EXHIBIT 4.36
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SECURITIES PURCHASE AGREEMENT
dated as of February 3, 2000,
among
WAM!NET INC.
and
SILICON GRAPHICS, INC.
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TABLE OF CONTENTS
Page
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SECTION 1. AUTHORIZATION....................................................1
SECTION 2. CLOSING..........................................................1
SECTION 3. SALE AND PURCHASE OF SHARES......................................1
3.1. Shares...........................................................1
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION................2
4.1. Organization; Subsidiaries.......................................2
4.2. Qualification; Good Standing.....................................2
4.3. Corporate Authorization; Enforceability..........................3
4.4. No Conflict......................................................3
4.5. Capitalization...................................................3
4.6. Securities Laws; Applicable Corporation Laws.....................6
4.7. Financial Information............................................6
4.8. Absence of Changes...............................................6
4.9. Reserved.........................................................8
4.10. Agreements.......................................................8
4.11. Title to Assets.................................................10
4.12. Real Property...................................................10
4.13. Intellectual Property Rights; Proprietary Information
of Third Parties..............................................10
4.14. Compliance with Laws; Governmental Authorizations...............11
4.15. Litigation......................................................12
4.16. Environmental Matters...........................................12
4.17. Tax Matters.....................................................12
4.18. Employee Benefit Plans..........................................13
4.19. Insurance.......................................................14
4.20. Related Transactions............................................14
4.21. Offering of the Shares..........................................14
4.22. Disclosure......................................................14
4.23. Reserved........................................................15
4.24. Reserved........................................................15
4.25. Brokers and Finders.............................................15
4.26. Year 2000 Compliance............................................15
4.27. Reserved........................................................15
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.................16
5.1. Due Authorization...............................................16
5.2. Investment Representations......................................16
5.3. Brokers and Finders.............................................17
5.4. Investor Sophistication.........................................17
5.5. Reserved........................................................17
SECTION 6. COVENANTS OF THE CORPORATION AND THE PURCHASER..................17
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6.1. Regulatory Approvals; Reasonable Best Efforts;
Further Assurances............................................17
6.2. Certain Filings.................................................17
6.3. Confidentiality.................................................18
6.4. Public Announcements............................................18
SECTION 7. COVENANTS OF THE CORPORATION....................................18
7.1. Certificate of Designation......................................18
7.2. Restrictions Pending the Closing................................19
7.3. Reservation of Shares...........................................19
7.4. Use of Proceeds.................................................19
7.5. Access to Records...............................................19
7.6. Reserved........................................................19
7.7. Financial Reporting and other Information.......................19
7.8. Payment of Obligations..........................................20
7.9. Insurance.......................................................21
7.10. Certain Notices.................................................21
7.11. Conduct of Business.............................................21
7.12. Related Transactions............................................21
7.13. Internal Controls...............................................21
7.14. Reserved........................................................22
7.15. Reserved........................................................22
7.16. Purchaser Lock-Up...............................................22
7.17. Reserved........................................................22
7.18. Consents........................................................22
SECTION 8. REGISTRATION RIGHTS OF THE PURCHASER............................22
8.1. Demand Registration.............................................22
8.2. "Piggy-Back" Registration.......................................23
8.3. General Terms...................................................24
8.4. Underwriting Agreement..........................................25
8.5. Road Show.......................................................25
8.6. Reserved........................................................25
SECTION 9. CONDITIONS TO EACH CLOSING......................................25
9.1. Conditions of Each Party........................................25
9.2. Conditions to Obligations of the Purchaser......................26
9.3. Conditions to Obligations of the Corporation....................27
SECTION 10. TERMINATION....................................................27
10.1. Effect of Termination..........................................28
SECTION 11. MISCELLANEOUS..................................................28
11.1. Survival.......................................................28
11.2. Indemnification................................................28
11.3. Reserved.......................................................29
11.4. Assignment; Parties in Interest................................29
11.5. Entire Agreement...............................................30
11.6. Notices........................................................30
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11.7. Amendments.....................................................31
11.8. Counterparts...................................................31
11.9. Headings.......................................................31
11.10. Governing Law..................................................31
11.11. Jurisdiction...................................................31
11.12. No Waiver......................................................32
11.13. Binding Effect.................................................32
11.14. Cumulative Powers..............................................32
INDEX......................................................................38
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SECURITIES PURCHASE AGREEMENT, dated as of February 3, 2000, among
WAM!NET INC., a Minnesota corporation (the "Corporation"), and Silicon Graphics,
Inc., a Delaware corporation ("SGI").
WHEREAS, the Corporation desires to sell to SGI 10,000 shares (the
"Shares") of its Class F Convertible Preferred Stock, $.01 par value (the "Class
F Preferred Stock"), and SGI desires to purchase the Shares from the Corporation
upon the terms and subject to the conditions set forth below.
NOW THEREFORE, the parties hereto agree as follows:
Section 1. Authorization.
The Corporation has authorized the issuance and sale, upon the terms
and subject to the conditions set forth in this Agreement, of the Shares for a
purchase price of $1000.00 per Share (the "Per Share Price") or $10.0 million in
the aggregate (the "Purchase Price"). The powers, designations, preferences and
relative, participating, optional or other rights, and the qualifications,
limitations, and restrictions of the Class F Preferred Stock are set forth in
the Statement of Rights and Preferences of Class F Preferred Stock ("Class F
Certificate of Designation") attached hereto as Exhibit A.
Section 2. Closing.
Unless this Agreement shall have been terminated and the transactions
herein contemplated shall have been abandoned in accordance with this Agreement,
the closing of the sale and purchase of the Shares and the other transactions
contemplated hereby (the "Closing") shall be held at 10:00 a.m. on the date
which is the third business day after the conditions in Section 9 have been
satisfied or waived (other than those of such conditions which are customarily
satisfied at a closing), at the office of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (or at such other time, date and place as the
parties may mutually agree). The date on which the Closing actually occurs is
hereinafter referred to as the "Closing Date."
Section 3. Sale and Purchase of Shares.
3.1. Shares.
At the Closing, the Corporation shall issue, sell and deliver to SGI
10,000 Shares of Class F Preferred Stock and SGI shall deliver to the
Corporation, as full payment therefor, the Purchase Price in cash by wire
transfer of immediately available funds to such bank account or bank accounts
designated by the Corporation.
Section 4. Representations and Warranties of the Corporation.
The Corporation hereby represents and warrants to the Purchaser as of
the date hereof and as of the Closing Date that:
4.1. Organization; Subsidiaries.
(a) Organization. The Corporation and each Subsidiary (as
defined below) is a corporation duly organized and validly existing
under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own, lease and operate the
assets used in its business, to carry on its business as presently
conducted, to enter into the Documents (as hereinafter defined), to
perform its obligations thereunder, and to consummate the transactions
contemplated thereby. Attached as Schedule 4.1(a) are correct and
complete copies of the Articles of Incorporation of the Corporation
including all amendments and certificates of Designation, and the
By-laws of the Corporation and each Subsidiary, each as in effect on
the date hereof (collectively, the "Organizational Documents"). No
amendments, revisions or waivers of any provisions of any
Organizational Documents have occurred, are in the process of occurring
or otherwise have been requested. For purposes of this Agreement,
"Documents" collectively means (i) this Agreement and (ii) the Class F
Certificate of Designation.
(b) Subsidiaries. Set forth on Schedule 4.1(b) hereto is a
complete list of all of the subsidiaries of the Corporation (each a
"Subsidiary"). Except as set forth on Schedule 4.1(b) hereto, the
Corporation does not own, directly or indirectly, any capital stock or
other equity securities of any corporation, nor does the Corporation
have any direct or indirect ownership interest, including interests in
partnerships and joint ventures, in any other entity or business and
there are no agreements to acquire such interests. Each Subsidiary has
been duly organized, is validly existing and in good standing under the
laws of its respective jurisdiction of incorporation and is duly
qualified and in good standing as a foreign corporation, and is
authorized to do business, in all jurisdictions in which the character
of its properties or the nature of its businesses requires such
qualification or authorization, except for qualifications and
authorizations the lack of which, individually or in the aggregate,
would not reasonably be expected to result in a material adverse effect
upon the business, prospects, properties, liabilities, assets,
operations, results of operations, condition (financial or otherwise),
or affairs of the Corporation or result in the loss from employment of
any Principal Executive Officer as such term is defined on Schedule I
(a "Material Adverse Effect"). Each Subsidiary has the requisite power
and authority to own and hold its properties and to carry on its
business as now being conducted. Except as disclosed on Schedule 4.1(b)
hereto: (i) all of the outstanding shares of capital stock of each
Subsidiary are owned beneficially and of record by the Corporation,
another Subsidiary or any combination thereof, in each case free and
clear of any liens, charges, restrictions, claims or encumbrances other
than restrictions on transfer imposed by the Securities Act of 1933, as
amended (the "Securities Act"); and (ii) there are no outstanding
subscriptions, warrants, options, convertible securities or other
rights (contingent or other) pursuant to which any Subsidiary is or may
become obligated to issue any shares of its capital stock to any person
other than the Corporation or a Subsidiary.
4.2. Qualification; Good Standing.
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Each of the Corporation and every Subsidiary is authorized to do
business and is in good standing as a foreign corporation in each jurisdiction
the laws of which require such respective entity to be so authorized, except
where the failure to be so qualified or in good standing could not reasonably be
expected to have a Material Adverse Effect.
4.3. Corporate Authorization; Enforceability.
The Corporation has taken all corporate action necessary to authorize
its execution and delivery of the Documents, the performance of its obligations
thereunder, and its consummation of the transactions contemplated thereby. Each
Document has been executed and delivered by an officer of the Corporation in
accordance with such authorization. Each Document constitutes a valid and
binding obligation of the Corporation, enforceable in accordance with its terms,
subject to applicable bankruptcy, reorganization, fraudulent conveyance,
insolvency, moratorium, and similar laws now or hereafter in effect affecting
creditors' rights generally and to general principles of equity.
4.4. No Conflict.
The execution and delivery by the Corporation of the Documents, its
consummation of the transactions contemplated thereby, and its compliance with
the provisions thereof, will not other than in instances which could not
reasonably be expected to have a Material Adverse Effect, (i) violate or
conflict with any of the Organizational Documents, (ii) violate, conflict with,
result in a breach of, constitute a default under, or give rise to any right of
termination, cancellation, or acceleration (with or without notice or lapse of
time, or both) under any agreement, lease, security, license, permit, or
instrument to which the Corporation or any Subsidiary is a party, or to which it
or any of them or any of their respective assets or businesses are subject,
(iii) result in the imposition of any Encumbrance (as hereinafter defined) on
any asset of the Corporation, (iv) violate or conflict with any Laws applicable
to the Corporation or its properties or assets, or (v) require any consent,
approval or other action of, notice to, or filing with any entity or person
(governmental or private), except for the filing of the Class F Certificate of
Designations and those that have been obtained or made. For purposes of this
Agreement, "Encumbrance" means any security interest, mortgage, lien, pledge,
charge, easement, reservation, clouds, equities, rights of way, options, rights
of first refusal and any other encumbrances, whether or not relating to the
extension of credit or the borrowing of money. For purposes of this Agreement,
"Laws" means all laws, statutes, rules, regulations, ordinances, bylaws, writs,
Permits, Orders and other legislative, administrative or judicial restrictions.
4.5. Capitalization.
(a) Capitalization.
(i) As of the date hereof, the authorized capital
stock of the Corporation consists of 500,000,000 shares, the
Designation and classes of which are set forth on Schedule
4.5(a) hereto. The Corporation does not hold any of its shares
in treasury.
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(ii) As of January 31, 2000, 9,494,797 shares of the
Corporation's common stock, par value $.01 per share ("Common
Stock"), 115,206 shares of the Corporation's Class A Preferred
Stock par value $10.00 per share (the "Class A Preferred
Stock"), 5,710,425 shares of the Corporation's Class B
Preferred Stock par value $.01 per share (the "Class B
Preferred Stock"), 878,527 shares of the Corporation's Class C
Preferred Stock, par value $.01 per share (the "Class C
Preferred Stock"), and 2,196,317 shares of the Corporation's
Class D Preferred Stock, par value $.01 per share (the "Class
D Preferred Stock") are issued and outstanding and have been
validly issued and are fully paid and nonassessable and are
not subject to preemptive rights. Except as set forth herein,
there are no other shares of capital stock of the Corporation
outstanding. As of the date hereof, the Class B Preferred
Stock, Class C Preferred Stock and Class D Preferred Stock are
convertible into 5,710,425, 878,527 and 2,196,317 shares of
Common Stock, respectively. The Corporation has also entered
into an agreement, dated as of December 31, 1999, with Winstar
Communications, Inc. with respect to the sale of 50,000 shares
of the Corporation's Class E Convertible Preferred Stock, $.01
par value (the "Class E Preferred Stock"), and an option to
acquire an additional 50,000 shares of the Corporation's Class
E Convertible Preferred Stock. The 50,000 shares of Class E
Preferred Stock subject to sale are convertible into 9,689,922
shares of Common Stock, representing an initial conversion
price of $5.16 per share of Common Stock. Upon issuance of the
Common Stock underlying such preferred shares, in accordance
with their respective Certificates of Designation, such Common
Stock will be validly issued, fully paid and non-assessable.
(b) Options, Warrants, Convertible Securities. Except as set
forth on Schedule 4.5(a) hereto, as of the date hereof there are no
outstanding subscriptions, options, warrants or other agreements or
rights of any kind to acquire any additional shares of capital stock of
the Corporation or other instruments or securities convertible into or
exchangeable for, or which otherwise confer on the holder thereof any
right to acquire, any such additional shares of capital stock, nor is
the Corporation committed to issue any such option, warrant, right or
security. Except as set forth on Schedule 4.5(b) hereto, the
Corporation has no obligation (contingent or other) to purchase, redeem
or otherwise acquire any of its equity securities or any interest
therein or to pay any dividend or make any other distribution in
respect thereof. Schedule 4.5(a) additionally sets forth (i) all of the
outstanding warrants of the Corporation, specifying the exercise prices
and periods of such warrants and amount of Common Stock issuable upon
exercise of such warrants; and (ii) stock options of the Corporation,
specifying the exercise prices and periods of such options and the
amount of Common Stock issuable upon exercise of the stock option held
by each such holder. As of January 31, 2000, 96,605,853 shares of
Common Stock are issuable upon exercise or conversion of all of the
Corporation's outstanding options, warrants, and other rights of any
kind to acquire shares of the Corporation's Common Stock (which number
includes the number of shares of Common Stock underlying the shares of
preferred stock to be issued to Winstar Communications, Inc. in
connection with its equity investment in the Company but does not
include the Class B Warrants issued in September 1997 to MCI WorldCom,
Inc.).
(c) Agreements.
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(i) Except as set forth in Schedule 4.5(c)(i), as of
the date hereof, there are no agreements relating to the
purchase or sale of capital stock between the Corporation and
any of its shareholders or affiliates, and to the best of the
Corporation's knowledge, there are no such agreements among
any of its shareholders and other parties.
(ii) Except as contemplated hereby and as set forth
in Schedule 4.5(c)(ii), there are no agreements or
understandings granting to any person or entity any right to
cause the Corporation or any Subsidiary to effect a
registration under the Securities Act of 1933, as amended
("Securities Act"), of any shares of the Corporation's capital
stock.
(iii) Except as set forth on Schedule 4.5(c)(iii),
there are no voting trusts, voting agreements, proxies or
other agreements, instruments or understandings with respect
to the voting of the capital stock of the Corporation between
the Corporation and any of its shareholders or affiliates and
to the best of the Corporation's knowledge, there are no such
agreements among any of its shareholders and any other
parties.
(d) Due Authorization. The Shares are duly authorized and,
when issued and paid for pursuant to the terms of this Agreement, will
be validly issued, fully paid and nonassessable and will have the
rights, preferences and privileges specified in the Class F Certificate
of Designation. The shares of the Corporation's Common Stock issuable
upon conversion of the Shares ("Conversion Shares") are duly authorized
and have been reserved for issuance and, when issued upon conversion in
accordance with the terms of the Class F Certificate of Designation,
will be validly issued, fully paid and nonassessable, and will be free
and clear of all liens, encumbrances and restrictions (other than the
restrictions on transfer imposed by the Securities Act or any other
applicable federal or state securities laws, and the rules and
regulations promulgated thereunder). Neither the issuance, sale or
delivery of the Shares nor the contemplated issuance or delivery of the
Conversion Shares is subject to or will trigger any preemptive or other
similar right of shareholders of the Corporation, any anti-dilution
right or right of first refusal or other preemptive or similar right in
favor of any person, in each case except for rights that have been
listed on Schedule 4.5(d).
(e) Securityholders. Schedule 4.5(a) sets forth the name and
address of each record holder of more than five-percent of the
outstanding shares of any of the Common Stock, the Class A Preferred
Stock, the Class B Preferred Stock, the Class C Preferred Stock, the
Class D Preferred Stock and the Class E Preferred Stock and the number
of such shares of Common Stock or Preferred Stock held by each such
holder.
(f) Reservation of Shares. The Corporation has reserved, and
at all times from and after the date hereof will keep reserved, free
from preemptive rights, out of its authorized but unissued shares of
Common Stock, solely for the purpose of effecting the conversion of all
shares of Class A Preferred Stock, Class B Preferred Stock, Class C
Preferred Stock, Class D Preferred Stock, Class E Preferred Stock and
Class F Preferred Stock, sufficient shares of Common Stock to provide
for the conversion of all such shares of Preferred Stock.
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4.6. Securities Laws; Applicable Corporation Laws.
(a) The sale of the Shares contemplated hereby is exempt from
registration under the Securities Act. The issuance of all other shares
of capital stock of the Corporation on or before the date hereof has
been made in compliance with the Securities Act and all applicable
state securities or blue sky laws.
(b) The sale of the Shares contemplated hereby and the other
transactions contemplated hereby are in compliance with all applicable
laws, including the Minnesota Business Corporation Act, and any
consents which are required to be obtained pursuant to such laws have
either been obtained or waived in writing.
4.7. Financial Information.
(a) Schedule 4.7 sets forth (i) the audited consolidated
balance sheet of the Corporation at December 31, 1998 (the "Balance
Sheet") and the related statements of operations, shareholders' equity
and cash flows of the Corporation for the 12 months then ended and (ii)
the unaudited consolidated balance sheet of the Corporation at
September 30, 1999 (the "Interim Balance Sheet") and the related
unaudited consolidated statements of operations, shareholders' equity
and cash flows for the Corporation for the 9 months then ended
(collectively, the "Financial Statements").
(b) The Financial Statements: (i) present fairly the financial
position of the Corporation and the results of operations,
shareholders' equity and cash flows of the Corporation at the dates and
for the periods indicated, (ii) are in accordance with the books and
records of the Corporation which books and records are complete and
correct and fairly reflect all material transactions of the
Corporation's business, and (iii) have been prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied
(except as set forth in the notes thereto and subject, in the case of
unaudited Financial Statements, to normal year-end adjustments, and the
absence of notes thereto). Except as incurred under agreements on
Schedule 4.10(a) or as set forth on Schedule 4.7, at the date of the
Interim Balance Sheet, the Corporation did not have any material
Liability of any nature or any loss contingency (as such term is used
in the Statement of Financial Accounting Standards No. 5 issued by the
Financial Accounting Standards Board in March 1975) that was not
adequately disclosed or provided for on the Interim Balance Sheet,
including the notes thereto. For purposes of this Agreement,
"Liability" means any liability or obligation, whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated and whether due or to become due,
regardless of when asserted.
4.8. Absence of Changes.
(a) Since the date of the Interim Balance Sheet there has not
been:
(i) any change in the assets, liabilities or
financial condition of the Corporation (on a consolidated
basis), except for changes (i) in the ordinary course of
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business or (ii) which in the aggregate have not resulted in
and would not reasonably be expected to result in a Material
Adverse Effect;
(ii) any event or change that would reasonably be
expected to result in a Material Adverse Effect, individually
or in the aggregate, whether or not insured against;
(iii) to the best of the Corporation's knowledge, any
damage, destruction or loss (whether or not covered by
insurance) affecting any asset of the Corporation in excess of
$100,000;
(iv) any liability or loss contingency incurred by
the Corporation that would have to be disclosed on financial
statements (including the notes thereto) (on a consolidated
basis) in accordance with GAAP, other than liabilities
incurred in the ordinary course of business consistent with
past practice;
(v) to the best of the Corporation's knowledge, any
commitment to borrow money from or provide financial support
to any person or entity entered into by the Corporation;
(vi) any payment or discharge of any Liability by the
Corporation outside the ordinary course of business consistent
with past practice to the best of the Corporation's knowledge;
(vii) any sale, assignment, license, or other
disposition of any asset or right of the Corporation or any
Subsidiary outside the ordinary course of business consistent
with past practice;
(viii) any declaration or payment of any dividend or
other distribution with respect to any shares of capital stock
of the Corporation, or the direct or indirect acquisition of
any equity securities by the Corporation;
(ix) any labor trouble, problem or grievance
affecting the business of the Corporation other than such
matters which would not reasonably be expected to have a
Material Adverse Effect;
(x) any write-down of the value of any inventory of
the Corporation, or any write-off as uncollectible of any
accounts or notes receivable of the Corporation, which could
reasonably be expected to result in a Material Adverse Effect;
(xi) any increase in the direct or indirect
compensation of senior officers of the Corporation or any
Subsidiary (including, without limitation, any increase
pursuant to any bonus, pension, profit-sharing, deferred
compensation, or other plan or commitment), in excess of 20%
above the prior year;
(xii) any capital expenditure or commitment therefor
by the Corporation or any Subsidiary for additions to
property, plant or equipment in excess of $250,000;
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(xiii) any change in the accounting or tax methods,
practices, or assumptions followed by the Corporation or any
Subsidiary; or
(xiv) any other transaction or event not in the
ordinary course of business consistent with past practice.
(b) The Corporation's independent accountants have not advised
the Corporation that the Interim Balance Sheet and the related
unaudited financial statements (i) do not comply in all material
respects with the applicable accounting requirements of the Securities
Act and the related published rules and regulations thereunder and (ii)
are not in conformity with GAAP.
4.9. Reserved.
4.10. Agreements.
(a) Schedule 4.10(a) sets forth a list of all material written
and oral contracts, agreements, licenses, commitments, instruments and
understandings ("Agreements"), and all Agreements of the following
types regardless of materiality, to which the Corporation or any
Subsidiary is a party ("Disclosed Agreements"):
(i) individually provide for the future purchase by
the Corporation or any Subsidiary of products or services in
excess of $50,000 or call for expenditures of the Corporation
or any Subsidiary in excess of $50,000, which expenditures or
commitments have not been disclosed in the Initial Budget
annexed to Schedule 4.10(a) hereto;
(ii) provide for the employment by the Corporation or
any Subsidiary of any director or officer or consultant (other
than for legal or accounting services) earning $100,000 or
more for any engagement or provide for any payments or
benefits (including severance payments or benefits) to any
director, officer or employee;
(iii) provide for the borrowing of money or a line of
credit by the Corporation or any Subsidiary, or a leasing
transaction of a type required to be capitalized by the
Corporation in accordance with GAAP;
(iv) provide for a strategic relationship regarding
the Corporation or any Subsidiary and a third party, including
any joint venture, partnership or similar arrangement;
(v) provide for the sale, assignment, license, or
other disposition of any asset or any material right of the
Corporation with a value in excess of $30,000;
(vi) provide for the lease by the Corporation or any
Subsidiary of any real property;
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(vii) provide for the lease by the Corporation or any
Subsidiary of any personal property with a value, or
reflecting replacement costs, in excess of $30,000 or
involving lease payments in excess of $30,000 per year;
(viii) were entered into with any labor union;
(ix) provide for a tax sharing;
(x) provide for any distribution, agency, or
licensing arrangement with the Corporation or any Subsidiary;
(xi) require the Corporation to issue dividends or
shares of its Common Stock upon exercise of warrants;
(xii) restrict the Corporation or any Subsidiary, or
any of the officers or employees listed on Schedule
4.10(a)(ii), from engaging in any business activity in any way
related to the business of the Corporation anywhere in the
world, restrict any such person in the performance of his or
her obligations and responsibilities to the Corporation or any
Subsidiary, or create any other obligation or liability of any
such person, in any way related to the business of the
Corporation, arising from his or her prior employment;
(xiii) grant to any person or entity, other than the
Corporation or any Subsidiary, any right, title, or interest
in any invention or know-how conceived by employees of the
Corporation or any Subsidiary and related to the business of
the Corporation;
(xiv) provide for a loan guaranty, surety, indemnity,
or other financial support by the Corporation or any
Subsidiary to any person or entity; or
(xv) grant to any person or entity a security
interest in any asset or right of the Corporation or any
Subsidiary.
(b) Each Disclosed Agreement or understanding required to be
set forth on Schedule 4.10(a) is in full force and effect and
constitutes a valid and binding obligation of all parties thereto.
Except as set forth on Schedule 4.10(a), the Corporation and, to the
extent a Subsidiary is a party, the Subsidiary has performed in all
material respects the obligations required to be performed by it and is
not in material default and has not received notice alleging it to be
in default under any such Disclosed Agreement. To the knowledge of the
Corporation, there exists no event or condition which, after notice or
lapse of time, or both, would constitute such a material default under
any Disclosed Agreement. To the knowledge of the Corporation, there are
no material defaults by any other party to any such Disclosed
Agreement. The Corporation has made available to the Purchaser correct
and complete copies of all Disclosed Agreements set forth on Schedule
4.10(a).
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4.11. Title to Assets.
Except for properties leased by the Corporation or any Subsidiary, the
Corporation and each Subsidiary has good and marketable title to all assets
reflected on the Interim Balance Sheet as being owned by it, or acquired by it
after the date of the Interim Balance Sheet (except for inventory sold or
otherwise disposed of in the ordinary course of business, and accounts and notes
receivable paid in full, since the date of the Interim Balance Sheet), free and
clear of all Encumbrances, other than Permitted Liens and other than those which
would not reasonably be expected to result in a Material Adverse Effect. Such
assets are in good operating condition and repair, are adequate and suitable for
their intended use in the business of the Corporation and are sufficient for the
conduct of the business except as would not reasonably be expected to result in
a Material Adverse Effect. There does not exist any condition which interferes
with the economic value or use of such assets except as would not reasonably be
expected to result in a Material Adverse Effect. The term "Permitted Liens"
means (i) liens arising by operation of law in the ordinary course of business
that, individually and in the aggregate, do not in any respect interfere with
the use or value of any of the assets subject thereto, (ii) minor imperfections
of title which do not detract from the value of the property affected or impair
the operations of the Corporation, (iii) liens for taxes not yet due and
payable, (iv) liens arising in connection with debt incurred pursuant to and in
accordance with the covenant section, and (v) liens relating to monies borrowed
by the Corporation or any Subsidiary.
4.12. Real Property.
Except as disclosed on Schedule 4.12, neither the Corporation nor any
Subsidiary owns or holds, directly or indirectly, any real property. Neither the
Corporation nor any Subsidiary leases, directly or indirectly, any real property
other than as listed on Schedule 4.12.
4.13. Intellectual Property Rights; Proprietary Information of Third
Parties.
(a) Each of the Corporation and each Subsidiary owns or is
licensed to use all patents, trademarks, copyrights, service marks, and
applications and registrations therefor, and all trade names (including
WAM!NET, WAM!BASE and WAM!PROOF), domain names, URLs, customer lists,
trade secrets, proprietary processes and formulae, inventions,
know-how, other confidential and proprietary information, and other
industrial and intellectual property rights necessary to permit such
entities to carry on their respective business as presently conducted.
Schedule 4.13 sets forth a list of all patents, trademarks, copyrights,
service marks, and applications and registrations therefor, and all
trade names, domain names or URLs held or owned by the Corporation and
each Subsidiary and all other proprietary intellectual property rights
of the Corporation and each Subsidiary. All registered patents,
copyrights, trademarks, domain name and URL rights and service marks
listed on Schedule 4.13 are in full force and effect and are not
subject to any taxes or maintenance fees and the Corporation or a
Subsidiary has the right to bring infringement Proceedings with respect
thereto. Neither the Corporation nor any Subsidiary (i) licenses or
grants to anyone other than to the Corporation or any Subsidiary rights
of any nature to use any intellectual property right that is material
to its business, other than certain software and equipment which is
provided to the Corporation's clients which enable them to access the
Corporation's network and avail themselves of the Corporation's
services, (ii)
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is not obligated to and does not pay royalties to anyone for use of its
intellectual property rights, and (iii) does not market or sell any
product or service that violates any intellectual property right of a
third party. Except as set forth on such Schedule, there is no pending
or, to the knowledge of the Corporation, threatened claim or litigation
against the Corporation or any Subsidiary contesting the right to use
its intellectual property rights, asserting the misuse of any thereof,
or asserting the infringement or other violation of any intellectual
property rights of a third party.
(b) All inventions and know-how conceived by employees of the
Corporation and each Subsidiary, while in the employ of the Corporation
or such Subsidiary, and related to the business of the Corporation or
any Subsidiary were "works for hire," and all right, title, and
interest therein were transferred and assigned to the Corporation or a
Subsidiary and the Corporation or a Subsidiary has maintained all
right, title and interest therein without any Encumbrances thereon. The
Corporation has taken all reasonable security measures to protect the
secrecy, confidentiality, and value of its trade secrets, proprietary
processes and formulae, inventions, know-how and other confidential and
proprietary information.
(c) No third party has claimed or, to the Company's knowledge,
has reason to claim that the Corporation or any Subsidiary has (i)
violated or may be violating any of the terms or conditions of any
non-competition or non-disclosure agreement with such third party, (ii)
disclosed or may be disclosing or utilized or may be utilizing any
trade secret or proprietary information or documentation of such third
party or (iii) interfered or may be interfering in the employment
relationship between such third party and any of its present or former
employees. Neither the Corporation or any Subsidiary has utilized nor
proposes to utilize any trade secret or any information or
documentation proprietary to any other person in violation of existing
arrangements with such person, and neither the Corporation or any
Subsidiary has violated any confidential relationship which any such
person may have had with any third party, in connection with the
development, manufacture or sale of any product or the development or
sale of any service of the Corporation or any Subsidiary.
4.14. Compliance with Laws; Governmental Authorizations.
Each of the Corporation and each Subsidiary is in compliance in all
respects with all Laws, except for such instances where non-compliance would not
result in a Material Adverse Effect. Each of the Corporation and each Subsidiary
has all permits, licenses, authorizations, registrations, franchises, approvals,
certificates or variances (collectively, "Permits") from each Governmental
Authority that is necessary or advisable in the conduct of its business as
presently conducted except in such cases which would not reasonably be expected
to result in a Material Adverse Effect. For purposes of this Agreement,
"Governmental Authority" means any federal, state, municipal, local or foreign
government and any court, tribunal, administrative agency, commission, board,
agency or other governmental or regulatory authority or agency, whether domestic
or foreign. Neither the Corporation nor any Subsidiary is licensed to provide
communication services under any state, federal or foreign laws nor is any one
of them required to be so licensed.
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4.15. Litigation.
Except as set forth on Schedule 4.15, there are no (i) actions, suits,
claims, investigations or other proceedings (collectively, "Proceedings") by or
before any Governmental Authority or other arbitration or mediation body,
pending or, to the knowledge of the Corporation, threatened against the
Corporation or any Subsidiary, or (ii) judgments, writs, decrees, injunctions,
compliance agreements, or orders of any Governmental Authority or other
arbitration or mediation body, against the Corporation or any Subsidiary.
4.16. Environmental Matters.
Each of the Corporation and each Subsidiary is in compliance with all
Laws relating to the protection of the environment (the "Environmental Laws").
Except for the operation of machinery and equipment in the ordinary course of
business in compliance with applicable Environmental Laws, neither the
Corporation nor any Subsidiary has handled, stored or released, or exposed any
person to, any hazardous substance, as defined in 42 U.S.C.A. Section 9601(14)
or any other applicable Environmental Laws (a "Hazardous Substance"). Neither
the Corporation nor any Subsidiary is liable or responsible for clean-up costs,
remedial work or damages in connection with the handling, storage, release, or
exposure by it of any Hazardous Substance except in cases which would not
reasonably be expected to result in a Material Adverse Effect. No claims for
clean-up costs, remedial work or damages have been made by any person or entity
in connection with the handling, storage, release, or exposure by the
Corporation and/or any Subsidiary of any Hazardous Substance.
4.17. Tax Matters.
(a) (i) The Corporation has timely filed or been included in
all required returns, declarations of estimated tax, reports, and
statements relating to any Taxes due and payable by it (collectively,
the "Returns"); (ii) all Returns were correct and complete as of the
time of filing; (iii) the Corporation has timely paid all Taxes
required to be paid by it through the date hereof; (iv) the Corporation
has made provision on its most recent interim balance sheet for all
Taxes payable by it for all periods prior to the date of such interim
balance sheet for which no Returns have yet been filed; (v) the
Corporation has made provision on its books for all Taxes payable by it
for all periods beginning on or after the date of its most recent
interim balance sheet for which no Returns have yet been filed; (vi)
the Corporation has no knowledge of any pending tax audits of any
Returns; (vii) the Corporation has no knowledge that any deficiency or
addition to any Taxes has been proposed, asserted or assessed in
writing against the Corporation; and (viii) the Corporation has not
granted any extension of the statute of limitations applicable to any
Return or other claim for Taxes.
(b) "Taxes" means, with respect to any person or entity, (i)
all material Federal, state, local, and foreign taxes, including,
without limitation, all taxes on or based upon net income, gross
income, income as specially defined, earnings, profits or selected
items of income, earnings, or profits, and all gross receipts, sales,
use, ad valorem, transfer, franchise, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property, or
windfall profits taxes, alternative or add-on minimum taxes, customs
duties, or other
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taxes, fees, assessments or charges of any kind, together with any
interest, penalties, additions to tax or additional amounts imposed by
any taxing authority on such person or entity, and (ii) any material
liability for the payment of any amount of the type described in the
preceding clause (i) as a result of being a "transferee" (within the
meaning of Section 6901 of the Internal Revenue Code of 1986, as
amended (the "Code"), or any other applicable Laws) of another person
or entity.
4.18. Employee Benefit Plans.
(a) Schedule 4.18 sets forth a list of all "employee pension
benefit plans" and "employee benefit plans," as defined in Section 3(2)
and (3) of the Employee Retirement Income Security Act of 1974
("ERISA"), and other written or formal plans or group arrangements
involving direct or indirect compensation (not including any
government-mandated programs) currently or previously maintained or
contributed by the Corporation or any ERISA Affiliate for the benefit
of any employee or former employee thereof under which the Corporation
and/or any Subsidiary has or may have any present or future obligation
or liability (collectively, the "Employee Plans"). "ERISA Affiliate"
means any entity which is a member of (i) a "controlled group of
corporations," as defined in Section 414(b) of the Code, (ii) a group
of entities under "common control," as defined in Section 414(c) of the
Code, or (iii) an "affiliated service group," as defined in Section
414(m) of the Code, any of which includes the Corporation.
(b) Schedule 4.18 further sets forth a list of all plans,
trusts, or arrangements (written or oral) providing for insurance
coverage (including any self-insured arrangements), workers'
compensation, medical benefits, disability benefits, supplemental
unemployment benefits, vacation benefits, retirement benefits, deferred
compensation, profit-sharing, bonuses, stock options, stock
appreciation, or other forms of incentive compensation, insurance or
benefits (collectively, the "Benefit Arrangements") that (i) are not
Employee Plans, (ii) are maintained or contributed to by the
Corporation or any Subsidiary, and (iii) cover any director, officer,
employee, or former employee of the Corporation or any Subsidiary.
(c) Each Employee Plan and Benefit Arrangement has been
maintained in substantial compliance with its terms and with the
requirements prescribed by applicable Laws. There has not been any
"accumulated funding deficiency," as defined in Section 412 of the
Code, with respect to any Employee Plan. There has not been any partial
or complete withdrawal by the Corporation or any Subsidiary with
respect to any Employee Plan which is a "multiemployer plan," as
defined in Section 3(37) of ERISA, and the Corporation has no current
plans to withdraw from any such Employee Plan. Except as set forth on
Schedule 4.18, neither the Corporation or any Subsidiary is in default
or alleged to be in default in the payment or other provision of any
benefit under any Employee Plan or Benefit Arrangement. Except as set
forth on Schedule 4.18, no actions have been taken or are currently
planned with respect to any Employee Plan or Benefit Arrangement that
would increase the expense of maintaining or the benefits provided
under such Employee Plan or Benefit Arrangement above the level of the
expense incurred or benefits provided in respect thereof for each of
the years 1999 and 1998.
(d) The execution and delivery by the Corporation of the
Documents and its consummation of the transactions contemplated thereby
will not constitute a triggering event
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under any Employee Plan or Benefit Arrangement that will, or upon the
occurrence of subsequent events would, accelerate the time of payment
or vesting, or increase the amount of compensation or benefits, for any
director, officer, employee, or former employee of the Corporation.
4.19. Insurance.
The Corporation maintains valid and effective insurance policies,
issued by financially sound and reputable insurers, to insure it against all
risks usually insured against by persons or entities conducting businesses
similar to that of the Corporation or such Subsidiary in the locality in which
such businesses are conducted. The Corporation has paid all due premiums with
respect to all policies of insurance currently maintained by the Corporation.
4.20. Related Transactions.
(a) Except as set forth on Schedule 4.20, and except for
compensation to regular employees, since January 1, 1998, no current
director or executive officer of the Corporation or holder of at least
5% of the outstanding capital stock of the Corporation has been (i) a
party to any transaction with the Corporation valued in excess of
$60,000 during any twelve-month period, or (ii) the direct or indirect
owner of an interest in any business organization that is or was a
competitor, supplier or customer of the Corporation (other than
interests in non-affiliated publicly held companies).
4.21. Offering of the Shares.
The Corporation has not, directly or indirectly, solicited any other
offer to buy or offer to sell, and will not, directly or indirectly, solicit any
other offer to buy or offer to sell, any security which is or would be
integrated with the sale of the Shares in a manner that would require the Shares
to be registered under the Securities Act.
4.22. Disclosure.
The Corporation has filed all required registration statements, reports
and proxy statements with the Securities and Exchange Commission ("SEC Reports")
when due (or within permitted extension periods) in accordance with the
Securities Act and the Securities Exchange Act of 1934, as amended ("Exchange
Act"), as the case may be. As of their respective dates (or, in the case of any
amended SEC Report, as of the date of the amendment), the SEC Reports complied
in all material respects with all applicable requirements of the Securities Act
or the Exchange Act, as the case may be. As of their respective dates (or, in
the case of any amended SEC Report, as of the date of the amendment), none of
the SEC Reports contained any untrue statement of a material fact or omitted to
state a material fact required to be stated or incorporated by reference therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. This Agreement does
not contain an untrue statement of a material fact nor does it omit to state a
material fact necessary in order to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading. None of the statements, documents, certificates or other items
prepared by the Corporation and supplied to SGI or its counsel in
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connection with the transactions contemplated hereby (other than those relating
to (i) projected financial information, (ii) plans and objectives regarding the
Corporation's future operations, (iii) future economic performance and (iv)
assumptions underlying any of the matters described in (i) through (iii), each
as to which no representation or warranty is given other than, however, that
such representations are reasonable in light of existing or known facts or
trends and were prepared in good faith) contains an untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading.
4.23. Reserved.
4.24. Reserved.
4.25. Brokers and Finders.
No person or entity acting on behalf or under the authority of the
Corporation is or will be entitled to any broker's, finder's, or similar fee or
commission in connection with the sale of the Shares.
4.26. Year 2000 Compliance.
(a) The Corporation and each Subsidiary has used (or is in the
process of using) appropriate procedures to verify that its software
which is licensed or otherwise provided to its customers and the
software used in its business will recognize and process date fields
after the turn of the century, and perform date-dependent calculations
and operations (including sorting, comparing and reporting) after the
turn of the century correctly, and the Corporation and each Subsidiary
has used (or is in the process of using) reasonable efforts to ensure
that such software will not produce invalid and incorrect results as a
result of the change of century (all without human intervention, other
than original data entry of valid dates).
(b) The Corporation has (i) analyzed the operations of the
Corporation and the Subsidiaries that could be adversely affected by
failure to become Year 2000 compliant and (ii) developed a plan for
becoming Year 2000 compliant in a timely manner, the implementation of
which is on schedule in all material respects. The disclosure in the
Corporation's Exchange Act reports (e.g., Form 10-K, 10-Q, etc.)
regarding the progress of the Year 2000 compliance program and Year
2000 remediation were accurate when made.
(c) Based upon responses to its inquiries to its suppliers and
vendors, the Corporation reasonably believes any suppliers and vendors
that are material to the operations of the Corporation and the
Subsidiaries will be Year 2000 compliant for their own computer
applications except to the extent that a failure to do so could not
reasonably be expected to have a Material Adverse Effect.
4.27. Reserved.
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Section 5. Representations and Warranties of the Purchaser.
Each Purchaser represents and warrants to the Corporation on behalf of
itself (and not any other Purchaser) as of the date hereof and the Closing Date
that:
5.1. Due Authorization.
The Purchaser has taken all action necessary to authorize its execution
and delivery of the Documents to which it is a party, the performance of its
obligations thereunder, and its consummation of the transactions contemplated
thereby. Each Document to which the Purchaser is a party has been executed and
delivered by an officer of the Purchaser in accordance with such authorization
or by the Purchaser. Each Document to which the Purchaser is a party constitutes
a valid and binding obligation of the Purchaser, enforceable in accordance with
its terms, subject to applicable bankruptcy, reorganization, insolvency,
moratorium, and similar laws affecting creditors' rights generally and to
general principles of equity.
5.2. Investment Representations.
(a) The Purchaser is acquiring the Shares for its own account,
for investment and not with a view to the distribution thereof, nor
with any present intention of distributing the same.
(b) The Purchaser understands that the Shares have not been,
and the Conversion Shares will not be, registered under the Securities
Act or applicable state securities laws, by reason of their issuance in
a transaction exempt from the registration requirements of the
Securities Act, and such shares must be held indefinitely unless
subsequent disposition thereof is registered under applicable
securities laws or is exempt from registration.
(c) The Purchaser understands that the exemption from
registration afforded by Rule 144 (the provisions of which are known to
the Purchaser) promulgated under the Securities Act depends on the
satisfaction of various conditions and that, if applicable, Rule 144
may only afford the basis for sales under certain circumstances and
only in limited amounts.
(d) The Purchaser is an "accredited investor," as such term is
defined in Rule 501 (the provisions of which are known to the
Purchaser) promulgated under the Securities Act.
(e) The Purchaser has such knowledge and experience in
financial, tax and business matters so as to enable the Purchaser to
utilize the information made available to the Purchaser in connection
with the investment in the Shares to evaluate the merits and risks of
an investment in the Shares and to make an informed investment decision
with respect thereto; provided, however, that the foregoing shall in no
way affect, diminish or derogate from the representations and
warranties made by the Corporation hereunder or the right of the
Purchaser to rely thereon and to seek indemnification hereunder.
(f) The Purchaser has not been formed for the specific purpose
of acquiring the Shares.
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(g) The Purchaser hereby acknowledges that the purchase and
sale of the Shares is intended to be exempt from registration under the
Securities Act by virtue of Section 4(2) and/or Section 3(b) of the
Securities Act and, if applicable, in the sole judgment of the
Corporation, the provisions of Regulation D thereunder, which exemption
is dependent upon the truth, completeness and accuracy of the
statements made by the Purchaser herein and in any other documents
furnished by the Purchaser to the Corporation.
5.3. Brokers and Finders.
No person or entity acting on behalf or under the authority of the
Purchaser is or will be entitled to any broker's, finder's, or similar fee or
commission in connection with the transactions contemplated hereby.
5.4. Investor Sophistication.
Purchaser has sufficient knowledge and experience and is capable of
evaluating the merit and risks of its investment in the Corporation as
contemplated by this Agreement and is able to bear the economic risk of such
investment for an indefinite period of time. Purchaser has been given access to
SEC Reports. Purchaser has had the opportunity to ask questions of and receive
answers from representatives of the Corporation concerning the terms and
conditions of this Agreement, to discuss the Corporation's business, management
and financial affairs with the Corporation's management and to obtain any other
additional information Purchaser desires or deems relevant.
5.5. Reserved.
Section 6. Covenants of the Corporation and the Purchaser.
6.1. Regulatory Approvals; Reasonable Best Efforts; Further Assurances.
The Corporation and the Purchaser acknowledge that certain regulatory
or governmental approvals may be required to lawfully consummate the
transactions contemplated by this Agreement. Subject to the terms and conditions
of this Agreement, the Corporation and the Purchaser will, and will cause their
Affiliates to, use their reasonable best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary or desirable
under applicable laws and regulations to consummate the transactions
contemplated by this Agreement. The Corporation and the Purchaser agree to
execute and deliver such other documents, certificates, agreements and other
writings and to take such other actions as may be necessary or desirable in
order to consummate or implement expeditiously the transactions contemplated by
this Agreement.
6.2. Certain Filings.
The Corporation and the Purchaser will, and will cause their Affiliates
to, cooperate with one another (i) in determining whether any action by or in
respect of, or filing with, any governmental body, agency, official or authority
is required, or any actions, consents, approvals or waivers are required to be
obtained from parties to any material contracts, in connection with
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the consummation of the transactions contemplated by this Agreement or the
conversion by such Purchaser of such Purchaser's Shares and (ii) in taking such
actions or making any such filings, furnishing information required in
connection therewith and seeking timely to obtain any such actions, consents,
approvals or waivers. Without limiting the generality of the foregoing, the
Corporation and the Purchaser obligated to file a notification under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended ("HSR Act")
shall promptly after the date of this Agreement prepare and file the
notifications required under the HSR Act in connection with the transactions
contemplated by this Agreement. The Corporation and the Purchaser shall (A) give
the other parties prompt notice of the commencement of any action, suit,
litigation, arbitration, preceding or investigation by or before any
governmental body with respect to the transactions contemplated by this
Agreement, (B) keep the other parties informed as to the status of any such
action, suit, litigation, arbitration, preceding or investigation, and (C)
promptly inform the other parties of any communication to or from the Federal
Trade Commission, the Department of Justice or any other governmental body
regarding the transactions contemplated by this Agreement.
6.3. Confidentiality.
Except as set forth in Section 6.4 below and as required by applicable
securities laws upon the advice of counsel, without the consent of the other
party, neither the Corporation nor any Purchaser shall make any public comment,
statement or communication with respect to, or otherwise disclose or permit the
disclosure of the terms of this Agreement and the transactions contemplated
hereby, and each party shall cause its authorized officers, directors, partners,
employees, counsel, accountants, agents and other representatives to strictly
comply with the foregoing.
6.4. Public Announcements.
Neither party to this Agreement may publicly disseminate a press
release or file a public report (on Form 8-K or otherwise) with the Securities
and Exchange Commission or otherwise publicly announce the transactions
contemplated by this Agreement, unless the other parties consent. Such parties
shall not unreasonably withhold or delay their approval to any such proposed
announcements.
Section 7. Covenants of the Corporation.
Unless otherwise indicated, and as long as any of the Shares or
Conversion Shares remain outstanding, the Corporation shall and shall cause each
Subsidiary to abide and perform with respect to the following covenants:
7.1. Certificate of Designation.
Following the execution of this Agreement, the Corporation shall cause
to be filed the Class F Certificate of Designation as required pursuant to the
law of the State of Minnesota.
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7.2. Restrictions Pending the Closing.
After the date hereof and prior to the Closing Date, except as
expressly provided for in this Agreement or as consented to in writing by the
Purchaser, the Corporation will not:
(i) amend its certificate of incorporation or bylaws, except
to file the Class F Certificate of Designation;
(ii) split, combine or reclassify any shares of its capital
stock without appropriately adjusting the conversion price and/or ratio
applicable to the Shares prior to their issuance at the Closing;
(iii) declare or pay any dividend or distribution (whether in
cash, stock or property) in respect of its Common Stock;
(iv) take any action, or knowingly omit to take any action,
that could reasonably be expected to result in (A) any of the
representations and warranties of the Corporation set forth in Article
4 becoming untrue or (B) any of the conditions to the obligations of
the Purchaser set forth in Section 8.1 or 8.2 not being satisfied; or
(v) enter into any agreement or commitment to do any of the
foregoing.
7.3. Reservation of Shares.
For so long as any of the Shares are outstanding, the Corporation shall
keep reserved for issuance a sufficient number of shares of Common Stock to
satisfy its conversion obligations under the Class F Certificate of Designation.
7.4. Use of Proceeds.
The Corporation shall use the cash proceeds received by it upon the
sale of the Shares for general working capital purposes.
7.5. Access to Records.
The Corporation shall, and shall cause each Subsidiary to, afford to
the Purchaser and its authorized employees, counsel, accountants and other
representatives, upon reasonable notice and during ordinary business hours, (i)
full access to all books, records and properties of the Corporation and such
Subsidiary, and (ii) the opportunity to interview any officer of the Corporation
or such Subsidiary regarding its affairs; any investigation pursuant to this
Section shall be conducted in a manner that does not interfere unreasonably with
the conduct of the business of the Corporation and such Subsidiary.
7.6. Reserved.
7.7. Financial Reporting and other Information.
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(a) So long as the Purchaser beneficially owns Shares or
Conversion Shares, the Corporation shall deliver to such Purchaser the
following:
(i) within 30 days after the end of each month,
commencing with the month of December, (A) the unaudited
balance sheet of the Corporation at the end of such month, (B)
the unaudited statements of income and cash flows of the
Corporation for such month, (C) comparative statements of
income of the Corporation for the year to date, the comparable
figures for the prior year, the current Budget for the year to
date and projected figures for the year and (D) textual
discussion describing changes from prior periods and
describing operating trends;
(ii) within 45 days after the end of each fiscal
quarter, commencing with the quarterly period ending March 31,
2000, (A) the unaudited balance sheet of the Corporation at
the end of such fiscal quarter, (B) the unaudited statements
of income and cash flows of the Corporation for such fiscal
quarter, and (C) comparative statements of income of the
Corporation for such fiscal quarter and the year to date, the
comparable figures for the corresponding fiscal quarter and
the year to date period of the prior year and the current
Budget for such fiscal quarter and for the year to date; and
(iii) within 90 days after the end of each fiscal
year commencing with the current fiscal year of the
Corporation, (A) the audited balance sheet of the Corporation
at the end of such fiscal year, together with comparisons to
the balance sheet of the Corporation at the end of the prior
fiscal year and to the current Budget, (B) the audited
statements of income and cash flows of the Corporation for
such fiscal year, together with comparisons to the statements
of income and cash flows of the Corporation for the prior
fiscal year and to the current Budget, and (C) an audit report
of Ernst & Young, independent certified public accountants, on
such balance sheets and statements; and
(iv) any other financial and operating data and other
information relating to the Corporation and each Subsidiary as
the Purchaser may reasonably request;
(v) all information made available to the
Corporation's shareholders or directors, at the same time as
such information is delivered to such persons; and
(vi) monthly management reports in a form reasonably
acceptable to the Purchaser.
(b) All financial information to be delivered under this
Section shall be in accordance with the books and records of the
Corporation and shall have been prepared in accordance with GAAP,
subject to year-end and audit adjustments.
7.8. Payment of Obligations.
The Corporation shall, and shall cause each Subsidiary to, pay or
discharge or cause to be paid or discharged all material claims or demands, and
all Taxes levied or imposed upon the Corporation or its Subsidiaries or upon the
income, profits or property of the Corporation or its
-20-
Subsidiaries; provided, however, that the Corporation or such Subsidiary shall
not be required to pay or discharge or cause to be paid or discharged any such
claim, demand, or Tax the amount, applicability or validity of which is being
contested in good faith by appropriate proceedings and for which adequate
provision has been made.
7.9. Insurance.
The Corporation shall, and shall cause each Subsidiary to, maintain
with financially sound and reputable insurers such insurance as may be required
by law and such other insurance, to such extent and against such hazards and
liabilities, as is customarily maintained by companies similarly situated and
exercising sound business practice.
7.10. Certain Notices.
The Corporation shall promptly notify the Purchaser of (i) the
commencement or notice of any threat of any Proceeding, dispute or grievance
against or affecting the Corporation, which, if adversely determined, might
reasonably be expected to have a Material Adverse Effect, (ii) any material
default under any indebtedness of the Corporation and (iii) any material default
or breach under any of the items required to be listed on Schedule 4.10(a) or
any of the items which would have been required to be listed on Schedule 4.10(a)
if such item were effective prior to the date hereof.
7.11. Conduct of Business.
The Corporation shall (i) take all actions required to assure that the
Corporation remains duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, (ii) take all actions
required to assure that the Corporation maintains all Permits to conduct its
business, and (iii) conduct its business in compliance with all Laws.
7.12. Related Transactions.
Excluding any existing arrangements between Winstar Communications,
Inc. and MCI WorldCom, Inc., the Corporation shall not directly or indirectly
enter into any transaction with any Related Party, other than any transaction
entered into in the ordinary course of business and on terms and conditions not
less favorable to the Corporation as the terms and conditions which would apply
in a similar transaction negotiated on an arms-length basis with a party that is
not a Related Party. "Related Party" means (a) each current or future director
or executive officer of the Corporation, (b) each parent, sibling, spouse, or
descendant of any of the foregoing, (c) each entity of which any of the
foregoing is a director, officer, partner or holder of more than 10% of the
outstanding voting power of any class of capital stock and (d) any person or
entity which is the beneficial owner of 5% or more of the outstanding voting
power of the Corporation.
7.13. Internal Controls.
(a) Internal Controls.
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The Corporation maintains and will continue to maintain a
system of internal accounting controls sufficient to provide reasonable
assurances that: (i) transactions are executed in accordance with
management's general or specific authorization, (ii) transactions are
recorded as necessary in order to permit preparation of financial
statements in accordance with generally accepted accounting principles
and to maintain accountability for assets and (iii) the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
7.14. Reserved.
7.15. Reserved.
7.16. Purchaser Lock-Up.
The Purchaser agrees that, without the consent of the Corporation, it
will not directly or indirectly offer, sell, dispose of, pledge, encumber or
otherwise transfer any of the Shares or the Conversion Shares until six months
after the consummation of the Company's initial public offering of Common Stock.
7.17. Reserved.
7.18. Consents.
Prior to the Closing, the Corporation shall use its commercially
reasonable best efforts to obtain all consents and approvals of third parties,
if any, required to consummate the transactions contemplated by this Agreement
so that such consummation shall not conflict with or cause a breach of or
default under any agreement or other obligation binding upon the Corporation,
including without limitation all such consents and approvals required with
respect to its obligations for borrowed money and under its Articles of
Incorporation and Certificates of Designation.
Section 8. Registration Rights of the Purchaser.
8.1. Demand Registration.
(a) Grant of Right. The Corporation agrees to register on two
occasions, upon written demand ("Initial Demand Notice") of the
Purchaser, all of the Conversion Shares, regardless of whether the
Shares have been converted (the "Registrable Securities"). The
Corporation will file a registration statement covering the Registrable
Securities within 60 days after receipt of the Initial Demand Notice
and use its best efforts to have such registration statement declared
effective promptly thereafter. The demand for registration may be made
at any time during a period commencing on the earlier of (i) the six
month anniversary of the consummation of the Corporation's initial
public offering of its Common Stock, and (ii) the one year anniversary
of the date Shares are first issued.
(b) Terms. The Corporation shall bear all fees and expenses
attendant to registering the Registrable Securities, including the
expenses of one legal counsel selected by the
-22-
Purchaser to represent them in connection with the sale of the
Registrable Securities but not including any and all underwriting
commissions and discounts which will be the responsibility of the
Purchaser participating in the underwriting. The Corporation will
qualify or register the Registrable Securities in such states as are
reasonably requested by the Purchaser. The Corporation shall cause any
registration statement filed pursuant to the demand rights granted
under this Section to remain effective with respect to the Registrable
Securities covered by such registration statement until all such
securities have been sold.
8.2. "Piggy-Back" Registration.
(a) Grant of Right. The Purchaser shall have the right at any
time and from time to time to include the Registrable Securities as
part of any other registration of securities filed by the Corporation
(other than pursuant to Form ▇-▇, ▇▇▇▇ ▇-▇ or any equivalent forms or
in connection with the Corporation's initial public offering to the
extent that no other selling shareholder is included in the
registration statement). Notwithstanding the foregoing, if, in the
written opinion of the managing underwriter or underwriters of a public
offering by the Corporation of its shares of Common Stock, the
inclusion of the Registrable Securities, when added to the securities
being registered by the Corporation, will exceed the maximum amount of
the Corporation's securities that can be marketed without materially
and adversely affecting the entire offering, then (i) the Corporation
will include in such registration first, only those securities, the
holders of which as of the date hereof have piggy-back registration
rights (as listed on Schedule 8.2), second, the Registrable Securities
allocated (if necessary) among the holders thereof on a pro rata basis
based on the number of Registrable Securities requested to be included
in such registration statement, and third, capital stock of the
Corporation to be sold for the account of others with applicable
piggy-back registration rights, with such priorities among them as the
Corporation shall decide. If, subsequent to the exercise of all of the
demand registration rights referred to in Section 8.1, any Registrable
Securities requested to be included in an offering ("Other Offering")
pursuant to the "piggy-back" rights described in this Section 8.2. are
not so included because of the operation of the first proviso of the
preceding sentence, then the holders of the Registrable Securities
shall have the right to require the Corporation, at its expense, to
prepare and file a registration statement under the Securities Act
covering such Registrable Securities.
(b) Terms. The Corporation shall bear all fees and expenses
attendant to registering the Registrable Securities, including the
reasonable expenses of any legal counsel selected by the Holders to
represent them in connection with the sale of the Registrable
Securities, but the Purchaser participating in the registration shall
pay any and all discounts and underwriting commissions. In the event of
such a proposed registration, the Corporation shall furnish the owners
of the Registrable Securities with not less than 30 days written notice
prior to the proposed date of filing of such registration statement.
Such notice shall continue to be given for each registration statement
filed by the Corporation until such time as all of the Registrable
Securities have been sold by the Purchaser. The owners of the
Registrable Securities shall exercise the "piggy-back" rights provided
for herein by giving written notice within 15 days of the receipt of
the Corporation's notice of its intention to file a registration
statement. The Corporation shall cause any registration statement filed
pursuant to the "piggyback" rights granted under this Section to remain
effective with respect to the Registrable Securities covered
-23-
by such registration statement until all of the such securities have
been sold by the Purchaser. Notwithstanding the foregoing, in no event
shall the Corporation be obligated to maintain the effectiveness of any
registration statement filed pursuant to Sections 8.1 and 8.2 for a
period in excess of three years from the initial date of issuance of
the Shares.
8.3. General Terms.
(a) Indemnification. The Corporation shall indemnify the
owner(s) of the Registrable Securities to be sold pursuant to any
registration statement hereunder and each person, if any, who controls
such person within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, against all loss, claim, damage, expense or
liability (including all reasonable attorneys' fees and other expenses
reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which any of them may become subject under the
Securities Act, the Exchange Act or otherwise, arising from such
registration statement, except to the extent that any loss, claim,
damage, expense or liability arises out of or relates to written
information furnished by or on behalf of the Purchaser, for inclusion
in such registration statement ("Purchaser Information"). The owner(s)
of the Registrable Securities to be sold pursuant to such registration
statement, and their successors and assigns, shall severally, and not
jointly, indemnify the Corporation against all loss, claim, damage,
expense or liability (including all reasonable attorneys' fees and
other expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which it may become subject
under the Securities Act, the Exchange Act or otherwise, arising from
Purchaser Information furnished by or on behalf of such owner(s).
(b) Exercise of Shares. Nothing contained in this Section 8
shall be construed as requiring the Purchaser to convert the Shares
prior to or after the filing of any registration statement or the
effectiveness thereof.
(c) Documents Delivered to Holders. The Corporation shall
deliver promptly to the Purchaser participating in any of the foregoing
offerings who requests it, all correspondence between the Securities
and Exchange Commission and the Corporation, its counsel or auditors
and all memoranda relating to discussions with the Securities and
Exchange Commission or its staff with respect to the registration
statement. The Corporation also shall furnish to the Purchaser
participating in any of the foregoing offerings that are underwritten,
and to each underwriter of any such offering, a signed counterpart,
addressed to the Purchaser and underwriter, of (i) an opinion of
counsel to the Corporation, dated the effective date of such
registration statement (and an opinion dated the date of the closing
under the underwriting agreement relating to such offering), and (ii) a
"cold comfort" letter dated the effective date of such registration
statement (and a letter dated the date of the closing under the
underwriting agreement) signed by the independent public accountants
who have issued a report on the Corporation's financial statements
included in such registration statement, in each case covering
substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of
such accountants' letter, with respect to events subsequent to the date
of such financial statements, as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to underwriters
in underwritten public offerings of securities. In the event that the
Purchaser requests information pursuant to this Section (c), then,
prior to
-24-
furnishing such information, the Corporation shall have the right to
require the Purchaser to enter into a confidentiality agreement with
the Corporation with respect to any information to be provided to the
Purchaser that the Corporation reasonably considers to be proprietary,
non-public or otherwise confidential.
8.4. Underwriting Agreement.
In the event that the demand registration filed by the Purchaser
pursuant to Section 8.1(a) is for an underwritten offering, then the Purchaser
shall have the right to select the underwriters of the offering, which
underwriters shall be reasonably acceptable to the Corporation. The Corporation
shall enter into an underwriting agreement with the managing underwriter
selected by the Purchaser whose Registrable Securities are being registered
pursuant to Section 8.1. Such agreement shall be reasonably satisfactory in form
and substance to the Corporation, each such person and such managing
underwriter, and shall contain such representations, warranties and covenants by
the Corporation and such other terms as are customarily contained in agreements
of that type used by the underwriter. Such persons shall be parties to any
underwriting agreement relating to an underwritten sale of their Registrable
Securities and may, at their option, require that any or all of the
representations, warranties and covenants of the Corporation to or for the
benefit of such underwriter shall also be made to and for the benefit of such
persons. Such persons shall not be required to make any representations or
warranties to or agreements with the Corporation or the underwriter except as
they may relate to such persons, their shares and their intended methods of
distribution.
8.5. Road Show.
In connection with any underwritten public offering concerning the
Purchaser, the Corporation will participate in road-shows regarding such
offering.
8.6. Reserved.
Section 9. Conditions to Each Closing.
9.1. Conditions of Each Party.
The respective obligations of each of the Corporation and the Purchaser
to consummate the transactions contemplated hereby are subject to the
fulfillment, at or prior to the Closing, of each of the following conditions,
any or all of which may be waived in whole or in part to the extent permitted by
applicable law;
(a) All filings required to be made, and all consents,
approvals, permits and authorizations required to be obtained, prior to
the Closing, from any Governmental Authorities in connection with the
execution and delivery by the parties of the Documents and the
consummation of the transactions contemplated thereby shall have been
made or obtained; and
(b) No court or governmental or regulatory authority of
competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, judgment, decree,
injunction or other order (whether temporary, preliminary or permanent)
or
-25-
taken any action that prohibits the consummation of the transactions
contemplated by this Agreement; provided, however, that any party
invoking this condition shall use its reasonable best efforts to have
any such judgment, decree, injunction or order vacated.
9.2. Conditions to Obligations of the Purchaser.
The obligations to be performed by the Purchaser under this Agreement
at or after the Closing are subject to the satisfaction at or prior to each of
the Closing of the following conditions, unless waived by the Purchaser:
(a) Material Adverse Effect. There shall not have been any
event which has or is reasonably likely to have a Material Adverse
Effect.
(b) Accuracy of Representations and Warranties. Each of the
representations and warranties of the Corporation contained in this
Agreement and in any certificate or other writing delivered by the
Corporation pursuant hereto qualified as to materiality shall be true
and correct, and those not so qualified shall be true and correct in
all material respects, in each case at and as of the Closing Date as if
made at and as of such respective times (except to the extent it
relates to a particular date).
(c) Performance of Covenants. The Corporation shall have
performed in all material respects all covenants and agreements
required to be performed by it under this Agreement and each other
Document.
(d) Class F Certificate of Designation. Prior to the Closing,
the Class F Certificate of Designation shall have been filed with and
accepted by the Secretary of State of the State of Minnesota and shall
have become effective.
(e) Stock Certificates. At the Closing stock certificates
representing the Class F Preferred Stock sold at such closing shall
have been delivered by the Corporation to the Purchaser.
(f) Use of Proceeds. At the Closing the Purchaser shall have
received a certificate of the Corporation describing in reasonable
detail the proposed use of proceeds received by the Corporation upon
the sale of the Shares.
(g) Legal Opinion. SGI shall have received an opinion dated as
of the Closing Date of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, in a form and
substance attached hereto as Exhibit C.
(h) Officer's Certificate. At the Closing the Purchaser shall
receive a certificate from an officer of the Corporation to the effect
that all conditions set forth in this Section 9.2 shall have been
satisfied.
(i) Required Consents and Approvals. Prior to the Closing
Date, the Corporation shall have received all consents and approvals of
third parties, if any, required to consummate the transactions
contemplated by this Agreement so that such consummation shall not
conflict with or cause a breach of or default under any agreement or
other obligation binding
-26-
upon the Corporation, including without limitation all such consents
and approvals required with respect to its obligations for borrowed
money and under its Articles of Incorporation and Certificates of
Designation.
9.3. Conditions to Obligations of the Corporation.
The obligations to be performed by the Corporation under this Agreement
at or after the Closing are subject to the satisfaction at or prior to the
Closing and the Option Closing, if any, of the following conditions, unless
waived by the Corporation:
(a) Accuracy of Representations and Warranties. Each of the
representations and warranties of the Purchaser contained in this
Agreement and in any certificate or other writing delivered by the
Purchaser pursuant hereto qualified as to materiality shall be true and
correct, and those not so qualified shall be true and correct in all
material respects, in each case at and as of the Closing Date as if
made at and as of such respective times (except to the extent it
relates to a particular date);
(b) Performance of Covenants. The Purchaser shall have
performed in all material respects all covenants and agreements
required to be performed by it under this Agreement and each other
Document to which it is a party.
Section 10. Termination.
This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time prior to the Closing:
(a) by joint written agreement of the Corporation and the
Purchaser;
(b) by the Corporation, if any Purchaser has breached any
representation, warranty, covenant or agreement contained in this
Agreement and has not cured such breach within ten (10) business days
after written notice to SGI (provided that the Corporation is not then
in material breach of the terms of this Agreement; and provided further
that no cure period shall be required for a breach which by its nature
cannot be cured);
(c) by the Purchaser, if the Corporation has breached any
representation, warranty, covenant or agreement contained in this
Agreement and has not cured such breach within ten (10) business days
after written notice to the Corporation (provided that the Purchaser is
not then in material breach of the terms of this Agreement; and
provided further that no cure period shall be required for a breach
which by its nature cannot be cured);
(d) by any party, if the Closing has not occurred on or before
March 31, 2000; provided, however, that a party may not terminate this
Agreement pursuant to this Section if the failure of such party to
fulfill any of its obligations hereunder shall have been the principal
reason that the Closing shall not have occurred on or before said date;
(e) by any party if there shall be a change of law or
regulation that makes consummation of the transactions contemplated
hereby illegal or otherwise prohibited or if
-27-
consummation of the transactions contemplated hereby would violate any
nonappealable, final order, decree or judgment of any court or
governmental body having competent jurisdiction; or
The party desiring to terminate this Agreement pursuant to the above-referenced
clauses shall give notice of such termination to the other parties hereto.
10.1. Effect of Termination.
(a) If this Agreement is terminated, such termination shall be
without liability of either party (or any shareholder, director,
officer, employee, agent, consultant or representative of such party)
to the other parties to this Agreement; provided that if such
termination shall result from the (i) willful failure by any party to
fulfill a condition to the performance of the obligations of the other
parties, (ii) failure by any party to perform a covenant of this
Agreement, (iii) breach by any party hereto of any representation,
warranty, covenant or agreement contained herein, or (iv) a Closing
Failure by any party, such party shall be fully liable for any and all
damages incurred or suffered by the other parties as a result of such
failure or breach.
Section 11. Miscellaneous
11.1. Survival.
The representations, warranties, covenants and other agreements
contained herein, shall survive the Closing and the consummation of the
transactions contemplated hereby. No right of the Purchaser for indemnification
hereunder shall be affected by any examination made for or on behalf of the
Purchaser, the knowledge of any of the Purchaser's officers, directors,
shareholders, employees or agents, or the acceptance by the Purchaser of any
certificate or opinion.
11.2. Indemnification.
(a) The Corporation shall indemnify, defend and hold the
Purchaser and its officers, directors, employees, shareholders,
partners, members, affiliates and agents harmless against all
Liability, loss or damage, together with all reasonable costs and
expenses related thereto (including reasonable legal fees and
expenses), relating to or arising from the untruth, inaccuracy or
breach of any of the representations, warranties or agreements of the
Corporation contained in this Agreement.
(b) The Purchaser shall indemnify, defend and hold the
Corporation and its respective officers, directors, employees,
shareholders, partners, members, affiliates and agents harmless against
all Liability, loss or damage, together with all reasonable costs and
expenses related thereto (including reasonable legal fees and
expenses), relating to or arising from the untruth, inaccuracy or
breach of any of the representations, warranties or agreements of the
Purchaser contained in this Agreement.
(c) Promptly after receipt by any party entitled to
indemnification under either Section 11.2(a) or Section 11.2(b) (an
"indemnified party") of notice of the commencement of any action
involving a claim which may give rise to a claim for indemnity under
the preceding paragraphs of this Section, the indemnified party will
give written notice to the party against
-28-
whom indemnification is sought (the "indemnifying party") of the
commencement of such action. In case any such action is brought against
an indemnified party, the indemnifying party will be entitled to
participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying
party shall not be responsible for any legal or other expenses
subsequently incurred by the indemnified party in connection with the
defense thereof; provided, however, that if any indemnified party shall
have reasonably concluded that there may be one or more legal or
equitable defenses available to it which are additional to or conflict
with those available to the indemnifying party, or that such claim or
litigation involves or could have an effect upon matters beyond the
scope of the indemnity agreement provided in this Section, the
indemnifying party shall not have the right to assume the defense of
such action on behalf of the indemnified party and the indemnifying
party shall reimburse the indemnified party and any person controlling
the indemnified party for that portion of the fees and expenses of any
counsel retained by the indemnified party which is reasonably related
to the matters covered by the indemnity agreement provided in this
Section.
(d) If the indemnification provided for in this Section is
held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, claim, damage, liability or
action referred to herein, then the indemnifying party, in lieu of
indemnifying the indemnified party hereunder, shall contribute to the
amounts paid or payable by the indemnified party as a result of such
loss, claim, damage, liability or action in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on
the one hand and of the indemnified party on the other in connection
with the statements or omissions which resulted in such loss, claim,
damage or liability as well as any other relevant equitable
considerations. The amount paid or payable to an indemnified party as a
result of the losses, claims, damages, liabilities or expenses referred
to above shall be deemed to include any legal or other expenses
reasonably incurred in connection with investigating or defending the
same.
(e) The indemnification provided for under this Agreement will
remain in full force and effect regardless of any investigation made by
or on behalf of the indemnified party or any officer, director or
controlling person of the indemnified party and will survive the
transfer of securities.
11.3. Reserved.
11.4. Assignment; Parties in Interest.
This Agreement shall bind and inure to the benefit of the parties and
each of their respective successors and permitted assigns (it being understood
that this Agreement may be assigned by the Purchaser without the consent of any
person solely in connection with the transfer of Shares).
-29-
11.5. Entire Agreement.
This Agreement (including all Schedules and Exhibits hereby) together
with the other Documents contain the entire understanding of the parties with
respect to the subject matter hereof and supersedes all prior agreements and
understandings among the parties with respect to such subject matter.
11.6. Notices.
All notices, claims, certificates, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered or if sent by nationally-recognized overnight
courier, by telecopy, or by registered or certified mail, return receipt
requested and postage prepaid, addressed as follows:
(a) if to the Corporation:
WAM!NET INC.
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III, President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Purchaser:
Silicon Graphics, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
Telephone: (650) _________
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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In any case, with a copy to:
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
High Street Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the party to whom notice is to be given may have
furnished to the other parties in writing in accordance herewith. Any such
notice or communication shall be deemed to have been received (a) in the case of
personal delivery, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the next business day after the date
when sent, (c) in the case of telecopy transmission, when received, and (d) in
the case of mailing, on the date of receipt.
11.7. Amendments.
The terms and provisions of this Agreement may only be modified or
amended pursuant to an instrument signed by all of the parties hereto.
11.8. Counterparts.
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
11.9. Headings.
The section and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.10. Governing Law.
Except as to matters governed by the MBCA, this Agreement shall be
governed by and construed in accordance with the domestic laws of the State of
New York, without giving effect to any law or rule that would cause the laws of
any jurisdiction other than the State of New York to be applied.
11.11. Jurisdiction.
The parties hereto agree that any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby may only be brought
in the United States District Court for the Southern District of New York or any
New York State court sitting in New York City, and each of the parties hereby
consents to the exclusive jurisdiction of such courts (and of the appropriate
-31-
appellate courts therefrom) in any such suit, action or proceeding and
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such suit, action
or proceeding in any such court or that any such suit, action or proceeding
which is brought in any such court has been brought in an inconvenient forum.
Process in any such suit, action or proceeding may be served on any party
anywhere in the world, whether within or without the jurisdiction of any such
court. Without limiting the foregoing, each party agrees that service of process
on such party as provided in the Section entitled "Notices" shall be deemed
effective service of process on such party.
11.12. No Waiver.
No delay by or on behalf of an Purchaser in exercising any rights
conferred hereunder, and no course of dealing between an Purchaser and the
Corporation shall operate as a waiver of any right granted hereunder, unless
expressly waived in writing by the party whose waiver is alleged.
11.13. Binding Effect
All covenants, representations, warranties and other stipulations in
this Agreement and other documents referred to herein, given by or on behalf of
any of the parties hereto, shall bind and inure to the benefit of the respective
successors, heirs, personal representatives and assigns of the parties hereto.
11.14. Cumulative Powers.
No remedy herein conferred upon the Purchaser or any holder of the
Class F Preferred Stock is intended to be exclusive of any other remedy, and
each such remedy shall be cumulative and in addition to every other remedy given
hereunder or now or hereafter existing at law, or in equity or by statue or
otherwise.
-32-
IN WITNESS WHEREOF, the parties have executed and delivered this Stock
Purchase Agreement on the date first above written.
WAM!NET INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
Name:
Title:
SILICON GRAPHICS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name:
Title:
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Index
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Exhibit A Statements of Rights and Preferences of Class
F Preferred Stock
Exhibit B ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ Legal Opinion
Schedule I Certain Management
Schedule 4.1(a) Articles of Incorporation and Bylaws
Schedule 4.1(b) List of Subsidiaries
Schedule 4.5(a) Designation and Classes of Capital Stock
Schedule 4.5(a)(vi) Right of First Refusal Agreements
Schedule 4.5(b) Options, Warrants and Convertible Securities
Schedule 4.5(c)(i) Purchase Agreements
Schedule 4.5(c)(ii) Registration Rights Agreements
Schedule 4.5(e) Record Holders
Schedule 4.7 Financial Statements
Schedule 4.10(a) Material Contracts
Schedule 4.12 Real Property
Schedule 4.13 Intellectual Property
Schedule 4.14 License to Provide Communications Services
Schedule 4.15 Litigation
Schedule 4.18 Employee Pension Benefit Plans
Schedule 4.20 Related Transactions
Schedule 8.2 Piggy-back Registration Rights