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EXHIBIT 4.3
BUILDNET, INC.
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SERIES C INVESTOR RIGHTS AGREEMENT
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October 29, 1999
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BUILDNET, INC.
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SERIES C INVESTOR RIGHTS AGREEMENT
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Table of Contents
Page
SECTION 1. RESTRICTIONS ON TRANSFER........................................................................1
1.1 RESTRICTIVE LEGEND.......................................................................................1
SECTION 2. REGISTRATION RIGHTS.............................................................................2
2.1 CERTAIN DEFINITIONS......................................................................................2
2.2 DEMAND REGISTRATION......................................................................................3
2.2(a) Demand for Registration.............................................................................3
2.2(b) Underwriting........................................................................................4
2.3 PIGGYBACK REGISTRATION...................................................................................5
2.3(a) Company Registration................................................................................5
2.3(b) Underwriting........................................................................................5
2.3(c) Right to Terminate Registration.....................................................................6
2.4 EXPENSES OF REGISTRATION.................................................................................6
2.5 OBLIGATIONS OF THE COMPANY...............................................................................7
2.6 INDEMNIFICATION..........................................................................................9
2.7 INFORMATION BY HOLDER...................................................................................12
2.8 TRANSFER OF REGISTRATION RIGHTS.........................................................................12
2.9 FORM S-3................................................................................................12
2.10 DELAY OF REGISTRATION.................................................................................13
2.11 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS.........................................................13
2.12 RULE 144 REPORTING....................................................................................13
2.13 "MARKET STAND-OFF" AGREEMENT..........................................................................14
2.14 AMENDMENT OF REGISTRATION RIGHTS......................................................................14
2.15 AIRCRAFT CARRIER RELEASE..............................................................................14
2.16 TERMINATION OF REGISTRATION RIGHTS....................................................................15
SECTION 3. RIGHTS OF FIRST REFUSAL........................................................................15
3.1 PRO RATA RIGHT..........................................................................................15
3.2 NEW SECURITIES..........................................................................................15
3.3 REQUIRED NOTICES........................................................................................15
3.4 COMPANY'S RIGHT TO SELL.................................................................................16
3.5 EXPIRATION OF RIGHT.....................................................................................16
3.6 ASSIGNMENT..............................................................................................16
SECTION 4. COMPANY COVENANTS..............................................................................16
4.1 AFFIRMATIVE COVENANTS...................................................................................16
4.1(a) Financial Statements and Information...............................................................16
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4.1(d) Prompt Payment of Taxes............................................................................18
4.1(f) Maintenance of Insurance...........................................................................18
4.1(h) Compliance with Applicable Laws....................................................................18
4.1(i) Key Man Insurance..................................................................................18
4.2 NEGATIVE COVENANTS......................................................................................18
4.2(e) Dividends..........................................................................................19
4.2(f) Merger; Change in Control; Acquisition of Assets...................................................19
4.2(i) Related Party Transactions.........................................................................19
4.4 EXPIRATION OF COVENANTS.................................................................................19
SECTION 5. MISCELLANEOUS..................................................................................20
5.1 GOVERNING LAW...........................................................................................20
5.2 JURISDICTION............................................................................................20
5.3 WAIVER OF JURY TRIAL....................................................................................20
5.4 SUCCESSORS AND ASSIGNS..................................................................................20
5.5 ENTIRE AGREEMENT........................................................................................20
5.6 SEVERABILITY............................................................................................20
5.7 AMENDMENT AND WAIVER....................................................................................20
5.8 DELAYS OR OMISSIONS.....................................................................................21
5.9 NOTICES, ETC............................................................................................21
5.10 TITLES AND SUBTITLES..................................................................................22
5.11 COUNTERPARTS..........................................................................................22
EXHIBITS
A Schedule of Investors
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BUILDNET, INC.
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SERIES C INVESTOR RIGHTS AGREEMENT
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This Series C Investor Rights Agreement (the "Agreement") is entered
into as of October 29, 1999, by and among Buildnet, Inc., a North Carolina
corporation (the "Company"), with its principal office at 4813 Emperor Blvd.,
Suite 130, Durham, NC, 27703, and the holders of the Company's Series C
Preferred Stock (the "Series C Stock") as listed on Exhibit A attached hereto.
The holders of Series C Stock are collectively referred to herein as the
"Investors" and each individually as an "Investor."
WHEREAS, in connection with the issuance and sale of Series C Stock to
the Series C Investors pursuant to that certain Series C Preferred Stock
Purchase Agreement, dated as of the date hereof, by and among the Company and
the Investors (the "Series C Agreement") the Company desires to provide the
Investors certain rights with respect to registration of the shares of stock
held by them and certain other rights with respect to such shares as an
inducement to the Investors to purchase shares of the Series C Stock;
NOW, THEREFORE, in consideration of the mutual agreements, covenants
and conditions contained herein, the Company and each of the Investors hereby
agree as follows.
Section 1.
RESTRICTIONS ON TRANSFER
1.1 Restrictive Legend. Each certificate representing (a) the Series C
Stock, (b) the Company's Common Stock issued upon conversion of the Series C
Stock, and (c) any other securities issued in respect of the Series C Stock or
Common Stock issued upon conversion of the Series C Stock or upon stock split,
stock dividend, recapitalization, merger, consolidation or similar event, shall
(unless otherwise permitted by the provisions of Section 1.2 below) be stamped
or otherwise imprinted with a legend in substantially the following form (in
addition to any legend required under applicable state securities laws).
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD, MORTGAGED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS, OR THE AVAILABILITY
OF AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF THE
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SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES
LAWS. COPIES OF THE STOCK PURCHASE AGREEMENT, INVESTOR RIGHTS AGREEMENT
AND BYLAWS, AS AMENDED, PROVIDING FOR RESTRICTIONS ON TRANSFER OF THESE
SECURITIES MAY BE OBTAINED UPON WRITTEN REQUEST BY THE HOLDER OF RECORD
OF THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.
Each Holder (as defined below) consents to the Company making a
notation on its records and giving instructions to any transfer agent of the
Series C Stock or the Common Stock in order to implement the restrictions on
transfer established in this Section 1. The requirement that the above
securities legend be placed upon certificates evidencing shares of Series C
Stock or Common Stock shall cease and terminate upon the earliest of the
following events: (i) when such shares are transferred in an underwritten public
offering, (ii) when such shares are transferred pursuant to Rule 144 under the
Securities Act or (iii) when such shares are transferred in any other
transaction if the seller delivers to the Company an opinion of its counsel,
which counsel and opinion shall be reasonably satisfactory to the Company, to
the effect that such legend is no longer necessary in order to protect the
Company against a violation by it of the Securities Act upon any sale or other
disposition of such shares without registration thereunder. Upon the
consummation of any event requiring the removal of a legend hereunder, the
Company, upon the surrender of certificates containing such legend, shall, at
its own expense, deliver to the holder of any such shares as to which the
requirement for such legend shall have terminated, one or more new certificates
evidencing such shares not bearing such legend.
Section 2.
REGISTRATION RIGHTS
The Company hereby grants to each of the Holders (as defined below) the
registration rights set forth in this Section 2, with respect to the Registrable
Securities (as defined below) owned by such Holders. The Company and the Holders
agree that the registration rights provided herein set forth the sole and entire
agreement, and supersede any prior agreement, between the Company and the
Holders with respect to registration rights for the Company's securities.
2.1 Certain Definitions. As used in this Section 2:
(a) The term "Affiliate" means, with respect to any individual,
partnership or entity, any individual, partnership or entity that directly or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, such individual, partnership or entity.
(b) The terms "register," "registered" and "registration" refer to
a registration effected by filing with the SEC a registration statement (the
"Registration Statement") in
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compliance with the 1933 Act, and the declaration or ordering by the SEC of the
effectiveness of such Registration Statement.
(c) The term "Registrable Securities" means (i) shares of Common
Stock of the Company issued or issuable upon conversion of the shares of Series
C Stock held by Investors as set forth on Exhibit A or any transferee in a
Permitted Transfer (as defined in Section 2.8 below), and (ii) any shares of
Common Stock issued as (or issuable upon the conversion or exercise of any
warrant, right or other security that is issued as) a dividend or other
distribution with respect to, or in exchange or in replacement of, such
Registrable Securities; provided, however, that shares of Common Stock or other
securities shall only be treated as Registrable Securities if and so long as (A)
they have not been sold to or through a broker or dealer or underwriter in a
public distribution or a public securities transaction, (B) they have not been
sold in a transaction exempt from the registration and prospectus delivery
requirements of the 1933 Act under Section 4(1) thereof so that all transfer
restrictions and restrictive legends with respect thereto are removed upon the
consummation of such sale, and (C) the registration rights associated with such
securities have not been terminated pursuant to Section 2.16 hereof.
(d) The term "Holder" (collectively, "Holders") means any Investor
(and any transferee as permitted by Section 2.8 hereof) holding Registrable
Securities, securities exercisable or convertible into Registrable Securities or
securities exercisable for securities convertible into Registrable Securities.
(e) The term "Initiating Holders" means any Investor(s) holding at
least fifteen percent (15%) of the Registrable Securities then held by all
Investors and not registered at the time of any request for registration made
pursuant to Section 2.2 of this Agreement.
2.2 Demand Registration.
(a) Demand for Registration. If the Company shall receive from
Initiating Holders a written demand that the Company effect any registration (a
"Demand Registration") of the Registrable Securities (other than a registration
on Form S-3 or any related form of registration statement, such a request being
provided for under Section 2.9 hereof) having an anticipated net aggregate
offering price (after deduction of underwriter commissions and offering
expenses) of at least $5,000,000, the Company will:
(i) promptly (but in any event within ten (10) days) give
written notice of the proposed registration to all other Holders; and
(ii) use its best efforts to effect such registration as soon
as practicable and as will permit or facilitate the sale and distribution of all
or such portion of such Initiating Holders' Registrable Securities as are
specified in such demand, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such demand as are specified in a
written demand received by the Company within fifteen (15) days after such
written notice is given, provided that the Company shall not be obligated to
take any action to effect any such registration, pursuant to this Section 2.2:
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(A) with respect to any demand for registration by
Initiating Holders, after the Company has effected four (4) such registrations
initiated by Initiating Holders pursuant to this Section 2.2; provided, however,
that a registration requested pursuant to Section 2.2 shall not be deemed to be
a demand for registration by Initiating Holders unless a Registration Statement
covering at least eighty percent (80%) of the Registrable Securities specified
in the notices from the Initiating Holders has become effective and all shares
registered thereunder have been sold;
(B) if the Company shall furnish to such Holders a
certificate signed by the President of the Company, stating that in the good
faith judgment of the Board of Directors of the Company it would be seriously
detrimental to the Company and its shareholders for such Registration Statement
to be filed at the date filing would be required, in which case the Company
shall have an additional period of not more than sixty (60) days within which to
file such Registration Statement; provided, however, that the Company shall not
use this right more than once in any 12-month period; or
(C) prior to the earlier of (a) the date three (3) years
from the date of this Agreement or (b) the date the initial, firmly underwritten
public offering of the Company's securities is declared effective by the SEC.
(b) Underwriting. If the Initiating Holders intend to distribute
the Registrable Securities covered by their demand by means of an underwriting,
they shall so advise the Company as part of their demand made pursuant to this
Section 2.2; and the Company shall include such information in the written
notice referred to in Section 2.2(a)(i). In such event, the right of any Holder
to registration pursuant to this Section 2.2 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein.
The Company shall, together with all holders of capital stock of the
Company proposing to distribute their securities through such underwriting,
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected by a majority-in-interest of the Initiating Holders and
reasonably satisfactory to the Company. Notwithstanding any other provision of
this Section 2.2, if the underwriter shall advise the Company that marketing
factors (including, without limitation, an adverse effect on the per share
offering price) require a limitation of the number of shares to be underwritten,
then the Company shall so advise all Holders of Registrable Securities that have
requested to participate in such offering, and the number of shares of
Registrable Securities that may be included in the registration and underwriting
shall be allocated pro rata among such Holders thereof in proportion, as nearly
as practicable, to the respective amounts of Registrable Securities held by such
Holders at the time of filing the Registration Statement; provided, however,
that the number of shares of Registrable Securities to be included in such
underwriting shall not be reduced unless all other securities are first entirely
excluded from the underwriting. No Registrable Securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be
included in such registration.
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If any Holder disapproves of the terms of the underwriting, such Holder
may elect to withdraw therefrom by written notice to the Company, the
underwriter and the Initiating Holders. The Registrable Securities so withdrawn
shall also be withdrawn from registration.
If the underwriter has not limited the number of Registrable Securities
to be underwritten, the Company may include securities for its own account (or
for the account of other shareholders) in such registration if the underwriter
so agrees and if the number of Registrable Securities would not thereby be
limited.
2.3 Piggyback Registration.
(a) Company Registration. If at any time or from time to time the
Company shall determine to register any of its securities, either for its own
account or for the account of security holders, other than a registration
relating solely to employee benefit plans, a registration on Form S-4 relating
solely to an SEC Rule 145 transaction or a registration pursuant to Section 2.2
or 2.9 hereof, the Company will:
(i) promptly (but in any event within ten (10) days) give to
each Holder written notice thereof; and
(ii) include in such registration (and any related
qualification under state securities laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made within fifteen (15) days after receipt of such
written notice from the Company, by any Holder or Holders, except as set forth
in Section 2.3(b) below.
Such Registrable Securities shall only be included to the extent that
inclusion will not diminish the number of securities included by the Company or
by other holders of securities exercising a Demand Registration.
(b) Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 2.3(a)(i). In such event the right of any Holder to
registration pursuant to this Section 2.3 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein.
All Holders proposing to distribute their Registrable Securities
through such underwriting shall, together with the Company and the other parties
distributing their securities through such underwriting, enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of this Section 2.3, if the underwriter determines that marketing
factors require a limitation of the number of shares to be underwritten, the
underwriter may limit the number of Registrable Securities to be included in the
registration and underwriting; provided, however, that the amount of Registrable
Securities and other securities that have contractual rights with respect to
registration similar to those provided in this Section 2.3 shall not be reduced
below
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twenty-five percent (25%) of the total number of securities in such offering,
but in the case of the Company's initial public offering, the underwriter may
exclude Registrable Securities entirely from such registration and underwriting
subject to the terms of this Section 2.3; provided, further, that no other
stockholders' securities are included including, without limitation, those of
directors, officers and employees of the Company. The Company shall so advise
all holders of the Company's securities that would otherwise be registered and
underwritten pursuant hereto, and the number of shares of such securities,
including Registrable Securities, that may be included in the registration and
underwriting shall be allocated in the following manner: shares, other than
Registrable Securities and other securities that have contractual rights with
respect to registration similar to those provided for in this Section 2.3
(provided that the holders of Registrable Securities shall have consented to the
granting of such registration rights pursuant to Section 2.11 hereof), requested
to be included in such registration by shareholders shall be excluded, and if a
limitation on the number of shares is still required, the number of Registrable
Securities and other securities that have contractual rights with respect to
registration that may be included shall be allocated among the holders thereof
in proportion, as nearly as practicable, to the amounts of Registrable
Securities and such other securities held by each such holder at the time of
filing the Registration Statement, provided that no such limitation shall
diminish the number of securities to be included by any holder exercising
contractual rights with respect to a Demand Registration (whether pursuant to
this or any other agreement). For purposes of any such underwriter cutback, all
Registrable Securities and other securities held by any holder that is a
partnership or corporation, shall also include any Registrable Securities held
by the partners, retired partners, shareholders or affiliated entities of such
holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons, and
such holder and other persons shall be deemed to be a single "selling holder,"
and any pro rata reduction with respect to such "selling holder" shall be based
upon the aggregate amount of shares carrying registration rights owned by all
entities and individuals included in such "selling holder," as defined in this
sentence. No securities excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such registration.
Nothing in this Section 2.3(b) is intended to diminish the number of securities
to be included by the Company or by any holder exercising contractual rights
with respect to a Demand Registration (whether pursuant to this or any other
agreement) in the underwriting.
If any Holder disapproves of the terms of the underwriting, it may
elect to withdraw therefrom by written notice to the Company and the
underwriter. The Registrable Securities so withdrawn shall also be withdrawn
from registration.
(c) Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 2.3 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration.
2.4 Expenses of Registration. All Registration Expenses (as defined
below) incurred in connection with all registrations effected pursuant to
Sections 2.2, 2.3 and 2.9, shall be borne by the Company; provided, however,
that the Company shall not be required to pay stock transfer taxes or
underwriters' discounts or selling commissions relating to Registrable
Securities. "Registration Expenses" means any and all expenses incident to
performance of or
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compliance with this Agreement, including without limitation, (i) all
registration and filing fees of the Commission, a stock exchange or the National
Association of Securities Dealers, Inc., (ii) all fees and expenses of complying
with securities or blue sky laws (including fees and disbursements of counsel
for the underwriters in connection with blue sky qualifications of the
Registrable Securities) unless paid by the underwriters, (iii) all printing,
messenger and delivery expenses, (iv) all fees and expenses incurred in
connection with the listing of the Registrable Securities on any securities
exchange, (v) the fees and disbursements of counsel for the Company and of its
independent public accountants, including the expenses of any special audits
and/or "cold comfort" letters required by or incident to such performance and
compliance (vi) the reasonable fees and disbursements of one counsel selected by
the Holders of a majority of the Registrable Securities being registered to
represent all Holders of the Registrable Securities being registered in
connection with each such registration, (vii) any fees and disbursements of
underwriters customarily paid by the issuers or sellers of securities, including
fees and disbursements of underwriters customarily paid by the issuers or
sellers of securities, including fees and disbursements of counsel for the
underwriters, but excluding underwriting discounts and commissions, (viii)
liability insurance if the Company so desires or if the underwriters so require,
and (ix) the reasonable fees and expenses of any special experts retained by the
Company in connection with the requested registration. Notwithstanding anything
to the contrary above, the Company shall not be required to pay for any
Registration Expenses of any registration proceeding under Section 2.2 and the
Holders shall retain their rights pursuant to Section 2.2 if the registration
request is subsequently withdrawn at the request of the Holders of a majority of
the Registrable Securities to have been registered, provided, however, that in
the event that Holders holding at least a majority of the Registrable Securities
held by the Investors agree to forfeit their right to one demand registration
pursuant to Section 2.2 (in which event such right shall be forfeited by all the
Investors), then the Company shall be required to pay the expenses of such
withdrawn registration. In the absence of such an agreement to forfeit, the
Holders of Registrable Securities to have been registered shall bear all such
expenses pro rata on the basis of the Registrable Securities to have been
registered. Notwithstanding the preceding sentence, however, if at the time of
the withdrawal, the Holders have learned of a materially adverse change in the
condition, business or prospects of the Company from that known to the Holders
at the time of their request, then the Holders shall not be required to pay any
of said expenses and shall retain their rights pursuant to Section 2.2.
2.5 Obligations of the Company. Whenever required under this Section 2
to effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) use its best efforts to prepare and file, within forty-five
(45) days after the period within which a request for registration may be given
to the Company, with the SEC a Registration Statement with respect to such
Registrable Securities and use its best efforts to cause such Registration
Statement to become effective, and keep such Registration Statement effective
for the lesser of one hundred twenty (120) days or until the Holder or Holders
have completed the distribution relating thereto, provided, however, that such
one hundred twenty (120) day period shall be extended for a period of time equal
to the period the Holder or Holders refrain from selling any securities included
in such registration at the request of an underwriter of the Company's stock.
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(b) prepare and file with the SEC such amendments and supplements
to such Registration Statement and the prospectus used in connection with such
Registration Statement as may be necessary to keep such Registration Statement
effective and to comply with the provisions of the 1933 Act with respect to the
disposition of all securities covered by such registration statement in
accordance with the intended methods of disposition by the seller or sellers
thereof set forth in such Registration Statement; provided that before filing a
Registration Statement or prospectus, or any amendments or supplements thereto,
the Company will furnish to one counsel selected by the Holders of a majority of
the Registrable Securities covered by such Registration Statement to represent
all Holders of Registrable Securities covered by such Registration Statement,
copies of all documents proposed to be filed, which documents will be subject to
the review of such counsel.
(c) furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
1933 Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them.
(d) use its best efforts to register or otherwise qualify the
securities covered by such Registration Statement under such other securities
laws of such states and other jurisdictions as shall be reasonably requested by
the Holders or the managing underwriter, provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions where, but for the requirements of this paragraph (d), it would
not be obligated to be so qualified unless the Company is already subject to
service in such jurisdiction and except as may be required by the 1933 Act.
(e) in the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) notify each Holder of Registrable Securities covered by such
Registration Statement, at any time when a prospectus relating thereto is
required to be delivered under the 1933 Act, of the happening of any event as a
result of which the prospectus included in such Registration Statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing and at
the request of any such seller, prepare and furnish to such seller a reasonable
number of copies of an amended or supplemental prospectus as may be necessary so
that, as thereafter delivered to the sellers of such Registrable Securities,
such prospectus shall not included an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances then
existing.
(g) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably
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practicable (but not more than eighteen (18) months) after the effective date of
the Registration Statement, an earnings statement that shall satisfy the
provisions of Section 11(a) of the Securities Act and the rules and regulations
promulgated thereunder.
(h) obtain a "cold comfort" letter or letters from the Company's
independent public accountants in customary form and covering matters of the
type customarily covered by "cold comfort" letters as the seller or sellers of a
majority of such Registrable Securities shall reasonably request.
(i) obtain an opinion of counsel for the Company in customary form
and covering matters of the type customarily covered in opinions of issuer's
counsel as the sellers shall reasonably request.
(j) use its best efforts to list the Registrable Securities covered
by such Registration Statement with any securities exchange on which the Common
Stock is then listed.
(k) make available for inspection by each Holder including
Registrable Securities in such registration, any underwriter participating in
any distribution pursuant to such registration, and any attorney, accountant or
other agent retained by such Holder or underwriter, all financial and other
records, pertinent corporate documents and properties of the Company, as such
parties may reasonably request, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such Holder,
underwriter, attorney, accountant or agent in connection with such Registration
Statement.
(l) cooperate with Holders including Registrable Securities in such
registration and the managing underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold, such certificates to be in such denominations and registered in such
names as such Holders or the managing underwriters may request at least two
business days prior to any sale of Registrable Securities.
(m) permit any Holder which Holder, in the sole and exclusive
judgment, exercised in good faith, of such Holder, might be deemed to be a
controlling person of the Company, to participate in good faith in the
preparation of such Registration Statement and to require the insertion therein
of material, furnished to the Company in writing, that in the reasonable
judgment of such Holder and its counsel should be included.
(n) provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
2.6 Indemnification.
(a) The Company will, and does hereby undertake to, indemnify and
hold harmless each Holder of Registrable Securities, each of such Holder's
officers, directors, partners and agents, and each person controlling such
Holder, with respect to any registration, qualification or compliance effected
pursuant to this Section 2, and each underwriter, if any, and
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each person who controls any underwriter, of the Registrable Securities held by
or issuable to such Holder, against all claims, losses, damages and liabilities
(or actions in respect thereto) to which they may become subject under the 1933
Act, the Securities Exchange Act of 1934, as amended (the "1934 Act"), or other
federal or state law arising out of or based on (i) any untrue statement (or
alleged untrue statement) of a material fact contained in any prospectus,
offering circular or other similar document (including any related Registration
Statement, notification, or the like) incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances in which
they were made, (ii) any violation or alleged violation by the Company of any
federal, state or common law rule or regulation applicable to the Company in
connection with any such registration, qualification or compliance, or (iii) any
failure to register or qualify Registrable Securities in any state where the
Company or its agents have affirmatively undertaken or agreed in writing that
the Company (the undertaking of any underwriter chosen by the Company being
attributed to the Company) will undertake such registration or qualification on
behalf of the Holders of such Registrable Securities (provided that in such
instance the Company shall not be so liable if it has undertaken its best
efforts to so register or qualify such Registrable Securities) and will
reimburse, as incurred, each such Holder, each such underwriter and each such
director, officer, partner, agent and controlling person, for any legal and any
other expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability or action; provided that the Company
will not be liable in any such case to the extent that any such claim, loss,
damage, liability or expense arises out of or is based on any untrue statement
or omission made in conformity with written information furnished to the Company
by an instrument duly executed by such Holder or underwriter and stated to be
specifically for use therein.
(b) Each Holder will, and if Registrable Securities held by or
issuable to such Holder are included in such registration, qualification or
compliance pursuant to this Section 2, does hereby undertake to indemnify and
hold harmless the Company, each of its directors and officers, and each person
controlling the Company, each underwriter, if any, and each person who controls
any underwriter, of the Company's securities covered by such a Registration
Statement, and each other Holder, each of such other Holder's officers,
partners, directors and agents and each person controlling such other Holder,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such Registration Statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances in which they were made, and will reimburse, as incurred, the
Company, each such underwriter, each such other Holder, and each such director,
officer, partner and controlling person of the foregoing, for any legal or any
other expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability or action, in each case to the extent,
but only to the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) was made in such Registration Statement,
prospectus, offering circular or other document, in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder and stated to be specifically for use therein;
provided, however, that the liability of each Holder hereunder shall be limited
to the proportion of any such claim, loss, damage or liability
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that is equal to the proportion that the public offering price of the shares
sold by such Holder under such Registration Statement bears to the total public
offering price of all securities sold thereunder, but in any event not to exceed
the net proceeds received by such Holder from the sale of securities under such
Registration Statement. It is understood and agreed that the indemnification
obligations of each Holder pursuant to any underwriting agreement entered into
in connection with any Registration Statement shall be limited to the
obligations contained in this subsection 2.6(b).
(c) Each party entitled to indemnification under this Section 2.6
(the "Indemnified Party") shall give notice to the party required to provide
such indemnification (the "Indemnifying Party") of any claim as to which
indemnification may be sought promptly after such Indemnified Party has actual
knowledge thereof, and shall permit the Indemnifying Party to assume the defense
of any such claim or any litigation resulting therefrom; provided that counsel
for the Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be subject to approval by the Indemnified Party (whose
approval shall not be unreasonably withheld) and the Indemnified Party may
participate in such defense at the Indemnifying Party's expense if
representation of such Indemnified Party would be inappropriate due to actual or
potential differing interests between such indemnified party and any other party
represented by such counsel in such proceeding; and provided further that the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 2, except
to the extent that such failure to give notice shall materially adversely affect
the Indemnifying Party in the defense of any such claim or any such litigation.
An Indemnifying Party, in the defense of any such claim or litigation, may,
without the consent of each Indemnified Party, consent to entry of any judgment
or enter into any settlement that includes as an unconditional term thereof the
giving by the claimant or plaintiff therein, to such Indemnified Party, of a
release from all liability with respect to such claim or litigation.
(d) In order to provide for just and equitable contribution to
joint liability under the 1933 Act in any case in which either (i) any Holder
exercising rights under this Agreement, or any controlling person of any such
Holder, makes a claim for indemnification pursuant to this Section 2.6 but it is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 2.6 provides for indemnification in
such case, or (ii) contribution under the 1933 Act may be required on the part
of any such Holder or any such controlling person in circumstances for which
indemnification is provided under this Section 2.6; then, and in each such case,
the Company and such Holder will contribute to the aggregate claims, losses,
damages or liabilities to which they may be subject (after contribution from
others) in such proportion so that such Holder is responsible for the portion
represented by the percentage that the public offering price of the securities
offered by such Holder pursuant to the Registration Statement bears to the
public offering price of all securities offered by such Registration Statement,
and the Company will be responsible for the remaining portion; provided,
however, that, in any case, (A) no such Holder will be required to contribute
any amount in excess of the public offering price of all securities offered by
it pursuant to such Registration Statement, after deduction of underwriting
discounts and commissions; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of
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the 1933 Act) will be entitled to contribution from any person or entity who was
not guilty of such fraudulent misrepresentation.
(e) The indemnities provided in this Section 2.6 shall survive the
transfer of any Registrable Securities by such Holder.
2.7 Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may reasonably request in writing and as
shall be required in connection with any registration, qualification or
compliance referred to in this Section 2.
2.8 Transfer of Registration Rights.
(a) The rights, contained in Sections 2.2, 2.3 and 2.9 hereof, to
cause the Company to register the Registrable Securities, may be assigned or
otherwise conveyed to a transferee or assignee of Registrable Securities, who
shall be considered a "Holder" for purposes of this Section 2, provided that (i)
any such transfer by Investor is effected in compliance with Section 1.2 hereof;
and (ii) such transfer is a "Permitted Transfer" as defined herein.
(b) For purposes of this Agreement, a "Permitted Transfer" shall
mean: (i) a transaction not involving a change in beneficial ownership; (ii)
transactions involving distribution without consideration by a shareholder that
is a partnership to any of its partners, retired partners, or to the estate of
any of its partners; (iii) transactions involving distribution without
consideration by a shareholder that is a corporation or limited liability
company to any of its shareholders or members, as applicable; (iv) transfers by
any shareholder who is an individual to a trust for the benefit of such
shareholder or his family; (v) a transfer in which the transferee acquires at
least 5,000 shares of Registrable Securities, or securities convertible into or
exercisable for such number of shares, subject to adjustment for combinations,
consolidations, recapitalizations, stock splits, stock dividends and the like;
or (vi) transfers by gift, will or intestate succession to the spouse, lineal
descendants or ancestors of any shareholder or spouse of a shareholder, or (vii)
transfer by any Holder to any of its Affiliates.
2.9 Form S-3. If the Company's stock becomes publicly traded, the
Company shall use its best efforts to qualify for registration on Form S-3 and
to that end the Company shall register the Common Stock under the 1934 Act
within twelve (12) months following the effective date of the first registration
of any securities of the Company on Form S-1. After the Company has qualified
for the use of Form S-3, the Holders of Registrable Securities shall have the
right to request registrations on Form S-3 thereafter under this Section 2.9.
The Company shall give notice to all Holders of Registrable Securities of the
receipt of a request for registration pursuant to this Section 2.9 and shall
provide a reasonable opportunity for other Holders to participate in the
registration. Subject to the foregoing, the Company will use its best efforts to
effect as soon as practicable the registration of all shares of Registrable
Securities on Form S-3, as the case may be, to the extent requested by the
Holder or Holders thereof for purposes of disposition; provided, however, that
the Company shall not be obligated to effect any such registration if (a) the
Holders, together with the holders of any other securities of the Company
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entitled to inclusion in such registration, propose to sell Registrable
Securities and such other securities (if any) at an aggregate price to the
public of less than $500,000, or (b) the Company shall have already made two (2)
registrations on Form S-3 within the 12-month period immediately preceding the
request, or (c) the Company has already effected four (4) such registrations on
Form S-3 initiated by Initiating Holders pursuant to this Section 2.9.
Notwithstanding the foregoing, nothing herein shall restrict, prohibit, or limit
in any way a Holder's ability to exercise its registration rights under Sections
2.2 or 2.3 hereof. The Company shall have no obligation to take any action to
effect any registration pursuant to this Section 2.9 for any of the reasons set
forth in Section 2.2(a)(ii)(A) or (C) (which shall be deemed to apply to the
obligations under this Section 2.9 with equal force). In addition, any
registration pursuant to this Section 2.9 shall be subject to the provisions of
Section 2.2(b), which shall be deemed to apply to the obligations under this
Section 2.9 with equal force, except that any reference therein to Section 2.2
or a subsection thereof shall, for these purposes only, be deemed to be a
reference to this Section 2.9.
2.10 Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 2.
2.11 Limitations on Subsequent Registration Rights. From and after the
date of this Agreement, the Company shall not, without the prior written consent
of the Holders of a majority of the Registrable Securities then outstanding and
not registered, enter into any agreement with any holder or prospective holder
of any securities of the Company that would allow such holder or prospective
holder to (a) require the Company to effect a registration or (b) include any
securities in any registration filed under Section 2.2, 2.3 or 2.9 hereof,
unless, under the terms of such agreement, such holder or prospective holder may
include such securities in any such registration only to the extent that the
inclusion of such securities will not diminish the amount of Registrable
Securities that are included in such registration.
2.12 Rule 144 Reporting. With a view to making available to the Holders
the benefits of certain rules and regulations of the SEC that may permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to:
(a) make and keep current public information available, within the
meaning of SEC Rule 144 or any similar or analogous rule promulgated under the
1933 Act, at all times after it has become subject to the reporting requirements
of the 1934 Act;
(b) file with the SEC, in a timely manner, all reports and other
documents required of the Company under the 1933 Act and 1934 Act (after it has
become subject to such reporting requirements);
(c) so long as a Holder owns any Registrable Securities, furnish to
such Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 (at any time
commencing ninety (90) days after the effective date of the first registration
filed by the Company for an offering of its securities to the general public),
the 1933 Act and the 1934 Act (at any time after it has become subject to such
reporting requirements); a copy of the most recent annual or quarterly report of
the Company;
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and such other reports and documents as a Holder may reasonably request in
availing itself of any rule or regulation of the SEC allowing it to sell any
such securities without registration.
2.13 "Market Stand-Off" Agreement. Each Holder that is a "One Percent
Shareholder," as defined below, hereby agrees that during a period, not to
exceed 180 days, following the effective date of a registration statement of the
Company filed under the 1933 Act, it shall not, to the extent requested by the
Company and any underwriter, sell, pledge, transfer, make any short sale of,
loan, grant any option for the purchase of, or otherwise transfer or dispose of
(other than to donees who agree to be similarly bound) any Registrable
Securities held by it at any time during such period except Common Stock
included in such registration; provided, however, that:
(a) such agreement shall be applicable only to the first such
registration statement of the Company that covers Common Stock (or other
securities) to be sold on its behalf to the public in an underwritten offering;
and
(b) all other "One Percent Shareholders" with registration rights
(whether or not pursuant to this Agreement) and all officers and directors of
the Company enter into similar agreements.
For purposes of this Section 2.13, the term "One Percent Shareholder"
shall mean a shareholder of the Company who holds at least one percent of the
outstanding Common Stock of the Company (assuming conversion of all outstanding
Preferred Stock of the Company and full exercise of all Warrants).
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
2.14 Amendment of Registration Rights. Any provision of this Section 2
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holders of at least a majority of the
Registrable Securities then outstanding and not registered; except that any
amendment or waiver affecting the rights or privileges of the Investors shall
require the written consent of the holders of a majority of the shares of Series
C Stock then outstanding; except further that any amendment to Section 2.13 that
pertains to shares of Registrable Securities held by an investment company
advised by an investment advisor registered under the Investment Company Act of
1940, as amended, requires the written consent of such investment company(s).
Any amendment or waiver effected in accordance with this Section shall be
binding upon each Holder, each future Holder of Registrable Securities and the
Company.
2.15 Aircraft Carrier Release. The parties agree that if Release No.
33-7606A, or a similar release, is adopted by the SEC, the parties shall make
amendments to this Agreement necessary to preserve the intent of this Agreement.
All references to SEC forms in this Agreement include successor forms thereto.
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2.16 Termination of Registration Rights. The rights of any particular
Holder to cause the Company to register securities under Sections 2.2, 2.3 or
2.9 hereof shall terminate as to any Holder on the date such Holder is able to
dispose of all of its Registrable Securities in any 90-day period pursuant to
SEC Rule 144 (or any similar or analogous rule promulgated under the 1933 Act),
provided, however that such rights shall not terminate with respect to any
Holder owning more than one-half percent (1/2%) of the Company's outstanding
Common Stock of the Company until such time as such Holder owns less than
one-half percent (1/2%) of the outstanding Common Stock of the Company.
Section 3.
RIGHTS OF FIRST REFUSAL
3.1 Pro Rata Right. The Company hereby grants to each Investor, subject
to the terms and conditions specified in this Section 3, the right of first
refusal to purchase up to its pro rata share of all New Securities (as defined
in Section 3.2 hereof) that the Company may, from time to time, propose to sell
and issue. An Investor's pro rata share, for purposes of this right of first
refusal, is the ratio (a) the numerator of which is the number of shares of
Common Stock issued or issuable to such Investor upon the conversion of shares
of Series C Stock held by such Investor on the date of the Company's written
notice pursuant to Section 3.3 hereof, and (b) the denominator of which is the
number of shares of Common Stock outstanding, assuming for this purpose
conversion or exercise of all securities convertible into or exercisable for
Common Stock of the Company.
3.2 New Securities. "New Securities" shall mean any capital stock of
the Company, whether now authorized or not, and rights, options or warrants to
purchase capital stock, and securities of any type whatsoever that are, or may
become, convertible into capital stock; provided that the term "New Securities"
does not include (i) the Series A Preferred Stock of the Company, the Series B
Preferred Stock of the Company or the Series C Stock (collectively, the
"Preferred Stock"); (ii) securities issuable upon conversion of or with respect
to Preferred Stock; (iii) securities issued pursuant to the acquisition of
another corporation by the Company by merger, purchase of substantially all the
assets or other reorganization whereby the Company owns more than 50% of the
voting power of such corporation; (iv) capital stock or securities exercisable
for or convertible into such capital stock issued in connection with any
borrowings, direct or indirect, from financial or other institutions regularly
engaged in the business of lending of money if such issuance is approved by the
Board of Directors of the Company; (v) shares of Common Stock, and options,
warrants or rights convertible into such Common Stock, issued to employees,
consultants or directors of the Company pursuant to any incentive agreement or
arrangement approved by the Board of Directors of the Company; (vi) shares of
Common Stock or Preferred Stock issued upon exercise of options or warrants
outstanding on the date hereof; or (vii) securities issued pursuant to any stock
dividend, stock split, combination or other reclassification by the Company of
any of its capital stock.
3.3 Required Notices. In the event the Company proposes to undertake an
issuance of New Securities, it shall give each Investor written notice of its
intention, describing the type of
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New Securities, the price and the general terms upon which the Company proposes
to issue the same. Each Investor shall have fifteen (15) days from the date of
any such notice to agree to purchase the Investor's pro rata share of such New
Securities for the price and upon the general terms specified in the notice by
giving written notice to the Company and stating therein the quantity of New
Securities to be purchased. After such initial 15-day period, for an additional
period of fifteen (15) days, each Investor may also exercise its right of
overallotment such that if any Investor fails to exercise its right hereunder to
purchase its pro rata portion of the New Securities proposed to be sold by the
Company, each other Investor may, by notifying the Company of such Investor's
desire to acquire more that its pro rata share as part of its exercise notice
pursuant to this Section 3.3, purchase the nonpurchasing Investor's portion on a
pro rata basis.
3.4 Company's Right to Sell. In the event the Investors fail to
exercise their rights of first refusal as to all New Securities offered within
said 15-day period, the Company shall have ninety (90) days thereafter to sell
all such New Securities respecting which the Investors' rights of first refusal
hereunder were not exercised, at a price and upon general terms no more
favorable in any material respect to the purchasers thereof than specified in
the Company's notice. In the event the Company has not sold all such New
Securities within said 90-day period, the Company shall not thereafter issue or
sell any New Securities, without first offering such securities to the Investors
in the manner provided herein.
3.5 Expiration of Right. The rights of first refusal granted under this
Section 3 shall not apply to, and shall expire upon, the effectiveness of the
Company's initial registration statement for the sale of its shares of Common
Stock in a firm commitment underwritten public offering registered under the
1933 Act (other than a registration relating solely to employee benefit plans or
to a transaction under Rule 145 under the 1933 Act or any successor rule
thereto) (a "Qualified Public Offering").
3.6 Assignment. The rights of first refusal set forth in this Section 3
are nonassignable, except that (a) such right is assignable by each Investor to
any wholly owned subsidiary or parent of, or to any corporation, entity or other
person that is, within the meaning of the 1933 Act, controlling, controlled by
or under common control with, such Investor, and (b) such right is assignable in
any Permitted Transfer (as defined in Section 2.8(b)) by an Investor.
Section 4.
COMPANY COVENANTS
The Company hereby covenants and agrees as follows.
4.1 Affirmative Covenants.
(a) Financial Statements and Information. The Company will keep
books of account and prepare financial statements and will take the following
actions with respect to such information (all of the foregoing and following to
be kept and prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis).
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(i) As soon as practicable, but in any event within ninety
(90) days after the end of each fiscal year of the Company, beginning with the
fiscal year ended December 31, 1999, the Company will furnish to each Investor
and each other Holder (1) a copy of the financial statements of the Company for
such fiscal year containing a consolidated balance sheet, statement of income,
statement of shareholders' equity, and statement of cash flows, each as at the
end of such fiscal year and for the period then ended and in each case setting
forth in comparative form the figures for the preceding fiscal year, all in
reasonable detail and audited and certified by independent public accountants of
recognized standing selected by the Company's Board of Directors, and containing
an opinion that such financial statements have been prepared in conformity with
generally accepted accounting principles applied on a basis consistent with
prior years (except as otherwise specified in such report) and (2) a statement
from the principal financial or accounting officer of the Company (or, upon the
request of the holders of a majority of the Common Stock issued or issuable upon
conversion of the Preferred Stock or exercise of any warrants held by holders of
Preferred Stock, a statement from the auditors of the Company) discussing
whether the Company is in material compliance with this Agreement and all its
other material agreements. In addition to the foregoing, upon the request of any
Investor who holds no less than 1,500,000 shares of Common Stock issued or
issuable upon conversion of the Series C Stock, subject to adjustment for stock
splits, stock dividends and the like, the Company shall use its best efforts to
cause the auditors of the Company to meet with such Investor for purposes of
reviewing the Company's financial statements and condition.
(ii) As soon as practicable after the end of each of the first
three quarters of the fiscal year, but in any event within thirty (30) days
after the end of each such quarter, the Company will furnish to each Investor
and each other Holder the unaudited consolidated balance sheets of the Company
and its subsidiaries, if any, as of the end of such quarter, and its unaudited
consolidated statements of income and losses, shareholders' equity and cash
flows for such quarter, setting forth in each case in comparative form the
figures for the corresponding period of the preceding fiscal year, all in
reasonable detail and prepared in accordance with generally accepted accounting
principles, except that such financial statements may not contain notes and will
be subject to year-end adjustment, and certified by the principal financial or
accounting officer of the Company. Such quarterly report shall include a
narrative, summary description of the Company's operations for such quarter from
the Chief Executive or Operating Officer, indicating whether the Company is
materially in compliance with this Agreement and other material agreements and
discussing any material variances from the Company's operating plan.
(iii) The Company will promptly notify the Investors of the
occurrence of any material default (with or without notice or lapse of time or
both) under, or material breach of, any material debt agreement or obligation,
and it shall deliver to each Investor any default notice in connection
therewith. The Investors shall be entitled to participate in any discussions
with the Company's lenders regarding any such default.
(iv) The Company will provide each Investor who holds no less
than 1,500,000 shares of Common Stock issued or issuable upon conversion of the
Series C Stock, subject to adjustments for stock splits, stock dividends and the
like, a notice and with respect to (ii) a copy via facsimile of the following
events, (i) if the Company files a registration statement under the Securities
Act for purposes of a public offering of securities of the Company, within
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twenty-four hours after such filing, (ii) if the Company issues a press release,
within twenty-four hours after such press release, and (iii) if the Company
issues additional shares of Preferred Stock, within twenty-four hours after such
issuance.
(v) With respect to (i) through (iv) above and (b) below, the
holdings of each Investor advised by the same investment adviser shall be
aggregated for the purposes of determining whether such Investor meets the
1,500,000 share threshold.
(vi) The Company shall permit each holder of at least 1,500,000
shares of Common Stock issued or issuable upon conversion of the Series C Stock,
except for a Holder reasonably deemed by the Company to be a competitor of the
Company, at such Holder's expense, to visit and inspect the Company's
properties, to examine its books of account and records and to discuss the
Company's affairs, finances and accounts with its officers, all at such
reasonable times as may be requested by the Investor; provided, however, that
the Company shall not be obligated pursuant to this Section 4.1(b) to provide
access to any information which it reasonably considers to be a trade secret or
other confidential information.
(c) Prompt Payment of Taxes. The Company and its subsidiaries, if
any, will timely pay and discharge, or cause to be paid and discharged, all
lawful taxes, assessments and governmental charges or levies imposed upon any of
their income, profits, properties or businesses; provided, however, that any
such tax, assessment, charge or levy need not be paid if the validity thereof
shall currently be contested in good faith by appropriate proceedings; and
provided, further, that the Company and its subsidiaries will pay all such
taxes, assessments, charges or levies forthwith upon the commencement of
proceedings to foreclose any tax lien that may have attached as security
therefor or with respect thereto.
(d) Maintenance of Insurance. The Company shall maintain, and cause
each subsidiary to maintain, insurance (including directors and officers
insurance) with responsible and reputable insurance companies or associations in
such amounts and covering such risks as is customarily carried by companies
engaged in similar businesses and owning similar properties in the same general
areas in which the Company or such subsidiary operates.
(e) Compliance with Applicable Laws. The Company shall comply in
all material respect with all applicable statutes, laws, ordinances, rules and
regulations of any governmental authority (whether now in effect or hereinafter
enacted) and any filing requirements relating thereto including without
limitation, the U.S. Foreign Corrupt Practices Act and environmental laws and
regulations. The Company shall do all things necessary to preserve, renew and
keep in full force and effect and in good standing its corporate existence and
authority necessary to continue its business.
(f) Key Man Insurance. The Company shall maintain a policy of "key
man" insurance on the lives of Nathan Morton, Mike Atwood, Keith Brown and Chuck
Cosby with minimum coverage of $1,000,000, unless otherwise directed by the
Board of Directors. The proceeds from such policies shall be payable to the
Company.
4.2 Negative Covenants. Without the prior written consent of the
holders of at least a majority of the Series C Stock, the Company covenants and
agrees as follows.
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(a) Dividends. Except as otherwise permitted in the Articles of
Incorporation of the Company, as amended from time to time, or this Agreement,
the Company shall not declare or make any dividends or distributions of its
cash, stock, property or assets.
(b) Merger; Change in Control; Acquisition of Assets. The Company
will not (a) sell, lease or otherwise dispose of (whether in one transaction or
a series of related transactions) all or substantially all of its assets, (b)
merge with or into or consolidate with another entity (except into or with a
wholly-owned subsidiary of the Company with the requisite shareholder approval)
in which the shareholders of the Company immediately prior to such merger or
consolidation possess a minority of the acquiring entity immediately following
such merger or consolidation, or (c) voluntarily liquidate or wind up its
operations.
(c) Related Party Transactions. The Company shall not enter into
any material agreement, transaction or relationship with any person that
controls, is controlled by, or is under common control with, the Company or with
any officer, director, shareholder or employee of the Company, including any
member of any of their immediate families, unless such agreement, transaction or
relationship is substantially on terms that would be offered by an unaffiliated
party.
(d) The Company shall not, directly or indirectly, pay or cause to
be paid any remuneration, whether by way of supplemental or additional interest,
fee or otherwise to any Purchaser or other shareholder of the Company as
consideration for or as an inducement to entering into by any Purchaser or other
shareholder of the Company of any waiver or amendment of any of the terms and
provisions of the Agreements or the Articles which affects any Purchasers'
rights as an investor, unless such remuneration is concurrently paid, on the
same terms, ratably to all Purchaser whether or not such Purchasers grant such
waiver or agree to such amendment.
(e) The Company shall not become an "investment company" or a
company "controlled" by an "investment company", within the meaning of the 1940
Act. In the event the Company breaches the foregoing, the Company shall
forthwith notify the Purchasers and shall take immediate corrective action to
remedy such breach.
4.3 Expiration of Covenants. The covenants set forth in this Section 4
shall expire and be of no further force or effect upon the closing of a
Qualified Public Offering (as defined in Section 3.5 hereof). After such time,
the Investors shall be entitled to receive such annual and quarterly reports as
the Company shall distribute to its shareholders generally.
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Section 5.
MISCELLANEOUS
5.1 Governing Law. This Agreement shall be governed by, and construed
and interpreted in accordance with the laws of the State of New York as applied
to agreements among New York residents made and to be performed entirely within
the State of New York.
5.2 Jurisdiction. Each party hereto hereby irrevocably and
unconditionally submits to the exclusive jurisdiction of the state and federal
courts located in the State of New York, County of New York, for any actions,
suits, or proceedings arising out of or relating to this agreement and the
transactions contemplated hereby. Each party hereto agrees not to commence any
action, suit or proceeding relating thereto except in such courts. Each of the
parties hereto hereby irrevocably and unconditionally waives any objection to
the laying of venue of any action, suit or proceeding arising out of this
agreement or the transactions contemplated hereby, in such state or federal
courts as aforesaid and hereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
5.3 Waiver of Jury Trial. The parties hereby waive trial by jury in any
judicial proceeding to which they are parties involving, directly or indirectly,
any matter in any way arising out of, related to or connected with this
Agreement.
5.4 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
5.5 Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement among the parties with regard to the subjects
hereof. Nothing in this Agreement, express or implied, is intended to confer
upon any party, other than the parties hereto and their successors and assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
5.6 Severability. Any invalidity, illegality or limitation of the
enforceability with respect to any Investor of any one or more of the provisions
of this Agreement, or any part thereof, whether arising by reason of the law of
any such person's domicile or otherwise, shall in no way affect or impair the
validity, legality or enforceability of this Agreement with respect to other
Investors. In case any provision of this Agreement shall be invalid, illegal or
unenforceable, it shall to the extent practicable, be modified so as to make it
valid, legal and enforceable and to retain as nearly as practicable the intent
of the parties, and the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
5.7 Amendment and Waiver. Except as otherwise expressly provided
herein, any term of this Agreement may be amended and the observance of any term
of this Agreement may
20
24
be waived (either generally or in a particular instance, either retroactively or
prospectively and either for a specified period of time or indefinitely) with
the written consent of the Company and Investors (or their transferees) holding
at least a majority of the shares of Registrable Securities, voting together as
a single group (treating Series C Stock as if converted at the conversion rate
then in effect, and including, for such purposes, shares of Common Stock into
which any shares of Series C Stock shall have been converted that are held by a
Holder); provided, however, that no such amendment or waiver shall reduce the
aforesaid percentage of Registrable Securities, the holders of which are
required to consent to any waiver or supplemental agreement, without the consent
of the holders of all of such Registrable Securities. Any amendment or waiver
effected in accordance with this Section 5.7 shall be binding upon each Investor
and each transferee of the Registrable Securities. Upon the effectuation of each
such amendment or waiver, the Company shall promptly give written notice thereof
to the Investors who have not previously consented thereto in writing.
Notwithstanding anything to the contrary in this Section 5.7, the Company shall
be entitled to include additional purchasers of its Series C Stock pursuant to
the Series C Agreement as parties to this Agreement, and to treat such
purchasers as "Investors" and "Holders" hereunder, by amending Exhibit A
attached hereto and providing such Exhibit A, as amended, to the other parties
to this Agreement. Notwithstanding the foregoing any amendment to Section 2.13
that pertains to shares of Registrable Securities held by any investment company
advised by an investment advisor registered under the Investment Company Act of
1940, as amended, shall require the written consent of such investment
company(s).
5.8 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to the Company, any Investor, or any transferees upon
any breach, default or noncompliance of any Investor or any transferee or the
Company under this Agreement, shall impair any such right, power or remedy, nor
shall it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of any similar breach, default or
noncompliance thereafter occurring. It is further agreed that any waiver,
permit, consent or approval of any kind or character on the part of the Company
or the Investors of any breach, default or noncompliance under this Agreement or
any waiver on the Company's or the Investors' part of any provisions or
conditions of this Agreement must be in writing and shall be effective only to
the extent specifically set forth in such writing and that all remedies, either
under this Agreement, by law, or otherwise afforded to the Company and the
Investors, shall be cumulative and not alternative.
5.9 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery or upon confirmed delivery by facsimile or telecopy, or
on the fifth day (or the tenth day if to a party with an address outside of the
United States) following mailing by registered or certified mail, return receipt
requested, postage prepaid, addressed: (a) if to an Investor, at such Investor's
address as set forth on the schedule attached hereto, or at such other address
as such Investor shall have furnished to the Company in writing, or (b) if to
the Company, at its address first above written, or at such other address as the
Company shall have furnished to the Investors in writing.
21
25
5.10 Titles and Subtitles. The titles of the sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
5.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
22
26
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the parties as of the date first above written.
THE COMPANY: BUILDNET, INC.
By: /s/ Stephen L. Holcombe
Name: Stephen L. Holcombe
Title: Senior Vice President, Chief Financial Officer
INVESTORS: /s/ Investors listed in Exhibit A hereto
(Printed or Typed Name)
By: /s/ Investors listed in Exhibit A hereto
Name:
------------------------------------------------
Title:
-----------------------------------------------
[SIGNATURE PAGE TO SERIES C INVESTOR RIGHTS AGREEMENT]
27
EXHIBIT A
SCHEDULE OF INVESTORS
- ----------------------------------------------------------
NAME AND ADDRESS SERIES C SHARES
- ----------------------------------------------------------
- ----------------------------------------------------------
A. G. Jonas, Jr. 11,363
1006 Hibriten Drive
P.O. Box 1650
Lenoir, NC 28645
- ----------------------------------------------------------
A. P. Anderson 11,363
2505 Morganton Boulevard
Lenoir, NC 28645
- ----------------------------------------------------------
Alison W. Killilea 5,000
896 Lombard Street
San Francisco, CA 94133
- ----------------------------------------------------------
Alpine Capital 227,273
Attn: Chet Ranawat
152 East 65th Street, Suite 400
New York, NY 10021
- ----------------------------------------------------------
Andersen Windows, Inc. 227,273
100 Fourth Avenue N
Bayport, MN 55003
- ----------------------------------------------------------
Andrew P. Rifkin 3,409
1 Park Place
Short Hills, NJ 07078
- ----------------------------------------------------------
Antar & Co. 113,636
c/o Legacy Trust Co.
Attn: Edward Naumes
600 Jefferson, Suite 350
Houston, TX 77251
- ----------------------------------------------------------
Argent Fund Management Ltd. 56,818
c/o Bernard Herold & Co., Inc.
Attn: Vidur Bhalla
555 Madison Avenue, 17th Floor
New York, NY 10022
- ----------------------------------------------------------
BancBoston Ventures Inc. 1,818,182
Attn: John Doggett
175 Federal Street
Boston, MA 02110
- ----------------------------------------------------------
Barry A. Sholem 3,409
c/o Donaldson, Lufkin & Jenrette
2121 Avenue of the Stars, Suite 3000
Los Angeles, CA 90067
- ----------------------------------------------------------
Bayview 99 I, LP 61,550
c/o BancBoston Robertson Stephens Inc.
Attn: Jennifer Sherrill
555 California Street, Suite 2600
San Francisco, CA 94104
- ----------------------------------------------------------
Bayview 99 II, LP 52,086
c/o BancBoston Robertson Stephens Inc.
Attn: Jennifer Sherrill
555 California Street, Suite 2600
San Francisco, CA 94104
- ----------------------------------------------------------
BB Smith LLC 113,636
Attn: T. Greg Smith
3918 Jackson Street
Alexandria, LA 71303
- ----------------------------------------------------------
Beazer Homes USA, Inc. 227,272
Attn: David S. Weiss
5775 Peachtree Dunwoody Road, Suite
B-200
Atlanta, GA 30342
- ----------------------------------------------------------
Beth Chartoff 1,136
145 East 27th Street, Apt. 7K
New York, NY 10016
- ----------------------------------------------------------
28
- ----------------------------------------------------------
BMC Fund, Inc. Growth Portfolio 113,636
c/o First Union National Bank
Attn: Jay Bunnell, NC 1156
301 South Tryon Street, T-12
Charlotte, NC 28288
- ----------------------------------------------------------
Broyhill Family Foundation, Inc. 45,454
Attn: Dan Wakin
800 Golfview Park
P. O. Box 500
Lenoir, NC 28645
- ----------------------------------------------------------
Broyhill Investments, Inc. 45,454
Attn: Dan Wakin
800 Golfview Park
P. O. Box 500
Lenoir, NC 28645
- ----------------------------------------------------------
Building Materials Holding Corporation 227,272
Attn: Michael D. Mahre
One Market Plaza
Steuart Tower
26th Fl, Suite 2650
San Francisco, CA 94105-1475
- ----------------------------------------------------------
Buildnet TTM, LLC 54,545
P.O. Box 12218
RTP, NC 27709
- ----------------------------------------------------------
Burke International Tours Profit Sharing 22,727
401-K Plan
Attn: E. Udean Burke, Trustee
4643 Highway 16 South
Newton, NC 28658
- ----------------------------------------------------------
Cameron Ashley Building Products, Inc. 227,272
Attn: John S. Davis
11651 Plano Road
Dallas, TX 75243
- ----------------------------------------------------------
Carolyn E. West 2,272
16710 Telge Road
Cypress, TX 77429
Tel: (281) 351-4727
- ----------------------------------------------------------
Carpelian Assets Limited 147,727
c/o BancBoston Robertson Stephens Inc.
Attn: Richard Brand
555 California St., Suite 2600
San Francisco, CA 94104
- ----------------------------------------------------------
Charles D. Peebler Jr., For the Benefit of 227,272
Plum Holdings L.P.
c/o Drinker Biddle & Reath, LLP
Attn: Neil Haimm
1000 West Lakes Drive, Suite 300
Berwyn, PA 19312
cc: Paul Gruenberg
c/o Plum Capital, LLC
1018 Westview Street
Philadelphia, PA 19119
- ----------------------------------------------------------
Chartwell Holdings, Ltd. 56,818
c/o BancBoston Robertson Stephens Inc.
Attn: Kimy Ruiz
555 California Street
San Francisco, CA 94104
- ----------------------------------------------------------
Christina's Trust #2 U/D/T dated 1/20/99 56,818
Attn: Mike Huffington
10580 Wilshire Blvd., #71
Los Angeles, CA 90024
- ----------------------------------------------------------
Clark Callander 5,681
2815 Scott Street
San Francisco, CA 94123
- ----------------------------------------------------------
Covestco-Seteura LLC 681,818
c/o Freeborn & Peters
Attn: Kelly North Matthews
950 Seventeenth Street, Suite 2600
- ----------------------------------------------------------
29
- ----------------------------------------------------------
Denver, CO 80202-2826
- ----------------------------------------------------------
CVT Management LLC 113,636
Attn: Alex Roudi
4370 La Jolla Village Drive, Suite 960
San Diego, CA 92122
- ----------------------------------------------------------
D. Paul Thompson 11,363
3304 Stonethrow Drive
Newton, NC 28658
- ----------------------------------------------------------
D. R. Horton, Inc. 522,726
Attn: Richard Beckwitt
1901 Ascension Boulevard, Suite 100
Arlington, TX 76006
- ----------------------------------------------------------
Dale Haithcock 3,409
c/o BancBoston Robertson Stephens Inc.
555 California St., Ste. 2600
San Francisco, CA 94104
- ----------------------------------------------------------
Damac Associate Investors Inc BVI 227,273
c/o Damac Al Baraka Investment Co. LLC
PO Box 2195
Dubai, United Arab Emirates
- ----------------------------------------------------------
Damac Investor IV Inc BVI 227,273
c/o Damac Al Baraka Investment Co. LLC
PO Box 2195
Dubai, United Arab Emirates
- ----------------------------------------------------------
Damac Technology Partners LP Cayman 454,545
c/o Damac Al Baraka Investment Co. LLC
PO Box 2195
Dubai, United Arab Emirates
- ----------------------------------------------------------
Dana Craver 17,045
24 Brodge Street, Apt. 3
Frenchtown, NJ 08825
- ----------------------------------------------------------
David B. and Lori J. Sanson 5,681
850 Meadow Creek Court
Walnut Creek, CA 94596
- ----------------------------------------------------------
David C. Blatte 2,272
c/o Donaldson, Lufkin & Jenrette
277 Park Avenue
New York, NY 10172
- ----------------------------------------------------------
David K. Dwyer 17,045
c/o Salomon Smith Barney
388 Greenwich Street
New York, New York 10013
- ----------------------------------------------------------
David S. Weiss 5,681
1855 Redbourne Drive
Atlanta, GA 30350
- ----------------------------------------------------------
DCT, L.L.C. 227,272
Attn: Kurt Swanson
3773 Howard Hughes Parkway, Suite 350N
Las Vegas, NV 89109
- ----------------------------------------------------------
Decima Corporation 50,000
c/o Murdoch & Company
Bank of Bermuda
Attn: Charles Boulton
Compass Point
9 Bermudiana Road
Hamilton, HM 11, Bermuda
- ----------------------------------------------------------
Deerwood Enterprises, Ltd. 600,000
Attn: Frank Liu
5177 Richmond Avenue, Suite 1166
Houston, TX 77056
- ----------------------------------------------------------
Diemar Investments LP 2,272
c/o Donaldson, Lufkin & Jenrette
Attn: Robert E. Diemar, Jr.
277 Park Avenue
New York, NY 10172
- ----------------------------------------------------------
30
- ----------------------------------------------------------
Donald H. Ankeny 2,272
c/o BancBoston Robertson Stephens Inc.
555 California St., Suite 2600
San Francisco, CA 94104
- ----------------------------------------------------------
Donald J. Tomnitz 22,727
c/o D. R. Horton, Inc.
1901 Ascension Boulevard, Suite 100
Arlington, TX 76006
- ----------------------------------------------------------
Donald R. Horton 113,636
c/o D. R. Horton, Inc.
1901 Ascension Boulevard, Suite 100
Arlington, TX 76006
- ----------------------------------------------------------
Douglas M. Weill 2,272
10 Nancy Lane
Chappaqua, NY 10514
- ----------------------------------------------------------
Edelman Investment Partnership 11,363
c/o Ruxton Partners
Attn: Alan Edelman
1233 Mount Royal Avenue
Baltimore, MD 21217
- ----------------------------------------------------------
Edward Borgerding 22,727
- ----------------------------------------------------------
Emmeram von Braun 40,000
Groso Strasse #9
82166 Graefelfing
Germany
- ----------------------------------------------------------
Encore Venture Partners, LP 227,273
Attn: Steve DesJardins
1250 Fourth Street, Fifth Floor
Santa Monica, CA 90401
- ----------------------------------------------------------
Eric A. Anderson 3,409
1088 Park Avenue, Apt. 9C
New York, NY 10128
- ----------------------------------------------------------
Eric J. E. Higgs 2,272
881 Innes Avenue
San Francisco, CA 94124
- ----------------------------------------------------------
Eric S. Lemer 3,409
245 E. 63rd Street, Apt. 216
New York, NY 10021
- ----------------------------------------------------------
Fidelity Management Trust Co., Custodian 11,363
for Galloway C. Carey
III-Rollover IRA
#104-374237
c/o Fidelity Investments
8 Montgomery Street
San Francisco, CA 94104
- ----------------------------------------------------------
First Winchester Investments Ltd. 113,636
c/o NWT Management S.A.
Attn: Angelo De Riz
16-18 rue de la Pelisserie
Case Postale 3501
1211 Geneva 3
Switzerland
- ----------------------------------------------------------
Fujigin Capital Company 113,636
Attn: Takashi Nogata
Central Plaza Building, 4th Floor
1-1 Kaguragashi, Shinjuku-Ku
Tokyo, 162-0823 Japan
- ----------------------------------------------------------
Gary S. Cangelosi 47,727
c/o Kenton Place, LLC
18549 Vineyard Point Lane
Cornelius, NC 28031
- ----------------------------------------------------------
Geoffrey R. B. Carey Rev. Trust dated 11,363
8/28/97
Attn: Geoffrey R.B. Carey
1430 West Joppa Road
Baltimore, MD 21204
- ----------------------------------------------------------
George A. Moretz Family Limited 11,363
Partnership
c/o First Union National Bank
Attn: Matt Fallaw
- ----------------------------------------------------------
31
- ----------------------------------------------------------
P.O. Box 279
Hickory, NC 28603
- ----------------------------------------------------------
GGEP Coinvestment Partners L.L.C. 80,681
c/o Gilbert Global Equity Partners
Attn: W. Paul Wallace
590 Madison Avenue, 40th Floor
New York, NY 10022
- ----------------------------------------------------------
Global Internet Group Ltd. 170,455
Attn: Thomas O. Mudd, III
5850 San Felipe, Suite 205
Houston, TX 77057
- ----------------------------------------------------------
Global Technology Investors Fund LLC 500,000
c/o Bessemer Trust Company, N.A.
Attn: Peter Frischman
630 Fifth Avenue, 37th Floor
New York, NY 10111
- ----------------------------------------------------------
Global Technology Investors Fund LTD 409,090
c/o Bessemer Trust Company, N.A.
Attn: Peter Frischman
630 Fifth Avenue, 37th Floor
New York, NY 10111
- ----------------------------------------------------------
Gregory A. Nejmeh 11,363
c/o Donaldson, Lufkin & Jenrette
277 Park Avenue
New York, NY 10172
- ----------------------------------------------------------
H.E.P. Living trust U/D/T dated 340,909
5/31/95 as restated 10/16/98
Attn: Mike Huffington
10580 Wilshire Blvd., # 71
Los Angeles, CA 90024
- ----------------------------------------------------------
Isabella's Trust #2 U/D/T dated 1/20/99 56,818
Attn: Mike Huffington
10580 Wilshire Blvd., # 71
Los Angeles, CA 90024
- ----------------------------------------------------------
J. H. McKlveen & Co. 5,000
Attn: Thomas G. McKlveen
Box 517
Prairie City, IA 50228
- ----------------------------------------------------------
James B. Greenfield 7,954
c/o BancBoston Robertson Stephens Inc.
555 California St., Ste. 2600
San Francisco, CA 94104
- ----------------------------------------------------------
Joel Rassman 5,681
c/o Toll Brothers, Inc.
Attn: Ann Marie P. Mitchell
3103 Philmont Avenue
Huntingdon Valley, PA 19006
- ----------------------------------------------------------
John H. McKlveen, III 1,137
1715 Lyon Street
San Francisco, CA 94115
- ----------------------------------------------------------
John Hancock Series Trust on behalf of John 681,817
Hancock Global Technology Fund
c/o John Hancock Advisers, Inc.
Attn: Al Ouellette
101 Huntington Avenue
Boston, MA 02199
- ----------------------------------------------------------
John P. Siracuse 22,727
c/o BancBoston Robertson Stephens Inc.
One International Place, 30th floor
Boston, MA 02110
- ----------------------------------------------------------
Joseph Shalom 56,818
c/o Children's Apparel Network
77 South First Street
Elizabeth, NJ 07206
- ----------------------------------------------------------
Karl Austen 52,413
c/o Armstrong Hirsch
1888 Century Park East
- ----------------------------------------------------------
32
- ----------------------------------------------------------
18th Floor
Los Angeles, CA 90067
- ----------------------------------------------------------
Kaufman and Broad Home Corporation 227,272
Attn: Glen Barnard
8401 East Belleview Avenue
Denver, CO 80237
- ----------------------------------------------------------
Kelso Traders Limited 22,727
c/o BancBoston Robertson Stephens Inc.
Attn: Kimy Ruiz
555 California Street
San Francisco, CA 94104
- ----------------------------------------------------------
Kevin E. Barnes 11,363
3 Cloud View Circle
Sausalito, CA 94965
- ----------------------------------------------------------
KMF Partners, L.P. 113,636
Attn: Karen M. Fleiss
1270 Avenue of the Americas
11th Fl.
New York, NY 10020
- ----------------------------------------------------------
Kohler Co. 227,272
Attn: Jeffrey P. Cheney
444 Highland Drive
Kohler, WI 53044
- ----------------------------------------------------------
LAD Internet Partners Ltd. 136,363
c/o Sierra Advisory, Ltd.
Attn: Masoud Ladjevardian
1177 West Loop Road, Suite 1450
Houston, TX 77027
- ----------------------------------------------------------
LaFarge Corporation 227,272
Attn: Larry J. Waisanen
11130 Sunrise Valley Drive, Suite 300
Reston, VA 20191
- ----------------------------------------------------------
Lanoga Corporation 227,272
Attn: Daryl D. Nagel
17946 NE 65th Street
Redmond, WA 98073
- ----------------------------------------------------------
Larry M. Tekler 2,272
15A Castle Street
San Francisco, CA 94166
- ----------------------------------------------------------
Lars Sorensen 131,000
c/o BancBoston Robertson Stephens Inc.
555 California St., Ste. 2600
San Francisco, CA 94104
- ----------------------------------------------------------
Lennar Corporation 681,818
Attn: David B. McCain
700 NW 107th Avenue
Miami, FL 33172
- ----------------------------------------------------------
Mathew Yohannan 1,002
c/o BancBoston Robertson Stephens Inc.
555 California St., Ste. 2600
San Francisco, CA 94104
- ----------------------------------------------------------
Matthew Glaser 11,364
c/o BancBoston Robertson Stephens Inc.
590 Madison Avenue, 36th Floor
New York, NY 10022
- ----------------------------------------------------------
Maverick Fund II, Ltd. 26,245
c/o Maverick Capital, Ltd.
Attn: Sharyl Robertson
300 Crescent Court, Suite 1850
Dallas, TX 75201
- ----------------------------------------------------------
Maverick Fund USA, Ltd. 132,385
c/o Maverick Capital, Ltd.
Attn: Sharyl Robertson
300 Crescent Court, Suite 1850
Dallas, TX 75201
- ----------------------------------------------------------
33
- ----------------------------------------------------------
Maverick Fund, LDC 295,915
c/o Maverick Capital, Ltd.
Attn: Sharyl Robertson
300 Crescent Court, Suite 1850
Dallas, TX 75201
- ----------------------------------------------------------
Mayflower Venture Capital Fund II, LLC 1,237,499
Attn: Diane Pace
2626 Glenwood Avenue, Suite 100
Raleigh, NC 27608
- ----------------------------------------------------------
Mayflower Venture Capital, LLC 59,558
Attn: Stanley H. Van Etten
2626 Glenwood Avenue, Suite 100
Raleigh, NC 27608
- ----------------------------------------------------------
MCP Global Corporation Ltd 454,545
c/o Robertson Stpehens
Attn: MCP Global Corporation
Ltd.-Acct. 44-
951630
555 California Street, 26th Floor
San Francisco, CA 94104
- ----------------------------------------------------------
Michael E. Powers 11,363
330 Lake Forest Drive
Taylorsville, NC 28681
- ----------------------------------------------------------
Michael Graham 6,818
c/o BancBoston Robertson Stephens Inc.
555 California St., Suite 2600
San Francisco, CA 94104
- ----------------------------------------------------------
Michael J. Rosso 1,503
2525 Larkin Street, #302
San Francisco, CA 94109
- ----------------------------------------------------------
Michael R. Olson 1,136
c/o BancBoston Robertson Stephens Inc.
555 California St., Ste. 2600
San Francisco, CA 94104
- ----------------------------------------------------------
Michael S. Dana 5,681
85 Upper Mountain Avenue
Montclair, NJ 07042
- ----------------------------------------------------------
N.V.C.B.C., LLC 227,272
c/o Michael A. Garcia
10625 Gaskins Way
Manasses, VA 20109
- ----------------------------------------------------------
Neil N. Hasson 3,409
25 Rosslyn Hill
London/NW3 5UJ
United Kingdom
- ----------------------------------------------------------
Newpoint (BVI) Holdings, Ltd. 56,818
c/o BancBoston Robertson Stephens Inc.
Attn: Kimy Ruiz
555 California Street
San Francisco, CA 94104
- ----------------------------------------------------------
Oblique Investments Limited 22,727
c/o NWT Management S.A.
Attn: Angelo De Riz
16-18 rue de la Pelisserie
Case Postale 3501
1211 Geneva 3
Switzerland
- ----------------------------------------------------------
Oktava Management Corporation 50,000
c/o Murdoch & Company
Bank of Bermuda
Attn: Charles Boulton
Compass Point
9 Bermudiana Road
Hamilton, HM 11, Bermuda
- ----------------------------------------------------------
Orion Technology Ventures 113,636
Attn: David Kohl
450 North Roxbury Drive, Suite 600
Beverly Hills, CA 90210
- ----------------------------------------------------------
34
- ----------------------------------------------------------
Owens Corning 227,272
Attn: Aris Chicles
One Owens Corning Parkway
Toledo, OH 43659
- ----------------------------------------------------------
Paine Webber as Custodian Rollover 56,818
IRA FBO Arjun C. Waney A/C No. WE 41212
c/o Paine Webber
Attn: Carl Waney
1251 Avenue of the Americas, 2nd Floor
New York, Nerw York 10020
- ----------------------------------------------------------
Paul H. Broyhill Family Limited Partnership 22,727
Attn: Dan Wakin
800 Golfview Park
P. O. Box 500
Lenoir, NC 28645
- ----------------------------------------------------------
Philip C. Mittleman 222,726
1108 Somera Road
Bel Air, CA 90077
- ----------------------------------------------------------
Philip P. Vineyard 56,818
912 2nd Street NE
Hickory, NC 28601
- ----------------------------------------------------------
Private Equity Portfolio Fund II, LLC 227,272
c/o BancBoston Capital Inc.
Attn: Cynthia K. Duda
175 Federal Street, 10th Floor
Boston, MA 02110
- ----------------------------------------------------------
Pulte Corporation 227,273
Attn: Roger A. Cregg
33 Bloomfield Hills Parkway, Suite 200
Bloomfield Hills, MI 48304
- ----------------------------------------------------------
Richard A. Brand Rollover IRA 3,409
c/o BancBoston Robertson Stephens Inc.
Attn: Richard Brand
555 California St., Suite 2600
San Francisco, CA 94104
- ----------------------------------------------------------
Richard Beckwitt 22,727
c/o D. R. Horton, Inc.
1901 Ascension Boulevard, Suite 100
Arlington, TX 76006
- ----------------------------------------------------------
Richard L. Moriarty 17,044
83 Ridgewood Avenue
Glenridge, NJ 07028
- ----------------------------------------------------------
Robert A. McLalan & Heidi M. McLalan 5,681
c/o BancBoston Robertson Stephens Inc.
555 California St., Ste. 2600
San Francisco, CA 94104
- ----------------------------------------------------------
Robert Eric Hart 11,363
367 Sixth Street NW
Hickory, NC 28601
- ----------------------------------------------------------
Robert I. Brody 3,409
205 West 89th Street, Apt. 5I
New York, NY 10024
- ----------------------------------------------------------
Robert I. Toll 56,818
c/o Toll Brothers, Inc.
Attn: Ann Marie P. Mitchell
3103 Philmont Avenue
Huntingdon Valley, PA 19006
- ----------------------------------------------------------
Robert Lawrence Zangrillo 227,272
314 Galena
Aspen, CO 81611
- ----------------------------------------------------------
Robert S. Blank 5,681
c/o Toll Brothers, Inc.
Attn: Ann Marie P. Mitchell
3103 Philmont Avenue
Huntingdon Valley, PA 19006
- ----------------------------------------------------------
Robert S. Colman Trust U/D/T dated 3/13/85 113,636
c/o Colman Partners, LLC
Attn: Robert S. Colman
One Maritime Plaza, Suite 2535
35
San Francisco, CA 94111
- ----------------------------------------------------------
Roger D. Van Dyke 23,000
204 New Castle Place
Chapel Hill, NC 27514
- ----------------------------------------------------------
RS Co-Investment Fund 2,153,068
c/o BancBoston Robertson Stephens Inc.
Attn: Dale Haithcock
555 California St., Suite 2600
San Francisco, CA 94104
- ----------------------------------------------------------
Salim Reshwan 3,409
c/o BancBoston Robertson Stephens Inc.
555 California St., Ste. 2600
San Francisco, CA 94104
- ----------------------------------------------------------
Salomon Smith Barney as Custodian 56,818
Rollover IRA FBO Arjun C. Waney A/C No.
532-63444-12 043
c/o Salomon Smith Barney
Attn: Frank Padace
7979 Ivanhoe Avenue, Suite 300
La Jolla, CA 92037
- ----------------------------------------------------------
Sashi Rentala 1,136
c/o Donaldson, Lufkin & Jenrette
277 Park Avenue
New York, NY 10172
- ----------------------------------------------------------
Seligman Communication And Information 227,273
Fund, Inc.
c/o J&W Seligman
Attn: Jim Curtis
100 Park Avenue, 7th Floor
New York, NY 10017
- ----------------------------------------------------------
Seligman Investment Opportunities (Master) 286,363
Fund-NTV
c/o J&W Seligman
Attn: Jim Curtis
100 Park Avenue, 7th Floor
New York, NY 10017
- ----------------------------------------------------------
Seligman New Technologies Fund, Inc. 1,077,273
c/o J&W Seligman
Attn: Jim Curtis
100 Park Avenue, 7th Floor
New York, NY 10017
- ----------------------------------------------------------
SGC Partners II LLC 1,136,363
Attn: Justin Hall-Tipping
1221 Avenue of the Americas
13th Floor
New York, NY 10020
- ----------------------------------------------------------
Southeast Interactive Technology 227,272
Fund II
Attn: Norvell E. Miller, IV
630 Davis Drive, Suite 220
Morrisville, NC 27713
- ----------------------------------------------------------
SRS Internet Holding Ltd 272,726
c/o Sierra Advisory, Ltd.
Attn: Masoud Ladjevardian
1177 West Loop Road, Suite 1450
Houston, TX 77027
- ----------------------------------------------------------
Stephen G. Blumenreich 2,272
10 Thacher Street, Apt. 512
Boston, MA 02113
- ----------------------------------------------------------
Steven G. Puccinelli 2,272
1030 5th Avenue, Apt. 7E
New York, NY 10028
- ----------------------------------------------------------
Steven L. Kantor 2,272
100 Woodhollow Court
Muttontown, NY 11791
- ----------------------------------------------------------
36
- ----------------------------------------------------------
The CIT Group/Equity Investments, 56,818
Inc.
Attn: Mark Vanderveen
650 CIT Drive
Livingston, NJ 07039
- ----------------------------------------------------------
The Orion Fund, LP 113,636
c/o Orion Capital Partners
Attn: Robert Choi
1999 Avenue of the Stars, Suite 2820
Los Angeles, CA 90067
- ----------------------------------------------------------
Thomas W. Glasgow, Jr. 11,363
17 Eastwood Road
Asheville, NC 28803
- ----------------------------------------------------------
Thomas W. Sheedy 5,681
c/o BancBoston Robertson Stephens Inc.
555 California St., Ste. 2600
San Francisco, CA 94104
- ----------------------------------------------------------
Todd J. Carter 6,818
c/o BancBoston Robertson Stephens Inc.
555 California St., Suite 2600
San Francisco, CA 94104
- ----------------------------------------------------------
Toll Brothers, Inc. 227,273
Attn: Ann Marie P. Mitchell
3103 Philmont Avenue
Huntingdon Valley, PA 19006
- ----------------------------------------------------------
Trentham Group Limited 17,045
- ----------------------------------------------------------
Vance H. Edwards 45,454
1102 Wessex Court
Goldsboro, NC 27530
- ----------------------------------------------------------
Victory Fire Limited 113,636
c/o BancBoston Robertson Stephens Inc.
Attn: Kimy Ruiz
555 California Street
San Francisco, CA 94104
- ----------------------------------------------------------
Waverly Avenue Investors II LLC 454,545
c/o Banc of America Securities
Attn: John Kern
Two International Place, 25th Floor
Boston, MA 02110
- ----------------------------------------------------------
Wesley E. Collins 11,363
349 Tremont Circle SE
Lenoir, NC 28645
- ----------------------------------------------------------
William J. Abrams 2,272
815 Park Avenue, Apt. 10B
New York, NY 10021
- ----------------------------------------------------------
William J. Curtis 227,272
29160 Heathercliff Road
Malibu, CA 90265
- ----------------------------------------------------------
William James Bell 1993 Trust 454,545
Attn: William Bell
10539 Bellagio Rd.
Los Angeles, CA 90077
- ----------------------------------------------------------
William N. & Kathryn E. Keller 5,681
c/o BancBoston Robertson Stephens Inc.
555 California St., Ste. 2600
San Francisco, CA 94104
- ----------------------------------------------------------
William N. Thompson 5,681
c/o BancBoston Robertson Stephens Inc.
555 California St., Suite 2600
San Francisco, CA 94104
- ----------------------------------------------------------
Windsor Capital Growth Fund #10 340,909
Attn: Mohamed Hadid
638 N. Faring Road
Los Angeles, CA 90077
- ----------------------------------------------------------
WRYP 99 11,364
Attn: Larry Robbins
4101 Lake Boone Trail, Suite 300
Raleigh, NC 27607
- ----------------------------------------------------------
37
- ----------------------------------------------------------
Zvi Barzilay 5,681
c/o Toll Brothers, Inc.
Attn: Ann Marie P. Mitchell
3103 Philmont Avenue
Huntingdon Valley, PA 19006
- ----------------------------------------------------------
- ----------------------------------------------------------
TOTAL 24,322,619
- ----------------------------------------------------------
38
EXHIBIT 4.3
BUILDNET, INC.
AMENDMENT NO. 1 TO
SERIES C INVESTOR RIGHTS AGREEMENT
THIS AMENDMENT NO. 1 TO THE SERIES C INVESTOR RIGHTS AGREEMENT (the
"Amendment") is entered into this 31st day of January 2000, by and among
Buildnet, Inc., a North Carolina corporation (the "Company"), the undersigned
holders of Preferred Stock of the Company, the undersigned holder of the UniLink
Notes (as defined herein), the undersigned holder of JD Edwards Notes (as
defined herein) and the undersigned holders of the NxTrend Shares (as defined
herein).
WHEREAS, the Company and holders of Series C Preferred Stock of the
Company listed on Exhibit A attached hereto (the "Investors") of the Company
have entered into that Series C Investor Rights Agreement dated as of October
29, 1999 (the "Rights Agreement"); and
WHEREAS, in connection with the Company's acquisition of certain assets
of The UniLink Group, LLC ("UniLink"), the Company has issued a convertible
promissory note or notes (the "UniLink Notes"), as set forth on Exhibit B
attached hereto, to UniLink pursuant to which UniLink and/or its owners may
acquire shares of the Company's Common Stock (the "UniLink Shares"); and
WHEREAS, in connection with the Company's acquisition of certain assets
of the J.D. Edwards World Source Company ("JD Edwards"), the Company intends to
issue a convertible promissory note or notes (the "JD Edwards Notes"), as set
forth on Exhibit C attached hereto, to JD Edwards pursuant to which JD Edwards
and/or its owners may acquire shares of the Company's Common Stock (the "JD
Edwards Shares"); and
WHEREAS, in connection with the Company's acquisition of NxTrend
Technology, Inc. ("NxTrend"), the Company has issued shares of its Common Stock
(the "NxTrend Shares") to the holders of outstanding shares of NxTrend capital
stock, as set forth on Exhibit D attached hereto; and
WHEREAS, the Company has agreed to provide the holders of the UniLink
Notes, and desires to agree to provide the holders of the JD Edwards Notes and
the NxTrend Shares, certain rights with respect to registration of certain
shares held by them by means of amending the Rights Agreement to include the
UniLink Shares, JD Edwards Shares and the NxTrend Shares within the definition
of "Registrable Securities" contained therein; and
WHEREAS, the Company and the Investors desire to amend the Rights
Agreement to include the UniLink Shares, the JD Edwards Shares and the NxTrend
Shares within the definition of "Registrable Securities" contained therein; and
WHEREAS, Section 2.14 of the Rights Agreement requires the written
consent of holders of a majority of the Registrable Securities then outstanding
and not registered to amend the registration rights provisions of the Rights
Agreement and Section 5.7 of the Rights
39
Agreement requires the written consent of holders of a majority of the
Registrable Securities, voting together as a single class, to amend any
provision of the Rights Agreement; and
WHEREAS, the undersigned Investors constitute the requisite percentage
of Investors required to amend the Rights Agreement; and
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions set forth in this Amendment, and other good and valuable
consideration, the receipt of which is hereby acknowledged, and pursuant to
Sections 2.14 and 5.7 of the Rights Agreement, the parties to this Amendment
mutually agree as follows.
1. Capitalized Terms. All capitalized terms used herein that are
not otherwise defined herein shall have the meanings assigned to them in the
Rights Agreement unless the context hereof requires otherwise.
2. Amendments. The Investor Rights Agreement is hereby amended as
follows:
2.1 Subsection 2.1(c), clause (i), shall be amended and restated as
follows.
"shares of Common Stock of the Company issued or issuable upon
conversion of the shares of Series C Stock held by the Investors as set
forth on Exhibit A, shares of Common Stock of the Company issued or
issuable upon conversion of the UniLink Notes as set forth on Exhibit
B, shares of Common Stock of the Company issued or issuable upon
conversion of the JD Edwards Notes as set forth on Exhibit C, or shares
of Common Stock of the Company issued to the former shareholders of
NxTrend Technology, Inc., as set forth on Exhibit D, or any transferee
in a Permitted Transfer (as defined in Section 2.8 below), and"
2.2 Exhibit B (Holders of UniLink Notes) shall be added to the Rights
Agreement in the form attached hereto as Exhibit B, Exhibit C (Holders
of JD Edwards Notes) shall be added to the Rights Agreement in the form
attached hereto as Exhibit C, and Exhibit D (Holders of NxTrend Shares)
shall be added to the Rights Agreement in the form attached hereto as
Exhibit D.
2.3 Subsection 2.1(d) shall be amended and restated as follows.
"(d) The term "Holder" (collectively, "Holders") means any Investor,
any UniLink Holder, any JD Edwards Holder or any NxTrend Holder (and
any transferee as permitted by Section 2.8 hereof) holding Registrable
Securities, securities exercisable or convertible into Registrable
Securities or securities exercisable for securities convertible into
Registrable Securities."
2.4 Subsection 2.1(e) shall be amended and restated as follows.
"(e) The term "Initiating Holders" means any Investor(s), UniLink
Holder(s), JD Edwards Holder(s) and/or NxTrend Holder(s) holding at
least fifteen percent (15%) of the Registrable Securities then held by
all Investors, UniLink Holders, JD Edwards
40
Holders and NxTrend Holders and not registered at the time of any
request for registration made pursuant to Section 2.2 of this
Agreement."
2.5 New subsections (f), (g), (h), (i) and (j) shall be added to Section
2.1 immediately following subsection (e), stating as follows.
"(f) The term `UniLink Notes' means the convertible promissory note
or notes issued by the Company to The UniLink Group, LLC, effective
January 18, 2000, as further set forth on Exhibit B.
(g) The term `UniLink Holder' means any holder of a UniLink Note
or shares of the Company's Common Stock issued or issuable upon
conversion thereof.
(h) The term `JD Edwards Notes' means the convertible promissory
note or notes issued by the Company to the J.D. Edwards World Source
Company, on or about January ___, 2000, as further set forth on Exhibit
C.
(i) The term `JD Edwards Holder' means any holder of a JD Edwards
Note or shares of the Company's Common Stock issued or issuable upon
conversion thereof.
(j) The term `NxTrend Holder' means any holder of the Company's
Common Stock as set forth on Exhibit D hereto."
3. Validity. The parties agree that this Amendment is entered
into in accordance with Sections 2.14 and 5.7 of the Rights Agreement.
4. No Other Amendment. Except as specifically amended pursuant to
this Amendment, the Rights Agreement remains in full force and effect in
accordance with its terms.
5. Governing Law. All questions concerning the construction,
validity and interpretation of this Amendment will be governed by and construed
in accordance with the internal law (and not the law of conflicts) of New York.
6. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7. Binding Effect. This Amendment shall be binding upon and shall
inure to the benefit of the parties hereto and their heirs, successors and
assigns.
[THE NEXT PAGE IS THE SIGNATURE PAGE.]
41
IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 to
the Series C Investor Rights Agreement as of the date first above written.
COMPANY:
BUILDNET, INC.
By: /s/ Bayard M. Atwood, III
Name: Bayard M. Atwood, III
Title: President
INVESTORS:
By: /s/ Investors listed in Exhibit A hereto
Name: Investors listed in Exhibit A hereto
42
EXHIBIT A
SCHEDULE OF INVESTORS
INVESTOR SHARES
- -------- ------
John Hancock Series Trust on behalf of John 681,817
Hancock Global Technology Fund
c/o John Hancock Advisers, Inc.
Attn: Al Ouellette
101 Huntington Avenue
Boston, MA 02199
- ---------------------------------------------------------------
Seligman Communication And Information 227,273
Fund, Inc.
c/o J&W Seligman
Attn: Jim Curtis
100 Park Avenue, 7th Floor
New York, NY 10017
- ---------------------------------------------------------------
Seligman New Technologies Fund, Inc. 1,077,273
c/o J&W Seligman
Attn: Jim Curtis
100 Park Avenue, 7th Floor
New York, NY 10017
- ---------------------------------------------------------------
Seligman Investment Opportunities (Master) 286,363
Fund-NTV
c/o J&W Seligman
Attn: Jim Curtis
100 Park Avenue, 7th Floor
New York, NY 10017
- ---------------------------------------------------------------
Alpine Capital 227,273
Attn: Chet Ranawat
152 East 65th Street, Suite 400 New York, NY 10021
- ---------------------------------------------------------------
BancBoston Ventures Inc. 1,818,182
Attn: John Doggett
175 Federal Street
Boston, MA 02110
- ---------------------------------------------------------------
William James Bell 1993 Trust 454,545
Attn: William Bell
10539 Bellagio Rd.
Los Angeles, CA 90077
- ---------------------------------------------------------------
Christina's Trust #2 U/D/T dated 1/20/99 56,818
Attn: Mike Huffington
10580 Wilshire Blvd., # 71
Los Angeles, CA 90024
- ---------------------------------------------------------------
Isabella's Trust #2 U/D/T dated 1/20/99 56,818
Attn: Mike Huffington
10580 Wilshire Blvd., # 71
Los Angeles, CA 90024
- ---------------------------------------------------------------
H.E.P. Living trust U/D/T dated 5/31/95 as 340,909
restated 10/16/98
Attn: Mike Huffington
10580 Wilshire Blvd., # 71
Los Angeles, CA 90024
- ---------------------------------------------------------------
Robert Lawrence Zangrillo 227,272
314 Galena
Aspen, CO 81611
- ---------------------------------------------------------------
Covestco-Seteura LLC 681,818
c/o Freeborn & Peters
Attn: Kelly North Matthews
950 Seventeenth Street, Suite 2600
Denver, CO 80202-2826
- ---------------------------------------------------------------
SGC Partners II LLC 1,136,363
Attn: Justin Hall-Tipping
1221 Avenue of the Americas, 13th Floor
New York, NY 10020
- ---------------------------------------------------------------
Southeast Interactive Technology Fund II 227,272
Attn: Norvell E. Miller, IV
630 Davis Drive, Suite 220
Morrisville, NC 27713
- ---------------------------------------------------------------
Deerwood Enterprises, Ltd. 600,000
Attn: Frank Liu
5177 Richmond Avenue, Suite 1166
Houston, TX 77056
- ---------------------------------------------------------------
RS Co-Investment Fund 2,153,068
c/o BancBoston Robertson Stephens Inc.
Attn: Dale Haithcock
555 California St., Suite 2600
San Francisco, CA 94104
10
43
- ---------------------------------------------------------------
William J. Curtis 227,272
29160 Heathercliff Road
Malibu, CA 90265
- ---------------------------------------------------------------
Private Equity Portfolio Fund II, LLC 227,272
c/o BancBoston Capital Inc.
Attn: Cynthia K. Duda
175 Federal Street, 10th Floor
Boston, MA 02110
- ---------------------------------------------------------------
Toll Brothers, Inc. 227,273
Attn: Robert Toll
3103 Philmont Avenue
Huntingdon Valley, PA 19006
- ---------------------------------------------------------------
Robert I. Toll 56,818
c/o Toll Brothers, Inc.
3103 Philmont Avenue
Huntingdon Valley, PA 19006
- ---------------------------------------------------------------
Mayflower Venture Capital, LLC 59,558
Attn: Stanley H. Van Etten
2626 Glenwood Avenue, Suite 100
Raleigh, NC 27608
- ---------------------------------------------------------------
Mayflower Venture Capital Fund II, LLC 1,237,499
Attn: Diane Pace
2626 Glenwood Avenue, Suite 100
Raleigh, NC 27608
- ---------------------------------------------------------------
Lennar Corporation 681,818
Attn: David B. McCain
700 NW 107th Avenue
Miami, FL 33172
- ---------------------------------------------------------------
Global Technology Investors Fund LLC 500,000
c/o Bessemer Trust Company, N.A.
Attn: Peter Frischman
630 Fifth Avenue
New York, NY 10111
- ---------------------------------------------------------------
Global Technology Investors Fund LTD 409,090
c/o Bessemer Trust Company, N.A.
Attn: Peter Frischman
630 Fifth Avenue
New York, NY 10111
- ---------------------------------------------------------------
Maverick Fund, LDC 295,915
c/o Maverick Capital, Ltd.
Attn: Sharyl Robertson
300 Crescent Court, Suite 1850
Dallas, TX 75201
- ---------------------------------------------------------------
Maverick Fund USA, Ltd. 132,385
c/o Maverick Capital, Ltd.
Attn: Sharyl Robertson
300 Crescent Court, Suite 1850
Dallas, TX 75201
- ---------------------------------------------------------------
Maverick Fund II, Ltd. 26,245
c/o Maverick Capital, Ltd.
Attn: Sharyl Robertson
300 Crescent Court, Suite 1850
Dallas, TX 75201
- ---------------------------------------------------------------
D. R. Horton, Inc. 522,726
Attn: Richard Beckwitt
1901 Ascension Boulevard, Suite 100
Arlington, TX 76006
- ---------------------------------------------------------------
Donald R. Horton 113,636
c/o D. R. Horton, Inc.
1901 Ascension Boulevard, Suite 100
Arlington, TX 76006
- ---------------------------------------------------------------
TOTAL: 14,970,571
- ---------------------------------------------------------------
44
EXHIBIT B
NEITHER THIS NOTE NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"'33 ACT"), OR APPLICABLE STATE SECURITIES LAWS. THIS NOTE AND SUCH
SECURITIES ARE ACQUIRED FOR INVESTMENT ONLY AND NOT WITH A VIEW TO
DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, MORTGAGED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SECURITIES UNDER THE '33 ACT AND ANY APPLIcABLE
STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO MAKER
THAT SUCH REGISTRATION IS NOT REQUIRED.
BUILDNET, INC.
SUBORDINATED
CONVERTIBLE PROMISSORY NOTE
$27,000,000 Raleigh, North Carolina
January 18, 2000
For value received, BUILDNET, INC., a North Carolina corporation
("Maker"), promises to pay to THE UNILINK GROUP, LLC, a Georgia limited
liability company that is changing its name to TUG LIQUIDATION, LLC ("Payee"),
the principal sum of TWENTY-SEVEN MILLION DOLLARS ($27,000,000), with interest
thereon at the rate of eight per cent (8%) per annum from the date hereof (the
"Original Issue Date"), payable at 1770 The Exchange, Suite 240, Atlanta,
Georgia, 30339 or at such other place as Payee may designate in writing, on or
before January 18, 2002 (the "Maturity Date").
SECTION 1. ISSUE.
SECTION 1.1 RELATIONSHIP OF NOTE TO ACQUISITION. This Note has been
executed and delivered pursuant to and in accordance with the terms and
conditions of that certain Acquisition Agreement of even date herewith by and
among TUG Acquisition Corporation, a Georgia corporation and wholly owned
subsidiary of Maker that is changing its name to The UniLink Group, Inc. (the
"Subsidiary"), Maker and Payee (the "Purchase Agreement"), and is subject to the
terms and conditions thereof which are, by this reference, incorporated herein
and made a part hereof. Payment or conversion of this Note is also secured under
the terms of that certain Security Agreement of even date herewith by and among
the Subsidiary and Payee (the "Security Agreement"), and is subject to the terms
and conditions thereof which are, by this reference, incorporated herein and
made a part hereof. Payment of this Note is subordinated to Senior Debt. As used
herein, "Senior Debt" means the secured and unsecured debt of Maker in favor of
commercial lenders, including banks, insurance companies, and similar financial
institutions, and any first priority security interests in the Assets (as
defined in the Purchase Agreement) heretofore granted by Payee and assumed by
Maker.
SECTION 1.2 PAYMENT OF NOTE. ON THE MATURITY DATE, Maker shall pay
principal and interest in full by wire transfer to Payee's account per Payee's
instructions or by certified check sent by overnight courier to Payee's address,
above (unless otherwise notified by Payee); provided, however, that to receive
such payment Payee must surrender this Note for cancellation to Maker at the
office of Maker described in Section 1.3 hereof or to a paying agent appointed
by Maker. Principal and interest shall be considered paid on the date due, and
no interest shall accrue thereafter, if there is on deposit on that date, in a
bank trust account for the benefit of Payee, money sufficient to pay all
principal and interest then due on the Note.
SECTION 1.3 OFFICE FOR CONVERSION AND PAYMENT. Maker shall maintain an
office where the Note shall be surrendered for conversion or payment. This
office will initially be located at the offices of Maker at 4813 Emperor
Boulevard, Suite 130, Durham, NC 27703, until further notice from Maker to
Payee. Payee may convert all or any portion of the principal amount of this Note
into BuildNet Common Stock at any time and from time to time. If Payee
11
45
elects to convert less than the full principal amount of this Note then
outstanding, such conversion shall be permitted only in one hundred (100)-share
increments. Upon surrender of this Note for conversion in part, Maker shall
issue a new Note in substantially the same form as this Note, except that the
principal amount thereof shall be reduced by the principal amount hereof so
converted.
SECTION 2. CONVERSION.
SECTION 2.1 RIGHT TO CONVERT. Payee may, at any time and from time to
time prior to the Maturity Date, convert all or, with Maker's prior written
consent, any portion of the then outstanding principal amount and accrued and
unpaid interest thereon of this Note into a number of shares of BuildNet Common
Stock equal to the principal amount of this Note to be converted divided by the
Conversion Price. If Payee elects to convert less than the full principal amount
of this Note then outstanding, such conversion shall be permitted only in one
hundred (100)-share increments unless Maker has given its contemporaneous
consent to conversion of an odd lot. Upon surrender of this Note for conversion
in part, Maker shall issue a new Note in substantially the same form as this
Note, except that the principal amount thereof shall be reduced by the principal
amount hereof so converted. Payee and Maker shall observe the procedures in
Section 2.4 hereof in any conversion under this Section 2.1.
SECTION 2.2 MANDATORY CONVERSION. All outstanding principal and accrued
and unpaid interest due under this Note shall automatically be converted into
BuildNet Common Stock equal to the then outstanding principal amount of this
Note divided by the Conversion Price, in accordance with Section 2.4 hereof,
upon the first to occur of (a) the expiration of any "lock up period" to which
Maker's venture capital investors are subject following an initial public
offering of the BuildNet Common Stock, and (b) the day prior to the closing of
any merger or share exchange in which the consideration to be received by Payee
would consist of freely tradable shares of capital stock of the acquiring
company (in each case, a "Mandatory Conversion Event"). From and after a
Mandatory Conversion Event, this Note shall represent solely the right to
receive such number of shares of BuildNet Common Stock issuable upon the date of
such Mandatory Conversion Event.
SECTION 2.3 CONVERSION PRICE. The conversion price shall initially be
US$4.40 per Conversion Share, subject to adjustment as set forth in Section 2.8
hereof (such conversion price and such conversion price as so adjusted, is
hereinafter the "Conversion Price").
SECTION 2.4 PROCEDURES FOR CONVERSION. To convert this Note into
BuildNet Common Stock, Payee must (i) give written notice to Maker of Payee's
exercise of its right to convert all or any portion of the outstanding principal
amount of this Note into BuildNet Common Stock, specifying the principal amount
hereof to be converted, (ii) if the BuildNet Common Stock is to be registered in
the name of a person other than Payee, furnish to Maker the name, address and
social security or taxpayer identification number of such person, (iii)
surrender this Note to Maker at the office of Maker described in Section 1.3
hereof, or to a stock registrar or conversion agent appointed by Maker, (iv)
furnish appropriate endorsements or transfer documents as required by Maker or
any stock registrar or conversion agent appointed by Maker, and (v) furnish such
other information as Maker may reasonably require. Maker shall pay any and all
documentary stamp or similar issue or transfer taxes payable to the United
States of America or any State of the United States of America, or any political
subdivision thereof, in respect of the delivery to Maker of this Note for
conversion or the issuance or delivery of BuildNet Common Stock upon conversion
of this Note; provided, however, that Maker shall not be required to pay any tax
that may be payable in respect of any transfer involved in the issuance or
delivery of BuildNet Common Stock in a name other than that of Payee upon
conversion, and no such issuance or delivery shall be made unless and until the
person requesting such issuance has paid to Maker the amount of any such tax or
has established, to the satisfaction of Maker, that such tax has been paid. The
date on which Payee satisfies all the requirements of this Section 2.4 shall be
the "Conversion Date." As soon as is practical thereafter, Maker shall deliver,
directly or through any stock registrar or conversion agent appointed by Maker,
a certificate for the number of full number of shares of BuildNet Common Stock
issuable upon such conversion and a check for any fractional share. The
certificate for such shares shall be legended with such securities law
restrictions on transfer as may then be applicable. From and after the
Conversion Date the person in whose name the certificate is registered shall be
treated as a shareholder of record and shall enjoy all rights, privileges,
12
46
and preferences and shall be subject to all terms, conditions, and limitations
applicable to BuildNet Common Stock pursuant to Maker's Articles of
Incorporation, as amended, and Bylaws.
SECTION 2.5 EFFECT OF RECORD DATE. If any adjustment to be made to the
Conversion Price pursuant to Section 2.8 hereof becomes effective immediately
after a record date for an event as therein described, and conversion occurs
prior to such event but after the record date, Maker may defer issuing,
delivering, or paying to Payee any additional BuildNet Common Stock or check for
any fractional share required by reason of such adjustment until the occurrence
of such event, provided that Maker delivers to Payee an instrument evidencing
Payee's right to receive such additional shares or check upon the occurrence of
the event giving rise to the adjustment.
SECTION 2.6 RESERVATION OF SHARES. Until such time as all of the Notes
have been redeemed or converted into BuildNet Common Stock, Maker shall reserve
out of its authorized but unissued Common Stock a sufficient number of shares
BuildNet Common Stock to permit the conversion of the entire outstanding
principal amount of this Note. All BuildNet Common Stock issued upon conversion
of this Note shall be fully paid and non-assessable.
SECTION 2.7 FRACTIONAL SHARES. Fractional shares will not be issued
upon conversion hereof. In lieu thereof, Maker shall deliver cash in the amount
of the product of the Conversion Price multiplied by the fraction arising in the
calculation of the number of shares of BuildNet Common Stock issuable upon
conversion hereof.
SECTION 2.8 ADJUSTMENTS TO CONVERSION PRICE. The Conversion Price shall
be subject to adjustment from time to time as follows:
(a) Consolidation, Merger, or Sale. In case of the
consolidation or merger of Maker with or into, or the sale of all or
substantially all of its assets to, any person, or in the case of any
consolidation or merger of another corporation into Maker in which
Maker is the surviving corporation, and in which there is a
reclassification or change of the shares of Common Stock of Maker, this
Note shall, after such consolidation, merger or sale, be convertible
into the kind and number of securities or amount and kind of property
of Maker or the corporation resulting from such merger or consolidation
or to which such sale shall be made, as the case may be (the "Successor
Corporation"), to which a holder of the number of shares of BuildNet
Common Stock deliverable upon conversion (immediately prior to the time
of such consolidation, merger or sale) of this Note would have been
entitled upon such consolidation, merger or sale; and in any such case
appropriate adjustments shall be made in the application of the
provisions set forth in Section 2.8 hereof with respect to the rights
and interests of Payee, such that the provisions set forth in Section
2.8 hereof shall thereafter correspondingly be made applicable, as
nearly as may reasonably be, in relation to the number and kind of
securities or the type and amount of property thereafter deliverable
upon the conversion of this Note. The above provisions shall similarly
apply to successive consolidations, mergers and sales. Any adjustment
required by this Section 2.8(a) because of a consolidation, merger or
sale to which Section 2.8(a) hereof is applicable shall be set forth in
an undertaking delivered to Payee and executed by the Successor
Corporation.
(b) Adjustments for Stock Dividends and Splits. In the event
Maker should at any time or from time to time after the Original Issue
Date fix a record date for the effectuation of a stock split, or
subdivision of the outstanding shares of Common Stock (except in
connection with a consolidation, merger, or sale covered by Section
2.8(a) hereof) or the determination of holders of BuildNet Common Stock
entitled to receive a dividend or other distribution payable in
additional shares of BuildNet Common Stock or other securities or
rights convertible into, or entitling Payee thereof to receive directly
or indirectly, additional shares of BuildNet Common Stock (hereinafter
referred to as "BuildNet Common Stock Equivalents") without payment of
any consideration by such Payee for the additional shares of BuildNet
Common Stock or the Common Stock Equivalents (including the additional
shares of BuildNet Common Stock issuable upon conversion or exercise
thereof), then, as of such record date (or
13
47
the date of such dividend, distribution, split, or subdivision if no
record date is fixed), the Conversion Price shall be appropriately
decreased so that the number of shares of BuildNet Common Stock
issuable upon conversion of a Note shall be increased in proportion to
the increase in the number of outstanding shares resulting from such
stock split, stock dividend, distribution, or subdivision.
(c) Reverse Stock Splits. In the event Maker should at any
time or from time to time after the Original Issue Date, fix a record
date for the effectuation of a reverse stock split, or a transaction
having a similar effect on the number of outstanding shares of BuildNet
Common Stock, (except in connection with the consolidation, merger, or
sale covered by Section 2.8(a) hereof), then, as of such record date
(or the date of such reverse stock split or similar transaction if no
record date is fixed), the Conversion Price shall be appropriately
increased so that the number of shares of BuildNet Common Stock
issuable upon conversion of this Note shall be decreased in proportion
to the decrease in the number of outstanding shares of BuildNet Common
Stock resulting from the reverse stock split or similar transaction.
(d) Reclassification. In the event Maker should at any time or
from time to time after the Original Issue Date, fix a record date for
a reclassification of its Common Stock, then, as of such record date
(or the date of the reclassification if no record date is set), this
Note shall thereafter be convertible into such number and kind of
securities as would have been issuable as the result of such
reclassification to a holder of a number of shares of BuildNet Common
Stock equal to the number of shares of BuildNet Common Stock issuable
upon conversion of this Note immediately prior to such
reclassification.
SECTION 3. DEFAULT AND REMEDIES.
SECTION 3.1 DEFAULT. As used herein, a "Default" hereunder occurs if:
(a) Maker defaults in the payment of principal when the same
becomes due and payable at the Maturity Date;
(b) Maker fails to comply with any of its other agreements or
covenants contained in this Note and such failure is not cured within
ten (10) days after Maker receives written demand from Holder to remedy
the same; or
(c) There is an Event of Default under the Security Agreement.
14
48
SECTION 3.2 REMEDIES OF HOLDERS. Upon the occurrence of a Default
described in Section 3.1 hereof, Payee may, in addition to the exercise of any
right, power, or remedy permitted to such holder or holders by law and under the
Security Agreement, declare (by written notice or notices to Maker) the entire
principal of and all interest accrued on the Note to be due and payable, and
such Notes shall thereupon become immediately due and payable, without
presentment, demand, protest, or other notice of any kind, all of which are
hereby expressly waived by Maker. Subject to restrictions imposed by Senior
Debt, upon such declaration, Maker shall immediately pay to Payee the entire
principal of and interest accrued on the Notes, plus all costs of collection,
including attorneys' fees.
SECTION 3.3 EFFECT OF DELAY. A delay or omission by Payee in exercising
any right or remedy arising upon a Default shall not impair such right or remedy
or constitute a waiver of or an acquiescence in the Default. All remedies are
cumulative to the extent permitted by law.
SECTION 4. GENERAL PROVISIONS.
SECTION 4.1 WAIVERS OF MAKER. Maker hereby waives protest, presentment,
notice of dishonor and notice of acceleration of maturity and agrees to continue
to remain bound for the payment of principal and all other sums due under this
Note notwithstanding any change by way of any extension of time for the payment
hereof.
SECTION 4.2 PREPAYMENT. This Note may be prepaid in full or in part at
any time by the mutual consent of Maker and Payee without penalty or premium.
SECTION 4.3 GOVERNING LAW. This Note is to be governed by and construed
in accordance with the laws of the State of North Carolina.
SECTION 4.4 NO IMPAIRMENT. Maker will not, by amendment of its Articles
of Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issuance, or sale of securities, or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed hereunder by Maker, but will at
all times and in good faith assist in the carrying out of all provisions of
Sections 4 and 5 hereof and in the taking of all such action as may be necessary
or appropriate in order to protect the conversion rights of Payees of the Notes
against impairment.
[NEXT PAGE IS THE SIGNATURE PAGE.]
49
IN WITNESS WHEREOF, the undersigned has caused this instrument to be
executed as of the 18th day of January, 2000.
BUILDNET, INC.
By:
-------------------------------
Name:
--------------------------------
Title:
------------------------------
50
EXHIBIT C
CONVERTIBLE PROMISSORY NOTE
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ACT), OR UNDER
ANY STATE SECURITIES LAW. THE SECURITIES MAY NOT BE OFFERED, SOLD, OR OTHERWISE
TRANSFERRED UNLESS THEY ARE RECISTERED UNDER THE ACT AND ALL APPLICABLE STATE
SECURITIES LAWS OR ARE IN COMPLIANCE WITH AN EXEMPTION THEREFROM.
SECURED CONVERTIBLE NOTE
$
------------------
FOR VALUE RECEIVED, BUILDNET CORP., a California corporation (the
"Issuer"), promises and agrees to pay to J.D. Edwards World Source Company
("Lender"), the principal sum of _________________ with interest on the unpaid
principal balance from ______________, until paid, at the rate of eight percent
(8%) per annum (the "Loan Rate"). Principal and interest shall be payable in one
(1) installment ______________________ plus interest, (the "Payment"), due on
the ______ day of _____________ (the "Payment Date"). If not sooner paid, the
entire principal amount outstanding and accrued interest thereon, shall be due
and payable on January 25, 2001 ("Maturity Date"). Payment of this Note shall be
subordinated to any Senior Debt. "Senior Debt" shall mean the secured and
unsecured debt of Issuer in favor of commercial lenders, including banks,
insurance companies and similar financial institutions.
1. Asset Purchase Agreement. This is the "Note" referred to in that
certain Asset Purchase Agreement dated ___________, by and between Issuer and
Lender ("Asset Purchase Agreement"). All capitalized tennis used herein which
are not otherwise defined herein shall have the meanings specified in the Asset
Purchase Agreement.
2. Application of Payments. All payments and prepayments on account of the
indebtedness evidenced by this Note shall be first applied to amounts due
pursuant to the Security Agreement; secondly, to late fees and accrued and
unpaid interest on the unpaid principal balance of this Note; thirdly, to all
other sums then due Lender hereunder; and the remainder, if any, to said unpaid
principal balance. Issuer reserves the privilege, without cost or penalty, to
prepay all or any part of the principal balance of this Note at any time and
from time to time upon the mutual consent of both parties. Any prepayment on
account of the indebtedness evidenced by this Note shall not extend or postpone
the due date of any subsequent payment hereunder. Notwithstanding the above,
Issuer shall not have a night to pre-pay the Not: for a period of sixty (60)
days prior to a Triggering Event.
3. Default Rate. After maturity or the earlier Acceleration of the
indebtedness evidenced by this Note, or if said indebtedness has not been
accelerated, during any period in which an Event of Default (as hereinafter
defined) exists Lender this Note or the Security Agreement. Issuer shall pay
interest on the balance of principal remaining unpaid during any such period at
an annual rate equal to fifteen percent (15%). The interest accruing
51
under this paragraph shall be immediately due and payable by Issuer to the
holder of this Note and shall be additional indebtedness evidenced by this Note.
4. Payment Terms. All payments of principal and interest hereunder shall
be paid in coin or currency which, at the time or times of payment, is the legal
tender for public and private debts in the United States of America and shall be
made at such place as Lender or the legal holder or holders of this Note may
from time to time appoint, and in the absence of such appointment, then at the
offices of Lender__________________. Payment submitted in funds not available
until collected shall continue to bear interest until collected. If payment
hereunder becomes due and payable on a Saturday, Sunday or legal holiday under
the laws of the State of Colorado, the due date thereof shall be extended to the
next succeeding business day, and interest shall be payable thereon at the then
applicable Loan Rate during such extension. Payment may also be made by wire
transfer to __________________________.
5. Security Agreement. This Note is the note referred to in the Security
Agreement of even date herewith between Issuer and Lender (the "Security
Agreement"). This Note is secured, by the collateral described in the Security
Agreement (the "Collateral"). Reference is hereby made to the Security Agreement
(which is incorporated herein by reference as fully and with the same effect as
if set forth herein at length) for a description of the Collateral, a statement
of the covenants and agreements contained therein, a statement of the rights,
remedies, and security afforded thereby, and all matters therein contained.
6. Conversion.
(a) All or any part of the outstanding principal and accrued but unpaid
interest on this Note (the "Convertible Amount") shall be convertible, at the
option of the Lender upon the occurrence of a Triggering Event (as defined
below), at the office of the Issuer, into the number of fully paid and
nonassessable shares of common stock of Issuer which results from dividing the
"Conversion Price" in effect at the time of the Triggering Event into the
Convertible Amount.
(b) A "Triggering Event" is defined as the closing of the Issuer's sale
of its common stock or the sale of shares of the Issuer's common stock held by
the Issuer's stockholders in a firm commitment underwritten public offering
pursuant to a registration statement under the Securities Act of 1933, as
amended. Subject to compliance with applicable securities laws, issuer shall
notify Lender of the estimated date of the Triggering Event at a reasonable time
prior to the Closing of such public offering. The "Conversion Price" shall be
the price of the shares as stated in the final prospectus filed with the
Securities and Exchange Commission.
(c) Before the Lender shall be entitled to convert this Note into shares
of common stock, Lender shall surrender this Note, accompanied by a proper
assignment thereof to the Company or in blank, at the office of the Issuer, and
shall give written notice to the Issuer at its principal corporate office, of
the election to convert the same (or a specified portion hereof) and shall state
therein the name or names in which the certificate or certificates for shares of
common stock are to be issued. The Issuer shall, as soon as practicable
thereafter, issue and deliver at such Office to the Lender or to the nominee or
nominees of the Lender, a certificate or certificates for the number of shares
of common stock to which the Lender shall be entitled as aforesaid, together
with cash in respect of any fraction of a share of common stock issuable upon
conversion, and, if applicable, a new Note representing the amount of principal
not converted. Such conversion shall be deemed to have been made on the day of
the Triggering Event. The conversion shall be conditioned upon the closing with
the underwriters of the sale of securities pursuant to an underwritten offering
of securities registered pursuant to the Securities Act of
2
52
1933, as amended, such that the Lender shall not be deemed to have converted
this Note until immediately prior to the closing of such sale of securities.
(d) The Issuer will not, through any reorganization, recapitalization,
transfer of assets, consolidation. merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Issuer, but will at all times in good faith assist in the carrying out of all
the provisions of this Section 8 and in the taking of all such action as may be
necessary or appropriate in order to protect the conversion rights of the Lender
against impairment.
(e) No fractional shares of common stock or scrip representing
fractional shares shall be issued upon the conversion of a Note. Instead of any
fractional shares of common stock which would otherwise be issuable upon
conversion of a Note, the Company shall pay to the Lender a cash adjustment in
respect of such fractional shares in an amount equal to the same fraction of the
Conversion Price then in effect.
(f) The Issuer shall at all times, reserve and keep available out of its
authorized but unissued shares of common stock, solely for the purpose of
effecting the conversion of this Note, such number of shares of common stock as
shall from time to time be sufficient to effect the conversion of all of the
outstanding principal amount of this Note and if at any time the number of
authorized but unissued Shares of common stock shall not be sufficient to effect
the conversion of this Note, in addition to such other remedies as shall be
available to the Lender, the Issuer will take such corporate action as shall be
necessary to increase the number of authorized but unissued shares of common
stock to such number of shares as shall be sufficient for such purposes,
including, without limitation, engaging in best efforts to obtain the requisite
stockholder approval of any necessary amendment to these provisions.
(g) Any notice required by the provisions of this Section 8 to be given
to the Lender shall be deemed given if sent by certified mail, return receipt
requested, reputable overnight courier or personal delivery addressed to the
Lender at its address for making payments due hereunder.
7. Termination. Lender may terminate this Agreement upon the occurrence of
any Event of Default subject to the following:
(a) In the Event of Default, Lender shall give written notice of
termination of this Agreement to Issuer, and the specific grounds for
termination.
(b) If such Event of Default is not cured by Issuer within thirty (30)
days from the date of such notice of termination, Lender may terminate this
Agreement.
(c) Upon termination, the entire principal outstanding amount and
accrued interest thereon shall be immediately due and payable upon demand by
Lender.
8. Events of Default. The occurrence of any one or more of the following
events shall constitute an "Event of Default" under this Note:
(a) the failure by Issuer to make payment of principal or interest or
payment of any other amount due to Lender under this Note or the Security
Agreement within fifteen (15) days after the date when any such payment is due
in accordance with the terms hereof;
3
53
(b) the occurrence of any one or more of the "Events of Default" under
the Security Agreement;
(c) the sale, assignment (other than to Issuer's affiliated companies
and successors) or other disposition of all or any portion of the Collateral or
Issuer's rights in the Collateral in violation of die Security Agreement; or
(d) any default, in payment of performance of any Senior Debt.
9. Remedies. At the election of the holder hereof, and without notice, the
principal balance remaining unpaid under this Note, and all unpaid interest
accrued thereon, shall be and become immediately due and payable in full in the
case of the occurrence of any Event of Default which has not been cured within
the cure period provided in Section 7 above. Failure to exercise this option
shall not constitute a waiver of the right to exercise same in the event of any
subsequent Event of Default. No holder hereof shall, by any act of omission or
commission, be deemed to waive any of its rights, remedies or powers hereunder
or otherwise unless such waiver is in writing and signed by the holder hereof,
and then only to the extent specifically set forth therein. The rights, remedies
and powers of the holder hereof, as provided in this Note and the Security
Agreement are cumulative and concurrent, and may be pursued singly, successively
or together against the Issuer, the Premises and any other security given at any
time to secure the repayment hereof, all at the sole discretion of the holder.
If any suit or action is instituted or attorneys are employed to collect this
Note or any part thereof, Issuer promises and agrees to pay all costs of
collection, including attorneys' fees and court costs.
10. Waiver. Issuer and all others who now or may at time become liable for
all or any part of the obligations evidenced hereby, expressly agree hereby to
be jointly and severally bound, and jointly and severally: (i) waive and
renounce any and all redemption and exemption rights and the benefit of all
valuation and appraisement privileges against the indebtedness evidenced by this
Note or by any extension or renewal hereof; (ii) waive presentment and demand
for payment, notices of nonpayment and of dishonor, protest of dishonor, and
notice of protest, (iii) waive any and all lack of diligence and delays in the
enforcement of the payment hereof; (iv) agree that the liability of each Issuer,
endorser or obligor shall be unconditional and without regard to the liability
of any other person or entity for the payment hereof, and shall not in any
manner be affected by any indulgence or forbearance granted or consented to by
Lender to any of them with respect hereto; (v) consent to any and all extensions
of time, renewals, waivers, or modifications that may be granted by Lender with
respect to the payment or other provisions hereof, and to the release of any
security at any time given for the payment hereof, or any part thereof, with or
without substitution, and to the release of any person or entity liable for the
payment hereof, and (vi) consent to the addition of any and all other borrowers,
endorsers, and other obligors for the payment hereof, and to the acceptance of
any and all other security for the payment hereof, and agree that the addition
of any such borrowers, endorsers, or other obligors, or security shall not
affect the liability of Issuer for all or any part of the obligations evidenced
hereby.
11. Amendments. Time is of the essence hereof. This Note may not be changed
or amended orally but only by an instrument in writing signed by the party
against whom enforcement of the change or amendment is sought. This Note has
been made and delivered at Littleton, Colorado and all funds disbursed to or for
the benefit of Issuer will be disbursed in ________________. This Note shall
inure to the benefit of and may be enforced by Lender, its successors and
assigns.
12. Relationship of Parties. Lender shall in no event be construed for any
purpose to be a partner, joint venturer, agent or associate of Issuer or any
beneficiary thereof or of any lessee, operator, concessionaire or
4
54
licensee of Issuer or any beneficiary thereof in the conduct of their respective
businesses, and by the execution of this Note, Issuer agrees to indemnify,
defend, and hold Lender harmless from and against any and all damages, costs,
expenses and liability that may be incurred by Lender as a result of a claim
that Lender is such partner, joint venturer, agent or associate.
13. Severability. In the event one or more of the provisions contained in
this Note shall for any reason be held to be invalid, illegal or unenforceable
in any respect by a court of competent jurisdiction, such invalidity, illegality
or unenforceability shall not affect any other provision of this Note, and this
Note shall be construed as if such invalid, illegal or unenforceable provision
had never been contained herein or therein.
14. Assignment. Lender may assign the Note, and if Lender does assign this
Note, the assignee shall be entitled to the performance of all of BuildNet's
agreements and obligations under this Note and the Security Agreement, and the
assignee shall be entitled to all the rights and remedies of Lender under this
Note and Security Agreement, and Buildnet expressly agrees that it will assert
no claims or defenses it may have against Lender against assignee except those
available to it in this Note and the Security Agreement. Assignments by Lender
to subsidiaries of Lender may be done at any time and without the consent of
Buildnet, Assignments by Lender to other than subsidiaries may be done upon
termination, pursuant to Section 7 hereof, or prior to termination, with the
prior consent of Buildnet.
THIS NOTE SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF
BORROWER AND LENDER DETERMINED, IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED
TO CONFLICTS OF LAW PROVISIONS) OF THE STATE OF COLORADO. AS PART OF THE
CONSIDERATION FOR NEW VALUE THIS DAY RECEIVED, BORROWER HEREBY CONSENTS TO THE
EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT WITH JURISDICTION OVER THE
CITY AND COUNTY OF DENVER, STATE OF COLORADO. BORROWER AND LENDER HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY SUIT CR PROCEEDING
ARISING OUT OF OR RELATED TO THIS NOTE OR THE OTHER LOAN DOCUMENTS. BORROWER
WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED ON LACK OF JURISDICTION OR
IMPROPER VENUE OR FORUM NON CONVENIENS TO ANY SUIT OR PROCEEDING INSTITUTED BY
LENDER UNDER THIS NOTE IN ANY STATE OR FEDERAL COURT WITH JURISDICTION OVER THE
CITY AND COUNTY OF DENVER, STATE OF COLORADO AND CONSENTS TO THE GRANTING OF
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THE NOTE.
Signatures to Follow
5
55
IN WITNESS WHEREOF, Issuer has executed this Note as of the day and year
first written above.
BUILDNET CORP.
- -----------------------
By: Mike Atwood
Its: President
ATTEST:
-----------------------
-----------------------
Secretary
Address of Issuer:
56
EXHIBIT D
SCHEDULE OF HOLDERS OF NXTREND SHARES
Common Stock
------------
Series A Mandatorily Redeemable, Convertible Preferred Stock
Advent VII L.P. 1,500,000.0
Advent Atlantic and Pacific II L.P. 562,200.0
Advent Atlantic and Pacific III L.P. 750,000.0
Advent New York L.P. 150,000.0
TA Venture Investors Limited Partnership 27,000.0
Summit Ventures IV, L.P. 1,908,600.0
Summit Investors III, L.P. 84,200.0
Technology Leaders II L.P. 111,400.0
Technology Leaders II Offshore C.V. 88,600.0
Market Street Partners - R&D System 18,000.0
-------------
Total 5,200,000.0
Series B Mandatorily Redeemable, Convertible Preferred Stock
Guy M. Lammie 455,000.0
Rita L. Lammie 455,000.0
Amy Lammie Trust 97,500.0
Daina Lammie Trust 97,500.0
Lacey Lammie Trust 195,000.0
-------------
Total 1,300,000.0
Senior Mandatorily Redeemable Preferred Stock -
Junior Mandatorily Redeemable Preferred Stock -
Common Stock
Guy Lammie 1,241,637.0
Bob Davidson 16,666.0
1110692 Ontario Limited (Systemetrix) 38,890.0
Saber Systems 50,000.0
-------------
Total 105,556.0
Options Exercised
Aguado, Axel 124.0
Becker, Patrick J. 40,625.0
Berriman, Mark W. 500.0
Bishop, Mike 13,000.0
Bowen, Elizabeth A. 250.0
Bowling, Dawn M. 500.0
Brown, James S. 3,750.0
Clark, Jeffrey 2,800.0
Cunningham, Kathleen J. 73,957.0
Dekker, C. Jeff 17,916.0
Jacobsen, Ross 6,875.0
Lammie, Guy 70,000.0
Mann, John 343.0
Niemann, Ronald W. 250.0
Pallon, Irene 25.0
Patrick, Melissa C. 437.0
Powers, Niel 5,000.0
Quintana, Gerald A. 20,750.0
Riefstahl, Robert D. 8,125.0
Rossi, Frank A. 20,750.0
Siffermann, Robert D. 3,500.0
Smith, Peter 20,750.0
Swaving, Roger 1,625.0
Taylor, Michael T. 500.0
Topp, Jay 15,875.0
Watson, Timothy J. 26,250.0
Wittig, Andrew J. 562.0
-------------
Total 355,039.0
Total 1,702,232.0
-------------
Total Common Stock 8,202,232.0
=============
Granted and Unexercised Options 1,908,539.0
-------------
Total Common & Granted 10,110,771.0
=============