Exhibit 10.8
C-BRIDGE INTERNET SOLUTIONS, INC.
SERIES A CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT
Dated as of October 7, 1999
Table of Contents
Page No.
1. Authorization and Sale of Shares............................... 1
1.1 Authorization........................................... 1
1.2 Sale of Shares.......................................... 1
1.3 Use of Proceeds......................................... 1
2. The Closings................................................... 1
3. Representations of the Company................................. 2
3.1 Organization and Standing.............................. 2
3.2 Capitalization......................................... 3
3.3 Subsidiaries, Etc...................................... 3
3.4 Securityholder Lists and Agreements.................... 4
3.5 Issuance of Shares..................................... 4
3.6 Authority for Agreement; No Conflict................... 4
3.7 Governmental Consents.................................. 5
3.8 Litigation............................................. 6
3.9 Financial Statements................................... 6
3.10 Absence of Undisclosed Liabilities..................... 6
3.11 Events Subsequent to the Balance Sheet................. 6
3.12 Taxes.................................................. 7
3.13 Property and Assets.................................... 8
3.14 Intellectual Property.................................. 8
3.15 Insurance.............................................. 9
3.16 Material Contracts and Obligations..................... 9
3.17 Compliance.............................................10
3.18 Absence of Changes.....................................10
3.19 Employees..............................................10
3.20 ERISA..................................................11
3.21 Books and Records......................................11
3.22 Permits................................................11
3.23 Environmental Matters..................................11
3.24 U.S. Real Property Holding Corporation.................12
3.25 Disclosures............................................12
3.26 Year 2000..............................................12
4. Representations of the Purchasers..............................13
4.1 Investment..............................................13
4.2 Authority...............................................13
4.3 Experience..............................................13
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5. Conditions to the Obligations of the Purchasers................14
5.1 Accuracy of Representations and Warranties.............14
5.2 Performance............................................14
5.3 Opinion of Counsel.....................................14
5.4 Ancillary Agreements...................................14
5.5 Non-Competition Agreement..............................14
5.6 Outsourcing Agreement..................................14
5.7 Certificates and Documents.............................14
5.8 Minimum Investment.....................................15
5.9 Compliance Certificates................................15
5.10 Other Matters..........................................15
6. Condition to the Obligations of the Company....................15
6.1 Accuracy of Representations and Warranties.............15
7. Affirmative Covenants of the Company...........................15
7.1 Inspection and Observation..............................15
7.2 Financial Statements and Other Information..............16
7.3 Material Changes and Litigation.........................17
7.4 Agreements with Employees; Options......................17
7.5 Directors...............................................18
7.6 Reservation of Common Stock.............................18
7.7 Related Party Transactions..............................18
7.8 Termination of Covenants................................18
8. Transfer of Shares.............................................18
8.1 Restricted Shares.......................................18
8.2 Requirements for Transfer...............................19
8.3 Legend..................................................19
8.4 Rule 144A Information...................................19
9. Miscellaneous..................................................20
9.1 Successors and Assigns..................................20
9.2 Confidentiality.........................................20
9.3 Survival of Representations and Warranties..............20
9.4 Expenses................................................21
9.5 Indemnification.........................................21
9.6 Brokers.................................................21
9.7 Severability............................................21
9.8 Specific Performance....................................21
9.9 Governing Law...........................................22
9.10 Notices.................................................22
9.11 Complete Agreement......................................22
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9.12 Amendments and Waivers..................................22
9.13 Pronouns................................................23
9.14 Counterparts; Facsimile Signatures......................23
9.15 Section Headings........................................23
10. Definitions....................................................23
EXHIBITS
Exhibit A - List of Purchasers
Exhibit B - Certificate of Amendment
Exhibit C-1 - Nondisclosure and Assignment of Inventions Agreement
Exhibit C-2 - Confidentiality and Non-Competition Agreement
Exhibit D - Opinion of Counsel
Exhibit E - Stockholders' Voting Agreement
Exhibit F - Investor Rights Agreement
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C-BRIDGE INTERNET SOLUTIONS, INC.
SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
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This Agreement dated as of October 7, 1999 is entered into by and among C-
bridge Internet Solutions, Inc., a Delaware corporation (the "Company"), and the
individuals and entities listed on Exhibit A attached hereto (collectively, the
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"Purchasers").
In consideration of the mutual promises and covenants contained in this
Agreement, the parties hereto agree as follows:
1. Authorization and Sale of Shares.
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1.1 Authorization. The Company has, or before the Closing (as
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defined in Section 2) will have, duly authorized the sale and issuance, pursuant
to the terms of this Agreement, of 1,850,000 shares of its Series A Convertible
Preferred Stock, $0.01 par value per share (the "Series A Preferred"), having
the rights, restrictions, privileges and preferences set forth in the
Certificate of Amendment attached hereto as Exhibit B (the "Certificate of
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Amendment"). The Company has, or before the Closing will have, adopted and
filed the Certificate of Amendment with the Secretary of State of the State of
Delaware.
1.2 Sale of Shares. Subject to the terms and conditions of this
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Agreement, at the Closing the Company will sell and issue to each of the
Purchasers, and each of the Purchasers will purchase, the number of shares of
Series A Preferred set forth opposite such Purchaser's name on Exhibit A for the
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purchase price of $6.00 per share (the "Purchase Price"). The shares of Series
A Preferred sold under this Agreement are referred to as the "Shares." The
Company's agreement with each of the Purchasers is a separate agreement, and the
sale of Shares to each of the Purchasers is a separate sale.
1.3 Use of Proceeds. The Company will use the proceeds from the sale
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of the Shares for general corporate and working capital purposes.
2. The Closings.
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(a) The closing (the "Closing") of the sale and purchase of the Shares
under this Agreement shall take place at the offices of ▇▇▇▇ and ▇▇▇▇ LLP, ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ at 10:00 a.m. on October 8, 1999, or at such
other time, date and place as are mutually agreeable to the Company and
▇'▇▇▇▇▇▇▇▇, Graev & Karabell, LLP, special counsel to the Purchasers. At the
Closing, the Company shall deliver to each of the Purchasers a certificate for
the number of Shares being purchased
at the Closing by such Purchaser, registered in the name of such Purchaser,
against payment to the Company of the Purchase Price, by wire transfer, check,
cancellation of indebtedness or other method acceptable to the Company. The date
of the Closing is hereinafter referred to as the "Closing Date." If at the
Closing any of the conditions specified in Section 6 shall not have been
fulfilled, each of the Purchasers shall, at his or its election, be relieved of
all of his or its obligations under this Agreement without thereby waiving any
other rights he or it may have by reason of such failure or such non-
fulfillment.
(b) The Company may sell, at any time prior to 30 days after the
Closing, in one or more closings (each, a "Subsequent Closing"), up to 333,334
additional Shares at the Purchase Price, to such purchasers (each, an
"Additional Purchaser") as may be approved by the Board of Directors of the
Company. At each Subsequent Closing, (i) the Company and each Additional
Purchaser shall execute and deliver a counterpart signature page hereto,
whereupon such Additional Purchaser shall become a "Purchaser" hereunder and the
Shares purchased by such Additional Purchaser shall be deemed to be "Shares" for
purposes of this Agreement, and (ii) the Company shall cause Exhibit A hereto be
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amended to reflect the purchases made by the Additional Purchasers at each
Subsequent Closing. At each Subsequent Closing, the Company shall deliver to
each Additional Purchaser a certificate for the number of Shares being purchased
at the Subsequent Closing by such Additional Purchaser, registered in the name
of such Additional Purchaser, against payment to the Company of the Purchase
Price in the manner specified above. The Company shall deliver to each
Purchaser, within 15 days after any Subsequent Closing, written notice of such
Subsequent Closing (which notice shall specify the names of each Additional
Purchaser and the number of shares of Series A Preferred issued to each).
3. Representations of the Company. Except as disclosed by the Company in
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the Disclosure Schedule dated the date hereof (the "Disclosure Schedule") and
delivered to the Purchasers, the Company hereby represents and warrants to each
of the Purchasers that the statements contained in this Section 3 are true,
complete and correct. The Disclosure Schedule shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Section
3, and the disclosures in any paragraph of the Disclosure Schedule shall qualify
only the corresponding paragraph of this Section 3, unless otherwise specified.
3.1 Organization and Standing. The Company is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to conduct its business as
presently conducted and to enter into and perform this Agreement and all other
agreements required to be executed by the Company at or prior to the Closing
pursuant to Section 5.4 (the "Ancillary Agreements") and to carry out the
transactions contemplated by this Agreement and the Ancillary Agreements. The
Company is duly
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qualified to do business as a foreign corporation and is in good standing in the
Commonwealth of Massachusetts and in each other jurisdiction in which the
failure so to qualify would have a material adverse effect on the business,
assets or condition (financial or otherwise) of the Company (a "Company Material
Adverse Effect"). The Company has furnished to the Purchasers true, complete and
correct copies of its Certificate of Incorporation and By-laws, each as amended
to date and presently in effect. The Company has at all times complied with all
provisions of its Certificate of Incorporation and By-laws and is not in default
under, or in violation of, any such provision.
3.2 Capitalization. The authorized capital stock of the Company
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(immediately prior to the Closing) will consist of 30,000,000 shares of common
stock, $0.01 par value per share (the "Common Stock"), of which 12,167,687
shares are issued and outstanding (including 510,000 shares held in treasury by
the Company) and 9,727,081 shares have been reserved for issuance pursuant to
the 1997 Stock Incentive Plan and the 1999 Stock Incentive Plan (the "Plans") of
the Company and other arrangements as approved by the Board of Directors, and
5,000,000 shares of Preferred Stock, $0.01 par value per share, of which
1,850,000 shares have been designated as Series A Preferred, none of which
shares are issued or outstanding. All of the issued and outstanding shares of
Common Stock have been duly authorized and validly issued and are fully paid and
nonassessable. Except as provided in this Agreement, (i) no subscription,
warrant, option, convertible security or other right (contingent or otherwise)
to purchase or acquire any shares of capital stock of the Company is authorized
or outstanding, (ii) the Company has no obligation (contingent or otherwise) to
issue any subscription, warrant, option, convertible security or other such
right or to issue or distribute to holders of any shares of its capital stock
any evidences of indebtedness or assets of the Company, (iii) the Company has no
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
any shares of its capital stock or any interest therein or to pay any dividend
or make any other distribution in respect thereof, and (iv) there are no
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to the Company. All of the issued and outstanding shares of
capital stock of the Company have been offered, issued and sold by the Company
in compliance with applicable federal and state securities laws. Except as
contemplated by the Ancillary Agreements, no person has any right to cause the
Company to effect the registration under the Securities Act of 1933, as amended
(the "Securities Act"), of any securities (including debt securities) of the
Company.
Immediately upon consummation of the Closing, the Shares shall represent
(on an as converted basis), at least seven and two-tenths percent (7.2%) of the
Company's Common Stock on a fully diluted basis, including the conversion of all
outstanding shares of Preferred Stock and including the exercise of all options,
warrants or rights to purchase or receive shares of Common Stock.
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3.3 Subsidiaries, Etc. Section 3.3 of the Disclosure Schedule sets
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forth for each subsidiary of the Company (a "Subsidiary") (a) its name and
jurisdiction of incorporation, (b) the number of shares of authorized, issued
and outstanding capital stock of each class of its capital stock and (c) the
names and the number of shares held by each holder of such shares. Each
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Each
Subsidiary is duly qualified to conduct business and is in good standing under
the laws of each jurisdiction in which the nature of its businesses or the
ownership or leasing of its properties requires such qualification, except where
the failure to so qualify would not have a material adverse effect on the
business, properties or rights of such Subsidiary. Each Subsidiary has all
requisite corporate power and authority to carry on the businesses in which it
is engaged and to own and use the properties owned and used by it. The Company
has delivered or made available to special counsel to the Purchasers correct and
complete copies of the Certificate of Incorporation and By-laws of each
Subsidiary, as amended to date. All of the issued and outstanding shares of
capital stock of each Subsidiary are duly authorized, validly issued, fully
paid, nonassessable and are held of record and beneficially by either the
Company or another Subsidiary, free and clear of any restrictions on transfer
(other than restrictions under the Securities Act and state securities laws),
claims, security interests, options, warrants, rights, contracts, calls,
commitments, equities and demands. There are no outstanding or authorized
options, warrants, rights, agreements or commitments to which the Company or any
Subsidiary is a party or which are binding on any of them providing for the
issuance, disposition or acquisition of any capital stock of any Subsidiary.
There are no outstanding stock appreciation, phantom stock or similar rights
with respect to any Subsidiary. There are no voting trusts, proxies or other
agreements or understandings with respect to the voting of any capital stock of
any Subsidiary. No Subsidiary is in default under or in violation of any
provision of its Charter or By-Laws. The Company does not control directly or
indirectly or have any direct or indirect equity participation in any
corporation, partnership, trust, or other business association which is not a
Subsidiary.
3.4 Securityholder Lists and Agreements. Section 3.4 of the
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Disclosure Schedule sets forth a true, complete and correct list of the
securityholders of the Company, showing the number of shares of Common Stock or
other securities of the Company held by each securityholder as of the date of
this Agreement and, in the case of options, warrants and other convertible
securities, the exercise price thereof and the number and type of securities
issuable thereunder. Except as provided in this Agreement, there are no
agreements, written or oral, between the Company and any holder of its
securities, or, to the Company's knowledge, among any holders of its securities,
relating to the acquisition (including without limitation rights of first
refusal, anti-dilution or pre-emptive rights), disposition, registration under
the Securities Act or voting of the capital stock of the Company.
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3.5 Issuance of Shares. The issuance, sale and delivery of the
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Shares in accordance with this Agreement, and the issuance and delivery of the
shares of Common Stock issuable upon conversion of the Shares, have been, or
will be on or prior to the Closing, duly authorized by all necessary corporate
action on the part of the Company, and all such shares have been duly reserved
for issuance. The Shares when so issued, sold and delivered against payment
therefor in accordance with the provisions of this Agreement, and the shares of
Common Stock issuable upon conversion of the Shares, when issued upon such
conversion, will be duly and validly issued, fully paid and nonassessable.
3.6 Authority for Agreement; No Conflict. The execution, delivery
------------------------------------
and performance by the Company of this Agreement and the Ancillary Agreements,
and the consummation by the Company of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary corporate action. This
Agreement has been, and the Ancillary Agreements when executed at the Closings
will be, duly executed and delivered by the Company and constitute valid and
binding obligations of the Company enforceable in accordance with their
respective terms, subject as to enforcement of remedies to applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
generally the enforcement of creditors' rights and subject to a court's
discretionary authority with respect to the granting of a decree ordering
specific performance or other equitable remedies. The execution of and
performance of the transactions contemplated by this Agreement and the Ancillary
Agreements and compliance with their respective provisions by the Company will
not (a) conflict with or violate any provision of the Certificate of
Incorporation or By-laws of the Company, (b) require on the part of the Company
any filing with, or any permit, authorization, consent or approval of, any
court, arbitrational tribunal, administrative agency or commission or other
governmental or regulatory authority or agency (each of the foregoing is
hereafter referred to as a "Governmental Entity"), (c) conflict with, result in
a breach of, constitute (with or without due notice or lapse of time or both) a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice, consent or
waiver under, any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest (as defined below) or other arrangement to which
the Company is a party or by which the Company is bound or to which its assets
are subject, other than any of the foregoing events listed in this clause (c)
which do not and would not be considered reasonably likely to, either
individually or in the aggregate, have a Company Material Adverse Effect, (d)
result in the imposition of any Security Interest upon any assets of the Company
or (e) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company or any of its properties or assets. For purposes of
this Agreement, "Security Interest" means any mortgage, pledge, security
interest, encumbrance, charge, or other lien (whether arising by contract or by
operation of law).
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3.7 Governmental Consents. No consent, approval, order or
---------------------
authorization of, or registration, qualification, designation, declaration or
filing with, any Governmental Entity is required on the part of the Company in
connection with the execution and delivery of this Agreement or the Ancillary
Agreements, the offer, issuance, sale and delivery of the Shares, the issuance
and delivery of the shares of Common Stock issuable upon conversion of the
Shares or the other transactions to be consummated at the Closing, as
contemplated by this Agreement and the Ancillary Agreements, except such filings
as shall have been made prior to and shall be effective on and as of the Closing
and such filings required to be made after the Closing under applicable federal
and state securities laws, all of which filings are specified in Section 3.7 of
the Disclosure Schedule. Based on the representations made by each of the
Purchasers in Section 4 of this Agreement, the offer and sale of the Shares to
each of the Purchasers will be in compliance with applicable federal and state
securities laws.
3.8 Litigation. There is no action, suit or proceeding, or
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governmental inquiry or investigation, pending, or, to the Company's knowledge,
any reasonable basis therefor or threat thereof, against the Company, which
questions the validity of this Agreement or the right of the Company to enter
into it, or which would reasonably be expected to result, either individually or
in the aggregate, in a Company Material Adverse Effect, nor is there any
litigation pending, or, to the Company's knowledge, any reasonable basis
therefor or threat thereof, against the Company, the proposed activities of the
Company, or negotiations by the Company with prospective investors in the
Company. The Company is not subject to any outstanding judgement, order or
decree.
3.9 Financial Statements. The Company has furnished to each of the
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Purchasers a complete and correct copy of (i) the audited balance sheet of the
Company at December 31, 1998 and the related audited statements of operations
and cash flows for the fiscal year then ended, and (ii) the unaudited balance
sheet of the Company (the "Balance Sheet") at June 30, 1999 (the "Balance Sheet
Date") and the related statements of operations and cash flow for the six months
then ended, (collectively, the "Financial Statements"). The Financial
Statements are complete and correct, are in accordance with the books and
records of the Company and present fairly in all material respects the financial
condition and results of operations of the Company, at the dates and for the
periods indicated, and have been prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied, except that the unaudited
Financial Statements may not be in accordance with GAAP because of the absence
of footnotes normally contained therein and are subject to normal year-end audit
adjustments which in the aggregate will not be material.
3.10 Absence of Undisclosed Liabilities. The Company does not have
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any liability (whether known or unknown and whether absolute or contingent),
except for (a) liabilities shown on the Balance Sheet, (b) liabilities which
have arisen since the
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Balance Sheet Date in the ordinary course of business and which are similar in
nature and amount to the liabilities which arose during the comparable period of
time in the immediately preceding fiscal period and (c) contractual and other
liabilities incurred in the ordinary course of business which are not required
by GAAP to be reflected on a balance sheet.
3.11 Events Subsequent to the Balance Sheet.
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Since the Balance Sheet Date, the Company has operated in the ordinary
course consistent with past practice, and the Company has not suffered any
Company Material Adverse Effect. Since that date, except as set forth on
Schedule 3.10:
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(a) the Company has not sold, leased, licensed, transferred or
assigned any material asset, other than in the ordinary course of business,
consistent with past practice;
(b) no person has accelerated, terminated, modified or canceled any
contract (or series of related contracts) involving more than $100,000 to which
the Company is a party or by which the Company is bound and, to the knowledge of
the Company, no person has notified the Company in writing that it intends to
take any such action;
(c) the Company has not experienced any material damage, destruction
or loss (whether or not covered by insurance) to any of its respective material
assets;
(d) the Company has not paid any dividends, made any redemptions of or
distributions in respect of its capital stock;
(e) the Company has not paid any fee, interest, dividend, royalty or
any other payment of any kind to any affiliate thereof, other than the payment
to the officers and directors of the Company of their current salaries (if any);
(f) the Company has not increased the compensation of any employee,
officer or director of the Company or made any contributions to any employee
benefit plan other than in the ordinary course of business and consistent with
past practice;
(g) the Company has not incurred any material indebtedness or any
material increase in the amount payable by the Company under any credit or loan
agreement to which the Company is a party;
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(h) the Company has not incurred any single capital expenditure in
excess of $100,000 or capital expenditures in the aggregate in excess of
$250,000; and
(i) the Company has not committed to do any of the foregoing.
3.12 Taxes. The amount shown on the Balance Sheet as provision for
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taxes is sufficient in all material respects for payment of all accrued and
unpaid federal, state, county, local and foreign taxes for the period then ended
and all prior periods. The Company has filed or has obtained presently
effective extensions with respect to all federal, state, county, local and
foreign tax returns which are required to be filed by it, such returns are true,
complete and correct and all taxes shown thereon to be due have been timely paid
with exceptions not material in the aggregate to the Company. Federal income
tax returns of the Company have not been audited by the Internal Revenue
Service, and no controversy with respect to taxes of any type is pending or, to
the Company's knowledge, threatened. The Company has withheld or collected from
each payment made to its employees the amount of all taxes required to be
withheld or collected therefrom and has paid all such amounts to the appropriate
taxing authorities when due. Neither the Company nor any of its stockholders
has ever filed (a) an election pursuant to Section 1362 of the Internal Revenue
Code of 1986, as amended (the "Code"), that the Company be taxed as an S
Corporation or (b) consent pursuant to Section 341(f) of the Code relating to
collapsible corporations. The Company has not incurred any obligation to make
any payments that (A) will be non-deductible under, or would otherwise
constitute a "parachute payment" within the meaning of, Section 280G of the Code
(or any corresponding provision of state, local or foreign income tax law) or
(B) are or may be subject to the imposition of an excise tax under Section 7999
of the Code.
3.13 Property and Assets. The Company has good title to, or a valid
-------------------
leasehold interest in, all of its material properties and assets, including all
properties and assets reflected in the Balance Sheet, except those disposed of
since the date thereof in the ordinary course of business, and none of such
properties or assets is subject to any Security Interest other than those the
material terms of which are described in the Balance Sheet or in Section 3.12 of
the Disclosure Schedule.
3.14 Intellectual Property.
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(a) The Company owns, free and clear of all Security Interests, or has
the legally enforceable right to use, all Intellectual Property (as defined
below in this Section 3.13) used by it in its business as currently conducted.
No other person or entity (other than licensors of software that is generally
commercially available, licensors of Intellectual Property under the agreements
disclosed pursuant to paragraph (d) below and non-exclusive licensees of the
Company's Intellectual
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Property in the ordinary course of the Company's business) has any rights to any
of the Intellectual Property owned or used by the Company, and, to the Company's
knowledge, no other person or entity is infringing, violating or
misappropriating any of the Intellectual Property that the Company owns. For
purposes of this Agreement, "Intellectual Property" means all (i) patents and
patent applications, (ii) copyrights and registrations thereof, (iii) mask works
and registrations and applications for registration thereof, (iv) computer
software, data and documentation, (v) trade secrets and confidential business
information, whether patentable or unpatentable and whether or not reduced to
practice, know-how, manufacturing and production processes and techniques,
research and development information, copyrightable works, financial, marketing
and business data, pricing and cost information, business and marketing plans
and customer and supplier lists and information, (vi) trademarks, service marks,
trade names, domain names and applications and registrations therefor and (vii)
other proprietary rights relating to any of the foregoing.
(b) None of the activities or business conducted by the Company
infringes, violates or constitutes a misappropriation of (or in the past
infringed, violated or constituted a misappropriation of) any Intellectual
Property of any other person or entity. The Company has not received any
written complaint, claim or notice alleging any such infringement, violation or
misappropriation, and to the knowledge of the Company, there is no reasonable
basis for any such complaint, claim or notice.
(c) Section 3.13(c) of the Disclosure Schedule identifies each (i)
patent that has been issued or assigned to the Company with respect to any of
its Intellectual Property, (ii) pending patent application that the Company has
made with respect to any of its Intellectual Property, (iii) any copyright or
trademark registration or application with respect to the Company's Intellectual
Property, and (iv) license or other agreements pursuant to which the Company has
granted any rights to any third party with respect to any of its Intellectual
Property.
(d) Section 3.13(d) of the Disclosure Schedule identifies each
agreement with a third party pursuant to which the Company obtains rights to
Intellectual Property material to the business of the Company (other than
software that is generally commercially available) that is owned by a party
other than the Company. Other than license fees for software that is generally
commercially available, the Company is not obligated to pay any royalties or
other compensation to any third party in respect of its ownership, use or
license of any of its Intellectual Property.
(e) The Company has taken commercially reasonable precautions (i) to
protect its rights in its Intellectual Property and (ii) to maintain the
confidentiality of its trade secrets, know-how and other confidential
Intellectual Property, and, to the Company's knowledge, there have been no acts
or omissions
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(other than those made based on reasonable, good faith business decisions) by
the officers, directors, shareholders and employees of the Company the result of
which would be to materially compromise the rights of the Company to apply for
or enforce appropriate legal protection of the Company's Intellectual Property.
(f) All of the Company's Intellectual Property has been created by
employees of the Company within the scope of their employment by the Company or
by independent contractors of the Company who have executed agreements expressly
assigning all right, title and interest in such Intellectual Property to the
Company. No portion of the Company's Intellectual Property was jointly
developed with any third party.
3.15 Insurance. The Company maintains valid policies of workers'
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compensation insurance and of insurance with respect to its properties and
business of the kinds and in the amounts not less than is customarily obtained
by corporations of established reputation engaged in the same or similar
business and similarly situated, including, without limitation, insurance
against loss, damage, fire, theft, public liability and other risks.
3.16 Material Contracts and Obligations. Section 3.15 of the
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Disclosure Schedule sets forth a list of all material agreements or commitments
of any nature (whether written or oral) to which the Company is a party or by
which it is bound, including, without limitation, (a) any agreement which
requires future expenditures by the Company in excess of $100,000 or which might
result in payments to the Company in excess of $100,000, (b) any employment and
consulting agreements, employee benefit, bonus, pension, profit-sharing, stock
option, stock purchase and similar plans and arrangements, (c) any distributor,
sales representative or similar agreement, (d) any agreement with any current or
former stockholder, officer or director of the Company, or any "affiliate" or
"associate" of such persons (as such terms are defined in the rules and
regulations promulgated under the Securities Act), including, without
limitation, any agreement or other arrangement providing for the furnishing of
services by, rental of real or personal property from, or otherwise requiring
payments to, any such person or entity, (e) any agreement under which the
Company is restricted from carrying on any business anywhere in the world, (f)
any agreement relating to indebtedness for borrowed money, (g) any agreement for
the disposition of a material portion of the Company's assets, and (h) any
agreement for the acquisition of the business or shares of another party. The
Company has made available to the Purchasers copies of such of the foregoing
agreements (or an accurate summary of any oral agreement). All of such
agreements and contracts are valid, binding and in full force and effect.
Neither the Company, nor, to the Company's knowledge, any other party thereto,
is in default of any of its obligations under any of the agreements or contracts
listed on the Disclosure Schedule, in a manner which could reasonably be
expected to result in a Company Material Adverse Effect.
-10-
3.17 Compliance. The Company has, in all material respects, complied
----------
with all laws, regulations and orders applicable to its present business and has
all material permits and licenses required thereby. There is no term or
provision of any mortgage, indenture, contract, agreement or instrument to which
the Company is a party or by which it is bound, or, to the Company's knowledge,
of any provision of any state or federal judgment, decree, order, statute, rule
or regulation applicable to or binding upon the Company, which materially
adversely affects or, so far as the Company may now foresee, in the future could
reasonably be expected to result in a Company Material Adverse Effect. To the
Company's knowledge, none of the employees of the Company is in material
violation of any term of any contract or covenant (either with the Company or
with another entity) relating to employment, patents, assignment of inventions,
proprietary information disclosure, non-competition or non-solicitation.
3.18 Absence of Changes. Since the Balance Sheet Date, there has
------------------
been no material adverse change in the business, assets or condition (financial
or otherwise), other than changes occurring in the ordinary course of business
(which ordinary course changes have not, individually or in the aggregate, had a
Company Material Adverse Effect); provided, however, that the Purchasers
acknowledge that the Company has continued to incur operating losses since the
Balance Sheet Date.
3.19 Employees. It is the policy of the Company that all employees
---------
of the Company who have access to confidential or proprietary information of the
Company have executed and delivered nondisclosure and assignment of invention
agreements in the form of Exhibit C-1 and confidentiality and non-competition
-----------
agreements in the form of Exhibit C-2. The Company is not aware that any key
-----------
employee of the Company has plans to terminate his or her employment
relationship with the Company. All employees of the Company are engaged by the
Company on a full time basis. The Company has complied in all material respects
with all applicable laws relating to wages, hours, equal opportunity, collective
bargaining, workers' compensation insurance and the payment of social security
and other taxes. None of the employees of the Company is represented by any
labor union, and there is no labor strike or other labor trouble pending with
respect to the Company (including, without limitation, any organizational drive)
or, to the Company's knowledge, threatened.
3.20 ERISA. The Company does not have or otherwise contribute to or
-----
participate in any employee benefit plan subject to the Employee Retirement
Income Security Act of 1974, as amended, other than a medical benefit plan with
respect to which the Company has made all required contributions and has
complied with all applicable laws.
-11-
3.21 Books and Records. The minute books of the Company contain true,
-----------------
complete and correct records of all meetings and other corporate actions of its
stockholders and its Board of Directors and committees thereof. The stock
ledger of the Company is true, complete and correct and reflects all issuances,
transfers, repurchases and cancellations of shares of capital stock of the
Company.
3.22 Permits. Section 3.21 of the Disclosure Schedule sets forth a
-------
list of all material permits, licenses, registrations, certificates, orders or
approvals from any Governmental Entity ("Permits") issued to or held by the
Company. Such listed Permits are the only Permits that are required for the
Company to conduct its business as presently conducted, except for those the
absence of which could not reasonably be expected to result in a Company
Material Adverse Effect. Each such Permit is in full force and effect and, to
the knowledge of the Company, no suspension or cancellation of such Permit is
threatened and there is no reasonable basis for believing that such Permit will
not be renewable upon expiration.
3.23 Environmental Matters.
---------------------
(a) The Company has complied in all material respects with all
applicable Environmental Laws (as defined below in this Section 3.22(a)). There
is no pending or, to the knowledge of the Company, threatened civil or criminal
litigation, written notice of violation, formal administrative proceeding, or
investigation, inquiry or information request by any Governmental Entity,
relating to any Environmental Law involving the Company. For purposes of this
Agreement, "Environmental Law" means any federal, state or local law, statute,
rule or regulation or the common law relating to the protection of human health
or the environment, including without limitation CERCLA (as defined below), the
Resource Conservation and Recovery Act of 1976, any statute, regulation or order
pertaining to (i) treatment, storage, disposal, generation and transportation of
industrial, toxic or hazardous materials or substances or solid or hazardous
waste; (ii) air, water and noise pollution; (iii) groundwater and soil
contamination; (iv) the release or threatened release into the environment of
industrial, toxic or hazardous materials or substances, or solid or hazardous
waste, including without limitation, emissions, discharges, injections, spills,
escapes or dumping of pollutants, contaminants, or chemicals; (v) the protection
of wild life, marine life and wetlands, including without limitation all
endangered and threatened species; (vi) storage tanks, vessels, abandoned or
discarded barrels, containers and other closed receptacles; (vii) health and
safety of employees and other persons; and (viii) manufacture, processing, use,
distribution, treatment, storage, disposal, transportation or handling of
pollutants, contaminants, toxic or hazardous materials or substances or oil or
petroleum products or solid or hazardous waste. As used in this Section 3.22,
the terms "release" and "environment" shall have the meaning set forth in the
federal Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLA").
-12-
(b) Neither the Company, nor to the knowledge of the Company, any
third party has released any Materials of Environmental Concern (as defined
below in this Section 3.22(b)) into the environment at any parcel of real
property or any facility formerly or currently owned, operated or controlled by
the Company. The Company is not aware of any releases of Materials of
Environmental Concern at parcels of real property of facilities other than those
owned, operated or controlled by the Company that could reasonably be expected
to have an adverse impact on the real property or facilities owned, operated or
controlled by the Company. For purposes of this Agreement, "Materials of
Environmental Concern" means any chemicals, pollutants or contaminants,
hazardous substances (as such term is defined under CERCLA), solid wastes and
hazardous wastes (as such terms are defined under the federal Resource
Conservation and Recovery Act), toxic materials, oil or petroleum and petroleum
products, or any other material subject to regulation under any Environmental
Law.
3.24 U.S. Real Property Holding Corporation. The Company is not now
--------------------------------------
and has never been a "United States Real Property Holding Corporation" as
defined in Section 897(c)(2) of the Code and Section 1.897-2(b) of the
Regulations promulgated by the Internal Revenue Service.
3.25 Disclosures. Neither this Agreement, the Disclosure Schedule nor
-----------
any Exhibit hereto, nor any report, certificate or instrument furnished to any
of the Purchasers or their special counsel in connection with the transactions
contemplated by this Agreement, including, without limitation, the Business Plan
of the Company dated May, 1999 (the "Plan"), when read together, contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements contained herein
or therein, in light of the circumstances under which they were made, not
misleading. Each projection furnished in the Plan was prepared in good faith
based on reasonable assumptions and represents the Company's best estimate as of
such date of future results based on information available as of such date.
3.26 Year 2000.
---------
All of the Company's software programs are designed to be used prior to,
during and after the calendar year 2000 A.D., and such products, devices and
programs will operate during each such time period without error relating to
date data and date-dependent data, specifically including any error relating to,
or the program of, date data which represents or references different centuries
or more than one century, other than such errors which have not had nor could
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. Other than any
-13-
of the following which has not had nor could reasonably be expected to have a
Company Material Adverse Effect, without limiting the generality of the
foregoing:
(a) each such program will not abnormally end or provide invalid or
incorrect results as a result of date data, specifically including date data
which represents or references different centuries or more than one century; and
(b) each such program has been designed to ensure Year 2000
compatibility, including, but not limited to, date data century recognition,
calculations which accommodate same century and multi-century formulas and date
values and date data interface values that reflect the appropriate century.
4. Representations of the Purchasers. Each of the Purchasers severally
---------------------------------
represents and warrants to the Company as follows:
4.1 Investment. Such Purchaser is acquiring the Shares, and the
----------
shares of Common Stock into which the Shares may be converted, for his, her or
its own account for investment and not with a view to, or for sale in connection
with, any distribution thereof, nor with any present intention of distributing
or selling the same; and, except as contemplated by this Agreement and the
Exhibits hereto, such Purchaser has no present or contemplated agreement,
undertaking, arrangement, obligation, indebtedness or commitment providing for
the disposition thereof. Such Purchaser is an "accredited investor" as defined
in Rule 501(a) under the Securities Act.
4.2 Authority. Such Purchaser has full power and authority to enter
---------
into and to perform this Agreement in accordance with its terms. Any Purchaser
which is a corporation, partnership or trust represents that it has not been
organized, reorganized or recapitalized specifically for the purpose of
investing in the Company.
4.3 Experience. Such Purchaser has carefully reviewed the
----------
representations concerning the Company contained in this Agreement, has read the
Plan and has made detailed inquiry concerning the Company, its business and its
personnel; the officers of the Company have made available to such Purchaser any
and all written information which he, she or it has requested and have answered
to such Purchaser's satisfaction all inquiries made by such Purchaser; and such
Purchaser has sufficient knowledge and experience in finance and business that
he, she or it is capable of evaluating the risks and merits of his, her or its
investment in the Company and such Purchaser is able financially to bear the
risks thereof.
5. Conditions to the Obligations of the Purchasers. The obligation of
-----------------------------------------------
each of the Purchasers to purchase Shares at the Closing is subject to the
fulfillment, or the waiver by such Purchaser, of each of the following
conditions on or before the Closing:
-14-
5.1 Accuracy of Representations and Warranties. Each representation
------------------------------------------
and warranty contained in Section 3 shall be true and correct in all material
respects on and as of the Closing Date with the same effect as though such
representation and warranty had been made on and as of that date.
5.2 Performance. The Company shall have performed and complied with
-----------
all agreements and conditions contained in this Agreement required to be
performed or complied with by the Company prior to or at the Closing.
5.3 Opinion of Counsel. Each Purchaser shall have received an
------------------
opinion from ▇▇▇▇ and ▇▇▇▇ LLP, counsel for the Company, dated the Closing Date,
addressed to the Purchasers, and satisfactory in form and substance to each
Purchaser, to the effect set forth on Exhibit D.
---------
5.4 Ancillary Agreements.
--------------------
(a) Stockholders' Voting Agreement. The Stockholders' Voting
------------------------------
Agreement attached hereto as Exhibit E ( the "Stockholders' Voting Agreement")
---------
shall have been executed and delivered by each of the Purchasers and by each of
the Founders (as defined therein). All such action shall have been taken as may
be necessary to elect a Board of Directors of the Company, effective upon the
Closing, in accordance with the Stockholders' Voting Agreement.
(b) Investor Rights Agreement. The Investor Rights Agreement attached
-------------------------
hereto as Exhibit F (the "Investor Rights Agreement") shall have been executed
---------
and delivered by the Company and each of the Purchasers.
5.5 Non-Competition Agreement. A non-competition agreement between
-------------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, CEE Incorporated and Cambridge Executive Enterprises,
Inc. on terms reasonably acceptable to the Purchasers, shall have been executed
and delivered.
5.6 Outsourcing Agreement. An exclusive outsourcing agreement by and
---------------------
among CEE Incorporated, Cambridge Executive Enterprises, Inc. and the Company,
on terms reasonably acceptable to the Purchasers, shall have been executed and
delivered to the Purchasers.
5.7 Certificates and Documents. The Company shall have delivered to
--------------------------
special counsel to the Purchasers:
(a) The Certificate of Incorporation of the Company, as amended and in
effect as of the Closing Date (including the Certificate of Amendment),
certified by the Secretary of State of the State of Delaware;
-15-
(b) a certificate, as of the most recent practicable date, as to the
corporate good standing of the Company issued by the Secretary of State of the
State of Delaware;
(c) By-laws of the Company, certified by its Secretary or
Assistant Secretary as of the Closing Date; and
(d) Resolutions of the Board of Directors and stockholders of the
Company, authorizing and approving all matters in connection with this Agreement
and the transactions contemplated hereby, certified by the Secretary or
Assistant Secretary of the Company as of the Closing Date.
5.8 Minimum Investment. Purchasers shall have tendered at the
------------------
Closings aggregate consideration of not less than $8.0 million for the purchase
of Shares.
5.9 Compliance Certificates. The Company shall have delivered to the
-----------------------
Purchasers a certificate, executed by the President of the Company, dated the
Closing Date, certifying to the fulfillment of the conditions specified in
Sections 5.1, 5.2, 5.4, 5.5 and 5.6 of this Agreement.
5.10 Other Matters. All corporate and other proceedings in connection
-------------
with the transactions contemplated by this Agreement 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.
6. Condition to the Obligations of the Company. The obligations of the
-------------------------------------------
Company under Section 1.2 of this Agreement are subject to fulfillment, or the
waiver, of the following condition on or before the Closings:
6.1 Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of the Purchasers contained in Section 4 shall be true and
correct in all material respects on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
that date.
7. Affirmative Covenants of the Company.
------------------------------------
7.1 Inspection and Observation. The Company shall permit each
--------------------------
Purchaser, or any authorized representative thereof reasonably acceptable to the
Company, to visit and inspect the properties of the Company, including its
corporate
-16-
and financial records, and to discuss its business and finances with officers of
the Company, during normal business hours following reasonable notice and as
often as may be reasonably requested.
7.2 Financial Statements and Other Information.
------------------------------------------
(a) The Company shall deliver to each Purchaser:
(i) within 90 days after the end of each fiscal year of
the Company, an audited balance sheet of the Company as at the end of such year
and audited statements of income and of cash flows of the Company for such year,
certified by certified public accountants of established national reputation
selected by the Company, and prepared in accordance with GAAP; and
(ii) within 45 days after the end of each fiscal quarter
of the Company (other than the fourth quarter), an unaudited balance sheet of
the Company as at the end of such quarter, and unaudited statements of income
and of cash flows of the Company for such fiscal quarter and for the current
fiscal year to the end of such fiscal quarter.
(b) The Company shall deliver to each Major Purchaser (as defined
in paragraph (d) below):
(i) within 30 days after the end of each month (other
than the last month of any fiscal quarter), an unaudited balance sheet of the
Company as at the end of such month and unaudited statements of income and of
cash flows of the Company for such month and for the current fiscal year to the
end of such month, setting forth in comparative form the Company's projected
financial statements for the corresponding periods for the current fiscal year;
(ii) as soon as available, but in any event prior to the
commencement of each new fiscal year, a business plan and projected financial
statements for such fiscal year;
(iii) such other notices, information and data with
respect to the Company as the Company delivers to the holders of its capital
stock at the same time it delivers such items to such holders; and
(iv) with reasonable promptness, such other information
and data as such Major Purchaser may from time to time reasonably request.
(c) The foregoing financial statements shall be prepared on a
consolidated basis if the Company then has any subsidiaries. The financial
statements
-17-
delivered pursuant to clause (ii) of paragraph (a) and clause (i) of paragraph
(b) shall be accompanied by a certificate of the chief financial officer of the
Company stating that such statements have been prepared in accordance with GAAP
consistently applied (except as noted) and fairly present in all material
respects the financial condition and results of operations of the Company at the
date thereof and for the periods covered thereby.
(d) For purposes of this Agreement, the term "Major Purchaser" shall
mean a Purchaser purchasing not less than 166,666 Shares so long as such
Purchaser continues to own not less than 166,666 Shares. For purposes of
determining the number of Shares held by a Purchaser: (i) the foregoing numbers
shall be adjusted for any stock splits, stock dividends, recapitalizations or
similar events; (ii) Shares shall include Shares which have been converted into
Common Stock so long as such Common Stock is held by such Purchaser; and (iii)
Shares shall include Shares held by affiliates of such Purchaser and, with
respect to a Purchaser that is a corporation or partnership, Shares distributed
to and held by its shareholders and partners.
7.3 Material Changes and Litigation. The Company shall promptly
-------------------------------
notify the Purchasers of any material adverse change in the business, assets or
condition (financial or otherwise) of the Company and of any litigation or
governmental proceeding or investigation brought or, to the Company's knowledge,
threatened against the Company, officer, director, key employee or principal
stockholder of the Company which, if adversely determined, could be considered
reasonably likely to result in a Company Material Adverse Effect.
7.4 Agreements with Employees; Options.
----------------------------------
(a) The Company shall require all persons now or hereafter employed by
the Company who have access to confidential and proprietary information of the
Company to enter into nondisclosure and assignment of inventions agreements
substantially in the form of Exhibit C-1 and confidentiality and non-competition
-----------
agreements substantially in the form of Exhibit C-2, or such other form as may
-----------
be approved by the Board of Directors of the Company.
(b) Unless otherwise agreed by a majority of the members of the Board
of Directors who are not employees of the Company, all options or restricted
stock granted or issued under the Plans of the Company shall become exercisable
at the rate of 12.5% every six months from the grant or issue and thereafter
over the subsequent four years so long as the holder continues to be an employee
or consultant of the Company, subject to accelerated vesting of 100% of the
unvested portion of such options or restricted stock in the event of an
Acquisition Event (as defined in the standard form of stock option agreement and
restricted stock agreement for use under such Plan).
-18-
(c) The Company shall purchase and keep in force directors and
officers' insurance (including coverage for all outside directors) in such an
amount and with such coverage as is customary for similar businesses and
adequate to the needs of the Company.
7.5 Directors.
---------
(a) The Company shall promptly reimburse in full each director of the
Company who is not an employee of the Company and who was elected as a director
solely or in part by the holders of Series A Preferred for all of his or her
reasonable out-of-pocket expenses incurred in attending each meeting of the
Board of Directors of the Company or any committee thereof.
(b) The Board of Directors shall meet on at least a quarterly basis,
unless otherwise agreed by a majority of the members of the Board of Directors
who are not employees of the Company.
7.6 Reservation of Common Stock. The Company shall reserve and
---------------------------
maintain a sufficient number of shares of Common Stock for issuance upon
conversion of all of the outstanding Shares.
7.7 Related Party Transactions.
--------------------------
(a) The Company shall not enter into any agreement with any
stockholder, officer or director of the Company, or any "affiliate" or
"associate" of such persons (as such terms are defined in the rules and
regulations promulgated under the Securities Act), including, without
limitation, any agreement or other arrangement providing for the furnishing of
services by, rental of real or personal property from, or otherwise requiring
payments to, any such person or entity, without the consent of at least a
majority of the members of the Company's Board of Directors having no interest
in such agreement or arrangement.
(b) The affirmative vote of both a majority of the members of the
Board of Directors, and the director elected solely by the holders of the Series
A Preferred, shall be required to (i) establish or increase the compensation of
executive officers of the Company or (ii) grant stock options to any officer of
the Company.
7.8 Termination of Covenants. The covenants of the Company contained
------------------------
in Sections 7.1 through 7.7 shall terminate, and be of no further force or
effect, upon the closing of the Company's first public offering of Common Stock
pursuant to an effective registration statement under the Securities Act,
resulting in gross proceeds to the Company of at least $15.0 million, at a price
to the public of at least $10.00 per
-19-
share (as adjusted for stock splits, stock dividends, recapitalizations and
similar events).
8. Transfer of Shares.
------------------
8.1 Restricted Shares. "Restricted Shares" means (i) the Shares,
-----------------
(ii) the shares of Common Stock issued or issuable upon conversion of the
Shares, (iii) any shares of capital stock of the Company acquired by the
Purchasers pursuant to the Investor Rights Agreement, and (iv) any other shares
of capital stock of the Company issued in respect of such shares (as a result of
stock splits, stock dividends, reclassifications, recapitalizations, or similar
events); provided, however, that shares of Common Stock which are Restricted
-------- -------
Shares shall cease to be Restricted Shares (x) upon any sale pursuant to a
registration statement under the Securities Act, Section 4(1) of the Securities
Act or Rule 144 under the Securities Act or (y) at such time as they become
eligible for sale under Rule 144(k) under the Securities Act.
8.2 Requirements for Transfer.
-------------------------
(a) Restricted Shares shall not be sold or transferred unless either
(i) they first shall have been registered under the Securities Act, or (ii) the
Company first shall have been furnished with an opinion of legal counsel,
reasonably satisfactory to the Company, to the effect that such sale or transfer
is exempt from the registration requirements of the Securities Act.
(b) Notwithstanding the foregoing, no registration or opinion of
counsel shall be required for (i) a transfer by a Purchaser which is a
corporation to a wholly owned subsidiary of such corporation, a transfer by a
Purchaser which is a partnership to a partner of such partnership or a retired
partner of such partnership who retires after the date hereof, or to the estate
of any such partner or retired partner, or a transfer by a Purchaser which is a
limited liability company to a member of such limited liability company or a
retired member who resigns after the date hereof or to the estate of any such
member or retired member; provided that the transferee in each case agrees in
writing to be subject to the terms of this Section 8 to the same extent as if it
were the original Purchaser hereunder, (ii) inter-fund transfers (such as
transfers to affiliates of the Purchasers), or (iii) a transfer made in
accordance with Rule 144 under the Securities Act.
8.3 Legend. Each certificate representing Restricted Shares shall
------
bear a legend substantially in the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be offered,
sold or otherwise transferred, pledged
-20-
or hypothecated unless and until such shares are registered under such
Act or an opinion of counsel satisfactory to the Company is obtained
to the effect that such registration is not required."
The foregoing legend shall be removed from the certificates representing
any Restricted Shares, at the request of the holder thereof, at such time as
they become eligible for resale pursuant to Rule 144(k) under the Securities
Act.
8.4 Rule 144A Information. The Company shall, at all times during
---------------------
which it is neither subject to the reporting requirements of Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), nor
exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act, upon
the written request of any Purchaser, provide in writing to such Purchaser and
to any prospective transferee of any Restricted Shares of such Purchaser the
information concerning the Company described in Rule 144A(d)(4) under the
Securities Act ("Rule 144A Information"). The Company also shall, upon the
written request of any Purchaser, cooperate with and assist such Purchaser or
any member of the National Association of Securities Dealers, Inc. PORTAL system
in applying to designate and thereafter maintain the eligibility of the
Restricted Shares for trading through PORTAL. The Company's obligations under
this Section 8.4 shall at all times be contingent upon receipt from the
prospective transferee of Restricted Shares of a written agreement to take all
reasonable precautions to safeguard the Rule 144A Information from disclosure to
anyone other than persons who will assist such transferee in evaluating the
purchase of any Restricted Shares.
9. Miscellaneous.
-------------
9.1 Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement, and the rights and obligations of each
Purchaser hereunder, may be assigned by such Purchaser to any person or entity
to which Shares are transferred by such Purchaser, and such transferee shall be
deemed a "Purchaser" for purposes of this Agreement; provided that the
transferee provides written notice of such assignment to the Company. The
Company may not assign its rights under this Agreement.
9.2 Confidentiality. Each Purchaser agrees that he, she or it will
---------------
keep confidential and will not disclose, divulge or use for any purpose other
than to monitor his, her or its investment in the Company any confidential,
proprietary or secret information which such Purchaser may obtain from the
Company pursuant to financial statements, reports and other materials submitted
by the Company to such Purchaser pursuant to this Agreement, or pursuant to
visitation or inspection rights granted
-21-
hereunder ("Confidential Information"), unless such Confidential Information is
known, or until such Confidential Information becomes known, to the public
(other than as a result of a breach of this Section 9.2 by such Purchaser);
provided, however, that a Purchaser may disclose Confidential Information (i)
-------- -------
to its attorneys, accountants, consultants, and other professionals to the
extent necessary to obtain their services in connection with monitoring its
investment in the Company, (ii) to any prospective purchaser of any Shares from
such Purchaser as long as such prospective purchaser agrees in writing to be
bound by the provisions of this Section 9.2, (iii) to any affiliate of such
Purchaser or to a partner, stockholder or subsidiary of such Purchaser, provided
that such affiliate agrees in writing to be bound by the provisions of this
Section 9.2, or (iv) as may otherwise be required by law, provided that the
Purchaser takes reasonable steps to minimize the extent of any such required
disclosure.
9.3 Survival of Representations and Warranties. All agreements,
------------------------------------------
representations and warranties contained herein shall survive the execution and
delivery of this Agreement and the closing of the transactions contemplated
hereby.
9.4 Expenses. The Company shall pay, at the Closing, the reasonable
--------
fees (up to a maximum of $20,000) and disbursements of ▇'▇▇▇▇▇▇▇▇, Graev and
Karabell LLP, special counsel to the Purchasers, in connection with the
preparation of this Agreement and the other agreements contemplated hereby and
the closing of the transactions contemplated hereby.
9.5 Indemnification.
---------------
(a) The Company shall indemnify, defend and hold each Purchaser
harmless against all liability, loss or damage, together with all reasonable
costs and expenses related thereto (including reasonable legal fees and
expenses), relating to or arising from the untruth, inaccuracy or breach of any
of the representations, warranties, covenants, or agreements of the Company
contained in this Agreement, except that the obligation of the Company to any
Purchaser with respect to any such liability, loss or damage shall not exceed
the purchase price for the Shares purchased by such Purchaser.
(b) Each Purchaser shall, severally and not jointly, indemnify and
hold the Company harmless against all liability, loss or damage, together with
all reasonable costs and expenses related thereto (including reasonable legal
fees and expenses), relating to or arising from the untruth, inaccuracy or
breach of any of the representations, warranties, covenants, or agreements of
such Purchaser contained in this Agreement, except that the obligation of such
Purchaser to the Company with respect to any such liability, loss or damage
shall not exceed an amount equal to the purchase price for the Shares purchased
by such Purchaser.
-22-
9.6 Brokers. The Company and each Purchaser (i) represents and
-------
warrants to the other parties hereto that he, she or it has not retained a
finder or broker in connection with the transactions contemplated by this
Agreement, and (ii) will indemnify and save the other parties harmless from and
against any and all claims, liabilities or obligations with respect to brokerage
or finders' fees or commissions, or consulting fees in connection with the
transactions contemplated by this Agreement asserted by any person on the basis
of any statement or representation alleged to have been made by such
indemnifying party.
9.7 Severability. The invalidity or unenforceability of any
------------
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
9.8 Specific Performance. In addition to any and all other remedies
--------------------
that may be available at law in the event of any breach of this Agreement, each
Purchaser shall be entitled to specific performance of the agreements and
obligations of the Company hereunder and to such other injunctive or other
equitable relief as may be granted by a court of competent jurisdiction.
9.9 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the internal laws of the State of Delaware (without reference
to the conflicts of law provisions thereof).
9.10 Notices. All notices, requests, consents, and other
-------
communications under this Agreement shall be in writing and shall be deemed
delivered (i) two business days after being sent by registered or certified
mail, return receipt requested, postage prepaid or (ii) one business day after
being sent via a reputable nationwide overnight courier service guaranteeing
next business day delivery, in each case to the intended recipient as set forth
below:
If to the Company, at C-bridge Internet Solutions, Inc., ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: President, or at such other
address or addresses as may have been furnished in writing by the Company to the
Purchasers, with a copy to ▇▇▇▇ and ▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.;
If to a Purchaser, at the address set forth on Exhibit A for such
---------
Purchaser, or at such other address or addresses as may have been furnished to
the Company in writing by such Purchaser, with a copy to ▇'▇▇▇▇▇▇▇▇ Graev &
Karabell, LLP, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇
▇. Nissan, Esq.
Any party may give any notice, request, consent or other communication
under this Agreement using any other means (including, without limitation,
personal
-23-
delivery, messenger service, telecopy, first class mail or electronic mail), but
no such notice, request, consent or other communication shall be deemed to have
been duly given unless and until it is actually received by the party for whom
it is intended. Any party may change the address to which notices, requests,
consents or other communications hereunder are to be delivered by giving the
other parties notice in the manner set forth in this Section.
9.11 Complete Agreement. This Agreement (including its Exhibits) and
------------------
the Ancillary Agreements constitute the entire agreement and understanding of
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings relating to such subject matter including,
without limitation, that certain Term Sheet dated September 10, 1999.
9.12 Amendments and Waivers. Except as otherwise expressly set forth
----------------------
in this Agreement, any term of this Agreement may be amended or terminated and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), with the
written consent of the Company and the holders of at least 50% of the shares of
Common Stock issued or issuable upon conversion of the Shares. Notwithstanding
the foregoing, this Agreement may be amended with the consent of the holders of
less than all of the shares of Common Stock issued or issuable upon conversion
of the Shares only in a manner which applies to all such holders in the same
fashion. Any amendment, termination or waiver effected in accordance with this
Section 9.11 or Section 2(b) shall be binding upon each holder of any Shares
(including shares of Common Stock into which such Shares have been converted)
even if they do not execute such consent, each future holder of all such
securities and the Company. No waivers of or exceptions to any term, condition
or provision of this Agreement, in any one or more instances, shall be deemed to
be, or construed as, a further or continuing waiver of any such term, condition
or provision.
9.13 Pronouns. Whenever the context may require, any pronouns used in
--------
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and
vice versa.
9.14 Counterparts; Facsimile Signatures. This Agreement may be
----------------------------------
executed in any number of counterparts, each of which shall be deemed to be an
original, and all of which shall constitute one and the same document. This
Agreement may be executed by facsimile signatures.
9.15 Section Headings. The section headings are for the convenience
----------------
of the parties and in no way alter, modify, amend, limit, or restrict the
contractual obligations of the parties.
-24-
10. Definitions. For purposes of this Agreement, each of the following
-----------
defined terms is defined in the Section of this Agreement indicated below:
Defined Term Section
------------ -------
Additional Purchaser 2(b)
Ancillary Agreements 3.1
Balance Sheet 3.9
Balance Sheet Date 3.9
CERCLA 3.23(a)
Certificate of Amendment 1.1
Closing 2(a)
Closing Date 2(a)
Code 3.12
Common Stock 3.2
Company Introduction
Company Material Adverse Effect 3.1
Confidential Information 9.2
Disclosure Schedule 3
Environmental Law 3.23(a)
ERISA 3.20
Exchange Act 8.4
Financial Statements 3.9
GAAP 3.9
Governmental Entity 3.6
Intellectual Property 3.14(a)
Investor Rights Agreement 5.4(b)
Major Purchaser 7.2(d)
Materials of Environmental Concern 3.23(b)
Permits 3.22
Plans 3.2
Purchase Price 1.2
Purchasers Introduction
Restricted Shares 8.1
Rule 144A Information 8.4
Securities Act 3.2
Security Interest 3.6
Series A Preferred 1.1
Shares 1.2
Stockholders' Voting Agreement 5.4(a)
Subsequent Closing 2(b)
-25-
Executed as of the date first written above.
COMPANY:
C-BRIDGE INTERNET SOLUTIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
PURCHASERS:
INSIGHT CAPITAL PARTNERS III, L.P.
By: InSight Venture Associates III, L.L.C.,
its General Partner
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name:
Title:
INSIGHT CAPITAL PARTNERS (CAYMAN)
III, L.P.
By: InSight Venture Associates III, L.L.C.,
its General Partner
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name:
Title:
INSIGHT CAPITAL PARTNERS III -
CO-INVESTORS, L.P.
By: InSight Venture Associates III, L.L.C.,
its General Partner
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name:
Title:
-26-
H&D INVESTMENTS 97
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
-----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: General Partner
-27-
ORACLE CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President, Corporate Development
-28-
EXHIBIT A
---------
List of Purchasers
------------------
Name and Address No. of Shares of Aggregate
of Purchaser Series A Preferred Purchase Price
------------------------------------ -------------------- ------------------
InSight Capital Partners III, L.P. 954,129 $5,724,774
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇/▇▇/ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
InSight Capital Partners 236,355 $1,418,130
(Cayman) III, L.P.
c/o ▇.▇. ▇▇▇▇▇▇ & Company
▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
Grand Cayman, Cayman Islands
InSight Capital Partners III - 142,849 $ 857,094
Co-Investors, L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇/▇▇/ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
H&D Investments 97 6,667 $ 40,002
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇ and ▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Oracle Corporation 305,555 1,833,330
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
Total: $9,873,330
----- ----------