Exhibit 10.8
PREFERRED STOCK PURCHASE AGREEMENT
PREFERRED STOCK PURCHASE AGREEMENT dated as of August 11, 2000 (the
"Agreement") by and among InFlow, Inc., a Delaware corporation (the "Company"),
and Cornerstone Equity Investors IV, LP, Private Equity Portfolio Fund II, LLC,
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital (U.S.), Inc., Carlyle High Yield Partners, L.P., Spire
Capital Partners, L.P. and ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇ II, L.P. (each, an
"Additional Investor" and, collectively, the "Additional Investors").
1. Purchase and Sale of Stock.
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1.1 Omitted.
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1.2 Sale and Issuance of Series C Preferred Stock.
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(a) Prior to the date hereof, the Company has adopted and filed
with the Secretary of State of Delaware the Fifth Amended and Restated
Certificate of Incorporation in the form attached hereto as Exhibit A (the
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"Restated Certificate").
(b) Subject to the terms and conditions of this Agreement, each
of Cornerstone Equity Investors IV, LP, Private Equity Portfolio Fund II, LLC,
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital (U.S.), Inc., Carlyle High Yield Partners, L.P., Spire
Capital Partners, L.P. and ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇ II, L.P. agrees, severally
but not jointly, to purchase from the Company at the Closing, and the Company
agrees to sell and issue to each Additional Investor at the Closing, that number
of shares of Series C Preferred Stock set forth opposite such Additional
Investor's name on Schedule A hereto (the "Purchase Shares") for a purchase
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price of $20.50 per share.
1.3 Closing. The purchase and sale of the Series C Preferred
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Stock to the Additional Investors shall take place at the Company's offices
located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m.
on August 11, 2000, or at such other time and place as the Company and the
Additional Investors mutually agree upon orally or in writing (which time and
place are designated as the "Closing"). No later than August 31, 2000, the
Company shall deliver to each Additional Investor a certificate representing the
Series C Preferred Stock that such Additional Investor is purchasing against
payment of the purchase price therefor by wire transfer of immediately available
funds.
1.4 Post-Closing Obligations. In the event that, at any time,
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the Company's representation and warranty in Section 2.2 is determined not to
have been true when made, the Company shall promptly issue to the Additional
Investors, on a pro rata basis as an adjustment to the purchase price paid for
the shares of Series C Preferred Stock purchased hereunder and without the
payment of additional consideration by the Additional Investors, an additional
number of shares of Series C Preferred Stock such that each Additional Investor
would own the same economic interest and voting power as it would have owned had
such representation and warranty been true and correct in all respects when
made. If at the time of an
adjustment pursuant to the preceding sentence any shares of Series C Preferred
Stock purchased hereunder have been converted into Common Stock, the Company
shall issue additional shares of Common Stock with respect to such converted
shares of Series C Preferred Stock based on the conversion ratio that would have
been in effect if such shares had remained outstanding. Any additional shares
issued pursuant to this Section 1.4 shall (i) be treated as if they were issued
at the Closing, (ii) shall reflect any anti-dilution adjustments arising from
the date of Closing through the date of such issuance, and (iii) be deemed to be
an adjustment to the per share purchase price of the Series C Preferred Stock
set forth in Section 1.2(b) above and to have been issued as part of a single
integrated transaction with the issuance of the shares of Series C Preferred
Stock at the Closing. Concurrently with each such issuance, the Company shall
pay or accrue all dividends or other distributions which would have been paid or
accrued with respect to such additional shares from the date of Closing through
the date of such issuance.
1.5 Omitted.
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1.6 Restated Certificate Adjustments. The parties agree for
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federal tax purposes to treat any adjustments to the Conversion Price (as
defined in the Restated Certificate) of the Series C Preferred Stock as a result
of a Reduced Offering (as defined in the Restated Certificate) or a Reduced
Liquidation Event (as defined in the Restated Certificate) as adjustments to the
purchase price of the Purchase Shares.
2. Representations and Warranties of the Company. The Company
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hereby represents, warrants and covenants to each Additional Investor with
respect to the purchase of the Purchase Shares on the date hereof that, except
as set forth on the Schedule of Exceptions (the "Schedule of Exceptions")
attached hereto as Schedule D, which exceptions shall be deemed made hereunder:
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2.1 Organization, Good Standing, Power and Qualification. The
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Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Company has all requisite corporate
power and authority to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently, and as
it is currently proposed to be, engaged and has the power and authority to
execute, deliver and perform its obligations under this Agreement, the
Investors' Rights Agreement and the Stockholders' Agreement, and to issue, sell
and deliver the Purchase Shares and the Common Stock (as hereinafter defined)
issuable upon conversion of the Purchase Shares. The Company is duly qualified
to transact business and is in good standing in each jurisdiction in which the
failure to so qualify would have a material adverse effect on the business,
assets, operations, properties or financial condition of the Company (an "MAE").
2.2 Capitalization and Voting Rights. (a) The authorized,
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issued and outstanding capital stock of the Company will consist immediately
prior to the Closing of:
(i) Preferred Stock. 17,920,000 shares of Preferred
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Stock, par value $0.001 (the "Preferred Stock"), of which (i) 3,310,000
shares have been designated Series A Preferred Stock (the "Series A
Preferred Stock"), of which 3,309,953 shares are outstanding, (ii)
7,000,000 shares have been designated Series B Preferred Stock (the "Series
B Preferred Stock"), of which 6,896,552 shares are outstanding and
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(iii) 7,610,000 shares have been designated Series C Preferred Stock (the
"Series C Preferred Stock"), of which 5,707,317 shares are outstanding. The
rights, privileges and preferences of the Series A Preferred Stock, Series
B Preferred Stock, and Series C Preferred Stock are as stated in the
Restated Certificate.
(ii) Common Stock. 42,080,000 shares of common stock,
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par value $0.001 ("Common Stock"), of which 3,655,480 shares are issued and
outstanding.
(b) The outstanding shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and Common Stock are owned by
the stockholders and in the numbers specified in Exhibit B hereto.
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(c) The outstanding shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and Common Stock are all duly
and validly authorized and issued, fully paid and nonassessable, and were issued
in compliance with all applicable state and federal laws concerning the issuance
of securities.
(d) Except for (A) the conversion privileges of the Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, (B) the
rights provided in Section 3 of the Fifth Amended and Restated Stockholders'
Agreement in the form attached hereto as Exhibit C (the "Stockholders'
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Agreement"), and (C) 1,798,000 options outstanding as of June 15, 2000, as set
forth on Schedule 2.2 (which list is true and complete in all material
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respects), and such other options which have been granted in the ordinary course
by the Company since such date to purchase shares of the Company's Common Stock
pursuant to the Company's 1997 Stock Option/Stock Issuance Plan, as amended (the
"Option Plan"), which Option Plan authorizes the grant of options to purchase up
to 2,685,000 shares of Common Stock ("Management Option Pool"), there are no
outstanding options, warrants, rights (including conversion or preemptive
rights) or agreements for the purchase or acquisition from the Company of any
shares of its capital stock. All options granted from the Management Option Pool
shall contain vesting and buy-back restrictions in substantially the same form
as issuances of options from the Management Option Pool prior to the date of
this Agreement. The Company may also grant warrants to purchase up to 250,000
shares of Common Stock to a lender or financial institution in connection with a
new credit facility. The Company is not a party or subject to any agreement or
understanding which affects or relates to the voting or giving of written
consents with respect to any security or other ownership interest in the Company
or by a director of the Company.
(e) The 5,707,317 outstanding shares of Series C Preferred
Stock combined with the issuance by the Company of 1,902,440 shares of Series C
Preferred Stock pursuant to the terms of this Agreement, as of the date hereof
would constitute, in the aggregate, approximately 31% of the Company's
outstanding capital stock, calculated on a fully diluted basis.
2.3 Subsidiaries. The Company does not presently own or
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control, directly or indirectly, any interest in any other corporation,
association, or other business entity, except for the subsidiaries listed on
Exhibit D attached hereto. The Company is not a participant
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in any joint venture, partnership, or similar arrangement. The Company is not,
directly or indirectly, subject to any obligation or requirement to provide
funds to, or invest in any company, partnership, association, joint venture or
similar non-corporate business enterprise.
2.4 Authorization. All corporate action on the part of the
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Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement, the Fifth Amended and
Restated Investors' Rights Agreement in the form attached hereto as Exhibit E
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(the "Investors' Rights Agreement"), and the Stockholders' Agreement, the
performance of all obligations of the Company hereunder and thereunder, and the
authorization (or, in the case of the Common Stock, reservation for issuance),
sale and issuance of the Series C Preferred Stock being sold hereunder and the
Common Stock issuable upon conversion of the Series C Preferred Stock has been
taken or will be taken prior to the Closing. This Agreement, the Investors'
Rights Agreement, and the Stockholders' Agreement constitute valid and legally
binding obligations of the Company, enforceable in accordance with their
respective terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies, and (iii) to the extent the indemnification provisions contained in
the Investors' Rights Agreement may be limited by applicable federal or state
securities laws.
2.5 Valid Issuance of Preferred and Common Stock. The Series C
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Preferred Stock that is being purchased hereunder, when issued, sold and
delivered in accordance with the terms of this Agreement for the consideration
expressed herein, will be duly and validly issued, fully paid and nonassessable,
free and clear of all liens and other encumbrances and will be free of
restrictions on transfer, other than restrictions on transfer under this
Agreement, the Investors' Rights Agreement, the Stockholders' Agreement and
under applicable state and federal securities laws. The Common Stock issuable
upon conversion of the Series C Preferred Stock being purchased hereunder has
been duly and validly reserved for issuance and, upon issuance in accordance
with the terms of the Restated Certificate, will be duly and validly issued,
fully paid and nonassessable, free and clear of all liens and other encumbrances
and will be free of restrictions on transfer, other than restrictions on
transfer under this Agreement, the Investors' Rights Agreement, the
Stockholders' Agreement and under applicable state and federal securities laws.
2.6 Consents. No consent, approval, order or authorization of,
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or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority or any individual, firm,
corporation, partnership, trust, limited liability company, incorporated or
unincorporated association, joint venture, joint stock company or other entity
of any kind (each, a "Person") on the part of the Company is required in
connection with the consummation of the transactions contemplated by this
Agreement which have not been obtained prior to the date of this Agreement,
except for filings required pursuant to applicable federal and state securities
laws and blue sky laws.
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2.7 Offering. The Company filed a Registration Statement on
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Form S-1 with the Securities and Exchange Commission on February 18, 2000 and
filed amendments thereto on March 28, 2000 and May 12, 2000 (File No. 333-30684)
for the issuance of up to 8,050,000 shares of its Common Stock. Assuming the
truth and accuracy of each Additional Investor's representations set forth in
Section 3 of this Agreement (and such similar representations made by other
purchasers of the Company's Series C Preferred Stock), including without
limitation the qualification of each Additional Investor as a "qualified
institutional buyer" within the meaning of Rule 144A of the Securities Act of
1933, as amended (the "Act"), or an institutional "accredited investor" as
defined under Regulation D of the Act as set forth in Section 3.10, the offer,
sale and issuance of the Series C Preferred Stock as contemplated by this
Agreement and the issuance of the Common Stock upon conversion of such Series C
Preferred Stock as contemplated by the Restated Certificate are exempt from the
registration requirements of the Act.
2.8 Litigation There is no action, suit, proceeding or
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investigation pending, or to the Company's knowledge currently threatened,
against the Company that questions the validity of this Agreement, the
Investors' Rights Agreement or the Stockholders' Agreement or the right of the
Company to enter into any of the foregoing or to consummate the transactions
contemplated hereby or thereby, or that would have, either individually or in
the aggregate, an MAE. The Company is not a party or subject to the provisions
of any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality. There is no action, suit, proceeding or investigation
by the Company currently pending or that the Company intends to initiate.
2.9 Proprietary Information Agreements. Each employee and
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officer of the Company has executed a Proprietary Information and Inventions
Agreement in substantially the form made available to the Additional Investors.
2.10 Patents and Trademarks. Schedule 2.10 sets forth a complete
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and accurate list and description of all material franchises, licenses, patents,
patent rights, patent applications, trademarks, trademark rights, trademark
applications, service marks, service ▇▇▇▇ rights, trade names, trade name
rights, copyrights, copyright applications, and rights with respect to any of
the foregoing (collectively, "Intellectual Property") presently owned or held by
the Company. The Company owns the right to use all of the Intellectual Property.
To the actual knowledge of the Company (without independent investigation), the
Intellectual Property is all that is necessary for the Company to conduct its
business as presently conducted or as it is presently proposed to be conducted.
To its knowledge (but without having conducted any special investigation or
patent search), no Intellectual Property conflicts with or infringes on the
valid rights of others and the Company has not received any notice of
infringement upon or conflict with the asserted rights of others. No event has
occurred which permits, or after notice or lapse of time would permit, the
revocation or termination of any of the Intellectual Property. The Company has a
valuable body of trade secrets, including know-how, concepts, computer programs,
technology, streaming media files, domain name, domain name applications,
databases, websites, other materials included on the Company's website and other
technical data (the "Proprietary Information"). To its knowledge, the Company
has the right to use the Proprietary Information free and clear of any rights,
liens, encumbrances or claims of others, except that the possibility exists that
other persons may have independently developed trade
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secrets or technical information similar or identical to those of the Company.
The Company is not aware of any such independent development nor of any
misappropriation or infringement of its Proprietary Information or Intellectual
Property. The Company is not aware that any of its employees is obligated under
any contract (including licenses, covenants or commitments of any nature) or
other agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of his or her best
efforts to promote the interests of the Company or that would conflict with the
Company's business. The Company does not believe it is or will be necessary to
utilize any inventions of any of its employees (or people it currently intends
to hire) or consultants made prior to their employment by the Company, except
for inventions that have been assigned or licensed to the Company as of the date
hereof. The Company has taken reasonable steps to protect and preserve the
security and confidentiality of its Intellectual Property and Proprietary
Information. Immediately following the Closing, the Company will continue to
own or license all Intellectual Property and Proprietary Information owned or
use by it on the same terms and conditions as immediately prior to the Closing.
2.11 Compliance with Other Instruments. The Company is not in
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violation of any provision of its Restated Certificate or Bylaws or any
securities issued by the Company, any indenture, credit agreement, contract,
agreement, instrument or other undertaking ("Contractual Obligations") or any
judgment, order, writ, decree or contract, statute, rule or regulation to which
the Company or its assets or property is subject ("Requirements of Law"), a
violation of which would have an MAE. The execution, delivery and performance of
this Agreement, the Investors' Rights Agreement and the Stockholders' Agreement
and the consummation of the transactions contemplated hereby and thereby will
not result in any such violation, or be in conflict with or constitute, with or
without the passage of time and giving of notice, either (i) a default under the
Restated Certificate, the Bylaws, any Contractual Obligation or Requirement of
Law, or (ii) an event that results in the creation of any lien, charge or
encumbrance upon any assets of the Company or the suspension, revocation,
impairment, forfeiture or nonrenewal of any material permit, license,
authorization or approval applicable to the Company, its business or operations
or any of its assets or properties.
2.12 Agreements; Action.
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(a) Except for agreements explicitly contemplated hereby,
there are no agreements, understandings or proposed transactions between the
Company and any of its officers, directors, affiliates or any affiliate thereof.
(b) Except for this Agreement, the Investors' Rights
Agreement and the Stockholders' Agreement, Schedule 2.12 hereto sets forth a
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complete and accurate list of all material Contractual Obligations of the
Company in effect on and as of the Closing. To its knowledge, each such
Contractual Obligation is valid and enforceable by the Company against any other
party thereto in accordance with its terms except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally, and by laws relating to the availability of
specific performance, injunctive relief or other equitable remedies. The Company
has performed and is in compliance with all of the terms of such Contractual
Obligations and all instruments and agreements relating thereto and no default
or event of
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default, or event or condition which with notice or lapse of time or both would
constitute such a default or event of default, on its part or, to its actual
knowledge, on the part of any other party thereto exists with respect to any
material Contractual Obligation of the Company, except where such
nonperformance, noncompliance, default or event of default is not reasonably
likely to result in an MAE. The Company has no actual knowledge that any such
Contractual Obligation contains any contractual requirement with which there is
a reasonable likelihood the Company will be unable to comply and such failure to
comply would likely result in an MAE or the Company's compliance is reasonably
likely to result in an MAE.
(c) There are no judgments, orders, writs or decrees to
which the Company is a party or by which it is bound that involve obligations
(contingent or otherwise) of, or payments to the Company, in excess of $25,000.
(d) The Company has not (i) declared or paid any dividends
or authorized or made any distribution upon or with respect to any class or
series of its capital stock, (ii) except for a potential credit facility the
Company is considering entering into, as set forth on the Financial Statements
(as hereinafter defined), or pursuant to the Contractual Obligations set forth
on Schedule 2.12, incurred any indebtedness for money borrowed or any other
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liabilities which would be commitments required to be disclosed in the footnotes
to financial statements under generally accepted accounting principles,
individually for which it currently owes, or in the future will owe in excess of
$100,000 or, in the case of indebtedness and/or liabilities individually less
than $100,000, in excess of $250,000 in the aggregate, (iii) made any loans or
advances to any Person, other than advances in the ordinary course of business,
or (iv) sold, exchanged or otherwise disposed of any of its assets or rights,
other than the sale of its inventory in the ordinary course of business.
(e) For the purposes of subsections (c) and (d) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same Person (including Persons 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.
2.13 Related-Party Transactions. No employee, officer or
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director of the Company, holder of greater than five percent (5%) of the
Company's outstanding Common Stock, or member of his or her immediate family is
indebted to, or a party to any agreements, contracts or transactions with the
Company, nor is the Company indebted (or committed to make loans or extend or
guarantee credit) to any of them. To the best of the Company's knowledge, none
of such persons has any direct or indirect ownership interest in any firm or
corporation with which the Company is affiliated or with which the Company has a
business relationship, or any firm or corporation that competes with the
Company, except that employees, officers or directors of the Company and members
of their immediate families may own stock in publicly traded companies that may
compete with the Company. No member of the immediate family of any officer or
director of the Company is directly or indirectly interested in any material
Contractual Obligation with the Company.
2.14 Financial Statements. The Company has delivered to each
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Additional Investor its audited financial statements (balance sheet and
statement of operations,
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statement of stockholders' equity and statement of cash flows, including notes
thereto) at December 31, 1999 and for the fiscal year then ended and its
unaudited financial statements (balance sheet and statement of operations,
statement of stockholders' equity and statement of cash flows) at March 31, 2000
and for the three-month period then ended (the "Financial Statements"). The
Financial Statements have been prepared in accordance with the books and records
of the Company, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated and with each other and fairly present in all material respects the
assets, liabilities, financial condition and operating results of the Company as
of the dates, and for the periods, indicated therein, subject in the case of
unaudited Financial Statements to normal year-end audit adjustments. Except as
set forth in the Financial Statements, the Company has no liabilities or
obligations, contingent or otherwise, other than (i) liabilities incurred in the
ordinary course of business subsequent to March 31, 2000 and (ii) obligations
under contracts and commitments incurred in the ordinary course of business and
not required under generally accepted accounting principles to be reflected in
the Financial Statements, which, in both cases, individually or in the
aggregate, are not material to the financial condition or operating results of
the Company and which the Company has satisfied as they have become due. Except
as disclosed in the Financial Statements, the Company is not a guarantor or
indemnitor of any indebtedness of any other Person. The Company maintains and
will continue to maintain a standard system of accounting established and
administered in accordance with generally accepted accounting principles.
2.15 Changes. Since March 31, 2000, except for the prior
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issuances of shares of Series C Preferred Stock, there has not been:
(a) any change in the assets, liabilities, financial
condition or operating results of the Company from that reflected in the
Financial Statements, except changes in the ordinary course of business
consistent with past practice that are not reasonably likely to have an MAE;
(b) any damage, destruction or loss, whether or not covered
by insurance, materially and adversely affecting the assets, properties,
financial condition, operating results or business of the Company;
(c) any waiver by the Company of a material right or of a
material debt owed to it;
(d) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business consistent with past practice and not material to the assets,
properties, financial condition, operating results or business of the Company;
(e) any material change or amendment to a contract or
arrangement required to be set forth on Schedule 2.12 by which the Company or
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any of its assets or properties is bound or subject;
(f) any material change in any compensation arrangement or
agreement with any employee of the Company;
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(g) except for the prior issuance of shares of Series C
Preferred Stock, the issuance of Common Stock upon the exercise of options
issued pursuant to the Option Plan, or the issuance of options pursuant to the
Option Plan, any issuance of stocks, bonds or other securities of the Company;
(h) any loans made to the Company;
(i) any payment of any dividend or other distribution of
the Company's assets in respect of any of the Company's capital stock;
(j) any sale, assignment or transfer of any Intellectual
Property, Proprietary Information or material assets of the Company;
(k) any material transaction to which the Company is a
party that is not in the ordinary course of business consistent with past
practice; or
(l) any agreement or commitment by the Company to do any of
the things described in this Section 2.15.
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2.16 Tax Returns. The Company has duly and timely filed all
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federal, state, county, local and foreign income and other tax returns, reports
and declarations (collectively, "Returns") relating to all net income, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
license, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property or windfall profits taxes, or other taxes of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority (domestic or foreign) upon
the Company ("Taxes") which have been required by applicable law to have been
filed except where the failure to do so would not be reasonably likely to have
an MAE. Such returns were true, complete and correct in all material respects.
No audits of federal income tax Returns of the Company have been conducted at
any time since its formation or are currently pending, and the Company has not
been advised that any of its Returns are being audited. The Company has paid all
Taxes that have become due and payable, or where payment is not required to be
made, has made adequate provision on its books, records and financial statements
in accordance with generally accepted accounting principles for the payment of
all Taxes that have not become due, except where the failure to do so would not
be reasonably likely to have an MAE. No deficiencies for any Tax, assessment or
governmental charge have been asserted or assessed against the Company which
have not been paid, settled or adequately provided for and there is no basis for
any such assessments or charges. The Company is not and has never been a party
to a Tax sharing agreement or any other agreement to indemnify any person for
Tax liability. Except as set forth on the Schedule of Exceptions, the Company
has never been a member of a combined, consolidated, unitary or affiliated group
for federal, state, local or foreign Tax purposes. The Company is not a party to
any agreement that could result in a material limitation on the tax
deductibility of compensation expense by reason of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), or otherwise. The Company is not
required and has not made, agreed or elected to change its method of tax
accounting pursuant to Section 481 of the Code, or otherwise. The Company has
complied in all material respects with all laws relating to the collecting and
withholding of Taxes.
2.17 Permits. The Company (i) has all governmental or other
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regulatory approvals, licenses, permits and other authorizations in accordance
with all Requirements of Law necessary for it to conduct its business, each of
which is in full force and effect, is final and not subject to review on appeal
and is not the subject of any pending or, to the best of its knowledge,
threatened attack by direct or collateral proceeding, and (ii) is in compliance
in all respects with each governmental approval, license, permit and
authorization relating to it or any of its properties under all applicable
Requirements of Law, except where the failure to so obtain or comply would not
be reasonably likely to have an MAE. Since its date of organization, the Company
has not, to its knowledge, been the subject of any investigation conducted by
any grand jury, administrative agency or other governmental authority. The
Company has not and, to its knowledge, its officers, directors and employees
have not, directly or indirectly, made, authorized or received any payment,
contribution or gift of money, property, or services, in violation of applicable
law, (i) as a kickback or bribe to any Person or (ii) to any political
organization or the holder of, or any aspirant to, any elective or appointive
office of any governmental authority.
2.18 Environmental and Safety Laws. The Company conducts its
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business and operations in compliance with all applicable environmental laws,
ordinances and
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regulations ("Environmental Laws"), except where the failure to comply with
Environmental Laws would not have an MAE. The Company has not received notice of
any material claim, action, suit, proceeding, hearing or investigation against
the Company based on or related to the manufacture, processing, distribution,
use, treatment, storage, disposal or transport of hazardous material or waste.
To its knowledge, the Company is not in violation of any applicable statute, law
or regulation relating to the environment or occupational health and safety, and
to its knowledge, no material expenditures are or will be required in order to
comply with any such existing statute, law or regulation. To the knowledge of
the Company, the Company has not received any official or formal notification of
any current, pending or outstanding violation of Environmental Laws by any
previous occupants of the premises currently leased by the Company.
2.19 Disclosure. Neither this Agreement (including all the
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exhibits and schedules hereto) nor any other certificates or agreements made or
delivered in connection herewith contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements herein
or therein not misleading in light of the circumstances under which they were
made. The Company's financial projections provided to the Additional Investors
were prepared by the Company in good faith based upon the Company's past
experience in its business.
2.20 Registration Rights. Except as provided in the Investors'
-------------------
Rights Agreement and the Stockholders' Agreement, the Company has not granted or
agreed to grant any registration rights, including piggyback rights, to any
person or entity or entered into any voting agreements with respect to the
capital stock of the Company.
2.21 Corporate Documents. The Restated Certificate and Bylaws of
-------------------
the Company are in the forms previously made available to the Additional
Investors. The minute books of the Company have been made available to the
Additional Investors for their review in connection with the purchase of the
Series C Preferred Stock; such minute books are current and contain correct and
complete copies of all minutes of meetings, resolutions and other actions and
proceedings of the board of directors and shareholders and all committees of the
Company. The record books relating to the equity interests of the Company have
been made available to the Additional Investors for their review in connection
with the purchase of the Series C Preferred Stock; such record books are
current, correct and complete and reflect the issuance, sale or exchange of all
of capital stock and other ownership and equity interests in the Company.
2.22 Title to Property and Assets. Schedule 2.22 sets forth a
---------------------------- -------------
complete and accurate list of all real property and improvements (collectively
"Real Property") owned or leased by the Company. The Company has good and
marketable, indefeasible fee simple title to the Real Property described in
Schedule 2.22 as being owned by it, and valid and subsisting leasehold rights in
-------------
the Real Property described in Schedule 2.22 as being leased by it, free and
-------------
clear of all mortgages, pledges, security interests, charges, liens and other
encumbrances. Schedule 2.22 also sets forth a complete and accurate list of
-------------
all of the material items of equipment, machinery, computers, chattels, tools,
parts, machine tools, furniture, furnishings, fixtures and supplies of every
nature owned or leased by the Company in connection with its business as of
March 31, 2000. The Company has good and marketable fee simple title to such
items described in Schedule 2.22 as being owned by it, and valid and subsisting
-------------
leasehold rights
11
in such items described in Schedule 2.22 as being leased by it, free and clear
-------------
of all mortgages, pledges, security interests, charges, liens and other
encumbrances. The property and assets set forth on Schedule 2.22 are in a good
state of repair and are sufficient for the Company to operate its business.
2.23 Labor Agreements and Actions. The Company is not bound by
----------------------------
or subject to (and none of its assets or properties is bound by or subject to)
any written or oral, express or implied, contract, commitment or arrangement
with any labor union, and no labor union has requested or, to the Company's
knowledge, has sought to represent any of the employees, representatives or
agents of the Company. There is no strike or other labor dispute involving the
Company pending, or to the Company's knowledge, threatened. The Company is not
aware that any officer or key employee, or that any group of key employees,
intends to terminate their employment with the Company, nor does the Company
have a present intention to terminate the employment of any of the foregoing.
The employment of each officer and employee of the Company is terminable at the
will of the Company. The Company is not a party to or bound by any currently
effective employment contract, deferred compensation agreement, bonus plan,
incentive plan, profit sharing plan, retirement agreement or other employee
compensation agreement. The Company has complied in all material respects with
all applicable state and federal equal employment opportunity and other laws
related to employment. The Company has withheld all amounts required by law or
agreement to be withheld by it from the wages, salaries and other payments to
its employees and is not liable for any arrears of wages or any taxes or
penalties for failure to comply with any of the foregoing. There are no pending,
threatened or anticipated (i) employment discrimination charges or complaints
against or involving the Company before any federal, state, or local board,
department, commission or agency, (ii) unfair labor practice charges or
complaints, disputes or grievances affecting the Company, or (iii) strikes, slow
downs, work stoppages, or lockouts or threats thereof affecting the Company.
2.24 Insurance. The Company maintains insurance policies as set
---------
forth on Schedule 2.24 (i) insuring the properties, assets and operations of its
-------------
business in such amounts and against such liabilities to the extent required by
applicable law or regulations, (ii) insuring against interruptions in its
business, and (iii) as are customary for similar companies in the Company's
industry. Such policies are in full force and effect and have been underwritten
by unaffiliated insurers and will be in full force and effect immediately after
the Closing. The Company has paid all premiums on such policies due and payable
prior to the date of this Agreement. To its knowledge, the Company has not done
anything by way of action or inaction that invalidates any of such policies in
whole or in part.
2.25 Governmental Regulations. The Company is not a "registered
------------------------
investment company" or an "affiliated person" or a "principal underwriter" of a
"registered investment company" as such terms are defined in the Investment
Company Act of 1940, as amended.
2.26 Certain Tax Matters. The Company's capital stock does not
-------------------
constitute a United States real property interest as that term is defined in
Section 897(c)(1)(A)(ii) of the Internal Revenue Code of 1986, as amended (the
"Code"), and the Company is not and has not been a "United States real property
holding corporation" as defined in Section 897(c)(2) of
12
the Code (a "USRPHC"). To its knowledge, no Additional Investor shall, solely by
virtue of its purchase and ownership of the Series C Preferred Stock and the
underlying Common Stock, (i) be deemed to have received "unrelated business
taxable income" as defined in Section 512 of the Code ("UBTI") as a result of
the Company's operations, or (ii) be deemed to be engaged in the conduct of a
"trade or business within the United States" within the meaning of Section
864(b) of the Code, and the Company shall exercise its reasonable best efforts
consistent with prudent business practices to ensure that the Additional
Investors do not receive UBTI and are not deemed to be engaged in a U.S. trade
or business solely as a result of their ownership of the Company's securities.
From time to time upon request of any Additional Investor, the Company shall
make a determination as to the Company's status as a USRPHC and as to the
accuracy of the foregoing representations and warranties and shall notify each
Additional Investor of and change in circumstances that could result in any of
the foregoing representations and warranties no longer being true and correct as
soon as practicable after the Company obtains knowledge of such change in
circumstances.
2.27 Employee Benefits. Except as set forth on the Schedule of
-----------------
Exceptions, the Company does not maintain or contribute to any Employee Pension
Benefit Plan or Employee Welfare Benefit Plan (as defined in Sections 3(2) and
3(1), respectively, of the Employee Retirement Income Securities Act of 1974, as
amended ("ERISA")). To the knowledge of the Company, the plans set forth on the
Schedule of Exceptions comply in form and in operation in all respects with the
applicable requirements of ERISA and the Code, except where the failure to so
comply would not have an MAE.
2.28 Customers. The Company is not aware of any customer of the
---------
Company set forth on Schedule 2.12 having an intention to cease doing business
-------------
with the Company subsequent to the Closing.
2.29 FCPA. To the knowledge of the Company, the Company has not
----
committed a violation of the Foreign Corrupt Practices Act of 1977, as amended,
which would have an MAE.
2.30 Use of Proceeds. The Company shall use the proceeds from
---------------
the sale of Series C Preferred Stock to the Additional Investors pursuant to
this Agreement to fund the capital costs of constructing data network exchange
facilities (including potential international expansion) and for working
capital, general corporate purposes and acquisitions and investments approved by
the Company's board of directors; provided, however, that pending any such uses,
the Company may invest the proceeds in interest bearing securities.
3. Representations and Warranties of the Additional Investors. Each
----------------------------------------------------------
Additional Investor, severally but not jointly, hereby represents, warrants and
covenants that:
3.1 Authorization. Such Additional Investor has full power and
-------------
authority to enter into this Agreement, the Investors' Rights Agreement and the
Stockholders' Agreement, and each such agreement constitutes its valid and
legally binding obligation, enforceable in accordance with its terms, except (i)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors' rights
generally, (ii) as limited by laws relating to the availability of
13
specific performance, injunctive relief or other equitable remedies, and (iii)
to the extent the indemnification provisions contained in the Investors' Rights
Agreement may be limited by applicable federal or state securities laws.
3.2 Purchase Entirely for Own Account. This Agreement is made
---------------------------------
with each Additional Investor in reliance upon such Additional Investor's
representation to the Company, which by such Additional Investor's execution of
this Agreement such Additional Investor hereby confirms, that the Series C
Preferred Stock to be received by such Additional Investor and the Common Stock
issuable upon conversion thereof (collectively, the "Securities") will be
acquired for investment for such Additional Investor's own account and not with
a view to the resale or distribution of any part thereof in violation of
applicable securities laws, and that such Additional Investor has no present
intention of selling, granting any participation in or otherwise distributing
the same in violation of applicable securities laws. By executing this
Agreement, such Additional Investor further represents that such Additional
Investor does not have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participations to such person or to any
third person in violation of applicable securities laws, with respect to any of
the Securities.
3.3 Disclosure of Information. Such Additional Investor
-------------------------
represents that it has (i) had an opportunity to ask questions and receive
answers from the Company regarding the terms and conditions of the offering of
the Series C Preferred Stock and the business, properties, prospects and
financial condition of the Company and (ii) been furnished by the Company with
all information regarding the Company which it has requested or desired to know.
3.4 Investment Experience. Such Additional Investor is an
---------------------
investor in securities of companies in the development stage and acknowledges
that it can bear the economic risk of its investment, and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Series C Preferred Stock. If other
than an individual, such Additional Investor also represents it has not been
organized for the purpose of acquiring the Series C Preferred Stock.
3.5 Restricted Securities. Such Additional Investor understands
---------------------
that the Securities it is purchasing are characterized as "restricted
securities" under the federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under such laws and applicable regulations such Securities may be resold
without registration under the Act only in certain limited circumstances. In the
absence of an effective registration statement covering the Series C Preferred
Stock (or the Common Stock issued on conversion thereof) or an available
exemption from registration under the Act, the Series C Preferred Stock (and any
Common Stock issued on conversion thereof) must be held indefinitely. In this
connection, such Additional Investor represents that it is familiar with SEC
Rule 144, as presently in effect, and understands the resale limitations imposed
thereby and by the Act, including without limitation the Rule 144 condition that
current information about the Company be available to the public. Such
information is not now available and the Company has no present plans to make
such information available.
3.6 Further Limitations on Disposition.
----------------------------------
14
(a) Without in any way limiting the representations set
forth above, such Additional Investor further agrees not to make any disposition
of all or any portion of the Securities unless:
(i) There is then in effect a registration statement
under the Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(ii) (A) Such Additional Investor shall have notified
the Company of the proposed disposition and shall have furnished the Company, if
reasonably requested, with a detailed statement of the circumstances surrounding
the proposed disposition, and (B) if reasonably requested by the Company, such
Additional Investor shall have furnished the Company with an opinion of counsel,
reasonably satisfactory to the Company that such disposition will not require
registration of such shares under the Act. It is agreed that the Company will
not require opinions of counsel for transactions made pursuant to Rule 144
except in unusual circumstances.
(b) Notwithstanding the provisions of subsections (i) and
(ii) above, no such registration statement or opinion of counsel shall be
necessary for a transfer by an Additional Investor to any affiliate or limited
or general partner of such Additional Investor if the transferee agrees in
writing to be subject to the terms hereof to the same extent as if he or she
were an original Additional Investor hereunder.
3.7 Legends. It is understood that the certificates evidencing
-------
the Securities may bear one or all of the following legends:
(a) "These securities have not been registered under the
Securities Act of 1933, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in effect
with respect to the securities under such Act or an applicable exemption
therefrom."
(b) Any legend required by the Investors' Rights Agreement
and the Stockholders' Agreement.
The Company agrees, upon the request of any Additional Investor
or its transferee, to remove the legend required by paragraph (a) above at such
time as all Securities held by such person may be freely transferred pursuant to
SEC Rule 144(k) or are properly sold pursuant to an effective registration
statement under the Act, and to remove the legend required by paragraph (b)
above at such time as the restrictions of the Investors' Rights Agreement and
the Stockholders' Agreement are no longer applicable to such Securities.
3.8 Tax Advisors. Such Additional Investor has reviewed with
------------
such Additional Investor's own tax advisors the federal, state and local tax
consequences of this investment, where applicable, and the transactions
contemplated by this Agreement. With respect to matters related to the tax
consequences of the transactions contemplated by this Agreement, each such
Additional Investor is relying solely on such advisors and not on any statements
or representations of the Company or any of its agents and understands that each
such
15
Additional Investor (and not the Company) shall be responsible for such
Additional Investor's own tax liability that may arise as a result of this
investment or the transactions contemplated by this Agreement.
3.9 Additional Investor Counsel. Such Additional Investor
---------------------------
acknowledges that such Additional Investor has had the opportunity to review
this Agreement, the exhibits and the schedules attached hereto and the
transactions contemplated by this Agreement with such Additional Investor's own
legal counsel. Each such Additional Investor is relying solely on such
Additional Investor's legal counsel and not on ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
for legal advice with respect to this investment or the transactions
contemplated by this Agreement.
3.10 Qualified Institutional Buyer. Other than with respect to
-----------------------------
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇ II, L.P. ("▇▇▇▇▇▇▇▇") and Spire Capital Partners,
L.P. ("Spire"), each Additional Investor is a "qualified institutional buyer" as
defined under Rule 144A of the Act. ▇▇▇▇▇▇▇▇ and Spire are each an institutional
"accredited investor" as defined under Regulation D of the Act.
4. Conditions of Additional Investor's Obligations at Closing. The
----------------------------------------------------------
obligations of each Additional Investor under Section 1 of this Agreement are
subject to the fulfillment on or before the Closing of each of the following
conditions, the waiver of which shall not be effective against any Additional
Investor who does not consent thereto:
4.1 Representations and Warranties. The representations and
------------------------------
warranties of the Company contained in Section 2 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.
4.2 Performance. The Company shall have performed and complied
-----------
with all agreements, obligations and conditions contained in this Agreement that
are required to be performed or complied with by it on or before the Closing.
4.3 Compliance Certificate. The Chief Financial Officer of the
----------------------
Company shall deliver to the Additional Investors at the Closing a certificate
stating that the conditions specified in Sections 4.1 and 4.2 have been
fulfilled.
4.4 Qualifications. All authorizations, approvals or permits, if
--------------
any, of any governmental authority or regulatory body of the United States or of
any state or any Person that are required in connection with the consummation of
the transactions contemplated by this Agreement, including the lawful issuance
and sale of the Securities pursuant to this Agreement, shall be duly obtained
and effective as of the Closing.
4.5 Proceedings and Documents. All corporate and other
-------------------------
proceedings in connection with the transactions contemplated at the Closing and
all documents incident thereto shall be reasonably satisfactory in form and
substance to the Additional Investors, and they shall have received all such
counterpart original and certified or other copies of such documents as they may
reasonably request.
16
4.6 Investors' Rights Agreement. The Company, each Additional
---------------------------
Investor and the other parties thereto shall have entered into the Investors'
Rights Agreement in the form attached hereto as Exhibit E.
---------
4.7 Stockholders' Agreement. The Company, each Additional
-----------------------
Investor and the other parties thereto shall have entered into the Stockholders'
Agreement in the form attached as Exhibit C.
---------
4.8 No Material Adverse Change. Since March 31, 2000, there
--------------------------
shall have occurred no material adverse change in the business, assets or
financial condition of the Company.
4.9 No Litigation or Other Proceedings. There shall be no
----------------------------------
pending or threatened litigation, bankruptcy, insolvency, injunction, order,
suit, investigation or claim against or affecting the Company, any of its
properties or rights, any of its executive officers or with respect to any of
the transactions contemplated by this Agreement, the Investors' Rights Agreement
or the Stockholders' Agreement which would be reasonably likely to have an MAE.
4.10 Legal Opinion. The Additional Investors shall have received
-------------
the opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, legal counsel to the Company,
dated as of the Closing in the form of Exhibit F hereto. Omitted. Officer's
--------- ------------------
Certificate. The Chief Financial Officer of the Company shall deliver to the
-----------
Additional Investors at the Closing a certificate certifying that attached
copies of the Restated Certificate and the Bylaws of the Company and the board
resolutions regarding the transactions contemplated by this Agreement are true
and correct copies thereof.
4.13 Certificate of Incorporation. The Company shall have
----------------------------
delivered to the Additional Investors a copy of the Restated Certificate
certified as of a recent date by the Secretary of State of the State of
Delaware.
5. Conditions of the Company's Obligations at Closing. The
--------------------------------------------------
obligations of the Company to each Additional Investor under this Agreement are
subject to the fulfillment on or before the Closing of each of the following
conditions by that Additional Investor:
5.1 Representations and Warranties. The representations and
------------------------------
warranties of the Additional Investors contained in Section 3 shall be true on
and as of the Closing with the same effect as though such representations and
warranties had been made on and as of the Closing.
5.2 Payment of Purchase Price. The Additional Investors shall
-------------------------
have delivered the purchase price specified in Section 1.2.
5.3 Investors' Rights Agreement. Each Additional Investor and
---------------------------
other parties thereto (other than the Company) shall have entered into the
Investors' Rights Agreement in the form attached as Exhibit E.
---------
17
5.4 Stockholders' Agreement. Each Additional Investor and other
-----------------------
parties thereto (other than the Company) shall have entered into the
Stockholders' Agreement in the form attached as Exhibit C.
---------
6. Covenants.
---------
6.1 Covenant of the Company. So long as any Additional Investor
-----------------------
owns at least 25% of the Series C Preferred Stock owned by such Additional
Investor immediately after giving effect to the purchase contemplated pursuant
to this Agreement, the Company shall provide prompt written notice to such
Additional Investor of any event which has resulted in an MAE or any event which
would be reasonably likely to have an MAE.
6.2 Covenant of the Parties. With respect to any acquisition of
-----------------------
securities of the Company by any Additional Investor as to which the ▇▇▇▇-▇▇▇▇▇-
▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR Act"), applies,
the Company and such Additional Investor agree to use commercially reasonable
best efforts to comply with the filing and waiting period requirements of the
HSR Act as soon as commercially reasonable.
7. Miscellaneous.
-------------
7.1 Survival. The warranties, representations and covenants of
--------
the Company and the Additional Investors contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Additional Investors or the Company.
7.2 Successors and Assigns. Except as otherwise provided herein,
----------------------
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Securities). Nothing in this Agreement, express or implied,
is intended to confer upon any party, other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
7.3 Governing Law. This Agreement shall be governed by and
-------------
construed under the laws of the State of Colorado as applied to agreements among
Colorado residents entered into and to be performed entirely within Colorado,
without giving effect to such state's conflict of laws principles .
7.4 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.5 Notices. All notices required or permitted hereunder shall
-------
be in writing and shall be deemed effectively given: (i) upon personal delivery
to the party to be notified, (ii) when sent by confirmed facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; or (iii) one day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification of receipt. All
communications shall be sent to the address as set forth on the signature page
hereof or at
18
such other address as such party may designate by ten days advance written
notice to the other parties hereto.
7.6 Finder's Fee. Each party represents that it neither is nor
------------
will be obligated for any finders' fee or commission in connection with this
transaction. Each Additional Investor agrees to indemnify and to hold harmless
the Company from any liability for any commission or compensation in the nature
of a finders' fee (and the costs and expenses of defending against such
liability or asserted liability) for which such Additional Investor or any of
its officers, partners, employees or representatives is responsible. The Company
agrees to indemnify and hold harmless each Additional Investor from any
liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
7.7 Expenses. Irrespective of whether the Closing is effected,
--------
the Company shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement. If the
Closing is effected, the Company shall, at the Closing, reimburse Cornerstone
for all reasonable expenses of Cornerstone incurred in connection with the
negotiation, execution, delivery and performance of this Agreement in an amount
not to exceed $10,000; provided further, Cornerstone agrees to use its
reasonable efforts to minimize such expenses. If any action at law or in equity
is necessary to enforce or interpret the terms of this Agreement, the Investors'
Rights Agreement, the Stockholders' Agreement or the Restated Certificate, the
prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
7.8 Amendments and Waivers. Any term of this Agreement may be
----------------------
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Common Stock not previously sold to the public that is issued
or issuable upon conversion of the Series C Preferred Stock. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any securities purchased under this Agreement at the time outstanding
(including securities into which such securities are convertible), each future
holder of all such securities and the Company.
7.9 Effect of Amendment or Waiver. Each Additional Investor
-----------------------------
acknowledges that by the operation of Section 7.8 hereof the holders of a
majority of the Common Stock not previously sold to the public that is issued or
issuable upon conversion of the Series C Preferred Stock will have the power to
diminish or eliminate all rights of such Additional Investor under this
Agreement.
7.10 Severability. If one or more provisions of this Agreement
------------
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
19
7.11 Aggregation of Stock. All shares of the Series C Preferred
--------------------
Stock or Common Stock issued upon conversion thereof held or acquired by
affiliated entities or persons shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement.
7.12 Entire Agreement. This Agreement and the documents referred
----------------
to herein constitute the entire agreement among the parties and no party shall
be liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or therein.
7.13 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.14 Jury Trial. Each party to this Agreement hereby waives a
----------
trial by jury in any legal action or proceeding relating to this Agreement.
20
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
INFLOW, INC.
By: /s/ Art Zeile
-------------
Art Zeile
President and Chief Executive Officer
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ADDITIONAL INVESTORS:
Cornerstone Equity Investors IV, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇ II, L.P.
By: ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ LLC,
General Partner
By: /s/
---------------------
Name: ▇▇▇ ▇▇▇▇▇▇ ▇▇
Title: Managing Director By: /s/
--------------------
Name: ▇▇▇▇▇ Van Genderen
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ Title: Partner
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Address: Republic Plaza
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Private Equity Portfolio Fund II, LLC BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital (U.S.), Inc.
By: /s/ By: /s/
------------------------ ------------------------
Name:_______________________ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title:______________________ Title: President
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ADDITIONAL INVESTORS (continued)
--------------------
Carlyle High Yield Partners, L.P. Spire Capital Partners, L.P.
By: TCG High Yield, L.L.C., its General By: Spire Capital Partners, LLC,
Partner its General Partner
By: /s/ By: /s/
------------------------ ------------------------
Name: ▇▇▇▇ ▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Executive Managing Director Title: Managing Member
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, 41st Floor Address: ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
2
Schedule A
----------
Additional Investors
--------------------
---------------------------------------------------------------------
Additional Investor Number of Shares of Aggregate
------------------- ------------------- ------------------
of Series C Purchase Price
----------- ------------------
Preferred Stock
---------------
---------------------------------------------------------------------
CORNERSTONE EQUITY 975,610 $20,000,005.00
INVESTORS IV, LP
---------------------------------------------------------------------
PRIVATE EQUITY 97,561 $ 2,000,000.50
PORTFOLIO FUND II, LLC
--------------------------------------------------------------------
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ 463,416 $ 9,500,028.00
CAPITAL (U.S.), INC.
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SPIRE CAPITAL PARTNERS, L.P. 146,342 $ 3,000,011.00
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CARLYLE HIGH YIELD PARTNERS, 97,561 $ 2,000,000.50
L.P.
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▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ AND 121,950 $ 2,499,975.00
SCANO II, L.P.
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