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EXHIBIT 10.1
COMMON STOCK PURCHASE AGREEMENT
DATED AS OF NOVEMBER 13, 2000
BY AND BETWEEN
USINTERNETWORKING, INC.
AND
ACQUA WELLINGTON
NORTH AMERICAN EQUITIES FUND, LTD.
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TABLE OF CONTENTS
PAGE
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ARTICLE I Definitions..............................................1
Section 1.1 Definitions..........................................1
ARTICLE II Purchase and Sale of Common Stock.........................3
Section 2.1 Purchase and Sale of Stock...........................3
Section 2.2 The Shares...........................................3
Section 2.3 Purchase Price and Closing...........................4
ARTICLE III Representations and Warranties...........................4
Section 3.1 Representations and Warranties of the Company........4
Section 3.2 Representations and Warranties of the Purchaser.....11
ARTICLE IV Covenants................................................12
Section 4.1 Securities Compliance...............................12
Section 4.2 Registration and Listing............................13
Section 4.3 Registration Statement..............................13
Section 4.4 Compliance with Laws................................13
Section 4.5 Keeping of Records and Books of Account.............13
Section 4.6 Intentionally Omitted...............................13
Section 4.7 Non-public Information..............................13
Section 4.8 Effective Registration Statement....................13
Section 4.9 No Stop Orders......................................14
Section 4.10 Amendments to the Registration Statement............14
Section 4.11 Prospectus Delivery.................................14
Section 4.12 Other Financing.....................................15
Section 4.13 Notices.............................................15
ARTICLE V Conditions to Closing, Draw Downs and Call Options......15
Section 5.1 Conditions Precedent to the Obligation of the
Company to Issue a Draw Down Notice or Grant a
Call Option and Sell the Shares.....................15
Section 5.2 Conditions Precedent to the Obligation of the
Purchaser to Close..................................16
Section 5.3 Conditions Precedent to the Obligation of the
Purchaser to Accept a Draw Down or Call Option
Grant and Purchase the Shares.......................17
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ARTICLE VI Draw Down Terms; Call Option...........................19
Section 6.1 Draw Down Terms....................................19
Section 6.2 Purchaser's Call Option............................22
ARTICLE VII Termination............................................22
Section 7.1 Termination by Mutual Consent......................22
Section 7.2 Other Termination..................................22
Section 7.3 Effect of Termination..............................23
ARTICLE VIII Indemnification........................................23
Section 8.1 General Indemnity..................................23
Section 8.2 Indemnification Procedures.........................25
ARTICLE IX Miscellaneous...........................................26
Section 9.1 Fees and Expenses..................................26
Section 9.2 Specific Enforcement, Consent to Jurisdiction......26
Section 9.3 Entire Agreement; Amendment........................26
Section 9.4 Notices............................................26
Section 9.5 Waivers............................................27
Section 9.6 Headings...........................................28
Section 9.7 Successors and Assigns.............................28
Section 9.8 Governing Law......................................28
Section 9.9 Survival...........................................28
Section 9.10 Counterparts.......................................28
Section 9.11 Publicity..........................................28
Section 9.12 Severability.......................................28
Section 9.13 Further Assurances.................................29
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COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is dated as of
November 13, 2000 by and between USinternetworking, Inc., a Delaware corporation
(the "Company"), and Acqua Wellington North American Equities Fund, Ltd., a
limited liability company organized under the laws of the Commonwealth of The
Bahamas (the "Purchaser").
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.1 Definitions.
(a) "Alternate Market" shall mean the Nasdaq Small Cap Market, the
American Stock Exchange, the New York Stock Exchange or the OTC Bulletin Board,
whichever is at the time the principal trading exchange or market for the Common
Stock.
(b) "Call Option" shall have the meaning assigned to such term in
Section 6.2(a) hereof.
(c) "Commission" shall mean the Securities and Exchange
Commission.
(d) "Commission Documents" shall mean all reports, schedules,
forms, statements and other documents filed by the Company with the Commission
pursuant to the reporting requirements of the Exchange Act, including material
filed pursuant to Section 13(a) or 15(d) of the Exchange Act, which have been
previously filed by the Company and which shall be filed by the Company in the
future during the Investment Period, including, without limitation the Form 10-K
filed by the Company for the year ended December 31, 1999 (the "Form 10-K"),
and shall include all information contained in such filings and all filings
incorporated by reference therein.
(e) "Commission Filings" means the Registration Statement on Form
S-3 No. 333-47858, and all other filings made by the Company with the Commission
prior to or after the Effective Date pursuant to the Exchange Act.
(f) "Common Stock" shall have the meaning assigned to such term in
Section 2.1 hereof.
(g) "Draw Down" means the exercise by the Company of its right to
request the purchase of shares of Common Stock by the Purchaser.
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(h) "Draw Down Amount" means the actual amount of a Draw Down up to
$35,000,000 or such other amount mutually agreed upon by the Purchaser and the
Company.
(i) "Draw Down Discount Percentage" means 94% if the Threshold Price is
equal to or greater than $3.00 but less than $4.00; provided, however, that (i)
for every $1.00 increase in the Threshold Price above $3.00 up to $5.00, the
draw down discount percentage shall be increased 0.5%, incrementally, and (ii)
for every $3.00 increase in the Threshold Price above $5.00, the draw down
discount percentage shall be increased 0.5%, incrementally, up to a maximum
draw down discount percentage of 96%.
(j) "Draw Down Exercise Date" shall have the meaning assigned to such
term in Section 5.1 hereof.
(k) "Draw Down Notice" shall have the meaning assigned to such term in
Section 6.1(i) hereof.
(l) "Draw Down Pricing Period" shall mean the period of eighteen (18)
consecutive Trading Days following a Draw Down Notice, or such other period
mutually agreed upon by the Purchaser and the Company.
(m) "Effective Date" shall mean November 24, 2000, the date the
Registration Statement of the Company covering the Shares being subscribed for
hereby was declared effective.
(n) "Investment Period" shall have the meaning assigned to such term in
Section 7.1 hereof.
(o) "Material Adverse Effect" shall mean any effect on the business,
operations, prospects or financial condition of the Company that is material and
adverse to the Company and its subsidiaries, taken as a whole and/or any
condition, circumstance, or situation that would prohibit or otherwise
interfere with the ability of the Company to enter into and perform any of its
obligations under this Agreement in any material respect.
(p) "Material Change in Ownership" shall mean that, as of any
particular measurement date, the officers and significant owners of the Company
shall beneficially own in the aggregate less than 1% of the outstanding Common
Stock of the Company, except that for purposes of making any such calculation,
Common Stock issued to the Purchaser pursuant to this Agreement shall not be
included in such calculation.
(q) "Prospectus" as used in this Agreement means the prospectus in the
form included in the Registration Statement, as supplemented by any prospectus
supplement filed with the Commission pursuant to Rule 424(b).
(r) "Registration Statement" shall mean the registration statement on
Form S-3, Commission File Number 333-47858 under the Securities Act, filed with
the Commission for the registration of the Shares, as such Registration
Statement may be amended from time to time.
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(s) "Section 6.1(m) Notice" shall have the meaning assigned to such
term in Section 6.1(m) hereof.
(t) "Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
(u) "Settlement Date" shall have the meaning assigned to such term in
Section 6.1(d) hereof.
(v) "Shares" shall mean collectively the shares of Common Stock of the
Company that may be purchased hereunder upon exercise of any Draw Down or Call
Option.
(w) "Threshold Price" is the lowest price at which the Company may set
in the Draw Down Notice to sell Shares during a Draw Down Pricing Period (not
taking into account the Draw Down Discount Percentage during such Draw Down
Pricing Period).
(x) "Trading Day" shall mean a day on which the Common Stock is traded
on the Nasdaq National Market or an Alternate Market.
(y) "Truncated Draw Down Allocation Amount" shall mean the portion of
the Draw Down Amount Requested that is allocated to the purchase of Shares in
accordance with Section 6.1 hereof for each Trading Day in a reduced Draw Down
Pricing Period (as provided in Section 6.1(m) hereof).
(z) "VWAP" shall mean the daily volume weighted average price (based on
a Trading Day from 9:30 a.m. to 4:00 p.m., New York time) of the Common Stock
of the Company on the NASDAQ National Market or an Alternate Market as reported
by Bloomberg Financial LP using the AQR function.
ARTICLE II
PURCHASE AND SALE OF COMMON STOCK
SECTION 2.1 Purchase and Sale of Stock. Subject to the terms and
conditions of this Agreement, the Company shall issue and sell to the Purchaser
and the Purchaser shall purchase from the Company up to $140,000,000 of the
Company's common stock, $.001 par value per share (the "Common Stock"),
consisting of (i) an initial Draw Down, subject to Section 6.1 hereof, of up to
$6,000,000 which may be requested at any time after ten (10) Trading Days after
the Closing Date, and an initial Call Option, subject to Section 6.2 hereof, of
up to $5,000,000, to be granted with the initial Draw Down, and (ii) subsequent
Draw Downs, subject to Section 6.1 hereof, and Call Options, subject to Section
6.2 hereof, of up to the Draw Down Amount for the applicable Draw Down Pricing
Period that the Company may grant to the Purchaser in its sole discretion.
SECTION 2.2 The Shares. The Company has authorized and has reserved
and covenants to continue to reserve, subject to Section 4.4(b) hereof, free of
preemptive rights and
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other similar contractual rights of stockholders, a sufficient number of its
authorized but unissued shares of its Common Stock to cover the Shares to be
issued in connection with all Draw Downs and Call Options.
SECTION 2.3 Purchase Price and Closing. The Company agrees to issue and
sell to the Purchaser and, in consideration of and in express reliance upon the
representations, warranties, covenants, terms and conditions of this Agreement,
the Purchaser, agrees to purchase that number of the Shares to be issued in
connection with the Initial Purchase, each Draw Down and each Call Option
exercised by the Purchaser. The closing of the execution and delivery of this
Agreement shall take place at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, The Chrysler
Building, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Closing") at
10:00 a.m., New York time, on (i) November 13, 2000, or (ii) such other time
and place or on such date as the Purchaser and the Company may agree upon (the
"Closing Date"). Each party shall deliver all documents, instruments and
writings required to be delivered by such party pursuant to this Agreement at or
prior to the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of the Company. The Company
hereby makes the following representations and warranties to the Purchaser:
(a) Organization, Good Standing and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of
Delaware and has the requisite corporate power to own, lease and operate its
properties and assets and to conduct its business as it is now being conducted.
As of the date hereof, the Company does not have any subsidiaries (as defined in
Section 3.1(g)) except as set forth in the Commission Documents or the
Commission Filings or on Schedule 3.1(g) attached hereto. The Company and each
such subsidiary is duly qualified as a foreign corporation to do business and
is in good standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary except for
any jurisdiction in which the failure to be so qualified will not have a
Material Adverse Effect.
(b) Authorization; Enforcement. The Company has the requisite corporate
power and authority to enter into and perform this Agreement and to issue and
sell the Shares in accordance with the terms hereof. The execution, delivery and
performance of this Agreement by the Company and the consummation by it of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action, and, except as contemplated by Sections 2.2 or
4.4(b), no further consent or authorization of the Company or its Board of
Directors or stockholders is required. This Agreement has been duly executed and
delivered by the Company. This Agreement constitutes, or shall constitute when
executed and delivered, a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership or
similar
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laws relating to, or affecting generally the enforcement of, creditor's rights
and remedies or by other equitable principles of general application.
(c) Capitalization. The authorized capital stock of the Company and the
shares thereof issued and outstanding as of the date hereof are set forth on
Schedule 3.l(c) attached hereto. All of the outstanding shares of the Company's
Common Stock have been duly and validly authorized, and are fully paid and
non-assessable. Except as set forth in this Agreement including Schedule 3.l(c)
attached hereto or as set forth in the Commission Documents or the Commission
Filings, as of the date hereof no shares of Common Stock are entitled to
preemptive rights or registration rights and there are no outstanding options,
warrants, scrip, rights to subscribe to, call or commitments of any character
whatsoever relating to, or securities or rights convertible into, any shares of
capital stock of the Company. Furthermore, except as set forth in this Agreement
including Schedule 3.1(c) attached hereto or as set forth in the Commission
Documents or the Commission Filings as of the date hereof there are no
contracts, commitments, understandings, or arrangements by which the Company is
or may become bound to issue additional shares of the capital stock of the
Company or options, securities or rights convertible into shares of capital
stock of the Company. Except for customary transfer restrictions contained in
agreements entered into by the Company in order to sell restricted securities or
as set forth in Schedule 3.1(c) attached hereto or as set forth in the
Commission Documents or the Commission Filings as of the date hereof, the
Company is not a party to any agreement granting registration rights to any
person with respect to any of its equity or debt securities. The Company is not
a party to, and it has no knowledge of, any agreement restricting the voting or
transfer of any shares of the capital stock of the Company. Except as set forth
in Schedule 3.1(c) attached hereto, the offer and sale of all capital stock,
convertible securities, rights, warrants, or options of the Company issued prior
to the Closing complied with all applicable federal and state securities laws,
and no stockholder has a right of rescission or damages with respect thereto
which would have a Material Adverse Effect. The Company has furnished or made
available to the Purchaser true and correct copies of the Company's Certificate
of Incorporation and in effect on the date hereof (the "Charter"), and the
Company's Bylaws as in effect on the date hereof (the "Bylaws").
(d) Issuance of Shares. The Shares to be issued under this Agreement
have been or, prior to the issuance to Purchaser hereunder, will be duly
authorized by all necessary corporate action and, when paid for and issued in
accordance with the terms hereof, the Shares shall be validly issued and
outstanding, fully paid and non-assessable, and the Purchaser shall be entitled
to all rights accorded to a holder of Common Stock.
(e) No Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated herein do not (i) violate any provision of the Company's Charter or
Bylaws, (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
material agreement, mortgage, deed of trust, indenture, note, bond, license,
lease agreement, instrument or obligation to which the Company is a party, (iii)
create or impose a lien, charge or encumbrance on any property of the Company
under any agreement or any commitment to which the Company is a party or by
which the Company is bound or by which any of its respective properties or
assets are bound, or (iv) result in a violation of any federal,
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state, local or foreign statute, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations) applicable to the
Company or any of its subsidiaries or by which any property or asset of the
Company or any of its subsidiaries are bound or affected, except, in all cases
(other than violations pursuant to clauses (i) and (iv) (to the extent of
federal securities law), for such conflicts, defaults, terminations,
amendments, acceleration, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect. The Company
is not required under federal, state or local law, rule or regulation to obtain
any consent, authorization or order of, or make any filing or registration
with, any court or governmental agency in order for it to execute, deliver or
perform any of its obligations under this Agreement, or issue and sell the
Shares in accordance with the terms hereof (other than any filings which may be
required to be made by the Company with the Commission, or the Nasdaq National
Market subsequent to the Closing, and, any registration statement which may be
filed pursuant hereto); provided that, for purpose of the representation made
in this sentence, the Company is assuming and relying upon the accuracy of the
relevant representations and agreements of the Purchaser herein.
(f) Commission Documents, Financial Statements. The Common Stock of
the Company is registered pursuant to Section 12(b) or 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the Company has
timely filed all Commission Documents. The Company has delivered or made
available to the Purchaser true and complete copies of the Commission Documents
filed with the Commission since December 31, 1999 and prior to the Closing
Date. The Company has not provided to the Purchaser any information which,
according to applicable law, rule or regulation, should have been disclosed
publicly by the Company but which has not been so disclosed, other than with
respect to the transactions contemplated by this Agreement. As of its date,
the Form 10-K for the year ended December 31, 1999 complied in all material
respects with the requirements of the Exchange Act and the rules and
regulations of the Commission promulgated thereunder and other federal, state
and local laws, rules and regulations applicable to such documents, and the
said Form 10-K, as of its date, did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the Commission Documents comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the Commission or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles ("GAAP") applied on
a consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the
case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements), and fairly present in all
material respects the financial position of the Company and its subsidiaries as
of the dates thereof and the results of operations and cash flows for the
period then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
(g) Subsidiaries. The Commission Documents, the Commission Filings
or Schedule 3.1(g) attached hereto set forth each subsidiary of the Company as
of the date hereof, showing the jurisdiction of its incorporation or
organization and showing the percentage of each person's ownership of the
outstanding stock or other interests of such subsidiary. For the
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purposes of this Agreement, "subsidiary" shall mean any corporation or other
entity of which at least a majority of the securities or other ownership
interest having ordinary voting power (absolutely or contingently) for the
election of directors or other persons performing similar functions are at the
time owned directly or indirectly by the Company and/or any of its other
subsidiaries. Except as set forth in the Commission Documents or the
Commission Filings, none of such subsidiaries is a "significant subsidiary" as
defined in Regulation S-X.
(h) No Material Adverse Effect. Since June 30, 2000, the Company
has not experienced or suffered any Material Adverse Effect except continued
losses from operations.
(i) No Undisclosed Liabilities. Except as set forth on Schedule
3.1(i) attached hereto, the Company has no liabilities, obligations, claims or
losses (whether liquidated or unliquidated, secured or unsecured, absolute,
accrued, contingent or otherwise) that would be required to be disclosed on a
balance sheet of the Company or any subsidiary (including the notes thereto) in
conformity with GAAP not disclosed in the Commission Documents, the Commission
Filings or on Schedule 3.1(i) attached hereto, other than those incurred in the
ordinary course of the Company's or its subsidiaries respective businesses
since June 30, 2000 and which, individually or in the aggregate, do not or
would not have a Material Adverse Effect.
(j) No Undisclosed Events or Circumstances. No event or
circumstance has occurred or exists with respect to the Company or its
subsidiaries or their respective businesses, properties, prospects, operations
or financial condition, which, under applicable law, rule or regulation,
requires public disclosure or announcement by the Company but which has not
been so publicly announced or disclosed and which, individually or in the
aggregate, do not or would not have a Material Adverse Effect.
(k) Indebtedness. The Commission Documents, the Commission Filings
or Schedule 3.1(k) attached hereto sets forth as of June 30, 2000 all
outstanding secured and unsecured Indebtedness of the Company, or for which the
Company or any subsidiary has commitments. For the purposes of this Agreement,
"Indebtedness" shall mean (a) any liabilities for borrowed money or amounts
owed in excess of $1,000,000 (other than trade accounts payable incurred in the
ordinary course of business), (b) all guaranties, endorsements and other
contingent obligations in respect of Indebtedness of others, whether or not the
same are or should be reflected in the Company's balance sheet (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 in excess of
$1,000,000 due under leases required to be capitalized in accordance with
GAAP. Neither the Company or any subsidiary is in default with respect to any
Indebtedness.
(l) Title to Assets. Each of the Company and its subsidiary has
good and marketable title to all of its real and personal property reflected
in the Commission Documents, free of any mortgages, pledges, charges, liens,
security interests or other encumbrances, except for those indicated in the
Commission Documents or the Commission Filings or on Schedule 3.1(l) attached
hereto such that could not reasonably be expected to cause a Material Adverse
Effect. All said leases of the Company and each of its subsidiaries are valid
and subsisting and in full force and effect in all material respects.
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(m) Actions Pending. There is no action, suit, claim,
investigation or proceeding pending or, to the knowledge of the Company,
threatened against the Company which questions the validity of this Agreement
or the transactions contemplated hereby or any action taken or to be taken
pursuant hereto or thereto. There is no action, suit, claim, investigation or
proceeding pending or, to the knowledge of the Company, threatened against or
involving the Company or any subsidiary, or any of their respective properties
or assets which, if adversely determined, is reasonably likely to result in a
Material Adverse Effect.
(n) Compliance with Law. The business of the Company has been and
is presently being conducted in accordance with all applicable federal, state
and local governmental laws, rules, regulations and ordinances, except as such
that do not cause a Material Adverse Effect. Each of the Company and its
subsidiary has all franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals necessary for the
conduct of its business as now being conducted unless the failure to possess
such franchises, permits, licenses, consents and other governmental or
regulatory authorizations and approvals, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
(o) Certain Fees. Except as set forth on Schedule 3.1(o) attached
hereto, no brokers, finders or financial advisory fees or commissions will be
payable by the Company with respect to the transactions contemplated by this
Agreement.
(p) Disclosure. To the Company's knowledge, neither this Agreement
or the Schedules hereto nor any other documents, certificates or instruments
furnished to the Purchaser by or on behalf of the Company in connection with
the transactions contemplated by this Agreement contain any untrue statement of
a material fact or omits to state a material fact necessary in order to make
the statements made herein or therein, in the light of the circumstances under
which they were made herein or therein, not misleading.
(q) Operation of Business. The Company or its subsidiary owns or
has a valid right to use all patents, trademarks, service marks, trade names,
copyrights, licenses and authorizations as set forth in the Commission
Documents or the Commission Filings and all rights with respect to the
foregoing, which are necessary for the conduct of its business as now conducted
without to the Company's knowledge any conflict with the rights of others,
except to the extent set forth in the Commission Documents or the Commission
Filings that a Material Adverse Effect could not reasonably be expected to
result from such conflict.
(r) Environmental Compliance. Except as disclosed in the Commission
Filings, the Company has obtained all approvals, authorization, certificates,
consents, licenses, orders and permits or other similar authorizations of all
governmental authorities, or from any other person, that are required under any
Environmental Laws. "Environmental Laws" shall mean all applicable laws
relating to the protection of the environment including, without limitation,
all requirements pertaining to reporting, licensing, permitting, controlling,
investigating or remediating emissions, discharges, releases or threatened
releases of hazardous substances, chemical substances, pollutants, contaminants
or toxic substances, materials or wastes, whether solid, liquid or gaseous in
nature, into the air, surface water, groundwater or land, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
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transport or handling of hazardous substances, chemical substances, pollutants,
contaminants or toxic substances, material or wastes, whether solid, liquid or
gaseous in nature. Except for such instances as would not individually or in
the aggregate have a Material Adverse Effect, to the best of the Company's
knowledge, there are no past or present events, conditions, circumstances,
incidents, actions or omissions relating to or in any way affecting the Company
that violate or could reasonably be expected to violate any Environmental Law
after the Closing or that could reasonably be expected to give rise to any
environmental liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation (i) under any
Environmental Law, or (ii) based on or related to the manufacture, processing,
distribution, use, treatment, storage (including without limitation underground
storage tanks), disposal, transport or handling, or the emission, discharge,
release or threatened release of any hazardous substance.
(s) Material Agreements. Except as set forth in the Commission
Documents, the Commission Filings or on Schedule 3.1(s) attached hereto, the
Company is not a party to any written or oral contract, instrument, agreement,
commitment, obligation, plan or arrangement, a copy of which would be required
to be filed with the Commission as an exhibit to a registration statement on
Form S-3 or applicable form (collectively, "Material Agreements") if the
Company was registering securities under the Securities Act. The Company has
in all material respects performed all the obligations required to be performed
by it to date under the foregoing Material Agreements, has received no notice
of default and, to the best of the Company's knowledge is not in default under
any Material Agreement now in effect, the result of which could reasonably be
expected to cause a Material Adverse Effect.
(t) Transactions with Affiliates. Except as set forth in the
Commission Documents, the Commission Filings or on Schedule 3.1(s) attached
hereto, there are no loans, leases, agreements, contracts, royalty agreements,
management contracts or arrangements or other continuing transactions exceeding
$1,000,000 between (a) the Company or any subsidiary on the one hand, and (b) on
the other hand, any officer, employee, consultant or director of the Company, or
any person who would be covered by Item 404(a) of Regulation S-K or any
corporation or other entity controlled by such officer, employee, director or
person.
(u) Securities Act of 1933. The Company has complied in all
material respects with all applicable federal and state securities laws in
connection with the offer, issuance and sale of the Shares hereunder.
(i) Each Prospectus included as part of the Registration
Statement as originally filed or as part of any amendment or supplement
thereto, or filed pursuant to Rule 424 under the Securities Act, complied when
so filed in all material respects with the provisions of the Securities Act.
The Commission has not issued any order preventing or suspending the use of any
Prospectus.
(ii) The Company meets the requirements for the use of Form S-3
under the Securities Act. The Registration Statement in the form in which it
became effective and also in such form as it may be when any post-effective
amendment thereto became effective and the Prospectus and any supplement or
amendment thereto when filed with the Commission under Rule 424(b) under the
Securities Act, complied in all material respects with the provisions of the
Securities Act and did not at any such times contain an untrue statement of a
material fact
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or omit to state a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in the light of the
circumstances under which they made) not misleading, except that this
representation and warranty does not apply to statements in or omissions from
the Registration Statement or the Prospectus made in reliance upon and in
conformity with information relating to the Purchaser furnished to the Company
in writing by or on behalf of the Purchaser expressly for use therein.
(iii) The Company has not distributed and, prior to the
completion of the sale of the Shares to the Purchaser, will not distribute any
offering material in connection with the offering and sale of the Shares other
than the Registration Statement, the Prospectus or other materials, if any,
permitted by the Securities Act.
(v) Employees. Except as set forth in the Commission Documents, the
Commission Filings or on Schedule 3.1(v) attached hereto, as of the date hereof,
the Company has no collective bargaining arrangements or agreements covering any
of its employees. Except as set forth on Schedule 3.1(v) attached hereto, as of
the date hereof the Company has no employment contract or any other similar
contract or restrictive covenant, relating to the right of any officer, key
employee or consultant to be employed or engaged by the Company whose
termination individually or in the aggregate could reasonably be expected to
have a Material Adverse Effect. As of the date hereof, since June 30, 2000, no
officer, consultant or key employee of the Company whose termination, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, has terminated or, to the knowledge of the Company, has
any present intention of terminating his or her employment or engagement with
the Company.
(w) Use of Proceeds. The proceeds from the sale of the Shares will be
used by the Company and its subsidiary as set forth in the Registration
Statement.
(x) Public Utility Holding Company Act and Investment Company Act
Status. The Company is not a "holding company" or a "public utility company" as
such terms are defined in the Public Utility Holding Company Act of 1935, as
amended. The Company is not, and as a result of and immediately upon Closing
will not be, an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.
(y) ERISA. No liability to the Pension Benefit Guaranty Corporation
has been incurred with respect to any Plan (as defined below) by the Company
which is or would have a Material Adverse Effect. The execution and delivery of
this Agreement and the issue and sale of the Shares will not involve any
transaction which is subject to the prohibitions of Section 406 of ERISA or in
connection with which a tax could be imposed pursuant to Section 4975 of the
Internal Revenue Code of 1986, as amended, provided that, if any of the
Purchaser, or any person or entity that owns a beneficial interest in any of the
Purchaser, is an "employee pension benefit plan" (within the meaning of Section
3(2) of ERISA) with respect to which the Company is a "party in interest"
(within the meaning of Section 3(14) of ERISA), the requirements of Sections
407(d)(5) and 408(e) of ERISA, if applicable, are met. As used in this Section
3.1(y), the term "Plan" shall mean an "employee pension benefit plan" (as
defined in Section 3 of ERISA) which is or has been established or maintained,
or to which contributions are or have
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been made, by the Company or by any trade or business, whether or not
incorporated, which, together with the Company, is under common control, as
described in Section 414(b) or (c) of the Code.
(z) Acknowledgement Regarding Purchaser's Purchase of Shares. The
Company acknowledges and agrees that the Purchaser is acting solely in the
capacity of arm's length purchaser with respect to this Agreement and the
transactions contemplated hereunder. The Company further acknowledges that
the Purchaser is not acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to this Agreement and the transactions
comtemplated hereunder and any advice given by the Purchaser or any of its
representatives or agents in connection with this Agreement and the transactions
contemplated hereunder is merely incidental to the Purchaser's purchase of the
Shares.
SECTION 3.2 Representations and Warranties of the Purchaser. The
Purchaser hereby makes the following representations and warranties to the
Company:
(a) Organization and Standing of the Purchaser. The Purchaser is a
limited liability company duly organized, validly existing and in good standing
under the laws of the Commonwealth of the Bahamas.
(b) Authorization and Power. The Purchaser has the requisite
corporate power and authority to enter into and perform this Agreement and to
purchase the Shares in accordance with the terms hereof. The execution,
delivery and performance of this Agreement by Purchaser and the consummation by
it of the transactions contemplated hereby have been duly authorized by all
necessary corporate action, and no further consent or authorization of the
Purchaser, its Board of Directors or stockholders is required. This Agreement
constitutes, or shall constitute when executed and delivered, a valid and
binding obligation of the Purchaser enforceable against the Purchaser in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership, or similar laws relating to, or affecting
generally the enforcement of, creditor's rights and remedies or by other
equitable principles of general application.
(c) No Conflicts. The execution, delivery and performance of this
Agreement and the consummation by the Purchaser of the transactions contemplated
hereby and thereby or relating hereto do not and will not (i) result in a
violation of such Purchaser's charter documents or bylaws or (ii) conflict with,
or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of any material agreement, mortgage,
deed of trust, indenture, note, bond, license, lease agreement, instrument or
obligation to which the Purchaser is a party, (iii) create or impose or lien,
charge or encumbrance on any property of the Purchaser under any agreement or
any commitment to which the Purchaser is party or by which the Purchaser is on
or by which any of its respective properties or assets are bound or (iv) result
in a violation of any law, rule, or regulation, or any order, judgment or decree
of any court or governmental agency applicable to the Purchaser or its
properties, except for such conflicts, defaults and violations as would not,
individually or in the aggregate, prohibit or otherwise interfere with the
ability of the Purchaser to enter into and perform its obligations under this
Agreement in any material respect. The Purchaser is not required to obtain any
consent,
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authorization or order of, or make any filing or registration with, any court
or governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement or to purchase the Shares in accordance with
the terms hereof, provided that for purposes of the representation made in this
sentence, the Purchaser is assuming and relying upon the accuracy of the
relevant representations and agreements of the Company herein.
(d) Information. The Purchaser and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Shares which
have been requested by the Purchaser. The Purchaser and its advisors, if any,
have been afforded the opportunity to ask questions of the Company. The
Purchaser has sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision with respect to its
acquisition of the Shares. Purchaser understands that it (and not the Company)
shall be responsible for its own tax liabilities that may arise as a result of
this investment or the transactions contemplated by this Agreement.
(e) Selling Restriction. The Purchaser has the right to sell that
number of Shares equal in number to the number of Shares to be purchased
pursuant to this Agreement during the Investment Period. The Purchaser
covenants, however, that prior to and during the Investment Period, neither the
Purchaser nor any of its affiliates nor any entity managed by the Purchaser will
ever sell any securities of the Company (including, without limitation, any
grant of any option to purchase or acquire any right to dispose or otherwise
dispose for value, any shares of Common Stock or any securities convertible
into, or exchangeable for, or warrants to purchase any shares of Common Stock or
any swap, short sale, hedge or other agreement that transfers, in whole or in
part, the economic risk of ownership of the Common Stock) other than what the
Purchaser has accumulated to purchase under the terms of this Agreement or in
any accounts directly or indirectly managed by the Purchaser or any affiliate of
the Purchaser or any entity managed by the Purchaser. In addition, on a daily
Trading Day basis, the Purchaser agrees to restrict the volume of sales of
Shares by the Purchaser, its affiliates and any entity managed by the Purchaser
to no more than thirty percent (30%) of the total trading volume of the Common
Stock, as reported on Bloomberg Financial LP using the HP function, for such
Trading Day.
ARTICLE IV
COVENANTS
The Company convenants with the Purchaser as follows, which convenants are
for the benefit of the Purchaser and its permitted assignees, that during the
term of this Agreement:
SECTION 4.1 Securities Compliance. The Company shall notify the
Commission and the Nasdaq National Market or an Alternate Market, if applicable,
in accordance with their rules and regulations, of the transactions contemplated
by this Agreement, and shall take all other necessary action and proceedings as
may be required and permitted by applicable law, rule and regulation, for the
legal and valid issuance of the Shares to the Purchaser or subsequent holders.
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SECTION 4.2 Registration and Listing. The Company will take all action
necessary to cause its Common Stock to continue to be registered under Sections
12(b) or 12(g) of the Exchange Act, will comply in all respects with its
reporting and filing obligations under the Exchange Act, and will not take any
action or file any document (whether or not permitted by the Securities Act or
the rules promulgated thereunder) to terminate or suspend such registration or
to terminate or suspend its reporting and filing obligations under the Exchange
Act or Securities Act, except as permitted herein. The Company will take all
action necessary to continue the listing or trading of its Common Stock and the
listing of the Shares purchased by Purchaser hereunder on the Nasdaq National
Market or an Alternate Market and will comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the Nasdaq
National Market or an Alternate Market.
SECTION 4.3 Registration Statement. Before the Company shall issue
a Draw Down Notice, the Company shall have caused a sufficient number of
shares of Common Stock to be authorized and registered to cover the Shares to
be issued in connection with this Agreement.
SECTION 4.4 Compliance with Laws.
(a) The Company shall comply with all applicable laws, rules,
regulations and orders, noncompliance with which could reasonably be expected to
have a Material Adverse Effect.
(b) The Company will not be obligated to issue and the Purchaser will
not be obligated to purchase any shares of the Company's Common Stock which
would result in the issuance under this Agreement of more than nineteen and
nine-tenths percent (19.9%) of the issued and outstanding shares of the
Company's Common Stock.
SECTION 4.5 Keeping of Records and Books of Account. The Company
shall 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 its subsidiares, and in which, for each fiscal
year, all proper reserves for depreciation, depletion, obsolescence,
amortization, taxes, bad debts and other purposes in connection with its
business shall be made.
SECTION 4.6 Intentionally Omitted.
SECTION 4.7 Non-public Information. Neither the Company nor any of
its officers or agents shall disclose any material non-public information
about the Company to the Purchaser and neither the Purchaser nor any of its
affiliates, officers or agents will solicit any material non-public information
from the Company.
SECTION 4.8 Effective Registration Statement. If it is necessary for
a post-effective amendment to the Registration Statement to be filed and
declared effective before the offering of any Shares may commence, the Company
will endeavor to cause such post-effective amendment to be filed and declared
effective as soon as reasonbly practicable and will advise the Purchaser
promptly and, if requested by the Purchaser, will confirm such
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advice in writing, when it receives notice that the Registration Statement or
such post-effective amendment has become effective.
SECTION 4.9 No Stop Orders. The Company will advise the Purchaser
promptly and, if requested by the Purchaser, will confirm such advice in
writing: (i) of its receipt of notice of any request by the Commission for
amendment of or a supplement to the Registration Statement, any Prospectus or
for additional information; (ii) of its receipt of notice of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of the suspension of qualification of the Shares for offering or
sale in any jurisdiction or the initiation of any proceeding for such purpose;
and (iii) of its becoming aware of the happening of any event, which makes any
statement of a material fact made in the Registration Statement or the
Prospectus (as then amended or supplemented) untrue or which requires the making
of any additions to or changes in the Registration Statement or the Prospectus
(as then amended or supplemented) in order to state a material fact required by
the Securities Act or the regulations thereunder to be stated therein or
necessary in order to make the statements therein not misleading, or of the
necessity to amend or supplement the Prospectus (as then amended or
supplemented) to comply with the Securities Act or any other law. If at any
time the Commission shall issue any stop order suspending the effectiveness of
the Registration Statement, the Company will make all reasonable efforts to
obtain the withdrawal of such order at the earliest possible time.
SECTION 4.10 Amendments to the Registration Statement. The Company will not
(i) file any amendment to the Registration Statement or make any amendment or
supplement to the Prospectus that relates to the Purchaser in any manner
whatsoever of which the Purchaser shall not previously have been advised or to
which the Purchaser shall reasonably object after being so advised or (ii) so
long as, in the reasonable opinion of counsel for the Purchaser, a Prospectus is
required to be delivered in connection with any purchase of Shares by the
Purchaser, file any information, documents or reports pursuant to the Exchange
Act without delivering a copy of such information, documents or reports to the
Purchaser, promptly following such filing.
SECTION 4.11 Prospectus Delivery. The Company shall file a Prospectus
supplement to its Registration Statement on the first business day immediately
following the end of each Draw Down Pricing Period, and will deliver to the
Purchaser, without charge, in such quantities as reasonably requested by the
Purchaser, copies of each form of Prospectus and prospectus supplement on each
Settlement Date. The Company consents to the use of the Prospectus (and of any
amendment or supplement thereto) in accordance with the provisions of the
Securities Act and with the securities or Blue Sky laws of the jurisdictions in
which the Shares may be sold by the Purchaser, in connection with the offering
and sale of the Shares and for such period of time thereafter as the Prospectus
is required by the Securities Act to be delivered in connection with sales of
the Shares. If during such period of time any event shall occur that in the
judgment of the Company and its counsel or in the opinion of counsel for the
Purchaser is required to be set forth in the Prospectus (as then amended or
supplemented) or should be set forth therein in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary to supplement or amend the Prospectus to
comply with the Securities Act or any other law, the Company will
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forthwith prepare and, subject to the provisions of Section 4.10 above, file
with the Commission an appropriate supplement or amendment thereto, and will
expeditiously furnish to the Purchaser a reasonable number of copies thereof.
SECTION 4.12 Other Financing. If the Company enters into any definitive
financing agreement, the primary purpose of which would be to obtain equity
financing for the Company (an "Other Financing"), during the Investment Period,
the Company shall promptly notify the Purchaser of such Other Financing. If the
Company enters into an Other Financing during a Draw Down Pricing Period, the
Purchaser shall have the options set forth in Section 6.1(k) hereof. As used
herein, "Other Financing" shall not include the Company (i) issuing shares of
Common Stock in connection with the Company's option plans, stock purchase
plans, 401K plan, stockholder rights plans, currently outstanding warrants or
options, or increase the number of shares available under any such plans (the
primary purpose of which is not to raise equity), (ii) issuing shares of Common
Stock, securities convertible into Common Stock or warrants to purchase shares
of Common Stock issued for the purposes of licensing agreement, strategic and/or
collaborative agreements with third parties, (iii) issuing shares of Common
Stock and/or warrants in connection with the formation and maintenance of
strategic partnerships, alliances or joint ventures or for the acquisition of
products, licenses, businesses (including divisions thereof) or other assets,
(iv) issuing securities by any subsidiary of the Company, (v) issuing the
securities which are set forth on Schedule 4.12 (each a "Permitted Transaction")
and (vi) warrants to purchase Common Stock issued in connection with equipment
financing or leasing arrangements.
SECTION 4.13 Notices. The Company shall immediately notify the Purchaser
that (i) a Material Adverse Effect or Material Change in Ownership has occurred
or (ii) the Company has entered into an Other Financing (as defined in Section
4.12 hereof).
ARTICLE V
CONDITIONS TO CLOSING, DRAW DOWNS AND CALL OPTIONS
SECTION 5.1 Conditions Precedent to the Obligation of the Company to Issue
a Draw Down Notice or Grant a Call Option and Sell the Shares. The obligation
hereunder of the Company to enter into this Agreement and to issue a Draw Down
Notice or grant a Call Option and sell the Shares to the Purchaser is subject to
the satisfaction or waiver, at or before the Initial Purchase and each Draw Down
or Call Option request (the "Draw Down Exercise Date"), of each of the
conditions set forth below. These conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion.
(a) Accuracy of the Purchaser's Representations and Warranties. The
representations and warranties of the Purchaser in this Agreement shall be true
and correct in all material respects as of the date when made and as of each
Draw Down Exercise Date and each Settlement Date as though made at that time,
except for representations and warranties that are expressly made as of a
particular date.
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(b) Registration Statement. The Company shall have a dollar amount of
Shares registered under the Registration Statement which are in a dollar
amount equal to or in excess of the number of Shares issuable pursuant to such
Draw Down Notice or Call Option. The Registration Statement registering the
Shares shall have been declared effective by the Commission and shall have been
amended or supplemented, as required, to disclose the sale of the Shares prior
to the Closing Date or each Settlement Date, as applicable, and there shall be
no stop order suspending the effectiveness of the Registration Statement.
(c) Performance by the Purchaser. The Purchaser shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Purchaser at or prior to the Closing or each Settlement Date, as
applicable.
(d) No Injunction. No statute, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement.
(e) No Suspension, Etc. Trading in the Company's Common Stock shall not
have been suspended by the Commission or the Nasdaq National Market or an
Alternate Market (except for any suspension of trading of limited duration
agreed to by the Company, which suspension shall be terminated prior to such
Draw Down Exercise Date and applicable Settlement Date), and, at any time prior
to each Draw Down Exercise Date, trading in securities generally as reported on
the Nasdaq National Market or an Alternate Market shall not have been suspended
or limited, or minimum prices shall not have been established on securities
whose trades are reported by the Nasdaq National Market or an Alternate Market,
nor shall a banking moratorium have been declared either by the United States or
New York State authorities, nor shall there have occurred any material outbreak
or escalation of hostilities or other national or international calamity or
crisis of such magnitude in its effect on, or any material adverse change in any
financial market which, in each case, in the judgment of the Company, makes it
impracticable or inadvisable to issue the Shares.
(f) No Proceedings or Litigation. No action, suit or proceeding before any
arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been threatened, against
the Company, or any of the officers, directors or affiliates of the Company
seeking to restrain, prevent or change the transactions contemplated by this
Agreement, or seeking damages in connection with such transactions.
SECTION 5.2 Conditions Precedent to the Obligation of the Purchaser to
Close. The obligation hereunder of the Purchaser to enter this Agreement is
subject to the satisfaction or waiver, at or before the Closing, of each of the
conditions set forth below. These conditions are for the Purchaser's sole
benefit and may be waived by the Purchaser at any time in its sole discretion.
(a) Accuracy of the Company's Representations and Warranties. Each of the
representations and warranties of the Company shall be true and correct in all
material respects
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as of the date when made and as of the Closing Date, as though made at that
time, except for representations and warranties that speak as of a particular
date.
(b) Performance by the Company. The Company shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing.
(c) Effective Registration Statement. The Registration Statement
registering the Shares shall have been declared effective by the Commission
prior to the Closing Date and there shall be no stop order suspending
the effectiveness of the Registration Statement.
(d) No Injunction. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of any of the transactions contemplated by this Agreement.
(e) No Proceedings or Litigation. No action, suit or proceeding before any
arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been threatened, against
the Company, or any of the officers, directors or affiliates of the Company
seeking to restrain, prevent or change the transactions contemplated by this
Agreement, or seeking damages in connection with such transactions.
(f) Opinion of Counsel, Etc. At the Closing, the Purchaser shall have
received an opinion of counsel to the Company, dated the date of Closing, in
the form of Exhibit A-1 and A-2 hereto, and a closing certificate from the
Company, dated the date of Closing.
SECTION 5.3 Conditions Precedent to the Obligation of the Purchaser to
Accept a Draw Down or Call Option Grant and Purchase the Shares. The obligation
hereunder of the Purchaser to consummate the Initial Purchase, accept a Draw
Down or Call Option grant and to acquire and pay for the Shares on the
Settlement Date is subject to the satisfaction or waiver, at or before the
consummation of the Initial Purchase each Draw Down Exercise Date and each
Settlement Date, as applicable, of each of the conditions set forth below.
The conditions are for the Purchaser's sole benefit and may be waived by the
Purchaser at any time in its sole discretion.
(a) Accuracy of the Company's Representations and Warranties. Each of the
representations and warranties of the Company shall be true and correct in all
material respects as of the date when made and as of the Draw Down Exercise Date
and Settlement Date, as applicable, as though made at that time, except for
representations and warranties that speak as of a particular date.
(b) Registration Statement. The Company shall have a dollar amount of
Shares registered under the Registration Statement which are in a dollar amount
equal to or in excess of the number of Shares issuable pursuant to such Draw
Down Notice or Call Option. The Registration Statement registering the offer
and sale of the Shares shall have been declared
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effective by the Commission and shall have been amended or supplemented, as
required, to disclose the sale of the Shares prior to each Draw Down Exercise
Date or each Settlement Date, as applicable, and there shall be no stop
order suspending the effectiveness of the Registration Statement.
(c) No Suspension, Etc. Trading in the Company's Common Stock shall
not have been suspended by the Commission or the Nasdaq National Market or an
Alternate Market (except for any suspension of trading of limited duration
agreed to by the Company, which suspension shall be terminated prior to each
Draw Down Exercise Date), and, at any time prior to such Draw Down Exercise
Date or such Settlement Date, trading in securities generally as reported by
the Nasdaq National Market or an Alternate Market shall not have been
suspended or limited, or minimum prices shall not have been established on
securities whose trades are reported by the Nasdaq National Market or an
Alternate Market, nor shall a banking moratorium have been declared either by
the United States or New York State authorities, nor shall there have occurred
any material outbreak or escalation of hostilities or other national or
international calamity or crisis of such magnitude in its effect on, or any
material adverse change in any financial market which, in each case, in the
judgment of the Purchaser, makes it impracticable or inadvisable to purchase the
Shares. The Common Stock shall be listed on Nasdaq or an Alternate Market.
(d) Performance by the Company. The Company shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or
complied with by the Company at or prior to the Draw Down Exercise Date and
the Settlement Date and shall have delivered the Compliance Certificate
substantially in the form attached hereto as Exhibit C.
(e) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction
which prohibits the consummation of any of the transactions contemplated by
this Agreement.
(f) No Proceedings or Litigation. No action, suit or proceeding
before any arbitrator or any governmental authority shall have been commenced,
and no investigation by any governmental authority shall have been threatened,
against the Company, or any of the officers, directors or affiliates of the
Company seeking to restrain, prevent or change the transactions contemplated
by this Agreement, or seeking damages in connection with such transactions.
(g) No Material Adverse Effect; No Material Change in Ownership. No
Material Adverse Effect except continued losses from operations or Material
Change in Ownership shall have occurred.
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ARTICLE VI
DRAW DOWN TERMS; CALL OPTION
SECTION 6.1 Draw Down Terms. Subject to the satisfaction of the
conditions set forth in this Agreement, the parties agree as follows:
(a) The Company, may, in its sole discretion, issue a Draw Down
Notice with respect to a Draw Down during each Draw Down Pricing Period of up
to $5,000,000 if the Threshold Price is equal to or greater than $3.00 but
less than $4.00 and up to an additional $2,000,000 for every $1.00 increase in
the Threshold Price above $3.00 for a maximum Draw Down Amount during each
Draw Down Pricing Period of up to $35,000,000; provided, that the Company may,
in its sole discretion, issue a Draw Down Notice with respect to any Draw Down
Amount at any Threshold Price or any Draw Down Discount Percentage pursuant to
terms mutually agreed upon by the Purchaser and the Company, which Draw Down
the Purchaser will be obligated to accept. Prior to issuing any Draw Down
Notice, the Company shall have Shares registered under the Registration
Statement which are valued in a dollar amount equal to or in excess of the
Draw Down Amount.
(b) The number of Shares to be issued in connection with each Draw
Down shall be equal to the sum of the quotients (for each Trading Day of the
Draw Down Pricing Period for which the VWAP equals or exceeds the Threshold
Price) of (x) 1/18th (or such other fraction based on the length of the Draw
Down Pricing Period) of the Draw Down Amount divided by (y) the applicable
Draw Down Discount Percentage (or such other percentage mutually agreed upon
by the parties) multiplied by the VWAP of the Common Stock for such Trading
Day.
(c) Only one Draw Down shall be allowed in each Draw Down Pricing
Period.
(d) The number of Shares purchased by the Purchaser with respect to
each Draw Down shall be determined on a daily basis during each Draw Down
Pricing Period and settled on the second business day following the end of
each Draw Down Pricing Period (the "Settlement Date").
(e) There shall be a minimum of five (5) Trading Days between Draw
Downs, unless otherwise mutually agreed upon between the Purchaser and the
Company.
(f) There shall be a maximum of twenty four (24) monthly Draw Downs
during the term of this Agreement.
(g) Each Draw Down will expire on the end of the last Trading Day of
each Draw Down Pricing Period
(h) If the VWAP on a given Trading Day in a Draw Down Pricing Period
is less than the Threshold Price, then the total amount of the Draw Down for
the relevant Draw Down Pricing Period will be reduced by 1/18th (or such other
fraction based on the length of the
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Draw Down Pricing Period). At no time shall the Threshold Price be set below
$3.00, unless mutually agreed upon by the Company and the Purchaser. If trading
in the Company's Common Stock is suspended for any reason for more than three
(3) hours in any Trading Day, at the Purchaser's option, the price of the Common
Stock shall be deemed to be below the Threshold Price for that Trading Day and
the Draw Down for the relevant Draw Down Pricing Period shall be reduced by
1/18th (or such other fraction based on the length of the Draw Down Pricing
Period). Notwithstanding anything in the foregoing to the contrary, for each
Trading Day during the Draw Down Pricing Period that the VWAP is less than the
Threshold Price or is deemed to be below the Threshold Price pursuant to the
immediately preceding sentence, the Purchaser may elect in its sole discretion
to purchase Shares at a price equal to the Threshold Price multiplied by the
Draw Down Discount Percentage at the end of such Draw Down Pricing Period. The
Purchaser will inform the Company via facsimile transmission no later than 8:00
p.m. (New York time) on the last Trading Day of such Draw Down Pricing Period as
to the number of Shares, if any, the Purchaser chooses to purchase under such
circumstances set forth in this Section 6.1(h).
(i) The Company must inform the Purchaser via facsimile transmission
as to the Draw Down Amount the Company wishes to exercise before commencement
of trading on the first Trading Day of the Draw Down Pricing Period covered by
such notice (the "Draw Down Notice"), substantially in the form attached
hereto as Exhibit D. In addition to the Draw Down Amount, the Company shall
set the Threshold Price with each Draw Down Notice and shall designate the
first Trading Day of the Draw Down Pricing Period. Notwithstanding anything in
the foregoing to the contrary, if the Company wishes the date of the Draw Down
Notice to be the first day of the Draw Down Pricing Period, the Draw Down
Notice must be delivered to the Purchaser and receipt of such Draw Down Notice
confirmed by the Purchaser prior to the commencement of trading on the date of
such Draw Down Notice.
(j) On each Settlement Date, the Company shall deliver the Shares
purchased by the Purchaser to the Purchaser or to The Depositary Trust Company
("DTC") on the Purchaser's behalf via the Deposit Withdrawal Agent Commission
system ("DWAC"), and upon receipt of the Shares, the Purchaser shall cause
payment therefor to be made to the account designated by the Company by wire
transfer of immediately available funds provided that the Shares are received
no later than 1:00 p.m., New York time, or next day available funds if the
Shares are received thereafter.
(k) If during any Draw Down Pricing Period the Company shall enter
into an Other Financing (other than shares of Common Stock issued under this
Agreement or pursuant to a Permitted Transaction), the Purchaser may in its
sole discretion (i) purchase the Draw Down Amount of shares of Common Stock
and/or exercise Call Options granted during such Draw Down Pricing Period on
the terms at which the Company issued shares of Common Stock in the Other
Financing during such Draw Down Pricing Period, net of any third party's
discount and fees, (ii) purchase the Draw Down Amount of shares of Common
Stock and/or exercise Call Options granted during such Draw Down Pricing
Period at the applicable Draw Down Discount Percentage times the VWAP for such
Draw Down Pricing Period, or (iii) elect not to purchase any Shares during
such Draw Down Pricing Period. The Purchaser shall notify the Company of its
election on the business day preceding the Settlement Date.
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(l) If on the Settlement Date, the Company fails to deliver the
Shares to be purchased by the Purchaser, and such failure continues for ten
(10) Trading Days. the Company shall pay, in cash, as liquidated damages and
not as a penalty to the Purchaser an amount equal to two percent (2%) of the
Draw Down Amount for the initial thirty (30) days and each additional thirty
(30) day period thereafter until such failure has been cured, which shall be
pro rated for such periods less than thirty (30) days (the "Periodic Amount").
Cash payments to be made pursuant to this clause (l) shall be due and payable
immediately upon demand in immediately available cash funds.
(m) If during any Draw Down Pricing Period the Company reasonably
believes an event may occur which would require the suspension of the
Registration Statement, the Company shall notify the Purchaser before
commencement of trading on any Trading Day (a "Section 6.1(m) Notice") and
reduce the number of Trading Days in such Draw Down Pricing Period. The last
Trading Day of such Draw Down Pricing Period shall be the Trading Day
preceding the receipt of the Section 6.1(m) Notice; provided, however, that
if the Company delivers the Section 6.1(m) Notice during trading hours on a
Trading Day, then the last Trading Day of such Draw Down Pricing Period shall
be the Trading Day on which the Section 6.1(m) Notice was received by the
Purchaser.
The Purchaser will purchase the Truncated Draw Down Allocation for each
of the Trading Days prior to receipt of the Section 6.1(m) Notice, for an
aggregate purchase price determined in accordance with clauses (b) and (i) of
this Section 6.1.
In addition, the Purchaser may, at its option, elect to purchase Shares
in an additional dollar amount equal to the product of the Draw Down Amount
Requested, first multiplied by (x) a fraction, the numerator of which equals
one (1) and the denominator of which equals eighteen (18) or such other number
of Trading Days in such Draw Down Pricing Period as the parties may have
mutually agreed upon with respect to such Draw Down Pricing Period (eighteen
or such other mutually agreed upon number being referred to herein as the
"Trading Day Number"), and next multiplied by (y) that number that is equal to
the Trading Day Number minus the number of Trading Days in the reduced Draw
Down Pricing Period. The price per share for such additional dollar amount
shall equal (i) the aggregate total of Truncated Draw Down Allocation Amounts
during the reduced Draw Down Pricing Period divided by (ii) the number of
Shares to be purchased during such reduced Draw Down Pricing Period.
Upon receipt of the Section 6.1(m) Notice, the Purchaser may (x) elect
to purchase the Common Stock at the Threshold Price for any Trading Day that
the VWAP was below the Threshold Price during the reduced Draw Down Pricing
Period in accordance with Section 6.1(i) hereof, (y) elect to purchase the
Common Stock in the additional amount as set forth in the preceding paragraph
of this Section 6.1(m), and (z) elect to exercise any unexercised Call Options
(for a Call Option Amount not to exceed $1,000,000) by issuing a Call Option
Notice to the Company, in each such case, no later than 10:00 a.m. (New York
time) on the first Trading Day after the end of the reduced Draw Down Pricing
Period. The exercise price of the Call Option shall be based on the VWAP on
the last Trading Day of the reduced Draw Down Pricing Period (in lieu of the
VWAP as specified in clause (A) of Section 6.2(b) hereof) and otherwise
determined in accordance with Section 6.2(b) hereof.
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The Settlement Date for the Truncated Draw Down Amount exercised during
an effected Draw Down Pricing Period shall be the second Trading Day after
receipt of the Section 6.1(m) Notice.
SECTION 6.2 Purchaser's Call Option.
(a) During each Draw Down Pricing Period, the Company at its sole
discretion may grant to the Purchaser the right to exercise multiple call
options of up to the applicable Draw Down Amount (a "Call Option"). The amount
of the Call Option shall be set forth in the Draw Down Notice. For each Trading
Day during a Draw Down Pricing Period, the Purchaser may exercise a Call Option
by providing notice to the Company of the exercise of a Call Option (the "Call
Option Notice"), substantially in the form attached hereto as Exhibit E.
(b) The number of shares of Common Stock to be issued in connection
with each Call Option shall equal the quotient of (i) the amount of the Call
Option exercised and (ii) the product of the applicable Draw Down Discount
Percentage and the greater of (A) the VWAP for the Common Stock on the day the
Purchaser issues its Call Option Notice and (B) the Threshold Price.
(c) Each Call Option exercised shall be settled on the applicable
Settlement Date.
(d) The Threshold Price designated by the Company in its Draw Down
Notice shall apply to each Call Option.
(e) For each Call Option that the Purchaser exercises pursuant to this
Section 6.2, the Purchaser must issue via facsimile a Call Option Notice to the
Company no later than 8:00 p.m. (New York time) on the day such Call Option is
exercised. If the Purchaser does not exercise a Call Option by 8:00 p.m. (New
York time) on the last day of the applicable Draw Down Pricing Period, the
Purchaser's Call Options with respect to that Draw Down Pricing Period shall
terminate.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination by Mutual Consent. The term of this Agreement
shall expire on the earlier of (i) twenty eight (28) months from the date of
execution of this Agreement (the "Investment Period"), (ii) the date that the
entire dollar amount of the shares of Common Stock registered under the
Registration Statement have been issued and sold and (iii) the date that the
Purchaser has purchased in the aggregate $140,000,000 pursuant to all Draw Downs
issued and Call Options granted and exercised. This Agreement may be terminated
at any time by mutual consent of the parties.
SECTION 7.2 Other Termination. the Company shall inform the Purchaser,
and the Purchaser shall have the right to terminate this Agreement within the
subsequent thirty (30) days (the "Event Period"), if (x) the Company enters into
an Other Financing (other than a
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Permitted Financing or an underwritten public offering) which provides for (i)
the issuance of Common Stock or securities convertible, exercisable or
exchangeable into Common Stock at a discount to the then current market price of
the Common Stock, (ii) a mechanism for the reset of the purchase price of the
Common Stock to below the then current market price of the Common Stock, or
(iii) the issuance of Common Stock with warrants, which have an exercise price
such that together with the price of the Common Stock would result in the
issuance of shares of Common Stock at a per share price below the then current
market price of the Common Stock, or (y) an event resulting in a Material
Adverse Effect except continued losses from operations or Material Change in
Ownership has occurred. The Purchaser may terminate this Agreement upon one (1)
day's notice during the Event Period.
SECTION 7.3 Effect of Termination. In the event of termination by the
Company or the Purchaser, written notice thereof shall forthwith be given to the
other party and the transactions contemplated by this Agreement shall be
terminated without further action by either party. If this Agreement is
terminated as provided in Section 7.1 or 7.2 herein, this Agreement shall become
void and of no further force and effect, except as provided in Section 9.9
hereof. Nothing in this Section 7.3 shall be deemed to release the Company or
the Purchaser from any liability for any breach under this Agreement, or to
impair the rights of the Company and the Purchaser to compel specific
performance by the other party of its obligations under this Agreement.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 General Indemnity.
(a) Indemnification by the Company. the Company will indemnify and hold
harmless the Purchaser, each of its directors, fund managers and officers, and
each person, if any, who controls the Purchaser within the meaning of Section 15
of the Securities Act or Section 20(a) of the Exchange Act from and against any
losses, claims, damages, liabilities and expenses (including reasonable costs of
defense and investigation and all reasonable attorneys' fees) to which the
Purchaser, each of its directors, fund managers and officers, and each person,
if any, who controls the Purchaser may become subject, under the Securities Act
or otherwise, insofar as such losses, claims, damages, liabilities and expenses
(or actions in respect thereof) arise out of or are based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained, or
incorporated by reference, in the Registration Statement relating to Common
Stock being sold to the Purchaser (including the any prospectus supplement filed
in connection with the transactions contemplated hereunder (the "Prospectus
Supplement") which are a part of it), or any amendment or supplement to it, or
(ii) the omission or alleged omission to state in that Registration Statement or
any document incorporated by reference in the Registration Statement, a material
fact required to be stated therein or necessary to make the statements therein
not misleading, provided that the Company shall not be liable under this Section
8.1(a) to the extent that a court of competent jurisdiction shall have
determined by a final judgment (with no appeals available) that such loss,
claim, damage, liability or action resulted directly from any such acts or
failures to act, undertaken or omitted to be taken by the Purchaser or such
person through its bad
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faith or willful misconduct; provided, however, that the foregoing indemnity
shall not apply to any loss, claim, damage, liability or expense to the extent,
but only to the extent, arising out of or based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with written information furnished to the Company by the
Purchaser expressly for use in the Registration Statement, any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto); and
provided, further, that with respect to the Prospectus, the foregoing indemnity
shall not inure to the benefit of the Purchaser or any such person from whom the
person asserting any loss, claim, damage, liability or expense purchased Common
Stock, if copies of the Prospectus were timely delivered to the Purchaser
pursuant hereto and a copy of the Prospectus (as then amended or supplemented if
the Company shall have furnished any amendments or supplements thereto) was not
sent or given by or on behalf of the Purchaser or any such person to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Common Stock to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage, liability or expense.
The Company will reimburse the Purchaser and each such controlling person
promptly upon demand for any legal or other costs or expenses reasonably
incurred by the Purchaser or any controlling person in investigating, defending
against, or preparing to defend against any such claim, action, suit or
proceeding, except that the Company will not be liable to the extent a claim or
action which results in a loss, claim, damage, liability or expense arises out
of, or is based upon, an untrue statement, alleged untrue statement, omission or
alleged omission, included in any Registration Statement, Prospectus or
Prospectus Supplement or any amendment or supplement to the thereto in reliance
upon, and in conformity with, written information furnished by the Purchaser to
the Company for inclusion in the Registration Statement, Prospectus or
Prospectus Supplement.
(b) Indemnification by the Purchaser. The Purchaser will indemnify and
hold harmless the Company, each of its directors and officers, and each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act from and against any
expenses (including reasonable costs of defense and investigation and all
attorneys' fees) to which the Company and each director, officer and person, if
any, who controls the Company may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages, liabilities and expenses
(or actions in respect thereof) arise out of or are based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any Prospectus or Prospectus Supplement or any
amendment or supplement to it or (ii) the omission or alleged omission to state
in the Registration Statement or any Prospectus or Prospectus Supplement or any
amendment or supplement to it a material fact required to be stated therein or
necessary to make the statements therein not misleading, to the extent, but only
to the extent, the untrue statement, alleged untrue statement, omission or
alleged omission was made in reliance upon, and in conformity with, written
information furnished by the Purchaser to the Company for inclusion in the
Registration Statement, the Prospectus or Prospectus Supplement or an amendment
or supplement thereto, and the Purchaser will reimburse the Company and each
such director, officer or controlling person promptly upon demand for any legal
or other costs or expenses reasonably incurred by the Company or the other
person in investigating, defending against, or preparing to defend against any
such claim, action, suit or proceeding.
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SECTION 8.2 Indemnification Procedures. Promptly after a person receives
notice of a claim or the commencement of an action for which the person intends
to seek indemnification under paragraph (a) or (b) of Section 8.1, the person
will notify the indemnifying party in writing of the claim or commencement of
the action, suit or proceeding, but failure to notify the indemnifying party
will not relieve the indemnifying party from liability under paragraph (a) or
(b) of Section 8.1, except to the extent it has been materially prejudiced by
the failure to give notice. The indemnifying party will be entitled to
participate in the defense of any claim, action, suit or proceeding as to which
indemnification is being sought, and if the indemnifying party acknowledges in
writing the obligation to indemnify the party against whom the claim or action
is brought, the indemnifying party may (but will not be required to) assume the
defense against the claim, action, suit or proceeding with counsel satisfactory
to it. After an indemnifying party notifies an indemnified party that the
indemnifying party wishes to assume the defense of a claim, action, suit or
proceeding the indemnifying party will not be liable for any legal or other
expenses incurred by the indemnified party in connection with the defense
against the claim, action, suit or proceeding except that if, in the opinion of
counsel to the indemnifying party, one or more of the indemnified parties should
be separately represented in connection with a claim, action, suit or proceeding
the indemnifying party will pay the reasonable fees and expenses of one separate
counsel for the indemnified parties. Each indemnified party, as a condition to
receiving indemnification as provided in Paragraph (a) or (b) or Section 8.1,
will cooperate in all reasonable respects with the indemnifying party in the
defense of any action or claim as to which indemnification is sought. No
indemnifying party will be liable for any settlement of any action effected
without its prior written consent. No indemnifying party will, without the prior
written consent of the indemnified party, effect any settlement of a pending or
threatened action with respect to which an indemnified party is, or is informed
that it may be, made a party and for which it would be entitled to
indemnification, unless the settlement includes an unconditional release of the
indemnified party from all liability and claims which are the subject matter of
the pending or threatened action.
If for any reason the indemnification provided for in this Agreement is
not available to, or is not sufficient to hold harmless, an indemnified party in
respect of any loss or liability referred to in paragraph (a) or (b) of Section
8.1, each indemnifying party will, in lieu of indemnifying the indemnified
party, contribute to the amount paid or payable by the indemnified party as a
result of the loss or liability, (i) in the proportion which is appropriate to
reflect the relative benefits received by the indemnifying party on the one hand
and by the indemnified party on the other from the sale of stock which is the
subject of the claim, action, suit or proceeding which resulted in the loss or
liability or (ii) if that allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits of the
sale of stock, but also the relative fault of the indemnifying party and the
indemnified party with respect to the statements or omissions which are the
subject of the claim, action, suit or proceeding that resulted in the loss or
liability, as well as any other relevant equitable considerations.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Fees and Expenses. Each party shall bear its own fees and
expenses related to the transactions contemplated by this Agreement; provided,
however, that the Company shall pay, at the Closing, all reasonable attorneys
fees and expenses (exclusive of disbursements and out-of-pocket expenses)
incurred by the Purchaser of up to $25,000 in connection with the preparation,
negotiation, execution and delivery of this Agreement. In addition, the Company
shall pay all reasonable fees and expenses incurred by the Purchaser in
connection with any amendments, modifications or waivers of this Agreement or
incurred in connection with the enforcement of this Agreement, including,
without limitation, all reasonable attorneys' fees and expenses.
SECTION 9.2 Specific Enforcement, Consent to Jurisdiction.
(a) The Company and the Purchaser acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof or
thereof, this being in addition to any other remedy to which any of them may be
entitled by law or equity.
(b) Each of the Company and the Purchaser (i) hereby irrevocably
submits to the jurisdiction of the United States District Court and other courts
of the United States sitting in the State of New York for the purposes of any
suit, action or proceeding arising out of or relating to this Agreement and (ii)
hereby waives, and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient forum or that
the venue of the suit, action or proceeding is improper. Each of the Company and
the Purchaser consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing in this
Section shall affect or limit any right to serve process in any other manner
permitted by law.
SECTION 9.3 Entire Agreement Amendment. This Agreement contains the
entire understanding of the parties with respect to the matters covered hereby
and, except as specifically set forth herein, neither the Company nor the
Purchaser makes any representations, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be waived or amended
other than by a written instrument signed by the party against whom enforcement
of any such amendment or waiver is sought.
SECTION 9.4 Notices. Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective (a) upon hand delivery, by telecopy or facsimile at the
address or number designated below (if delivered on a business day during normal
business hours where such notice is to be
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received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
If to the Company: Usinternetworking, Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
With copies to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to the Purchaser: Acqua Wellington North American
Equities Fund, Ltd.
c/o Fortis Fund Services (Bahamas) Ltd.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Centre
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇-▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Tel. No: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇
With copies to: ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
The Chrysler Building
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel. No: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No: (▇▇▇)▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Any party hereto may from time to time change its address for notices by
giving at least ten (10) days written notice of such changed address to the
other party hereto.
SECTION 9.5 Waivers. No waiver by either party of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
provisions, condition or requirement hereof, nor shall any delay or omission of
any party to exercise any right hereunder in any manner impair the exercise of
any such right accruing to it thereafter.
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SECTION 9.6 Headings. The article, section and subsection headings
in this Agreement are for convenience only and shall not constitute a part of
this Agreement for any other purpose and shall not be deemed to limit or affect
any of the provisions hereof.
SECTION 9.7 Successors and Assigns. The Purchaser may not assign this
Agreement to any person without the prior consent of the Company, which consent
will not be unreasonably withheld. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. The
parties hereto may not amend this Agreement or any rights or obligations
hereunder without the prior written consent of the Company and each Purchaser to
be affected by the amendment. After Closing, the assignment by a party to this
Agreement of any rights hereunder shall not affect the obligations of such party
under this Agreement.
SECTION 9.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving effect to the choice of law provisions.
SECTION 9.9 Survival. The representations and warranties of the
Company and the Purchaser contained in Article III and the covenants contained
in Article IV shall survive the execution and delivery hereof and the Closing
until the termination of this Agreement, and the agreements and covenants set
forth in Article VIII of this Agreement shall survive the execution and delivery
hereof and the Closing hereunder.
SECTION 9.10 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and shall become effective when counterparts have been signed by
each party and delivered to the other parties hereto, it being understood that
all parties need not sign the same counterpart. In the event any signature is
delivered by facsimile transmission, the party using such means of delivery
shall cause four additional executed signature pages to be physically delivered
to the other parties within five days of the execution and delivery hereof.
SECTION 9.11 Publicity. The Company shall not issue any press release
or otherwise make any public statement or announcement with respect to this
Agreement or the transactions contemplated hereby or the existence of this
Agreement without the prior written consent of the Purchaser which consent shall
not be unreasonably withheld. In the event the Company is required by law or
regulation to issue a press release or otherwise make a public statement or
announcement with respect to this Agreement or the transaction contemplated
hereby prior to or after the Closing, the Company shall consult with the
Purchaser on the form and substance of such press release or other disclosure.
SECTION 9.12 Severability. The provisions of this Agreement 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 the provisions
contained in this Agreement 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, and this Agreement shall be reformed and construed as if such
invalid or illegal or unenforceable provision, or part of
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such provision, had never been contained herein, so that such provisions would
be valid, legal and enforceable to the maximum extent possible.
SECTION 9.13 Further Assurances. From and after the date of this
Agreement, upon the request of the Purchaser or the Company, each of the Company
and the Purchaser shall execute and deliver such instrument, 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.
[END OF PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officer as of the
date first above written.
USINTERNETWORKING, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: CHIEF EXECUTIVE OFFICER
ACQUA WELLINGTON NORTH
AMERICAN EQUITIES FUND, LTD.
By:
-------------------------------
Name:
Title:
34
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.
USINTERNETWORKING, INC.
By:
--------------------------------
Name:
Title:
ACQUA WELLINGTON NORTH
AMERICAN EQUITIES FUND, LTD.
By: /s/ ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Director