EXHIBIT 10.37
VIEWLOCITY, INC.
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SECURITIES PURCHASE AGREEMENT
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10.0% Senior Subordinated Notes
and
Warrants to Purchase Common Stock
As of December 5, 2000
TABLE OF CONTENTS
Page
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ARTICLE I PURCHASE, SALE AND TERMS OF SECURITIES 1
1.1 The Senior Subordinated Notes and Warrants to Purchase
Common Stock..........................................................1
1.2 The Warrant Shares....................................................1
1.3 Sale of Securities....................................................1
1.4 The Closing...........................................................1
1.5 Use of Proceeds.......................................................2
1.6 Representations, Warranties, and Covenants by the Purchasers..........2
1.7 Repayments and Prepayments............................................4
ARTICLE II CONDITIONS TO THE PURCHASERS' OBLIGATION 5
2.1 Any Securities........................................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY 7
3.1 Organization and Standing.............................................7
3.2 Corporate Action......................................................7
3.3 Governmental Approvals................................................8
3.4 Litigation............................................................8
3.5 Certain Agreements of Officers and Key Employees......................8
3.6 Compliance with Other Instruments.....................................8
3.7 Material Contracts....................................................9
3.8 ERISA.................................................................10
3.9 Transactions with Affiliates..........................................10
3.10 Assumptions or Guaranties of Indebtedness of Other Persons............10
3.11 Investments in Other Persons..........................................10
3.12 Securities Laws.......................................................10
3.13 Disclosure............................................................10
3.14 Brokers or Finders....................................................11
3.15 Capitalization; Status of Capital Stock...............................11
3.16 Registration Rights...................................................12
3.17 Books and Records.....................................................12
3.18 Title to Assets; Intellectual Property................................12
3.19 Payment of Taxes......................................................13
3.20 Financial Statements..................................................13
3.21 No Undisclosed Liabilities............................................13
3.22 Technology............................................................13
3.23 Indebtedness..........................................................14
3.24 Private Offering......................................................14
ARTICLE IV COVENANTS OF THE COMPANY 14
4.1 Affirmative Covenants of the Company Other Than Reporting
Requirements..........................................................14
4.2 Negative Covenants of the Company.....................................17
4.3 Reporting Requirements................................................19
ARTICLE V REMEDIES ON DEFAULT 21
5.1 Acceleration..........................................................21
5.2 No Waivers or Election of Remedies, Expenses, etc.....................21
ARTICLE VI DEFINITIONS AND ACCOUNTING TERMS 22
6.1 Certain Defined Terms.................................................22
6.2 Accounting Terms......................................................30
6.3 Knowledge.............................................................30
ARTICLE VII FORM, REGISTRATION, TRANSFER AND EXCHANGE OF SECURITIES;
LOST SECURITIES 30
7.1 Generally.............................................................30
7.2 Other Transfers.......................................................31
7.3 Further Assurances....................................................31
ARTICLE VIII 31
8.1 Grant of Right of First Refusal.......................................31
8.2 Notice of Acceptance..................................................32
8.3 Conditions to Acceptances and Purchase................................33
8.4 Further Sale..........................................................33
8.5 Termination of Right of First Refusal.................................33
8.6 Exception.............................................................34
ARTICLE IX MISCELLANEOUS 34
9.1 No Waiver; Cumulative Remedies........................................34
9.2 Amendments, Waivers and Consents......................................35
9.3 Addresses for Notices.................................................35
9.4 Costs, Expenses and Taxes.............................................36
9.5 Binding Effect; Assignment............................................36
9.6 Survival of Representations and Warranties............................36
9.7 Prior Agreements......................................................36
9.8 Severability..........................................................36
9.9 Governing Law; Jury Waiver............................................36
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9.10 Headings 37
9.11 Counterparts; Telefacsimile...........................................37
9.12 Further Assurances....................................................37
9.13 Confidentiality.......................................................37
9.14 Indemnification.......................................................38
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SCHEDULES:
Schedule I List of Purchasers
EXHIBITS
Exhibit 1.1A Form of Note
Exhibit 1.1B Form of Warrant
Exhibit 1.6(b) Accredited Investor/Qualified Institutional Buyer
Exhibit 2.2(k) Opinion of Counsel
Exhibit 3.1 Foreign Qualifications
Exhibit 3.4 Litigation
Exhibit 3.7 Material Contracts
Exhibit 3.8 ERISA
Exhibit 3.9 Transactions with Affiliates
Exhibit 3.11 Investments in Other Persons
Exhibit 3.13 Knowledgeable Persons
Exhibit 3.14 Broker's Fees
Exhibit 3.15 Capitalization; Status of Capital Stock
Exhibit 3.16 Registration Rights
Exhibit 3.18(b) Intellectual Property
Exhibit 3.18(c) Compensation for use of Intellectual Property Rights
Exhibit 3.19 Taxes
Exhibit 3.20(a) Audited Financials
Exhibit 3.20(b) Unaudited Financials
Exhibit 3.21 Permitted Indebtedness
Exhibit 3.22 Technology
Exhibit 3.23 Senior Indebtedness
Exhibit 3.24 Securities Issuances
Exhibit P-1 Permitted Liens
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This
SECURITIES PURCHASE AGREEMENT, dated as of December 5, 2000
(this "AGREEMENT"), is entered into among VIEWLOCITY, INC., a Delaware
corporation ("COMPANY"), with its chief executive office located at ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and each of the Persons
identified on SCHEDULE I attached hereto (each a "PURCHASER," collectively, the
"PURCHASERS").
ARTICLE I
PURCHASE, SALE AND TERMS OF SECURITIES
1.1 THE SENIOR SUBORDINATED NOTES AND WARRANTS TO PURCHASE COMMON
STOCK. The Company has authorized the issuance and sale to each Purchaser or its
nominee or designee of the Company's (i) senior subordinated notes (herein,
together with any such notes that may be issued hereunder in substitution or
exchanged therefor, each a "NOTE" and collectively, the "NOTES"), in an
aggregate principal amount of up to $10,000,000, to be dated the date of
issuance thereof, to mature December 5, 2005, to bear interest on the unpaid
balances thereof from the date thereof until the principal thereof shall be paid
in full at the rate of 10.0% per annum, based upon a 365 day year for actual
days elapsed, and to be substantially in the form attached hereto as EXHIBIT
1.1A, and (ii) warrants for the purchase of the Company's Common Stock, $.01 par
value per share ("COMMON STOCK"), which are to have the terms and provisions set
forth in the form of Warrant attached hereto as EXHIBIT 1.1B (the "WARRANTS").
All of the Notes shall be identical in all respects other than their respective
principal amounts, the dates of issuance and the names of the registered
holders. All of the Warrants shall be identical in all respects other than the
number of shares of Common Stock which may be purchased thereunder, the dates of
issuance and the names of the registered holders. The Notes and the Warrants are
sometimes referred to herein as the "SECURITIES."
1.2 THE WARRANT SHARES. The Company has authorized and reserved, and
covenants to continue to reserve, free of preemptive rights and other
preferential rights, a sufficient number of its previously authorized but
unissued shares of Common Stock issuable upon exercise of the Warrants. Any
shares of Common Stock issuable upon exercise of the Warrants, and such shares
when issued, are herein referred to as the "WARRANT SHARES."
1.3 SALE OF SECURITIES.
At the Closing, the Company, agrees to issue to each Purchaser, and
each Purchaser, severally and not jointly, agrees to acquire from the Company
the Notes and Warrants set forth opposite such Purchaser's name on SCHEDULE I
hereto. The aggregate purchase price of the Securities being purchased by each
Purchaser is set forth opposite such Purchaser's name on SCHEDULE I.
1.4 THE CLOSING. This Agreement shall become effective upon the
execution and delivery hereof by the Company and each Purchaser (such date, the
"CLOSING"). Upon the satisfaction of all of the conditions precedent to the
purchase of the Securities by the
Purchasers set forth in ARTICLE II herein, the Company will issue and deliver
the Notes and Warrants to be sold to each of the Purchasers (or its nominee or
designee) against payment of the full purchase price therefor by wire transfer
of immediately available funds to an account designated by the Company.
1.5 USE OF PROCEEDS. The Company shall use the proceeds from the sale of
the Securities for working capital and general corporate purposes.
1.6 REPRESENTATIONS, WARRANTIES, AND COVENANTS BY THE PURCHASERS.
(a) Each of the Purchasers represents and warrants,
severally, but not jointly, that (a) it will acquire the Securities to be
acquired by it for its own account and that the Securities are being and will be
acquired by it for the purpose of investment and not with a view to distribution
or resale thereof; (b) the execution of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
action on the part of such Purchaser; (c) this Agreement has been duly executed
and delivered, and constitutes a valid, legal, binding and enforceable agreement
of such Purchaser; (d) it has taken no action which would give rise to any claim
by any other person for any brokerage commissions, finders' fees or the like
relating to this Agreement or the transactions contemplated hereby; (e) such
Purchaser has had the opportunity to ask questions of and receive answers from
representatives of the Company concerning the terms of the offering of the
Securities and to obtain additional information concerning the Company and its
business; and (f) such Purchaser has the ability to evaluate the merits and
risks of an investment in the Securities and can bear the economic risks of such
investment. Each Purchaser represents and warrants that it has retained no
finder or broker in connection with the transactions contemplated by this
Agreement. The acquisition by each Purchaser of the Securities acquired by it
shall constitute a confirmation of the representations and warranties made by
each such Purchaser as at the date of such acquisition. Each Purchaser further
represents that it understands and agrees that no public market now exists for
any of the Securities or the Warrant Shares, that there is no assurance that a
public market will ever exist for the Securities or the Warrant Shares, and that
until registered under the Securities Act or transferred pursuant to the
provisions of Rule 144 as promulgated by the Commission, all Securities and
certificates evidencing any of the Warrant Shares, whether upon initial issuance
or upon any transfer thereof, shall bear a legend, prominently stamped or
printed thereon, reading substantially as follows:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD, MORTGAGED,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES LAWS, OR THE
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AVAILABILITY OF AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF
THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES LAWS."
(b) ACCREDITED INVESTOR/QUALIFIED INSTITUTIONAL BUYER.
Each Purchaser further represents and warrants severally, but not jointly, that
(a) such Purchaser was not formed for the sole purpose of consummating the
transactions contemplated by this Agreement or any of the other Financing
Documents, (b) as reflected on EXHIBIT 1.6(b) attached hereto, such Purchaser is
either (i) a "Qualified Institutional Buyer" as that term is defined in Rule
144A promulgated under the Securities Act, or (ii) an "Accredited Investor" as
such term is defined in Rule 501(a) promulgated under the Securities Act, and
(c) in the case of any Purchaser that is an Accredited Investor, such Purchaser
is a large institutional Accredited Investor.
(c) NO GENERAL SOLICITATION. Each Purchaser further
represents and warrants severally, but not jointly, that (a) no form of general
solicitation or general advertising (within the meaning of Rule 502(c) of
Regulation D under the Securities Act) has been relied upon by such Purchaser in
connection with the offer and sale of the Securities or the Warrant Shares by
the Company to such Purchaser, including, but not limited to, advertisements,
articles, notices or other communications published in any newspaper, magazine,
or similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or general
advertising, (b) such Purchaser has not relied upon the Company's registration
statement on Form S-1 (the "REGISTRATION STATEMENT"), pursuant to which the
Company plans to effect a Qualifying Public Offering, in connection with the
Company's offer and sale of the Securities or the Warrant Shares to such
Purchaser, (c) such Purchaser did not become aware of the Company as a result of
the filing of the Registration Statement with the Securities and Exchange
Commission, and (d) such Purchaser or its affiliate has had business contacts
with the Company since November 1999.
(d) VCOC AND TERM OF RIGHTS HEREUNDER. WestBridge
represents that it is required by the terms of its governing instrument to
operate as a venture capital operating company within the meaning of Department
of Labor Regulations Section 2510.3-101. WestBridge agrees that the rights
granted pursuant SECTIONS 4.1(h)(i) and (ii) hereof shall be of no force or
effect upon the earlier of (1) the consummation of the sale of the Company's
securities pursuant to a registration statement filed by the Company under the
Securities Act in connection with the firm commitment underwritten offering of
its securities to the general public; or (2) such date as WestBridge, or any
affiliate, does not own, directly or indirectly any Notes, Warrants, or capital
stock of the Company.
(e) PROTECTION OF CONFIDENTIAL INFORMATION. WestBridge,
and any designee or representative of WestBridge, agrees to hold in confidence
and trust any confidential information provided to or learned by it in
connection with the rights granted under SECTION 4.1(h), or otherwise, in
accordance with SECTION 9.13. WestBridge agrees to
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cause each such designee or representative to execute the Company's standard
form of nondisclosure agreement providing for nondisclosure of the Company's
proprietary information. The confidentiality provisions of this SECTION 1.3(e)
shall survive any termination of the rights granted pursuant to SECTIONS
4.1(h)(i) and (ii) hereof.
1.7 REPAYMENTS AND PREPAYMENTS.
(a) PRINCIPAL AND INTEREST. The unpaid principal balance
of the Notes, in each case, together with any and all interest accrued and
unpaid thereon, automatically and unconditionally shall be due and payable in
full on the Maturity Date. Interest on the unpaid principal balance of the Notes
(computed on the basis of a 365-day year for actual days elapsed) shall be
payable from and including the date thereof on the unpaid principal balance
thereof outstanding from time to time at the rate of 10.0% per annum until the
entire principal balance thereof and all interest accrued thereunder is paid in
full. Such interest is to be compounded annually and added to the principal
amount of the Notes on December __ of each year commencing December __, 2001,
and on the Maturity Date. Any payment on or in respect of the Notes shall be
made by cashiers check or by wire transfer of immediately available funds, in
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, at such address or to such
account, as applicable, as shall be designated to the Company by the holders of
the Notes.
(b) OPTIONAL PREPAYMENT. The Notes shall be subject to
prepayment, at the option of the Company, in whole or in part at any time and
from time to time. To exercise such right of prepayment, the Company must
provide the holders of the Notes with a written notice of any such prepayment at
least 10 Business Days, but not more than 25 Business Days, prior to the
proposed prepayment date, which notice shall specify the proposed prepayment
date (such date the "OPTIONAL PREPAYMENT DATE"). On the Optional Prepayment
Date, the Company shall be obligated to prepay the portion of the principal of
the Notes, on a pro rata basis, that the Company has specified is to be prepaid
on such date plus accrued and unpaid interest on such principal amount to the
date of the prepayment, in full. Any such prepayment shall be made by cashiers
check or by wire transfer of immediately available funds, in currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts, at such address or to such account, as applicable,
as shall be designated to the Company by the holders of the Notes. In addition,
the Company may terminate this Agreement at any time that no principal,
interest, or other amounts payable in respect of the Notes shall be outstanding
by providing the holders of the Notes written notice of such termination;
provided, however, that such termination shall not affect any Purchaser's
obligations pursuant to SECTION 9.13 hereof.
(c) APPORTIONMENT OF PREPAYMENTS. Partial prepayments
shall first be applied to accrued and unpaid interest, and then principal. Any
prepayment shall be allocated among the Notes so that the amount prepaid with
respect to the Notes is PRO RATA based upon the then aggregate outstanding
principal thereof.
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(d) PURCHASE OF NOTES. The Company immediately will
cancel all Notes acquired by the Company (whether pursuant to any payment,
prepayment, or purchase of Notes pursuant to any provision of this Agreement, or
otherwise), and no Notes may be issued in substitution or exchange for any such
Notes. If, the foregoing notwithstanding, the Company shall fail to cancel such
Notes then, such Notes shall be deemed not to be outstanding for any purpose
under this Agreement.
ARTICLE II
CONDITIONS TO THE PURCHASERS' OBLIGATION
2.1 ANY SECURITIES The obligation of any Purchaser to purchase and pay
for the Securities to be purchased by it is subject to the satisfaction of the
following conditions, each of which shall have been satisfied within 30 days of
the Closing:
2.1.1 REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties of the Company set forth in ARTICLE III hereof shall be true and
correct on the date of the Closing and as of the Funding Date.
2.1.2 DOCUMENTATION. The Purchasers shall have received all of the
following documents or instruments, or evidence of completion thereof, each in
full force and effect and otherwise in form and substance satisfactory to the
Purchasers and their counsel:
(a) this Agreement.
(b) the Notes.
(c) the Warrants.
(d) the Rights Agreement.
(e) the VCOC Letter.
(f) [intentionally omitted].
(g) the Subordination Agreement.
(h) the Acknowledgement.
(i) A copy of the Certificate of Incorporation of the
Company (the "CERTIFICATE OF INCORPORATION"), certified by the Secretary of
State of the State of Delaware, a copy of the resolutions of the Board of
Directors evidencing approval of this Agreement, the issuance of the Notes and
the Warrants and the other matters contemplated hereby, and a copy of the
By-laws of the Company, all of which shall have been certified by the Secretary
of the Company to be true, complete and correct copies thereof, and certified
copies of all
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documents evidencing other necessary corporate or other action and governmental
approvals obtained by the Company, if any, with respect to this Agreement and
the Securities.
(j) [intentionally omitted]
(k) The opinion of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP,
counsel to the Company, in the form of EXHIBIT 2.2(k) attached hereto.
(l) A certificate of the Secretary of the Company which
shall certify the names of the officers of the Company authorized to sign this
Agreement, the certificates for the Notes and the Warrants and the other
documents, instruments or certificates to be delivered pursuant to this
Agreement by the Company or any of its officers, together with the true
signatures of such officers. The Purchasers may conclusively rely on such
certificate until they shall receive a further certificate of the Secretary or
an Assistant Secretary of the Company canceling or amending the prior
certificate and submitting the signatures of the officers named in such further
certificate.
(m) A certificate of the President of the Company
stating that the representations and warranties of the Company contained in
ARTICLE III hereof and in the other Financing Documents are true and correct and
that all conditions required to be performed prior to or at the Closing have
been performed as of the Closing.
(n) Certificates of Good Standing for the Company from
the Secretaries of State of the state of Delaware and Georgia, and each other
jurisdiction in which the failure to be duly qualified or licensed would result
in a Material Adverse Effect upon the Company and its Subsidiaries, in each
case, dated within 10 days of the Closing.
(o) The purchase price of the securities shall be wired
transferred to a bank account established by the company and maintained by an
office of a bank located within the state of
California.
(p) The Company shall have paid all of the costs and
expenses identified in SECTION 9.4 to the extent invoices therefor have been
presented to the Company as of the Closing.
(q) The Purchasers shall have received such evidence as
the Purchasers shall require demonstrating that the Company shall have received
all licenses, approvals or evidence of other actions required by any
governmental authority in connection with the execution and delivery by the
Company of this Agreement or any of the other Financing Documents or with the
consummation of the transactions contemplated hereby and thereby.
2.1.3 CONSENTS, WAIVERS, ETC. Prior to the Closing, the Company
shall have obtained all consents, waivers, or amendments to existing transaction
documents, if any, that are necessary to execute and deliver this Agreement,
issue the Notes and the Warrants and to carry out the transactions contemplated
hereby and thereby. All such consents and waivers
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shall be in full force and effect. All corporate and other actions and
governmental filings necessary to effectuate the terms of this Agreement, the
Notes and the Warrants and other agreements and instruments executed and
delivered by the Company in connection herewith shall have been made or taken,
except for any post-sale filing that may be required under federal or state
securities laws. In addition to the documents set forth above, the Company shall
have provided to the Purchasers any other information or copies of documents
that they may reasonably request.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each of the Purchasers
as follows as of the date hereof and as of the Funding Date:
3.1 ORGANIZATION AND STANDING. The Company is a duly organized and
validly existing corporation in good standing under the corporate laws of the
State of Delaware and has all requisite corporate power and authority for the
ownership and operation of its properties and for the carrying on of its
business as now conducted or as now proposed to be conducted. The Company is
duly licensed or qualified and in good standing as a foreign corporation
authorized to do business in all jurisdictions wherein the character of the
property owned or leased, or the nature of the activities conducted, by it makes
such licensing or qualification necessary as set forth in EXHIBIT 3.1, except
where the failure to so qualify could not reasonably be expected to have a
material adverse effect on the business, operations, properties or condition of
the Company and its Subsidiaries taken as a whole, or which might call into
question the validity of this Agreement, any of the Securities, or any action
taken or to be taken pursuant hereto or thereto (a "MATERIAL ADVERSE EFFECT").
3.2 CORPORATE ACTION. The Company has all necessary corporate power and
has taken all corporate action required to enter into and perform this
Agreement, the Notes, the Warrants, the Rights Agreement, and any other
agreements and instruments executed in connection herewith (collectively, the
"FINANCING DOCUMENTS"). The Financing Documents are valid and binding
obligations of the Company, enforceable in accordance with their terms except to
the extent that the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (regardless of whether enforcement is sought by
proceedings in equity or at law). The issuance, sale and delivery of the
Securities in accordance with this Agreement and the issuance, sale and delivery
of the Warrant Shares have been duly authorized and reserved for issuance by all
necessary corporate action on the part of the Company. Sufficient authorized but
unissued shares of Common Stock have been reserved by appropriate corporate
action in connection with the prospective exercise of the Warrants, and the
issuance of the Securities is not, and the issuance of the Warrant Shares upon
the exercise of the Warrants will not be, subject to preemptive rights or other
preferential rights in any present stockholders of the Company and will not
conflict with any provision of any contract set forth on EXHIBIT 3.7.
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3.3 GOVERNMENTAL APPROVALS. Except for the filing of any notice
subsequent to the Closing that may be required under applicable state and/or
federal securities laws (which, if required, shall be filed on a timely basis
and a copy of which shall be provided to the Purchasers and their counsel), no
authorization, consent, approval, license, exemption of or filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, is or will be necessary
for the execution and delivery by the Company of this Agreement, for the offer,
issue, sale and delivery of the Securities and the Warrant Shares, or for the
performance by the Company of its obligations under any of the Financing
Documents.
3.4 LITIGATION. Except as set forth in EXHIBIT 3.4, there is no
litigation or governmental proceeding or investigation pending or, to the
knowledge of the Company, threatened against the Company affecting any of its
respective properties or assets, or against any officer or Key Employee relating
to such person's performance of duties for the Company. The Company is not in
default with respect to any order, writ, injunction, decree, ruling or decision
of any court, commission, board or other governmental agency specifically naming
the Company or an officer of the Company. Except as set forth in EXHIBIT 3.4,
there are no actions or proceedings pending or, to the knowledge of the Company,
threatened against the Company which could reasonably be expected to result,
either in any case or in the aggregate, in any Material Adverse Effect. The
foregoing sentences include, without limiting their generality, actions pending
or, to the knowledge of the Company, threatened, involving the prior employment
of any of the Company's officers or employees (including any Key Employees) or
their use in connection with the Company's business of any information or
techniques allegedly proprietary to any of their former employers.
3.5 CERTAIN AGREEMENTS OF OFFICERS AND KEY EMPLOYEES.
(a) To the knowledge of the Company, no officer or Key
Employee of the Company is in violation of any term of any employment contract,
patent disclosure agreement, proprietary information agreement, noncompetition
agreement, or any other contract or agreement or any restrictive covenant
relating to the employment of any such officer or Key Employee by the Company,
the nature of the business conducted or to be conducted by the Company or
relating to the use of trade secrets or proprietary or confidential information
of others. The Company has no reason to believe that the employment of the
Company's officers and Key Employees will subject the Company or any Purchaser
to any liability to third-parties. The Company has entered into Nonsolicitation
Agreements and Invention and Nondisclosure Agreements with each of its
employees.
(b) To the knowledge of the Company, no officer of the
Company nor any Key Employee of the Company whose termination, either
individually or in the aggregate, would have a Material Adverse Effect, has
expressed any present intention of terminating his employment with the Company.
3.6 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is in compliance in
all respects with the terms and provisions of this Agreement and of its
Certificate of
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Incorporation and By-laws, and in all material respects with the terms and
provisions of all contracts listed on EXHIBIT 3.7. The Company is in compliance
with (a) all judgments, decrees, or governmental orders by which it is bound or
to which any of its properties or assets are subject, and (b) all statutes,
rules or regulations by which it is bound or to which any of its properties or
assets are subject except to the extent where the failure to comply would not
have a Material Adverse Effect. Neither the execution and delivery of this
Agreement or the issuance of the Securities, nor the consummation of any
transaction contemplated by this Agreement, has constituted or resulted in or
will constitute or result in a default or violation of any term or provision of
any of the foregoing documents, instruments, judgments, agreements, decrees,
orders, statutes, rules and regulations.
3.7 MATERIAL CONTRACTS.
(a) Except as set forth on EXHIBIT 3.7, neither the
Company nor any of its properties or assets is a party to or bound by any (i)
contract not made in the ordinary course of business, or involving a commitment
or payment by the Company in excess of $50,000 or, in the Company's belief,
otherwise material to the business of the Company; (ii) contract among
stockholders or granting a right of first refusal or for a partnership or a
joint venture or for the acquisition, sale or lease of any assets or capital
stock of the Company or any other Person or involving a sharing of profits;
(iii) mortgage, pledge, conditional sales contract, security agreement,
factoring agreement or other similar contract with respect to any real or
tangible personal property of the Company; (iv) loan agreement, credit
agreement, promissory note, guarantee, subordination agreement, letter of credit
or any other similar type of contract; (v) contract with any governmental
agency; or (vi) binding commitment or agreement to enter into any of the
foregoing. The Company has delivered or otherwise made available to the
Purchasers true, correct and complete copies of the contracts listed on EXHIBIT
3.7 (except as noted thereon), together with all amendments, modifications,
supplements or side letters affecting the obligations of any party thereunder.
(b) (i) Each of the contracts listed on EXHIBIT 3.7 is
valid and enforceable in accordance with its terms (except to the extent that
the enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(regardless of whether enforcement is sought by proceedings in equity of at
law)), and there is no default under any contract listed on EXHIBIT 3.7 by the
Company or, to the knowledge of the Company, by any other party thereto, and no
event has occurred that with. the lapse of time or the giving of notice or both
would constitute a default thereunder except where such default, individually or
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect, and (ii) no previous or current party to any contract has given written
notice to the Company of or made a written claim with respect to any breach or
default thereunder and the Company has no knowledge of any notice of or claim
with respect to any such breach or default.
9
(c) With respect to the contracts listed on EXHIBIT 3.7
that were assigned to the Company by a third party, all necessary consents to
such assignment have been obtained.
3.8 ERISA. Except as set forth on EXHIBIT 3.8, neither the Company, nor
any of its Subsidiaries, maintains or contributes to, nor has any present
intention to establish, any employee pension benefit plans for its employees
that would be subject to ERISA.
3.9 TRANSACTIONS WITH AFFILIATES. Except as set forth on EXHIBIT 3.9, as
contemplated hereby or consented to by the Purchasers in accordance with this
Agreement, there are no loans, leases, royalty agreements or other continuing
transactions in excess of $50,000 or, in the Company's judgment, otherwise
material to the operations of the Company, between any officer, employee or
director of the Company or any Person owning 5% or more of any class of capital
stock of the Company, officer, employee, director or stockholder or any
corporation or other entity controlled by such officer, employee, director or
stockholder or a member of the immediate family of such officer, employee,
director or stockholder.
3.10 ASSUMPTIONS OR GUARANTIES OF INDEBTEDNESS OF OTHER PERSONS. The
Company has not assumed, guaranteed, endorsed or otherwise become directly or
contingently liable on (including, without limitation, liability by way of
agreement, contingent or otherwise, to purchase, to provide funds for payment,
to supply funds to or otherwise invest in the debtor or otherwise to assure the
creditor against loss), any indebtedness of any other Person.
3.11 INVESTMENTS IN OTHER PERSONS. Except as set forth on EXHIBIT 3.11,
the Company has not made any loan or advance to any Person in excess of $50,000
or, in the Company's judgment, otherwise material to the operations of the
Company, which is outstanding on the date of this Agreement, nor is it committed
or obligated to make any such loan or advance, nor does the Company own any
capital stock, assets comprising the business of, obligations of, or any
interest in, any Person except as disclosed in this Agreement. The Company's
total Investment in its Subsidiaries, taken as a whole, does not exceed
$45,000,000.
3.12 SECURITIES LAWS. Except for the filing of any notice subsequent to
the Closing that may be required under applicable state and/or federal
securities laws, the Company has complied with all applicable federal and state
securities laws in connection with the offer, issuance and sale of the
Securities. Prior to the Closing, neither the Company, nor any of its
Subsidiaries, nor anyone acting on its behalf has sold, offered to sell or
solicited offers to buy the Securities or similar securities to, or solicit
offers with respect thereto from, or entered into any preliminary conversations
or negotiations relating thereto with, any Person, so as to bring the issuance
and sale of the Securities under the registration provisions of the Securities
Act and applicable state securities laws.
3.13 DISCLOSURE. Neither this Agreement nor any other agreement,
document, certificate or written statement furnished to the Purchasers or their
counsel by or on behalf of the Company in connection with the transactions
contemplated hereby contains any untrue
10
statement of a material fact or omits to state a material fact relating directly
to the Company necessary in order to make the statements contained herein or
therein not misleading. There is no fact within the Knowledge of the Company (as
hereinafter defined) which has not been disclosed herein or in writing to the
Purchasers and which taken by itself would constitute a circumstance having a
Material Adverse Effect. As used herein, "Knowledge of the Company" shall mean
the actual knowledge of the Persons set forth on EXHIBIT 3.13.
3.14 BROKERS OR FINDERS. Except as set forth on EXHIBIT 3.14, no Person
has or will have, as a result of the transactions contemplated by this
Agreement, any right, interest or valid claim against or upon the Company for
any commission, fee or other compensation as a finder or broker because of any
act or omission by the Company or any of their respective agents.
3.15 CAPITALIZATION; STATUS OF CAPITAL STOCK. (a) Set forth on EXHIBIT
3.15, is a complete and accurate description of the authorized capital stock of
the Company, by class, and as of the Closing, a description of the number of
shares of each such class that are issued and outstanding. All the outstanding
shares of capital stock of the Company have been duly authorized, and are
validly issued, fully paid and non-assessable. The Warrant Shares, when issued
and delivered in accordance with the terms hereof and after payment of the
purchase price therefor, will be duly authorized, validly issued, fully-paid and
non-assessable.
(b) Set forth on EXHIBIT 3.15 is a complete and accurate list of
the Company's direct and indirect Subsidiaries showing: (i) the jurisdiction of
their formation; (ii) the number of shares of each class of common and preferred
stock authorized for each of such Subsidiaries; and (iii) the number and the
percentage of the outstanding shares of each such class owned directly or
indirectly by the Company. All of the issued and outstanding capital stock of
each such Subsidiary has been validly issued and is fully paid and
non-assessable.
(c) Except as otherwise set forth in EXHIBIT 3.15, no options,
warrants, subscriptions or purchase rights of any nature to acquire from the
Company, or from any of its Subsidiaries, shares of capital stock or other
securities are authorized, issued or outstanding, nor is the Company or any of
its Subsidiaries obligated in any other manner to issue shares of its capital
stock or other securities except as contemplated by this Agreement.
(d) Except as set forth in EXHIBIT 3.15, there are no
restrictions on the transfer of shares of capital stock of the Company other
than those imposed by relevant federal and state securities laws and as
otherwise contemplated by this Agreement, the Certificate of Incorporation, the
Stockholders Agreement, the Second Series E Convertible Preferred Stock Purchase
Agreement, dated as of June 22, 2000, as amended, by and between the Company and
the Purchasers (as defined therein) listed on the signature pages thereto (the
"SECOND SERIES E PREFERRED STOCK PURCHASE AGREEMENT"), lock up agreements by and
between certain shareholders of the Company and the underwriters of the
Company's planned Qualifying Public Offering, and the Rights Agreement. Other
than as provided in this Section, there are no agreements, understandings,
trusts or other collaborative
11
arrangements or understandings concerning the voting of the capital stock of the
Company. The offer and sale of all capital stock and other securities of the
Company issued before the Closing complied with or were exempt from all
applicable federal and state securities laws and no stockholder has a right of
rescission with respect thereto.
3.16 REGISTRATION RIGHTS. Except as set forth in EXHIBIT 3.16 and except
for the rights granted to the Purchasers and certain other parties pursuant to
the Rights Agreement, no Person has demand or other rights to cause the Company
or any of its Subsidiaries to file any registration statement under the
Securities Act relating to any securities of the Company or any securities of
its Subsidiaries, or any right to participate in any such registration
statement.
3.17 BOOKS AND RECORDS. The books of account, ledgers, order books,
records and documents of the Company and each of its Subsidiaries accurately and
completely reflect in all material respects all material information relating to
the business of the Company and its Subsidiaries, the location and collection of
its assets, and the nature of all transactions giving rise to the obligations or
accounts receivable of the Company or its Subsidiaries.
3.18 TITLE TO ASSETS; INTELLECTUAL PROPERTY.
(a) The Company and each of its Subsidiaries has good
and marketable title in fee to such of its fixed assets, if any, as are real
property, and good and marketable title to all of its other assets and
properties, free of any Liens other than Permitted Liens. The Company and each
of its Subsidiaries enjoys peaceful and undisturbed possession under all leases
under which it is operating, and all said leases are valid and subsisting and in
full force and effect.
(b) The Company does not know of any claim, previously
asserted, pending, or threatened against the Company or any of its Subsidiaries
("CLAIM") that would interfere with, or adversely impact upon, the Company's or
its Subsidiaries' unencumbered right to use, make, sell, license, distribute,
promote, apply, develop and make derivative works of ("USE"), the patents,
patent rights, permits, licenses, trade secrets, trademarks (registered or
unregistered), trademark rights, trade names, trade name rights, franchises,
copyrights (registered or unregistered), inventions (regardless of whether
patentable or not), software, confidential information, innovations and other
intellectual property rights being used to conduct their business as now
operated and as now proposed to be operated, or in the development, manufacture,
use, distribution or licensing of the Company's or its Subsidiaries' proprietary
technology, information, products, processes, or services (collectively, the
"INTELLECTUAL PROPERTY RIGHTS") (a list of all material patents, trademarks,
trade names, permits, and licenses in Use by the Company and its Subsidiaries is
attached hereto as EXHIBIT 3.18(b)); and the Company does not have any reason to
believe that the Use of the Intellectual Property Rights infringes, conflicts or
will conflict with valid rights of any other Person. No claim is known by the
Company to be pending or threatened to the effect that, and the Company has no
reason to believe that, any such Intellectual Property Right is invalid or
unenforceable by the Company, any of its Subsidiaries, or its licensor. Except
as
12
set forth in EXHIBIT 3.18(c), neither the Company nor any of its Subsidiaries
has any obligation to compensate any Person for the use of any such Intellectual
Property Rights, and except in the ordinary course of business or as set forth
in EXHIBIT 3.18(c), neither the Company nor any of its Subsidiaries has granted
any Person any license or other rights to use in any manner any of the
Intellectual Property Rights of the Company or any Subsidiary thereof, whether
requiring the payment of royalties or not.
3.19 PAYMENT OF TAXES. Except to the extent permitted by SECTION 4.1(a)
hereof and except as set forth on EXHIBIT 3.19 attached hereto, (a) all tax
returns and reports of the Company and its Subsidiaries required to be filed by
them have been duly and timely filed, and (b) all taxes, assessments, fees, and
other governmental charges upon the Company or its Subsidiaries, or upon their
respective assets, income, and franchises that are due and payable have been
paid when due and payable. There is no actual or, to the Company's knowledge,
proposed tax assessment against the Company or its Subsidiaries that, in any of
the foregoing cases either individually or in the aggregate, has had or
reasonably could be expected to have a Material Adverse Effect.
3.20 FINANCIAL STATEMENTS. Attached hereto as EXHIBIT 3.20(a) are copies
of the audited balance sheet of the Company as of December 31, 1999, the
statements of income and retained earnings of the Company for the period then
ended, and the statements of cash flows of the Company for the period then ended
(the "AUDITED FINANCIALS"). Attached hereto as EXHIBIT 3.20(b) are copies of the
unaudited balance sheet of the Company as of September 30, 2000, the statements
of income and retained earnings of the Company for the period then ended, and
the statements of cash flows of the Company for the period then ended (the
"Unaudited Financials", and together with the Audited Financials, the "FINANCIAL
STATEMENTS"). Each of the Financial Statements was prepared in good faith, is
complete and correct in all material respects, has been prepared in accordance
with GAAP (subject to normal year-end audit adjustments and, the case of the
Unaudited Financials, the absence of footnotes) and in conformity with the
practices consistently applied by the Company and presents fairly, in all
material respects, the financial position, results of operations and cash flows
of the Company, as of the dates and for the periods indicated.
3.21 NO UNDISCLOSED LIABILITIES. Except as set forth on EXHIBIT 3.21 or
in the Financial Statements and except for such liabilities or obligations
incurred by the Company in the ordinary course of business consistent with past
practice since the date of the Unaudited Financials, the Company does not have
any material liabilities or obligations (whether absolute or contingent,
liquidated or unliquidated or due or to become due).
3.22 TECHNOLOGY. Except as set forth in EXHIBIT 3.22, the products,
processes, proprietary technology, and other proprietary know-how owned or used
by the Company and its Subsidiaries were completely developed by the Company's,
its Subsidiaries', or their respective predecessors-in-interest's full-time
employees only (or independent contractors or consultants who have entered into
an appropriate assignment thereof); the concepts, inventions and original works
of authorship owned or used by the Company, or its Subsidiary, were developed or
conceived by such employees, contractors, or consultants
13
within the scope of their employment or engagement, as the case may be, by the
Company, a Subsidiary of the Company, or a predecessor-in-interest of the
Company or a Subsidiary and are connected with the Company's, or its
Subsidiaries', underlying products, processes and proprietary technology.
3.23 INDEBTEDNESS. Set forth on EXHIBIT 3.23 is a true and complete list
of all indebtedness of the Company (including all Deferred Acquisition
Obligations) outstanding immediately prior to the Closing that is to remain
outstanding after the Closing and such Schedule accurately reflects the
aggregate principal amount of such indebtedness and the principal terms thereof.
The aggregate principal amount of all Deferred Acquisition Obligations does not
exceed $3,500,000.
3.24 PRIVATE OFFERING.
(a) Assuming the truth and correctness of the
representations and warranties set forth in SECTION 1.6, the sale of the
Securities hereunder is exempt from the registration and prospectus delivery
requirements of the Securities Act. In the case of each offer or sale of the
Securities, no form of general solicitation or general advertising was used by
any of Company or any of its Subsidiaries or their respective representatives,
including, but not limited to, advertisements, articles, notices or other
communications published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.
(b) The Purchasers are the sole purchasers of the
Securities. Except as set forth on SCHEDULE 3.24, no securities have been issued
and sold by the Company within the six-month period immediately prior to the
date hereof.
ARTICLE IV
COVENANTS OF THE COMPANY
4.1 AFFIRMATIVE COVENANTS OF THE COMPANY OTHER THAN REPORTING
REQUIREMENTS. Without limiting any other covenants and provisions hereof, the
Company covenants and agrees that until the outstanding principal amount of the
Notes (together with all interest thereon) shall have been repaid in full, it
will perform and observe the following covenants and provisions, and will cause
each Subsidiary, if and when such Subsidiary exists, to perform and observe such
of the following covenants and provisions as are applicable to such Subsidiary:
(a) PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION. Duly
and timely file all tax returns and reports required to be filed in compliance
with all applicable laws, regulations, rules, and procedures and pay all taxes,
assessments, and other governmental charges imposed upon the Company or any of
its Subsidiaries or any of the assets of the Company or any of its Subsidiaries
or in respect of any franchises, business, income, or assets of the Company or
any of its Subsidiaries before any penalty or interest
14
accrues thereon, and all claims (including claims for labor, services,
materials, and supplies) that have become due and payable and that by law have
or may become a Lien (other than Permitted Liens) upon any of such assets, prior
to the time when any material penalty or fine shall be incurred with respect
thereto except where the failure to so file or pay such taxes, assessments, or
other governmental charges could nor reasonably expected to have a Material
Adverse Effect; PROVIDED, HOWEVER, that no such charge, claim, or Lien need be
paid if it is being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted and if such reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have been
made therefor.
(b) MAINTENANCE OF INSURANCE. At its expense and for so
long as the Notes, the Warrants, or the Warrant Shares remain outstanding, the
Company shall maintain with a reputable insurance company or association
insurance in such amounts and covering its properties and assets and such risks
as ordinarily are insured against by other persons engaged in the same or
similar businesses and owning similar properties in the same general areas in
which the Company or any Subsidiary operates for the type and scope of its
properties and businesses.
(c) PRESERVATION OF CORPORATE EXISTENCE. Preserve and
maintain, and, unless the Company deems it not to be in its best interests,
cause each Subsidiary to preserve and maintain, its corporate existence, rights,
franchises and privileges in the jurisdiction of its incorporation, and qualify
and remain qualified, and cause each Subsidiary to qualify and remain qualified,
as a foreign corporation in each jurisdiction in which such qualification is
necessary or desirable in view of its business and operations or the ownership
or lease of its properties, except where the failure to be so qualified could
not reasonably be expected to have a Material Adverse Effect. Use commercially
reasonable efforts to secure, preserve and maintain, and cause each Subsidiary
to use commercially reasonable efforts to secure, preserve and maintain, all
licenses and other rights to use patents, processes, licenses, permits,
trademarks, trade names, inventions, intellectual property rights or copyrights,
owned or possessed by it and deemed by the Company to be material to the conduct
of its business or the business of any Subsidiary.
(d) COMPLIANCE WITH LAWS. Comply, and cause all
Subsidiaries to comply, with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority, where noncompliance could
reasonably be expected to have a Material Adverse Effect.
(e) MAINTENANCE OF PROPERTIES; MATERIAL ASSETS. Use
commercially reasonable efforts to maintain and preserve, and cause each
Subsidiary to use commercially reasonable efforts to maintain and preserve, all
of its properties and assets in good repair, working order and condition,
ordinary wear and tear excepted, including, without limitation, the maintenance
and preservation of any material patents, trademarks, copyrights, licenses,
permits or agreements being used by the Company, or any of its Subsidiaries, in
its business as now operated and as now proposed to be operated.
15
(f) NOTICE OF CHANGE OF CONTROL OR ACQUISITION; REQUIRED
PREPAYMENT UPON CHANGE OF CONTROL OR ACQUISITION. Deliver written notice to the
Purchasers no later than 20 days prior to the consummation of a pending (i)
Change of Control, or (ii) Acquisition. At the option of the Majority Holders,
by written notice thereof delivered to the Company no later than 10 days prior
to either a Change of Control or an Acquisition that does not otherwise qualify
as a Permitted Acquisition (such event, a "TRIGGERING EVENT"), the Company shall
prepay in cash in full all principal then outstanding under the Notes
concurrently with the consummation of any such Triggering Event, together with
(i) accrued and unpaid interest thereon to the prepayment date, and (ii) any or
all other amounts payable to the holders of the Notes under or in respect of the
Notes.
(g) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Keep, and
cause each Subsidiary to keep, adequate records and books of account in which
complete entries will be made in accordance with GAAP consistently applied,
reflecting all financial transactions of the Company and any Subsidiary, and in
which, for each fiscal year, all proper reserves for depreciation, depletion,
returns of merchandise, obsolescence, amortization, taxes, bad debts and other
purposes in connection with its business shall be made.
(h) ATTENDANCE AT BOARD MEETING.
(i) CONSULTATION RIGHTS. Permit a designee of
WestBridge to (i) discuss the business operations, properties and financial and
other conditions of the Company with any authorized officer, employee, agent,
representative, director or independent accountant of the Company, (ii) submit
proposals or suggestions to the Company's management from time to time with the
requirement that the management of the Company shall discuss such proposals with
the WestBridge designee within a reasonable period after such suggestion, and
(iii) to call a meeting with the management of the Company at reasonable times
and on reasonable notice to discuss such proposals or suggestions.
(ii) BOARD OBSERVATION RIGHTS. Permit WestBridge
to have one representative present (whether in person or by telephone) in an
observer capacity at all meetings of the Board of Directors of the Company. The
Company shall send to each such representative all of the notices, information
and other materials that are distributed to the directors of the Company and
shall provide the WestBridge representative with a notice and agenda of each
meeting of the Board of Directors of the Company all at the same time and in the
same manner as such notices, agenda, information and other materials are
provided to the members of the Board of Directors of the Company; provided,
however, that upon the request of any such representative, the Company shall
refrain from sending such notices, information and other materials to such
representative for so long as such WestBridge representative shall request.
WestBridge shall provide notice to the Company of the identity and address of,
or any change with respect to the identity or address of, such representative.
(iii) EXCEPTIONS. The consultation and board
visitation rights set forth in SECTIONS 4.1 (h)(i) and (h)(ii) above
notwithstanding, Westbridge shall not be
16
entitled to attend any portion of any meeting, or receive any information or
other materials distributed to the Board of Directors, if the Board of Directors
determines upon advice of counsel that such exclusion is necessary to preserve
the attorney-client privilege or to protect highly confidential proprietary
information.
4.2 NEGATIVE COVENANTS OF THE COMPANY. Without limiting any other
covenants and provisions hereof, the Company covenants and agrees that until the
outstanding principal amount of the Notes (together with all interest thereon)
shall have been repaid in full, it will comply with and observe the following
covenants and provisions, and will cause each Subsidiary, if and when such
Subsidiary exists, to comply with and observe such of the following covenants
and provisions as are applicable to such Subsidiary, and will not:
(a) LIMITATION ON INDEBTEDNESS. At any time permit
(i) the aggregate amount of Indebtedness for Borrowed
Money (exclusive of Senior Indebtedness, Deferred
Acquisition Obligations, and all indebtedness in respect of
the Notes) to exceed $5,000,000 at any one time outstanding,
(ii) the aggregate amount of Senior Indebtedness to
exceed $5,100,000 at any one time outstanding, or
(iii) the aggregate amount of Deferred Acquisition
Obligations to exceed $3,500,000 at any one time
outstanding.
(b) DISTRIBUTIONS. Declare or pay any dividends,
purchase, repurchase, redeem, retire, or otherwise acquire for value any of its
capital stock (or rights, options or warrants to purchase such shares) now or
hereafter outstanding, return any capital to its stockholders as such, or make
any distribution of assets to its stockholders as such, and will not make any
payment in cash, securities or other property or purchase on or in respect of,
or repurchase, redeem, retire or otherwise acquire for value, any indebtedness
of the Company that is subordinated by its express terms in right of payment to
the Notes, or permit any Subsidiary to do any of the foregoing (such
transactions being hereinafter referred to as "DISTRIBUTIONS"), except that any
such Subsidiary may declare and make payment of cash and stock dividends, return
capital and make distributions of assets to the Company, and EXCEPT as
specifically provided for in the Company's Certificate of Incorporation or if
such dividend, purchase, repurchase, redemption, retirement or other acquisition
for value is solely in the form of capital stock (or rights, options or warrants
to purchase such shares) of the Company; PROVIDED, HOWEVER, that nothing herein
contained shall prevent the Company from:
(i) effecting a stock split or declaring or
paying any dividend consisting of shares of any class of capital stock to
the holders of shares of such class of capital stock, or
17
(ii) redeeming any stock of a deceased stockholder
out of insurance held by the Company on that stockholder's life, or
(iii) repurchasing the shares of Common Stock at
the original cost thereof held by officers, employees, directors or
consultants of the Company which are subject to restrictive stock purchase
agreements under which the Company has the option, to repurchase such
shares upon the occurrence of certain events, including the termination of
employment,
if in the case of any such transaction the payment can be made in compliance
with the other terms of this Agreement.
(c) DEALINGS WITH AFFILIATES AND OTHERS. Other than as
contemplated by this Agreement, and other than transactions in the ordinary
course of business involving less than $50,000, enter into any transaction,
including, without limitation, any loans or extensions of credit or royalty
agreements, with any officer or director of the Company or any Subsidiary or
holder of any class of capital stock of the Company, or any member of their
respective immediate families or any corporation or other entity directly or
indirectly affiliated with one or more of such officers, directors or
stockholders or members of their immediate families unless such transaction is
approved in advance by a majority of disinterested members of the Board of
Directors, or absent such Board of Directors approval, by the Majority Holders.
(d) MERGER, CONSOLIDATION; ETC. Except for Permitted
Transactions, consolidate with or merge with or into any other entity or sell,
convey, transfer or lease all or substantially all of its assets in a single
transaction or a series of related transactions to any Person.
(e) LIMITATION ON LIENS. Directly or indirectly create,
incur, assume or suffer to exist any Lien on or with respect to any of its
assets, of any kind, whether now owned or hereafter acquired, or any income or
profits therefrom, except for Permitted Liens.
(f) ACQUISITIONS. Except for Permitted Acquisitions,
consummate any Acquisition.
(g) ERISA. Establish any defined benefit plans for its
employees that would be subject to ERISA.
(h) CONDUCT OF BUSINESS. Engage in any business other
than the business currently conducted by them as of the Closing and other lines
of business reasonably incidental or related thereto.
(i) UPSTREAM LIMITATIONS. Enter into any agreement,
contract, or arrangement restricting the ability of any Subsidiary of Company to
pay or make dividends or distributions in cash or kind, to make loans, advances,
or other payments of whatsoever
18
nature or to make transfers or distributions of all or any part of its
properties or assets to Company or to any Subsidiary of the Company.
(j) LAYERED DEBT. The Company will not create, assume,
incur, guarantee or suffer to exist any indebtedness, other than indebtedness
evidenced by the Notes, that is subordinate by its terms in right of payment to
the Senior Indebtedness unless such indebtedness, by its terms or the terms of
the instrument creating or evidencing it, is PARI PASSU with the Notes or
subordinate in right of payment to the Notes pursuant to subordination
provisions substantially similar to those contained in the Notes.
(k) RESTRICTED PAYMENTS. Make payments on, or purchase,
repurchase, redeem, retire or otherwise acquire for value, Indebtedness for
Borrowed Money that, by the express terms governing its repayment, is junior to,
or PARI PASSU with, the Notes, without making a simultaneous payment, purchase,
repurchase, redemption, retirement or other acquisition for value to the holder
of the Notes in an amount which is in the same proportion to the unpaid balance
of the Notes as the amount of the payment, purchase, repurchase, redemption,
retirement or other acquisition for value bears to the unpaid principal amount
of such Indebtedness for Borrowed Money.
(l) INVESTMENTS IN SUBSIDIARIES. Except for Permitted
Subsidiary Investments, make or acquire any Investment in its Subsidiaries.
(m) LIMITATION ON SALE OF ASSETS. Except for the sale of
inventory in the ordinary course of business and the disposition of obsolete
assets that are no longer used or useful in current or planned business
operation of the Company, sell or otherwise dispose of any assets.
(n) DIVIDENDS ON PREFERRED STOCK. Permit any certificate
of designation of the Company with respect to Disqualified Stock to provide that
dividends shall be paid or accrued unless such dividends are otherwise permitted
to be paid or accrued pursuant to this Agreement.
(o) STAY, EXTENSION AND USURY LAWS. At any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, and will use all reasonable efforts to resist any attempts to claim or take
the benefit of, any stay, extension or usury law wherever enacted, now or at any
time hereafter in force, which may affect the covenants or the performance of
its obligations under this Agreement, the Notes or the Common Stock (in each
case, to the extent the Company may lawfully so agree), and the Company (to the
extent it may lawfully do so) hereby expressly waives all benefit or advantage
of any such law, and covenants that it will not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the holders
of the Notes, but will suffer and permit the execution of every such power as
though no such law has been enacted.
4.3 REPORTING REQUIREMENTS. The Company will furnish the following to
each Purchaser who holds Notes with at least $1,000,000 in principal amount
outstanding in the
19
aggregate; provided, however, that following the consummation of a Qualifying
Public Offering, none of the following statements, reports, or documents shall
be delivered to any such Purchaser unless and until such Purchaser has delivered
to the Company a non-disclosure agreement and an agreement not to trade on the
disclosed information, in each case, in form and substance reasonably acceptable
to the Company:
(a) MONTHLY REPORTS. as soon as practicable after the
end of the first and second monthly accounting periods in each fiscal quarter of
the Company and in any event within 30 days thereafter, an unaudited
consolidated balance sheet of the Company and its Subsidiaries, if any, as of
the end of each such monthly period, and unaudited consolidated statements of
income and consolidated statements of cash flows of the Company and its
Subsidiaries for such period, prepared in accordance with GAAP, all in
reasonable detail and signed, subject to changes resulting from year-end audit
adjustments, by the principal financial or accounting officer of the Company;
PROVIDED, HOWEVER, that upon the request of a Purchaser, the Company shall
refrain from sending to such Purchaser any of the financial statements described
in this SECTION 4.3(a) for so long as such Purchaser shall request;
(b) QUARTERLY REPORTS. as soon as practicable after the
end of the first, second and third quarterly accounting periods in each fiscal
year of the Company and in any event within 45 days thereafter, an unaudited
consolidated balance sheet of the Company and its Subsidiaries, if any, as of
the end of each such quarterly period, and unaudited consolidated statements of
income and consolidated statements of cash flows of the Company and its
Subsidiaries for such period, prepared in accordance with GAAP, all in
reasonable detail and signed, subject to changes resulting from year-end audit
adjustments, by the principal financial or accounting officer of the Company;
PROVIDED, HOWEVER, that upon the request of a Purchaser, the Company shall
refrain from sending to such Purchaser any of the financial statements described
in this SECTION 4.3(b) for so long as such Purchaser shall request;
(c) ANNUAL REPORTS. as soon as practicable after the end
of each fiscal year, and in any event within 90 days thereafter, consolidated
balance sheets of the Company and its Subsidiaries, if any, as of the end of
such fiscal year, and consolidated statements of income and consolidated
statements of cash flows of the Company and its Subsidiaries for such fiscal
year, prepared in accordance with GAAP and setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable
detail and audited by the Company's independent public accountants who shall be
a nationally recognized firm; PROVIDED, HOWEVER, that upon the request of a
Purchaser, the Company shall refrain from sending to such Purchaser any of the
financial statements described in this SECTION 4.3(c) for so long as such
Purchaser shall request;
(d) STOCKHOLDERS' AND COMMISSION REPORTS. promptly upon
sending, making available, or filing the same, such reports and financial
statements as the Company or any Subsidiary shall (i) file with the Commission,
or (ii) send or make available to one or more to the holders of any equity
interests in the Company; and
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(e) ANNUAL BUDGETS. as soon as available, but in any
event not later than 30 days prior to the end of any fiscal year, a copy of the
Company's and its Subsidiaries' annual budget for the forthcoming fiscal year,
month by month, including balance sheets and sources and applications of funds
statements and, as soon as prepared, any other budgets or revised budgets
prepared by the Company; PROVIDED, HOWEVER, that upon the request of a
Purchaser, the Company shall refrain from sending to such Purchaser any of the
financial statements described in this SECTION 4.3(e) for so long as such
Purchaser shall request.
ARTICLE V
REMEDIES ON DEFAULT
5.1 ACCELERATION.
(a) If an Event of Default with respect to the Company
described in PARAGRAPH (a), (f) OR (g) of the definition of Event of Default in
SECTION 6.1 of this Agreement has occurred, all the Notes then outstanding shall
automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is
continuing, the Majority Holders may at any time at their option, by notice or
notices to the Company, declare all the Notes then outstanding to be immediately
due and payable.
Upon any Notes becoming due and payable under this SECTION 5.1,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus all accrued and unpaid
interest thereon (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived.
If any Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under this SECTION 5.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.
5.2 NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC. No course of
dealing and no delay on the part of any holder of any Note in exercising any
right, power or remedy shall operate as a waiver thereof or otherwise prejudice
such holder's rights, powers or remedies. No right, power or remedy conferred by
this Agreement or by any Note upon any holder thereof shall be exclusive of any
other right, power or remedy referred to herein or therein or now or hereafter
available at law, in equity, by statute or otherwise. The Company will pay to
the holder of each Note on demand such further amount as shall be sufficient to
cover all
21
reasonable costs and expenses of such holder incurred in any enforcement or
collection under this ARTICLE V, including, without limitation, reasonable
attorneys fees, expenses and disbursements.
ARTICLE VI
DEFINITIONS AND ACCOUNTING TERMS
6.1 CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"ACKNOWLEDGEMENT" means an acknowledgement and agreement to be
bound, in form and substance satisfactory to the Purchasers, executed and
delivered by Viewlocity AB in favor of the Purchasers.
"ACQUISITION" means any purchase by the Company of any Person or all
or substantially all of the assets of any other Person.
"AFFILIATE" means, with respect to any Person, another Person that
directly or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified; PROVIDED,
HOWEVER, that no Purchaser shall be deemed not to be an Affiliate of Company or
any of its Affiliates.
"AGREEMENT" means this
Securities Purchase Agreement as from time to
time amended and in effect between the parties, including all Exhibits hereto.
"BOARD OF DIRECTORS" means the board of directors of the Company as
constituted from time to time.
"BUSINESS DAY" means any day other than a Saturday, Sunday, or any
day that either is a legal holiday under the laws of the State of
California or
is a day on which banking institutions located in such State are authorized or
required by law or other governmental action to close.
"CAPITAL LEASE" means leases required to be capitalized in
accordance with applicable Statements of Financial Accounting Standards,
determined by discounting all such payments at the interest rate determined in
accordance with applicable Statements of Financial Accounting Standards.
"CHANGE OF CONTROL" shall mean (a) any merger or consolidation which
results in the voting securities of the Company outstanding immediately prior
thereto representing immediately thereafter (either by remaining outstanding or
by being converted into voting securities of the surviving or acquiring entity)
less than 50% of the combined voting power of the voting securities of the
Company or such surviving or acquiring entity outstanding immediately after such
merger or consolidation; (b) the acquisition by an individual, entity or
22
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (for purposes of this
definition, a "Person") of beneficial ownership of any capital stock of the
Company if, after such acquisition, such Person beneficially owns (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) 50% or more of either
(i) the then outstanding shares of Common Stock of the Company (the "Outstanding
Company Common Stock") or (ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); PROVIDED, HOWEVER, that
for purposes of this subsection (b), the following acquisitions shall not
constitute a Change of Control: (i) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company or (ii) any acquisition by any corporation pursuant to
a transaction which results in all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior to such transaction
beneficially owning, directly or indirectly, more than 50% of the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, respectively, of the resulting or acquiring corporation in such
transaction (which shall include, without limitation, a corporation which as a
result of such transaction owns all or substantially all of the Company's assets
either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such transaction, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
respectively; (c) any sale of all or substantially all of the assets of the
Company; or (d) the complete liquidation of the Company.
"CLOSING" shall have the meaning attributable to it in SECTION 1.4
of this Agreement.
"COMMISSION" means the Securities and Exchange Commission (or any
other federal agency administering the securities laws).
"COMMON STOCK" means the Company's common stock, par value $.01.
"COMPANY" means Viewlocity, Inc., a Delaware corporation, and its
successors and assigns.
"CONSOLIDATED" and "CONSOLIDATING" when used with reference to any
term defined herein mean that term as applied to the accounts of the Company and
its Subsidiaries consolidated in accordance with GAAP.
"CONTROL" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "Controlling" and "Controlled" have meanings correlative thereto.
23
"DEFERRED ACQUISITION OBLIGATIONS" means deferred payment
obligations owing to any Person in connection with an Acquisition consummated on
or before the Closing.
"DISQUALIFIED STOCK" means any capital stock of the Company which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the sole option of the holder thereof, in whole or in part, on
or prior to the Maturity Date.
"ENVIRONMENTAL CLAIM" means any claim, action, cause of action,
investigation of which the Company, including any of its employees, is aware, or
notice (written or oral) by any Person alleging potential liability (including,
without limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, or penalties) arising out of, based on or resulting from (a)
the presence, or release into the environment, of any Material of Environmental
Concern at any location, regardless of whether owned or operated by the Company,
or (b) circumstances forming the basis of any violation, or alleged violation,
of any Environmental Law.
"ENVIRONMENTAL LAWS" means all Federal, state, local and foreign
laws and regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), including, without limitation, laws
and regulations relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern.
"EQUITY VALUE" means (a) if the Company's stock is listed or
admitted to trading on a national securities exchange, the Company's market
capitalization as of the date of determination, and (b) at all other times, the
Company's valuation as of the closing of the immediately preceding preferred
stock financing round.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
An "EVENT OF DEFAULT" shall exist if any of the following conditions
or events shall occur and be continuing:
(a) the Company defaults in the payment of any amounts due under any
one or more of the Notes when due;
(b) the Company or any Subsidiary defaults in observance of any
covenants contained in SECTIONS 4.1 (other than SECTION 4.1(f)) or 4.3 which
continues unremedied 20 days after written notice thereof is sent to the Company
or the Company or any Subsidiary
24
defaults in observance of any covenants contained in this Agreement or any of
the other Financing Documents (other than a covenant that is dealt with
elsewhere in this definition);
(c) the Company or any Subsidiary defaults (after any applicable
grace period) in the payment of any principal or interest or any other amount in
respect of (i) Indebtedness for Borrowed Money (other than the Notes) of the
Company with an aggregate amount outstanding in excess of $250,000, the effect
of which default is (A) to cause or permit the holder or holders of such
indebtedness, irrespective of whether exercised, to accelerate the maturity of
the obligations thereunder, or (B) to cause the termination of the agreement or
instrument evidencing such Indebtedness for Borrowed Money;
(d) a final judgment or final order of a court of competent
jurisdiction for the payment of money aggregating in excess of $50,000 (in
excess of the amount covered by insurance) is rendered against the Company or
its Subsidiary which judgment or order remains uncontested, unappealed, unpaid,
unstayed for a period of 45 days;
(e) any representation or warranty in this Agreement or in any
certificate, financial statement or other document delivered pursuant to this
Agreement shall prove to have been incorrect in any material respect when made
where such failure to be correct has a Material Adverse Effect;
(f) the Company or any Subsidiary shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing; or
(g) an involuntary case or other proceeding shall be commenced
against the Company or any Subsidiary seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60 days; or an order for
relief shall be entered against the Company or any Subsidiary under the federal
bankruptcy laws as now or hereafter in effect.
"FINANCING DOCUMENTS" shall have the meaning set forth in SECTION
3.2.
"FUNDING DATE" means the date on which the Securities shall be
purchased by Purchasers.
25
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.
"INDEBTEDNESS FOR BORROWED MONEY" means with respect to any Person
(a) all obligations, contingent and otherwise, for borrowed money, (b) all
guaranties, endorsements and other contingent obligations, in respect of
Indebtedness for Borrowed Money of other Persons, whether or not the same are or
should be so reflected in said balance sheet of such Person (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business and (c)
the present value of any lease payments due by such Person under Capital Leases.
"INVESTMENT" means, with respect to any Person, any investment by
such Person in any other Person (including affiliates) in the form of loans,
guarantees, advances, or capital contributions, purchases or other acquisitions
for consideration of indebtedness or stock, and any other items that are or
would be classified as investments on a balance sheet prepared in accordance
with GAAP.
"INVESTOR DIRECTORS" has the meaning ascribed to such term in the
Stockholders Agreement.
"KEY EMPLOYEE" means the president, chief executive officer, chief
financial officer, chief operating officer, vice president of operations,
research, development, sales or marketing, or any other individual who performs
a significant role in the operations of the Company or a Subsidiary as may be
reasonably designated as a Key Employee by the Board of Directors.
"LIEN" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance or any interest or title
of any vendor, lessor, lender or other secured party to or of such Person under
any conditional sale or other title retention agreement or Capital Lease, upon
or with respect to any property or asset of such Person (including in the case
of stock, stockholders' agreements, voting trust agreements and all similar
arrangements).
"MAJORITY HOLDERS" means, as of any date of determination, the
holders of at least a majority of the unpaid principal amount of the Notes then
outstanding.
"MATERIAL ADVERSE EFFECT" shall have the meaning set forth in
SECTION 3.1.
"MATERIALS OF ENVIRONMENTAL CONCERN" means chemicals, pollutants,
contaminants, industrial, toxic or hazardous wastes, substances or constituents,
petroleum and petroleum products (or any by-product or constituent thereof),
asbestos or asbestos-containing materials, or PCBs.
"MATURITY DATE" means December 5, 2005.
"NOTE" or "NOTES" shall have the meaning set forth in SECTION 1.1.
26
"OPTIONAL PREPAYMENT DATE" shall have the meaning set forth in
SECTION 1.7(b).
"PERMITTED ACQUISITIONS" means an Acquisition so long as (a) no
Event of Default shall have occurred and be continuing or would result from the
consummation of the proposed Acquisition, (b) the assets being acquired, or the
Person whose stock is being acquired, are, in the reasonable discretion of the
Board of Directors, useful in or engaged in, as applicable, the business of the
Company and its Subsidiaries or a business reasonably related thereto, (c) the
Company has provided to the Purchasers prior written notice thereof not less
than 30 days prior to the anticipated closing date of the proposed Acquisition
together with such documentation that the Purchasers may reasonably request
demonstrating that after giving effect to the subject Acquisition, the Company
and its Subsidiaries would not suffer a Material Adverse Effect, (d) the total
consideration payable by the Company and its Subsidiaries in connection with the
proposed Acquisition does not exceed 10.0% of the Equity Value of the Company
and its Subsidiaries, and (e) after giving effect to the proposed Acquisition,
the total consideration paid by the Company and its Subsidiaries in connection
with all Permitted Acquisitions does not exceed 25% of the Equity Value of the
Company and its Subsidiaries.
"PERMITTED LIENS" means the following types of Liens: (a) Liens for
taxes, assessments, or governmental charges or claims the payment of which is
not at the time required by SECTION 4.1(a) hereof; (b) statutory Liens of
landlords and depository institutions and Liens of carriers, warehousemen,
mechanics, materialmen, and other Liens imposed by law incurred in the ordinary
course of business for sums not yet delinquent or being contested in good faith
by appropriate proceedings diligently pursued; provided, however, that the
Company or its Subsidiary shall have made such reserve or other provisions
therefor as may be required by GAAP; (c) Liens (other than any Liens imposed by
ERISA) incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance, and other types
of social security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts or
permits, performance and return-of-money bonds, and other similar obligations
(exclusive of obligations for the payment of borrowed money); (d) easements,
rights-of-way, zoning, and similar restrictions and other encumbrances affecting
real property that do not in any case materially interfere with the ordinary
conduct of the business of the Company, or any of its Subsidiaries; (e) leases
or subleases, not otherwise prohibited by this Agreement, granted to others not
interfering in any material respect with the business of the Company or any of
its Subsidiaries; (f) Liens arising from filing UCC financing statements or
other public records of Liens regarding operating leases or Indebtedness for
Borrowed Money; (g) any interest or title of a lessor under any lease permitted
by this Agreement (including any Lien granted by such lessor on the asset of
such lessor) under which the Company or any of its Subsidiaries is lessee; (h)
Liens existing on the date hereof, that are set forth on EXHIBIT P-1 attached
hereto and renewals and extensions thereof; (i) Liens in the nature of the
subordination of the leasehold interest of the Company or any of its
Subsidiaries in any real property to a mortgage or comparable Lien upon such
real property; (j) Liens in favor of customs and revenue authorities to secure
the payment of customs duties
27
in connection with the importation of goods in the ordinary course of business
and other similar Liens arising in the ordinary course of business; (k) Liens in
favor of a trustee under any indenture securing commercially reasonable amounts
relating to fees due to the trustee in connection with its services under such
indenture; (l) Liens arising by virtue of common law, statutory or contractual
provisions relating to bankers' liens, rights of set-off or similar rights and
remedies as to deposit accounts or securities accounts maintained in the
ordinary course of business; (m) licensing agreements executed by the Company or
any of its Subsidiaries as licensor for the use of intellectual property entered
into in the ordinary course of business and consistent with past practice; (n)
Liens upon any equipment acquired by the Company after the date hereof,
PROVIDED, that the indebtedness secured is permitted to be incurred under
SECTION 4.2 and the Lien (i) attaches within 90 days after the date on which the
Company obtains possession of such equipment, (ii) attaches solely to the
equipment so acquired, and (iii) only secures the purchase price thereof; and
(o) any extension, renewal, or replacement (or successive extensions, renewals,
or replacements), in whole or in part, of any Lien referred to in the foregoing
clauses, provided, that such extension, renewal or replacement Lien shall be
limited to all or a part of the property which secured the Lien so extended,
renewed, or replaced (plus improvements on such property).
"PERMITTED SUBSIDIARY INVESTMENTS" means Investments by the Company
in its Subsidiaries, taken as a whole, after the Closing in an amount not
greater than $350,000 in the aggregate at any one time outstanding; PROVIDED,
HOWEVER, that if the Company elects to make an Investment in a Subsidiary and
after giving to the proposed Investment, the Company's Investment in such
Subsidiary shall exceed $100,000, then, prior to the making of the proposed
Investment, the Company shall cause the Subsidiary that is the object of the
Investment to execute a guaranty, in form and substance satisfactory to the
Purchasers, in favor of the Purchasers relative to the payment and performance
of the obligations of the Company to the Purchasers under this Agreement, the
Notes, and the other Financing Documents.
"PERMITTED TRANSACTIONS" means any merger, consolidation, or
reorganization between (a) any wholly-owned Subsidiary of the Company and the
Company so long as the Company is the surviving entity in such transaction and
is solvent after giving effect to the merger, consolidation, or reorganization,
or (b) any solvent wholly-owned Subsidiaries of the Company.
"PERSON" means an individual, corporation, partnership, joint
venture, trust, or unincorporated organization, or a government or any agency or
political subdivision thereof.
"PREFERRED STOCK" is defined in SECTION 8.1 hereof.
"PURCHASER" and "PURCHASERS" shall have that meaning attributable to
those words in SECTION 1.3 of this Agreement.
"QUALIFYING PUBLIC OFFERING" means the sale of the Company's
securities pursuant to a registration statement filed by the Company under the
Securities Act in
28
connection with a firm commitment underwritten offering of its securities to the
general public.
"RIGHTS AGREEMENT" means that certain Fourth Amended and Restated
Registration Rights Agreement, dated as of even date herewith, among the
Company, the Purchasers and such other Persons identified on the signature pages
thereof, in form and substance satisfactory to the Purchasers.
"SECOND SERIES E CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT"
shall have the meaning set forth in the SECTION 3.15(e) of this Agreement.
"SECURITIES" shall have the meaning set forth in SECTION 1.1 of this
Agreement.
"SECURITIES ACT" means the Securities Act of 1933, or any similar
federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.
"SERIES B PURCHASE WARRANTS" means those certain purchase warrants
issued by the Company in favor of Frontec AB relative to the purchase by Frontec
AB of 7,005,495 shares of the Company's series B Preferred Stock.
"SENIOR INDEBTEDNESS" all indebtedness (including reimbursement
obligations in respect of letters of credit) of the Company under the Senior
Lender Loan Documents.
"SENIOR LENDER LOAN DOCUMENTS" means that certain Loan and Security
Agreement, dated as of November 26, 1999, by and among Imperial Bank, the
Company, Frontec AMT, Inc., and Viewlocity AB, as amended, together with all
other agreements, documents, and instruments executed in connection therewith.
"STOCKHOLDERS AGREEMENT" shall mean that certain Third Amended and
Restated Stockholders Agreement, dated as of June 22, 2000, among the Company
and the Purchasers therein defined.
"SUBORDINATION AGREEMENT" means a subordination agreement, in form
and substance satisfactory to the Purchasers, among the Purchasers and Imperial
Bank.
"SUBSIDIARY" or "SUBSIDIARIES" means any corporation, partnership,
trust or other entity of which the Company and/or any of its other Subsidiaries
(as herein defined) directly or indirectly owns at the time a majority of the
outstanding shares of every class of equity securities of such corporation,
partnership, trust or other entity.
"TRANSFER" means the sale, pledge, assignment, or other transfer of
the Securities, in whole or in part, and of the rights of the holder thereof
with respect thereto and under this Agreement.
"TRANSFEREE" means any direct or indirect transferee of all or any
part of any Securities permitted under SECTION 7.2 hereof.
29
"VCOC LETTER" means a letter agreement among the Company and
WestBridge that meets the Venture Capital Operating Company requirements and
that is in form and substance satisfactory to the Purchasers.
"WARRANT" shall have the meaning attributable to it in SECTION 1.1
of this Agreement.
"WARRANT SHARES" shall have that meaning attributable to it in
SECTION 1.2 of this Agreement.
"WESTBRIDGE" means WestBridge Ventures, L.P., a Delaware limited
partnership.
6.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP consistently applied, and all
financial data submitted pursuant to this Agreement shall be prepared in
accordance with such principles.
6.3 KNOWLEDGE. All references to the actual knowledge or awareness of
the Company shall mean the knowledge of any director or Key Employee of the
Company.
ARTICLE VII
FORM, REGISTRATION, TRANSFER AND EXCHANGE OF SECURITIES;
LOST SECURITIES
7.1 GENERALLY. The Company shall keep at its principal office a register
in which the Company shall provide for the registration of the Securities and of
Transfers of the Securities. Upon surrender for registration of Transfer of any
Security at the principal office of the Company, the Company shall, at its
expense, execute and deliver one or more new Securities of like tenor and of a
like aggregate principal amount or number of Warrant Shares, as applicable,
which Securities shall be registered in the name of such Transferee or
Transferees. At the option of the holder of any Security, such Security may be
exchanged for Securities of like tenor and of differing denominations, of a like
aggregate principal amount or number of Warrant Shares, as applicable, upon
surrender of the Security to be exchanged at the principal office of the
Company. Whenever any Securities are so surrendered for exchange, the Company
shall, at its expense, execute and deliver the Securities which the holder
making the exchange is entitled to receive. Every Security surrendered for
registration of Transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer duly executed, by the holder of such
Security or such holder's attorney duly authorized in writing. Any Security or
Securities issued in exchange for any Security or upon Transfer thereof shall
carry the rights carried by the Security so exchanged or transferred (including
without limitation, any rights to unpaid interest and interest to accrue which
were carried by the Note so exchanged or transferred, so that neither gain nor
loss of interest shall result from any such transfer or exchange). Upon receipt
of written notice from the holder of any Security and, in the case of any such
loss, theft, or destruction, upon receipt
30
of any unsecured indemnity agreement, or other indemnity reasonably satisfactory
to the Company from such holder, or in the case of any such mutilation, upon
surrender and cancellation of such Security, the Company will make and deliver a
new Security, of like tenor, in lieu of the lost, stolen, destroyed, or
mutilated Security.
7.2 OTHER TRANSFERS. Any holder of a Security may make a Transfer to any
Person provided (i) such Transfer is made in compliance with applicable Federal
and state securities laws, (ii) such holder of a Security has provided the
Company with such information as to such holder's compliance with applicable
securities laws as reasonably may be requested by the Company, (iii) such
Transfer is in compliance with SECTION 7.1 above, and (iv) such proposed
Transferee is not a direct competitor of the Company. Clause (ii) of the
preceding sentence shall not be deemed to require a holder of a Security to
provide the Company with an opinion of counsel regarding such compliance;
PROVIDED, HOWEVER, that if a Purchaser makes a Transfer to a non-affiliate, then
the Company may require the applicable Purchaser to provide to the Company an
opinion of in-house counsel reasonably satisfactory to the Company that the
proposed Transfer by Purchaser complies with applicable law. The Company shall
cooperate with any such Transfer including providing such information to any
holder of a Security or such holder's proposed Transferee as, in the reasonable
opinion of counsel to the transferor, may be necessary to satisfy the
requirements of Rule 144A of the Securities Act in connection with any Transfer
to a `Qualified Institutional Buyer' under such rule. Upon any transfer, the
Transferee shall, to the extent of such Transfer, be entitled to exercise the
rights of the Purchaser making such Transfer and shall thereafter be deemed a
"Purchaser" under this Agreement.
7.3 FURTHER ASSURANCES. The Company shall, from time to time at the
request of a Purchaser, execute and deliver to such Purchaser or to such party
or parties as such Purchaser may designate, all further instruments as may, in
such Purchaser's reasonable opinion, be necessary or advisable to give full
force and effect to any Transfer and shall provide to Purchaser or to such party
or parties as such Purchaser may designate all such information as such
Purchaser reasonably may request.
ARTICLE VIII
RIGHT OF FIRST REFUSAL
8.1 GRANT OF RIGHT OF FIRST REFUSAL. Until the consummation of a
Qualifying Public Offering, the Company shall not issue, sell or exchange, agree
or obligate itself to issue, sell or exchange, or reserve or set aside for
issuance, sale or exchange, any (i) shares of Common Stock, (ii) any other
equity security of the Company, including without limitation, shares of any of
the Company's convertible preferred stock, 0.01 par value per share ("PREFERRED
STOCK") (other than in a Qualifying Public Offering), (iii) any debt security of
the Company (other than debt with no equity feature and the issuance of the
Notes) including without limitation, any debt security which by its terms is
convertible into or exchangeable for any equity security of the Company, (iv)
any security of the Company that is a combination of debt and equity, or (v) any
option, warrant or other right to subscribe for,
31
purchase or otherwise acquire any such equity security or any such debt security
of the Company (other than the Warrants), unless in each case the Company shall
have first offered to sell such securities (the "OFFERED SECURITIES") to the
Purchasers, the holders of the Preferred Stock and Frontec AB and any permitted
transferees of Frontec AB in accordance with the terms and conditions set forth
in the Stockholders Agreement (together with Frontec AB, the "HOLDERS") (each an
"OFFEREE" and collectively, the "OFFEREES") as follows: The Company shall offer
to sell to each Offeree (a) that portion of the Offered Securities as the number
of shares of Common Stock (including all shares of capital stock convertible on
the date of the Offer (as defined below) into Common Stock, all Common Stock
issuable upon the exercise of the Warrants, and all shares issuable upon
exercise of the Series B Purchase Warrants which are exercisable on the date of
the Offer) then held, or deemed held pursuant to the immediately preceding
parenthetical, by such Offeree bears to the total number of shares of Common
Stock (including all shares of capital stock convertible on the date of the
Offer into Common Stock, all Common Stock issuable upon the exercise of the
Warrants, and all Shares issuable upon exercise of the Series B Purchase
Warrants which are exercisable on the date of the Offer) held, or deemed held
pursuant to the immediately preceding parenthetical, on such date by all
Offerees (the "BASIC AMOUNT"), and (b) such additional portion of the Offered
Securities as such Offeree shall indicate it will purchase should the other
Offerees subscribe for less than their Basic Amounts (the "UNDERSUBSCRIPTION
AMOUNT"), at a price and on such other terms as shall have been specified by the
Company in writing delivered to such Offeree (the "OFFER"), which Offer by its
terms shall remain open and irrevocable for a period of twenty (20) days from
receipt of the offer. The Company agrees that the right of first refusal
extended to the Purchasers pursuant to this SECTION 8.1 is PARI PASSU and runs
concurrently with the existing right of first refusal contained in SECTION 8 of
that certain Second Series E Convertible Preferred Stock Purchase Agreement
dated June 22, 2000 by and among the Company and the Purchasers (as defined
therein) and other stockholders of the Company listed on the signature pages
thereto.
8.2 NOTICE OF ACCEPTANCE. Notice of each Offeree's intention to accept,
in whole or in part, any Offer made pursuant to SECTION 8.1 shall be evidenced
by a writing signed by such Offeree and delivered to the Company prior to the
end of the 20-day period of such offer, setting forth such of the Offeree's
Basic Amount as such Offeree elects to purchase and, if such Offeree shall elect
to purchase all of its Basic Amount, such Undersubscription Amount as such
Offeree shall elect to purchase (the "NOTICE OF ACCEPTANCE"). If the Basic
Amounts subscribed for by all Offerees are less than the total Offered
Securities, then each Offeree who has set forth Undersubscription Amounts in its
Notice of Acceptance shall be entitled to purchase, in addition to the Basic
Amounts subscribed for, all Undersubscription Amounts it has subscribed for;
PROVIDED, HOWEVER, that should the Undersubscription Amounts subscribed for
exceed the difference between the Offered Securities and the Basic Amounts
subscribed for (the "AVAILABLE UNDERSUBSCRIPTION AMOUNT"), each Offeree who has
subscribed for any Undersubscription Amount shall be entitled to purchase only
that portion of the Available Undersubscription Amount as the Undersubscription
Amount subscribed for by such Offeree bears to the total Undersubscription
Amounts subscribed for by all Offerees, subject to rounding by the Board of
Directors to the extent it reasonably deems necessary.
32
8.3 CONDITIONS TO ACCEPTANCES AND PURCHASE.
(a) PERMITTED SALES OF REFUSED SECURITIES. In the event that
Notices of Acceptance are not given by the Offerees in respect of all the
Offered Securities, the Company shall have ninety (90) days from the expiration
of the period set forth in SECTION 8.1 to close the sale of all or any part of
such Offered Securities as to which a Notice of Acceptance has not been given by
the Offerees (the "REFUSED SECURITIES") to the Person or Persons specified in
the Offer, but only for cash and otherwise in all respects upon terms and
conditions, including, without limitation, unit price and interest rates, which
are no more favorable, in the aggregate, to such other Person or Persons or less
favorable to the Company than those set forth in the Offer.
(b) REDUCTION IN AMOUNT OF OFFERED SECURITIES. In the event the
Company shall propose to sell less than all the Refused Securities (any such
sale to be in the manner and on the terms specified in SECTION 8.3(a) above),
then each Offeree may, at its sole option and in its sole discretion, reduce the
number of, or other units of the Offered Securities specified in its respective
Notices of Acceptance to an amount which shall be not less than the amount of
the Offered Securities which the Offeree elected to purchase pursuant to SECTION
8.2 multiplied by a fraction, (i) the numerator of which shall be the amount of
Offered Securities which the Company actually proposes to sell, and (ii) the
denominator of which shall be the amount of all Offered Securities. In the event
that any Offeree so elects to reduce the number or amount of Offered Securities
specified in its respective Notices of Acceptance, the Company may not sell or
otherwise dispose of more than the reduced amount of the Offered Securities
until such securities have again been offered to the Offerees in accordance with
SECTION 8.1.
(c) CLOSING. Upon the closing, which shall include full payment
to the Company, of the sale to such other Person or Persons of all or less than
all the Refused Securities, the Offerees shall purchase from the Company, and
the Company shall sell to the Offerees, the number of Offered Securities
specified in the Notices of Acceptance, as reduced pursuant to SECTION 8.3(b) if
the Offerees have so elected, upon the terms and conditions specified in the
Offer. The purchase by the Offerees of any Offered Securities is subject in all
cases to the preparation, execution and delivery by the Company and the Offerees
of a purchase agreement relating to such Offered Securities reasonably
satisfactory in form and substance to the Offerees and their respective counsel.
8.4 FURTHER SALE. In each case, any Offered Securities not purchased by
the Offerees or other Person or Persons in accordance with SECTION 8.3 may not
be sold or otherwise disposed of until they are again offered to the Offerees
under the procedures specified in SECTIONS 8.1, 8.2 and 8.3.
8.5 TERMINATION OF RIGHT OF FIRST REFUSAL. The rights of the Offerees
under this SECTION 8 shall terminate immediately prior to the consummation of a
Qualifying Public Offering or, as to each Offeree when such Offeree owns less
than 25% of the shares of Common Stock (including all shares of capital stock of
the Company convertible into
33
Common Stock and all Common Stock issuable upon the exercise of the Warrants)
which were ever outstanding in the name of such Offeree, or which are deemed
held by such Offeree pursuant to this SECTION 8, whichever is earlier.
8.6 EXCEPTION. The rights of the Purchasers under this SECTION 8 shall
not apply to:
(a) Common Stock issued as a stock dividend to holders of Common
Stock or upon any subdivision or combination of shares of Common Stock;
(b) Preferred Stock issued as a dividend to holders of Preferred
Stock upon any subdivision or combination of shares of Preferred Stock;
(c) Issuance of the Series B Preferred Stock upon exercise of
the Series B Purchase Warrants;
(d) the Common Stock issuable upon the exercise of any Warrant
or any shares of Common Stock issued upon conversion of the Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock, or Series E Preferred Stock;
(e) any shares of the capital stock of the Company reserved for
issuance under any incentive stock option plan, in effect from time to time;
(f) Common Stock issued pursuant to the acquisition of another
corporation by the Company by merger (whereby the Company owns no less than 51%
of the voting power of such corporation) or purchase of substantially all of its
stock or assets, if such acquisition is approved by a majority of the Investor
Directors;
(g) Common Stock issued pursuant to any currently outstanding
options or warrants for the purchase of Common Stock as reflected in EXHIBIT
3.15 hereof;
(h) Common Stock issued pursuant to a Qualifying Public
Offering;
(i) the issuance of warrants for the purchase of 28,434 shares
of Common Stock to Imperial Bank or the issuance of Common Stock upon the
exercise thereof; and
(j) the issuance of shares of convertible preferred stock to BEA
Systems, Inc. or its affiliates or the issuance of Common Stock upon the
conversion thereof.
ARTICLE IX
MISCELLANEOUS
9.1 NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the part of
any party to this Agreement 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
34
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy hereunder. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
9.2 AMENDMENTS, WAIVERS AND CONSENTS. Any provision in this Agreement to
the contrary notwithstanding, and except as hereinafter provided, changes in or
additions to this Agreement or the Notes may be made, and compliance with any,
covenant or provision set forth herein may be omitted or waived, if the Company
(i) shall obtain consent thereto in writing from the Majority Holders, and (ii)
shall deliver, copies of such consent in writing to any holders who did not
execute such consent. The foregoing notwithstanding, no change, addition,
omission or waiver which causes any change in or extension of the time of
payment of the principal amount or interest, or the reduction of the rate of
interest on, or in any way affects or impairs the obligation of the Company in
respect of the principal of or interest on, any Note, or causes any change in
the provisions of SECTION 3 of any Note, or impairs or affects the right to
institute suit for payment of the Notes or causes any change in this SECTION
9.2, shall be made without the written consent of all of the holders the Notes.
Any waiver or consent may be given subject to the satisfaction of any conditions
stated therein and any waiver or consent shall be effectively only in the
specific instance and for the specific purpose for which given.
9.3 ADDRESSES FOR NOTICES. All notices, requests, demands and other
communications provided for hereunder shall be in writing and mailed, faxed or
delivered to each applicable party at the address set forth in SCHEDULE I hereto
or at such other address as to which such party may inform the other parties in
writing in compliance with the terms of this Section:
If to any other holder of the Securities: at such, holder's address
for notice as set forth in the register maintained by the Company, or, as to
each of the foregoing, at the addresses set forth on Schedule I hereto or at
such other address as shall be designated by such Person in a written notice to
the other parties complying as to delivery with the terms of this Section.
If to the Company: at the address set forth on page 1 hereof, or at
such other address as shall be designated by the Company in a written notice to
the other parties complying as to delivery with the terms of this Section, with
a copy to: ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, 1600 Atlanta Financial Center, ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
All such notices, requests, demands and other communications shall
sent by first class mail (postage prepaid), express overnight courier service,
registered mail (return receipt requested) or transmitted by facsimile and shall
be effective three days after deposited in the mails, or upon transmission by
facsimile, or the next business day if sent by express overnight courier
service, respectively, addressed as aforesaid, unless otherwise provided herein.
35
9.4 COSTS, EXPENSES AND TAXES. The Company agrees to pay in connection
with the preparation, execution and delivery of this Agreement and the issuance
of the Securities, the reasonable out-of-pocket expenses of WestBridge and its
Affiliates (including legal, accounting and other expenses) provided, that the
Company's maximum obligation for all such expenses incurred in connection with
the preparation, execution and delivery of this Agreement shall not exceed an
amount equal to (a) $30,000, plus (b) all fees, costs, and expenses of
WestBridge and its Affiliates incurred prior to November 15, 2000. In addition,
the Company shall pay any and all stamp and other taxes payable or determined to
be payable in connection with the execution and delivery of this Agreement, the
issuance of the Securities and the other instruments and documents to be
delivered hereunder or thereunder, and agrees to save the Purchasers harmless
from and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes.
9.5 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Company and the Purchasers and their respective
heirs, successors and assigns, except that the Company shall not have the right
to delegate any of its respective obligations hereunder or to assign its
respective rights hereunder or any interest herein without the prior written
consent of the Majority Holders.
9.6 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties, and agreements made in this Agreement or any of the other Financing
Documents shall survive the execution and delivery hereof or thereof and until
the payment in full in cash of all amounts due under the Notes.
9.7 PRIOR AGREEMENTS. This Agreement, the Notes, the Warrants, the
Stockholders Agreement, and the Rights Agreement constitute the entire agreement
between the parties and supersedes any prior understandings or agreements
concerning the purchase and sale of the Securities.
9.8 SEVERABILITY. The provisions of this Agreement and the Securities
are severable and, in the event that any court of competent jurisdiction shall
determine, that any one or more of the provisions or part of a provision
contained in this Agreement or the Securities shall, for any reason, be held to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision or part of a provision
of this Agreement or the terms of the Securities; but this Agreement and the
terms of the Securities, as the case may be, shall be reformed and construed as
if such invalid or illegal or unenforceable provision, or part of a provision,
had never been contained herein, and such provisions or part reformed so that it
would be valid, legal and enforceable to the maximum extent possible.
9.9 GOVERNING LAW; JURY WAIVER. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of
CALIFORNIA.
THE COMPANY AND EACH PURCHASER HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF
THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF SAN FRANCISCO, STATE OF
36
CALIFORNIA. TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE COMPANY AND EACH
PURCHASER HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY ACTION, CAUSE
OF ACTION, CLAIM, DEMAND, OR PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS
AGREEMENT, OR IN ANY WAY CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
DEALINGS OF THE COMPANY AND THE PURCHASERS WITH RESPECT TO THIS AGREEMENT, OR
THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE.
TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE COMPANY AND EACH PURCHASER HEREBY
AGREE THAT ANY SUCH ACTION, CAUSE OF ACTION, CLAIM, DEMAND, OR PROCEEDING SHALL
BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT EITHER PARTY MAY FILE A COPY
OF THIS SECTION WITH ANY COURT OR OTHER TRIBUNAL AS WRITTEN EVIDENCE OF THE
CONSENT OF THE OTHER PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
9.10 HEADINGS. Article, Section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
9.11 COUNTERPARTS; TELEFACSIMILE. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Agreement by
signing any such counterpart. Delivery of an executed counterpart of this
Agreement by telefacsimile shall be equally effective as delivery of an executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement.
9.12 FURTHER ASSURANCES. From and after the date of this Agreement, upon
the request of any Purchaser or the Company, the Company and the Purchasers
shall execute and deliver such instruments, documents and other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement and the Securities.
9.13 CONFIDENTIALITY. Each Purchaser agrees that he or it will keep
confidential and will not disclose or divulge any confidential, proprietary or
secret information which such Purchaser may obtain from the Company pursuant to
this Agreement and which the Company has advised such Purchaser is protected
information, unless such information is known, or until such information becomes
known, to the public; PROVIDED, HOWEVER, that such information may be disclosed
by such Purchaser (i) to counsel for and other advisors, accountants, and
auditors to such Purchaser and (ii) to comply with applicable laws or
governmental regulations, in any court proceeding, or in any action such
Purchaser must take to protect and enforce its rights under this Agreement,
provided that the Purchaser provides
37
prior written notice of such disclosure to the Company and takes reasonable and
lawful action to avoid or minimize the extent of such disclosure. Each Purchaser
agrees that it shall take all reasonably necessary actions to insure that such
Purchaser's directors, officers, managers, partners, and agents comply with this
SECTION 9.13.
9.14 INDEMNIFICATION.
(a) The Company further agrees to indemnify, defend, and
hold harmless Purchaser and any Transferee of the Securities and each of their
respective officers, directors, employees, and agents (each an "INDEMNIFIED
PARTY") from and against any and all actions, causes of action, suits, losses,
liabilities, and damages, and expenses (including reasonable attorneys fees and
disbursements) in connection therewith (collectively, the "INDEMNIFIED
LIABILITIES") incurred by an Indemnified Party as a result of, or arising out
of, or relating to any of the transactions contemplated hereby, except for (i)
any Indemnified Liabilities arising on account of the gross negligence or
willful misconduct of the applicable Indemnified Party, and (ii) any Indemnified
Liabilities realized by the Purchasers with respect to the offer and sale of the
Warrant Shares unless such Indemnified Liabilities arose out of and are the
result of a violation of applicable law or a breach by the Company of this
Agreement and the other Financing Documents; PROVIDED, HOWEVER, that, if and to
the extent such agreement to indemnify may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities that shall be permissible under applicable
law. The obligations of the Company under this SECTION 9.14 shall survive the
transfer of any Securities and repayment of the Notes.
(b) In case any action, claim or proceeding shall be
brought against any Indemnified Party with respect to which indemnity may be
sought against the Company hereunder, such Indemnified Party shall promptly
notify the Company in writing and the Company shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Party and payment of all fees and expenses incurred in connection with the
defense thereof. The failure to so notify the Company shall not affect any
obligation it may have to any Indemnified Party under this Agreement or
otherwise except to the extent that (as finally determined by a court of
competent jurisdiction (which determination is not subject to review or appeal))
such failure materially and adversely prejudiced the Company. Each Indemnified
Party shall have the right to employ separate counsel in such action, claim or
proceeding and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of each Indemnified Party unless: (i) the
Company has agreed to pay such expenses; or (ii) the Company has failed promptly
to assume the defense and employ counsel reasonably satisfactory to such
Indemnified Party; or (iii) the named parties to any such action, claim or
proceeding (including any impleaded parties) include any Indemnified Party and
the Company or an Affiliate of the Company, and such Indemnified Party shall
have been advised by counsel that either (x) there may be one or more legal
defenses available to it which are different from or in addition to those
available to the Company or such Affiliate or (y) a conflict of interest may
exist if such counsel represents such Indemnified Party and the Company or its
Affiliate; provided that, if
38
such Indemnified Party notifies the Company in writing that it elects to employ
separate counsel in the circumstances described in CLAUSE (i), (ii) OR (iii)
above, the Company shall not have the right to assume the defense thereof and
such counsel shall be at the expense of the Company; PROVIDED, HOWEVER, that the
Company 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
responsible hereunder for the fees and expenses of more than one such firm of
separate counsel (in addition to any local counsel), which counsel shall be
designated by such Indemnified Party. The Company shall not be liable for any
settlement of any such action effected without its written consent (which shall
not be unreasonably withheld). The Company agrees that it will not, without the
Indemnified Party's prior written consent, consent to entry of any judgment or
settle or compromise any pending or threatened claim, action or proceeding in
respect of which indemnification or contribution may be sought hereunder unless
the foregoing contains an unconditional release, in form and substance
reasonably satisfactory to such Indemnified Party, of such Indemnified Party
from all liability and obligation arising therefrom.
(c) If the indemnification provided for in this SECTION
9.14 is unavailable to, or insufficient to hold harmless, any Indemnified Party
in respect of any Indemnified Liabilities referred to herein, then the Company
shall have an obligation to contribute to the amount paid or payable by such
Persons as a result of such Indemnified Liabilities in such proportion as is
appropriate to reflect the relative fault of the Company, its Subsidiaries and
Affiliates, on the one hand, and such Indemnified Party, on the other hand, in
connection with the actions which resulted in such Indemnified Liabilities as
well as any other relevant equitable considerations. The amount paid or payable
by any such Person as a result of the Indemnified Liabilities referred to above
shall be deemed to include, subject to the limitations set forth in this SECTION
9.14, any legal or other fees or expenses reasonably incurred by such Person in
connection with any investigation, lawsuit or legal or administrative action or
proceeding, other than legal expenses incurred after the Company assumes the
defense in accordance with the immediately preceding paragraph if the proviso in
such paragraph with respect to engagement of separate counsel for the
Indemnified Party is not applicable.
(d) The parties hereto agree that it would not be just
and equitable if contribution pursuant to this SECTION 9.14 were determined by
PRO RATA allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who is not guilty of such fraudulent misrepresentation.
[signature page follows]
39
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be delivered in Los Angeles,
California by their respective officers thereunto
duly authorized as of the date first above written.
VIEWLOCITY, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
Title: President and CEO
-----------------------------
[Signature page continues]
S - 1
WESTBRIDGE VENTURES, L.P.,
a Delaware limited partnership
By: Westbridge Ventures, L.L.C., a Delaware
limited liability company, its General Partner
By: TCW Asset Management Company, as
Managing Member
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Title: Managing Director
-----------------------------------
By: /s/ ▇▇▇▇▇▇ ▇. Sun
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. Sun
------------------------------------
Title: Vice President
-----------------------------------
[Signature page continues]
S - 2
TCW LEVERAGED INCOME TRUST IV, L.P.
By: TCW Asset Management Company, as its
Investment Adviser
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Title: Managing Director
-------------------------------
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Title: Managing Director
-------------------------------
By: TCW (▇▇▇▇ ▇▇), L.L.C., as General Partner
By: TCW Asset Management Company, as
its Managing Member
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Title: Managing Director
-------------------------------
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Title: Managing Director
-------------------------------
[Signature page continues]
S - 3
TCW SHARED OPPORTUNITY FUND III, L.P.
By: TCW Asset Management Company,
Its Investment Adviser
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------
Title: Managing Director
---------------------------
By: /s/ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------
Title: Vice President
---------------------------
[Signature page continues]
S - 4
SHARED OPPORTUNITY FUND IIB, L.L.C.
By: TCW Asset Management Company,
as its Investment Adviser
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------
Title: Managing Director
---------------------------
By: /s/ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------
Title: Vice President
---------------------------
S - 5
SCHEDULE I
(PURCHASERS)
PURCHASER NOTES WARRANTS
WESTBRIDGE VENTURES, L.P. $6,000,000 300,000
▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
TCW LEVERAGED INCOME TRUST IV, L.P. 2,500,000 112,500
c/o WestBridge Ventures, L.L.C.
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TCW SHARED OPPORTUNITY FUND III, L.P. 1,250,000 62,500
c/o WestBridge Ventures, L.L.C.
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SHARED OPPORTUNITY FUND IIB, L.L.C. 500,000 25,000
c/o WestBridge Ventures, L.L.C.
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