreement, each
Purchaser shall be entitled to specific performance of the agreements and
obligations of the Company hereunder and to such other injunctive or other
equitable relief as may be granted by a court of competent jurisdiction.
11.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware (without reference to
the conflicts of law provisions thereof).
11.9 Notices. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be deemed delivered (i) two
business days after being sent by registered or certified mail, return receipt
requested, postage prepaid or (ii) one business day after being sent via a
reputable nationwide overnight courier service guaranteeing next business day
delivery, in each case to the intended recipient as set forth below:
22
If to the Company, at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: President, or at such other address or addresses as may have been
furnished in writing by the Company to the Purchasers, with a copy to ▇▇▇▇▇▇ ▇.
▇▇▇▇, Esq., ▇▇▇▇ and ▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; or
If to a Purchaser, at the address set forth on Exhibit A for such
Purchaser, or at such other address or addresses as may have been furnished to
the Company in writing by such Purchaser; or
Any party may give any notice, request, consent or other communication
under this Agreement using any other means (including, without limitation,
personal delivery, messenger service, telecopy, first class mail or electronic
mail), but no such notice, request, consent or other communication shall be
deemed to have been duly given unless and until it is actually received by the
party for whom it is intended. Any party may change the address to which
notices, requests, consents or other communications hereunder are to be
delivered by giving the other parties notice in the manner set forth in this
Section.
11.10 Complete Agreement. This Agreement (including its Exhibits) and the
Ancillary Agreements constitute the entire agreement and understanding of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings relating to such subject matter.
11.11 Amendments and Waivers. Except as otherwise expressly set forth in
this Agreement, any term of this Agreement may be amended or terminated and the
observance of any term of this Agreement may be waived with respect to all
parties to this Agreement (either generally or in a particular instance and
either retroactively or prospectively), with the written consent of the Company
and the holders of at least 66 2/3% of the shares of Common Stock issued or
issuable upon conversion of the Shares. Notwithstanding the foregoing, this
Agreement may be amended or terminated, and any right hereunder may be waived
with respect to all parties to this Agreement, with the consent of the Company
and the holders of less than all of the shares of Common Stock issued or
issuable upon conversion of the Shares only in a manner which applies to all
such holders in the same fashion. Any amendment, termination or waiver effected
in accordance with this Section 11.11 shall be binding upon each holder of any
Shares (including shares of Common Stock into which such Shares have been
converted), even if they do not execute such consent, each future holder of all
such securities and the Company. No waivers of or exceptions to any term,
condition or provision of this Agreement, in any one or more instances, shall be
deemed to be, or construed as, a further or continuing waiver of any such term,
condition or provision.
23
11.12 Pronouns. Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns and pronouns shall include the plural, and vice
versa.
11.13 Counterparts; Facsimile Signatures. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original, and
all of which shall constitute one and the same document. This Agreement may be
executed by facsimile signatures.
11.14 Section Headings. The section headings are for the convenience of the
parties and in no way alter, modify, amend, limit, or restrict the contractual
obligations of the parties.
11.15 Third Parties. Nothing expressed or implied in this Agreement is
intended, or is to be construed, to confer upon or give any person or entity
other than the parties hereto any rights or remedies under or by reason of this
Agreement.
11.16 Schedules and Exhibits. The schedules and exhibits attached to this
Agreement are incorporated herein and are to be part of this Agreement for all
purposes.
11.17 Mutual Efforts. Each party shall use its commercially reasonable
efforts to obtain, at its expense, all waivers, permits, consents, approvals or
other authorizations from Governmental Entities, and to effect all
registrations, filings and notices with or to Governmental Entities, as may be
required for such party to consummate the transactions contemplated by this
Agreement and to otherwise comply with all applicable laws and regulations in
connection with the consummation of the transactions contemplated by this
Agreement. Without limiting the generality of the foregoing, each of the Parties
shall promptly file any Notification and Report Forms and related material that
it may be required to file with the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Act, shall use commercially reasonable efforts to obtain an early termination of
the applicable waiting period, and shall make any further filings or information
submissions pursuant thereto that may be necessary, proper or advisable.
24
[Counterpart signature page to Series A
Preferred Stock Purchase Agreement]
Executed as of the date first written above.
▇▇▇▇▇▇▇▇.▇▇▇ INCORPORATED
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
Title: Chief Financial Officer
------------------------------
[Counterpart signature page to Series A
Preferred Stock Purchase Agreement]
Executed as of the date first written above.
MICROSTRATEGY INCORPORATED
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
Title: Chief Financial Officer
------------------------------
[Counterpart signature page to Series A
Preferred Stock Purchase Agreement]
Executed as of the date first written above.
AETHER CAPITAL LLC
By: Aether Systems, Inc.
--------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------
Title: Chief Executive Officer
-------------------------------
[Counterpart signature page to Series A
Preferred Stock Purchase Agreement]
Executed as of the date first written above.
SNOWDON LTD. PARTNERSHIP
By: Nevis LLC, its General Partner
------------------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------------
Title: President of Nevis LLC
-----------------------------
[Counterpart signature page to Series A
Preferred Stock Purchase Agreement]
Executed as of the date first written above.
VALHALLA CAPITAL L.P.
By: Valhalla Capital Management LLC
-------------------------------------
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
-------------------
Title: Managing Member
----------------------
[Counterpart signature page to Series A
Preferred Stock Purchase Agreement]
Executed as of the date first written above.
NEW VENTURE PARTNERS IV, L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
--------------------------
Title: General Partner
----------------------
[Counterpart signature page to Series A
Preferred Stock Purchase Agreement]
Executed as of the date first written above.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇
--------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇
--------------------
[Counterpart signature page to Series A
Preferred Stock Purchase Agreement]
Executed as of the date first written above.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ III
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, III
-------------------------------
[Counterpart signature page to Series A
Preferred Stock Purchase Agreement]
Executed as of the date first written above.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
-------------------
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------
Name: Art Marks
--------------------
EXHIBIT A
---------
Number of Shares to Number of Shares to
be Purchased in First be Purchased in Second Aggregate
Name and Address Closing Closing Purchase Price
Aether Capital LLC 4,702,194 3,134,796 $24,999,998.10
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Snowdon Ltd. Partnership 4,702,194 -- $14,999,998.86
c/o Nevis Capital Management
▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇ 1,567,398 -- $4,999,999.62
c/o Nevis Capital Management
▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, III 1,567,398 -- $4,999,999.62
c/o Nevis Capital Management
▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
New Venture Partners IV, L.P. 470,219 -- $1,499,998.61
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ & Art Marks 313,480 -- $1,000,001.20
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Valhalla Capital L.P. 78,370 -- $250,000.30
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
TOTAL: 13,401,253 3,134,796 $52,749,996.31