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EXHIBIT 10.3
ASIA ONLINE, LTD.
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
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TABLE OF CONTENTS
PAGE
1. AGREEMENT TO SELL AND PURCHASE.......................................1
1.1 Authorization of Shares.....................................1
1.2 Sale and Purchase...........................................1
2. CLOSING, DELIVERY AND PAYMENT........................................1
2.1 Closing.....................................................1
2.2 Delivery....................................................2
2.3 Subsequent Closings.........................................2
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................2
3.1 Organization, Good Standing and Qualification...............2
3.2 Subsidiaries................................................3
3.3 Capitalization; Voting Rights...............................3
3.4 Authorization; Binding Obligations..........................4
3.5 Financial Statements........................................4
3.6 Liabilities.................................................5
3.7 Agreements; Action..........................................5
3.8 Obligations to Related Parties..............................6
3.9 Changes.....................................................6
3.10 Title to Properties and Assets; Liens, Etc..................7
3.11 Intellectual Property.......................................8
3.12 Compliance with Other Instruments...........................8
3.13 Litigation..................................................9
3.14 Tax Returns and Payments....................................9
3.15 Employees..................................................10
3.16 Contracts..................................................10
3.17 Insurance..................................................11
3.18 Proprietary Information and Inventions Agreements..........11
3.19 Registration Rights........................................11
3.20 Compliance with Laws; Permits..............................11
3.21 Environmental and Safety Laws..............................12
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TABLE OF CONTENTS
(CONTINUED)
3.22 Year 2000 Compliance.......................................12
3.23 Offering Valid.............................................12
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS....................13
4.1 Requisite Power and Authority..............................13
4.2 Investment Representations.................................13
5. CONDITIONS TO CLOSING...............................................14
5.1 Conditions to Purchasers' Obligations at the Closing.......14
5.2 Conditions to Obligations of the Company...................16
6. MISCELLANEOUS.......................................................17
6.1 Governing Law..............................................17
6.2 Survival...................................................17
6.3 Successors and Assigns.....................................17
6.4 Entire Agreement...........................................17
6.5 Severability...............................................18
6.6 Amendment and Waiver.......................................18
6.7 Delays or Omissions........................................18
6.8 Waiver of Conflicts........................................18
6.9 Notices....................................................19
6.10 Expenses...................................................19
6.11 Attorneys' Fees............................................19
6.12 Titles and Subtitles.......................................19
6.13 Counterparts...............................................19
6.14 Broker's Fees..............................................19
6.15 Exculpation Among Purchasers...............................19
6.16 Confidentiality............................................20
6.17 Certain Series A Preferred Warrants........................20
6.18 Pronouns...................................................20
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LIST OF EXHIBITS
Schedule of Purchasers Exhibit A
Restated Certificate Exhibit B
Investor Rights Agreement Exhibit C
Financial Statements Exhibit D
Form of Legal Opinion Exhibit E
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ASIA ONLINE, LTD.
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES B PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is
entered into as of August 3, 1999, by and among ASIA ONLINE, LTD., a Delaware
corporation (the "Company") and each of those persons and entities, severally
and not jointly, whose names are set forth on the Schedule of Purchasers
attached hereto as Exhibit A (which persons and entities are hereinafter
collectively referred to as "Purchasers" and each individually as a
"Purchaser").
RECITALS
WHEREAS, the Company has authorized the sale and issuance of an
aggregate of eleven million nineteen thousand forty nine (11,019,049) shares of
its Series B-1 Voting Preferred Stock and Series B-2 Non-Voting Preferred Stock
(collectively, the "Shares");
WHEREAS, Purchasers desire to purchase the Shares on the terms and
conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Shares to Purchasers
on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND PURCHASE.
1.1 AUTHORIZATION OF SHARES. On or prior to the First Closing
(as defined in Section 2 below), the Company shall have authorized (a) the sale
and issuance to Purchasers of the Shares and (b) the issuance of such shares of
Voting Common Stock and Non-Voting Common Stock to be issued upon conversion of
the Shares (collectively, the "Conversion Shares"). The Shares and the
Conversion Shares shall have the rights, preferences, privileges and
restrictions set forth in the Restated Certificate of Incorporation of the
Company, in the form attached hereto as Exhibit B (the "Restated Certificate").
1.2 SALE AND PURCHASE. Subject to the terms and conditions
hereof, at each Closing (as hereinafter defined) the Company hereby agrees to
issue and sell to each Purchaser, severally and not jointly, and each Purchaser
agrees to purchase from the Company, severally and not jointly, the type and
number of Shares set forth opposite such Purchaser's name on Exhibit A, at a
purchase price of $3.176317 per share.
2. CLOSING, DELIVERY AND PAYMENT.
2.1 CLOSING. The initial closing of the sale and purchase of
the Shares under this Agreement (the "First Closing") shall take place on the
date hereof, at the offices of ▇▇▇▇▇▇ Godward LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other time or place as the Company and
Purchasers may mutually agree (the "First Closing Date"). The closing(s)
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of the sale and purchase of the Shares as set forth in Section 2.3 below shall
take place at such time and place as the Company and Purchasers participating
therein shall mutually agree at any time until August 31, 1999 (each a
"Subsequent Closing") (the First Closing and any Subsequent Closing shall
collectively be referred to herein as a "Closing" and each such date is referred
to as a "Closing Date").
2.2 DELIVERY. At each Closing, subject to the terms and
conditions hereof, the Company will deliver to the Purchasers certificates
representing the type and number of Shares to be purchased at such Closing by
each Purchaser, against payment of the purchase price therefor, by certified
check or wire transfer made payable to the order of the Company, or by
cancellation of indebtedness.
2.3 SUBSEQUENT CLOSINGS. At any time on or before August 31,
1999, the Company may sell, in one or more closings, any or all of the Shares
not sold at the First Closing hereunder to such purchasers as may be approved by
the Board of Directors of the Company (the "Subsequent Purchasers"). At each
Subsequent Closing, (i) each Subsequent Purchaser shall execute a counterpart
signature page hereto whereupon such Subsequent Purchaser shall become a
"Purchaser" hereunder and the Shares purchased by such Subsequent Purchaser
shall be deemed to be Shares hereunder and (ii) each Subsequent Purchaser shall
execute a counterpart signature page to the Investor Rights Agreement (as
defined below), whereupon such Subsequent Purchaser shall become an "Investor"
and "Holder" thereunder and the shares of Series B Preferred Stock held by such
Subsequent Purchaser shall be deemed "Shares" thereunder. All such sales shall
be made on the terms and conditions of this Agreement, including satisfaction of
the closing conditions set forth in Section 5.1 and the Subsequent Purchasers'
making of the representations and warranties set forth in Section 4 hereof.
Notwithstanding the foregoing, the Company shall be under no obligation to
update or supplement its representations and warranties set forth in Section 3
hereof or the Schedule of Exceptions in connection with any such Subsequent
Closing.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Except as set forth on a Schedule of Exceptions (the "Schedule
of Exceptions") delivered by the Company to the Purchasers at the First Closing,
the Company hereby represents and warrants to each Purchaser as of the date of
this Agreement as follows:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of the
Company and the Subsidiaries (as defined below) is a corporation or other
similar organization duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation. The Company and the Subsidiaries
have all requisite corporate power and authority to own and operate their
properties and assets and to carry on their businesses as presently conducted
and as presently proposed to be conducted. The Company has all requisite
corporate power and authority to execute and deliver this Agreement, the letter
agreement with ▇.▇. ▇▇▇▇▇▇ International Capital Corp. (the "JPMICC Letter") and
the Amended and Restated Investor Rights Agreement in the form attached hereto
as Exhibit C (the "Investor Rights Agreement"), to issue and sell the Shares and
the Conversion Shares, and to carry out the provisions of this Agreement, the
JPMICC Letter, the Investor Rights Agreement and the Restated Certificate. The
Company and the Subsidiaries are duly qualified and are authorized to do
business and are in good standing as foreign corporations in all jurisdictions
in which the nature of their activities and of their properties (both owned and
leased)
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makes such qualification necessary, except for those jurisdictions in which
failure to do so could not have a material adverse effect on the Company or any
Subsidiary or their respective businesses.
3.2 SUBSIDIARIES. Schedule A sets forth a complete and
accurate organizational chart as of the date hereof, indicating the name of each
entity in which the company holds a direct or indirect equity interest (each, a
"Subsidiary") and the jurisdiction of incorporation of each Subsidiary. The
Company does not own or control, directly or indirectly, any equity security or
other interest of any other corporation, limited partnership or other business
entity other than the Subsidiaries. The only Subsidiaries of the Company with
any active operations are Asia On-Line Limited and Asia Online (Phils) Inc. (the
"Operating Subsidiaries"). Neither the Company nor any of the Subsidiaries is a
participant in any joint venture, partnership or similar arrangement.
3.3 CAPITALIZATION; VOTING RIGHTS. The authorized capital
stock of the Company, immediately prior to the Closing, will consist of fifty
million (50,000,000) shares of Voting Common Stock (par value $.001 per share),
two million six hundred eight thousand three hundred ninety (2,608,390) shares
of which are issued and outstanding and one million nine hundred fifty four
thousand one hundred twenty (1,954,120) shares of which remain reserved for
future issuance to employees, officers, directors and consultants pursuant to
the Company's 1999 Equity Incentive Plan (after issuance of the 100,000 shares
of Voting Common Stock thereunder as described below), twenty five million
(25,000,000) shares of Non-Voting Common Stock, none of which are issued and
outstanding, and thirty two million six hundred thousand (32,600,000) shares of
Preferred Stock (par value $.001 per share), eight million six hundred thousand
(8,600,000) of which are designated Series A Preferred Stock, seven million nine
hundred forty two thousand nine hundred seventy (7,942,970) of which are issued
and outstanding, twelve million (12,000,000) of which are designated Series B-1
Voting Preferred Stock, none of which are issued and outstanding, and twelve
million (12,000,000) of which are designated Series B-2 Non-Voting Preferred
Stock, none of which are issued and outstanding. All issued and outstanding
shares of the Company's Common Stock (a) have been duly authorized and validly
issued, (b) are fully paid and nonassessable, and (c) were issued in compliance
with all applicable state and federal laws concerning the issuance of
securities. The rights, preferences, privileges and restrictions of the Shares
are as stated in the Restated Certificate. Each series of Preferred Stock is
convertible into Common Stock on a one-for-one basis. The Conversion Shares have
been duly and validly reserved for issuance. Other than the 2,054,120 shares
initially reserved for issuance under the Company's 1999 Equity Incentive Plan
(of which options for 240,000 shares of Voting Common Stock have been granted,
and of such options granted, 100,000 shares of Voting Common Stock of which have
previously been issued upon exercise thereof), the option to purchase up to
eighty seven thousand seven hundred nineteen (87,719) shares of Series A
Preferred Stock granted to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ pursuant to that certain Key Employee
Agreement by and between the Company and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ dated as of February 10,
1999, as amended, and the warrants to purchase in the aggregate 200,000 shares
of Series A Preferred Stock pursuant to that certain Note and Warrant Purchase
Agreement, dated as of April 30, 1999, by and among the Company and the
Purchasers listed therein (which will expire at the First Closing), and except
as may be granted pursuant to this Agreement and the Investor Rights Agreement,
there are no outstanding options, warrants, rights (including conversion or
preemptive rights and rights of first refusal), proxy or shareholder agreements,
or agreements of any kind for the purchase or acquisition from the Company or
any Subsidiary of any of its securities. Following the acquisition of the Shares
as provided herein, and assuming conversion of all outstanding Series A
Preferred Stock and Series B Preferred Stock, the Shares
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delivered to each of ▇.▇. ▇▇▇▇▇▇ International Capital Corporation ("JPMICC"),
Sixty Wall Street Fund, L.P. ("60WSF"), GE Capital Equity Investments, Inc., and
Pequot Private Equity Fund II, L.P. will represent 11.68%, 2.92%, 10.22% and
10.95%, respectively, of the issued and outstanding equity capital of the
Company and the Series B-1 Preferred Stock delivered to JPMICC and 60WSF will
represent 3.33% and 0.83%, respectively, of the issued and outstanding voting
securities of the Company. With the exception of the Company's right to
repurchase shares of the Company's Common Stock issued to employees of the
Company, or as will be set forth in the Restated Certificate, there are no
outstanding contractual or other rights or obligations to or of the Company or
any other Person to repurchase, redeem or otherwise acquire any securities of
the Company or any Subsidiary. When issued in compliance with the provisions of
this Agreement and the Restated Certificate, the Shares and the Conversion
Shares will be validly issued, fully paid and nonassessable, and will be free of
any liens or encumbrances; provided, however, that the Shares and the Conversion
Shares may be subject to restrictions on transfer under state and/or federal
securities laws as set forth herein or as otherwise required by such laws at the
time a transfer is proposed.
The capitalization of each of the Subsidiaries is as set forth
on Schedule B.
3.4 AUTHORIZATION; BINDING OBLIGATIONS.
(a) All corporate action on the part of the Company,
its officers, directors and shareholders necessary for the authorization of this
Agreement, the performance of all obligations of the Company hereunder and the
authorization, sale issuance and delivery of the Shares pursuant hereto has been
taken. All corporate action on the part of the Company, its officers, directors
and shareholders necessary for the authorization of the Investor Rights
Agreement and the JPMICC Letter, the performance of all obligations of the
Company thereunder and the authorization, sale, issuance and delivery of the
Conversion Shares pursuant to the Restated Certificate will be taken on or prior
to the Closing.
(b) The Company has duly executed and delivered this
Agreement, and will, on or prior to the Closing, duly execute and deliver the
Investor Rights Agreement and the JPMICC Letter. This Agreement constitutes, and
each of the Investor Rights Agreement and the JPMICC Letter will, when so
executed and delivered, constitute, the valid and binding obligation of the
Company, enforceable in accordance with its terms.
(c) The sale of the Shares and the subsequent
conversion of the Shares into Conversion Shares are not and will not be subject
to any preemptive rights or rights of first refusal.
3.5 FINANCIAL STATEMENTS. The Company has made available to
each Purchaser (a) the Operating Subsidiaries' audited balance sheet as at June
30, 1998 and audited statement of income and cash flows for the twelve months
ending June 1998, and (b) the Operating Subsidiaries' unaudited balance sheet as
at June 30, 1999 (the "Statement Date") and unaudited statement of income for
the twelve months ending June 1999, (collectively, the "Financial Statements"),
copies of which are attached hereto as Exhibit D. The Financial Statements are
complete and correct in all material respects, have been prepared in accordance
with Hong Kong generally accepted accounting principles applied on a consistent
basis throughout the periods indicated, except as disclosed therein, and present
fairly the financial condition and position of the Operating Subsidiaries as of
the
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Statement Date; provided, however, that the unaudited financial statements are
subject to normal recurring year-end audit adjustments (which are not expected
to be material), and may not contain all footnotes required under generally
accepted accounting principles.
3.6 LIABILITIES. Neither the Company nor any Subsidiary has
any liabilities or obligations (whether or not contingent) not otherwise
disclosed in writing to the Purchasers on or prior to the date hereof or set
forth in the Financial Statements attached hereto as Exhibit D, except current
liabilities incurred in the ordinary course of business of operating internet
service providers (but not including the business of acquiring internet service
providers) ("Ordinary Course of Business") which could not reasonably be
expected to be, either in any individual case or in the aggregate, materially
adverse to the assets, liabilities, financial condition, operation or prospects
of the Company or any Subsidiary.
3.7 AGREEMENTS; ACTION.
(a) Except for this Agreement and the Investor Rights
Agreement and employment agreements between the Company and its employees
providing for, among other things, the sale of the Company's Common Stock, there
are no agreements, understandings or proposed transactions between the Company
and any of its shareholders, officers, directors, affiliates or any affiliate
thereof.
(b) There are no agreements, understandings,
instruments, contracts, proposed transactions, judgments, orders, writs or
decrees to which the Company or any Subsidiary is a party or by which either the
Company or the Subsidiaries are bound which may involve (i) obligations
(contingent or otherwise) of, or payments to, the Company or the Subsidiaries in
excess of $500,000, or (ii) the transfer or license of any Intellectual Property
(as hereinafter defined) to or from the Company or the Subsidiaries (other than
licenses arising from the purchase of "off the shelf" or other standard
products), or (iii) provisions restricting the development, manufacture or
distribution of the Company's or the Subsidiaries' products or services, or (iv)
indemnification by the Company or the Subsidiaries with respect to infringements
of Intellectual Property (other than indemnification obligations arising from
purchase or sale or license agreements entered into in the Ordinary Course of
Business).
(c) Neither the Company nor the Subsidiaries have (i)
declared or paid any dividends, or authorized or made any distribution upon or
with respect to any class or series of its capital stock, (ii) incurred any
indebtedness for money borrowed or any other liabilities (other than with
respect to dividend obligations, distributions, indebtedness and other
obligations incurred in the ordinary course of business or as disclosed in the
Financial Statements) in excess of $500,000 individually or $1,000,000 in the
aggregate, (iii) made any loans or advances to any person, other than ordinary
advances for travel expenses, or (iv) sold, exchanged or otherwise disposed of
any of its assets or rights.
(d) For the purposes of subsections (b) and (c)
above, all indebtedness, liabilities, agreements, understandings, instruments,
contracts and proposed transactions involving the same person or entity
(including persons or entities the Company has reason to believe are affiliated
therewith) shall be aggregated for the purpose of meeting the individual minimum
dollar amounts of such subsections.
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3.8 OBLIGATIONS TO RELATED PARTIES. There are no obligations
of the Company or the Subsidiaries to officers, directors, shareholders, or
employees of the Company or the Subsidiaries (or any affiliates thereof) other
than (a) for payment of salary for services rendered, (b) reimbursement for
reasonable expenses incurred on behalf of the Company or the Subsidiaries and
(c) for other standard employee benefits made generally available to all
employees (including stock option agreements outstanding under any stock option
plan approved by the Board of Directors of the Company). Except as may be
disclosed in the Financial Statements, neither the Company nor any of the
Subsidiaries is a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation.
3.9 CHANGES. Since the Statement Date, there has not been:
(a) Any change in the assets, liabilities, financial
condition or operations of the Company or the Subsidiaries from that reflected
in the Financial Statements, other than changes in the Ordinary Course of
Business, none of which individually or in the aggregate has had or could have a
material adverse effect on such assets, liabilities, financial condition,
operations or prospects of the Company or any Subsidiary;
(b) Any resignation or termination of any officer or
key employee of the Company or of either of the Operating Subsidiaries; and the
Company, to the best of its knowledge, does not know of the impending
resignation or termination of employment of any such officer or key employee;
(c) Any material change in the contingent obligations
of the Company or any Subsidiary by way of guaranty, endorsement, indemnity,
warranty or otherwise;
(d) Any damage, destruction or loss, whether or not
covered by insurance, which could materially and adversely affect the
properties, business or prospects or financial condition of the Company or any
Subsidiary;
(e) Any waiver, forgiveness, cancellation or release
by the Company or any Subsidiary of a valuable right or of a material debt owed
to it;
(f) Any direct or indirect loans made by the Company
or any Subsidiary to any shareholder, employee, officer or director of the
Company or any Subsidiary;
(g) Any material change in any compensation
arrangement or agreement with any employee, officer, director or shareholder,
including the payment of any bonus;
(h) Any declaration or payment of any dividend or
other distribution of the assets of the Company or any Subsidiary;
(i) To the Company's knowledge, any labor
organization activity;
(j) Any debt, obligation or liability incurred,
assumed or guaranteed by the Company or any Subsidiary, except those for
immaterial amounts and for current liabilities incurred in the Ordinary Course
of Business;
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(k) Any sale, assignment, transfer or license of any
patents, trademarks, copyrights, trade secrets or other intangible assets;
(l) Any change in, or amendment or waiver of, any
material agreement (including without limitation, credit agreements and bank
loans) to which the Company or any Subsidiary is a party or by which it is
bound;
(m) Any mortgage, pledge, encumbrance or lien on any
property or assets, whether tangible or intangible, of the Company or any
Subsidiary;
(n) Any employment, consulting, retention,
change-in-control, collective bargaining or other incentive compensation,
profit-sharing, health or other welfare, stock option or other equity, pension,
retirement, vacation, severance, deferred compensation or other employment,
compensation or benefit plan, policy, agreement, trust, fund or arrangement for
the benefit of any officer, director, employee, sales representative, agent,
consultant or shareholder of the Company or any Subsidiary;
(o) Any loss of any supplier, service provider,
customer or employee that, individually or in the aggregate, could have or
result in a material adverse effect on the Company or any Subsidiary;
(p) Any amendment, supplement, waiver or modification
of the organizational documents of the Company or any Subsidiary, except as
contemplated by this Agreement;
(q) Any change in any respect of the accounting
practices, policies or principles of the Company or any Subsidiary;
(r) The sale of assets of the Company and the
Subsidiaries amounting, in the aggregate, to more than $50,000;
(s) Any other event or condition of any character
that, either individually or cumulatively, could materially and adversely
affect, or has materially and adversely affected, the business, assets,
liabilities, financial condition, operations or prospects of the Company or the
Operating Subsidiaries; or
(t) Any arrangement or commitment by the Company or
any Subsidiary to do any of the acts described in subsections (a) through (s)
above, or any failure to act that results in the occurrence of the acts
described in subsections (a) through (s) above.
3.10 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company
and each of the Subsidiaries has good and marketable title to their respective
properties and assets, and good title to their respective leasehold estates, in
each case subject to no mortgage, pledge, lien, lease, encumbrance or charge,
other than (a) those resulting from taxes which have not yet become delinquent,
(b) minor liens and encumbrances which do not materially detract from the value
of the property subject thereto or materially impair the operations of the
Company or the Operating Subsidiaries, and (c) those that have otherwise arisen
in the ordinary course of business. The
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Company and the Subsidiaries are in compliance with all material terms of each
lease to which they are a party or is otherwise bound.
3.11 INTELLECTUAL PROPERTY. The Company and the Subsidiaries
own or possess sufficient legal rights to all trademarks, service marks, trade
names, trade dress, copyrights, and similar rights (including registrations and
applications to register or renew the registration of any of the foregoing), and
letters patent and patent applications, and inventions, processes, designs,
formulae, trade secrets, know-how, confidential information, computer software,
data and documentation, and all similar intellectual property rights, tangible
embodiments of any of the foregoing (in any medium including electronic media),
and licenses of any of the foregoing (collectively, "Intellectual Property")
necessary for their business as now conducted and as presently proposed to be
conducted, without (except with respect to letters patent and patent
applications) any infringement of the rights of others and, with respect to
letters patent and patent applications, without any known infringement of the
rights of others. There are no outstanding options, licenses or agreements of
any kind relating to the foregoing, nor are the Company or the Subsidiaries
bound by or a party to any options, licenses or agreements of any kind with
respect to the Intellectual Property of any other person or entity other than
such licenses or agreements arising from the purchase of "off the shelf" or
standard products. The Company and each Subsidiary is in compliance with all
material terms of any licenses by which any of them use any Intellectual
Property, and each such license is in full force and effect. To the knowledge of
the Company, each licensor thereof is in compliance with all material terms of
the respective license. Neither the Company nor any Subsidiary is aware of the
existence of any fact or circumstance that would give the licensor thereof
grounds under the terms of such license to cancel, terminate or suspend such
license. The Company expects that all such licenses material to the operation of
the Company or any Subsidiary will be renewed in the ordinary course of business
on terms commercially reasonable to the Company or such Subsidiary. Neither the
Company nor any of the Subsidiaries has received any communications alleging
that the Company or the Subsidiaries have violated or, by conducting their
businesses as presently proposed, would violate any of the Intellectual Property
of any other person or entity. The Company is not aware that any of its
employees or employees of the Subsidiaries is obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with their duties to the Company or the
Subsidiaries, respectively, or that would conflict with the Company's or the
Subsidiaries' business as presently proposed to be conducted. Neither the
execution nor delivery of this Agreement, the Investor Rights Agreement or the
JPMICC Letter, nor the carrying on of the Company's or the Subsidiaries business
by the respective employees of the Company and the Subsidiaries, nor the conduct
of the Company's and the Subsidiaries' business as presently proposed, will, to
the Company's knowledge, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any employee is now obligated. The Company
does not believe it is or will be necessary for the Company or the Operating
Subsidiaries to utilize any Intellectual Property of their respective employees
made prior to their employment by the Company or the Operating Subsidiaries,
except for the Intellectual Property that has been assigned to the Company or
the Subsidiaries.
3.12 COMPLIANCE WITH OTHER INSTRUMENTS. Neither the Company
nor any Subsidiary is in violation or default of any term of its organizational
documents, or of any provision of any mortgage, indenture, contract, agreement,
instrument or contract to which it is a party or by
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which it is bound or of any judgment, decree, order or writ (each an "Order").
None of the Company or any Subsidiary has received any notice of, or has
knowledge of any claim alleging, any violation or default of any such term,
provision or Order. The execution, delivery, and performance of and compliance
with this Agreement, the Investor Rights Agreement and the JPMICC Letter, and
the issuance and sale of the Shares pursuant hereto and of the Conversion Shares
pursuant to the Restated Certificate, will not, with or without the passage of
time or giving of notice, result in any such material violation, or be in
conflict with or constitute a default under any such term, provision or Order,
or result in the creation of any mortgage, pledge, lien, encumbrance or charge
upon any of the properties or assets of the Company or any Subsidiary or the
suspension, revocation, impairment, forfeiture or nonrenewal of any permit,
license, authorization or approval applicable to the Company or any Subsidiary,
or their respective businesses or operations or any of their respective assets
or properties.
3.13 LITIGATION. There is no action, suit, proceeding or
investigation pending or currently threatened in writing, or, to the Company's
knowledge, otherwise threatened against the Company or any Subsidiary that (a)
questions the validity of this Agreement, the Investor Rights Agreement or the
JMPICC Letter, or the right of the Company to enter into any of such agreements,
or to consummate the transactions contemplated hereby or thereby, or (b) might
result, either individually or in the aggregate, in any adverse change in the
assets, condition, affairs or prospects of the Company or the Subsidiaries,
financially or otherwise, or any change in the current equity ownership of the
Company or the Subsidiaries, nor is the Company aware that there is any basis
for any of the foregoing. The foregoing includes, without limitation, actions
pending or threatened (or any basis therefor known to the Company) involving the
prior employment of any of the Company's or the Subsidiaries' employees, their
use in connection with the Company's or the Subsidiaries' business of any
information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers.
Neither the Company nor any Subsidiary is a party or subject to the provisions
of any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality. There is no action, suit, proceeding or investigation
by the Company or a Subsidiary currently pending or which the Company or a
Subsidiary intends to initiate.
3.14 TAX RETURNS AND PAYMENTS. The Company and each Subsidiary
has timely filed all tax returns and forms required to be filed by them. All
taxes shown to be due and payable on such returns, any assessments imposed, and
all other taxes due and payable by the Company or any Subsidiary on or before
the Closing, have been paid or will be paid prior to the time they become
delinquent. Neither the Company nor any Subsidiary has been advised (a) that any
of its returns have been or are being audited as of the date hereof, or (b) of
any deficiency in assessment or proposed judgment to its taxes. Neither the
Company nor any Subsidiary is currently the beneficiary of any extension of time
within which to file any tax return. The Company and each Subsidiary has duly
and timely withheld all taxes required to be withheld in connection with the
business of any of them and such withheld taxes have been either duly and timely
paid to the proper governmental authorities or properly set aside in accounts
for such purpose. The balance sheets contained in the Financial Statements
reflect an adequate reserve for all taxes payable or asserted to be payable by
the Company or any Subsidiary for all taxable periods or portions thereof
through the Closing. There has been no claim or issue (other than a claim or
issue that has been paid in full or for which adequate provision has been made
in the balance sheets contained in the Financial Statements) concerning any
liability for taxes of the Company or any Subsidiary asserted, raised or
threatened by
9.
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any taxing authority and, to the knowledge of the Company, no circumstances
exist to form the basis for such a claim or issue. There are no outstanding
adjustments for income tax purposes applicable to the Company or any Subsidiary
required as a result of changes in methods of accounting effected on or before
the Closing Date and no material elections for income tax purposes have been
made by the Company or any Subsidiary that are currently in force or by which
the Company or any Subsidiary is bound. Neither the Company nor any Subsidiary
is a party to or bound by or has any obligation under any tax allocation,
sharing, indemnity or similar agreement or arrangement.
3.15 EMPLOYEES. Neither the Company nor any Subsidiary has any
collective bargaining agreements with any of its employees. There is no labor
union organizing activity pending or, to the Company's knowledge, threatened
with respect to the Company or a Subsidiary. No employee has any agreement or
contract, written or verbal, regarding his employment other than the Company's
Form of Proprietary Information and Inventions Agreement. Other than the
Company's 1999 Equity Incentive Plan and the Key Employment Agreements for ▇▇▇▇▇
▇▇▇▇▇▇▇▇ and ▇▇ ▇▇▇▇▇▇▇, neither the Company nor any Subsidiary is a party to or
bound by any currently effective employment contract, deferred compensation
arrangement, bonus plan, incentive plan, profit sharing plan, retirement
agreement or other employee compensation plan or agreement. To the Company's
knowledge, no employee of the Company or a Subsidiary, nor any consultant with
whom the Company or a Subsidiary has contracted, is in violation of any term of
any employment contract, proprietary information agreement or any other
agreement relating to the right of any such individual to be employed by, or to
contract with, the Company because of the nature of the business to be conducted
by the Company or a Subsidiary; and to the Company's knowledge the continued
employment by the Company and each of the Subsidiaries of their respective
present employees, and the performance of the Company's and each of the
Subsidiaries' contracts with their respective independent contractors, will not
result in any such violation. The Company has not received any notice alleging
that any such violation has occurred. No employee of the Company or a Subsidiary
has been granted the right to continued employment by the Company or a
Subsidiary or to any material compensation following termination of employment
with the Company or a Subsidiary. The Company is not aware that any officer or
key employee, or that any group of key employees, intends to terminate his, her
or their employment with the Company or a Subsidiary, nor does the Company or a
Subsidiary have a present intention to terminate the employment of any officer,
key employee or group of key employees. The Company and each Subsidiary has
complied with all applicable laws, rules and regulations pertaining to the
employment or termination of employment of their respective employees, including
all such laws, rules and regulations relating to labor relations, equal
employment opportunities, fair employment practices, prohibited discrimination
or distinction and other similar employment activities.
3.16 CONTRACTS. The Company has delivered to the Purchasers
complete and correct copies of all written contracts listed on Schedule C, and
accurate descriptions of all material terms of all oral contracts listed on
Schedule C (collectively, the "Contracts"). All Contracts are legal, valid,
binding, in full force and effect and enforceable against each party thereto,
except to the extent that any failure to be enforceable, individually and in the
aggregate, could not have or result in a material adverse effect on the
business, operations or prospects of the Company or any Subsidiary, or
materially impair the ability of the Company to perform its respective
obligations hereunder and under the Investor Rights Agreement or the JPMICC
Letter. There does not exist under any Contract any violation, breach or event
of default, or event or condition that, after notice or lapse of time or both,
would constitute a violation, breach or event of default thereunder, on the
10.
15
part of the Company or any Subsidiary or, to the knowledge of the Company, any
other Person, that would have or result in a material adverse effect on the
business, operations or prospects of the Company or any Subsidiary, or
materially impair the ability of the Company to perform its respective
obligations hereunder and under the Investor Rights Agreement or the JPMICC
Letter. The enforceability of no Contract will be affected in any manner by the
execution, delivery or performance of this Agreement, the Investor Rights
Agreement or the JPMICC Letter, and no Contract contains any change in control
or other terms or conditions that will become applicable or inapplicable as a
result of the consummation of the transactions contemplated by this Agreement,
the Shareholders' Agreement or the JPMICC Letter.
3.17 INSURANCE. All insurance policies maintained at present
by or on behalf of the Company or any Subsidiary are in full force and effect,
and all premiums due thereon have been paid. The Company and each Subsidiary, as
the case may be, has complied in all material respects with the terms and
provisions of such policies. The insurance coverage provided by such policies is
adequate and suitable for the respective businesses of the Company and the
Subsidiaries, and is on such terms (including as to deductibles and self-insured
retentions), covers such risks, contains such deductibles and retentions, and is
in such amounts, as the insurance customarily carried by comparable companies of
established reputation similarly situated and carrying on the same or similar
business.
3.18 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each
current employee, officer and consultant of the Company and of each Operating
Subsidiary has executed a form of Proprietary Information and Inventions
Agreement.
3.19 REGISTRATION RIGHTS. Except as required pursuant to the
Investor Rights Agreement, the Company is presently not under any obligation,
and has not granted any rights, to register (as defined in Section 1.1 of the
Investor Rights Agreement) any of the Company's presently outstanding securities
or any of its securities that may hereafter be issued.
3.20 COMPLIANCE WITH LAWS; PERMITS. Neither the Company nor
any Subsidiary is in violation of any applicable statute, rule, regulation,
order or restriction of any government or any instrumentality or agency thereof
in respect of the conduct of its business or the ownership of its properties
which violation could, individually or in the aggregate, materially and
adversely affect the business, assets, liabilities, financial condition,
operations or prospects of the Company or any Subsidiary, and neither the
Company nor any Subsidiary has received any notice alleging any such violation.
No governmental orders, permissions, consents, approvals or authorizations are
required to be obtained and no registrations or declarations are required to be
filed in connection with the execution and delivery of this Agreement and the
issuance of the Shares or the Conversion Shares, except such as may be required
by United States federal or state securities laws, as will be filed in a timely
manner. The Company and each Subsidiary has all franchises, permits, licenses
and any similar authority (collectively, "Approvals") necessary for the conduct
of their businesses as now being conducted by them, the lack of which could,
individually or in the aggregate, materially and adversely affect the business,
properties, prospects or financial condition of the Company or the Subsidiary
and the Company believes it or each Subsidiary can obtain, without undue burden
or expense, any similar authority for the conduct of its business as planned to
be conducted. All Approvals have been duly obtained and are held by the Company
or a Subsidiary, and are in full force and effect. The Company and each
Subsidiary is in compliance with all Approvals held by it.
11.
16
There is no claim, litigation or action pending or, to the knowledge of the
Company, threatened, that could result in the revocation, cancellation,
suspension or modification or nonrenewal of any such Approval; none of the
Company or any Subsidiary has been notified that any such Approval will be
modified, suspended or cancelled; and there is no reasonable basis for any such
revocation, cancellation, suspension, modification or nonrenewal. The execution,
delivery and performance of this Agreement, the Investor Rights Agreement and
the JPMICC Letter and the consummation of the transactions contemplated hereby
and thereby do not and will not violate any such Approval, or result in any
revocation, cancellation, suspension, modification or nonrenewal thereof. Each
registration, report, statement, notice or other filing required to be filed by
the Company or any Subsidiary with any governmental authority under any
applicable law, rule, regulation or order has been timely filed, and when filed
complied and continues to comply with such applicable law, rule, regulation or
order in all material respects.
3.21 ENVIRONMENTAL AND SAFETY LAWS. To its knowledge, neither
the Company or any Subsidiary is in violation of any applicable statute, law or
regulation relating to the environment or occupational health and safety, and to
the Company's knowledge, no material expenditures are or will be required in
order to comply with any such existing statute, law or regulation.
3.22 YEAR 2000 COMPLIANCE. With respect to its business
critical information systems, the Company hereby represents, warrants, confirms
and agrees that it and each Subsidiary has (a) undertaken a detailed review and
assessment of all areas within its business and operations that could be
adversely affected by its failure to be Year 2000 Compliant on a timely basis;
(b) developed a detailed plan and timeline for becoming Year 2000 Compliant on a
timely basis; and implemented such plan in accordance with its timetable in all
material respects. The Company reasonably anticipates that it and each
Subsidiary will be Year 2000 Compliant on a timely basis. The Company covenants
that it will, within a reasonable time following Closing, make written inquiry
of each of its and each Subsidiary's key suppliers, vendors and service
providers as to whether such persons will, on a timely basis, be Year 2000
Compliant in all material respects. The Company shall promptly notify each
Investor if the business or operations of the Company will be materially
adversely affected by the failure of the Company, any Subsidiary or any key
supplier, vendor or service provider to be Year 2000 Compliant.
"Year 2000 Compliant" means, with regard to any entity, that
all software, embedded microchips and other data, word processing and
telecommunications capabilities used by and material to the business, operations
or financial condition of such entity are able to interpret and manipulate data
involving all calendar dates correctly and without causing any abnormal ending
scenario, including but not limited to complications related to dates on and
after January 1, 2000.
3.23 OFFERING VALID. Assuming the accuracy of the
representations and warranties of the Purchasers contained in Section 4.2
hereof, the offer, sale and issuance of the Shares and the Conversion Shares
will be exempt from the registration requirements of the Securities Act of 1933,
as amended (the "Securities Act"), and will have been registered or qualified
(or are exempt from registration and qualification) under the registration,
permit or qualification requirements of all applicable state securities laws.
Neither the Company nor any agent on its behalf has solicited or will solicit
any offers to sell or has offered to sell or will offer to sell all or any part
of the Shares to any person or persons so as to bring the sale of such Shares by
the Company within the registration provisions of the Securities Act or any
state securities laws.
12.
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4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
Each Purchaser hereby represents and warrants, severally and
not jointly, to the Company as follows (such representations and warranties do
not lessen or obviate the representations and warranties of the Company set
forth in this Agreement):
4.1 REQUISITE POWER AND AUTHORITY. Purchaser has all necessary
power and authority under all applicable provisions of law to execute and
deliver this Agreement and the Investor Rights Agreement and to carry out their
provisions. All action on Purchaser's part required for the lawful execution and
delivery of this Agreement and the Investor Rights Agreement have been or will
be effectively taken prior to the Closing. Upon their execution and delivery,
this Agreement and the Investor Rights Agreement will be valid and binding
obligations of Purchaser, enforceable in accordance with their terms, except (a)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors' rights,
(b) general principles of equity that restrict the availability of equitable
remedies, and (c) to the extent that the enforceability of the indemnification
provisions of Section 2.9 of the Investor Rights Agreement may be limited by
applicable laws.
4.2 INVESTMENT REPRESENTATIONS. Purchaser understands that
neither the Shares nor the Conversion Shares have been registered under the
Securities Act. Purchaser also understands that the Shares are being offered and
sold pursuant to an exemption from registration contained in the Securities Act
based in part upon Purchaser's representations contained in the Agreement.
Purchaser hereby represents and warrants as follows:
(a) PURCHASER BEARS ECONOMIC RISK. Purchaser has
substantial experience in evaluating and investing in private placement
transactions of securities in companies similar to the Company so that it is
capable of evaluating the merits and risks of its investment in the Company and
has the capacity to protect its own interests. Purchaser must bear the economic
risk of this investment indefinitely unless the Shares (or the Conversion
Shares) are registered pursuant to the Securities Act, or an exemption from
registration is available. Purchaser understands that the Company has no present
intention of registering the Shares, the Conversion Shares or any shares of its
Common Stock. Purchaser also understands that there is no assurance that any
exemption from registration under the Securities Act will be available and that,
even if available, such exemption may not allow Purchaser to transfer all or any
portion of the Shares or the Conversion Shares under the circumstances, in the
amounts or at the times Purchaser might propose.
(b) ACQUISITION FOR OWN ACCOUNT. Purchaser is
acquiring the Shares and the Conversion Shares for Purchaser's own account for
investment only, and not with a view towards their distribution.
(c) PURCHASER CAN PROTECT ITS INTEREST. Purchaser
represents that by reason of its, or of its management's, business or financial
experience, Purchaser has the capacity to protect its own interests in
connection with the transactions contemplated in this Agreement, and the
Investor Rights Agreement. Further, Purchaser has not published any
advertisement in connection with the transactions contemplated in the Agreement.
13.
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(d) ACCREDITED INVESTOR. Purchaser represents that it
is an accredited investor within the meaning of Regulation D under the
Securities Act.
(e) COMPANY INFORMATION. Purchaser has received and
read the Financial Statements and has had an opportunity to discuss the
Company's business, management and financial affairs with directors, officers
and management of the Company and has had the opportunity to review the
Company's operations and facilities. Purchaser has also had the opportunity to
ask questions of and receive answers from, the Company and its management
regarding the terms and conditions of this investment.
(f) RULE 144. Purchaser acknowledges and agrees that
the Shares, and, if issued, the Conversion Shares must be held indefinitely
unless they are subsequently registered under the Securities Act or an exemption
from such registration is available. Purchaser has been advised or is aware of
the provisions of Rule 144 promulgated under the Securities Act as in effect
from time to time, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things: the availability of certain current public information about the
Company, the resale occurring following the required holding period under Rule
144 and the number of shares being sold during any three-month period not
exceeding specified limitations.
(g) RESIDENCE. If the Purchaser is an individual,
then the Purchaser resides in the state or province identified in the address of
the Purchaser set forth on Exhibit A; if the Purchaser is a partnership,
corporation, limited liability company or other entity, then the office or
offices of the Purchaser in which its investment decision was made is located at
the address or addresses of the Purchaser set forth on Exhibit A.
5. CONDITIONS TO CLOSING.
5.1 CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE CLOSING. Each
Purchaser's obligation to purchase the Shares to be purchased by such Purchaser
at the Closing are subject to the satisfaction, at or prior to the Closing Date,
of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE
OF OBLIGATIONS. The representations and warranties made by the Company in
Section 3 hereof shall be true and correct in all material respects as of the
First Closing Date with the same force and effect as if they had been made as of
the First Closing Date. The Company shall have performed all obligations and
conditions herein required to be performed or observed by it on or prior to the
Closing.
(b) LEGAL INVESTMENT. On the Closing Date, the sale
and issuance of the Shares and the proposed issuance of the Conversion Shares
shall be legally permitted by all laws and regulations to which Purchasers and
the Company are subject.
(c) CONSENTS, PERMITS, AND WAIVERS. The Company shall
have obtained any and all consents, permits and waivers necessary or appropriate
for consummation of the transactions contemplated by the Agreement, the Investor
Rights Agreement, the JPMICC Letter and the Restated Certificate (except for
such as may be properly obtained subsequent to the Closing).
14.
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(d) FILING OF RESTATED CERTIFICATE. The Restated
Certificate shall have been filed with the Secretary of State of the State of
Delaware and shall continue to be in full force and effect as of the Closing
Date.
(e) CORPORATE DOCUMENTS. The Company shall have
delivered to Purchasers or their counsel, copies of all corporate documents of
the Company as Purchasers shall reasonably request.
(f) RESERVATION OF CONVERSION SHARES. The Conversion
Shares issuable upon conversion of the Shares shall have been duly authorized
and reserved for issuance upon such conversion.
(g) COMPLIANCE CERTIFICATE. The Company shall have
delivered to Purchasers a Compliance Certificate, executed by the President of
the Company, dated the Closing Date, to the effect that the conditions specified
in subsections (a), (c), (d) and (f) of this Section 5.1 have been satisfied.
(h) OTHER AGREEMENTS. An Investor Rights Agreement
substantially in the form attached hereto as Exhibit C shall have been executed
and delivered by the parties thereto and the JPMICC Letter shall have been
executed and delivered by the Company.
(i) BOARD OF DIRECTORS. Upon the First Closing, the
authorized size of the Board of Directors of the Company shall be seven members,
and the Board shall consist of ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, plus one vacancy to be an outside
director nominated by the holders of the Series B Preferred Stock.
(j) LEGAL OPINION. The Purchasers shall have received
from legal counsel to the Company an opinion addressed to them, dated as of the
Closing Date, in form and substance reasonably satisfactory to them.
(k) PROCEEDINGS AND DOCUMENTS. All corporate and
other proceedings in connection with the transactions contemplated hereunder and
under the Investor Rights Agreement, the JPMICC Letter and Restated Certificate
and all documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to the Purchasers and their
special counsel, and the Purchasers and their special counsel shall have
received all such counterpart originals or certified or other copies of such
documents as they may reasonably request.
(l) COMPLIANCE WITH SECURITIES LAWS. All federal and
state securities filings required in connection with the transactions
contemplated by this Agreement, the Investor Rights Agreement and the Restated
Certificate shall have been made or obtained except those filings which may
properly be made or obtained after Closing.
(m) DUE DILIGENCE. The Purchasers shall (i) have
completed their due diligence review of the Company and the Subsidiaries, and
(ii) be satisfied, in their sole discretion, with the results of such due
diligence review.
15.
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(n) APPROVALS. All approvals, consents, permissions,
authorizations or waivers required to be made or obtained by such Purchaser from
any investment committee, board of directors or shareholder, or creditor or
other third party, or any governmental or regulatory authority, in connection
with the execution and delivery of this Agreement, the Investor Rights Agreement
and the JPMICC Letter, or the consummation of the transactions contemplated
hereby or thereby, shall have been made or obtained.
(o) SCHEDULE OF EXCEPTIONS. The Schedule of
Exceptions to be delivered by the Company to Purchasers on or prior to the First
Closing shall be satisfactory to such Purchaser in its sole discretion.
(p) INJUNCTIONS. No writ, order, decree or injunction
of a court of competent jurisdiction or governmental entity shall have been
entered against the Company or any Subsidiary that prohibits or restricts the
consummation of the transactions contemplated by this Agreement, the Investor
Rights Agreement, the JPMICC Letter or the Restated Certificate, or limits or
restricts the operations of the business of the Company and its Subsidiaries (as
they are concurrently conducted) in a matter that could reasonably be expected
to result in a material adverse change in the business, financial condition,
results of operations or prospects of the Company or any Subsidiary.
(q) MATERIAL ADVERSE CHANGE. There shall not have
occurred or been threatened since the Statement Date, any event, occurrence,
fact, condition, change, development or effect that is or may be materially
adverse to the business, financial condition, results of operations or prospects
of the Company or any Subsidiary, except as set forth in the Schedule of
Exceptions.
(r) CONCURRENT PURCHASES. Each of the other
Purchasers shall have purchased at the First Closing the type and number of
shares set forth opposite such Purchasers name on Exhibit A.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's
obligation to issue and sell the Shares at each Closing is subject to the
satisfaction, on or prior to such Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties in Section 4 made by the Purchasers in Section 4
hereof shall be true and correct in all material respects at the date of the
Closing, with the same force and effect as if they had been made on and as of
said date.
(b) PERFORMANCE OF OBLIGATIONS. Purchasers shall have
performed and complied with all agreements and conditions herein required to be
performed or complied with by such Purchasers on or before each Closing.
(c) FILING OF RESTATED CERTIFICATE. The Restated
Certificate shall have been filed with the Secretary of State of the State of
Delaware.
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(d) INVESTOR RIGHTS AGREEMENT. An Investor Rights
Agreement substantially in the form attached hereto as Exhibit C shall have been
executed and delivered by the Purchasers.
6. MISCELLANEOUS.
6.1 GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of California as such laws are applied to
agreements between California residents entered into and performed entirely in
California, except as to matters of corporate law which shall be governed by the
General Corporation Law of Delaware. Any legal action or other legal proceeding
commenced among the parties hereto with respect to this Agreement shall be
commenced and maintained exclusively in a state or federal court located in the
County of Santa Clara, California. Each party hereto expressly and irrevocably
consents and submits to the exclusive jurisdiction of the applicable state and
federal courts located in the County of Santa ▇▇▇▇▇, State of California and
each appellate court located in the State of California, in connection with any
such proceeding. Each party agrees that such courts shall be deemed to be a
convenient forum in any such legal proceeding, and agrees not to assert (by way
of motion, as a defense or otherwise) any claim that such party is not subject
personally to the jurisdiction of any such courts, that such legal proceeding
has been brought in an inconvenient forum, that the venue of such legal
proceeding is improper or that this Agreement or the subject matter hereof may
not be enforced in or by any such courts. Personal service may be effected by
written notice served upon either party as provided by this Agreement, or as
otherwise permitted or provided by law in the State of California.
6.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by any Purchaser and
the closing of the transactions contemplated hereby. All statements as to
factual matters contained in any certificate or other instrument delivered by or
on behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.
6.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Shares from time to time. Each member of the
JPM Group shall have the right to assign any of its rights hereunder in whole or
in part (including the right to subscribe for Shares at the First Closing) to
any member of the JPM Group, provided that such assignee becomes a party hereto.
For the purposes of this Section 6.3, "JPM Group" means (a) JMPICC and Sixty
Wall Street Fund, L.P. (the "Fund"), (b) each entity controlled by JPMICC or the
Fund or any affiliate of either of them, (c) a partnership in which JPMICC or
the Fund, and/or one or more affiliates of either of them, constitute a majority
of the general partners or (d) an investment fund or unit trust managed by
JPMICC or the Fund, or any affiliate of either of them, or the fund manager of
JPMICC or the Fund, or an affiliate of either of them.
6.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and
Schedules hereto, the Investor Rights Agreement, the JPMICC Letter and the other
documents delivered pursuant hereto constitute the full and entire understanding
and agreement between the parties with regard to the subjects hereof and no
party shall be liable or bound to any other in any manner by any
17.
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representations, warranties, covenants and agreements except as specifically set
forth herein and therein.
6.5 SEVERABILITY. In case any provision of the Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
6.6 AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only
upon the written consent of the Company and holders of at least sixty percent
(60%) of the Shares (treated as if converted and including any Conversion Shares
into which the Shares have been converted that have not been sold to the
public).
(b) The obligations of the Company and the rights of
the holders of the Shares and the Conversion Shares under the Agreement may be
waived only with the written consent of the holders of at least sixty percent
(60%) of the Shares (treated as if converted and including any Conversion Shares
into which the Shares have been converted that have not been sold to the
public).
6.7 DELAYS OR OMISSIONS. It is agreed that no delay or
omission to exercise any right, power or remedy accruing to any party, upon any
breach, default or noncompliance by another party under this Agreement, the
Investor Rights Agreement, the JPMICC Letter or the Restated Certificate, shall
impair any such right, power or remedy, nor shall it be construed to be a waiver
of any such breach, default or noncompliance, or any acquiescence therein, or of
or in any similar breach, default or noncompliance thereafter occurring. It is
further agreed that any waiver, permit, consent or approval of any kind or
character on any Purchaser's part of any breach, default or noncompliance under
this Agreement, the Investor Rights Agreement, the JPMICC Letter or under the
Restated Certificate or any waiver on such party's part of any provisions or
conditions of the Agreement, the Investor Rights Agreement, the JPMICC Letter or
the Restated Certificate must be in writing and shall be effective only to the
extent specifically set forth in such writing. All remedies, either under this
Agreement, the Investor Rights Agreement, the JPMICC Letter, the Restated
Certificate, by law, or otherwise afforded to any party, shall be cumulative and
not alternative.
6.8 WAIVER OF CONFLICTS. Each party to this Agreement
acknowledges that legal counsel for the Company, ▇▇▇▇▇▇ Godward LLP ("▇▇▇▇▇▇
Godward"), has in the past performed and may continue in the future to perform
legal services for one or more of the Purchasers or their affiliates in matters
unrelated to the transactions contemplated by this Agreement, including, but not
limited to, the representation of the Purchasers in matters of a similar nature
to the transactions contemplated herein. Each party to this Agreement hereby (a)
acknowledges that they have had an opportunity to ask for and have obtained
information relevant to such representation, including disclosure of the
reasonably foreseeable adverse consequences of such representation; (b)
acknowledges that with respect to the transactions contemplated herein, ▇▇▇▇▇▇
Godward has represented the Company and not any individual Purchaser or any
individual shareholder, director or employee of the Company; and (c) gives its
informed consent to ▇▇▇▇▇▇ Godward's representation of the Company in the
transactions contemplated by this Agreement and ▇▇▇▇▇▇ Godward's previous or
continuing representation of one or more of the Purchasers or their affiliates
in matters unrelated to such transactions.
18.
23
6.9 NOTICES. All notices required or permitted hereunder shall
be in writing and shall be deemed effectively given: (a) upon personal delivery
to the party to be notified, (b) when sent by confirmed telex or facsimile if
sent during normal business hours of the recipient, if not, then on the next
business day, (c) eight (8) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (d) three (3) days
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All communications shall be
sent to the Company at the address as set forth on the signature page hereof and
to Purchaser at the address set forth on Exhibit A attached hereto or at such
other address as the Company or Purchaser may designate by ten (10) days advance
written notice to the other parties hereto.
6.10 EXPENSES. The Company shall pay all costs and expenses
that it incurs with respect to the negotiation, execution, delivery and
performance of the Agreement. The Company shall, at the First Closing, reimburse
the reasonable fees of and expenses of one special counsel for the Purchasers,
not to exceed $50,000, and shall reimburse such special counsel for reasonable
expenses incurred in connection with the negotiation, execution, delivery and
performance of this Agreement.
6.11 ATTORNEYS' FEES. In the event that any suit or action is
instituted to enforce any provision in this Agreement, the prevailing party in
such dispute shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under or with
respect to this Agreement, including without limitation, such reasonable fees
and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.
6.12 TITLES AND SUBTITLES. The titles of the sections and
subsections of the Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
6.13 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
6.14 BROKER'S FEES. Each party hereto represents and warrants
that no agent, broker, investment banker, person or firm acting on behalf of or
under the authority of such party hereto is or will be entitled to any broker's
or finder's fee or any other commission directly or indirectly in connection
with the transactions contemplated herein. Each party hereto further agrees to
indemnify each other party for any claims, losses or expenses incurred by such
other party as a result of the representation in this Section 6.14 being untrue.
6.15 EXCULPATION AMONG PURCHASERS. Each Purchaser acknowledges
that it is not relying upon any person, firm, or corporation, other than the
Company and its officers and directors, in making its investment or decision to
invest in the Company. Each Purchaser agrees that no Purchaser nor the
respective controlling persons, officers, directors, partners, agents, or
employees of any Purchaser shall be liable to any other Purchaser for any action
heretofore or hereafter taken or omitted to be taken by any of them in
connection with the Shares and Conversion Shares.
19.
24
6.16 CONFIDENTIALITY. Each party hereto agrees that, except
with the prior written consent of the delivering party, it shall at all times
keep confidential and not divulge, furnish or make accessible to anyone any
Confidential Information, provided that such party may deliver or disclose
Confidential Information to (a) such party's representatives and advisors who
agree to hold confidential the Confidential Information substantially in
accordance with the terms of this Section 6.16, (b) any other party hereto, (c)
any person or entity to which such party sells or offers to sell any Shares (if
such person or entity has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section 6.16),
(d) any governmental authority having jurisdiction over such Party in response
to any subpoena or other legal process or as may be required by applicable laws
or regulations, or (e) any other person or entity to which such delivery or
disclosure may be necessary or appropriate in response to any subpoena or other
legal or regulatory process. The provisions of this Section 6.16 shall be in
addition to, and not in substitution for, the provisions of any separate
nondisclosure agreement executed by the parties hereto. "Confidential
Information" shall mean information delivered by a party to another party hereto
in connection with the transactions contemplated by or otherwise pursuant to
this Agreement that is proprietary in nature; provided that such term does not
include information that (a) was publicly known or otherwise known to such
receiving party prior to the time of such disclosure, (b) subsequently becomes
publicly known through no act or omission by such receiving party or any person
or entity acting on such party's behalf, or (c) otherwise becomes known to such
receiving party other than through disclosure by the delivering party or any
person or entity with a duty to keep such information confidential.
6.17 CERTAIN SERIES A PREFERRED WARRANTS. Each of Nexus
Capital Partners I, L.P., MLS-I, L.P., Porcelain Partners, L.P. and Nexus
Partners, LLC hereby irrevocably waives any right it may have to exercise the
warrant, dated as of April 30, 1999, issued by the Company to it to acquire
Series A Preferred Stock, and agrees that hereafter it shall not exercise any
such warrant.
6.18 PRONOUNS. All pronouns contained herein, and any
variations thereof, shall be deemed to refer to the masculine, feminine or
neutral, singular or plural, as to the identity of the parties hereto may
require.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
20.
25
IN WITNESS WHEREOF, the parties hereto have executed the SERIES B
PREFERRED STOCK PURCHASE AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASER:
ASIA ONLINE, LTD. ▇.▇ ▇▇▇▇▇▇ INTERNATIONAL
CAPITAL CORP.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------- ---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President Name: ▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Title: Vice President
------------------------------------
SIXTY WALL STREET FUND, L.P.
BY: SIXTY WALL STREET CORPORATION,
ITS GENERAL PARTNER
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Title: Vice President
------------------------------------
PEQUOT PRIVATE EQUITY FUND II, L.P.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇ [STAMP]
-------------------------------------
Title: CFO
------------------------------------
GE CAPITAL EQUITY INVESTMENTS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Title: Managing Director
------------------------------------
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
SIGNATURE PAGE
26
SOFTBANK TECHNOLOGY VENTURES IV, L.P.
By: [ILLEGIBLE]
By: /s/ E. ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
Name: E. ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Title: Managing Member
------------------------------------
SOFTBANK TECHNOLOGY ADVISORS FUND, L.P.
By: [ILLEGIBLE]
By: /s/ E. ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
Name: E. ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Title: Managing Member
------------------------------------
NEXUS CAPITAL PARTNERS I, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
Title: General Partner
------------------------------------
MLS-I, L.P.
By: /s/ ▇▇▇▇▇▇ SCHIFFSTALL
---------------------------------------
Name: ▇▇▇▇▇▇ Schiffstall
-------------------------------------
Title: General Partner
------------------------------------
PORCELAIN PARTNERS, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
Title: General Partner
------------------------------------
27
NEXUS PARTNERS, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
Title: General Partner
------------------------------------
CONCENTRIC NETWORK CORPORATION
By: /s/ [ILLEGIBLE]
---------------------------------------
Name: [ILLEGIBLE]
-------------------------------------
Title: Vice President, Business Development
------------------------------------
28
EXHIBIT A
SCHEDULE OF PURCHASERS
AGGREGATE SERIES B-1 SERIES B-2
NAME AND ADDRESS SHARES PURCHASE PRICE PREFERRED SHARES PREFERRED SHARES
▇.▇. ▇▇▇▇▇▇ INTERNATIONAL 2,518,640 $ 8,000,000 639,329 1,879,311
CAPITAL CORPORATION
One, International Finance
Centre, 32nd Fl.
▇▇. ▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
Contact: ▇▇▇▇ ▇▇▇▇▇
SIXTY WALL STREET FUND, L.P. 629,660 $ 2,000,000 159,832 469,828
c/o ▇.▇. ▇▇▇▇▇▇
International Capital
Corporation
One, International
Finance Centre, 32nd Fl.
▇▇. ▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
Contact: ▇▇▇▇ ▇▇▇▇▇
PEQUOT PRIVATE EQUITY FUND II, 2,361,225 $ 7,500,000 2,361,225
L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Contact: ▇▇▇ ▇▇▇▇▇▇
GE CAPITAL EQUITY 2,203,810 $ 7,000,000 2,203,810
INVESTMENTS, INC.
▇▇/▇., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
Contact: ▇▇▇ ▇▇▇▇▇
SOFTBANK TECHNOLOGY 1,544,556 $ 4,906,000 1,544,556
VENTURES IV, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Contact: ▇▇▇▇▇ ▇▇▇▇▇▇▇
29
SOFTBANK TECHNOLOGY ADVISORS 29,594 $ 94,000 29,594
FUND, L.P.
▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Contact: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
NEXUS CAPITAL 944,490 $ 3,000,000(1) 944,490
PARTNERS I, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Contact: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
MLS-I, L.P. 62,966 $ 200,000(2) 62,966
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Contact: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
PORCELAIN PARTNERS, L.P. 47,224 $ 150,000(3) 47,224
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Contact: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
NEXUS PARTNERS, LLC 47,224 $ 150,000(4) 47,224
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Contact: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
CONCENTRIC NETWORK CORPORATION 629,660 $ 2,000,000 629,660
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Contact: ▇▇▇▇ ▇▇▇▇▇▇
TOTAL: 11,019,049 $35,000,000 8,669,910 2,349,139
========== =========== ========= =========
----------
(1) Includes $3,000,000 payable in the form of cancellation of that
certain promissory note dated April 30, 1999 in the original principal amount of
$3,000,000. The Company will write a check to Nexus Capital Partners I, L.P. to
reimburse $_____ in interest that is payable as of the First Closing Date.
(2) Includes $200,000 payable in the form of cancellation of that
certain promissory note dated April 30, 1999 in the original principal amount of
$200,000. The Company will write a check to MLS-I, L.P. to reimburse $_____ in
interest that is payable as of the First Closing Date.
(3) Includes $150,000 payable in the form of cancellation of that
certain promissory note dated April 30, 1999 in the original principal amount of
$150,000. The Company will write a check to Porcelain Partners, L.P. to
reimburse $_____ in interest that is payable as of the First Closing Date.
(4) Includes $150,000 payable in the form of cancellation of that
certain promissory note dated April 30, 1999 in the original principal amount of
$150,000. The Company will write a check to Nexus Partners, LLC to reimburse
$_____ in principal that is payable as of the First Closing Date.