Exhibit 10.2
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SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of June 17, 2000,
by and among MicroStrategy Incorporated, a Delaware corporation, with
headquarters located at 8000 Towers Crescent Drive, Vienna, Virginia 22182 (the
"Company"), and the investors listed on the Schedule of Buyers attached hereto
(individually, a "Buyer" and collectively, the "Buyers").
WHEREAS:
A. The Company and the Buyers are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by Rule 506
of Regulation D ("Regulation D") as promulgated by the United States Securities
and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 Act").
B. The Company has authorized the following new series of its preferred
stock, par value $0.001 per share: the Company's Series A Convertible Preferred
Stock (the "Preferred Stock"), which shall be convertible into shares of the
Company's Class A common stock, par value $0.001 per share (the "Common Stock")
(as converted, the "Conversion Shares"), in accordance with the terms of the
Company's Certificate of Designations, Preferences and Rights of the Preferred
Stock, in the form attached hereto as Exhibit A (the "Certificate of
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Designations").
C. The Buyers wish to purchase, upon the terms and conditions stated in
this Agreement, initially an aggregate of 12,500 shares of Preferred Stock (the
"Initial Preferred Shares") in the respective amounts set forth opposite each
Buyer's name on the Schedule of Buyers.
D. In the event that the Conversion Price (as defined in the Certificate of
Designations) on the date immediately following the last day of the Pricing
Period (as defined in the Certificate of Designations) is greater than $125,
then, subject to the terms and conditions set forth in this Agreement, the
Buyers will be required to buy and the Company will be required to sell an
aggregate additional number of shares of Preferred Stock (pro rata based on the
number of Initial Preferred Shares each Buyer purchased in relation to the total
number of Initial Preferred Shares issued) (the "Mandatory Preferred Shares")
equal to the lesser of (I) 5,000, and (II) the difference of (a) the product of
(i) 100, multiplied by (ii) the Conversion Price on the date immediately
following the last day of the Pricing Period, minus (b) 12,500. The Initial
Preferred Shares and the Mandatory Preferred Shares collectively are referred to
in this Agreement as the "Preferred Shares."
E. Contemporaneously with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement
substantially in the form attached hereto as Exhibit B (the "Registration Rights
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Agreement") pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.
NOW THEREFORE, the Company and the Buyers hereby agree as follows:
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1. PURCHASE AND SALE OF PREFERRED SHARES.
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a. Purchase of Preferred Shares. Subject to the satisfaction (or waiver
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of the conditions set forth in Sections 6(a) and 7(a) below, the Company shall
issue and sell to each Buyer and each Buyer severally agrees to purchase from
the Company the respective number of Initial Preferred Shares set forth opposite
such Buyer's name on the Schedule of Buyers (the "Initial Closing"). In the
event that the Conversion Price (as defined in the Certificate of Designations)
on the date immediately following the last day of the Pricing Period (as defined
in the Certificate of Designations) is greater than $125, then, subject to the
satisfaction (or waiver) of the conditions set forth in Sections 1(c), 6(b) and
7(b), each Buyer shall buy and the Company shall sell that number of Mandatory
Preferred Shares equal to such Buyer's pro rata portion (based on the number of
Initial Preferred Shares each Buyer purchased in relation to the total number of
Initial Preferred Shares issued) of an aggregate number of Mandatory Preferred
Shares equal to the lesser of (I) 5,000, and (II) the difference of (a) the
product of (i) 100, multiplied by (ii) the Conversion Price on the date
immediately following the last day of the Pricing Period, minus (b) 12,500 (the
"Mandatory Closing"). The purchase price (the "Purchase Price") of each
Preferred Share at each of the Closings shall be $10,000. "Business Days" means
any day other than Saturday, Sunday or other day on which commercial banks in
the city of New York are authorized or required by law to remain closed.
b. The Initial Closing Date. The date and time of the Initial Closing
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(the "Initial Closing Date") shall be 10:00 a.m. Central Time, within two (2)
Business Days following the date hereof, subject to the satisfaction (or waiver)
of the conditions to the Initial Closing set forth in Sections 6(a) and 7(a) (or
such later date as is mutually agreed to by the Company and the Buyers). The
Initial Closing shall occur on the Initial Closing Date at the offices of Katten
Muchin Zavis, 525 West Monroe Street, Suite 1600, Chicago, Illinois 60661-3693.
c. The Mandatory Closing Date. The date and time of the Mandatory
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Closing (the "Mandatory Closing Date") shall be 10:00 a.m. Central Time, on the
third (3rd) Business Day following the last day of the Pricing Period, subject
to satisfaction (or waiver) of the conditions to the Mandatory Closing set forth
in Sections 6(b) and 7(b) and the conditions set forth in this Section 1(c) (or
such later date as is mutually agreed to by the Company and the Buyers). The
Company shall deliver written notice by facsimile (the "Mandatory Share Notice")
to each Buyer on the first (1st) Business Day after the last day of the Pricing
Period (the "Mandatory Share Notice Date"). The Mandatory Share Notice shall set
forth (x) confirmation of the Conversion Price as of the date immediately
following the last day of the Pricing Period, and (y) in the event that the
Conversion Price is greater than $125 on the date immediately following the last
day of the Pricing Period, (I) each Buyer's pro rata portion of the aggregate
number of Mandatory Preferred Shares, each determined in accordance with Section
1(a), which each Buyer is required to purchase at such Mandatory Closing, (II)
each Buyer's aggregate Purchase Price for the Mandatory Preferred Shares and
(III) the date of the Mandatory Closing Date which date shall be the third (3rd)
Business Day after the last day of the Pricing Period. The Mandatory Closing
shall occur on the Mandatory Closing Date at the offices of Katten Muchin Zavis,
525 West Monroe Street, Suite 1600, Chicago, Illinois 60661-3693.
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d. Form of Payment. On each of the Closing Dates, (A) each Buyer shall
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pay the Purchase Price to the Company for the Preferred Shares to be issued and
sold to such Buyer by wire transfer of immediately available funds in accordance
with the Company's written wire instructions, less any amount withheld at the
Initial Closing for expenses pursuant to Section 4(l), and (B) the Company shall
deliver to each Buyer, stock certificates (in the denominations as such Buyer
shall request) (the "Preferred Stock Certificates") representing such number of
the Preferred Shares which such Buyer is then purchasing hereunder, duly
executed on behalf of the Company and registered in the name of such Buyer or
its designee.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
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Each Buyer represents and warrants with respect to only itself that:
a. Investment Purpose. Such Buyer (i) is acquiring the Preferred Shares
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and (ii) upon conversion of the Preferred Shares, will acquire the Conversion
Shares then issuable (the Preferred Shares, the Conversion Shares and the
Dividend Shares (as defined in the Certificate of Designations) collectively are
referred to herein as the "Securities"), for its own account for investment only
and not with a view towards, or for resale in connection with, the public sale
or distribution thereof, except pursuant to sales registered or exempted under
the 1933 Act; provided, however, that by making the representations herein, such
Buyer does not agree to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time,
provided further, however, that such disposition shall be in accordance with or
pursuant to a registration statement or an exemption under the 1933 Act.
b. Accredited Investor Status. Such Buyer is an "accredited investor" as
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that term is defined in Rule 501(a)(3) of Regulation D under the 1933 Act.
c. Reliance on Exemptions. Such Buyer understands that the Securities
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are being offered and sold to it in reliance on specific exemptions from the
registration requirements of the United States federal and state securities laws
and that the Company is relying in part upon the truth and accuracy of, and such
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire the Securities.
d. Information. Such Buyer and its advisors, if any, have been furnished
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with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Securities which
have been requested by such Buyer. Such Buyer and its advisors, if any, have
been afforded the opportunity to ask questions of the Company. Neither such
inquiries nor any other due diligence investigations conducted by such Buyer or
its advisors, if any, or its representatives shall modify, amend or affect such
Buyer's right to rely on the Company's representations and warranties contained
in Sections 3 and 9(m) below. Such Buyer understands that its investment in the
Securities involves a high degree of risk. Such Buyer has sought such
accounting, legal and tax advice as it has considered necessary to make an
informed investment
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decision with respect to its acquisition of the Securities.
e. No Governmental Review. Such Buyer understands that no United States
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federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
f. Transfer or Resale. Such Buyer understands that except as provided in
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the Registration Rights Agreement: (i) the Securities have not been and are not
being registered under the 1933 Act or any state securities laws, and may not be
offered for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder, (B) such Buyer shall have delivered to the Company an
opinion of counsel, in a generally acceptable form, to the effect that such
Securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration, or (C) such Buyer
provides the Company with reasonable assurance that such Securities can be sold,
assigned or transferred pursuant to Rule 144 promulgated under the 1933 Act (or
a successor rule thereto) ("Rule 144"); (ii) any sale of the Securities made in
reliance on Rule 144 may be made only in accordance with the terms of Rule 144
and further, if Rule 144 is not applicable, any resale of the Securities under
circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the 1933 Act) may
require compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register the Securities under the 1933 Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder. Notwithstanding the foregoing, the Securities may be
pledged in connection with a bona fide margin account or other loan secured by
the Securities.
g. Legends. Such Buyer understands that the certificates or other
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instruments representing the Preferred Shares and, until such time as the sale
of the Conversion Shares have been registered under the 1933 Act as contemplated
by the Registration Rights Agreement, the stock certificates representing the
Conversion Shares, except as set forth below, shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR APPLICABLE STATE SECURITIES LAWS OR (B) AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES
LAWS OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY THE SECURITIES.
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The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, if, unless otherwise required by state securities laws, (i) such
Securities are registered for resale under the 1933 Act, (ii) in connection with
a sale transaction, such holder provides the Company with an opinion of counsel
reasonably satisfactory to the Company, in a generally acceptable form, to the
effect that a public sale, assignment or transfer of the Securities may be made
without registration under the 1933 Act, or (iii) such holder provides the
Company with reasonable assurances (including, if requested by the Company,
delivering such reasonable assurances to the Company's counsel in connection
with such counsel rendering an opinion on the validity of a sale by such Buyer
pursuant to Rule 144) that the Securities can be sold pursuant to Rule 144
without any restriction as to the number of securities acquired as of a
particular date that can then be immediately sold.
h. Authorization; Enforcement; Validity. This Agreement and the
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Registration Rights Agreement have been duly and validly authorized, executed
and delivered on behalf of such Buyer and are valid and binding agreements of
such Buyer enforceable against such Buyer in accordance with their terms,
subject as to enforceability to general principles of equity and to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies.
i. Residency. Such Buyer is a resident of that country specified in its
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address on the Schedule of Buyers.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
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The Company represents and warrants to each of the Buyers that:
a. Organization and Qualification. The Company and its "Subsidiaries"
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(which for purposes of this Agreement means any entity in which the Company,
directly or indirectly, owns capital stock or holds an equity or similar
interest which ownership entitles the Company to elect a majority of the board
of directors or similar governing body of such entity) are corporations duly
organized and validly existing in good standing under the laws of the
jurisdiction in which they are incorporated, and have the requisite corporate
power and authorization to own their properties and to carry on their business
as now being conducted. Each of the Company and its Subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which its ownership of property or the nature of the
business conducted by it makes such qualification necessary, except to the
extent that the failure to be so qualified or be in good standing would not have
a Material Adverse Effect. As used in this Agreement, "Material Adverse Effect"
means any material adverse effect on the business, properties, assets,
operations, results of operations, or financial condition of the Company and its
Subsidiaries, if any, taken as a whole, or on the transactions contemplated
hereby or by the agreements and instruments to be entered into in connection
herewith, or on the authority or ability of the Company to perform its
obligations under the Transaction Documents (as defined below) or the
Certificate of Designations. A complete list of entities in which the Company,
directly or indirectly, owns capital stock or holds an equity or similar
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interest is set forth on Schedule 3(a).
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b. Authorization; Enforcement; Validity. The Company has the requisite
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corporate power and authority to enter into and perform its obligations under
this Agreement, the Registration Rights Agreement, the Irrevocable Transfer
Agent Instructions (as defined in Section 5) and each of the other agreements
entered into by the parties hereto in connection with the transactions
contemplated by this Agreement (collectively, the "Transaction Documents"), and
to issue the Securities in accordance with the terms hereof and thereof. The
execution and delivery of the Transaction Documents by the Company and the
execution and filing of the Certificate of Designations by the Company and the
consummation by it of the transactions contemplated hereby and thereby,
including without limitation the issuance of the Preferred Shares and the
reservation for issuance and the issuance of the Conversion Shares issuable upon
conversion thereof, have been duly authorized by the Company's Board of
Directors and no further consent or authorization is required by the Company,
its Board of Directors or its stockholders (except to the extent that
stockholder approval may be required pursuant to the rules of the Nasdaq
National Market for the issuance of a number of Conversion Shares greater than
19.99% of the number of shares of Common Stock outstanding immediately prior to
the Initial Closing Date (the "Nasdaq 19.99% Rule")). The Transaction Documents
have been duly executed and delivered by the Company. The Transaction Documents
constitute the valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies. The
Certificate of Designations has been filed prior to the Initial Closing Date
with the Secretary of State of the State of Delaware and will be in full force
and effect, enforceable against the Company in accordance with its terms and
shall not have been amended unless in compliance with its terms.
c. Capitalization. As of the date hereof, the authorized capital stock
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of the Company consists of (i) 100,000,000 shares of Class A common stock, of
which as of the date hereof 24,566,078 shares are issued and outstanding,
19,482,664 shares are reserved for issuance pursuant to the Company's stock
option and purchase plans, 55,175,515 shares are reserved for issuance pursuant
to conversion of the Company's Class B common stock and 78,334 shares are
issuable and reserved for issuance pursuant to securities (other than the
Preferred Stock, stock option and purchase plans and the Company's Class B
common stock) exercisable or exchangeable for, or convertible into, shares of
Common Stock, (ii) 100,000,000 shares of Class B common stock, of which as of
the hereof 55,175,515 shares are issued and outstanding and (iii) 5,000,000
shares of preferred stock, of which as of the date hereof, none are issued and
outstanding. All of such outstanding shares have been, or upon issuance will be,
validly issued and are fully paid and nonassessable. Except as disclosed in
Schedule 3(c), (A) no shares of the Company's capital stock are subject to
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preemptive rights or any other similar rights (arising under Delaware law,
Virginia law, the Company's Certificate of Incorporation or By-laws or any
agreement or instrument to which the Company is a party) any liens or
encumbrances granted or created by the Company; (B) there are no outstanding
debt securities issued by the Company; (C) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, any shares of
capital stock of the Company or any of its
PAGE 7
Subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its Subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its Subsidiaries; (D) there are
no agreements or arrangements under which the Company or any of its Subsidiaries
is obligated to register the sale of any of their securities under the 1933 Act
(except the Registration Rights Agreement); (E) there are no outstanding
securities or instruments of the Company or any of its Subsidiaries which
contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the Company or any
of its Subsidiaries; (F) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities as described in this Agreement; and (G) the Company does not have
any stock appreciation rights or "phantom stock" plans or agreements or any
similar plan or agreement. The Company has furnished to each Buyer true and
correct copies of the Company's Certificate of Incorporation, as amended and as
in effect on the date hereof (the "Certificate of Incorporation"), and the
Company's By-laws, as amended and as in effect on the date hereof (the
"By-laws"), and the terms of all securities convertible into or exercisable or
exchangeable for Common Stock and the material rights of the holders thereof in
respect thereto except for stock options granted under any employee benefit plan
or director stock option plan of the Company approved by the board of directors
of the Company.
d. Issuance of Securities. The Preferred Shares are duly authorized and,
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upon issuance in accordance with the terms hereof, shall be (i) validly issued,
fully paid and non-assessable, (ii) free from all taxes, liens and charges with
respect to the issuance thereof and (iii) entitled to the rights and preferences
set forth in the Certificate of Designations. As of the Initial Closing, at
least 4,000,000 shares of Common Stock (subject to adjustment pursuant to the
Company's covenant set forth in Section 4(f) below) will have been duly
authorized and reserved for issuance upon conversion of the Preferred Shares.
Upon conversion or issuance in accordance with the Certificate of Designations,
the Conversion Shares and the Dividend Shares, as the case may be, will be
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof, with the holders being entitled to
all rights accorded to a holder of Common Stock. The issuance by the Company of
the Securities is exempt from registration under the 1933 Act.
e. No Conflicts. The execution, delivery and performance of the
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Transaction Documents by the Company, the performance by the Company of its
obligations under the Certificate of Designations and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without
limitation, the reservation for issuance and issuance of the Conversion Shares)
will not (i) result in a violation of the Certificate of Incorporation or the
By-laws; (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
material agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party; (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations and the rules and regulations of the Principal Market
PAGE 8
(as defined below)) applicable to the Company or any of its Subsidiaries or by
which any property or asset of the Company or any of its Subsidiaries is bound
or affected. Neither the Company nor its Subsidiaries is in violation of any
term of its Certificate of Incorporation or its By-laws or their organizational
charter or by-laws, respectively. Except as disclosed in Schedule 3(e), neither
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the Company or any of its Subsidiaries is in violation of any term of or in
default under any contract, agreement, mortgage, indebtedness, indenture,
instrument, judgment, decree or order or any statute, rule or regulation
applicable to the Company or its Subsidiaries, except where such violations and
defaults would not result, either individually or in the aggregate, in a
Material Adverse Effect. The business of the Company and its Subsidiaries is not
being conducted, and shall not be conducted, in violation of any law, ordinance
or regulation of any governmental entity, except where such violations would not
result, either individually or in the aggregate, in a Material Adverse Effect.
Except as specifically contemplated by this Agreement, as required under the
1933 Act, as required by Blue Sky filings or as required by the Nasdaq 19.99%
Rule, the Company is not required to obtain any consent, authorization or order
of, or make any filing or registration with, any court or governmental agency or
any regulatory or self-regulatory agency in order for it to execute, deliver or
perform any of its obligations under or contemplated by the Transaction
Documents or to perform its obligations under the Certificate of Designations in
accordance with the terms hereof or thereof. Except as disclosed in Schedule
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3(e), all consents, authorizations, orders, filings and registrations which the
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Company is required to obtain pursuant to the preceding sentence have been
obtained or effected on or prior to the date hereof. The Company and its
Subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing. The Company is not in violation of the listing
requirements of the Principal Market, including, without limitation, the
requirements set forth in Rule 4310(c)(25)(H)(i) of The Nasdaq Stock Market's
Marketplace Rules and has no actual knowledge of any facts which would
reasonably lead to delisting or suspension of the Common Stock by the Principal
Market in the foreseeable future.
f. SEC Documents; Financial Statements. Since December 31, 1998, the
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Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the "1934 Act") (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the "SEC Documents"). A
complete list of the Company's SEC Documents is set forth on Schedule 3(f).
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Except as disclosed on Schedule 3(f), as of the date hereof, the SEC Documents,
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as they may have been subsequently amended by filings made by the Company with
the SEC prior to the date hereof, complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents. None of the SEC
Documents, as of the date hereof and as they may have been subsequently amended
by filings made by the Company with the SEC prior to the date hereof, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except as disclosed on Schedule 3(f), as of their respective dates,
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the financial statements of the Company included in the SEC Documents complied
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto. Except as
disclosed on Schedule
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PAGE 9
3(f), such financial statements have been prepared in accordance with generally
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accepted accounting principles, consistently applied, during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto, or (ii) in the case of unaudited interim statements, to
the extent they may exclude footnotes or may be condensed or summary statements)
and fairly present in all material respects the financial position of the
Company as of the dates thereof and the results of its operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). No other information provided by or on
behalf of the Company to the Buyers which is not included in the SEC Documents,
including, without limitation, information referred to in Section 2(d), contains
any untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstance under which they are or were made, not misleading. Neither the
Company nor any of its Subsidiaries nor any of their officers, directors,
employees or agents have provided the Buyers with any material, nonpublic
information. As of the date hereof, the Company meets the requirements for use
of Form S-3 for registration of the resale of Registrable Securities (as defined
in the Registration Rights Agreement). The Company is not required to file and
will not be required to file any agreement, note, lease, mortgage, deed or other
instrument entered into prior to the date hereof and to which the Company is a
party or by which the Company is bound which has not been previously filed as an
exhibit to its reports filed with the SEC under the 1934 Act.
g. Absence of Certain Changes. Except as disclosed in Schedule 3(g) or
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as disclosed in the Company's Annual Report on Form 10-K for the Year Ended
December 31, 1999 or Quarterly Report on Form 10-Q for the period ending March
31, 2000, since December 31, 1999, there has been no change or development that
has had or could reasonably be expected to have a Material Adverse Effect. The
Company has not taken any steps, and does not currently expect to take any
steps, to seek protection pursuant to any bankruptcy law nor does the Company or
any of its Subsidiaries have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy proceedings or any actual
knowledge of any fact which would reasonably lead a creditor to do so. Except as
disclosed in Schedule 3(g) or as disclosed in the Company's Quarterly Report on
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Form 10-Q for the period ending March 31, 2000, since December 31, 1999, the
Company has not declared or paid any dividends, sold any assets, individually or
in the aggregate, in excess of $500,000 outside of the ordinary course of
business or had capital expenditures, individually or in the aggregate, in
excess of $1,000,000.
h. Absence of Litigation. There is no action, suit, proceeding, inquiry
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or investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the Company
or any of its Subsidiaries, threatened against or affecting the Company, the
Common Stock or any of the Company's Subsidiaries or any of the Company's or the
Company's Subsidiaries' officers or directors in their capacities as such,
except as expressly set forth in Schedule 3(h) or, with respect to the Company
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and its Subsidiaries, to the extent that such action or threatened action does
not set forth potential liability, claims or charges, individually or in the
aggregate, in excess of $1,000,000. Except as set forth in Schedule 3(h), to the
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knowledge of the Company none of the directors or officers of the Company have
been involved in securities related litigation during the past five years.
PAGE 10
i. Acknowledgment Regarding Buyer's Purchase of Preferred Shares. The
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Company acknowledges and agrees that each of the Buyers is acting solely in the
capacity of an arm's length purchaser with respect to the Transaction Documents
and the Certificate of Designations and the transactions contemplated hereby and
thereby. The Company further acknowledges that each Buyer is not acting as a
financial advisor or fiduciary of the Company (or in any similar capacity) with
respect to the Transaction Documents and the Certificate of Designations and the
transactions contemplated hereby and thereby and any advice given by any of the
Buyers or any of their respective representatives or agents in connection with
the Transaction Documents and the Certificate of Designations and the
transactions contemplated hereby and thereby is merely incidental to such
Buyer's purchase of the Securities. The Company further represents to each Buyer
that the Company's decision to enter into the Transaction Documents has been
based solely on the independent evaluation by the Company and its
representatives.
j. No Undisclosed Events, Liabilities, Developments or Circumstances.
-----------------------------------------------------------------
Except for the issuance of the Preferred Stock contemplated by this Agreement,
no event, liability, development or circumstance has occurred or exists, or is
contemplated to occur, with respect to the Company or its Subsidiaries or their
respective business, properties, operations or financial condition, that would
be required to be disclosed by the Company under applicable securities laws on a
registration statement on Form S-1 filed with the SEC relating to an issuance
and sale by the Company of its Common Stock and which has not been publicly
disclosed.
k. No General Solicitation. Neither the Company, nor any of its
-----------------------
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the 1933 Act) in connection with the offer or sale of the
Securities.
l. No Integrated Offering. Neither the Company, nor any of its
----------------------
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of the
issuance by the Company of any of the Securities under the 1933 Act or cause
this offering of the Securities to be integrated with prior offerings by the
Company for purposes of the 1933 Act or, except as set forth on Schedule 3(l),
-------------
any applicable stockholder approval provisions, including, without limitation,
under the rules and regulations of any exchange or automated quotation system on
which any of the securities of the Company are listed or designated, nor will
the Company or any of its Subsidiaries take any action or steps that would
require registration of the issuance by the Company of any of the Securities
under the 1933 Act or, except as set forth on Schedule 3(l), cause the offering
-------------
of the Securities to be integrated with other offerings.
m. Employee Relations. Neither the Company nor any of its Subsidiaries
------------------
is involved in any union labor dispute nor, to the knowledge of the Company or
any of its Subsidiaries, is any such dispute threatened. None of the Company's
or its Subsidiaries' employees is a member of a union which relates to such
employee's relationship with the Company, neither the Company nor any of its
Subsidiaries is a party to a collective bargaining agreement, and the Company
and its
PAGE 11
Subsidiaries believe that their relations with their employees are good.
No executive officer (as defined in Rule 501(f) of the 1933 Act) has notified
the Company that such officer intends to leave the Company or otherwise
terminate such officer's employment with the Company. No executive officer, to
the best knowledge of the Company and its Subsidiaries, is, or is now expected
to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each such executive officer does not
subject the Company or any of its Subsidiaries to any liability with respect to
any of the foregoing matters.
n. Intellectual Property Rights. To the best of the Company's knowledge,
----------------------------
the Company and its Subsidiaries own or possess adequate rights or licenses to
use all trademarks, trade names, service marks, service mark registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and other intellectual
property rights necessary to conduct their respective businesses as now
conducted, except where the failure to own or possess such rights would not
result, either individual or in the aggregate, in a Material Adverse Effect.
Except as set forth on Schedule 3(n), to the best of the Company's knowledge,
-------------
none of the Company's trademarks, trade names, service marks, service mark
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets or other
intellectual property rights have expired or terminated, or are expected to
expire or terminate within two years from the date of this Agreement, except
where such expiration or termination would not result, either individually or in
the aggregate, in a Material Adverse Effect. The Company and its Subsidiaries do
not have any knowledge of any infringement by the Company or its Subsidiaries of
trademarks, trade names, service marks, service mark registrations, service
names, patents, patent rights, copyrights, inventions, licenses, trade secrets
or other intellectual property rights of others, or of any development of
similar or identical trade secrets or technical information by others and,
except as set forth on Schedule 3(n), there is no claim, action or proceeding
-------------
being made or brought against, or to the Company's knowledge, being threatened
against, the Company or its Subsidiaries regarding its trademarks, trade names,
service marks, service mark registrations, service names, patents, patent
rights, copyrights, inventions, licenses, trade secrets, or infringement of
other intellectual property rights. The Company and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of all of their intellectual properties.
o. Title. The Company and its Subsidiaries have good and marketable
-----
title in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the Company
and its Subsidiaries, in each case free and clear of all liens, encumbrances and
defects except such as are described in Schedule 3(o) or such as do not
-------------
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and any of its
Subsidiaries. Any real property and facilities held under lease by the Company
and any of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and facilities by the
Company and its Subsidiaries.
PAGE 12
p. Insurance. The Company and each of its Subsidiaries are insured by
---------
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any such
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect, taken as a
whole.
q. Regulatory Permits. Except for Permits (as defined below) the absence
------------------
of which would not result, either individually or in the aggregate, in a
Material Adverse Effect, the Company and its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses (the "Permits"), and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such Permit.
r. Internal Accounting Controls. The Company and each of its
----------------------------
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
s. No Materially Adverse Contracts, Etc. Neither the Company nor any of
------------------------------------
its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Company's officers has or is expected in the future to have a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a
party to any contract or agreement which in the judgment of the Company's
officers has or is expected to have a Material Adverse Effect.
t. Tax Status. The Company and each of its Subsidiaries (i) has made or
----------
filed all federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes), (ii) has paid all taxes and other governmental assessments
and charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and for which the Company has made appropriate reserves for on its books, and
(iii) has set aside on its books provisions reasonably adequate for the payment
of all taxes for periods subsequent to the periods to which such returns,
reports or declarations (referred to in clause (i) above) apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the
PAGE 13
Company know of no basis for any such claim.
u. Transactions With Affiliates. Except as set forth on Schedule 3(u)
---------------------------- -------------
and in the SEC Documents filed at least five (5) days prior to the date hereof,
and other than the grant of stock options disclosed on Schedule 3(c), none of
-------------
the officers, directors or employees of the Company is presently a party to any
transaction with the Company or any of its Subsidiaries (other than for services
as employees, officers and directors), including any contract, agreement or
other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring
payments to or from any such officer, director or employee or, to the knowledge
of the Company, any corporation, partnership, trust or other entity in which any
such officer, director, or employee has a substantial interest or is an officer,
director, trustee or partner.
v. Application of Takeover Protections. The Company and its board of
-----------------------------------
directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Certificate of Incorporation or the laws of
the state of its incorporation which is or could become applicable to the Buyers
as a result of the transactions contemplated by this Agreement, including,
without limitation, the Company's issuance of the Securities and the Buyers'
ownership of the Securities.
w. Rights Agreement. The Company has not adopted a shareholder rights
----------------
plan or similar arrangement relating to accumulations of beneficial ownership of
Common Stock or a change in control of the Company.
x. No Other Agreements. The Company has not, directly or indirectly,
-------------------
made any agreements with any Buyers relating to the terms or conditions of the
transactions contemplated by the Transaction Documents except as set forth in
the Transaction Documents.
4. COVENANTS.
---------
a. Best Efforts. Each party shall use its best efforts to timely satisfy
------------
each of the conditions to be satisfied by it as provided in Sections 6 and 7 of
this Agreement.
b. Form D and Blue Sky. The Company agrees to file a Form D with respect
-------------------
to the Securities as required under Regulation D and to provide a copy thereof
to each Buyer promptly after such filing. The Company shall, on or before each
of the Closing Dates, take such action as the Company shall reasonably determine
is necessary in order to obtain an exemption for or to qualify the Securities
for, sale to the Buyers at each of the Closings pursuant to this Agreement under
applicable securities or "Blue Sky" laws of the states of the United States, and
shall provide evidence of any such action so taken to the Buyers on or prior to
each of the Closing Dates. The Company shall make all filings and reports
relating to the offer and sale of the Securities required under applicable
securities or "Blue Sky" laws of the states of the United States following each
of the Closing Dates.
PAGE 14
c. Reporting Status. Until the later of (i) the date which is one year
----------------
after the date as of which the Investors (as that term is defined in the
Registration Rights Agreement) may sell all of the Conversion Shares without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor
thereto) and (ii) the date which is one (1) year after the Maturity Date (as
defined in the Certificate of Designations) (the "Reporting Period"), the
Company shall file all reports required to be filed with the SEC pursuant to the
1934 Act, and the Company shall not terminate its status as an issuer required
to file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would otherwise permit such termination.
d. Use of Proceeds. The Company will use the proceeds from the sale of
---------------
the Preferred Shares for substantially the same purposes and in substantially
the same amounts as indicated in Schedule 4(d).
-------------
e. Financial Information. The Company agrees to send the following to
---------------------
each Investor (as that term is defined in the Registration Rights Agreement)
during the Reporting Period: (i) within two (2) days after the filing thereof
with the SEC, a copy of its Annual Reports on Form 10-K, its Quarterly Reports
on Form 10-Q, any Current Reports on Form 8-K and any registration statements
(other than on Form S-8) or amendments filed pursuant to the 1933 Act, provided
that if any such report is not filed with the SEC through EDGAR then the Company
shall deliver a copy of such report to each Investor by facsimile on the same
day it is filed with the SEC; (ii) on the same day as the release thereof,
facsimile copies of all press releases issued by the Company or any of its
Subsidiaries; and (iii) copies of any notices and other information made
available or given to the stockholders of the Company generally,
contemporaneously with the making available or giving thereof to the
stockholders.
f. Reservation of Shares. The Company shall take all action necessary to
---------------------
at all times have authorized, and reserved for the purpose of issuance, no less
than 125% of the number of shares of Common Stock needed to provide for the
issuance of the shares of Common Stock upon conversion of all outstanding
Preferred Shares (without regard to any limitations on conversions).
g. Listing. The Company shall promptly secure the listing of all of the
-------
Registrable Securities (as defined in the Registration Rights Agreement) upon
each national securities exchange and automated quotation system, if any, upon
which shares of Common Stock are then listed (subject to official notice of
issuance) and shall maintain, so long as any other shares of Common Stock shall
be so listed, such listing of all Registrable Securities from time to time
issuable under the terms of the Transaction Documents and the Certificate of
Designations. The Company shall maintain the Common Stock's authorization for
quotation on the Nasdaq National Market ("NASDAQ") or listing on The New York
Stock Exchange, Inc. ("NYSE") (as applicable, the "Principal Market"). Neither
the Company nor any of its Subsidiaries shall take any action which would be
reasonably expected to result in the delisting or suspension of the Common Stock
from the Principal Market. The Company shall pay all fees and expenses in
connection with satisfying its obligations under this Section 4(g).
PAGE 15
h. Filing of Form 8-K. On or before the second (2nd) Business Day
------------------
following the Initial Closing Date the Company shall file a Current Report on
Form 8-K with the SEC describing the terms of the transactions contemplated by
the Transaction Documents and including as exhibits to such Current Report on
Form 8-K this Agreement, the Certificate of Designations and the Registration
Rights Agreement, in the form required by the 1934 Act. On or before the first
(1st) Business Day following the Mandatory Closing Date, if any, the Company
shall file a Current Report on Form 8-K with the SEC describing the transaction
consummated on the Mandatory Closing Date.
i. Proxy Statement. The Company shall provide each stockholder entitled
---------------
to vote at the next annual meeting of stockholders of the Company (after the
annual meeting scheduled for June 19, 2000), which meeting shall occur on or
before July 31, 2001 (the "Stockholder Meeting Deadline"), a proxy statement,
which has been previously reviewed by the Buyers and a counsel of their choice,
soliciting each such stockholder's affirmative vote at such annual stockholder
meeting for approval of the Company's issuance of all of the Securities as
described in this Agreement in accordance with applicable law and the rules and
regulations of the Principal Market (such affirmative approval being referred to
herein as the "Stockholder Approval"), and the Company shall use its best
efforts to solicit its stockholders' approval of such issuance of the Securities
and to cause the Board of Directors of the Company to recommend to the
stockholders that they approve such proposal.
j. Corporate Existence. So long as a Buyer beneficially owns any
-------------------
Preferred Stock, the Company shall maintain its corporate existence and shall
not sell all or substantially all of the Company's assets, except in the event
of a merger or consolidation or sale of all or substantially all of the
Company's assets, where the surviving or successor entity in such transaction
(i) assumes the Company's obligations hereunder and under the agreements and
instruments entered into in connection herewith and (ii) is a publicly traded
corporation whose common stock is quoted on or listed for trading on Nasdaq or
NYSE.
k. Pledge of Securities. The Company acknowledges and agrees that the
--------------------
Securities may be pledged by an Investor (as defined in the Registration Rights
Agreement) in connection with a bona fide margin agreement or other loan secured
by the Securities. The pledge of Securities shall not be deemed to be a
transfer, sale or assignment of the Securities hereunder, and no Investor
effecting a pledge of Securities shall be required to provide the Company with
any notice thereof or otherwise make any delivery to the Company pursuant to
this Agreement, any other Transaction Document or the Certificate of
Designations, including without limitation, Section 2(f) of this Agreement;
provided that an Investor and its pledgee shall be required to comply with the
provisions of Section 2(f) hereof in order to effect a sale, transfer or
assignment of Securities to such pledgee. The Company hereby agrees to execute
and deliver such documentation as a pledgee of the Securities may reasonably
request in connection with a pledge of the Securities to such pledgee by an
Investor.
l. Expenses. Subject to Section 9(l) below, at the Initial Closing, the
--------
Company shall pay an expense allowance of $50,000 (of which $25,000 has
previously been paid) to HFTP Investment L.L.C. (a Buyer), which amount, less
any amount paid prior to the Initial Closing, shall be
PAGE 16
withheld by such Buyer from its Purchase Price to be paid at the Initial
Closing.
m. Good Standing. Within 10 Business Days of the date hereof, the
-------------
Company shall deliver a good standing certificate to each of the Buyers,
certifying the Company's qualification to do business and its good standing in
the State of Virginia as certified by the Secretary of State of the State of
Virginia.
5. TRANSFER AGENT INSTRUCTIONS.
---------------------------
The Company shall issue irrevocable instructions to its transfer agent
in the form attached hereto as Exhibit C (the "Irrevocable Transfer Agent
---------
Instructions"), and any subsequent transfer agent, to issue certificates,
registered in the name of each Buyer or its respective nominee(s), for the
Conversion Shares in such amounts as specified from time to time by each Buyer
to the Company upon conversion of the Preferred Shares. Prior to registration of
the Conversion Shares under the 1933 Act, all such certificates shall bear the
restrictive legend specified in Section 2(g) of this Agreement. The Company
warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 5 and stop transfer instructions to
give effect to Section 2(f) hereof (in the case of the Conversion Shares, prior
to registration of the Conversion Shares under the 1933 Act) will be given by
the Company to its transfer agent and that the Securities shall otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and the Registration Rights Agreement. If a Buyer
provides the Company with an opinion of counsel, in a generally acceptable form,
to the effect that a public sale, assignment or transfer of Securities may be
made without registration under the 1933 Act or the Buyer provides the Company
with reasonable assurances (including, if requested by the Company, delivering
such reasonable assurances to the Company's counsel in connection with such
counsel rendering an opinion on the validity of a sale by such Buyer pursuant to
Rule 144) that the Securities can be sold pursuant to Rule 144 without any
restriction as to the number of securities acquired as of a particular date that
can then be immediately sold, the Company shall permit the transfer, and, in the
case of the Conversion Shares, promptly instruct its transfer agent to issue one
or more certificates in such name and in such denominations as specified by such
Buyer and without any restrictive legend. The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to the Buyers by
vitiating the intent and purpose of the transaction contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Section 5 will be inadequate and agrees, in the event of
a breach or threatened breach by the Company of the provisions of this Section
5, that the Buyers shall be entitled, in addition to all other available
remedies, to an order and/or injunction restraining any breach and requiring
immediate issuance and transfer, without the necessity of showing economic loss
and without any bond or other security being required.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
----------------------------------------------
a. Initial Closing Date. The obligation of the Company to issue and sell
--------------------
the Initial Preferred Shares to each Buyer at the Initial Closing is subject to
the satisfaction, at or before the Initial Closing Date, of each of the
following conditions, provided that these conditions are for the Company's sole
benefit and may be waived by the Company at any time in its sole discretion by
PAGE 17
providing each Buyer with prior written notice thereof:
(i) Such Buyer shall have executed each of the Transaction Documents
to which it is a party and delivered the same to the Company.
(ii) The Certificate of Designations shall have been filed with the
Secretary of State of the State of Delaware;
(iii) Such Buyer shall have delivered to the Company the Purchase
Price (less in the case of HFTP Investment L.L.C., the amounts withheld
pursuant to Section 4(l)) for the Initial Preferred Shares being purchased
by such Buyer at the Initial Closing by wire transfer of immediately
available funds pursuant to the wire instructions provided by the Company.
(iv) The representations and warranties of such Buyer shall be true
and correct as of the date when made and as of the Initial Closing Date as
though made at that time (except for representations and warranties that
speak as of a specific date), and such Buyer shall have performed,
satisfied and complied with the covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or
complied with by such Buyer at or prior to the Initial Closing Date.
b. Mandatory Closing Date. The obligation of the Company hereunder to
----------------------
issue and sell the Mandatory Preferred Shares to each Buyer at the Mandatory
Closing is subject to the satisfaction, at or before such Mandatory Closing
Date, of each of the following conditions, provided that these conditions are
for the Company's sole benefit and may be waived by the Company at any time in
its sole discretion by providing each Buyer with prior written notice thereof:
(i) Such Buyer shall have delivered to the Company the Purchase Price
for the Mandatory Preferred Shares being purchased by such Buyer at the
Mandatory Closing by wire transfer of immediately available funds pursuant
to the wire instructions provided by the Company.
(ii) The representations and warranties of such Buyer shall be true and
correct as of the date when made and as of the Mandatory Closing Date as
though made at that time (except for representations and warranties that
speak as of a specific date), and such Buyer shall have performed,
satisfied and complied with the covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or
complied with by such Buyer at or prior to the Mandatory Closing Date.
7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
-------------------------------------------------
a. The Initial Closing. The obligation of each Buyer hereunder to
-------------------
purchase the Initial Preferred Shares from the Company at the Initial Closing is
subject to the satisfaction, at or before the Initial Closing Date, of each of
the following conditions, provided that these conditions are for each Buyer's
sole benefit and may be waived by such Buyer at any time in its sole discretion
by
PAGE 18
providing the Company with prior written notice thereof:
(i) The Company shall have executed each of the Transaction Documents
and delivered the same to such Buyer.
(ii) The Certificate of Designations shall have been filed with the
Secretary of State of the State of Delaware, and a copy thereof certified
by the Secretary of State of the State of Delaware shall have been
delivered to such Buyer.
(iii) The Common Stock (x) shall be designated for quotation or listed
on the Principal Market and (y) shall not have been suspended by the SEC or
the Principal Market from trading on the Principal Market nor shall
suspension by the SEC or the Principal Market have been threatened either
(A) in writing by the SEC or the Principal Market or (B) by falling below
the minimum listing maintenance requirements of the Principal Market; and
the Conversion Shares issuable upon conversion of the Preferred Shares
shall be listed upon the Principal Market.
(iv) The representations and warranties of the Company shall be true
and correct as of the date when made and as of the Initial Closing Date as
though made at that time (except for representations and warranties that
speak as of a specific date) and the Company shall have performed,
satisfied and complied with the covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or
complied with by the Company at or prior to the Initial Closing Date. Such
Buyer shall have received a certificate, executed by the Chief Executive
Officer of the Company, dated as of the Initial Closing Date, to the
foregoing effect and as to such other matters as may be reasonably
requested by such Buyer, including, without limitation, an update as of the
Initial Closing Date regarding the representation contained in Section 3(c)
above.
(v) Such Buyer shall have received the opinion of Hale and Dorr LLP,
dated as of the Initial Closing Date, in the form of Exhibit D, attached
---------
hereto.
(vi) The Company shall have executed and delivered to such Buyer the
Preferred Stock Certificates (in such denominations as such Buyer shall
request) for the Preferred Shares being purchased by such Buyer at the
Initial Closing.
(vii) The Board of Directors of the Company shall have adopted
resolutions consistent with Section 3(b) above and in a form reasonably
acceptable to such Buyer (the "Resolutions").
(viii) As of the Initial Closing Date, the Company shall have reserved
out of its authorized and unissued Common Stock, solely for the purpose of
effecting the conversion of the Preferred Shares, at least 4,000,000 shares
of Common Stock.
(ix) The Irrevocable Transfer Agent Instructions, in the form of
Exhibit C attached
---------
PAGE 19
hereto, shall have been delivered to and acknowledged in writing by the
Company's transfer agent.
(x) The Company shall have delivered to such Buyer a certificate
evidencing the incorporation and good standing of the Company and each
Subsidiary in such entity's state of incorporation or organization issued
by the Secretary of State of such state of incorporation or organization as
of a date within ten days of the Initial Closing Date.
(xi) The Company shall have delivered to such Buyer a certified copy
of the Certificate of Incorporation as certified by the Secretary of State
of the State of Delaware as of a date within ten days of the Initial
Closing Date.
(xii) The Company shall have delivered to such Buyer a secretary's
certificate, dated as of the Initial Closing Date, certifying as to (A) the
Resolutions, (B) the Certificate of Incorporation and (C) the By-laws, each
as in effect at the Initial Closing.
(xiii) The Company shall have made all filings under all applicable
federal and state securities laws necessary to consummate the issuance of
the Securities pursuant to this Agreement in compliance with such laws.
(xiv) The Company shall have delivered to such Buyer a letter from the
Company's transfer agent certifying the number of shares of Common Stock
outstanding as of a date within five days of the Initial Closing Date.
(xv) The Company shall have received the approval of the requisite
number of stockholders to amend the Company's Certificate of Incorporation
to increase the authorized number of shares of Common Stock from
100,000,000 to 330,000,000 and shall have filed an amendment to its
Certificate of Incorporation reflecting such increase.
(xvi) The Company shall have delivered to the Buyers such other
documents relating to the transactions contemplated by the Transaction
Documents as the Buyers or their counsel may reasonably request.
b. Mandatory Closing Date. The obligation of each Buyer hereunder to
----------------------
purchase the Mandatory Preferred Shares from the Company at the Mandatory
Closing is subject to the satisfaction, at or before the Mandatory Closing Date,
of each of the following conditions, provided that these conditions are for each
Buyer's sole benefit and may be waived by such Buyer at any time in its sole
discretion:
(i) The Company shall have complied with and satisfied all of the
requirements of Section 1(c).
(ii) The Certificate of Designations, shall be in full force and
effect and shall not have been amended since the Initial Closing Date, and
a copy thereof certified by the
PAGE 20
Secretary of State of the State of Delaware shall have been delivered to
such Buyer.
(iii) The Common Stock (x) shall be designated for quotation or listed
on the Principal Market and (y) shall not have been suspended by the SEC or
the Principal Market from trading on or delisted from the Principal Market
nor shall delisting or suspension by such Principal Market have been
threatened either (A) in writing by the SEC or the Principal Market or (B)
by falling below the minimum listing maintenance requirements of the
Principal Market; and all of the Conversion Shares issuable upon conversion
of the Mandatory Preferred Shares shall be listed upon the Principal
Market.
(iv) The representations and warranties of the Company shall be true
and correct as of the date when made and as of the Mandatory Closing Date
as though made at that time (except for representations and warranties that
speak as of a specific date) and the Company shall have performed,
satisfied and complied with the covenants, agreements and conditions
required by the Transaction Documents or the Certificate of Designations to
be performed, satisfied or complied with by the Company at or prior to the
Mandatory Closing Date. Such Buyer shall have received a certificate,
executed by the Chief Executive Officer of the Company, dated as of the
Mandatory Closing Date, to the foregoing effect and as to such other
matters as may be reasonably requested by such Buyer including, without
limitation, an update as of the Mandatory Closing Date regarding the
representation contained in Section 3(c) above.
(v) Such Buyer shall have received the opinion of Hale and Dorr, LLP
dated as of the Mandatory Closing Date, in the form of Exhibit D attached
---------
hereto, with such changes as are reasonably acceptable to such Buyer.
(vi) The Company shall have executed and delivered to such Buyer the
Preferred Stock Certificates (in such denominations as such Buyer shall
request) for the Mandatory Preferred Shares being purchased by such Buyer
at the Mandatory Closing.
(vii) The Board of Directors of the Company shall have adopted, and
shall not have amended, the Resolutions.
(viii) As of the Mandatory Closing Date, the Company shall have
reserved out of its authorized and unissued Common Stock, solely for the
purpose of effecting the conversion of the Preferred Shares, a number of
shares of Common Stock equal to at least 125% of the number of shares of
Common Stock which would be issuable upon conversion in full of the then
outstanding Preferred Shares and the Mandatory Preferred Shares (without
regard to any limitations on conversions).
(ix) The Irrevocable Transfer Agent Instructions shall remain in
effect as of the Mandatory Closing Date and the Company shall cause its
Transfer Agent to deliver a letter to the Buyers to that effect.
(x) The Company shall have delivered to such Buyer a certificate
evidencing the
PAGE 21
incorporation and good standing of the Company and each Subsidiary in the
state of such entity's state of incorporation or organization issued by the
Secretary of State of such state of incorporation or organization as of a
date within ten days of the Mandatory Closing Date.
(xi) The Company shall have delivered to such Buyer a certified copy
of its Certificate of Incorporation as certified by the Secretary of State
of the State of Delaware within ten days of the Mandatory Closing Date.
(xii) The Company shall have delivered to such Buyer a secretary's
certificate, dated as of the Mandatory Closing Date, certifying as to (A)
the Resolutions, (B) the Certificate of Incorporation and (C) the Bylaws,
each as in effect at the Mandatory Closing.
(xiii) The Company shall have delivered to such Buyer a letter from
the Company's transfer agent certifying the number of shares of Common
Stock outstanding as of a date within five days of the Mandatory Closing
Date.
(xiv) The Company shall have made all filings under all applicable
federal and state securities laws necessary to consummate the issuance of
the Securities pursuant to this Agreement in compliance with such laws.
(xv) The Conversion Price on the date immediately following the last
date of the Pricing Period was greater than $125.
(xiv) The Company shall have delivered to such Buyer such other
documents relating to the transactions contemplated by this Agreement as
such Buyer or its counsel may reasonably request.
8. INDEMNIFICATION. In consideration of each Buyer's execution and delivery
---------------
of the Transaction Documents and acquiring the Securities thereunder and in
addition to all of the Company's other obligations under the Transaction
Documents and the Certificate of Designations, the Company shall defend,
protect, indemnify and hold harmless each Buyer and each other holder of the
Securities and all of their stockholders, officers, directors, employees and
direct or indirect investors and any of the foregoing persons' agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
"Indemnitees") from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby,
(c) any cause of action, suit or claim brought or made against such Indemnitee
(other than a cause of action, suit or claim which is
PAGE 22
(x) brought or made by the Company and (y) is not a shareholder derivative suit)
and arising out of or resulting from (i) the execution, delivery, performance or
enforcement of the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (ii) any transaction financed or to be
financed in whole or in part, directly or indirectly, with the proceeds of the
issuance of the Securities or (iii) the status of such Buyer or holder of the
Securities as an investor in the Company. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law. Except as
otherwise set forth herein, the mechanics and procedures with respect to the
rights and obligations under this Section 8 shall be the same as those set forth
in Sections 6(a) and (d) of the Registration Rights Agreement, including,
without limitation, those procedures with respect to the settlement of claims
and the Company's rights to assume the defense of claims.
9. MISCELLANEOUS.
-------------
a. Governing Law; Jurisdiction; Jury Trial. All questions concerning the
---------------------------------------
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of New York. Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
b. Counterparts. This Agreement may be executed in two or more identical
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party; provided that a facsimile signature shall be
considered due execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original, not a facsimile
signature.
c. Headings. The headings of this Agreement are for convenience of
--------
reference and shall not form part of, or affect the interpretation of, this
Agreement.
PAGE 23
d. Severability. If any provision of this Agreement shall be invalid or
------------
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement supersedes all other
----------------------------
prior oral or written agreements between each Buyer, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be amended or waived other than by an instrument in writing signed
by the Company and the holders of at least two-thirds (2/3)(b) of the Initial
Preferred Shares on the Initial Closing Date or, if prior to the Initial Closing
Date, the Buyers listed on the Schedule of Buyers as being obligated to purchase
at least two-thirds (2/3)(b) of the Initial Preferred Shares. No such amendment
shall be effective to the extent that it applies to less than all of the holders
of the Preferred Shares then outstanding. No consideration shall be offered or
paid to any person to amend or consent to a waiver or modification of any
provision of any of the Transaction Documents or the Certificate of Designations
unless the same consideration also is offered to all of the parties to the
Transaction Documents or holders of Preferred Shares, as the case may be.
f. Notices. Any notices, consents, waivers or other communications
-------
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) Business Day after deposit
with a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:
If to the Company:
MicroStrategy Incorporated
8000 Towers Crescent Drive
Vienna, Virginia 22182
Telephone: (703) 848-8600
Facsimile: (703) 847-4837
Attention: Mark S. Lynch, Chief Financial Officer
With a copy to:
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
PAGE 24
Telephone: (617) 526-6000
Facsimile: (617) 526-5000
Attention: Thomas S. Ward, Esq.
If to the Transfer Agent:
American Stock Transfer & Trust Co.
40 Wall Street, 46th Floor
New York, NY 10005
Telephone: (718) 921-8360
Facsimile: (718) 921-8310
Attention: Karen Lazar
If to a Buyer, to it at the address and facsimile number set forth on
the Schedule of Buyers, with copies to such Buyer's representatives as set forth
on the Schedule of Buyers, or at such other address and/or facsimile number
and/or to the attention of such other person as the recipient party has
specified by written notice given to each other party five days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a nationally recognized overnight
delivery service shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.
g. Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties and their respective successors and assigns,
including any purchasers of the Preferred Shares. The Company shall not assign
this Agreement or any rights or obligations hereunder without the prior written
consent of the holders of at least two-thirds (2/3) of the Preferred Shares then
outstanding, including by merger or consolidation, except pursuant to a Change
of Control (as defined in Section 4(b) of the Certificate of Designations) with
respect to which the Company is in compliance with Section 4 of the Certificate
of Designations and Section 4(j) of this Agreement. A Buyer may assign some or
all of its rights hereunder without the consent of the Company, provided,
however, that the transferee has agreed in writing to be bound by the applicable
provisions of this Agreement and the Company has consented to such assignment
and assumption, which consent shall not be unreasonably withheld.
Notwithstanding anything to the contrary contained in the Transaction Documents,
the Buyers shall be entitled to pledge the Securities in connection with a bona
fide margin account or other loan secured by the Securities.
h. No Third Party Beneficiaries. This Agreement is intended for the
----------------------------
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
i. Survival. Unless this Agreement is terminated under Section 9(l), the
--------
representations and warranties of the Company and the Buyers contained in
Sections 2 and 3, the
PAGE 25
agreements and covenants set forth in Sections 4, 5 and 9, and the
indemnification provisions set forth in Section 8, shall survive the Closings.
Each Buyer shall be responsible only for its own representations, warranties,
agreements and covenants hereunder.
j. Publicity. The Company and each Buyer shall have the right to approve
---------
before issuance any press releases or any other public statements with respect
to the transactions contemplated hereby; provided, however, that the Company
shall be entitled, without the prior approval of any Buyer, to make any press
release or other public disclosure with respect to such transactions as is
required by applicable law and regulations (although each Buyer shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release and shall be provided with a copy
thereof).
k. Further Assurances. Each party shall do and perform, or cause to be
------------------
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
l. Termination. In the event that the Initial Closing shall not have
-----------
occurred with respect to a Buyer on or before five (5) Business Days from the
date hereof due to the Company's or such Buyer's failure to satisfy the
conditions set forth in Sections 6(a) and 7(a) above (and the nonbreaching
party's failure to waive such unsatisfied condition(s)), the nonbreaching party
shall have the option to terminate this Agreement with respect to such breaching
party at the close of business on such date without liability of any party to
any other party; provided, however, that if this Agreement is terminated
pursuant to this Section 9(l), the Company shall remain obligated to reimburse
any nonbreaching Buyer for the expenses described in Section 4(l) above.
m. Placement Agent. The Company acknowledges that it has not engaged a
---------------
placement agent in connection with the sale of the Preferred Shares, however the
Company has engaged Chase H&Q Securities Corp. and Friedman, Billings & Ramsey,
Inc. as financial advisors in connection with the sale of the Preferred Shares.
The Company shall be responsible for the payment of any placement agent's fees,
financial advisory fees, or brokers' commissions relating to or arising out of
the transactions contemplated hereby. The Company shall pay, and hold each Buyer
harmless against, any liability, loss or expense (including, without limitation,
attorney's fees and out-of-pocket expenses) arising in connection with any such
claim.
n. No Strict Construction. The language used in this Agreement will be
----------------------
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.
o. Remedies. Each Buyer and each holder of the Securities shall have all
--------
rights and remedies set forth in the Transaction Documents and the Certificate
of Designations and all rights and remedies which such holders have been granted
at any time under any other agreement or contract and all of the rights which
such holders have under any law. Any person having any
PAGE 26
rights under any provision of this Agreement shall be entitled to enforce such
rights specifically (without posting a bond or other security), to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law.
p. Payment Set Aside. To the extent that the Company makes a payment or
-----------------
payments to any Buyer hereunder or pursuant to the Registration Rights
Agreement, the Certificate of Designations or the Buyers enforce or exercise
their rights hereunder or thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
* * * * * *
PAGE 27
IN WITNESS WHEREOF, the Buyers and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.
COMPANY: BUYERS:
MICROSTRATEGY INCORPORATED HFTP INVESTMENT L.L.C.
By: Promethean Asset Management, L.L.C.
Its: Investment Manager
By: /s/ Michael J. Saylor
----------------------------
Name: Michael J. Saylor By: /s/ James S. O'Brien, Jr.
Title:President and CEO -------------------------------
Name: James S. O'Brien, Jr.
Title:Managing Member
LEONARDO, L.P.
By: Angelo, Gordon & Co., L.P.
Its: General Partner
By: /s/ Michael L. Gordon
--------------------------------
Name: Michael L. Gordon
Title: Chief Operating Officer
FISHER CAPITAL LTD.
By: /s/ Daniel J. Hopkins
--------------------------------
Name: Daniel J. Hopkins
Its: Authorized Signatory
WINGATE CAPITAL LTD.
By: /s/ Daniel J. Hopkins
-------------------------------
Name: Daniel J. Hopkins
Its: Authorized Signatory
PAGE 28
SCHEDULE OF BUYERS
Number
of
Investor Address Preferred Investor's Representatives' Address
Investor Name and Facsimile Number Shares and Facsimile Number
- ---------------------- --------------------------------------- --------- ------------------------------------
HFTP Investment L.L.C. c/o Promethean Asset Management, L.L.C. 2,000 Promethean Investment Group, L.L.C.
750 Lexington Avenue, 22nd Floor 750 Lexington Ave., 22nd Floor
New York, NY 10022 New York, NY 10022
Attn: David M. Kittay Attn: David M. Kittay
John Floegel John Floegel
Telephone: (212) 702-5200 Telephone: (212) 702-5200
Facsimile: (212) 758-9334 Facsimile: (212) 758-9334
Residence: New York
Katten Muchin Zavis
525 W. Monroe, Suite 1600
Chicago, Illinois 60661-3693
Attn: Robert J. Brantman, Esq.
Telephone: (312) 902-5200
Facsimile: (312) 902-1061
Leonardo, L.P. c/o Angelo, Gordon & Co., L.P. 4,500 Angelo, Gordon & Co., L.P.
245 Park Avenue - 26th Floor 245 Park Avenue - 26th Floor
New York, New York 10167 New York, New York 10167
Attention: Ari Storch Attention: Ari Storch
Adam J. Chill Adam J. Chill
Facsimile: (212) 867-6449 Facsimile: (212) 867-6449
Telephone: (212) 692-2035 Telephone: (212) 692-2035
Residence: Cayman Islands
Fisher Capital Ltd. c/o Citadel Investment Group, L.L.C. 4,080 Katten Muchin Zavis
225 West Washington Street 525 W. Monroe Street
Chicago, Illinois 60606 Chicago, Illinois 60661-3693
Attn: Daniel J. Hopkins Attn: Robert J. Brantman, Esq.
Kenneth A. Simpler Telephone: (312) 902-5200
Telephone: (312) 696-2100 Facsimile: (312) 902-1061
Facsimile: (312) 338-0780
Residence: Cayman Islands
Wingate Capital Ltd. c/o Citadel Investment Group, L.L.C. 1,920 Katten Muchin Zavis
225 West Washington Street 525 W. Monroe Street
Chicago, Illinois 60606 Chicago, Illinois 60661-3693
Attn: Daniel J. Hopkins Attn: Robert J. Brantman, Esq.
Kenneth A. Simpler Telephone: (312) 902-5200
Telephone: (312) 696-2100 Facsimile: (312) 902-1061
Facsimile: (312) 338-0780
Residence: Cayman Islands
PAGE 29
SCHEDULES
---------
Schedule 3(a) - Subsidiaries
Schedule 3(c) - Capitalization
Schedule 3(e) - Conflicts
Schedule 3(f) - SEC Documents
Schedule 3(g) - Material Changes
Schedule 3(h) - Litigation
Schedule 3(l) - Integration
Schedule 3(n) - Intellectual Property
Schedule 3(o) - Liens
Schedule 3(u) - Transactions with Affiliates
Schedule 4(d) - Use of Proceeds
EXHIBITS
--------
Exhibit A - Form of Certificate of Designations
Exhibit B - Form of Registration Rights Agreement
Exhibit C - Form of Irrevocable Transfer Agent Instructions
Exhibit D - Form of Company Counsel Opinion