Exhibit 10.4
STOCK PURCHASE AGREEMENT
by
and
Among
USinternetworking, Inc.
and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ de Roetth,
Elisabeth de Roetth,
▇▇▇▇▇ de Roetth,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Grandchildren's Trust,
▇▇▇▇▇▇ ▇. ▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------
Dated as of June 19, 1998
TABLE OF CONTENTS
Page
----
ARTICLE 1. DEFINITIONS..........................................................1
1.1. Definitions.....................................................1
1.2. Accounting Terms; Financial Statements..........................4
1.3. Knowledge Standard..............................................4
1.4. Other Defined Terms.............................................4
ARTICLE 2. AUTHORIZATION OF PREFERRED SHARES; PURCHASE AND SALE OF
PREFERRED SHARES.....................................................5
2.1. Preferred Shares................................................5
2.2. Purchase and Sale of Preferred Shares...........................5
2.3. Closing.........................................................5
2.4. Fees and Expenses...............................................6
ARTICLE 3. CONDITIONS TO THE OBLIGATION OF THE PURCHASERS TO
PURCHASE THE PREFERRED SHARES........................................6
3.1. Representations and Warranties..................................6
3.2. Compliance with Terms and Conditions of this Agreement..........6
3.3. Delivery of Certificates Evidencing the Shares..................6
3.4. [intentionally omitted].........................................6
3.5. Secretary's Certificates........................................6
3.6. Documents.......................................................7
3.7. Purchase Permitted by Applicable Laws...........................7
3.8. Consents and Approvals..........................................7
3.9. Consent and Waiver..............................................7
3.10. Joinder to the Shareholders' Agreement.........................7
3.11. No Material Judgment or Order..................................7
3.12. Legal Opinion..................................................8
ARTICLE 4. CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSE.................8
4.1. Representations and Warranties..................................8
4.2. Compliance with this Agreement..................................8
4.3. [intentionally omitted].........................................8
4.4. Issuance Permitted by Applicable Laws...........................8
4.5. Payment of Purchase Price.......................................8
4.6. Consents and Approvals..........................................8
4.7. Consents and Waiver.............................................9
i
4.8. Joinder to the Shareholders' Agreement..........................9
4.9. Legal Opinion...................................................9
4.10. No Material Judgment or Order..................................9
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................9
5.1. Corporate Existence and Authority...............................9
5.2. Corporate Authorization; No Contravention.......................9
5.3. Governmental Authorization; Third Party Consents...............10
5.4. Binding Effect.................................................10
5.5. Capitalization.................................................10
5.6. Private Offering...............................................11
5.7. Litigation.....................................................11
5.8. Financial Statements...........................................12
5.9. Title and Condition of Assets..................................12
5.10. Contractual Obligations.......................................12
5.11. Tax Matters...................................................12
5.12. Severance Arrangements........................................12
5.13. Investment Company/Government Regulations.....................12
5.14. Broker's, Finder's or Similar Fees............................13
5.15. Labor Relations and Employee Matters..........................13
5.16. Employee Benefits Matters.....................................13
5.17. Outstanding Borrowings........................................13
5.18. Insurance Schedule............................................13
5.19. Solvency......................................................13
5.20. No Other Agreements to Sell the Assets or Capital Stock of
the Company..................................................14
5.21. Key Employees.................................................14
5.22. Compliance with Law...........................................14
5.23. Disclosure....................................................14
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS....................14
6.1. Location of Principal Office, Qualification as an Accredited
Investor.....................................................15
6.2. Transfer Restrictions Imposed by Securities Law................15
6.3. Binding Effect.................................................15
6.4. Purchase for Own Account.......................................15
6.5. Financial Condition; Sophistication............................16
6.6. Purchaser Representative; Power of Attorney; Receipt of
Information..................................................16
6.7. Broker's, Finder's or Similar Fees.............................17
6.8. Governmental Authorization; Third Party Consent................17
6.9. Litigation.....................................................17
ii
ARTICLE 7. COVENANTS OF THE COMPANY WITH RESPECT TO THE PERIOD
FOLLOWING THE CLOSING.............................................17
7.1. Reservation of Shares..........................................17
ARTICLE 8. INDEMNIFICATION.....................................................18
8.1. Idemnification.................................................18
8.2. Notification...................................................19
ARTICLE 9. MISCELLANEOUS.......................................................19
9.1. Survival of Representations and Warranties.....................19
9.2. Notices........................................................20
9.3. Successors and Assigns.........................................20
9.4. Amendment and Waiver...........................................21
9.5. Counterparts...................................................21
9.6. Headings.......................................................21
9.7. Governing Law..................................................21
9.8. Jurisdiction...................................................21
9.9. Severability...................................................22
9.10. Rules of Construction.........................................22
9.11. Entire Agreement..............................................22
9.12. Publicity.....................................................22
9.13. Further Assurances............................................22
9.14. Waiver of Jury Trail..........................................23
iii
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is entered into as of this
19th day of June, 1998, by and between (i) USinternetworking, Inc., a Delaware
corporation (the "Company") and (ii) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ de Roetth, Elisabeth de Roetth, ▇▇▇▇▇ de Roetth, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇ Grandchildren's Trust, ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
(collectively referred to herein as the "Purchasers").
RECITALS:
A. Upon the terms and subject to the conditions set forth in this
Agreement, the Company proposes to issue and sell shares of its Series A
Convertible Preferred Stock ("Series A Preferred Stock," as defined below) to
the Purchasers.
B. The Purchasers desire to purchase from the Company shares of the Series
A Preferred Stock as set forth on SCHEDULE 1 hereto.
C. Account Management Corporation has made certain representations in the
Certificate attached to this Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1.
DEFINITIONS
1.1 DEFINITIONS.
As used in this Agreement, and unless the context requires a different
meaning, the following terms have the meanings indicated:
"AFFILIATE" means, with respect to any specified Person, any Person that,
directly or indirectly, controls, is controlled by, or is under common control
with, such specified Person, whether by contract, through one or more
intermediaries, or otherwise.
"BUSINESS DAY" shall mean a day other than a Saturday or Sunday or any
federal holiday.
"COMMISSION" means the Securities and Exchange Commission or any similar
agency then having jurisdiction to enforce the Securities Act (as defined
below).
"COMMON STOCK" means the common stock, par value $.001 per share, of the
Company, or any other capital stock of the Company into which such stock is
reclassified or reconstituted.
"CONDITION OF THE COMPANY" means the assets, business, properties,
operations, financial condition or prospects of the company.
"EMPLOYEE PLANS" means all benefits arrangements, pension plans or welfare
plans adopted by the Company for its employees.
"EMPLOYEE STOCK OPTION PLAN" means an employee stock option plan adopted by
the Compensation Committee of the Board of Directors of the Company providing
for the issuance to certain employees of the Company of options to purchase a
certain number of shares of Common Stock at a certain exercise price per share.
The total number of shares of Common Stock which may be issued under such plan
shall not exceed 6.5% of the total number of outstanding shares of common stock
calculated on a fully diluted basis, not including the options and shares
issuable or issued on exercise of options pursuant to the Employee Stock Option
Plan.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission thereunder.
"GAAP" means United States generally accepted accounting principles, in
effect from time to time, consistently applied.
"GOVERNMENTAL AUTHORITY" means the government of any nation, state, city,
locality or other political subdivision of any thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"INDEBTEDNESS" means, as to any Person: (a) all obligations, whether or
not contingent, of such Person for borrowed money (including, without
limitation, reimbursement and all other obligations with respect to surety
bonds, letters of credit and bankers' acceptances, whether or not matured),
(b) all obligations of such Person evidenced by notes, bonds, debentures or
similar instruments, (c) all obligations of such Person representing the
balance of deferred purchase price of property or services, except trade
accounts payable and accrued commercial or trade liabilities arising in the
ordinary course of business, (d) all interest rate and currency swaps, caps,
collars and similar agreements or hedging devices under which payments are
obligated to be made by such Person, whether periodically or upon the
happening of a contingency, (e) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the even of default are limited to
repossession or sale of such property), (f) all obligations of such Person
under leases which have
-2-
been or should be, in accordance with GAAP, recorded as capital leases, (g)
all indebtedness secured by any Lien (other than Liens in favor of lessors
under leases other than leases included in clause (f)) on any property or
asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is non-recourse to
the credit of that Person, and (h) all Indebtedness of any other Person
referred to in clauses (a) through (f) above, guaranteed, directly or
indirectly, by that Person.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or other security interest
of any kind or nature whatsoever (excluding preferred stock or equity related
preferences) including, without limitation, those created by, arising under
or evidenced by any conditional sale or other title retention agreement, the
interest of a lessor under a capital lease obligation, or any financing lease
having substantially the same economic effect as any of the foregoing.
"OUTSTANDING BORROWINGS" means all Indebtedness of the Company for
borrowed money (including, without limitation, reimbursement and all other
obligations with respect to surety bonds, letters of credit and bankers'
acceptances, whether or not matured).
"PERSON" means any individual, firm, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock
company, Governmental Authority or other entity of any kind, and shall
include any successor (by merger or otherwise) of such entity.
"REQUIREMENTS OF LAW" means, as to any Person, the provisions of the
Certificate of Incorporation and By-laws or other organizational or governing
documents of such Person, and any law, treaty, rule, regulation, right,
privilege, qualification, license or franchise, order, judgment, or
determination of an arbitrator or a court or other Governmental Authority, in
each case, applicable or binding upon such Person or any of its property or
to which such Person or any of its property is subject or applicable to any
or all of the transactions contemplated by or referred to in the Transaction
Agreements.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"SERIES A PREFERRED STOCK" means the 8% Series A Convertible Preferred
Stock, par value $.01 per share, of the Company, or any other capital stock
of the Company into which such stock is reclassified or reconstituted.
"SHAREHOLDERS' AGREEMENT" means the Shareholders' Agreement, dated as of
May 28, 1998, by and among the Company and the Stockholders that are listed
as a party thereto and any Persons who become or became parties to the
Shareholders' Agreement whether pursuant to an amendment or otherwise.
"TRANSACTION AGREEMENTS" means this Agreement, the Joinder to the
Shareholders' Agreement (as defined in Section 3.10) and the Shareholders'
Agreement.
-3-
"TRANSACTION EXPENSES" means any and all reasonable out-of-pocket (i)
legal expenses incurred by the Purchasers in connection with the negotiation
and preparation of the Transaction Agreements, the consummation of the
transactions contemplated thereby and preparation for any of the foregoing,
including, without limitation, travel expenses, reasonable fees, charges and
disbursements of counsel and any similar or related legal costs and legal
expenses; and (ii) other expenses incurred by the Purchasers in connection
with the negotiation and preparation of this Agreement.
1.2. ACCOUNTING TERMS; FINANCIAL STATEMENTS.
All accounting terms used herein not expressly defined in this Agreement
shall have the respective meanings given to them in accordance with sound
accounting practice. The term "sound accounting practice" shall mean such
accounting practice as, in the opinion of the independent certified public
accountants regularly retained by the Company conforms at the time to GAAP
applied on a consistent basis except for changes with which such accountants
concur.
1.3. KNOWLEDGE STANDARD
When used herein, the phrase "to the knowledge of" any Person, "to the
best knowledge of" any Person or any similar phrase shall mean, (i) with
respect to any individual, the actual knowledge of such Person, (ii) with
respect to any corporation, the actual knowledge of the officers and
directors of such corporation and the knowledge of such facts that such
persons should have in the exercise of their duties after reasonable inquiry,
and (iii) with respect to a partnership, the actual knowledge of the officers
and directors of the general partner of such partnership and the knowledge of
such facts that such persons should have in the exercise of their duties
after reasonable inquiry.
1.4. Other Defined Terms.
The following terms shall have the meanings specified in the Sections
set forth below:
TERM SECTION
---- -------
Actions 5.7
Certificate of Incorporation 2.1
Certificate 2.1
Certificate of Designation 2.1
Closing Date 2.2
Closing 2.3
-4-
Indemnified Party 8.2
Indemnifying Party 8.2
Liabilities 8.1
Preferred Shares 2.1
Purchase Price 2.2
Purchasing Indemnified Party 9.1
Purchasing Indemnifying Party 9.1
Selling Indemnified Party 9.1
Selling Indemnifying Party 9.1
ARTICLE 2.
AUTHORIZATION OF PREFERRED SHARES;
PURCHASE AND SALE OF PREFERRED SHARES
2.1. PREFERRED SHARES.
The Board of Directors of the Company has authorized the issuance and sale
of 3,000 shares of the Series A Preferred Stock (the "Preferred Shares") and has
duly adopted resolutions establishing the rights, preferences, privileges and
restrictions of the Series A Preferred Stock. The Preferred Shares will have the
respective rights, preferences and privileges set forth in the Company's
Certificate of Incorporation, as amended (the "Certificate of Incorporation")
and the Certificate of Designations, Preferences, and Other Special Rights of
Preferred Stock and Qualifications, Limitations and Restrictions Thereof filed
on May 27, 1998 with respect thereto (the "Certificate of Designation" and
together with the Certificate of Incorporation, the "Certificate").
2.2. PURCHASE AND SALE OF PREFERRED SHARES.
Upon the terms and subject to the conditions herein contained, on the date
hereof or such other date as the parties may agree (the ("Closing Date"), the
Company shall issue to the Purchasers and the Purchasers shall acquire from the
Company, the number of Preferred Shares set forth next to each Purchaser's name
on SCHEDULE 1 hereto. The aggregate purchase price of such Preferred Shares, to
be paid by the Purchasers in the amount set forth next to each Purchaser's name
on SCHEDULE 1 hereto, shall be One Million Two Hundred Thousand Dollars
($1,200,024)(the "Purchase Price").
2.3. CLOSING
The closing of the sale to and purchase by the Purchasers of the Preferred
Shares (the "Closing") shall occur at 11 o'clock A.M., local time on the Closing
Date at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.,
▇▇▇▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇, or such other location as the parties may agree. At the
Closing, (i) the Company shall deliver to the Purchasers certificates evidencing
the Preferred Shares being purchased by the Purchasers, free and clear of any
Liens of any nature whatsoever, other than those created by the Certificate or
the Shareholders' Agreement, registered in the Purchasers' name, and (ii) the
Purchasers shall deliver to the Company the Purchase Price, in the amounts as
set forth next to each Purchaser's
-5-
name on SCHEDULE 1 hereto, by cashier's or certified check or wire transfer of
immediately available funds.
2.4. FEES AND EXPENSES.
Concurrently with the Closing, the Company shall reimburse each Purchaser
for the Transaction Expenses, which payment shall be made by wire transfer of
immediately available funds to an account or accounts designated by such
Purchaser.
ARTICLE 3.
CONDITIONS TO THE OBLIGATION OF THE
PURCHASERS TO PURCHASE THE PREFERRED SHARES
The obligation of each of the Purchasers to purchase the Preferred Shares,
to pay the Purchase Price therefor and to perform any of its obligations
hereunder on the Closing Date (unless otherwise specified) shall be subject to
the satisfaction of the following conditions on or before the Closing Date:
3.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company contained in Section 5
hereof shall be true and correct in all material respects as of the date hereof.
3.2. COMPLIANCE WITH TERMS AND CONDITIONS OF THIS AGREEMENT.
The Company shall have performed and complied with all of the agreements
and conditions set forth herein that are required to be performed or complied
with by the Company on or before the date hereof.
3.3. DELIVERY OF CERTIFICATES EVIDENCING THE SHARES.
The Company shall have delivered to the Purchasers the certificates
evidencing the Preferred Shares as set forth in Section 2.3.
3.4. [intentionally omitted]
3.5. SECRETARY'S CERTIFICATES.
The Purchasers shall have received a certificate from the Company, dated as
of the Closing Date and signed by the Secretary or an Assistant Secretary of the
Company, certifying that the attached copies of the Certificate of
Incorporation, Certificate of Designation, By-laws of the Company, (all of
which will be in form and substance consistent with this Agreement) and
resolutions of the Board of Directors of the Company approving this transaction
are all true, complete and correct and remain unamended and in full force and
effect.
-6-
3.6. DOCUMENTS
The Purchasers shall have received true, complete and correct copies of
such documents and such other information as they may have reasonably
requested in connection with or relating to the sale of the Preferred Shares
and the transactions required to be performed herein.
3.7. PURCHASE PERMITTED BY APPLICABLE LAWS.
The acquisition of and payment for the Preferred Shares to be acquired by
the Purchasers hereunder and the consummation of this Agreement (a) shall not be
prohibited by any Requirements of Law, and (b) shall not conflict with or be
prohibited by any Contractual Obligation of the Company.
3.8. CONSENTS AND APPROVALS
All consents, exemptions, authorizations, or other actions by, or notices
to, or filings with, Governmental Authorities and other Persons in respect of
all Requirements of Law and with respect to those material Contractual
Obligations of the Company necessary or required in connection with the
execution, delivery or performance (including, without limitation, the issuance
of the Preferred Shares and the issuance of the Common Stock upon conversion of
the Preferred Shares) by the Company shall have been obtained and be in full
force and effect and all waiting periods shall have lapsed without extension or
the imposition of any conditions or restrictions.
3.9. CONSENT AND WAIVER
The shareholders that are parties to the Shareholders' Agreement and the
holders of at least two-thirds of the outstanding shares of Series A Preferred
Stock shall have duly executed and delivered to the Purchasers the Consent and
Waiver substantially in the form attached as EXHIBIT A hereto
3.10. JOINDER TO THE SHAREHOLDERS' AGREEMENT
The shareholders that are parties to the Shareholders' Agreement shall have
duly executed and delivered to the Purchasers the Joinder to the Shareholders'
Agreement substantially in the form attached as EXHIBIT B hereto.
3.11. NO MATERIAL JUDGMENT OR ORDER
There shall not be any judgment or order of a court of competent
jurisdiction or any ruling of any Governmental Authority or any condition
imposed under any Requirement of Law which, in the reasonable judgment of the
Purchasers, would (i) prohibit the purchase of the Preferred Shares hereunder,
(ii) subject the Purchasers to any penalty if the Preferred Shares were to be
purchased hereunder, or (iii) question the validity or legality of the
transactions required to be performed under this Agreement.
-7-
3.12. LEGAL OPINION.
The Purchasers shall have received an opinion of counsel for the Company
in the form attached as EXHIBIT C hereto.
ARTICLE 4.
CONDITIONS TO THE OBLIGATION OF
THE COMPANY TO CLOSE
The obligation of the Company to issue and sell the Preferred Shares and
the other obligations of the Company hereunder, shall be subject to the
satisfaction of the following conditions on or before the Closing Date:
4.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Purchasers contained in
Section 6 hereof shall be true and correct in all material respects on and as
of the Closing Date as if made at and as of such date.
4.2. COMPLIANCE WITH THIS AGREEMENT
Each of the Purchasers shall have performed and complied with all of the
agreements and conditions set forth herein that are required to be performed
or complied with by the Purchasers on or before the Closing Date.
4.3. [intentionally omitted]
4.4. ISSUANCE PERMITTED BY APPLICABLE LAWS.
The issuance of the Preferred Shares to be issued by the Company
hereunder and the consummation of this Agreement (a) shall not be prohibited
by any Requirements of Law, and (b) shall not conflict with or be prohibited
by any Contractual Obligations of the Purchasers.
4.5. PAYMENT OF PURCHASE PRICE.
Each of the Purchasers shall have tendered to the Company the Purchase
Price as set forth in Schedule 1 hereto.
4.6. CONSENTS AND APPROVALS.
All consents, exemptions, authorizations, or other actions by, or
notices to, or filings with, Governmental Authorities and other Persons in
respect of all Requirements of Law and with respect to those material
Contractual Obligations of the Purchasers necessary or required in connection
with the execution, delivery or performance by the Purchasers shall have been
obtained and be in full force and effect and all waiting periods shall have
lapsed without extension or imposition of any conditions or restrictions.
-8-
4.7. CONSENT AND WAIVER.
The Consent and Waiver substantially in the form set forth in EXHIBIT A
hereto shall have been executed and delivered by each of the shareholders that
are a party to the Shareholders' Agreement and by the holders of at least
two-thirds of the outstanding shares of Series A Preferred Stock.
4.8. JOINDER TO THE SHAREHOLDERS' AGREEMENT.
The Joinder to the Shareholders' Agreement substantially in the form set
forth in EXHIBIT B hereto shall have been executed and delivered by each of the
shareholders that are a party to the Shareholders' Agreement.
4.9. LEGAL OPINION.
The Company shall have received an opinion of counsel for each of the
Purchasers in the form attached as EXHIBIT D hereto.
4.10. NO MATERIAL JUDGMENT OR ORDER.
There shall not be any judgment or order of a court of competent
jurisdiction or any ruling of any Governmental Authority or any condition
imposed under any Requirements of Law which, in the reasonable judgment of the
Company would (i) prohibit the sale of the Shares or the consummation of the
other transactions hereunder, (ii) subject the Company to any penalty if the
Shares were to be sold hereunder or (iii) question the validity or legality of
the transactions required to be performed under this Agreement.
ARTICLE 5.
REPRESENTATION AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to, and covenants with, the Purchasers
as of the date hereof as follows:
5.1. Corporate Existence and Authority.
The Company was incorporated on January 14, 1998 and (a) is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, (b) has all requisite corporate power and authority to own
and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently, or is currently proposed to be,
engaged, and (c) has the corporate power and authority to execute, deliver and
perform its obligations under the Transaction Agreements to which it is or
will be a party.
5.2. CORPORATE AUTHORIZATION; NO CONTRAVENTION.
The execution, delivery and performance by the Company of the Transaction
Agreements to which it is or will be a party and the consummation of the
transactions
-9-
contemplated hereby, including, without limitation, the issuance
of the Preferred Shares, (a) have been duly authorized by all necessary
corporate action, including, if required, stockholder action (b) do not conflict
with or contravene the terms of the Certificate or the By-laws of the Company,
or any amendment thereof; and (c) will not violate, conflict with or result in
any material breach or contravention of (i) any Contractual Obligation of the
Company or (ii) any Requirements of Law applicable to the Company.
5.3. GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENTS.
No approval, consent, compliance, exemption, authorization, or other
action by, or notice to, or filing with, any Governmental Authority or any
other Person in respect of any applicable Requirements of Law in effect on
the date hereof, and no lapse of a waiting period under any applicable
Requirements of Law in effect on the date hereof, is necessary or required in
connection with the execution and delivery of the Transaction Agreements to
which it is or will be a party or the performance by the Company or
enforcement against the Company of any material obligation by the Company
under the Transaction Agreements to which it is or will be a party or the
transactions to be performed thereunder.
5.4. BINDING EFFECT.
This Agreement has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity relating to enforceability.
5.5. CAPITALIZATION.
On the Closing Date, the capital stock of the Company shall consist of
at least One Hundred Fifty Million (150,000,000) shares of Common Stock and
One Hundred Thousand (100,000) shares of preferred stock, with such shares
including the Preferred Shares. Of the 150,100,000 authorized shares of
capital stock of the Company, as of the date hereof, there will be (i) 15
million shares of Common Stock issued and outstanding; (ii) at least
5,000,000 shares of Common Stock reserved for issuance pursuant to the
Employee Stock Option Plan; (iii) 52,000 shares of Series A Preferred Stock
issued and outstanding; and (iv) 108,600,000 fully diluted shares of Common
Stock outstanding, assuming conversion of all of the outstanding shares of
Series A Preferred Stock mentioned in subsection (iii) above, into 93,600,000
shares of Common Stock, but not including any shares authorized pursuant to
the Employee Stock Option Plan or otherwise. As of the Closing Date, all
outstanding shares of capital stock of the Company, including the Preferred
Shares, and the shares of Common Stock issuable upon conversion of the
Preferred Shares (when issued in accordance with the conversion terms
thereof), will be duly authorized and validly issued, fully paid,
nonassessable and free and clear of any Liens, preferential rights,
priorities, claims, options, charges or other encumbrances or restrictions
other than those created by the Certificate, the Bylaws, and the
Shareholders' Agreement.
-10-
(a) SCHEDULE 5.5 sets forth the name of each holder of the issued
and outstanding capital stock of the Company as of June 19, 1998, the number
of shares of such capital stock held beneficially or of record by each such
holder as of June 19, 1998, the name of each Person holding any options or
other rights to purchase any capital stock of the Company as of June 19, 1998
(except as may be permitted under the Shareholders' Agreement), the number,
class and series of shares of capital stock subject to each such option or
right as of June 19, 1998, and the exercise price of each such option or
right as of June 19, 1998. Except for the options under the Employee Stock
Option Plan and the Preferred Shares, there are no outstanding securities
convertible into or exchangeable for capital stock of the Company or options,
warrants or other rights to purchase or subscribe to capital stock of the
Company or contracts, commitments, agreements, understandings or arrangements
of any kind to which the Company or any holder is a party relating to the
issuance of any capital stock of the Company, any such convertible or
exchangeable securities or any such options, warrants or rights. The Company
has no subsidiaries.
(b) Except as set forth on SCHEDULE 5.5 and as may be provided in
the Shareholders' Agreement as of June 19, 1998, no Person has any preemptive
rights, rights of first refusal, "tag along" rights, rights of co-sale or any
similar rights with respect to the issuance of the Preferred Shares
contemplated hereby or the issuance of any additional shares of stock by the
Company. SCHEDULE 5.5 identifies all Persons holding any such rights as of
June 19, 1998 and describes the material terms of all such rights.
5.6. PRIVATE OFFERING.
No form of general solicitation or general advertising was used by the
Company or its representatives in connection with the offer or sale of the
Preferred Shares. No registration of the Preferred Shares pursuant to the
provisions of the Securities Act or any state securities or "blue sky" laws
will be required by the offer, sale or issuance of the Preferred Shares
pursuant to this Agreement. The Company agrees that neither it, nor anyone
authorized to act on its behalf, will offer or sell the Preferred Shares or
any other security so as to require the registration of the Preferred Shares
pursuant to the provisions of the Securities Act or any state securities
or "blue sky" laws, unless such Preferred Shares are so registered.
5.7. LITIGATION.
As of June 19, 1998, the Company has not received any notice of any
governmental charge, complaint or action or court order, writ, injunction,
judgment or decree outstanding or any claim, suit, legal proceeding,
(collectively, "Actions") which if adversely determined would have a material
adverse effect on (i) the Company or the Condition of the Company or (ii) the
transactions required to be performed by the Company under this Agreement and,
to the Company's knowledge, there is no valid basis therefor, and no Action
is threatened against the Company.
-11-
5.8. FINANCIAL STATEMENTS.
The Company was incorporated on January 14, 1998. As of June 19, 1998,
it has no assets, except as described below, and has not prepared financial
statements. SCHEDULE 5.8(a) sets forth all expenditures by or on behalf of
the Company since its formation through June 19, 1998 in excess of $25,000, in
any one case, or $250,000, in the aggregate. The Company's projections
attached hereto as SCHEDULE 5.8(b) are as of June 19, 1998 and were prepared
by the Company's management in good faith, are based on reasonable
assumptions, represent management's best estimates of the Company's predicted
operations and performance under its business plan and reflect actual
subjective expectations of the Company's management. The Company has no
reason to believe that the results reflected in such projections are not
attainable.
5.9. TITLE AND CONDITION OF ASSETS.
As of June 19, 1998, the Company currently has no assets (other than
cash) except as listed on SCHEDULE 5.10. As of June 19, 1998, the Company has
a valid and enforceable leasehold interest in its leases listed on SCHEDULE
5.10 pursuant to the terms of the lease agreements and is not in default
thereunder.
5.10. CONTRACTUAL OBLIGATIONS.
As of June 19, 1998, the Company has not entered into any contracts or
agreements or incurred any material liabilities, other than pursuant to this
Agreement, the Shareholder's Agreement and the agreements listed on SCHEDULE
5.10.
5.11. TAX MATTERS.
The Company has duly filed all tax reports and returns required to be
filed by it, including all federal, state, local and foreign tax returns and
reports and paid all taxes due with respect thereto.
5.12. SEVERANCE ARRANGEMENTS.
Except as set forth on SCHEDULE 5.12, as of June 19, 1998, the Company
has not entered into any severance or similar arrangement in respect of any
present or former employee of the Company that will result in any obligation
(absolute or contingent) of the Company to make any payment to such present
or former employee of the Company following termination of employment.
5.13. INVESTMENT COMPANY/GOVERNMENT REGULATIONS.
Immediately following the Closing, after giving effect to the
transactions contemplated by this Agreement and the Shareholders' Agreement
neither the Company nor any Person controlling, controlled by or under common
control with the Company will be an "investment company" within the meaning
of the Investment Company Act of 1940, as amended. The Company is not subject
to regulation under the Public Utility Holding Company Act of
-12-
1935, as amended, the Federal Power Act, or any federal or state statue or
regulation limiting its ability to incur Indebtedness.
5.14. BROKER'S FINDER'S SIMILAR FEES.
There are no brokerage commissions, finder's fee or similar fees or
commissions payable in connection with the transactions contemplated hereby
based on any agreement, arrangement or understanding with the Company or any
officer, director, shareholder, or Affiliate of the Company or any action
taken by any such person.
5.15. LABOR RELATIONS AND EMPLOYEE MATTERS.
(a) The Company is not and has not engaged in any unfair labor
practice.
(b) Except as set forth on SCHEDULE 5.10, as of June 19, 1998,
the Company is not a party to any employment agreement (other than "at will"
employment relationships), collective bargaining agreement or covenant not to
compete.
(c) No complaint under any statute or regulation relating to
employment has been filed against the Compny.
5.16. EMPLOYEE BENEFITS MATTERS.
As of the date hereof, the Company had not adopted or implemented an
Employee Plan, execpt as described on SCHEDULE 5.16.
5.17. OUTSTANDING BORROWINGS.
SCHEDULE 5.17 lists the amount of all material Outstanding Borrowings as
of June 19, 1998 and the name of each lender thereof.
5.18. INSURANCE SCHEDULE.
SCHEDULE 5.18 accurately summarizes all of the Company's insurance
policies or programs in effect as of June 19, 1998 and indicates the
insurer's name and policy number and also indicates any self-insurance
program that is in effect.
5.19. SOLVENCY.
The Company has not (i) made a general assignment for the benefit of its
creditors, (ii) filed any voluntary petition in bankruptcy or suffered the
filing of any involuntary petition in bankruptcy by its creditors, (iii)
suffered the appointment of a receiver to take possession of all or
substantially all of its assets or properties, (iv) suffered the attachment
or other judicial seizure of all substantially all of its assets or (v)
admitted in writing its inability to pay its debts as they come due.
-13-
5.20. NO OTHER AGREEMENTS TO SELL THE ASSETS OR CAPITAL STOCK OF THE
COMPANY.
Other than as otherwise set forth in this Agreement, the Company has no
legal obligation, absolute or contingent, other than the obligations of the
Company under this Agreement or the Shareholder's Agreement, to any person or
firm to (i) sell any capital stock of the Company or, outside of the ordinary
course of business, assets, or effect any merger, consolidation or other
reorganization of the Company or (ii) enter into any agreement with respect
to any of the foregoing.
5.21. KEY EMPLOYEES.
The performance by the Company's key employees of their duties for the
Company as contemplated by the Company's business plan will not violate any
provision of any agreement to which any of such persons or the Company is a
party, including any agreement with any former employer of any such person,
or give rise to any obligation or liability of the Company to any third party
or limit in any way the Company's ability to conduct its business. None of
the Company's key employees is engaged, directly or indirectly, or has any
interest (other than as a shareholder of a public company) in any entity
which is engaged in competition with the Company in its planned activities.
5.22. COMPLIANCE WITH LAW.
In its conduct of its business and affairs since its formation, the
Company has complied in all material respects with all applicable
Requirements of Law.
5.23. DISCLOSURE.
The Company has, to the best of its knowledge, fully responded to all
requests for information, and the Company has accurately answered all
questions from the Purchasers concerning the Condition of the Company, and
has not knowingly withheld any facts relating thereto which it reasonably
believes to be material with respect to its Condition. No information in this
Agreement or in any Exhibit or Schedule attached to this Agreement, contains
or will contain any untrue statement of a material fact or when considered
together with all such information delivered to the Purchasers omits to state
any material fact. The disclosures made in writing by the Company in
connection with this Agreement when read in the light of the circumstances
when made and taken as a whole, did not when made contain any untrue
statement of a material fact.
ARTICLE 6.
REPRESENTATIONS AND
WARRANTIES OF THE PURCHASERS
Each Purchaser, severally and not jointly, hereby represents and
warrants to the Company as of the date hereof as follows:
-14-
6.1. LOCATION OF PRINCIPAL OFFICE, QUALIFICATION AS AN ACCREDITED
INVESTOR.
The state in which Purchaser's principal domicile is located is the
state set forth in such Purchaser's address on SCHEDULE 2. Each Purchaser by
execution of this Agreement hereby represents that it qualifies as an
"accredited investor" for purposes of Regulation D promulgated under the
Securities Act. Such Purchaser acknowledges that the Company has made
available to such Purchaser at a reasonable time prior to the execution of
this Agreement the opportunity to ask questions and receive answers
concerning the terms and conditions of the sale of securities contemplated by
this Agreement and to obtain any additional information (which the Company
possesses or can acquire without unreasonable effort or expense) as may
be necessary to verify the accuracy of information furnished to such Purchaser.
6.2. TRANSFER RESTRICTIONS IMPOSED BY SECURITIES LAW.
Such Purchaser understand that the Preferred Shares have not been
registered under the Securities Act and applicable state securities laws,
and, therefore, cannot be resold unless they are subsequently registered
under the Securities Act and applicable state securities laws or unless an
exemption from such registration is available.
6.3. BINDING EFFECT.
This Agreement has been duly authorized by all necessary action on the
part of such Purchaser, has been duly executed and delivered by such
Purchaser, and this Agreement constitutes the legal, valid and binding
obligation of such Purchaser, enforceable against such Purchaser in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting the enforcement
of creditors' rights generally or by equitable principles relating to
enforceability.
6.4. PURCHASE FOR OWN ACCOUNT.
The Preferred Shares, and the shares of Common Stock to be issued upon
conversion of the Preferred Shares, are being or will be acquired by such
Purchaser for such Purchaser's own account and with no intention of
distributing or reselling such securities or any part thereof in any
transaction that would be in violation of the securities laws of the United
States of America, or any state, without prejudice, however, to the rights of
such Purchaser at all times to sell or otherwise dispose of all or any part
of the Preferred Shares or the shares of Common Stock issuable upon
conversion of the Preferred Shares under an effective registration statement
under the Securities Act, or under an exemption from such registration
available under the Securities Act, and subject, nevertheless, to the
disposition of such Purchaser's property being at all times within such
Purchaser's control. If such Purchaser should in the future decide to
dispose of any of the Preferred Shares or the shares of Common Stock issuable
upon conversion of the Preferred Shares, such Purchaser understands and
agrees that such Purchaser may do so only in compliance with the Securities
Act and applicable state securities laws, as then in effect. Such Purchaser
agrees to the imprinting, so long as required by law, of a legend on
certificates representing all of the Preferred Shares or the shares of Common
Stock to be issued upon conversion of the Preferred Shares to the following
effect:
-15-
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR SUCH LAWS. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN THE
SHAREHOLDERS' AGREEMENT, DATED AS OF MAY 28, 1998, AS AMENDED. A COPY OF
SUCH AGREEMENT MAY BE OBTAINED FROM THE COMPANY UPON REQUEST."
6.5 FINANCIAL CONDITION: SOPHISTICATION.
Such Purchaser's financial condition is such that such Purchaser is able
to bear the risk of holding the Preferred Shares for an indefinite period of
time and can bear the loss of such Purchaser's entire investment in the
Preferred Shares. Such Purchaser has such knowledge and experience in
financial and business matters and in making high risk investments of this
type that such Purchaser is capable of evaluating the merits and risks of the
purchase of the Preferred Shares and understands that there may be no
established market for the Company's capital stock.
6.6 PURCHASER REPRESENTATIVE; POWER OF ATTORNEY; RECEIPT OF INFORMATION.
Such Purchaser has appointed Account Management Corporation (the
"Purchaser Representative") as its representative for all purposes in
connection with its investment in the Company. The Purchaser Representative
is a registered investment adviser under the Investment Advisers Act of 1940,
the services of which such Purchaser has retained in connection with
investments in addition to Purchaser's investment in the Company. ▇▇.
▇▇▇▇▇▇▇▇ and Mr. ▇▇▇▇▇ de Roetth are the directors, officers and, with their
families, the beneficial owners of Purchaser Representative and are also
registered investment advisers under the Investment Advisers Act of 1940.
Except for ▇▇. ▇▇▇▇▇▇▇▇ and Mr. ▇▇▇▇▇ de Roetth, such Purchaser has duly and
validly granted to the Purchaser Representative a power of attorney
authorizing the Purchaser Representative to execute and deliver, on behalf of
such Purchaser, this Agreement and all other agreements, instruments, and
documents that the Purchaser Representative may deem necessary, appropriate,
or desirable in connection with Purchaser's investment in the Company.
Through the Purchaser Representative, such Purchaser has been furnished
access to the business records of the Company and such additional information
and documents as such Purchaser has requested and has been afforded an
opportunity to ask questions of and receive answers from representatives of
the Company concerning the terms and conditions of this Agreement, the
purchase of the Preferred Shares, the prospective operations, market
potential, capitalization, financial conditions, and prospects of the
business to be conducted by the Company, and all other matters deemed
relevant by such Purchaser.
-16-
6.7. BROKER'S, FINDER'S OR SIMILAR FEES.
There are no brokerage commissions, finder's fees or similar fees or
commissions payable in connection with the transactions contemplated hereby
based on any agreement, arrangement or understanding with such Purchaser or
any action taken by such Purchaser.
6.8. GOVERNMENTAL AUTHORIZATION; THIRD PARTY CONSENT.
No approval, consent, compliance, exemption, authorization, or other
action by, or notice to, or filing with, any Governmental Authority or any
other Person in respect of any Requirements of Law, and no lapse of a waiting
period under any Requirements of Law, is necessary or required in connection
with the execution, delivery or performance by such Purchaser (including,
without limitation, the aquisition of the Preferred Shares) or enforcement
against such Purchaser of the Transaction Agreements to which such Purchaser
is or will be a party or the transactions contemplated thereby.
6.9. LITIGATION.
No Actions are pending, or to the best knowledge of such Purchaser,
threatened relating to or affecting the transactions required to be performed
by such Purchaser under the Transaction Agreements to which such Purchaser is
or will be a party.
ARTICLE 7.
COVENANTS OF THE COMPANY WITH RESPECT
TO THE PERIOD FOLLOWING THE CLOSING
Until all Preferred Shares are no longer outstanding due to conversion
or otherwise and until the payment by the Company of all other amounts due to
the Purchasers under this Agreement or the related agreements referred to
herein or the Certificate, the Company hereby covenants and agrees with the
Purchasers as follows:
7.1. RESERVATION OF SHARES.
The Company shall at all times reserve and keep available out of its
authorized Common Stock, solely for the purpose of issue or delivery upon
conversion of the Preferred Shares as provided in the Certificate, the
maximum number of shares of Common Stock that may be issuable or deliverable
upon such conversion. Such shares of Common Stock shall, when issued or
delivered in accordance with the provisions of the Certificate, be duly
authorized, validly issued and fully paid and non-assessable. The Company
shall issue such Common Stock in accordance with the provisions of the
Certificate and shall otherwise comply with the terms thereof.
7.2. VOTING RIGHTS.
Except for ▇▇. ▇▇▇▇▇▇▇▇ and Mr. ▇▇▇▇▇ de Roetth, the Purchasers shall,
within 10 Business Days after the Closing Date, grant to the Purchaser
Representative its "voting proxy,"
-17-
which proxy shall, among other things, authorize the Purchaser
Representative to cast all votes on which the holder of the Preferred Shares,
or the shares of Common Stock into which such Preferred Shares may be
converted, may be lawfully entitled to vote.
ARTICLE 8
INDEMNIFICATION
8.1 INDEMNIFICATION.
(a) In addition to all other sums due hereunder or provided for in
this Agreement, the Company (the "Selling Indemnifying Party") shall defend,
indemnify and hold harmless the Purchasers and their agents, employees, and
assigns (each a "Purchasing Indemnified Party") to the fullest extent
permitted by law from and against any and all losses, costs, claims, damages,
expenses (including reasonable fees, disbursements and other charges of
counsel, as limited by Section 8.2 below) and other liabilities
(collectively, "Liabilities") incurred or suffered by any Purchasing
Indemnified Party resulting from or arising out of (i) any breach by any
Selling Indemnifying Party of any representation or warranty, covenant or
agreement of the Selling Indemnifying Party in this Agreement; provided,
however, that no Selling Indemnifying Party shall be liable under this
Section 8.1 to any Purchasing Indemnified Party to the extent that it is
finally judicially determined that such Liabilities resulted primarily from
the material breach by such Purchasing Indemnified Party of any
representation, warranty, covenant or other agreement of such Purchasing
Indemnified Party contained in this Agreement or (ii)any material liability
of the Company on the Closing Date not disclosed in this Agreement.
In addition to all other sums due hereunder or provided for in this
Agreement, each Purchaser (the "Purchasing Indemnifying Party"), severally
and not jointly, shall defend, indemnify and hold harmless the Company and
its Affiliates and its officers, directors, agents, employees, subsidiaries,
partners and assigns (each a "Selling Indemnified Party") to the fullest
extent permitted by law from and against any and all Liabilities incurred or
suffered by such Selling Indemnified Parties resulting from or arising out of
any breach of any representation, warranty, covenant or agreement of such
Purchasing Indemnifying Party in this Agreement; provided, however, that no
Purchasing Indemnifying Party shall not be liable under this Section 8.1 to a
Selling Indemnified Party to the extent that it is finally judicially
determined that such Liabilities resulted primarily from the material breach
by such Selling Indemnified Party of any representation, warranty, covenant
or other agreement of such Selling Indemnified Party contained in this
Agreement.
(c) if and to the extent that any indemnification provided for in
this Agreement is unenforceable for any reason, the Indemnifying Parties (as
defined below) obligated to indemnify any Indemnified Party (as defined
below) shall make the maximum contribution to the payment and satisfaction of
such indemnified liability which shall be permissible under applicable laws.
In connection with the obligation of the Indemnifying Parties to indemnify
for expenses as set forth herein, the Indemnifying Parties further agree,
upon presentation of appropriate invoices containing reasonable detail, to
reimburse each Indemnified
-18-
Party for all such expenses (including reasonable fees, disbursements and
other charges of counsel, as limited by Section 8.2 below) as they are
incurred by such Indemnified Party.
8.2. NOTIFICATION.
If any action or proceeding (including any governmental investigation or
inquiry) shall be brought or asserted against any party entitled to
indemnification pursuant to this Section 8 (an "Indemnified Party") in
respect of which indemnity may be sought from any party required to indemnify
such Indemnified Party (an "Indemnifying Party"), such Indemnified Party
shall promptly notify the Indemnifying Party in writing, and such
Indemnifying Party shall assume the defense thereof, including the employment
of counsel selected by such Indemnifying Party and reasonably satisfactory to
such Indemnified Party and the payment of all expenses; PROVIDED, HOWEVER,
that any failure to so notify such Indemnifying Party shall not impair
obligations hereunder except and only to the extent that such failure results
in actual prejudice to such Indemnifying Party. Such Indemnified Party shall
have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be the expense of such Indemnified Party unless (a) such Indemnifying
Party agreed to pay such fees and expenses or (b) such Indemnifying Party
shall have failed to assume the defense of such action or proceeding or has
failed to employ counsel reasonably satisfactory to such Indemnified Party
in any such action or proceeding or (c) the named parties to any such action
or proceeding (including any impleaded parties) include both such Indemnified
Party and such Indemnifying Party, and such Indemnified Party shall have
been advised by counsel that there may be one or more legal defenses
available to such Indemnified Party which are different from or additional
to those available to such Indemnifying Party (in which case, such
Indemnifying Party shall employ separate counsel at the expense of such
Indemnifying Party, it being understood, however, that such Indemnifying
Party shall not, in connection with any one such action or proceeding or
separate but substantially similar or related actions or proceedings in the
same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys at any time for such Indemnified Party and
any other Indemnified Parties). No Indemnifying Party shall be liable for any
settlement of any such action or proceeding effected without its written
consent (which shall not be withheld unreasonably), but if settled with its
written consent, or if there be a final judgment for the plaintiff in any
such action or proceeding, such Indemnifying Party agrees to indemnify and
hold harmless such Indemnified Party from and against any Liabilities by
reason of such settlement or judgment. No Indemnifying Party shall agree to
any settlement of any third party claim without the consent of the
Indemnified Party, which shall not be withheld if such settlement provides
only for the payment of money to be paid by the Indemnifying Party.
ARTICLE 9.
MISCELLANEOUS
9.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All of the representations and warranties made herein shall survive the
Closing for a period of twelve months.
-19-
9.2. NOTICES.
All notices, demands and other communications provided for or permitted
hereunder shall be made in writing and shall be by registered or certified
first-class mail, return receipt requested, courier service or personal
delivery or via facsimile;
(a) If to Purchasers:
Account Management Corporation
Two ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ de Roetth
with a copy to:
Ropes & ▇▇▇▇
▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇, Esq.
(b) if to the Company:
USinternetworking, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial overnight courier service; if delivered
by facsimile, upon confirmation of such transmission; and five business days
after being deposited in the mail, postage prepaid, if mailed.
9.3. SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon the
successors and permitted assigns of the parties hereto. This Agreement may
be assigned by the Purchasers to any permitted transferee of all or part of
the Preferred Shares or the Common Stock issued
-20-
upon conversion thereof. The Company may not assign any of its rights under
this Agreement without the written consent of the Purchasers. Except as
provided in this Section 9.3, no Person other than the parties hereto and
their successors and permitted assigns is intended to be a beneficiary of any
of the Transaction Agreements.
9.4. AMENDMENT AND WAIVER.
(a) No failure or delay on the part of the Company or the Purchasers
in exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company or
the Purchasers at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any provision
of this Agreement, any waiver of any provision of this Agreement, and any
consent to any departure by any party from the terms of any provision of this
Agreement, shall be effective (i) only if it is made or given in writing and
signed by the Company (if applicable) and the Purchasers, and (ii) only in
the specific instance and for the specific purpose for which made or given.
Except where notice is specifically required by this Agreement, no notice to
or demand on any party in any case shall entitle any party hereto to any
other or further notice or demand in similar or other circumstances.
9.5. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which taken together shall constitute
one and the same agreement.
9.6. HEADINGS.
The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.
9.7. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Maryland, without regard to the principles of conflicts
of law of such state.
9.8. JURISDICTION.
Each party to this Agreement hereby irrevocably agrees that any legal
action or proceeding arising out of or relating to this Agreement or any
agreements or transactions contemplated hereby may be brought in the courts
of the State of Maryland or of the United States of America for the District
of Maryland and hereby expressly submits to the personal jurisdiction and
venue of such courts for the purposes thereof and expressly waives any claim
of
-21-
improper venue and any claim that such courts are an inconvenient forum. Each
party hereby irrevocably consents to the service of process of any of the
aforementioned courts in any such suit, action or proceeding by the mailing
of copies thereof by registered or certified mail, postage prepaid, to the
address set forth in Section 9.2, such service to become effective 10 days
after such mailing.
9.9. SEVERABILITY.
If any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair
the benefits of the remaining provisions hereof.
9.10. RULES OF CONSTRUCTION.
Unless the context otherwise requires, "or" is not exclusive, and
references to sections or subsections refer to sections or subsections of
this Agreement.
9.11. ENTIRE AGREEMENT.
This Agreement, together with the exhibits and schedules hereto and the
other related agreements referred to herein, is intended by the parties as a
final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein or therein. This Agreement, together with the
exhibits and schedules hereto, and the other related agreements referred to
herein supersede all prior agreements and understandings between the parties
with respect to such subject matter.
9.12. PUBLICITY.
Except as may be required by applicable law, none of the parties hereto
shall issue a publicity release or announcement or otherwise make any public
disclosure concerning this Agreement or the transactions contemplated hereby,
without prior approval by the other parties hereto, provided that the
Purchasers may nonetheless communicate with their partners concerning such
transactions and investment in the Company and may publish a "tombstone" in
the customary form with respect to its investment. If any announcement is
required by law to be made by any party hereto, prior to making such
announcement such party will deliver a draft of such announcement to the
other parties and shall give the other parties an opportunity to comment
thereon.
9.13. FURTHER ASSURANCES.
Each of the parties shall execute such documents and perform such
further acts (including, without limitation, obtaining any consents,
exemptions, authorizations, or other
-22-
actions by, or giving any notices to, or making any filing with, any
Governmental Authority or any other Person) as may be reasonably required or
desirable to carry out or to perform the provisions of this Agreement.
9.14. WAIVER OF JURY TRIAL.
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
-23-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective officers hereunto duly authorized
as of the data first above written.
USINTERNETWORKING, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------
Title: Chairman & Chief Executive Officer
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:
--------------------------------------
▇▇▇▇▇▇▇▇▇▇▇ de Roetth
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:
--------------------------------------
Elisabeth de Roetth
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:
--------------------------------------
▇▇▇▇▇ de Roetth
------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇
-24-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective officers hereunto duly authorized
as of the date first above written.
USINTERNETWORKING, INC.
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By: /s/ ▇▇▇▇▇ de Roetth
------------------------
▇▇▇▇▇▇▇▇▇▇▇ de Roetth
By: ACCOUNT MANAGEMENT CORPORATION, poa
By: /s/ ▇▇▇▇▇ de Roetth
------------------
Elisabeth de Roetth
By: ACCOUNT MANAGEMENT CORPORATION, poa
By: /s/ ▇▇▇▇▇ de Roetth
------------------
▇▇▇▇▇ de Roetth
/s/ ▇▇▇▇▇ de Roetth
------------------
▇▇▇▇▇▇▇▇ de Roetth
-24-
By: ACCOUNT MANAGEMENT CORPORATION, poa
By: /s/ ▇▇▇▇▇ de Roetth
------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By: /s/ ▇▇▇▇▇ de Roetth
------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By: /s/ ▇▇▇▇▇ de Roetth
------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
/s/ ▇▇▇▇▇ de Roetth
------------------
▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Grandchildren's Trust
By: ACCOUNT MANAGEMENT CORPORATION, poa
/s/ ▇▇▇▇▇ de Roetth
------------------
-25-
▇▇▇▇▇▇ ▇. ▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By: /s/ ▇▇▇▇▇ de Roetth
------------------
▇▇▇▇▇ ▇▇▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By: /s/ ▇▇▇▇▇ de Roetth
------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By: /s/ ▇▇▇▇▇ de Roetth
------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By: /s/ ▇▇▇▇▇ de Roetth
------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By: /s/ ▇▇▇▇▇ de Roetth
------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By: /s/ ▇▇▇▇▇ de Roetth
------------------
-26-
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:/s/ ▇▇▇▇▇ de Roetth
-------------------
-27-
TABLE OF EXHIBITS
EXHIBITS
--------
EXHIBIT A CONSENT AND WAIVER
EXHIBIT B JOINDER TO THE SHAREHOLDER'S AGREEMENT
EXHIBIT C FORM OF OPINION - COMPANY COUNSEL
EXHIBIT D FORM OF OPINION - PURCHASERS' COUNSEL
CONSENT AND WAIVER
This CONSENT AND WAIVER is entered into this _____ day of July, 1998 by
and among (i) USinternetworking, Inc., a Delaware corporation (the "COMPANY")
(ii) BLUE CHIP CAPITAL FUND II L.P. ("BLUE CHIP"), MIAMI VALLEY VENTURE FUND
L.P. ("MIAMI VALLEY"), GROTECH PARTNERS IV, L.P. ("GROTECH"), GROTECH
PARTNERS V, L.P. ("GROTECH II"), VENROCK ASSOCIATES ("VENROCK"), VENROCK
ASSOCIATES II, L.P. ("VENROCK II"), SOUTHERN VENTURE FUND SBIC, L.P.
("▇▇▇▇▇▇"), SOUTHERN VENTURE FUND II, L.P. ("▇▇▇▇▇▇ II"), USi Partners, Ltd.
("USI PARTNERS") and US WEST Communications, Inc. ("US WEST" and, together
with Blue Chip, Miami Valley, Grotech, Grotech II, Venrock, Venrock II,
▇▇▇▇▇▇, ▇▇▇▇▇▇ II and USi Partners, the "PREFERRED STOCKHOLDERS") and (iii)
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(collectively referred to herein as the "INDIVIDUAL STOCKHOLDERS").
WHEREAS, each of the Individual Stockholders owns 5 million shares of
Common Stock of the Company, with such shares constituting all of the issued
and outstanding Common Stock of the Company as of the date hereof;
WHEREAS, the Preferred Stockholders own shares of Series A Preferred
Stock of the Company and pursuant to Section 5(b)(12) of the Certificate of
Incorporation, as amended by the Certificate of Designation, which sets forth
the terms and conditions of the Series A Preferred Stock, the Company must
obtain the consent of the holders of two-thirds of the outstanding shares of
Series A Preferred Stock to issue additional shares of Series A Preferred
Stock;
WHEREAS, the Preferred Stockholders, the Individual Stockholders and the
Company have entered into a Shareholder's Agreement, dated as of May 28,
1998, pursuant to Section 5 of which the Preferred Stockholders and the
Individual Stockholders have certain preemptive rights with respect to the
Company's issuance of additional shares of Series A Preferred Stock;
WHEREAS, the Company has entered into a Stock Purchase Agreement with
certain investors represented by Account Management Corporation (each an
"INDIVIDUAL PREFERRED STOCKHOLDER" or collectively, the "INDIVIDUAL PREFERRED
STOCKHOLDERS"), pursuant to which the Company has agreed to issue and sell up
to 3,000 shares of its Series A Preferred Stock to the Individual Preferred
Stockholders;
WHEREAS, the Preferred Stockholders, which Preferred Stockholders
constitute all of the holders of the Series A Preferred Stock as of the date
hereof, desire to consent to the issuance of the shares of Series A Preferred
Stock to each of the Individual Preferred Stockholders as required pursuant
to Section 5(b)(12) of the Certificate of Designation; and
WHEREAS, the Preferred Stockholders and the Individual Stockholders
desire to waive any rights they have under Section 5 of the Shareholders'
Agreement with respect to such issuance of shares by the Company to each of
the Individual Preferred Stockholders;
NOW, THEREFORE, in consideration of the foregoing, and the covenants and
agreements of the parties set forth herein, the parties hereto hereby agree as
follows:
1. The Preferred Stockholders do hereby consent to the above-referenced
issuance of shares of Series A Preferred Stock to each of the Individual
Preferred Stockholders and to the Individual Preferred Stockholders being
bound by the terms of Shareholders' Agreement as though an original party
thereto.
2. The Preferred Stockholders and the Individual Stockholders do hereby
waive any rights they have under Section 5 of the Shareholders' Agreement
with respect to the issuance of shares of Series A Preferred Stock by the
Company to each of the Individual Preferred Stockholders.
[THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
2
IN WITNESS WHEREOF, this written consent and waiver has been executed by
the undersigned as of the date first above written.
THE COMPANY:
USINTERNETWORKING, INC.
a Delaware corporation
By:
-------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Chief Executive Officer
THE PREFERRED STOCKHOLDERS:
BLUE CHIP CAPITAL FUND II LIMITED
PARTNERSHIP
By: BLUE CHIP VENTURE COMPANY,LTD.
Its General Partner
By:
-------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
Manager
MIAMI VALLEY VENTURE FUND L.P.
By: BLUE CHIP VENTURE COMPANY OF
DAYTON, LTD.
Its Special Limited Partner
By:
-------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
Manager
3
GROTECH PARTNERS IV L.P.
By: GROTECH CAPITAL GROUP IV, LLC
Its General Partner
By:
-------------------------------
Name:
Title:
GROTECH PARTNERS V L.P.
By: GROTECH CAPITAL GROUP V, LLC
Its General Partner
By:
-------------------------------
Name:
Title:
SOUTHERN VENTURE FUND SBIC, L.P.
By: SVF SBIC, L.P.
Its General Partner
By:
-------------------------------
Partner
By:
-------------------------------
Partner
SOUTHERN VENTURE FUND II, L.P.
By:
-------------------------------
General Partner
4
VENROCK ASSOCIATES
By:
---------------------------
General Partner
VENROCK ASSOCIATES II, L.P.
By:
---------------------------
General Partner
USI PARTNERS, LTD.
By:
---------------------------
Name:
Title:
US WEST COMMUNICATIONS, INC.
By:
---------------------------
Name:
Title:
THE INDIVIDUAL STOCKHOLDERS:
----------------------------
-------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
5
JOINDER AGREEMENT
This Joinder Agreement (this "JOINDER AGREEMENT") is made as of the date
written below by the undersigned (each, a "JOINING PARTY") and the parties to
the Shareholders' Agreement, dated as of May 28, 1998. Capitalized terms
used but not defined herein shall have the meanings given such terms in the
Shareholders' Agreement.
Accordingly, the Joining Party hereby acknowledges, agrees and confirms
that, by its execution of this Joinder Agreement, the Joining Party will be
deemed to be a party to the Shareholders' Agreement and shall have all of
the rights and obligations of a "STOCKHOLDER" thereunder as if it had
executed the Shareholders' Agreement. The Joining Party hereby ratifies, as of
the date hereof, and agrees to be bound by, all of the terms, provisions and
conditions contained in the Shareholders' Agreement. The execution of this
Joinder Agreement shall be a counterpart execution of the Shareholders'
Agreement, dated May 28, 1998, and the undersigned agrees to be bound by all
the terms thereof as though an original party thereto.
IN WITNESS WHEREOF, the undersigned has executed this Joinder Agreement
as of the date written below.
Date:
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION,poa
By:
-----------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION,poa
By:
----------------------------------
Elisabeth de Roetth
By: ACCOUNT MANAGEMENT CORPORATION,poa
By:
-----------------------------------
▇▇▇▇▇ de Roetth
--------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION,poa
By:
----------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION,poa
By:
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION,poa
By:
----------------------------------
▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Grandchildren's Trust
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:
----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:
----------------------------------
ACCEPTED AND ACKNOWLEDGED:
THE COMPANY:
USINTERNETWORKING, INC.
a Delaware corporation
By:
-------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chief Executive Officer
THE STOCKHOLDERS:
BLUE CHIP CAPITAL FUND II LIMITED
PARTNERSHIP
By: BLUE CHIP VENTURE COMPANY, LTD.
Its General Partner
By:
-----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
Manager
MIAMI VALLEY VENTURE FUND L.P.
By: BLUE CHIP VENTURE COMPANY OF
DAYTON, LTD.
Its Special Limited Partner
By:
----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
Manager
GROTECH PARTNERS IV L.P.
By: GROTECH CAPITAL GROUP IV, LLC
Its General Partner
By:
------------------------
Name:
Title:
GROTECH PARTNERS V L.P.
By: GROTECH CAPITAL GROUP V, LLC
Its General Partner
By:
---------------------------------
Name:
Title:
SOUTHERN VENTURE FUND SBIC, L.P.
By: SVF SBIC, L.P.
Its General Partner
By:
----------------------------------
Partner
By:
----------------------------------
Partner
SOUTHERN VENTURE FUND II, L.P.
By:
----------------------------------
General Partner
VENROCK ASSOCIATES
By:
----------------------------------
General Partner
VENROCK ASSOCIATES II, L.P.
By:
-------------------
General Partner
-----------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
USI PARTNERS, LTD.
By:
----------------------------
Name:
Title:
US WEST COMMUNICATIONS, INC.
By:
----------------------------
Name:
Title:
JOINDER AGREEMENT
This Joinder Agreement (this "JOINDER AGREEMENT") is made as of the date
written below by the undersigned (each, a "JOINING PARTY") and the parties to
the Shareholders' Agreement, dated as of May 28, 1998. Capitalized terms
used but not defined herein shall have the meanings given such terms in the
Shareholders' Agreement.
Accordingly, the Joining Party hereby acknowledges, agrees and confirms
that, by its execution of this Joinder Agreement, the Joining Party will be
deemed to be a party to the Shareholders' Agreement and shall have all of
the rights and obligations of a "STOCKHOLDER" thereunder as if it had
executed the Shareholders' Agreement. The Joining Party hereby ratifies, as of
the date hereof, and agrees to be bound by, all of the terms, provisions and
conditions contained in the Shareholders' Agreement. The execution of this
Joinder Agreement shall be a counterpart execution of the Shareholders'
Agreement, dated May 28, 1998, and the undersigned agrees to be bound by all
the terms thereof as though an original party thereto.
IN WITNESS WHEREOF, the undersigned has executed this Joinder Agreement
as of the date written below.
Date:
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:
-----------------------------------
▇▇▇▇▇▇▇▇▇▇▇ de Roetth
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:
----------------------------------
Elisabeth de Roetth
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:
-----------------------------------
▇▇▇▇▇ de Roetth
--------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:
----------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:
----------------------------------
▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Grandchildren's Trust
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:
----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
By: ACCOUNT MANAGEMENT CORPORATION, poa
By:
----------------------------------------
ACCEPTED AND ACKNOWLEDGED:
THE COMPANY:
USINTERNETWORKING, INC.
a Delaware corporation
By:
----------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chief Executive Officer
THE STOCKHOLDERS:
BLUE CHIP CAPITAL FUND II LIMITED
PARTNERSHIP
By: BLUE CHIP VENTURE COMPANY, LTD.
Its General Partner
By:
----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
Manager
MIAMI VALLEY VENTURE FUND L.P.
By: BLUE CHIP VENTURE COMPANY OF
DAYTON, LTD.
Its Special Limited Partner
By:
----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
Manager
GROTECH PARTNERS IV L.P.
By: GROTECH CAPITAL GROUP IV, LLC
Its General Partner
By:
----------------------------
Name:
Title:
GROTECH PARTNERS V L.P.
By: GROTECH CAPITAL GROUP V, LLC
Its General Partner
By:
----------------------------
Name:
Title:
SOUTHERN VENTURE FUND SBIC, L.P.
By: SVF SBIC, L.P.
Its General Partner
By:
----------------------------
Partner
By:
----------------------------
Partner
SOUTHERN VENTURE FUND II, L.P.
By:
----------------------------
General Partner
VENROCK ASSOCIATES
By:
----------------------------
General Partner
VENROCK ASSOCIATES II, L.P.
By:
-------------------------
General Partner
----------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
USI PARTNERS, LTD.
By:
-------------------------
Name:
Title:
US WEST COMMUNICATIONS, INC.
By:
-------------------------
Name:
Title:
EXHIBIT C
[LETTERHEAD OF ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇]
_____, 1998
To the Purchasers Listed on Schedule A Hereto:
Re: Stock Purchase Agreement dated as of June 19, 1998 (the
"Agreement") by and among USinternetworking, Inc., a Delaware
corporation, and the Purchasers, as listed on Schedule A attached
hereto.
Ladies and Gentlemen:
We have acted as counsel to USinternetworking, Inc., a Delaware
corporation (the "Company"), in connection with the purchase by Purchasers of
2,000 shares of Series A Convertible Preferred Stock, par value $.01 per share,
of the Company (the "Series A Preferred Stock") pursuant to the Agreement. This
opinion is rendered to you pursuant to Section 3.12 of the Agreement.
Capitalized terms defined in the Agreement, used herein, and not otherwise
defined herein shall have the meanings given them in the Agreement.
As such counsel, we have examined such matters of fact and questions of
law as we have considered appropriate for purposes of rendering the opinions
expressed below, except where a statement is qualified as to knowledge or
awareness, in which case we have made no or limited inquiry as specified below.
We have examined, among other things, the following:
[LETTERHEAD OF ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇]
To the Purchasers
_________, 1998
Page 2
(a) The Agreement; and
(b) The certificate of incorporation of the Company, as amended,
and the Bylaws of the Company (the "Governing Documents").
The documents described in subsections (a) and (b) above are referred
to herein collectively as the "Documents."
In our examination, we have assumed the genuineness of all signatures
(other than those of officers of the Company on the Documents), the authenticity
of all documents submitted to us as originals, and the conformity to authentic
original documents of all documents submitted to us as copies.
We have been furnished with, and with your consent have relied upon,
certificates of officer(s) of the Company with respect to certain factual
matters. In addition, we have obtained and relied upon such certificates and
assurances from public officials as we have deemed necessary.
We are opining herein as to the effect on the subject transaction only
of the federal laws of the United States, the internal laws of the State of
Maryland, and the General Corporation Law of the State of Delaware, and we
express no opinion with respect to the applicability thereto, or the effect
thereon, of the laws of any other jurisdiction or, in the case of Delaware, any
other laws, or as to any matters of municipal law or the laws of any other local
agencies within any state.
Our opinions set forth in clauses (i) and (iii) of paragraph 4 below
are based upon our consideration of only those statutes, rules and regulations
which, in our experience, are normally applicable to stock purchase
transactions. Whenever a statement herein is qualified by "to the best of our
knowledge" or a similar phrase, it is intended to indicate that those attorneys
in this firm who have rendered legal services in connection with the this stock
purchase transaction do not have current actual knowledge of the inaccuracy of
such statement. However, except as otherwise expressly indicated, we have not
undertaken any independent investigation to determine the accuracy of any such
statement, and no inference that we have any knowledge of any matters pertaining
to such statement should be drawn from our representation of the Company.
Subject to the foregoing and the other matters set forth herein, it is
our opinion that, as of the date hereof:
[LETTERHEAD OF ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇]
To the Purchasers
_________, 1998
Page 3
1. The Company has been duly incorporated and is validly existing and
in good standing under the laws of the State of Delaware with corporate power
and authority to own and lease its properties and to conduct its business and to
execute, deliver and perform its obligations under the Agreement. Based solely
on certificates from public officials, we confirm that the Company is qualified
to do business in the State of Maryland.
2. The execution, delivery and performance of the Agreement by the
Company has been duly authorized by all necessary corporate action of the
Company, and the Agreement has been duly executed and delivered by the Company.
3. The Agreement constitutes a legally valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms.
4. The execution and delivery of the Agreement by the Company and the
performance of the obligations of the Company under the Agreement do not: (i)
violate any federal or Maryland statute, rule or regulation applicable to the
Company or the Delaware General Corporation Law; (ii) violate the provisions of
the Governing Documents or of any agreement to which the Company is a party
identified to us by an officer of the Company as material to the Company's
business; or (iii) to the best our knowledge, require any consents, approvals,
authorizations, registrations, declarations or filings by the Company under any
federal statute, rule or regulation applicable to the Company. No opinion is
expressed in clauses (i) and (iii) of this paragraph 4 as to the application of
Section 548 of the federal Bankruptcy Code and comparable provisions of state
law or of any antifraud laws, antitrust or trade regulation laws.
5. The shares of Series A Preferred Stock to be issued pursuant to
the Agreement have been duly authorized and, when issued to and paid for by the
Purchasers in accordance with the terms of the Agreement, will be validly
issued, fully paid and non-assessable. The issuance of shares of Common Stock
upon conversion of the Preferred Shares has been duly authorized by the Company,
and, as of the date hereof, a sufficient number of shares of the authorized but
unissued Common Stock is available for issuance upon conversion of the Preferred
Shares. The shares of Common Stock to be issued upon conversion of the Preferred
Shares have been duly authorized and, when issued upon conversion of the
Preferred Stock in accordance with the terms of the Preferred Stock, will be
validly issued, fully paid and non-assessable.
6. As of June 19, 1998, the date of the Agreement, the authorized
capital stock of the Company consisted of One Hundred Fifty Million
(150,000,000) shares of Common
[LETTERHEAD OF ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇]
To the Purchasers
_________, 1998
Page 4
Stock, par value $0.001 per share, and One Hundred Thousand (100,000) shares of
preferred stock, par value $0.01 per share.
The opinions expressed in paragraph 3 above are subject to the
following limitations, qualifications and exceptions:
(a) such opinions are subject to bankruptcy, insolvency,
reorganization, moratorium, and other laws relating to or affecting the rights
of creditors; and
(b) such opinions are subject to the exercise of judicial
discretion in accordance with general principles of equity.
To the extent that the obligations of the Company may be dependent upon
such matters, we assume for purposes of this opinion that: all parties to the
Agreement other than the Company are duly formed, validly existing and in good
standing under the laws of their respective jurisdictions of formation; all
parties to the Agreement other than the Company have the requisite partnership
power and authority to execute and deliver the Agreement and to perform their
respective obligations under the Agreement; and the Agreement to which such
parties other than the Company are a party have been duly authorized, executed
and delivered by such parties and constitute their legally valid and binding
obligations, enforceable against them in accordance with their terms. We express
no opinion as to compliance by any parties to the Agreement with any state or
federal laws or regulations applicable to the subject transactions because of
the nature of their business.
This opinion is rendered only to you and is solely for your benefit in
connection with the transactions covered hereby. This opinion may not be relied
upon by you for any other purpose, or furnished to, quoted to or relied upon by
any other person, firm or corporation for any purpose, without our prior written
consent.
Very truly yours,
Schedule A
PURCHASERS
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ de Roetth
Elisabeth de Roetth
▇▇▇▇▇ de Roetth
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Grandchildren's Trust
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
DRAFT
WRITER'S DIRECT DIAL NUMBER: (617) ▇▇▇-▇▇▇ ▇
WRITERS E-MAIL ADDRESS: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
July 20, 1998
USinternetworking, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Gentlemen:
This opinion is furnished to you pursuant to Section 4.9 of that certain
Stock Purchase Agreement (the "Purchase Agreement") dated as of June 19, 1998
between you and the purchasers named therein (the "Purchasers"). The Purchasers
consist of two individuals acting in their own behalf (the "Signing Purchasers")
and fourteen individuals and one trust (the "Agency Purchasers") represented in
the transaction by Account Management Corporation, a Massachusetts corporation
("AMC") as Agent. Pursuant to the Purchase Agreement, the Purchasers have
executed and delivered a certain "Joinder Agreement" pursuant to which they have
become parties to a certain Shareholders' Agreement dated as of May 28, 1998.
The Purchase Agreement, the Joinder Agreement and the Shareholders' Agreement
are herein together referred to as the "Transaction Agreements".
We have acted as counsel for AMC and the Purchasers in connection with the
Transaction Agreements and the transactions contemplated thereby. We have acted
as counsel to AMC for a number of years, and are generally familiar with its
legal standing and legal affairs; our relationship to the Purchasers is as
special counsel for the particular transactions contemplated by the Transaction
Agreements.
We have examined a power of attorney executed by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ appointing
AMC as attorney in fact for purposes of the transactions contemplated by the
Transaction Agreements, and we have been informed that like powers of attorney
have been executed and delivered to AMC by each of the other Agency Purchasers.
We have examined a document furnished to us as a copy of the ▇▇▇▇▇▇▇ ▇. and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Grandchildren's Trust. We have also made inquiries as to the
age, financial standing and investing experience of all Purchasers who are
individuals. We are relying on the foregoing in connection with this opinion. We
point out the fact that the Transaction Agreements provide that the governing
law of such agreements is the law of Maryland. We are not members of the bar of
the state of Maryland, but have assumed for the
-2- July 20, 1998
purposes of this opinion that the law of Maryland does not differ from the law
of Massachusetts insofar as relevant to the conclusions expressed herein.
Based upon the foregoing, we are the opinion that:
1. AMC is a corporation duly incorporated, validly existing and in good
standing under the laws of The Commonwealth of Massachusetts.
2. AMC holds a valid, binding and enforceable power of attorney from each of
the Agency Purchasers.
3. The Purchase Agreement, and the Joinder Agreement have been duly executed
and delivered by or on behalf of the Purchasers, such execution and
delivery being by AMC, as agent, in the case of the Agency Purchasers.
Except as qualified by the following sentence and by the last paragraph of
this opinion, the Transaction Agreements constitute the legal valid and
binding obligations of the Purchasers, enforceable against each of them in
accordance with their terms. We express no opinion, however, on Section 4
of the Shareholders' Agreement (dealing with registration of securities
under the Securities Act of 1933, as amended, and state securities laws),
nor as to the effect of any limitations on the validity or enforceability
of that Section on other provisions of the Shareholders' Agreement.
(4) None of (i) the execution and delivery of the Transaction Agreements by
each of the Purchasers, (ii) the purchase of the Series A Preferred Stock by
each of the Purchasers, (iii) compliance with the terms and conditions of the
Transaction Agreements on the Closing Date will conflict with, breach the terms
and conditions of, constitute a default under, any judgment, decree, order,
agreement, lease or other instrument known to us to which any of the Purchasers
is a party or by which any of the Purchasers is legally bound.
(5) To our knowledge, there is no order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any United States
federal, state or local or any foreign government, governmental, regulatory or
administrative authority, agency or commission or any court, tribunal, or
judicial or arbitral body in existence which restrains or which materially and
adversely affects the transactions contemplated by the Transaction Agreement, or
is likely to render it impossible or unlawful to consummate such transactions.
Our opinion as to the legality, validity, binding effect and enforceability
of the Purchase Agreement and the other Transaction Agreements is subject to (a)
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of contracting parties and (b)
general principles of equity, regardless whether enforcement is sought in
proceedings in equity or at law. We also express no opinion as to the
enforceability of
-3- July 20, 1998
provisions relating to submission to jurisdiction, waiver of service of process,
venue or waiver of the right to trial by jury.
Very truly yours,
Ropes & ▇▇▇▇
▇▇▇/aml:3318915.01
SCHEDULES
SCHEDULE 1
SHARES OF SERIES A CONVERTIBLE PREFERRED STOCK
TO BE ISSUED BY THE COMPANY
TO EACH PURCHASER
Total Purchase Price To
Shares of Series A Be Paid By Such
Convertible Preferred Purchaser For Shares
Stock To Be Issued of Series A Convertible
By the Company To Preferred Stock Issued
Purchaser Each Purchaser To Each Purchaser
--------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 166.67 $ 100,002.00
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ 166.67 $ 100,002.00
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇ 166.67 $ 100,002.00
▇▇▇▇▇▇▇▇▇▇▇ de Roetth 125.00 $ 75,000.00
Elisabeth de Roetth and ▇▇▇▇▇ de Roetth 166.67 $ 100,002.00
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ 41.67 $ 25,002.00
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ 41.67 $ 25,002.00
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ 166.67 $ 100,002.00
▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Grandchildren's Trust 41.67 $ 25,002.00
▇▇▇▇▇▇ ▇. ▇▇▇▇ 166.67 $ 100,002.00
▇▇▇▇▇ ▇▇▇▇▇▇ 125.00 $ 75,000.00
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 166.67 $ 100,002.00
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 125.00 $ 75,000.00
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 125.00 $ 75,000.00
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 41.67 $ 25,002.00
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 166.67 $ 100,002.00
------------------------------------------
Total 2,000.04 $ 1,200,024
Page 1
SCHEDULE 2
Account Management Corporation
Two ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
SCHEDULE 5.5
--------------------------------------------------------------------------------
Holders of Issued and Outstanding Number of Shares of Capital Stock Held
Shares of Capital Stock
--------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 5,000,000 shares of Common Stock
--------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ 5,000,000 shares of Common Stock
--------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ 5,000,000 shares of Common Stock
--------------------------------------------------------------------------------
See attached for a list of the holders of Series A Preferred Stock.
See also attached for a list of employees granted stock options, which options
shall be governed by the Employee Stock Option Plan.
SERIES A CONVERTIBLE PREFERRED STOCK
Shares of Series A Convertible Preferred Stock
Holders Issued To Each Holder
--------------------------------------------------------------------------------
Blue Chip Capital Fund II 11,333.34
Limited Partnership
Miami Valley Venture Fund L.P. 1,999.99
Grotech Partners IV, and 16,666.67
Grotech Partners V, L.P.
Southern Venture Fund SBIC, L.P. 3,333.33
Southern Venture Fund, II, L.P. 1,666.67
Venrock Associates 3,583.33
Venrock Associates II, L.P. 4,750.00
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (or ▇▇▇▇▇▇▇▇ Technology
Capital) 1,666.67
USI Partners, Ltd. 1,166.67
US WEST Communications, Inc. 5,833.33
Total 52,000.00
Page 1
USINTERNETWORKING, INC.
STOCK PURCHASES AGREEMENT
SCHEDULE 6.8(A)
ALL EXPENDITURES IN EXCESS OF $25,000
PAYEE EXPLANATION AMOUNT
----- ----------- ------
American Express Advance payment of account $ 40,125.05
▇▇▇▇▇ & Partners Professional Services-Architect $ 42,282.93
▇▇▇▇▇▇▇-▇▇▇▇▇▇ Computer Equipment-Laptops $ 43,417.00
Computer Equipment-Printer, deskpro, notebooks $ 29,951.00
Consortium One-Annapolis L.L.C. Deposit related to the lease at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ $ 400,000.00
May Rent for ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ $ 30,052.54
June Rent for ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ $ 30,052.54
▇▇▇▇▇▇ ▇▇▇▇▇▇ Company Two copiers with interface boards (one color) includes delivery. $ 48,264.50
Installation and taxes.
One copier includes delivery, installation and taxes. $ 80,718.00
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Partial repayment of loan $ 100,000.00
Partial repayment of loan $ 342,489.95
PC Connection, Inc Computer Equipment $ 77,640.00
Computer Equipment $ 39,471.45
Computer Equipment $ 41,809.00
Computer Equipment $ 100,000.00
Computer Equipment $ 25,518.75
Realty Association Security Deposit and First month's rent for ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ $ 38,398.42
Page 1
USINTERNETWORKING, INC.
STOCK PURCHASES AGREEMENT
SCHEDULE 5.8(A)
ALL EXPENDITURES IN EXCESS OF $25,000
PAYEE EXPLANATION AMOUNT
----- ----------- ------
American Express Advance payment of account $ 40,125.05
▇▇▇▇▇ & Partners Professional Services-Architect $ 42,282.93
▇▇▇▇▇▇▇-▇▇▇▇▇▇ Computer Equipment-Laptops $ 43,417.00
Computer Equipment-Printer, deskpro, notebooks $ 29,951.00
Consortium One-Annapolis L.L.C. Deposit related to the lease at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ $ 400,000.00
May Rent for ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ $ 30,052.54
June Rent for ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ $ 30,052.54
▇▇▇▇▇▇ ▇▇▇▇▇▇ Company Two copiers with interface boards (one color) includes delivery. $ 48,264.50
Installation and taxes.
One copier includes delivery, installation and taxes. $ 80,718.00
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Partial repayment of loan $ 100,000.00
Partial repayment of loan $ 342,489.95
PC Connection, Inc Computer Equipment $ 77,640.00
Computer Equipment $ 39,471.45
Computer Equipment $ 41,809.00
Computer Equipment $ 100,000.00
Computer Equipment $ 25,518.75
Realty Association Security Deposit and First month's rent for ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ $ 38,398.42
Page 1
USINTERNETWORKING, INC.
STOCK PURCHASES AGREEMENT
SCHEDULE 5.8(A)
AGGEGRATE EXPENDITURES IN EXCESS OF $200,000
PAYEE EXPLANATION AMOUNT
----- ----------- ------
Consortium One-Annapolis L.L.C. Deposit and rent for ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (Lease) $ 465,915.00
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Payments on Loan $ 444,875.62
PC Connection, Inc. Computer Equipment $ 509,200.97
Page 1
SCHEDULE 5.10
LISTING OF CONTRACTUAL OBLIGATIONS
1) Officer Agreement by and between USinternetworking, Inc. and ▇▇▇▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ dated May 29. 1998.
2) Officer Agreement by and between USinternetworking, Inc. and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, dated June 2, 1998.
3) Officer Agreement by and between USinternetworking, Inc. and ▇▇▇▇▇
▇▇▇▇▇▇▇, dated June 2,1998.
4) Sublease Agreement, by and between Exsportise, Inc. and USinternetworking,
Inc., dated February 9,1998.
5) Agreement of Lease, by and between Consortium One-Annapolis, LLC and
USinternetworking, Inc., dated April 3,1998.
6) Letter Agreement between USinternetworking, Inc. and ▇▇▇▇ ▇▇▇▇▇▇, dated
April 10, 1998 (acceptance by Heiwig dated April 14, 1998).
7) Furniture Rental Agreement between ▇▇▇▇▇ Rents, Inc. and
USinternetworking, Inc., dated March 10, 1998.
8) Sublease Agreement, by and between Columbia Medical Plan and
USinternetworking, Inc. dated May 8, 1998.
9) Agreement of Lease, by and between Realty Associates, Inc. and
USinternetworking, Inc., dated June 3, 1998
10) Contract of Sale between First Church of ▇▇▇▇▇▇, Scientist, Seller, and
USinternetworking, Inc., Buyer, dated May 1, 1998.
SCHEDULE 5.16
EMPLOYEE PLANS
Although the Company has not adopted any formal employee benefit plans, the
contours of the employee benefit plans have been described in writing to
employees. The employee benefits are to include the following: (i) a 401(k) plan
that is to be noncontributory until January 1, 1999, and thereafter subject to a
1:2 employer match, (ii) the Employee Stock Option Plan, and (iii) other typical
plans such as health and vacation benefit plans. The Company has stated its
intention that the Employee Stock Option Plan will be a qualified plan that will
provide for the issuance of options to purchase shares at a discount of 20% from
the then-current market price, to the extent permissible at any time. Certain of
the Company's employees have been advised in writing, pursuant to the employment
offer letters, of the number of option shares the Company intends to award to
them. These option shares are listed in Schedule 5.5.
SCHEDULE 5.17
LISTING OF ALL OUTSTANDING BORROWINGS
1) $2,000,000 credit line with Cisco Systems Capital Corp. for the purchase
of Cisco Systems Products equipment. $0 outstanding at June 15, 1998.
2) $1,000,000 credit line with Hewlett-Packard Co. for the purchase of
Hewlett-Packard equipment. $651,758.06 outstanding at June 15, 1998.
SCHEDULE 5.18
LISTING OF INSURANCE POLICIES OR PROGRAMS
As of the date hereof, the Company has received only an Insurance Binder.