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EXHIBIT 10.1
SERIES A AND SERIES B PREFERRED STOCK
PURCHASE AGREEMENT
REQUISITE TECHNOLOGY, INC.
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PAGE
SECTION 1. AGREEMENT TO SELL AND PURCHASE............................................1
1.1. Authorization of Shares.............................................1
1.2. Sale and Purchase...................................................1
SECTION 2. CLOSING, DELIVERY AND PAYMENT.............................................2
2.1. Closing.............................................................2
2.2. Delivery............................................................2
2.3. Subsequent Sales of Series B Stock..................................2
2.4 Termination of Prior Agreements.....................................3
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................3
3.1. Organization, Good Standing and Qualification.......................3
3.2. Capitalization; Voting Rights.......................................3
3.3. Authorization; Binding Obligations..................................4
3.4. Financial Statements................................................4
3.5. Liabilities.........................................................4
3.6. Agreements; Action..................................................5
3.7. Obligations to Related Parties......................................5
3.8. Changes.............................................................6
3.9. Title to Properties and Assets; Liens, etc..........................7
3.10. Patents and Trademarks..............................................7
3.11. Compliance with Other Instruments...................................7
3.12. Litigation..........................................................8
3.13. Tax Returns and Payments............................................8
3.14 Employees...........................................................8
3.15. Non-Competition and Non-Disclosure Agreements.......................9
3.16. Obligations of Management...........................................9
3.17. Registration Rights.................................................9
3.18. Compliance with Laws; Permits.......................................9
3.19. Environmental and Safety Laws.......................................9
3.20. Offering Valid......................................................9
3.21. Full Disclosure.....................................................9
3.22. Qualified Small Business...........................................10
3.23. Minute Books.......................................................10
3.24. Section 83(b) Elections............................................10
3.25. Real Property Holding Corporation..................................10
3.26. Insurance..........................................................10
3.27. Investment Company Act.............................................10
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.........................10
4.1. Requisite Power and Authority......................................11
4.2. Investment Representations.........................................11
4.3. Transfer Restrictions..............................................12
SECTION 5. CONDITIONS TO CLOSING....................................................12
5.1. Conditions to Purchasers' Obligations at the Closing...............12
5.2. Conditions to Obligations of the Company...........................14
SECTION 6. MISCELLANEOUS............................................................14
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TABLE OF CONTENTS
(CONTINUED)
PAGE
6.1. Governing Law......................................................14
6.2. Survival...........................................................14
6.3. Successors and Assigns.............................................14
6.4. Entire Agreement...................................................15
6.5. Severability.......................................................15
6.6. Amendment and Waiver...............................................15
6.7. Delays or Omissions................................................15
6.8. Notices............................................................15
6.9. Expenses...........................................................16
6.10. Attorneys' Fees....................................................16
6.11. Titles and Subtitles...............................................16
6.12. Counterparts.......................................................16
6.13. Broker's Fees......................................................16
6.14. Exculpation Among Purchasers.......................................16
6.15. Pronouns...........................................................16
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INDEX OF EXHIBITS
Schedule of Purchasers Exhibit A
Restated Certificate Exhibit B
Form of First Warrant Exhibit C
Second Amended and Restated Software Development Agreement between Exhibit D
Company and DRC
Technology Transfer Agreement between the Company and CEI Exhibit E
Schedule of Exceptions Exhibit F
Investor Rights Agreement Exhibit G
Shareholders Agreement Exhibit H
List of Shareholders and Optionholders Exhibit I
Financial Statements Exhibit J
Non-Competition and Non-Disclosure Agreement Exhibit K
Form of Legal Opinion Exhibit L
Form of Stock Restriction Agreement Exhibit M
Form of Right of First Refusal Exhibit N
Form of Second Warrant Exhibit O
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SERIES A AND SERIES B PREFERRED STOCK
PURCHASE AGREEMENT
THIS SERIES A AND SERIES B PREFERRED STOCK PURCHASE AGREEMENT (the
"Agreement") is entered into as of this ____ day of July, 1996, by and among
REQUISITE TECHNOLOGY, INC., a Delaware corporation (the "Company") and each of
those persons and entities, severally and not jointly, whose names are set forth
on the Schedule of Purchasers attached hereto as Exhibit A (which persons and
entities are hereinafter collectively referred to as "Purchasers" and each
individually as a "Purchaser").
RECITALS
WHEREAS, the Company has authorized the sale and issuance of (i) an
aggregate of 189,630 shares of its Series A Preferred Stock (the "Series A
Stock"); (ii) a warrant to purchase up to an aggregate of 147,790 shares of
Series A Stock to be issued to Corporate Express, Inc. ("CEI") (the "First
Warrant"); (iii) a warrant to purchase up to an aggregate of 20,000 shares of
Common Stock to be issued to CEI (the "Second Warrant") (the First Warrant and
the Second Warrant shall collectively be referred to hereinafter as the "CEI
Warrants") and (iv) an aggregate of 2,408,839 shares of its Series B Preferred
Stock (the "Series B Stock") (the Series A Stock and the Series B Stock
described above shall collectively be referred to hereinafter as the "Shares");
WHEREAS, Purchasers desire to purchase the Shares, and CEI desires to
purchase the CEI Warrants, on the terms and conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Shares to
Purchasers, and the CEI Warrants to CEI, on the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, the parties hereto agree as follows:
SECTION 1. AGREEMENT TO SELL AND PURCHASE.
1.1. AUTHORIZATION OF SHARES. On or prior to the Closing (as defined in
Section 2 below), the Company shall have authorized (i) the sale and issuance to
Purchasers of the Shares, (ii) the sale and issuance of the CEI Warrants to CEI,
(iii) the issuance of Series A Stock to be issued pursuant to the exercise of
the First Warrant (the "Warrant Shares") and (iv) the issuance of such shares of
Common Stock to be issued upon conversion of the Shares and the Warrant Shares
and upon exercise of the Second Warrant (the "Conversion Shares"). The Shares,
the Warrant Shares and the Conversion Shares shall have the rights, preferences,
privileges and restrictions set forth in the Restated Certificate of
Incorporation of the Company, as amended, in the form attached hereto as Exhibit
B (the "Restated Certificate"). The First Warrant shall be in the form and have
the rights set forth in the form of warrant agreement attached hereto as Exhibit
C and the Second Warrant shall be in the form and have the rights set forth in
the form of warrant agreement attached hereto as Exhibit O.
1.2. SALE AND PURCHASE. Subject to the terms and conditions hereof, at
the Initial Closing (as hereinafter defined) the Company hereby agrees to (i)
issue and sell to each Purchaser, severally and not jointly, and each Purchaser
agrees to purchase from the Company, severally and not jointly, the number of
Shares set forth opposite such Purchaser's name on Exhibit A (collectively, the
"Initial Shares"), at an
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aggregate purchase price as set forth on the Schedule of Purchasers and (ii) to
issue the CEI Warrants to CEI.
SECTION 2. CLOSING, DELIVERY AND PAYMENT.
2.1. CLOSING. The closing of the sale and purchase of the Initial
Shares under this Agreement (the "Initial Closing") shall take place at 5:00
p.m. on the date hereof, at the offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other time or place as the
Company and Purchasers may mutually agree (such date is hereinafter referred to
as the "Initial Closing Date").
2.2. DELIVERY. At the Initial Closing, subject to the terms and
conditions hereof, the Company will deliver to the Purchasers certificates
representing the number of Initial Shares to be purchased at the Closing by each
Purchaser, against payment of the purchase price therefor by check, wire
transfer made payable to the order of the Company, cancellation of indebtedness,
any combination of the foregoing or by contribution of certain technology
pursuant to Section 2.3(b) below; provided, however, that the shares of Series A
Stock being purchased hereunder by CEI shall be made solely by conversion of the
outstanding principal amount of $256,000 together with all accrued interest
owing under that certain Convertible Note, dated November 23, 1994 and the
shares of Series B Stock being purchased hereunder by CEI shall be made solely
by conversion of the outstanding principal amount of $250,000 together with all
accrued interest under those certain Convertible Promissory Notes, dated
November 21, 1995, January 5, 1996, January 24, 1996, February 20, 1996 and
April 2, 1996 (collectively, all such notes shall be referred to as the "CEI
Notes").
2.3. SUBSEQUENT SALES OF SERIES B STOCK.
(a) At any time on or before August 1, 1996, the Company may
sell (the "Second Closing") up to 276,243 shares of Series B Stock to an
investment fund to be formed by ▇▇▇▇▇▇ ▇. Washing (the "Washing Fund") at a
price of $1.81 per share. In the event that the Washing Fund has not purchased
all of such 276,243 shares by such date, then ▇▇▇▇, ▇▇▇▇▇▇▇ Ventures or an
affiliated entity shall have the option until December 31, 1996, at its sole
discretion, to purchase any or all of such shares that are not purchased by the
Washing Fund. The option may be exercised by delivery to the Company of (i)
written notice and (ii) within thirty days of such written notice, a check or
wire transfer to the Company in the full amount of the exercise price.
(b) The Company shall issue (each a "Subsequent Closing") up
to 118,784 shares of Series B Stock to Distribution Resources Company ("DRC"),
upon satisfaction of and pursuant to the terms and conditions set forth in
Sections 5(b) and 5(c) of that certain Second Amended and Restated Software
Development Agreement between the Company and DRC, dated as of June 28, 1996, a
copy of which is attached hereto as Exhibit D (the "DRC Agreement").
Additionally, the Company shall issue up to 121,547 shares of Series B Stock to
CEI as follows: (i) 60,773 shares of Series B Stock shall be issued to CEI upon
satisfaction by DRC of the terms and conditions set forth in Section 5(b) of the
DRC Agreement and (ii) 60,774 shares of Series B Stock shall be issued to CEI
upon satisfaction by DRC of the terms and conditions set forth in Section 5(c)
of the DRC Agreement.
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(c) All sales made pursuant to Sections 2.3(a) and 2.3(b)
shall be made on the terms and conditions set forth in this Agreement. All
shares of Series B Stock sold pursuant to Sections 2.3(a) and 2.3(b) shall be
deemed to be "Shares" for all purposes under this Agreement and any purchasers
thereof shall be deemed to be "Purchasers" for all purposes under this
Agreement.
2.4 TERMINATION OF PRIOR AGREEMENTS. The Company and CEI hereby agree
that, effective upon the date hereof, the Convertible Loan Agreement dated
November 23, 1994, as amended on November 21, 1995, December 8, 1995, December
15, 1995, January 12, 1996, February 9, 1996 and April 30, 1996, (the "CEI Loan
Agreement") is terminated and shall be of no further force and effect. CEI
hereby acknowledges that its right to purchase the shares of Series B Stock set
forth on Schedule A hereto shall satisfy in full any and all rights CEI may have
under the CEI Loan Agreement (and any other agreement) to purchase shares of
Series B Stock being sold to the Purchasers hereunder and waives any and all
rights to purchase any additional shares of Series B Stock. CEI and DRC further
acknowledge and agree that, except as may be granted under this Agreement and
the Related Agreements (defined below), (i) neither of such parties shall have
any options, warrants, rights or agreements of any kind for the purchase or
acquisition from the Company of any of its securities, and (ii) all voting,
dividend, liquidation, redemption, registration or similar rights held by CEI or
DRC of any type are hereby terminated in their entirety. CEI and DRC further
acknowledge that upon exchange of the CEI Notes all indebtedness owing to CEI
and DRC from the Company shall be repaid in full.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth on the Schedule of Exceptions attached hereto as
Exhibit F, the Company hereby represents and warrants to each Purchaser as
follows:
3.1. ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement, the Investor Rights Agreement in the form attached hereto as
Exhibit G (the "Investor Rights Agreement"), and the Shareholders Agreement
attached hereto as Exhibit H (the "Shareholders Agreement") (collectively, the
"Related Agreements"), to issue and sell the Shares and the Conversion Shares
and to carry out the provisions of this Agreement, the Related Agreements and
the Restated Certificate and to carry on its business as presently conducted and
as presently proposed to be conducted. The Company is duly qualified and is
authorized to do business and is in good standing as a foreign corporation in
Colorado and all other jurisdictions in which the nature of its activities and
of its properties (both owned and leased) makes such qualification necessary,
except for those jurisdictions in which failure to do so would not have a
material adverse effect on the Company or its business. The Company owns no
equity securities of any other corporation, limited partnership or similar
entity. The Company is not a participant in any joint venture, partnership or
similar arrangement.
3.2. CAPITALIZATION; VOTING RIGHTS. The authorized capital stock of the
Company, immediately prior to the Closing, will consist of 10,000,000 shares of
Common Stock, 1,798,347 shares of which are issued and outstanding and 640,000
shares of which are reserved for future issuance to key employees and
consultants pursuant to the Company's 1995 Stock Option Plan, of which 340,000
remain available for issuance under such plan, and 2,746,259 shares of Preferred
Stock, 337,420 of which are designated Series A Preferred Stock, none of which
are issued and outstanding, and 2,408,839 of which are designated Series B
Preferred Stock, none of which are issued and outstanding. All issued and
outstanding shares of the Company's Common Stock (i) have been duly authorized
and validly issued to
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the persons listed on Exhibit I hereto, (ii) are fully paid and nonassessable,
and (iii) were issued in compliance with all applicable state and federal laws
concerning the issuance of securities. The rights, preferences, privileges and
restrictions of the Shares are as stated in the Restated Certificate. The
Conversion Shares have been duly and validly reserved for issuance. Other than
as set forth on Exhibit I, and except as may be granted pursuant to the Related
Agreements, there are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal), proxy or
shareholder agreements, or agreements of any kind for the purchase or
acquisition from the Company of any of its securities. When issued in compliance
with the provisions of this Agreement and the Restated Certificate, the Shares
and the Conversion Shares will be validly issued, fully paid and nonassessable,
and will be free of any liens or encumbrances; provided, however, that the
Shares and the Conversion Shares may be subject to restrictions on transfer
under state and/or federal securities laws as set forth herein or as otherwise
required by such laws at the time a transfer is proposed.
3.3. AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on the
part of the Company, its officers, directors and shareholders necessary for the
authorization of this Agreement and the Related Agreements, the performance of
all obligations of the Company hereunder and thereunder at the Closing and the
authorization, sale, issuance and delivery of the Shares pursuant hereto and the
Conversion Shares pursuant to the Restated Certificate has been taken or will be
taken prior to the Closing. The Agreement and the Related Agreements, when
executed and delivered, will be valid and binding obligations of the Company
enforceable in accordance with their terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights; (ii) general principles
of equity that restrict the availability of equitable remedies; and (iii) to the
extent that the enforceability of the indemnification provisions in Section 2.9
of the Investor Rights Agreement may be limited by applicable laws. The sale of
the Shares and the subsequent conversion of the Shares into Conversion Shares
are not and will not be subject to any preemptive rights or rights of first
refusal that have not been properly waived or complied with.
3.4. FINANCIAL STATEMENTS. The Company has delivered to each Purchaser
(i) its reviewed but not audited balance sheet as at December 31, 1995 and
reviewed but not audited statement of income and cash flows for the twelve
months ending December 31, 1995 and (ii) its unaudited balance sheet as at June
30, 1996 (the "Statement Date") and unaudited consolidated statement of income
and cash flows for the six month period ending on the Statement Date
(collectively, the "Financial Statements"), copies of which are attached hereto
as Exhibit J. The Financial Statements, together with the notes thereto, are
complete and correct in all material respects, have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods indicated, except as disclosed therein, and present
fairly the financial condition and position of the Company as of December 31,
1995 and the Statement Date; provided, however, that the financial statements as
of the Statement Date are subject to normal recurring year-end audit adjustments
(which are not expected to be material), and do not contain all footnotes
required under generally accepted accounting principles.
3.5. LIABILITIES. The Company has no material liabilities and, to the
best of its knowledge, knows of no material contingent liabilities not disclosed
in the Financial Statements, except current liabilities incurred in the ordinary
course of business subsequent to the Statement Date which have not been, either
in any individual case or in the aggregate, materially adverse.
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3.6. AGREEMENTS; ACTION.
(a) Except for agreements explicitly contemplated hereby and
agreements between the Company and its employees with respect to the sale of the
Company's Common Stock, there are no agreements, understandings or proposed
transactions between the Company and any of its officers, directors, affiliates
or any affiliate thereof.
(b) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or to its knowledge by which it is bound which may
involve (i) obligations (contingent or otherwise) of, or payments to, the
Company in excess of $10,000 or (ii) the license of any patent, copyright, trade
secret or other proprietary right to or from the Company (other than licenses
arising from the purchase of "off the shelf" or other standard products), or
(iii) provisions restricting or affecting the development, manufacture or
distribution of the Company's products or services, or (iv) indemnification by
the Company with respect to infringements of proprietary rights (other than
indemnification obligations arising from purchase or sale agreements entered
into in the ordinary course of business).
(c) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or any
other liabilities (other than with respect to dividend obligations,
distributions, indebtedness and other obligations incurred in the ordinary
course of business or as disclosed in the Financial Statements) individually in
excess of $10,000 or, in the case of indebtedness and/or liabilities
individually less than $10,000, in excess of $25,000 in the aggregate, (iii)
made any loans or advances to any person, other than ordinary advances for
travel expenses, or (iv) sold, exchanged or otherwise disposed of any of its
assets or rights, other than the sale of its inventory in the ordinary course of
business.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
(e) The Company has not engaged in the past three (3) months
in any discussion (i) with any representative of any corporation or corporations
regarding the consolidation or merger of the Company with or into any such
corporation or corporations, (ii) with any corporation, partnership, association
or other business entity or any individual regarding the sale, conveyance or
disposition of all or substantially all of the assets of the Company, or a
transaction or series of related transactions in which more than fifty percent
(50%) of the voting power of the Company is disposed of, or (iii) regarding any
other form of acquisition, liquidation, dissolution or winding up of the
Company.
3.7. OBLIGATIONS TO RELATED PARTIES. There are no obligations of the
Company to officers, directors, shareholders, or employees of the Company other
than (a) for payment of salary for services rendered, (b) reimbursement for
reasonable expenses incurred on behalf of the Company and (c) for other standard
employee benefits made generally available to all employees (including stock
option agreements outstanding under any stock option plan approved by the Board
of Directors of the Company). None of the officers, directors or shareholders of
the Company, or any members of their immediate families, are indebted to the
Company or have any direct or indirect ownership interest in any firm or
corporation with which the Company is affiliated or with which the Company has a
business
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relationship, or any firm or corporation which competes with the Company, except
that officers, directors and/or shareholders of the Company may own stock in
publicly traded companies which may compete with the Company. No officer,
director or shareholder, or any member of their immediate families, is, directly
or indirectly, interested in any material contract with the Company (other than
such contracts as relate to any such person's ownership of capital stock or
other securities of the Company). Except as may be disclosed in the Financial
Statements, the Company is not a guarantor or indemnitor of any indebtedness of
any other person, firm or corporation.
3.8. CHANGES. Since the Statement Date, there has not been to the
Company's knowledge:
(a) Any change in the assets, liabilities, financial condition
or operations of the Company from that reflected in the Financial Statements,
other than changes in the ordinary course of business, none of which
individually or in the aggregate has had or is expected to have a material
adverse effect on such assets, liabilities, financial condition or operations of
the Company;
(b) Any resignation or termination of any key officers of the
Company; and the Company, to the best of its knowledge, does not know of the
impending resignation or termination of employment of any such officer;
(c) Any material change, except in the ordinary course of
business, in the contingent obligations of the Company by way of guaranty,
endorsement, indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, business or
prospects or financial condition of the Company;
(e) Any waiver by the Company of a valuable right or of a
material debt owed to it;
(f) Any direct or indirect loans made by the Company to any
shareholder, employee, officer or director of the Company, other than advances
made in the ordinary course of business;
(g) Any material change in any compensation arrangement or
agreement with any employee, officer, director or shareholder;
(h) Any declaration or payment of any dividend or other
distribution of the assets of the Company;
(i) Any labor organization activity;
(j) Any debt, obligation or liability incurred, assumed or
guaranteed by the Company, except those for immaterial amounts and for current
liabilities incurred in the ordinary course of business;
(k) Any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets;
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(l) Any change in any material agreement to which the Company
is a party or by which it is bound which materially and adversely affects the
business, assets, liabilities, financial condition, operations or prospects of
the Company, including compensation agreements with the Company's employees; or
(m) Any other event or condition of any character that, either
individually or cumulatively, has materially and adversely affected the
business, assets, liabilities, financial condition, operations or prospects of
the Company.
3.9. TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company has good
and marketable title to its properties and assets, including the properties and
assets reflected in the most recent balance sheet included in the Financial
Statements, and good title to its leasehold estates, in each case subject to no
mortgage, pledge, lien, lease, encumbrance or charge, other than (i) those
resulting from taxes which have not yet become delinquent, (ii) minor liens and
encumbrances which do not materially detract from the value of the property
subject thereto or materially impair the operations of the Company, and (iii)
those that have otherwise arisen in the ordinary course of business. All
facilities, machinery, equipment, fixtures, vehicles and other properties owned,
leased or used by the Company are in good operating condition and repair and are
reasonably fit and usable for the purposes for which they are being used.
3.10. PATENTS AND TRADEMARKS. The Company owns or possesses sufficient
legal rights to all patents, trademarks, service marks, trade names, copyrights,
trade secrets, information and other proprietary rights and processes necessary
for its business as now conducted and as proposed to be conducted, without any
known infringement of the rights of others. There are no outstanding options,
licenses or agreements of any kind relating to the foregoing, nor is the Company
bound by or a party to any options, licenses or agreements of any kind with
respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information and other proprietary rights and processes
of any other person or entity other than such licenses or agreements arising
from the purchase of "off the shelf" or standard products. The Company has not
received any communications alleging that the Company has violated or, by
conducting its business as proposed, would violate any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights of any other person or entity. The Company is not aware that
any of its employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with their duties to the Company or that would conflict with the
Company's business as proposed to be conducted. Neither the execution nor
delivery of this Agreement, nor the carrying on of the Company's business by the
employees of the Company, nor the conduct of the Company's business as proposed,
will, to the Company's knowledge, conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any employee is now obligated. The Company
does not believe it is or will be necessary to utilize any inventions, trade
secrets or proprietary information of any of its employees made prior to their
employment by the Company, except for inventions, trade secrets or proprietary
information that have been assigned to the Company.
3.11. COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation or default of any term of its Restated Certificate or Bylaws, or of
any provision of any mortgage, indenture, contract, agreement, instrument or
contract to which it is party or by which it is bound or of any judgment,
decree, order, writ or, to its knowledge, any statute, rule or regulation
applicable to the Company which would materially and adversely affect the
business, assets, liabilities, financial condition, operations or prospects of
the Company. The execution, delivery, and performance of and compliance with
this
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Agreement, and the Related Agreements, and the issuance and sale of the Shares
pursuant hereto and of the Conversion Shares pursuant to the Restated Articles,
will not, with or without the passage of time or giving of notice, result in any
such material violation, or be in conflict with or constitute a default under
any such term, or result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of the Company or the
suspension, revocation, impairment, forfeiture or nonrenewal of any permit
license, authorization or approval applicable to the Company, its business or
operations or any of its assets or properties.
3.12. LITIGATION. There is no action, suit, proceeding or investigation
pending or to the Company's knowledge currently threatened against the Company
that questions the validity of this Agreement, or the Related Agreements or the
right of the Company to enter into any of such agreements, or to consummate the
transactions contemplated hereby or thereby, or which might result, either
individually or in the aggregate, in any material adverse change in the assets,
condition, affairs or prospects of the Company, financially or otherwise, or any
change in the current equity ownership of the Company, nor is the Company aware
that there is any basis for the foregoing. The foregoing includes, without
limitation, actions pending or threatened (or any basis therefor known to the
Company) involving the prior employment of any of the Company's employees, their
use in connection with the Company's business of any information or techniques
allegedly proprietary to any of their former employers, or their obligations
under any agreements with prior employers. The Company is not a party or subject
to the provisions of any order, writ, injunction, judgment or decree of any
court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Company currently pending or which the
Company intends to initiate.
3.13. TAX RETURNS AND PAYMENTS. The Company has timely filed all tax
returns (federal, state and local) required to be filed by it. All taxes shown
to be due and payable on such returns, any assessments imposed, and to the
Company's knowledge all other taxes due and payable by the Company on or before
the Closing have been paid or will be paid prior to the time they become
delinquent. The Company has not been advised (i) that any of its returns,
federal, state or other, have been or are being audited as of the date hereof,
or (ii) of any deficiency in assessment or proposed judgment to its federal,
state or other taxes. The Company has no knowledge of any liability of any tax
to be imposed upon its properties or assets as of the date of this Agreement
that is not adequately provided for.
3.14. EMPLOYEES. The Company has no collective bargaining agreements
with any of its employees. There is no labor union organizing activity pending
or, to the Company's knowledge, threatened with respect to the Company. No
employee has any agreement or contract, written or verbal, regarding his
employment. The Company is not a party to or bound by any currently effective
employment contract, deferred compensation arrangement, bonus plan, incentive
plan, profit sharing plan, retirement agreement or other employee compensation
plan or agreement. To the Company's knowledge, no employee of the Company, nor
any consultant with whom the Company has contracted, is in violation of any term
of any employment contract, proprietary information agreement or any other
agreement relating to the right of any such individual to be employed by, or to
contract with, the Company because of the nature of the business to be conducted
by the Company; and to the Company's knowledge the continued employment by the
Company of its present employees, and the performance of the Company's contracts
with its independent contractors, will not result in any such violation. The
Company has not received any notice alleging that any such violation has
occurred. No employee of the Company has been granted the right to continued
employment by the Company or to any material compensation following termination
of employment with the Company. The Company is not aware that any officer or key
employee, or that any group of key employees, intends to terminate their
employment
8.
13
with the Company, nor does the Company have a present intention to terminate the
employment of any officer, key employee or group of key employees.
3.15. NON-COMPETITION AND NON-DISCLOSURE AGREEMENTS. Each former and
current employee, officer and consultant of the Company has executed a
Non-Competition and Non-Disclosure Agreement in one of the forms attached as
Exhibit K hereto.
3.16. OBLIGATIONS OF MANAGEMENT. Each officer of the Company is
currently devoting one hundred percent (100%) of his business time to the
conduct of the business of the Company. The Company is not aware of any officer
or key employee of the Company planning to work less than full time at the
Company in the future.
3.17. REGISTRATION RIGHTS. Except as required pursuant to the Investor
Rights Agreement, the Company is presently not under any obligation, and has not
granted any rights, to register (as defined in Section 1.1 of the Investor
Rights Agreement) any of the Company's presently outstanding securities or any
of its securities that may hereafter be issued.
3.18. COMPLIANCE WITH LAWS; PERMITS. To its knowledge, the Company is
not in violation of any applicable statute, rule, regulation, order or
restriction of any domestic or foreign government or any instrumentality or
agency thereof in respect of the conduct of its business or the ownership of its
properties which violation would materially and adversely affect the business,
assets, liabilities, financial condition, operations or prospects of the
Company. No governmental orders, permissions, consents, approvals or
authorizations are required to be obtained and no registrations or declarations
are required to be filed in connection with the execution and delivery of this
Agreement and the issuance of the Shares or the Conversion Shares, except such
as has been duly and validly obtained or filed, or with respect to any filings
that must be made after the Closing, as will be filed in a timely manner. The
Company has all franchises, permits, licenses and any similar authority
necessary for the conduct of its business as now being conducted by it, the lack
of which could materially and adversely affect the business, properties,
prospects or financial condition of the Company and believes it can obtain,
without undue burden or expense, any similar authority for the conduct of its
business as planned to be conducted.
3.19. ENVIRONMENTAL AND SAFETY LAWS. To its knowledge, the Company is
not in violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety, and to its knowledge, no material
expenditures are or will be required in order to comply with any such existing
statute, law or regulation.
3.20. OFFERING VALID. Assuming the accuracy of the representations and
warranties of the Purchasers contained in Section 4.2 hereof, the offer, sale
and issuance of the Shares and the Conversion Shares will be exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act") and will have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit or qualification
requirements of all applicable state securities laws. Neither the Company nor
any agent on its behalf has solicited or will solicit any offers to sell or has
offered to sell or will offer to sell all or any part of the Shares to any
person or persons so as to bring the sale of such Shares by the Company within
the registration provisions of the Securities Act.
3.21. FULL DISCLOSURE. This Agreement, the Exhibits hereto, the Related
Agreements and all other documents delivered by the Company to Purchasers or
their attorneys or agents in connection
9.
14
herewith or therewith or with the transactions contemplated hereby or thereby,
do not contain any untrue statement of a material fact nor, to the Company's
knowledge, omit to state a material fact necessary in order to make the
statements contained herein or therein not misleading. The Business Plan, dated
March 25, 1996 (the "Business Plan") provided to each of the Purchasers was
prepared by the management of the Company in a good faith effort to describe the
Company's proposed business and products and the markets therefore. The
assumptions applied in preparing the Business Plan appeared reasonable to
management as of the date thereof and as of the date hereof; however, there is
no assurance that these assumptions will prove to be valid or that the
objectives set forth in the Business Plan will be achieved. To the Company's
knowledge, there are no facts which (individually or in the aggregate)
materially adversely affect the business, assets, liabilities, financial
condition, prospects or operations of the Company that have not been set forth
in the Agreement, the Exhibits hereto, the Related Agreements or in other
documents delivered to Purchasers or their attorneys or agents in connection
herewith.
3.22. QUALIFIED SMALL BUSINESS. The Company represents and warrants to
the Purchasers that, to the best of its knowledge, the Shares should qualify as
"Qualified Small Business Stock" as defined in Section 1202(c) of the Internal
Revenue Code of 1986, as amended (the "Code") as of the date hereof. The Company
will use reasonable efforts to comply with the reporting and record keeping
requirements of Section 1202 of the Code, any regulations promulgated thereunder
and any similar state laws and regulations, and agrees not to repurchase any
stock of the Company if such repurchase would cause such Shares not to so
qualify as "Qualified Small Business Stock."
3.23. MINUTE BOOKS. The minute books of the Company provided to the
Purchasers contain a complete summary of all meetings of directors and
shareholders since the time of incorporation.
3.24. SECTION 83(b) ELECTIONS. To the Company's knowledge, all
elections and notices permitted by Section 83(b) of the Internal Revenue Code
and any analogous provisions of applicable state tax laws have been timely filed
by all employees who have purchased shares of the Company's common stock under
agreements that provide for the vesting of such shares.
3.25. REAL PROPERTY HOLDING CORPORATION. The Company is not a real
property holding corporation within the meaning of Internal Revenue Code Section
897(c)(2) and any regulations promulgated thereunder.
3.26. INSURANCE. The Company has or will obtain promptly following the
Initial Closing fire and casualty insurance policies with coverage customary for
companies similarly situated to the Company.
3.27. INVESTMENT COMPANY ACT. The Company is not an "investment
company", or a company "controlled" by an "investment", within the meaning of
the Investment Company Act of 1940, as amended.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
Each Purchaser hereby represents and warrants to the Company as of each
Closing in which such Purchaser participates, as follows (such representations
and warranties do not lessen or obviate the representations and warranties of
the Company set forth in this Agreement):
10.
15
4.1. REQUISITE POWER AND AUTHORITY. Purchaser has all necessary power
and authority under all applicable provisions of law to execute and deliver this
Agreement and the Related Agreements and to carry out their provisions. All
action on Purchaser's part required for the lawful execution and delivery of
this Agreement and the Related Agreements have been or will be effectively taken
prior to the Closing. Upon their execution and delivery, this Agreement and the
Related Agreements will be valid and binding obligations of Purchaser,
enforceable in accordance with their terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights, (ii) general principles
of equity that restrict the availability of equitable remedies, and (iii) to the
extent that the enforceability of the indemnification provisions of Section 2.9
of the Investor Rights Agreement may be limited by applicable laws.
4.2. INVESTMENT REPRESENTATIONS. Purchaser understands that the Shares,
the Warrant Shares and the Conversion Shares have not been registered under the
Securities Act. Purchaser also understands that the Shares are being offered and
sold pursuant to an exemption from registration contained in the Securities Act
based in part upon Purchaser's representations contained in the Agreement.
Purchaser hereby represents and warrants as follows:
(a) PURCHASER BEARS ECONOMIC RISK. Purchaser has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that it is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests. Purchaser must bear the economic risk of
this investment indefinitely unless the Shares (or the Warrant Shares or
Conversion Shares) are registered pursuant to the Securities Act, or an
exemption from registration is available. Purchaser understands that the Company
has no present intention of registering the Shares, the Warrant Shares, the
Conversion Shares or any shares of its Common Stock. Purchaser also understands
that there is no assurance that any exemption from registration under the
Securities Act will be available and that, even if available, such exemption may
not allow Purchaser to transfer all or any portion of the Shares, the Warrant
Shares or the Conversion Shares under the circumstances, in the amounts or at
the times Purchaser might propose.
(b) ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring the
Shares and the Conversion Shares for Purchaser's own account for investment
only, and not with a view towards their distribution.
(c) PURCHASER CAN PROTECT ITS INTEREST. Purchaser represents
that by reason of its, or of its management's, business or financial experience,
Purchaser has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement, and the Related Agreements.
Further, Purchaser is aware of no publication of any advertisement in connection
with the transactions contemplated in the Agreement.
(d) ACCREDITED INVESTOR. Purchaser represents that it is an
accredited investor within the meaning of Regulation D under the Securities Act.
(e) COMPANY INFORMATION. Purchaser has received and read the
Financial Statements and Business Plan and has had an opportunity to discuss the
Company's business, management and financial affairs with directors, officers
and management of the Company and has had the opportunity to review the
Company's operations and facilities. Purchaser has also had the opportunity to
ask questions of and receive answers from, the Company and its management
regarding the terms and conditions of this investment.
11.
16
(f) RULE 144. Purchaser acknowledges and agrees that the
Shares, and, if issued, the Warrant Shares and the Conversion Shares must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Purchaser has been
advised or is aware of the provisions of Rule 144 promulgated under the
Securities Act, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things: the availability of certain current public information about the
Company, the resale occurring not less than two years after a party has
purchased and paid for the security to be sold, the sale being through an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934, as
amended) and the number of shares being sold during any three-month period not
exceeding specified limitations.
(g) RESIDENCE. If the Purchaser is an individual, then the
Purchaser resides in the state or province identified in the address of the
Purchaser set forth on Exhibit A; if the Purchaser is a partnership,
corporation, limited liability company or other entity, then the office or
offices of the Purchaser in which its investment decision was made is located at
the address or addresses of the Purchaser set forth on Exhibit A.
4.3. TRANSFER RESTRICTIONS. Each Purchaser acknowledges and agrees that
the Shares and, if issued, the Warrant Shares and the Conversion Shares are
subject to restrictions on transfer as set forth in the Investor Rights
Agreement.
SECTION 5. CONDITIONS TO CLOSING.
5.1. CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE CLOSING. Purchasers'
obligations to purchase the Shares at the Initial Closing are subject to the
satisfaction, at or prior to Initial Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company in Section 3
hereof shall be true and correct in all material respects as of Initial Closing
Date with the same force and effect as if they had been made as of Initial
Closing Date, and the Company shall have performed all obligations and
conditions herein required to be performed or observed by it on or prior to the
Closing.
(b) LEGAL INVESTMENT. On the Initial Closing Date, the sale
and issuance of the Shares and the Warrant, and the proposed issuance of the
Conversion Shares and the Warrant Shares, shall be legally permitted by all laws
and regulations to which Purchasers and the Company are subject.
(c) CONSENTS, PERMITS, AND WAIVERS. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement and the Related
Agreements (except for such as may be properly obtained subsequent to the
Initial Closing).
(d) FILING OF RESTATED CERTIFICATE. The Restated Certificate
shall have been filed with the Secretary of State of the State of Delaware.
(e) CORPORATE DOCUMENTS. The Company shall have delivered to
Purchasers or their counsel, copies of all corporate documents of the Company as
Purchasers shall reasonably request.
12.
17
(f) RESERVATION OF CONVERSION SHARES. The Conversion Shares
issuable upon conversion of the Shares shall have been duly authorized and
reserved for issuance upon such conversion.
(g) RESERVATION OF WARRANT SHARES. The Warrant Shares issuable
upon exercise of the First Warrant, and the Common Stock issuable upon exercise
of the Second Warrant, shall have been duly authorized and reserved for issuance
upon such exercise.
(h) AMENDMENT OF BYLAWS AND 1995 STOCK OPTION PLAN. The
Company shall have amended its Bylaws and its 1995 Stock Option Plan to provide
that the Company shall have a right of first refusal on the sale, assignment,
pledge or transfer in any manner of the shares of Common Stock of the Company in
the form attached hereto as Exhibit N. Additionally, all current optionholders
and Messrs. Goedde, Hill, ▇▇▇▇▇▇, ▇▇▇▇▇ and Ford shall have agreed to the
imposition of such right of first refusal on the shares of Common Stock held or
to be acquired by such persons.
(i) COMPLIANCE CERTIFICATE. The Company shall have delivered
to Purchasers a Compliance Certificate, executed by the President of the
Company, dated the date of the Closing, to the effect that the conditions
specified in subsections (a), (c), (d), (f), (g) and (h) of this Section 5.1
have been satisfied.
(j) INVESTOR RIGHTS AGREEMENT. An Investor Rights Agreement
substantially in the form attached hereto as Exhibit G shall have been executed
and delivered by the parties thereto.
(k) SHAREHOLDERS AGREEMENT. A Shareholders Agreement
substantially in the form attached hereto as Exhibit H shall have been executed
and delivered by the parties thereto.
(l) BOARD OF DIRECTORS. Upon the Closing, the authorized size
of the Board of Directors of the Company shall be six members and the Board
shall consist of ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. Washing and ▇▇▇▇▇▇▇ ▇▇▇▇▇.
(m) LEGAL OPINION. The Purchasers shall have received from
legal counsel to the Company an opinion addressed to them, dated as of the
Closing Date, in substantially the form attached hereto as Exhibit L.
(n) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
hereby and all documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to the Purchasers and their
special counsel, and the Purchasers and their special counsel shall have
received all such counterpart originals or certified or other copies of such
documents as they may reasonably request.
(o) STOCK RESTRICTION AGREEMENT. Each of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇ shall have entered into a Stock
Restriction Agreement in substantially the form attached hereto as Exhibit M.
(p) DRC AND CEI AGREEMENTS. The Company and DRC shall have
entered into the DRC Agreement, a copy of which is attached hereto as Exhibit D.
The Company and CEI shall have entered into that certain Technology Transfer
Agreement, a copy of which is attached hereto as Exhibit E.
13.
18
5.2. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's obligation
to issue and sell the Shares at each Closing is subject to the satisfaction, on
or prior to such Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties made by Purchasers in Section 4 hereof shall be true and correct
in all material respects at the date of the Closing, with the same force and
effect as if they had been made on and as of said date.
(b) PERFORMANCE OF OBLIGATIONS. Purchasers shall have
performed and complied with all agreements and conditions herein required to be
performed or complied with by Purchasers on or before the Closing.
(c) FILING OF RESTATED CERTIFICATE. The Restated Articles
shall have been filed with the Secretary of State of the State of Delaware.
(d) INVESTOR RIGHTS AGREEMENT. An Investor Rights Agreement
substantially in the form attached hereto as Exhibit G shall have been executed
and delivered by the Purchasers.
(e) CONSENTS, PERMITS, AND WAIVERS. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement and the Related
Agreements (except for such as may be properly obtained subsequent to the
Closing).
SECTION 6. MISCELLANEOUS.
6.1. GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of Delaware as such laws are applied to agreements between
Delaware residents entered into and performed entirely in Delaware.
6.2. SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by any Purchaser and
the closing of the transactions contemplated hereby. All statements as to
factual matters contained in any certificate or other instrument delivered by or
on behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.
6.3. SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Shares from time to time.
14.
19
6.4. ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules
hereto, the Related Agreements and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and no party shall be liable or bound to any
other in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein.
6.5. SEVERABILITY. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
6.6. AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only upon the
written consent of the Company and holders of at least a majority of the Shares
(treated as if converted and including any Conversion Shares into which the
Shares have been converted that have not been sold to the public).
(b) The obligations of the Company and the rights of the
holders of the Shares and the Conversion Shares under the Agreement may be
waived only with the written consent of the holders of at least a majority of
the Shares (treated as if converted and including any Conversion Shares into
which the Shares have been converted that have not been sold to the public).
6.7. DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement, the Related
Agreements or the Restated Certificate, shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of or in any similar breach,
default or noncompliance thereafter occurring. It is further agreed that any
waiver, permit, consent or approval of any kind or character on any Purchaser's
part of any breach, default or noncompliance under this Agreement, the Related
Agreements or under the Restated Certificate or any waiver on such party's part
of any provisions or conditions of the Agreement, the Related Agreements, or the
Restated Certificate must be in writing and shall be effective only to the
extent specifically set forth in such writing. All remedies, either under this
Agreement, the Related Agreements, the Restated Certificate, by law, or
otherwise afforded to any party, shall be cumulative and not alternative.
6.8. NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified; (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
Company at the address as set forth on the signature page hereof and to
Purchaser at the address set forth on Exhibit A attached hereto or at such other
address as the Company or Purchaser may designate by ten (10) days advance
written notice to the other parties hereto.
15.
20
6.9. EXPENSES. The Company shall pay all costs and expenses that it
incurs with respect to the negotiation, execution, delivery and performance of
the Agreement. The Company shall, at the Closing, reimburse the reasonable fees
and expenses of ▇▇▇▇▇▇ Godward ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to ▇▇▇▇ ▇▇▇▇▇▇▇
Ventures, incurred in connection with the negotiation, execution, delivery and
performance of this Agreement.
6.10. ATTORNEYS' FEES. In the event that any dispute among the parties
to this Agreement should result in litigation, the prevailing party in such
dispute shall be entitled to recover from the losing party all fees, costs and
expenses of enforcing any right of such prevailing party under or with respect
to this Agreement, including without limitation, such reasonable fees and
expenses of attorneys and accountants, which shall include, without limitation,
all fees, costs and expenses of appeals.
6.11. TITLES AND SUBTITLES. The titles of the sections and subsections
of the Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
6.12. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
6.13. BROKER'S FEES. Other than the finder's fee payable to ▇▇▇▇▇▇ ▇.
Washing, which shall be payable solely by the Company, each party hereto
represents and warrants that no agent, broker, investment banker, person or firm
acting on behalf of or under the authority of such party hereto is or will be
entitled to any broker's or finder's fee or any other commission directly or
indirectly in connection with the transactions contemplated herein. Each party
hereto further agrees to indemnify each other party for any claims, losses or
expenses incurred by such other party as a result of the representation in this
Section 6.13 being untrue.
6.14. EXCULPATION AMONG PURCHASERS. Each Purchaser acknowledges that it
is not relying upon any person, firm, or corporation, other than the Company and
its officers and directors, in making its investment or decision to invest in
the Company. Each Purchaser agrees that no Purchaser nor the respective
controlling persons, officers, directors, partners, agents, or employees of any
Purchaser shall be liable for any action heretofore or hereafter taken or
omitted to be taken by any of them in connection with the Shares and Conversion
Shares.
6.15. PRONOUNS. All pronouns contained herein, and any variations
thereof, shall be deemed to refer to the masculine, feminine or neutral,
singular or plural, as to the identity of the parties hereto may require.
[THIS SPACE INTENTIONALLY LEFT BLANK]
16.
21
IN WITNESS WHEREOF, the parties hereto have executed the SERIES A AND
SERIES B PREFERRED STOCK PURCHASE AGREEMENT as of the date set forth in the
first paragraph hereof.
COMPANY: PURCHASERS:
REQUISITE TECHNOLOGY, INC. ▇▇▇▇, ▇▇▇▇▇▇▇ VENTURES IV, L.P.
BY: FOURTH MDV PARTNERS, L.L.C.,
GENERAL PARTNER
By: By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------------- -------------------------------
Member Member
MDV IV ENTREPRENEURS' NETWORK FUND, L.P.
BY: FOURTH MDV PARTNERS, L.L.C.,
GENERAL PARTNER
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
Member
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. WASHING
--------------------------------------
▇▇▇▇▇▇ ▇. WASHING
22
CORPORATE EXPRESS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Title: VP - Information Systems
--------------------------------
DISTRIBUTION RESOURCES COMPANY
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
---------------------------------
Title: Chairman
--------------------------------
23
EXHIBIT A
SCHEDULE OF PURCHASERS
INITIAL CLOSING SHARES
SERIES A SERIES B AGGREGATE
NAME AND ADDRESS STOCK STOCK CASH PURCHASE PRICE
---------------- ----- ----- ---- --------------
▇▇▇▇, ▇▇▇▇▇▇▇ Ventures IV, L.P. 0 1,591,161 $2,539,004.78 $2,880,001.41(1)
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
MDV IV Entrepreneurs' Network Fund, L.P. 0 66,298 $105,791.11 $ 119,999.38(2)
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 0 55,248 $0.00 $ 99,998.88(3)
Minnesota River School of Fine Arts
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 0 13,812 $24,999.72 $ 24,999.72
▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. Washing 0 27,624(4) $49,999.44 $ 49,999.44
▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
---------
(1) Includes conversion of outstanding notes, dated April 26, 1996 and July 2,
1996, in the aggregate amount of $244,638.87 (including interest) and
$96,357.76 (including interest), respectively.
(2) Includes conversion of outstanding notes, dated April 26, 1996 and July 2,
1996 in the aggregate amount of $10,193,39 (including interest) and
$4,014.88 (including interest), respectively.
(3) Consists of conversion of an outstanding note, dated March 6, 1996. The
unpaid principal and all accrued interest will be repaid by the Company
upon the Initial Closing.
(4) Does not include the purchase of 276,243 shares of Series B Stock pursuant
to section 2.3(a).
1.
24
Corporate Express, Inc. 189,630(5) 138,122(6) $0.00 (7)
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Distribution Resources Company 0 0(8) $0.00 $0.00
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
----------
(5) Additionally, CEI shall receive (i) the First Warrant to purchase 147,790
shares of Series A Stock at $.10 per share and (ii) the Second Warrant to
purchase 20,000 shares of Common Stock at $.01 per share.
(6) Does not include the purchase of up to 121,547 shares of Series B Preferred
stock pursuant to Section 2.3(b).
(7) Consists of conversion of an outstanding note (together with all accrued
interest) in the amount of $256,000, dated November 23, 1994, for the
purchase of Series A Stock and conversion of five outstanding notes
(together with all accrued interest) in the aggregate amount of $250,000,
dated as of November 21, 1995, January 5, 1996 January 24, 1996, February
20, 1996 and April 2, 1996 for the purchase of Series B Stock.
(8) Does not included purchase of up to 118,784 shares of Series B Stock
pursuant to Section 2.3(b).
2.
25
REQUISITE TECHNOLOGY, INC.
FIRST AMENDMENT TO
SERIES A AND SERIES B PREFERRED STOCK PURCHASE AGREEMENT
This First Amendment to the Series A and Series B Preferred Stock
Purchase Agreement, dated as of July 18, 1996 (the "Purchase Agreement") is
entered into as of January 29, 1997, by and among Requisite Technology, Inc., a
Delaware corporation (the "Company"), certain holders of the Company's Series B
Preferred Stock (the "Initial Purchasers") and the additional purchasers set
forth on the Schedule of Purchasers attached hereto as Exhibit A (the
"Additional Purchasers").
RECITALS
WHEREAS, the Company, the Initial Purchasers and certain other persons
entered into the Purchase Agreement pursuant to which the Initial Purchasers and
such other purchasers purchased from the Company an aggregate of 1,892,265
shares of the Company's Series B Preferred Stock;
WHEREAS, the Company wishes to sell to the Additional Purchasers, and
the Additional Purchasers wish to purchase, an aggregate of 1,104,973 shares of
the Company's Series B Preferred Stock; and
WHEREAS, in accordance with Section 6.6 of the Purchase Agreement, the
Company and the Initial Purchasers wish to amend the Purchase Agreement to
include the Additional Purchasers as parties to such agreement and to permit the
sale of up to an additional 1,104,973 shares of Series B Preferred Stock
pursuant to this First Amendment.
In consideration of the mutual agreements, covenants and considerations
contained herein, the parties hereto agree as follows:
1. PURCHASE AND SALE; CLOSING
1.1 Subject to the terms and conditions hereof, and in reliance upon
the representations contained herein or incorporated by reference, the Company
hereby agrees to issue and sell to the Additional Purchasers, and the Additional
Purchasers hereby agree to purchase from the Company, that number of shares of
Series B Preferred Stock specified opposite the Additional Purchasers' names on
the Schedule of Purchasers attached hereto as Exhibit A, at a purchase price of
one dollar and eighty-one cents ($1.81) per share (the "Additional Shares").
1.2 The closing of the sale and purchase of the Additional Shares (the
"Second Closing") shall take place on the date hereof at the offices of ▇▇▇▇▇▇
Godward LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or at such other
time or place as the Company and the Additional Purchaser may mutually agree. At
the Second Closing, subject to the terms and
1.
26
conditions hereof, the Company will deliver to the Additional Purchasers
certificates representing the number of Additional Shares purchased by each such
Additional Purchaser from the Company against payment by or on behalf of each
such Additional Purchaser of the purchase price therefor by wire transfer, check
made payable to the order of the Company or by such other means as shall be
mutually agreeable to the Additional Purchasers and the Company.
2. PURCHASE AGREEMENT
2.1 All capitalized terms used herein without definition shall have the
meanings ascribed to them in the Purchase Agreement.
2.2 The Purchase Agreement and the Schedule of Purchasers thereto are
hereby amended (i) to include the Additional Purchasers as "Purchasers" for all
purposes thereunder with the Additional Purchasers agreeing to be bound by all
terms and conditions and making, as of the Second Closing, all representations
and warranties therein, including, without limitation, the representations and
warranties in Section 4 of the Purchase Agreement regarding investment intent,
the Additional Purchasers' qualifications and other matters; (ii) the Additional
Shares shall be deemed to be "Series B Stock" and "Shares" for all purposes
under the Purchase Agreement; (iii) references in the Purchase Agreement to the
"Closing" shall be deemed to refer to the Second Closing for purposes of the
purchase hereunder by the Additional Purchasers of the Additional Shares.
2.3 Section 2.3(a) is hereby amended and restated to read in full as
follows:
"At any time on or before January 31, 1997, the Company may sell
(the "Second Closing") up to 1,104,973 shares of Series B Stock to an investment
fund to be formed by ▇▇▇▇▇▇ ▇. Washing (the "Washing Fund") and such other
investors as may be mutually agreed to by the Company, ▇▇▇▇ ▇▇▇▇▇▇▇ Ventures and
the Washing Fund at a price of $1.81 per share."
2.4 Section 3.2 of the Purchase Agreement is hereby amended to read in
full as follows:
"3.2 CAPITALIZATION; VOTING RIGHTS. The authorized capital stock of
the Company, immediately prior to the Closing, will consist of 10,000,000 shares
of Common Stock, 1,898,347 shares of which are issued and outstanding and
1,125,000 shares of which are reserved for future issuance to key employees and
consultants pursuant to the Company's 1995 Stock Option Plan, of which 241,500
remain available for issuance under such plan, and 3,469,955 shares of Preferred
Stock, 337,420 of which are designated Series A Preferred Stock, 189,630 shares
of which are issued and outstanding, and 3,132,535 of which are designated
Series B Preferred Stock, 2,013,812 shares of which are issued and outstanding.
All issued and outstanding shares of the Company's Common Stock and Preferred
Stock (i) have been duly authorized and validly issued to the persons listed on
Exhibit I hereto, (ii) are fully paid and nonassessable, and (iii) were issued
in compliance with all applicable state and federal laws concerning the issuance
of securities. The rights, preferences, privileges and restrictions of the
2.
27
Shares are as stated in the Restated Certificate. The Conversion Shares have
been duly and validly reserved for issuance. Other than as set forth on Exhibit
I, and except as may be granted pursuant to the Related Agreements, there are no
outstanding options, warrants, rights (including conversion or preemptive rights
and rights of first refusal), proxy or shareholder agreements, or agreements of
any kind for the purchase or acquisition from the Company of any of its
securities. When issued in compliance with the provisions of this Agreement and
the Restated Certificate, the Shares and the Conversion Shares will be validly
issued, fully paid and nonassessable, and will be free of any liens or
encumbrances; provided, however, that the Shares and the Conversion Shares may
be subject to restrictions on transfer under state and/or federal securities
laws as set forth herein or as otherwise required by such laws at the time a
transfer is proposed.
2.5 The Company hereby represents and warrants to the Additional
Purchasers that the representations and warranties of the Company made in
Section 3 of the Purchase Agreement are true and correct in all material
respects as of the date of the Second Closing except (i) as set forth on the
updated Schedule of Exceptions attached as Exhibit B to this First Amendment
(ii) the references in such representations to the unaudited balance sheet of
the Company as at June 30, 1996, the unaudited consolidated statement of income
and cash flows for the six month period ending on June 30, 1996, and as to
changes since such date shall be deemed to refer to the unaudited balance sheet
of the Company as of December 31, 1996, and the unaudited statement of income
and cash flows for the twelve month period ending on December 31, 1996, copies
of which are attached hereto as Exhibit C and (iii) with respect to the purchase
of the Additional Shares hereunder, references to the "Restated Certificate of
Incorporation" of the Company shall be deemed to refer to the Restated
Certificate of Incorporation, as amended by the Certificate of Amendment
attached hereto as Exhibit D (the "Certificate of Amendment").
3. CONDITIONS TO ADDITIONAL OBLIGATIONS AT THE SECOND CLOSING. In lieu of the
conditions of the Additional Purchasers' obligations at the Closing set forth in
Section 5 of the Purchase Agreement, the Additional Purchasers' obligations to
purchase the Additional Shares at the Second Closing are subject to the
satisfaction, at or prior to the Second Closing, of the following conditions:
3.1 REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF OBLIGATIONS.
The representations and warranties made by the Company in Section 3 hereof shall
be true and correct in all material respects as of Closing with the same force
and effect as if they had been made on such date, and the Company shall have
performed all obligations and conditions herein required to be performed or
observed by it on or prior to the Second Closing.
3.2 LEGAL INVESTMENT. On the date of the Second Closing, the sale and
issuance of the Additional Shares, and the proposed issuance of the Conversion
Shares, shall be legally permitted by all laws and regulations to which the
Additional Purchasers and the Company are subject.
3.3 CONSENTS, PERMITS, AND WAIVERS. The Company shall have obtained any
and all consents, permits and waivers necessary or appropriate for consummation
of the transactions
3.
28
contemplated by the Purchase Agreement and the Related Agreements (except for
such as may be properly obtained subsequent to the Second Closing).
3.4 FILING OF CERTIFICATE OF AMENDMENT TO THE RESTATED CERTIFICATE. The
Certificate of Amendment to the Restated Certificate shall have been filed with
the Secretary of State of the State of Delaware.
3.5 CORPORATE DOCUMENTS. The Company shall have delivered to the
Additional Purchasers or their counsel, copies of all corporate documents of the
Company as the Additional Purchasers shall reasonably request.
3.6 RESERVATION OF CONVERSION SHARES. The Conversion Shares issuable
upon conversion of the Shares shall have been duly authorized and reserved for
issuance upon such conversion.
3.7 COMPLIANCE CERTIFICATE. The Company shall have delivered to the
Additional Purchasers a Compliance Certificate, executed by the President of the
Company, dated the date of the Second Closing, to the effect that the conditions
specified in Sections 3.1, 3.3, 3.4 and 3.6 have been satisfied.
3.8 INVESTOR RIGHTS AGREEMENT. The Company, the requisite parties to
the Investor Rights Agreement dated July 18, 1996, and the Additional Purchasers
shall have entered into an amendment to such agreement to provide that the
Additional Purchasers shall be deemed to be an "Investor" thereunder.
3.9 SHAREHOLDERS AGREEMENT. The Company, the requisite parties to the
Shareholder Agreement dated July 18, 1996 and the Additional Purchasers shall
have entered into an amendment to such agreement to provide that the Additional
Purchasers shall be deemed to be an "Investor" thereunder.
3.10 LEGAL OPINION. The Additional Purchasers shall have received from
legal counsel to the Company an opinion addressed to it, dated as of the Second
Closing, in substantially the form rendered at the Initial Closing.
3.11 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated at the Second Closing hereby and
all documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Additional Purchasers and its special
counsel, and the Additional Purchasers and their special counsel shall have
received all such counterpart originals or certified or other copies of such
documents as they may reasonably request.
4. COUNTERPARTS. This First Amendment may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
4.
29
5. OTHER TERMS AND CONDITIONS. All other terms and conditions of the Purchase
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this FIRST
AMENDMENT TO THE SERIES A AND SERIES B PREFERRED STOCK PURCHASE AGREEMENT as of
the date set forth in the first paragraph hereof.
COMPANY: INITIAL PURCHASERS:
REQUISITE TECHNOLOGY, INC. ▇▇▇▇, ▇▇▇▇▇▇▇ VENTURES IV, L.P.
BY: FOURTH MDV PARTNERS, L.L.C.,
GENERAL PARTNER
By: /s/ ▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------- --------------------------------
Member
Name: ▇▇▇▇ ▇▇▇▇▇
------------------------
Title: CEO MDV IV ENTREPRENEURS' NETWORK FUND,
----------------------- L.P.
BY: FOURTH MDV PARTNERS, L.L.C.,
GENERAL PARTNER
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Member
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. WASHING
-----------------------------------
▇▇▇▇▇▇ ▇. Washing
30
CORPORATE EXPRESS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------
Title: VP Information System
-----------------------------
ADDITIONAL PURCHASERS:
SEQUEL LIMITED PARTNERSHIP
BY: SEQUEL VENTURE PARTNERS L.L.C.
BY: /s/
--------------------------------
Manager
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇
31
EXHIBIT A
SCHEDULE OF PURCHASERS
SERIES A SERIES B AGGREGATE
NAME AND ADDRESS STOCK STOCK CASH PURCHASE PRICE
---------------- --------- -------- ----- --------------
INITIAL PURCHASER (FIRST CLOSING)
▇▇▇▇, ▇▇▇▇▇▇▇ Ventures IV, L.P. 0 1,591,161 $2,539,004.78 $ 2,880,001.41(1)
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
MDV IV Entrepreneurs' Network Fund, L.P. 0 66,298 $105,791.11 $ 119,999.38(2)
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 0 55,248 $ 0.00 $ 99,998.88(3)
Minnesota River School of Fine Arts
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 0 13,812 $ 24,999.72 $ 24,999.72
▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. Washing 0 27,624 $ 49,999.44 $ 49,999.44
▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
----------
(1) Includes conversion of outstanding notes, dated April 26, 1996 and July 2,
1996, in the aggregate amount of $244,638.87 (including interest) and
$96,357.76 (including interest), respectively.
(2) Includes conversion of outstanding notes, dated April 26, 1996 and July 2,
1996 in the aggregate amount of $10,193,39 (including interest) and
$4,014.88 (including interest), respectively.
(3) Consists of conversion of an outstanding note, dated March 6, 1996. The
unpaid principal and all accrued interest will be repaid by the Company upon
the Initial Closing.
32
Corporate Express, Inc. 189,630(4) 138,122(5) $ 0.00 (6)
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ADDITIONAL PURCHASERS (SECOND CLOSING)
Sequel Limited Partnership 0 1,088,399 $ 1,970,002.19 $ 1,970,002.19
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. Washing
▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇ 0 16,574 $ 29,998.94 $ 29,998.94
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
----------
(4) Additionally, CEI shall receive (i) the First Warrant to purchase 147,790
shares of Series A Stock at $.10 per share and (ii) the Second Warrant to
purchase 20,000 shares of Common Stock at $.01 per share.
(5) Does not include the purchase of up to 121,547 shares of Series B Preferred
stock pursuant to Section 2.3(b).
(6) Consists of conversion of an outstanding note (together with all accrued
interest) in the amount of $256,000, dated November 23, 1994, for the
purchase of Series A Stock and conversion of five outstanding notes
(together with all accrued interest) in the aggregate amount of $250,000,
dated as of November 21, 1995, January 5, 1996 January 24, 1996, February
20, 1996 and April 2, 1996 for the purchase of Series B Stock.
33
EXHIBIT B
UPDATED SCHEDULE OF EXCEPTIONS
34
EXHIBIT C
FINANCIAL STATEMENTS
DATED DECEMBER 31, 1996
35
EXHIBIT D
CERTIFICATE OF AMENDMENT TO RESTATED CERTIFICATE OF
INCORPORATION
