SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
Daleen Technologies, Inc.
-------------------------
(Name of Issuer)
Common Stock, par value $.01
----------------------------
(Title of Class of Securities)
23437N10
---------
(CUSIP Number)
Douglas E. Scott, Esq.
Senior Vice President and General Counsel
Science Applications International Corporation
10260 Campus Point Drive
San Diego, CA 92121
(858) 826-7325
------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
With a copy to:
Aloma H. Avery, Esq.
Senior Counsel
Science Applications International Corporation
10260 Campus Point Drive
San Diego, CA 92121
Tel: (858) 546-6000
January 19, 2000
-------------------------------------------------
(Date of Event which Requires Filing of Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box. [ ]
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(CONTINUED ON FOLLOWING PAGE(S))
Page 1 of 10
<PAGE>
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------
CUSIP No. 23437N10
- ------------------------------------------------------------------------------------------------------------------
- ----------- ------------------------------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS: Science Applications International Corporation
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS: 95-3630868
- ----------- ------------------------------------------------------------------------------------------------------
- ----------- ------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a) [__]
(b) [__]
- ----------- ------------------------------------------------------------------------------------------------------
- ----------- ------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ----------- ------------------------------------------------------------------------------------------------------
- ----------- ------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS (SEE INSTRUCTIONS) N/A
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- ----------- ------------------------------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [__]
- ----------- ------------------------------------------------------------------------------------------------------
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6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
- ----------- ------------------------------------------------------------------------------------------------------
- -------------------------- --------- ----------------------------------------- -----------------------------------
7 SOLE VOTING POWER None
NUMBER OF SHARES
BENEFICIALLY OWNED BY
EACH REPORTING PERSON
WITH
- -------------------------- --------- ----------------------------------------- -----------------------------------
8 SHARED VOTING POWER 1,496,615
- -------------------------- --------- ----------------------------------------- -----------------------------------
9 SOLE DISPOSITIVE POWER None
- -------------------------- --------- ----------------------------------------- -----------------------------------
10 SHARED DISPOSITIVE POWER 1,496,615
- ----------- ------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY
EACH REPORTING PERSON 1,496,615
- ----------- ------------------------------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) [__]
- ----------- ------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11) 7.0%
- ----------- ------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) CO
- ----------- ------------------------------------------------------------------------------------------------------
</TABLE>
Page 2 of 10
<PAGE>
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------
CUSIP No. 23437N10
- ------------------------------------------------------------------------------------------------------------------
- ----------- ------------------------------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS: SAIC Venture Capital Corporation
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS: 88-0447177
- ----------- ------------------------------------------------------------------------------------------------------
- ----------- ------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a) [__]
(b) [__]
- ----------- ------------------------------------------------------------------------------------------------------
- ----------- ------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ----------- ------------------------------------------------------------------------------------------------------
- ----------- ------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS (SEE INSTRUCTIONS) OO
- ----------- ------------------------------------------------------------------------------------------------------
- ----------- ------------------------------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [__]
- ----------- ------------------------------------------------------------------------------------------------------
- ----------- ------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION Nevada
- ----------- ------------------------------------------------------------------------------------------------------
- -------------------------- --------- ----------------------------------------- -----------------------------------
7 SOLE VOTING POWER None
NUMBER OF SHARES
BENEFICIALLY OWNED BY
EACH REPORTING PERSON
WITH
- -------------------------- --------- ----------------------------------------- -----------------------------------
- -------------------------- --------- ----------------------------------------- -----------------------------------
8 SHARED VOTING POWER 1,496,615
- -------------------------- --------- ----------------------------------------- -----------------------------------
- -------------------------- --------- ----------------------------------------- -----------------------------------
9 SOLE DISPOSITIVE POWER None
- -------------------------- --------- ----------------------------------------- -----------------------------------
- -------------------------- --------- ----------------------------------------- -----------------------------------
10 SHARED DISPOSITIVE POWER 1,496,615
- -------------------------- --------- ----------------------------------------- -----------------------------------
- ----------- ------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY
EACH REPORTING PERSON 1,496,615
- ----------- ------------------------------------------------------------------------------------------------------
- ----------- ------------------------------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) [__]
- ----------- ------------------------------------------------------------------------------------------------------
- ----------- ------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11) 7.0%
- ----------- ------------------------------------------------------------------------------------------------------
- ----------- ------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) CO
- ----------- ------------------------------------------------------------------------------------------------------
</TABLE>
Page 3 of 10
<PAGE>
ITEM 1. SECURITY AND ISSUER.
This Schedule 13D relates to the Common Stock, par value $.01 per share
(the "Common Stock") of Daleen Technologies, Inc. (the "Issuer"). The principal
executive offices of the Issuer are located at 902 Clint Moore Road, Boca Raton,
Florida 33487.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c) This Schedule 13D is being filed jointly by each of the
following persons pursuant to Rule 13d-1(k)(1) promulgated by the Securities and
Exchange Commission (the "Commission") pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended ( the "Exchange Act"): (i) Science Applications
International Corporation, a Delaware corporation ("SAIC"); and (ii) SAIC
Venture Capital Corporation, a Nevada corporation and wholly owned subsidiary of
SAIC ("SVCC" and, together with SAIC, the "Reporting Persons").
This Schedule 13D is being filed with respect to 1,496,615 shares of
Common Stock previously directly held by SAIC, the ownership of which was
previously reported on Schedule 13G.
On January 19, 2000, SAIC effected the transfer of the 1,496,615 shares
of Common Stock to its wholly owned subsidiary, SVCC, as an initial capital
contribution. SVCC's principal office is located at 3753 Howard Hughes Parkway,
Suite 200, Las Vegas, Nevada 89109. SVCC is a wholly owned venture capital
investment subsidiary of SAIC. SAIC's principal office is located at 10260
Campus Point Drive, San Diego, California 92121. SAIC provides diversified
professional and technical services and designs, develops and manufactures
high-technology products.
The following information with respect to each executive officer and
director of SAIC and SVCC is set forth in Appendix A hereto, which is
incorporated herein by reference: (i) name; (ii) business address; (iii)
principal occupation or employment; and (iv) name of any corporation or other
organization in which such employment is conducted, together with the principal
business address of any such corporation or organization other than SAIC or SVCC
for which such information is set forth above.
(d)-(f) During the last five years, neither SAIC nor SVCC nor, to the
best of their knowledge, any of the persons listed in Appendix A attached hereto
has been (a) convicted in a criminal proceeding (excluding traffic violations
and similar misdemeanors) or (b) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which such person
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to federal or
state securities laws or finding any violation with respect to such laws. To the
knowledge of SAIC and SVCC, each of the individuals listed in Appendix A
attached hereto is a United States citizen.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On January 19, 2000, SAIC effected the transfer of the 1,496,615 shares
of Common Stock to its wholly owned subsidiary, SVCC, as an initial capital
contribution.
ITEM 4. PURPOSE OF TRANSACTION.
On January 19, 2000, SAIC effected the transfer of the 1,496,615 shares
of Common Stock to its wholly owned subsidiary, SVCC, as an initial capital
contribution.
(a) - (j) Not applicable.
Page 4 of 10
<PAGE>
ITEM 5. INTEREST IN THE SECURITIES OF THE ISSUER.
(a) SVCC directly owns 1,496,615 shares of Common Stock, which
represent approximately 7.0% of the Common Stock of the Issuer. The calculation
of percentage of beneficial ownership was derived from the Issuer's Quarterly
Report on Form 10-Q for the period ending March 31, 2000, filed with the
Commission on May 15, 2000, in which the Issuer stated that the number of shares
of Common Stock outstanding as of May 8, 2000 was 21,653,176. For reporting
purposes, SAIC may be deemed the beneficial owner of the shares owned by SVCC.
(b) For reporting purposes, SVCC and SAIC may be deemed to share voting
and dispositive powers with respect to the 1,496,615 shares of Common Stock.
(c) None.
(d) SVCC is a wholly owned subsidiary of SAIC.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
SVCC is a wholly owned subsidiary of SAIC. Pursuant to the Series E
Convertible Preferred Stock Purchase Agreement dated as of June 30, 1999 between
the Issuer and SAIC, SAIC, along with any other holders of Common Stock issued
upon the conversion of Issuer's Series E Convertible Preferred Stock and upon
the exercise of certain warrants (collectively, the "Registrable Securities"),
has the right to request that the Issuer file a registration statement that
covers the sale of all or a part of the Registrable Securities. After the Issuer
has filed two such registrations and such registrations have been declared
effective, the Issuer shall have no obligations to effect any further
registrations, other than as described below. After the Issuer qualifies to file
its registration statements on Form S-3 or SB-2, SAIC may request that the
Issuer register its Common Stock for resale using a Form S-3 or SB-2, except
that the Issuer shall not be obligated to effect any such registration more than
twice in any one year. In addition, if the Issuer proposes to register any of
its securities under the Securities Act, either for its own account or for the
account of other security holders, SAIC is entitled to notice of the
registration and to include shares of Common Stock in the registration at the
Issuer's expense. All of these registration rights are subject to conditions and
limitations, including the right of the underwriters of an offering to limit the
number of shares included in the registration. All of these registration rights
have been transferred to SVCC.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit A: Agreement as to Joint Filing of Schedule 13D, dated as of May 17,
2000, between SAIC and SVCC.
Exhibit B: Series E Convertible Preferred Stock Purchase Agreement between
the Issuer and SAIC dated as of June 30, 1999
Page 5 of 10
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: May 17, 2000.
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
By /s/ Douglas E. Scott
-------------------------------------
Douglas E. Scott
Senior Vice President and General Counsel
SAIC VENTURE CAPITAL CORPORATION
By /s/ Ira J. Miller
-------------------------------------
Ira J. Miller
President
Page 6 of 10
<PAGE>
APPENDIX A
Directors and Executive Officers
The following table sets forth the name, business address and present
principal occupation or employment of each of the directors of Science
Applications International Corporation ("SAIC"). To the knowledge of SAIC, each
director listed below is a United States citizen.
<TABLE>
<CAPTION>
NAME, PRINCIPAL BUSINESS AND
ADDRESS OF CORPORATION OR OTHER
ORGANIZATION IN WHICH EMPLOYMENT
NAME PRINCIPAL OCCUPATION IS CONDUCTED
- ----------------------------- ----------------------------------------- -------------------------------------
<S> <C> <C>
Duane P. Andrews Corporate Executive Vice President and 1710 SAIC Drive
Director of SAIC McLean, VA 22102
J. Robert Beyster Chairman of the Board, Chief Executive 1241 Cave Street
Officer, President and Director of SAIC La Jolla, CA 92037
David A. Cox Executive Vice President and Director of 10260 Campus Point Drive
SAIC San Diego, CA 92121
Wolfgang H. Demisch Managing Director of Wasserstein Perella, Wasserstein Perella Securities,
an investment bank Inc.
31 West 52nd Street, 27th Floor
New York, NY 10019
David W. Dorman Chief Executive Officer of Concert Concert Communications Company
Communications Company 1230 Peachtree Street, Suite 2000
Atlanta, GA 30339
Wayne A. Downing Director of SAIC 2860 S. Circle Drive, Suite GL10
Colorado Springs, CO 80906
John E. Glancy Executive Vice President and Director of 1299 Prospect
SAIC La Jolla, CA 92037
Bobby R. Inman Director of SAIC 701 Brazos, Suite 500
Austin, TX 78701
Anita K. Jones Professor, Dept. of Computer Science, Department of Computer Science
University of Virginia Thornton Hall
University of Virginia
Charlottesville, VA 22903
Harry M. Jansen Kraemer, Jr. President and Chief Executive Officer of Baxter International, Inc.
Baxter International Inc., a health care One Baxter Parkway
products, systems and services company Deerfield, IL 60015
Claudine B. Malone President of Financial Management 7570 Potomac Fall Road
Consulting, Inc., a consulting company McLean, VA 22102
Stephen D. Rockwood Executive Vice President and Director of 16701 West Bernardo Drive
SAIC San Diego, CA 92127
</TABLE>
Page 7 of 10
<PAGE>
<TABLE>
<CAPTION>
NAME, PRINCIPAL BUSINESS AND
ADDRESS OF CORPORATION OR OTHER
ORGANIZATION IN WHICH EMPLOYMENT
NAME PRINCIPAL OCCUPATION IS CONDUCTED
- ----------------------------- ----------------------------------------- -------------------------------------
<S> <C> <C>
Louis A. Simpson President and Chief Executive Officer, Plaza Investment Managers, Inc.
Capital Operations of GEICO Corporation, 5951 La Sendita, Bldg. A
an insurance company Rancho Santa Fe, CA 92067
Richard C. Smith Chief Executive Officer of Telcordia 445 South Street
Technologies, Inc., a wholly owned Morristown, NJ 07960
subsidiary of SAIC
Edward A. Straker Executive Vice President and Director of 11251 Roger Bacon Drive
SAIC Reston, VA 20190
Monroe E. Trout Director of SAIC 9322 Norlake Circle
Knoxville, TN 37922
Joseph P. Walkush Sector Vice President and Director of SAIC 1241 Cave Street
La Jolla, CA 92037
John H. Warner, Jr. Corporate Executive Vice President and 10260 Campus Point Drive
Director of SAIC San Diego, CA 92121
Jasper A. Welch President of Jasper Welch Associates, a 2129 Foothill Road
consulting firm Santa Fe, NM 87505
A. Thomas Young Director of SAIC 12921 Esworthy Road
N. Potomac, MD 20878
</TABLE>
The following table sets forth the name, business address and title of
each of the executive officers of SAIC, excluding executive officers who are
also directors. To the knowledge of SAIC, each officer listed below is a United
States citizen. Unless otherwise indicated, the business address of each person
named below is c/o Science Applications International Corporation, 10260 Campus
Point Drive, San Diego, California 92121.
<TABLE>
<CAPTION>
NAME TITLE (AND ADDRESS, IF OTHER THAN AS INDICATED ABOVE)
- ----------------------------------- ---------------------------------------------------------------------
<S> <C>
Daniel W. Baldwin Corporate Executive Vice President and Treasurer
J. Dennis Heipt Corporate Executive Vice President and Secretary
Peter N. Pavlics Senior Vice President and Controller
William A. Roper, Jr. Corporate Executive Vice President and Chief Financial Officer
SAIC
1241 Cave Street
La Jolla, CA 92037
Robert A. Rosenberg Executive Vice President
SAIC
1710 SAIC Drive
McLean, VA 22102
Douglas E. Scott Senior Vice President and General Counsel
</TABLE>
Page 8 of 10
<PAGE>
The following table sets forth the name, business address and present
principal occupation or employment of each of the directors of SAIC Venture
Capital Corporation. ("SVCC"). To the knowledge of SVCC, each director listed
below is a United States citizen.
<TABLE>
<CAPTION>
NAME, PRINCIPAL BUSINESS AND
ADDRESS OF CORPORATION OR OTHER
ORGANIZATION IN WHICH EMPLOYMENT
NAME PRINCIPAL OCCUPATION IS CONDUCTED
- ----------------------------- ----------------------------------------- ------------------------------------
<S> <C> <C>
J. Robert Beyster (Chairman) Chairman of the Board, Chief Executive 1241 Cave Street
Officer, President and Director of SAIC La Jolla, CA 92037
J. Dennis Heipt Corporate Executive Vice President and 10260 Campus Point Drive
Secretary of SAIC San Diego, California 92121
William A. Roper, Jr. Corporate Executive Vice President and 1241 Cave Street
Chief Financial Officer of SAIC La Jolla, CA 92037
Douglas E. Scott Senior Vice President and General 10260 Campus Point Drive
Counsel of SAIC San Diego, California 92121
</TABLE>
The following table sets forth the name, business address and title of
each of the executive officers of SVCC, excluding executive officers who are
also directors. To the knowledge of SVCC, each officer listed below is a United
States citizen. Unless otherwise indicated, the business address of each officer
named below is c/o SAIC Venture Capital Corporation, 3753 Howard Hughes
Parkway, Suite 200, Las Vegas, Nevada 89109.
<TABLE>
<CAPTION>
NAME TITLE (AND ADDRESS, IF OTHER THAN AS INDICATED ABOVE)
- ----------------------------------- ---------------------------------------------------------
<S> <C>
Ira J. Miller President and Treasurer
</TABLE>
Page 9 of 10
<PAGE>
EXHIBIT A
AGREEMENT AS TO JOINT FILING OF SCHEDULE 13D
In accordance with Rule 13d-1(k)(1) under the Securities Exchange Act
of 1934, as amended, the undersigned hereby agree to the joint filing, on behalf
of each of them, of a Statement on Schedule 13D (including amendments thereto)
with respect to the Common Stock of Daleen Technologies, Inc. Each of them is
responsible for the timely filing of such Schedule 13D and any amendments
thereto, and for the completeness and accuracy of the information concerning
such person contained therein; but none of them is responsible for the
completeness or accuracy of the information concerning the other persons making
the filing, unless such person knows or has reason to believe that such
information is inaccurate.
Date: May 17, 2000
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
By /s/ Douglas E. Scott
------------------------------------
Douglas E. Scott
Senior Vice President and General Counsel
SAIC VENTURE CAPITAL CORPORATION
By /s/ Ira J. Miller
------------------------------------
Ira J. Miller
President
Page 10 of 10
<PAGE>
EXHIBIT B
DALEEN TECHNOLOGIES, INC.
Series E Convertible Preferred Stock
--------------------
PREFERRED STOCK PURCHASE AGREEMENT
--------------------
June 30, 1999
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
SECTION 1
AUTHORIZATION AND SALE OF THE SHARES
<S> <C>
1.1 Authorization of the Shares.....................................................................1
1.2 Sale of the Shares..............................................................................2
SECTION 2
CLOSING DATE; DELIVERY
2.1 Closing Date....................................................................................2
2.2 Delivery........................................................................................2
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Organization and Standing: Restated Articles and Bylaws........................................3
3.2 Corporate Power.................................................................................3
3.3 Subsidiaries....................................................................................4
3.4 Capitalization..................................................................................4
3.5 Authorization...................................................................................5
3.6 Financial Information...........................................................................6
3.7 Outstanding Debt................................................................................6
3.8 Absence of Liabilities..........................................................................7
3.9 Absence of Certain Changes......................................................................7
3.10 Taxes...........................................................................................7
3.11 Contracts; Insurance............................................................................8
3.12 Stockholders, Directors and Officers; Indebtedness.............................................11
3.13 Litigation.....................................................................................11
3.14 Consents.......................................................................................11
3.15 Properties; Liens and Encumbrances.............................................................12
3.16 Leases.........................................................................................12
3.17 Business of the Company........................................................................12
3.18 Franchises, Licenses, Trademarks, Patents and Other Rights.....................................13
3.19 Minute Books...................................................................................14
3.20 Offering.......................................................................................14
3.21 Compliance with Other Instruments..............................................................15
3.22 Employees......................................................................................15
3.23 Registration Rights............................................................................16
3.24 Environmental and Safety Laws..................................................................16
3.25 Disclosure.....................................................................................16
ii
<PAGE>
3.26 Year 2000 Compliance...........................................................................16
SECTION 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
4.1 Experience.....................................................................................17
4.2 Investment.....................................................................................17
4.3 Rule 144.......................................................................................17
4.4 Access to Data.................................................................................17
4.5 Confidentiality................................................................................17
SECTION 5
CONDITIONS TO CLOSING OF PURCHASER
5.1 Representations and Warranties Correct.........................................................18
5.2 Performance....................................................................................18
5.3 Opinion of Company's Counsel...................................................................18
5.4 Compliance Certificate.........................................................................18
5.5 Proceedings and Documents......................................................................18
5.6 Proprietary Information and Inventions, and Non-Competition Agreements.........................19
5.7 Qualifications.................................................................................19
5.8 Statement of Designation.......................................................................19
5.9 Issuance Taxes.................................................................................20
SECTION 6
CONDITIONS TO CLOSING OF COMPANY
SECTION 7
COVENANTS OF THE COMPANY
7.1 Basic Financial Information....................................................................21
7.2 Additional Information.........................................................................22
7.3 Right of First Refusal.........................................................................23
7.4 Prompt Payment of Taxes, etc...................................................................26
7.5 Maintenance of Properties and Leases...........................................................26
7.6 Insurance......................................................................................27
7.7 Key Man Life Insurance.........................................................................27
7.8 Accounts and Records...........................................................................27
7.9 Independent Accountants........................................................................27
iii
<PAGE>
7.10 Compliance with Requirements of Governmental Authorities.......................................28
7.11 Maintenance of Corporate Existence, etc........................................................28
7.12 Availability of Common Stock for Conversion....................................................28
7.13 Notice of Record Dates.........................................................................29
7.14 Proprietary Information and Inventions and Non-Competition Agreements..........................29
7.15 Employee Stock Purchase Agreement..............................................................29
7.16 Use of Proceeds................................................................................30
7.17 Replacement Directors..........................................................................30
SECTION 8
Restrictions on Transferability of
SECURITIES; COMPLIANCE WITH SECURITIES ACT
8.1 Restrictions on Transferability................................................................33
8.2 Certain Definitions............................................................................34
8.3 Restrictive Legend.............................................................................35
8.4 Notice of Proposed Transfers...................................................................36
8.5 Requested Registration.........................................................................37
8.6 Company Registration...........................................................................40
8.7 Expenses of Registration.......................................................................43
8.8 Registration on Form S-3 or Form SB-2..........................................................43
8.9 Registration Procedures........................................................................44
8.10 Indemnification................................................................................45
8.11 Information by Holder..........................................................................48
8.12 Limitations on Registration of Issues of
Securities.....................................................................................48
8.13 Rule 144 Reporting.............................................................................49
8.14 Transfer or Assignment of Registration Rights..................................................49
8.15 "Market Stand-off" Agreement...................................................................50
SECTION 9
MISCELLANEOUS
9.1 Governing Law..................................................................................51
9.2 Survival.......................................................................................51
9.3 Successors and Assigns.........................................................................51
9.4 Third Parties..................................................................................51
9.5 Entire Agreement; Amendment....................................................................51
9.6 Notices, etc...................................................................................52
9.7 Delays or Omissions............................................................................52
9.8 Separability...................................................................................52
9.9 Agent's Fees...................................................................................53
9.10 Expenses.......................................................................................53
iv
<PAGE>
9.11 Titles and Subtitles...........................................................................53
9.12 Counterparts...................................................................................54
</TABLE>
SCHEDULES AND EXHIBITS
Schedule of Exceptions
Exhibit A -- Series E Statement of Designation
Exhibit B -- Year 2000 Readiness Disclosure
Exhibit C -- Form of MMM Opinion
Exhibit D -- Proprietary Information and Inventions Agreement
Exhibit E -- Agreement Not to Compete
Exhibit F -- Form of Stockholders Agreement
v
<PAGE>
SERIES E CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES E CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (the
"Agreement") is dated as of June 30, 1999 by and among DALEEN TECHNOLOGIES,
INC., a Florida corporation (the "Company") and SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION, a Delaware corporation ("Purchaser" or "You").
WHEREAS, the Company has determined that it is in its best interest to
strengthen its long-term strategic relationships with certain companies;
WHEREAS, to enhance its long-term strategic relationships with such
companies, Danet, Inc. and Telcordia Technologies, Inc., the Company desires to
sell shares of its Series E Convertible Preferred Stock to Purchaser, which is
an affiliate and the parent company, respectively, of such companies; and
WHEREAS, Purchaser desires to enhance its long-term strategic
relationship with the Company by investing in securities of the Company;
In consideration for and of the mutual promises, covenants and
conditions hereinafter set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
SECTION 1
AUTHORIZATION AND SALE OF THE SHARES
1.1 AUTHORIZATION OF THE SHARES. The Company has, or before
the Closing (as hereinafter defined) will have, authorized the issue and sale of
One Million Four Hundred Ninety-Six Thousand Six Hundred Fifteen (1,496,615)
shares of its Series E Convertible Preferred Stock (the "Shares"), par value
$.01 per share (the "Series E Preferred"), having the powers, preferences and
rights set forth in the Company's Statement of Designation for the Series E
Preferred (the "Series E Statement of Designation"), a copy of which is attached
hereto as EXHIBIT A.
1.2 SALE OF THE SHARES. Subject to the terms and conditions
hereof and in reliance upon the representations, warranties and agreements
contained herein, the Company will issue and sell to You, and You will purchase
from the Company, at the Closing, 1,496,615 shares of Series E Preferred at the
purchase price of $9.00 per share, for an aggregate purchase price of Thirteen
Million, Four Hundred Sixty-Nine Thousand, Five Hundred Thirty-Five Dollars
($13,469,535) (the "Purchase Price").
1
<PAGE>
SECTION 2
CLOSING DATE; DELIVERY
2.1 CLOSING DATE. The purchase and sale of the Shares
hereunder (the "Closing") shall be held at the offices of Morris, Manning &
Martin, L.L.P., 1600 Atlanta Financial Center, 3343 Peachtree Road, N.E.,
Atlanta, Georgia 30326, at 10:00 a.m., Atlanta time, on June 30, 1999 or on such
other place or time on or prior to June 30, 1999 as may be agreed upon by the
Company and You. If the Closing does not occur by June 30, 1999, this Agreement
will be terminated forthwith and the parties hereto will have no further
obligations to each other under this Agreement.
2.2 DELIVERY. At the Closing, the Company will deliver the
Certificates (or copies thereof) to Purchaser and Purchaser will deliver to the
Company the Purchase Price by wire transfer to an account designed by the
Company by no later than June 30, 1999.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except to the extent set forth on the Company's Schedule of
Exceptions attached hereto (the "Schedule of Exceptions"), which Schedule of
Exceptions contains, with respect to each matter disclosed therein, a specific
reference to the representation and warranty to which such matter is an
exception, the Company hereby represents and warrants to You as follows:
3.1 ORGANIZATION AND STANDING: RESTATED ARTICLES AND BYLAWS.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida. The Company is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction in which the failure to so qualify would have a material adverse
effect on its business or properties. The Company has furnished You with
complete and correct copies of its Third Amended and Restated Articles of
Incorporation, as amended, filed August 5, 1998 (the "Restated Articles"), and
its Amended and Restated Bylaws (the "Bylaws") and, in each case, all amendments
to the date of this Agreement. Purchaser agrees and acknowledges that the
Company may re-incorporate in Delaware or may become the wholly-owned subsidiary
of a newly-created Florida or Delaware holding company (either occurrence, a
"Reorganization").
3.2 CORPORATE POWER. The Company has all requisite corporate
power and authority to own the properties owned by it and to carry on its
business as now conducted and to enter into this Agreement and will have at the
Closing Date all requisite corporate power to issue and sell the Shares and to
carry out and perform its obligations under the terms of this Agreement.
3.3 SUBSIDIARIES. Other than Daleen International Inc., a
corporation organized under the laws of U.S. Virgin Islands, the Company has no
active or material subsidiaries and does not own of record or beneficially any
capital stock or equity interest or investment in any corporation, association
or business entity.
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3.4 CAPITALIZATION. As of March 31, 1999, the Company's
authorized capital stock consists of (a) 20,000,000 shares of Common Stock, par
value $.001 per share, of which 3,240,020 shares are issued and outstanding; (b)
25,000,000 shares of preferred stock, par value $0.01 per share, 9,121,963 of
which are issued and outstanding, with 3,000,000 shares designated as Series A
Convertible Preferred Stock (the "Series A Preferred"), all of which are issued
and outstanding; 1,250,000 shares designated as Series B Convertible Preferred
Stock (the "Series B Preferred"), none of which are issued and outstanding;
1,222,222 shares designated as Series C Convertible Preferred Stock (the "Series
C Preferred"), of which 1,213,584 shares are issued and outstanding; 4,221,846
shares designated as Series D Convertible Preferred Stock (the "Series D
Preferred"), all of which are issued and outstanding; and 686,533 shares
designated as Series D-1 Convertible Preferred Stock (the "Series D-1
Preferred"), all of which are issued and outstanding. A true and correct list of
the capitalization of the Company (including outstanding shares of capital stock
and options, warrants or other rights to purchase capital stock, including
convertible debt) is set forth on the Schedule of Exceptions. All the aforesaid
issued and outstanding shares are duly authorized and validly issued, fully paid
and nonassessable, are owned of record and (to the best of the Company's
knowledge and belief) beneficially by the stockholders and in the amounts set
forth in the Schedule of Exceptions, and have been offered, issued, sold and
delivered by the Company in compliance with applicable federal and state
securities laws. There are no outstanding preemptive, conversion or other
rights, options, warrants or agreements granted or issued by or binding upon the
Company for the purchase or acquisition of any shares of its capital stock,
except with respect to the Series A Preferred, certain warrants granted by the
Company to purchase shares of Series B Convertible Preferred Stock (the "Series
B Warrants"), the Series C Preferred, the Series D Preferred, the Series D-1
Preferred and the Series E Preferred as set forth in the Restated Articles, as
amended, and except as disclosed in the Schedule of Exceptions. To the best of
the Company's knowledge and belief, no stockholder has granted options or other
rights to purchase any Common Stock from such stockholder other than as set
forth in the Schedule of Exceptions. The Company holds no shares of its capital
stock in its treasury. Neither the Common Stock nor the Preferred has been
registered under Section 12 of the Securities Exchange Act of 1934, as amended,
and no such registration is required in connection with the offer, issue and
sale of the Shares to You under the circumstances contemplated by this
Agreement.
3.5 AUTHORIZATION. All corporate action on the part of the
Company, its directors and stockholders necessary for the due authorization,
execution, delivery and performance by the Company of this Agreement and the
consummation of the transactions contemplated herein and therein, and for the
due authorization, issuance and delivery of the Shares and the issuance of the
Common Stock issuable upon conversion of the Shares has been taken or will be
taken prior to the Closing. This Agreement is a legal, valid and binding
obligation of the Company, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization and moratorium laws and other
laws of general application affecting enforcement of creditors' rights
generally. The execution, delivery and performance by the Company of this
Agreement and compliance herewith and the issuance and sale of the Shares and
the issuance of the Common Stock issuable upon conversion of the Shares will not
result in any violation of or be in conflict with, or result in a breach of, or
constitute a default under, any term or provision of any state or Federal law,
ordinance, rule or regulation to which the Company is subject, or the Company's
Restated Articles
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or Bylaws, as amended and in effect on the date hereof, or any material
mortgage, indenture, agreement, instrument, judgment, decree, order or other
restriction to which the Company is a party or by which it is bound, or result
in the creation of any mortgage, pledge, lien, encumbrance or charge upon any of
the properties or assets of the Company pursuant to any such term. No
stockholder has any preemptive right or rights of first refusal by reason of the
issuance of the Shares that will not be waived prior to Closing. The Shares,
when issued in compliance with the provisions of this Agreement, will be validly
issued, fully paid and nonassessable, and will be free of any liens or
encumbrances except for the restrictions set forth in this Agreement and the
Restated Articles. The Common Stock issuable upon conversion of the Shares has
been duly authorized and validly reserved is not subject to any preemptive
rights or rights of first refusal that have not been waived prior to issuance of
the Shares and, upon issuance, will be validly issued, fully paid and
nonassessable.
3.6 FINANCIAL INFORMATION. The Company has furnished the
Purchaser with (i) its unaudited balance sheet as of March 31, 1999 and
statement of income and changes in financial position for the three-month period
then ended and (ii) its audited balance sheet as of December 31, 1998 and
December 31, 1997 and statements of income and changes in financial position for
the twelve months ended December 31, 1998 and December 31, 1997 (all of which
are collectively referred to as the "Financial Statements"). The Financial
Statements present fairly the financial position and results of operations of
the Company at the dates and for the periods to which they relate, have been
prepared in accordance with generally accepted accounting principles
consistently followed throughout the periods involved and show all material
liabilities, absolute or contingent, of the Company required to be recorded
thereon in accordance with generally accepted accounting principles as at the
respective dates thereof.
3.7 OUTSTANDING DEBT. The Company has no outstanding
indebtedness for borrowed money except as reflected on the Financial Statements
and is not a guarantor or otherwise contingently liable for any such
indebtedness. There exists no default under the provisions of any instrument
evidencing any indebtedness or otherwise or of any agreement relating thereto
except as set forth in the Schedule of Exceptions.
3.8 ABSENCE OF LIABILITIES. The Company has no material
liabilities (fixed or contingent, including without limitation any tax
liabilities due or to become due) which are not fully reflected or provided for
on the Financial Statements, except as listed in the Schedule of Exceptions.
3.9 ABSENCE OF CERTAIN CHANGES. Since December 31, 1998,
except to the extent described in the Schedule of Exceptions or reflected in the
Financial Statements, there has not been any event or condition of any character
which has adversely affected the Company's business or prospects, including but
not limited to:
(a) Any material adverse change in the condition, assets,
liabilities or business of the Company;
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(b) Any damage, destruction or loss of any of the properties
or assets of the Company (whether or not covered by insurance) materially
adversely affecting the business or plans of the Company;
(c) Any declaration, setting aside or payment or other
distribution in respect of any of the Company's capital stock, or any direct or
indirect redemption, purchase or other acquisition of any of such stock by the
Company; or
(d) Any labor trouble, or any event or condition of any
character, materially adversely affecting the business or plans of the Company.
3.10 TAXES. The Company has duly filed within the time
prescribed by law (including extensions of time approved by the appropriate
taxing authority) all tax returns and reports required to be filed with the
United States Internal Revenue Service and with the State of Florida, and
(except to the extent that the failure to file would not have a material adverse
effect on the condition or operations of the Company) with all other
jurisdictions where such filing is required by law; all such tax returns and
reports are true and correct; and the Company has paid all taxes, interest,
penalties, assessments or deficiencies shown to be due or claimed to be due or
in respect of such tax returns and reports. The Company knows of (i) no other
tax returns or reports which are required to be filed which have not been so
filed and (ii) no unpaid assessment for additional taxes for any fiscal period
or any basis therefor. The Company's federal income tax returns have not been
audited by the Internal Revenue Service.
3.11 CONTRACTS; INSURANCE. Except as set forth in the Schedule
of Exceptions, the Company has no currently existing contract, obligation,
agreement, plan, arrangement, commitment or the like (written or oral) of any
material nature, including without limitation the following:
(a) Employment, bonus or consulting agreements, pension,
profit sharing, deferred compensation, incentive compensation, stock bonus,
retirement, stock option, stock purchase, severance or termination pay plan,
phantom stock or similar plans, including agreements evidencing rights to
purchase securities of the Company and agreements among shareholders and the
Company or an "employee benefit plan" as that term is defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") (an
"Employee Benefit Plan");
(b) Loan or other agreements, notes, indentures, or
instruments relating to or evidencing indebtedness for borrowed money, or
mortgaging, pledging or granting or creating a lien or security interest or
other encumbrance on any of the Company's property or any agreement or
instrument evidencing any guaranty by the Company of payment or performance by
any other person;
(c) Agreements with dealers, sales representatives, brokers or
other distributors, jobbers, advertisers or sales agencies;
(d) Agreements with any labor union or collective bargaining
organization or other labor agreements;
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(e) Any contract or series of contracts with the same person
for the furnishing or purchase of machinery, equipment, goods or services,
including without limitation agreements with processors and subcontractors;
(f) Any indenture, agreement or other document (including
private placement brochures) relating to the sale or repurchase of shares;
(g) Any joint venture contract or arrangement or other
agreement involving a sharing of profits or expenses to which the Company is a
party;
(h) Agreements limiting the freedom of the Company to compete
in any line of business or in any geographic area or with any person;
(i) Agreements providing for disposition of the business,
assets or shares of the Company, agreements of merger or consolidation to which
the Company is a party or letters of intent with respect to the foregoing;
(j) Letters of intent or agreements with respect to the
acquisition of the business, assets or shares of any other business; and
(k) Insurance policies, health insurance plans, medical plans
or any other benefit plans.
The Company has complied with all the material provisions of
all said contracts, obligations, agreements, plans, arrangements, and
commitments and is not in default thereunder. With respect to each Employee
Benefit Plan maintained by the Company: (i) such plan has been administered and
operated in compliance with the applicable requirements of ERISA and the
Internal Revenue Code of 1986, as amended (the "Code"); (ii) if intended to
qualify under section 401(a) of the Code, such Employee Benefit Plan so
qualifies, and its related trust is exempt from taxation under section 501(a) of
the Code; (iii) no event has occurred and there exists no circumstance under
which the Company could incur liability under ERISA, the Code, or otherwise
(other than for contributions or benefits paid or payable in the ordinary course
of operation of such plan); (iv) there are no actions, suits or claims pending
or threatened with respect to any Employee Benefit Plan or against the assets or
a fiduciary of any Employee Benefit Plan; (v) no "prohibited transaction" (as
defined in section 406 of ERISA or section 4975 of the Code) which is not
covered by an applicable exemption has occurred; (vi) no "reportable event" (as
defined in section 4043 of ERISA) has occurred; (vii) all contributions and
premiums due have been paid on a timely basis; and (viii) all contributions made
under any Employee Benefit Plan intended to be tax deductible meet the
requirements for deductibility under the Code. No Employee Benefit Plan is a
"defined benefit plan" within the meaning of section 3(35) of ERISA.
You have been supplied with a true and correct copy of each of
the written contracts and a true and correct description of the oral contracts
which are referred to on the Schedule of Exceptions, together with all material
amendments, waivers or other changes to all such documents.
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The Company maintains insurance which is adequate to protect
the Company and its financial condition against the risks involved in the
business conducted by the Company.
3.12 STOCKHOLDERS, DIRECTORS AND OFFICERS; INDEBTEDNESS. Set
forth in the Schedule of Exceptions is a correct and complete list or
description of all indebtedness of the Company to its officers, directors or
stockholders or any of their respective spouses or relatives and of all
indebtedness of such persons to the Company and of all contractual arrangements
between the Company and any officer, director or stockholder of the Company or
any of their respective spouses or relatives. Except as set forth in the
Schedule of Exceptions, none of the officers or directors or significant
employees or consultants of the Company, or their respective spouses or
relatives, owns directly or indirectly, individually or collectively, a material
interest in any entity which is a competitor, customer or supplier of (or has
any existing contractual relationship with) the Company.
3.13 LITIGATION. Except as set forth in the Schedule of
Exceptions, there is no pending or, to the Company's knowledge and belief,
threatened action, suit, proceeding or claim, or any basis therefor, whether or
not purportedly on behalf of the Company, to which the Company is or may be
named as a party or its property is or may be subject and in which an
unfavorable outcome, ruling or finding in any such matter or for all such
matters taken as a whole might have a material adverse effect on the condition,
financial or otherwise, or operations of the Company; and the Company has no
knowledge of any unasserted claim, the assertion of which is likely and which,
if asserted, will seek damages, an injunction or other legal, equitable,
monetary or nonmonetary relief which claim individually or collectively with
other such unasserted claims if granted would have a material adverse effect on
the condition, financial or otherwise, or operations of the Company.
3.14 CONSENTS. No consent, approval, qualification, order or
authorization of, or filing with, any governmental authority is required in
connection with the Company's valid execution, delivery or performance of this
Agreement, or the offer, issue or sale of the Shares by the Company, the
issuance of Common Stock upon conversion of the Shares, or the consummation of
any other transaction contemplated on the part of the Company hereby, except the
filing of Articles of Amendment to the Restated Articles containing the
Statement of Designation with the Secretary of State of the State of Florida.
3.15 PROPERTIES; LIENS AND ENCUMBRANCES. The Company owns no
real property and has a valid and indefeasible ownership interest in all its
other property and assets, free from all mortgages, pledges, liens, security
interests, conditional sale agreements, encumbrances or charges, except (i) as
listed on the Schedule of Exceptions hereto; and (ii) tax, materialmen's or like
liens for obligations not yet due or payable or being contested in good faith by
appropriate proceedings. The Company is not a "United States real property
holding corporation" within the meaning of Section 847(c)(2) of the Internal
Revenue Code of 1986, as amended.
3.16 LEASES. Set forth on the Schedule of Exceptions is a
correct and complete list (including the amount of rents called for and a
description of the leased property) of all material leases, whether for
real or personal property, under which the Company is a lessee. The Company
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enjoys peaceful and undisturbed possession under all such leases, all of such
leases are valid and subsisting and none of them is in default in any material
respect.
3.17 BUSINESS OF THE COMPANY. There is no pending nor, to the
Company's knowledge and belief, any threatened claim or litigation, or any basis
therefor, against or affecting the Company contesting its right to produce,
manufacture, sell or use any product, process, method, substance, part or other
material presently produced, manufactured, sold or used or planned to be
produced, manufactured, sold or used by the Company in connection with the
operations of the Company; and the Company has no knowledge that (i) there
exists, or there is pending or planned, any patent, invention, device,
application or principle, or any statute, rule, law, regulation, standard or
code which would materially adversely affect the condition, financial or
otherwise, or the operations of the Company; or (ii) there is any other factor
(other than fire, flood, accident, act of war or civil commotion, or any other
cause or event beyond the control of the Company) which may materially adversely
affect the condition, financial or otherwise, or the operations of the Company.
3.18 FRANCHISES, LICENSES, TRADEMARKS, PATENTS AND OTHER
RIGHTS. Schedule 3.18 in the Schedule of Exceptions sets forth a complete list
of all material proprietary rights of the Company, including, without
limitation, all franchises, permits, licenses, patents, patent rights,
trademarks, trade rights, trade names, trade name rights and copyrights. The
Company has all franchises, permits, licenses and other similar authority
necessary for the conduct of its business as now being conducted by it and as
planned to be conducted, the lack of which could materially and adversely affect
the operations or condition, financial or otherwise, of the Company, and it is
not in default in any material respect under any of such franchises, permits,
licenses or other similar authority. The Company owns or possesses all patents,
patent rights, trademarks, trademark rights, trade names, trade name rights and
copyrights and is the exclusive owner or licensee thereof and of all the
technology and know-how necessary to conduct its business as now being conducted
and as planned to be conducted without conflict with or infringement upon any
valid rights of others and the lack of which could materially and adversely
affect the operations or condition, financial or otherwise, of the Company, and
has not received any notice of infringement upon or conflict with the asserted
rights of others. The code for the Company's software products was written by
the Company's employees and is the Company's property; however, certain of the
Company's products must be used in conjunction with certain
commercially-available third-party software and databases set forth in the
Schedule of Exceptions (the "Third-Party Products"). Certain Third-Party
Products are included in the Company's own software packages and other
Third-Party Products must be purchased by users of the Company's software. The
Company makes no claims to ownership of any rights or royalties relating to the
Third-Party Products. Any user of the Company's software may be required to
obtain licenses for the use of such Third-Party Products either through the
Company or through the owners of such Third-Party Products.
3.19 MINUTE BOOKS. The minute books of the Company reviewed by
Purchaser contain a complete summary of all meetings of directors and
stockholders since the time of incorporation of the Company's predecessor and
reflect all transactions referred to in such minutes accurately in all material
respects.
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3.20 OFFERING. Neither the Company nor anyone acting on its
behalf in connection with the offering or sale of the Shares or any similar
securities of the Company has directly or indirectly offered the Shares or any
part thereof or any similar securities for sale to, or solicited any offer to
buy any of the same from, or otherwise approached or negotiated in respect
thereof with, anyone other than You and not more than 25 other accredited
investors, as defined in Regulation D under the Securities Act of 1933, as
amended (the "Securities Act", which term shall include any successor federal
statute). The offer, issuance and sale of the Shares as contemplated by this
Agreement are exempt from the registration requirements of the Securities Act,
and from any registration or filing requirements of any applicable state
securities laws, and neither the Company nor anyone acting on its behalf will
take any action hereafter that would cause the loss of such exemption.
3.21 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation of any term of its Restated Articles or Bylaws, in each case, as in
effect on the date hereof. The Company is not (and consummation of the
transaction contemplated by this Agreement will not cause the Company to be) in
violation of any term of any mortgage, indenture, contract, agreement,
instrument, judgment, decree, order, statute, rule or regulation to which the
Company is subject and a violation of which would have a material adverse effect
on the condition, financial or otherwise, or operations of the Company.
3.22 EMPLOYEES. To the best of the Company's knowledge and
belief, no employee of the Company is, or is now expected to be, in violation of
any term of any employment contract, patent disclosure agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant or any other common law obligation to a former employer relating to the
right of any such employee to be employed by the Company because of the nature
of the business conducted or to be conducted by the Company or to the use of
trade secrets or proprietary information of others, and the employment of the
Company's employees does not subject the Company or any of You to any liability.
There is no pending or, to the Company's knowledge and belief, threatened
action, suit, proceeding or claim, or to its knowledge any basis therefor or
threat thereof, with respect to any contract, agreement, covenant or obligation
referred to in the preceding sentence. The Company does not have any collective
bargaining agreement covering any of its employees. The Schedule of Exceptions
sets forth the names and current base salaries and existing bonus commitments of
the executive officers and employee directors of the Company. Except as set
forth on the Schedule of Exceptions, each employee of the Company is an
"employee at will" and may be terminated by the Company without any payment to
such employee (other than accrued wages).
3.23 REGISTRATION RIGHTS. Except as provided for in this
Agreement and as set forth in the Schedule of Exceptions, the Company is not
under any obligation to register (as defined in Section 8.2 below) any of its
currently outstanding securities or any of its securities which may hereafter be
issued.
3.24 ENVIRONMENTAL AND SAFETY LAWS. The Company is not
in violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety,
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and to its knowledge, no material expenditures are or will be required in order
to comply with any such existing statute, law or regulation.
3.25 DISCLOSURE. This Agreement and the Schedule of Exceptions
do not contain any untrue statement of a material fact and do not omit to state
a material fact necessary in order to make the statements contained therein or
herein not misleading. There is no fact known to the Company which materially
adversely affects or in the future may (so far as the Company can now foresee)
materially adversely affect the business, operations, affairs, condition,
properties or assets of the Company that has not been set forth in this
Agreement or in the other documents, certificates and instruments delivered to
You by or on behalf of the Company specifically for use in connection with the
transactions contemplated by this Agreement.
3.26 YEAR 2000 COMPLIANCE.
(a) The Company has developed and implemented a year 2000
readiness plan as a part of the Company's normal quality assurance program. As a
part of this plan, the Company is in the process of conducting an inventory of
its internal hardware, software and firmware that the Company deems to be
material to the operation of its business operations (collectively, the
"Operating Components") and is using a software tool to check the operating
systems and BIOS of the applicable Operating Components on a "component by
component basis". In addition, the Company has collected Year 2000 compliance
statements from vendors of its Operating Components. To the Company's knowledge,
based on the tests described above, its examination of vendor compliance
statements and its efforts as described in the Year 2000 Readiness Disclosure
Statement attached hereto as EXHIBIT B (the "Year 2000 Disclosure"), the Company
does not know of any material Year 2000 non-compliance in its Operating
Components.
(b) The Company's principal software product, BillPlex,
currently performs in accordance with the Year 2000 Disclosure. The Company has
created a version 2.3 of BillPlex, scheduled for release in August 1999, on
which the Company currently is performing systematic year 2000 tests based on a
variety of test plans and complete system test scenarios. As of the date of this
Agreement, the Company has found no material year 2000 compliance issues with
respect to version 2.3 of BillPlex.
(c) Except as disclosed in Schedule 3.26 of the Schedule of
Exceptions, the Company is not a party to or bound by any contract which
contains representations, warranties, covenants or agreements regarding year
2000 compliance.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company as
follows:
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4.1 EXPERIENCE. You are experienced in evaluating and
investing in newly organized, emerging companies such as the Company.
4.2 INVESTMENT. You are acquiring the Shares for investment
for Your own account and not with the view to, or for resale in connection with,
any distribution thereof, PROVIDED that the disposition of Your property shall
at all times be within Your control. You understand that the Shares and the
Common Stock issuable upon conversion of the Shares have not been registered
under the Securities Act by reason of specified exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of Your investment intent as expressed herein.
4.3 RULE 144. You acknowledge that the Shares to be purchased
by You must be held indefinitely unless they are subsequently registered under
the Act or an exemption from such registration is available. You have been
advised or are aware of the provisions of Rule 144 promulgated under the Act,
which permits limited resale of shares purchased in a private placement subject
to the satisfaction of certain conditions and that such Rule may not become
available for resale of the Shares.
4.4 ACCESS TO DATA. You have had an opportunity to discuss the
Company's business, management and financial affairs with its management and
have had the opportunity to review the Company's facilities.
4.5 CONFIDENTIALITY.
(a) The Company has disclosed and may disclose to Purchaser
certain Trade Secrets and Confidential Information. Purchaser hereby agrees that
Purchaser shall use the Trade Secrets and Confidential Information solely for
the purpose of evaluating the transactions between Company and Purchaser
contemplated herein, that the Trade Secrets and Confidential Information will be
kept confidential, and that Purchaser will not disclose any of the Trade Secrets
and Confidential Information in any manner whatsoever. Purchaser will hold in
confidence and not reproduce, distribute, transmit or transfer, directly or
indirectly, in any form, by any means, or for any purpose, the Trade Secrets or
the Confidential Information of Company or any portion thereof communicated,
discussed, delivered or made available by Company to or received by Purchaser.
Notwithstanding the foregoing, Purchaser may only disclose the Trade Secrets and
Confidential Information to full-time employees of Purchaser with a need to know
such information, provided each such employee shall be obligated in writing to
comply with the terms and conditions of this Agreement. Purchaser will not use
the Trade Secrets or the Confidential Information of Company or any portion
thereof communicated, discussed, delivered or made available by Company to or
received by Purchaser without the prior written consent of Company.
(b) Purchaser acknowledges that its obligations under this
Agreement with regard to the Trade Secrets of Company remain in effect for as
long as such information shall remain a trade secret under applicable law.
Purchaser acknowledges that its obligations with regard to the Confidential
Information of Company shall remain in effect for three (3) years after the
disclosure of such information to Purchaser. The foregoing obligations shall not
apply if and to the extent that:
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(i) Purchaser establishes that the information communicated was already known to
Purchaser, without obligation to keep it confidential, at the time of its
receipt from Company; (ii) Purchaser establishes that the information
communicated was independently developed by Purchaser; (iii) Purchaser
establishes that the information communicated was received by such party in good
faith from a third party lawfully in possession thereof and having no obligation
to keep such information confidential; or (iv) Purchaser establishes that the
information communicated was publicly known at the time of its receipt by
Purchaser or has become publicly known other than by a breach of this Agreement
or other action by Purchaser.
(c) Purchaser acknowledges that the remedies at law for breach
of any covenant contained in this Agreement may be inadequate and that Company
shall be entitled to injunctive relief for any breach of this Agreement by
Purchaser. Nothing contained herein shall be construed as limiting Company's
right to any other remedies at law, including the recovery of damages for breach
of this Agreement.
(d) As used herein, "Trade Secrets" means information of the
Company that constitutes a trade secret under applicable law. As used herein,
"Confidential Information" means information of the Company, other than Trade
Secrets, that is of value to its owner and is treated as confidential,
including, but not limited to, the terms and conditions of this Agreement.
(e) From the effective date of this Agreement, the terms and
conditions contained in this Section 4.5 supersede all prior agreements between
the parties related to the subject matter.
SECTION 5
CONDITIONS TO CLOSING OF PURCHASER
The Purchaser' obligation to purchase the Shares is subject to
the fulfillment to Your satisfaction on or prior to the date of the Closing of
each of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The
representations and warranties made by the Company herein and pursuant hereto
shall have been true and correct in all respects when made, and shall be true
and correct in all respects on the date of the Closing with the same force and
effect as if they had been made at and as of the date of the Closing, except for
such changes resulting from consummation of the transactions contemplated by
this Agreement and the Other Agreements.
5.2 PERFORMANCE. All covenants, agreements and conditions
contained in this Agreement to be performed or complied with by the Company on
or prior to the Closing shall have been performed or complied with in all
respects and at such time the Company shall not be in default in the performance
of or compliance with any of the provisions of this Agreement or of the Restated
Articles.
5.3 OPINION OF COMPANY'S COUNSEL. You shall have received from
Morris, Manning & Martin, LLP, counsel to the Company, an opinion addressed to
You, dated the date of the Closing, and in substantially the form attached as
EXHIBIT C hereto.
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5.4 COMPLIANCE CERTIFICATE. The Company shall have delivered
to You a certificate of the Chief Executive Officer of the Company, dated the
date of the Closing, certifying to the fulfillment of the conditions specified
in Sections 5.1 and 5.2 of this Agreement and other matters You reasonably
request.
5.5 PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated hereby and all
documents and instruments incident to such transactions shall be satisfactory in
substance and form to You and Your counsel.
5.6 PROPRIETARY INFORMATION AND INVENTIONS, AND
NON-COMPETITION AGREEMENTS.
(a) Each person employed by the Company who has access to
proprietary information concerning the Company, including, without limitation
James Daleen, Richard Schell, David Corey, Steven Wagman, David McTarnaghan,
Timothy Moss, Frank Dickinson and John Yin, has previously executed and
delivered to the Company a Proprietary Information and Inventions Agreement
substantially in the form of EXHIBIT D hereto.
(b) James Daleen, Richard Schell, David Corey, Steven Wagman,
David McTarnaghan, Timothy Moss, Frank Dickinson and John Yin and any other
person employed by the Company and designated as a "key person" by the
Purchaser, previously have executed an Agreement Not to Compete in substantially
the form of EXHIBIT E hereto.
5.7 QUALIFICATIONS. All authorizations, approvals or permits,
if any, of any governmental authority or regulatory body that are now required
in connection with the lawful issuance and sale of the Shares pursuant to this
Agreement, the conversion of the Shares into Common Stock and the issuance of
such Common Stock upon such conversion shall have been duly obtained and shall
be in full force and effect on and as of the Closing.
5.8 STATEMENT OF DESIGNATION. The Company shall have duly
filed with the Secretary of State of the State of Florida the Articles of
Amendment to the Restated Articles containing the Statement of Designation and
the Restated Articles, as so amended, shall be in full force and effect.
5.9 ISSUANCE TAXES. All taxes imposed by law in connection
with the issuance, sale and delivery of the Shares shall have been fully paid,
and all laws imposing such taxes shall have been fully complied with.
SECTION 6
CONDITIONS TO CLOSING OF COMPANY
The Company's obligation to sell the Shares is subject to the
fulfillment to its satisfaction on or prior to the Closing Date of each of the
conditions set forth in Sections 5.7 and 5.8, and Purchaser shall have consented
in writing to the Reorganization.
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SECTION 7
COVENANTS OF THE COMPANY
The Company hereby covenants and agrees, so long as a
Purchaser owns any Shares or any Common Stock issued upon conversion of the
Shares as follows:
7.1 BASIC FINANCIAL INFORMATION. The Company will furnish the
following reports to such Purchaser (or such Purchaser's representative):
(a) As soon as practicable after the end of each fiscal year
of the Company, and in any event within ninety days thereafter, a consolidated
balance sheet of the Company and its subsidiaries, if any, as at the end of such
fiscal year, and consolidated statements of operations, changes in stockholders'
equity and cash flows income and sources and applications of funds of the
Company and its subsidiaries, if any, for such year, prepared in accordance with
generally accepted accounting principles consistently applied and setting forth
in each case in comparative form the figures for the previous fiscal year, all
in reasonable detail and certified by independent public accountants of
recognized national standing selected by the Company.
(b) As soon as practicable after the end of the first, second
and third quarterly accounting periods in each fiscal year of the Company, and
in any event within forty-five days thereafter, a consolidated balance sheet of
the Company and its subsidiaries, if any, as of the end of each such quarterly
period, and consolidated statements of operations, changes in stockholders'
equity and cash flows income and sources and applications of funds of the
Company and its subsidiaries for such period and for the current fiscal year to
date, prepared in accordance with generally accepted accounting principles
consistently applied and setting forth in comparative form the figures for the
corresponding periods of the previous fiscal year, subject to changes resulting
from year-end audit adjustments, all in reasonable detail and certified by the
principal financial or accounting officer of the Company.
(c) From the date the Company becomes subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in lieu of the financial information required pursuant to Sections
7.1(a) and (b), copies of its annual reports on Form 10-K and its quarterly
reports on Form 10-Q, respectively.
7.2 ADDITIONAL INFORMATION. Until the earlier to occur of (i)
the date on which the Company is subject to the reporting requirements of
Section 13(a) of the Exchange Act, or (ii) the date on which quotations for the
Common Stock of the Company are reported by the automated quotations system
operated by the National Association of Securities Dealers, Inc., or by an
equivalent quotation system, the Company will deliver the reports described
below in this Section 7.2 to each such Purchaser:
(a) As soon as practicable after the end of each month and in
any event within thirty days thereafter, a consolidated balance sheet of the
Company and its subsidiaries, if any, as at the
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end of such month, and consolidated statements of income and of sources and
applications of funds of the Company and its subsidiaries, for each month and
for the current fiscal year of the Company to date, prepared in accordance with
generally accepted accounting principles consistently applied, together with a
comparison of such statements to the Company's operating plan then in effect and
approved by its Board of Directors and a comparison of such statements to the
statements for the corresponding periods of the Company's previous fiscal year,
and certified, subject to changes resulting from year-end audit adjustments, by
the principal financial or accounting officer of the Company.
(b) As soon as available (but in any event within sixty days
prior to the commencement of its fiscal year) a summary of the business plan and
financial plan of the Company for the next fiscal year, as contained in its
operating plan approved by the Company's Board of Directors. Any material
changes in such financial plan shall be submitted as promptly as practicable
after such changes have been approved by the Board of Directors.
(c) With reasonable promptness, such other information and
data with respect to the Company and its subsidiaries as any such Purchaser may
from time to time reasonably request.
(d) The foregoing provisions of this Section 7.2 shall not be
in limitation of any rights which a Purchaser may have with respect to the books
and records of the Company and its subsidiaries, or to inspect their properties
or discuss their affairs, finances and accounts, under the laws of the
jurisdictions in which they are incorporated.
(e) Each of the financial statements referred to in
subparagraphs (a) and (b) of Section 7.1 and subparagraph (a) of Section 7.2
shall be true and correct in all material respects as of the dates and for the
periods stated therein, subject in the case of the unaudited financial
statements to changes resulting from normal year-end adjustments (none of which
would, alone or in the aggregate, be materially adverse to the financial
condition, operating results, assets, operations or business prospects of the
Company and its subsidiaries taken as a whole).
7.3 RIGHT OF FIRST REFUSAL. The Company hereby grants to
Purchaser the right of first refusal to purchase, pro rata, all (or any part) of
New Securities (as defined in this Section 7.3) which the Company may, from time
to time, propose to sell and issue. A Purchaser's pro rata share, for purposes
of this right of first refusal, is the ratio of the number of shares of
Preferred held by such Purchaser to the total number of shares of Preferred held
by the Purchaser on the date such New Securities are issued. Each Purchaser
shall have a right of over-allotment such that if any Purchaser fails to
exercise its right hereunder to purchase its pro rata portion of New Securities,
the other Purchaser may purchase the non-purchasing Purchaser's portion on a pro
rata basis within five days from the date such non-purchasing Purchaser fails to
exercise its right hereunder to purchase its pro rata share of New Securities.
This right of first refusal shall be subject to the following provisions:
(a) "New Securities" shall mean any capital stock (including
the Common Stock or the Preferred) 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 or exchangeable for
capital stock; PROVIDED that the term "New Securities" does not include (i)
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securities purchased under this Agreement; (ii) securities offered to the public
pursuant to a registration statement filed pursuant to the Securities Act;
(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 not less than fifty-one percent of the
voting power of such corporation; (iv) any borrowings, direct or indirect, from
financial institutions or other persons by the Company, whether or not presently
authorized, including any type of loan or payment evidenced by any type of debt
instrument, PROVIDED such borrowings do not have any equity features, including
warrants, options or other rights to purchase capital stock, and are not
convertible into or exchangeable for capital stock of the Company;
(v) securities issued to employees, consultants, officers or directors of the
Company pursuant to any stock option plan or stock purchase or stock bonus
arrangement in effect on the date hereof or hereafter approved in accordance
with Section 7.15; or (vi) shares of Common Stock (on a one for one basis) sold
for over $9.00 per share (as adjusted for stock splits and combinations).
(b) In the event the Company proposes to undertake an issuance
of New Securities, it shall give You written notice of its intention, describing
the type of New Securities, the price and the general terms upon which the
Company proposes to issue the same. Each Purchaser shall have thirty days from
the date of receipt of any such notice to agree to purchase its pro rata share
of all or part 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.
(c) In the event any Purchaser fails to exercise its right of
first refusal within said 30-day period and after the expiration of the five-day
period for exercise of the over-allotment provisions of this Section 7.3, the
Company shall have 120 days thereafter to sell or enter into an agreement
(pursuant to which the sale of New Securities covered thereby shall be closed,
if at all, within 120 days from the date of said agreement) to sell the New
Securities respecting which Your option was not exercised, at a price and upon
general terms no more favorable to the Purchaser thereof than specified in the
Company's notice. In the event the Company has not sold within said 120-day
period or entered into an agreement to sell the New Securities within said
120-day period (or sold and issued New Securities in accordance with the
foregoing within 120 days from the date of said agreement), the Company shall
not thereafter issue or sell any New Securities, without first offering such
securities to You in the manner provided above.
(d) The right of first refusal granted under this Agreement
shall expire upon the first sale of Common Stock of the Company to the public in
an underwritten public offering at an offering, which sale is effected pursuant
to a registration statement filed with, and declared effective by, the
Securities and Exchange Commission (the "Commission") under the Securities Act,
with net proceeds to the Company of not less than $20 million (a "Qualified
Initial Public Offering" or "QIPO").
(e) The right of first refusal set forth in this Section 7.3
is nonassignable, except that such right is assignable by You to any
wholly-owned subsidiary or parent of, or to any corporation or entity which is,
within the meaning of the Securities Act, controlling, controlled by or under
common control with, You.
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7.4 PROMPT PAYMENT OF TAXES, ETC. The Company will promptly
pay and discharge, or cause to be paid and discharged, when due and payable, all
lawful taxes, assessments and governmental charges or levies imposed upon the
income, profits, property or business of the Company or any subsidiary;
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 if the Company shall have set aside on its books
adequate reserves with respect thereto; and PROVIDED, further, that the Company
will pay all such taxes, assessments, charges or levies forthwith upon the
commencement of proceedings to foreclose any lien which may have attached as
security therefor. The Company will promptly pay or cause to be paid when due,
or in conformance with customary trade terms, all other indebtedness incident to
operations of the Company.
7.5 MAINTENANCE OF PROPERTIES AND LEASES. The Company will
keep its properties and those of its subsidiaries in good repair, working order
and condition, reasonable wear and tear, fire and other extraordinary casualty
excepted, and from time to time make all needful and proper repairs, renewals,
replacements, additions and improvements thereto as necessary to prevent any
material adverse effects on the Company; and the Company and its subsidiaries
will at all times comply with each provision of all leases to which any of them
is a party or under which any of them occupies property if the breach of such
provision might have a material adverse effect on the condition, financial or
otherwise, or operations of the Company.
7.6 INSURANCE. The Company will keep its operations and assets
and those of its subsidiaries which are of an insurable character insured by
financially sound and reputable insurers against loss or damage by fire,
explosion and other risks customarily insured against by companies in the
Company's line of business, in amounts sufficient to prevent the Company or any
subsidiary from becoming a co-insurer and not in any event less than 100% of
insurable value of the property insured; and the Company will maintain, with
financially sound and reputable insurers, insurance against other hazards and
risks and liability to persons and property to the extent and in the manner
customary for companies in similar businesses similarly situated.
7.7 KEY MAN LIFE INSURANCE. Unless otherwise agreed by a
majority of the representatives of the Preferred on the Board of Directors, the
Company shall obtain and will at all times maintain with financially sound and
reputable insurers term life insurance on the life of James Daleen in the amount
of $2 million, and will pay all premiums in connection therewith. Such policies
shall not be cancelable except upon 30 days prior written notice to You.
7.8 ACCOUNTS AND RECORDS. The Company will keep true records
and books of account in which full, true and correct entries will be made of all
dealings or transactions in relation to its business and affairs in accordance
with generally accepted accounting principles applied on a consistent basis.
7.9 INDEPENDENT ACCOUNTANTS. The Company will retain
independent public accountants of recognized national standing who shall certify
the Company's financial statements at the end of each fiscal year. In the event
the services of the independent public accountants so
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selected, or any firm of independent public accountants
hereafter employed by the Company are terminated, the Company will promptly
thereafter notify the Purchaser and will request the firm of independent public
accountants whose services are terminated to deliver to the Purchaser a letter
of such firm setting forth the reasons for the termination of their services. In
the event of such termination, the Company will promptly thereafter engage
another such firm of independent public accountants. In its notice to the
Purchaser the Company shall state whether the change of accountants was
recommended or approved by the Board of Directors or any committee thereof.
7.10 COMPLIANCE WITH REQUIREMENTS OF GOVERNMENTAL AUTHORITIES.
The Company and all its subsidiaries shall duly observe and conform to all valid
requirements of governmental authorities relating to the conduct of their
businesses or to their properties or assets.
7.11 MAINTENANCE OF CORPORATE EXISTENCE, ETC. The Company
shall maintain in full force and effect its corporate existence, rights and
franchises and all licenses and other rights to use patents, processes,
licenses, trademarks, trade names or copyrights owned or possessed by it or any
subsidiary and deemed by the Company to be necessary to the conduct of its
business.
7.12 AVAILABILITY OF COMMON STOCK FOR CONVERSION. The Company
will not issue or agree to issue any shares of Common Stock or options, rights
or warrants to purchase Common Stock or securities convertible into or
exchangeable for Common Stock or take any other action if, after giving effect
thereto, the number of shares of Common Stock remaining unissued and duly
reserved for issuance upon conversion of the Shares shall be insufficient to
permit conversion of all the then authorized shares of Series E Preferred after
giving effect to any adjustment in the Conversion Price as a result of such
action.
7.13 NOTICE OF RECORD DATES. In the event of any making by the
Company of a record of the holders of any class of securities (other than the
Preferred) for the purpose of determining the holders thereof who are entitled
to receive any dividend or other distribution, the Company shall mail to You at
least ten days prior to such record date, specified herein, a notice specifying
the date on which any such record is to be taken for the purpose of such
dividend or distribution.
7.14 PROPRIETARY INFORMATION AND INVENTIONS AND
NON-COMPETITION AGREEMENTS. The Company will require each person now or
hereafter employed by it or any subsidiary (other than clerical staff) with
access to confidential information to enter into a Proprietary Information and
Inventions Agreement as provided by the Company in a form acceptable to the
Purchaser. The Company will require all persons now or hereafter employed by the
Company or a subsidiary, and designated as a "key person" by a majority of the
representatives of the Preferred on the Company's Board of Directors to execute
an agreement in substantially the form annexed hereto as EXHIBIT D as a
condition precedent to the employment of such individuals.
7.15 EMPLOYEE STOCK PURCHASE AGREEMENT. The Company will not
issue or grant or agree to issue or grant any shares of its capital stock or any
option, right or warrant to purchase shares of its capital stock or securities
convertible into or exchangeable for shares of its capital stock to any employee
or officer of the Company or a subsidiary except pursuant to a plan adopted by
the
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Board of Directors, with a majority of the representatives of the Preferred on
the Board of Directors having voted in favor thereof (a "Plan"); PROVIDED,
HOWEVER, that, except for issuances of shares in accordance with the current
terms of options or other commitments outstanding on the date of this Agreement
(as described in the Schedule of Exceptions), no such issuance or grant of
options shall be made without the unanimous approval of a majority of the
members of the Board of Directors nominated by the Preferred. Each such purchase
or the exercise of any such option will be subject to proportionate vesting over
a three-year period.
7.16 USE OF PROCEEDS. The Company will use the proceeds from
the sale of the Shares for general working capital purposes, or as determined by
the Board of Directors to be in the best interests of the Company.
7.17 STOCKHOLDERS AGREEMENT; ELECTION OF DIRECTOR. Purchaser
and the Company agree as follows:
(a) If the Company does not complete a QIPO by December 31,
1999, the Company, Purchaser and the holders of the Series A Preferred, the
Series D Preferred and the Series D-1 Preferred of the Company shall execute a
Stockholders Agreement, substantially in the form attached hereto as EXHIBIT F;
and
(b) For so long as Purchaser or its transferees holds at least
35% of the Shares, Purchaser shall be entitled to nominate one member of the
Board of Directors of the Company, which Director shall be elected solely by the
holders of the Series E Preferred; provided such member may not at any time be
affiliated or associated with another entity in the billing or customer care
market, including but not limited to Solect Technology Group.
7.18 TERMINATION. The provisions of Sections 7.3 through 7.17
shall terminate immediately prior to the first sale of Common Stock of the
Company in an underwritten registered (as defined in Section 8.2) public
offering with net proceeds to the Company of not less than $20 million.
SECTION 8
Restrictions on Transferability of
SECURITIES; COMPLIANCE WITH SECURITIES ACT
8.1 RESTRICTIONS ON TRANSFERABILITY. (a) The Preferred shall
not be transferable, except upon the conditions specified in this Section 8,
which conditions are intended to insure compliance with the provisions of the
Securities Act or, in the case of Section 8.15 hereof, to assist in an orderly
distribution. You will cause any proposed transferee of Preferred held by You to
agree to take and hold those securities subject to the provisions and upon the
conditions specified in this Section 8.
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8.2 CERTAIN DEFINITIONS. As used in this Section 8, the
following terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"Holder" shall mean any holder of the outstanding Preferred or
Registrable Securities which have not been sold to the public.
"Initiating Holders" shall mean Holders who own in the
aggregate of 50% or more of the Registrable Securities which have not been sold
to the public.
"Registrable Securities" shall mean (i) Common Stock issued or
issuable upon conversion of the Preferred or the Series B Warrants and (ii) any
Common Stock issued in respect of securities issued pursuant to the conversion
of the Preferred or the Series B Warrants or upon any stock split, stock
dividend, recapitalization or similar event.
The terms "register", "registered" and "registration" shall
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and applicable rules and
regulations thereunder, and the declaration or ordering of the effectiveness of
such registration statement.
"Registration Expenses" shall mean all expenses incurred by
the Company in compliance with Sections 8.5 and 8.6 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, blue sky fees and expenses, reasonable
fees and disbursements of one counsel for all the selling Holders and other
security holders, and the expense of any special audits incident to or required
by any such registration (but excluding the compensation of regular employees of
the Company, which shall be paid in any event by the Company).
"Restricted Securities" shall mean the securities of the
Company required to bear or bearing the legend set forth in Section 8.3 hereof.
"Selling Expenses" shall mean all underwriting discounts,
selling commissions and transfer taxes applicable to the sale of Registrable
Securities.
8.3 RESTRICTIVE LEGEND. Each certificate representing (i) the
Preferred, (ii) the Company's Common Stock issued upon conversion of the
Preferred, or (iii) any other securities issued in respect of the Preferred or
the Common Stock issued upon conversion of the Preferred, upon any stock split,
stock dividend, recapitalization, merger, consolidation or similar event, shall
(unless otherwise permitted or unless the securities evidenced by such
certificate shall have been registered under the Securities Act or sold pursuant
to Rule 144 or Regulation A thereunder) be stamped or otherwise imprinted with a
legend in the following form (in addition to any legend required under
applicable state securities laws):
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THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN
EXEMPTION FROM SUCH REGISTRATION UNDER SAID ACT.
Upon request of a holder of such a certificate, the Company
shall remove the foregoing legend from the certificate or issue to such holder a
new certificate therefor free of any transfer legend, if, with such request, the
Company shall have received either the opinion referred to in Section 8.4(i) or
the "no-action" letter referred to in Section 8.4(ii) to the effect that any
transfer by such holder of the securities evidenced by such certificate will not
violate the Securities Act and applicable state securities laws.
8.4 NOTICE OF PROPOSED TRANSFERS. The holder of each
certificate representing Restricted Securities by acceptance thereof agrees to
comply in all respects with the provisions of this Section 8.4. Prior to any
proposed transfer of any Restricted Securities (other than under circumstances
described in Sections 8.5, 8.6 and 8.8 hereof), the holder thereof shall give
written notice to the Company of such holder's intention to effect such
transfer. Each such notice shall describe the manner and circumstances of the
proposed transfer in sufficient detail, and shall be accompanied (except in
transactions in compliance with Rule 144) by either (i) a written opinion of
Morris, Manning & Martin, L.L.P. or legal counsel who shall be reasonably
satisfactory to the Company, addressed to the Company and reasonably
satisfactory in form and substance to the Company's counsel, to the effect that
the proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act, or (ii) a "no action" letter from the
Commission to the effect that the proposed transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, whereupon the holder of such
Restricted Securities shall be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by the holder to the
Company. Each certificate evidencing the Restricted Securities transferred as
above provided shall bear the appropriate restrictive legend set forth in
Section 8.3 above, except that such certificate shall not bear such restrictive
legend if the opinion of counsel or "no-action" letter referred to above is to
the further effect that such legend is not required in order to establish
compliance with any provisions of the Securities Act.
8.5 REQUESTED REGISTRATION.
(a) REQUEST FOR REGISTRATION. At any time after July 1, 2000
or such earlier time after the Company has effected a public offering of its
securities under the Securities Act, if the Company shall receive from
Initiating Holders a written request that the Company effect any registration
with respect to all or a part of the Registrable Securities, the Company will:
(i) promptly give written notice of the proposed registration
to all other Holders; and
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(ii) as soon as practicable, use its diligent best efforts to
effect such registration (including, without limitation, the execution
of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws,
appropriate compliance with applicable regulations issued under the
Securities Act and listing on appropriate exchanges) as may be so
requested and as would permit or facilitate the sale and distribution
of all or such portion of such Registrable Securities as are specified
in such request, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such request as are
specified in a written request given within thirty days after receipt
of such written notice from the Company; PROVIDED that the Company
shall not be obligated to effect, or to take any action to effect, any
such registration pursuant to this Section 8.5:
(A) In any jurisdiction in which the Company would be
required to execute a general consent to service of process in
effecting such registration, qualification or compliance, or in
which the cost of the foregoing is unreasonable in light of the
number of Registrable Securities requested to be sold in such
jurisdiction, unless the Company is already subject to service in
such jurisdiction and except as may be required by the Securities
Act or applicable rules or regulations thereunder; or
(B) After the Company has effected two such registrations
pursuant to this Section 8.5(a) and such registrations have been
declared or ordered effective and the sales of such Registrable
Securities shall have closed.
Subject to the foregoing clauses (A) and (B), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable, after receipt of the request or requests of
the Initiating Holders.
The registration statement filed pursuant to the request of
the Initiating Holders may, subject to the provisions of Section 8.5(b) below,
include other securities of the Company which are held by officers or directors
of the Company or which are held by persons who, by virtue of agreements with
the Company, are entitled to include their securities in any such registration,
but except as provided in the last sentence of Section 8.5(b) below the Company
shall have no right to include any of its securities in any such registration.
(b) UNDERWRITING. If the Initiating Holders intend to
distribute the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request made
pursuant to Section 8.5 and the Company shall include such information in the
written notice referred to in Section 8.5(a)(i) above. The right of any Holder
to registration pursuant to Section 8.5 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such Holder with respect to
such participation and inclusion) to the extent provided herein. A Holder may
elect to include in such underwriting all or a part of the Registrable
Securities such Holder holds.
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If officers or directors of the Company holding other
securities of the Company shall request inclusion in any registration pursuant
to Section 8.5, or if holders of securities of the Company who are entitled, by
contract with the Company, to have securities included in such a registration
(the "Other Shareholders") request such inclusion, the Initiating Holders shall,
on behalf of all Holders, offer to include the securities of such officers,
directors and Other Shareholders in the underwriting and may condition such
offer on their acceptance of the further applicable provisions of this Section
8. The Company shall (together with all Holders, officers, directors and Other
Shareholders proposing to distribute their securities through such underwriting)
enter into an underwriting agreement in customary form (including, without
limitation, customary indemnification and contribution provisions on the part of
the Company) with the representative of the underwriter or underwriters selected
for such underwriting by a majority in interest of the Initiating Holders and
reasonably acceptable to the Company; PROVIDED that such underwriting agreement
shall not provide for indemnification or contribution obligations on the part of
Holders greater than the obligations of the Holders pursuant to Section 8.10(b).
Notwithstanding any other provision of this Section 8.5, if the representative
advises the Initiating Holders in writing that marketing factors require a
limitation on the number of shares to be underwritten, the securities of the
Company held by officers or directors of the Company (other than Registrable
Securities) and the securities held by Other Shareholders (other than
Registrable Securities) shall be excluded from such registration to the extent
so required by such limitation and if a limitation of the number of shares is
still required, the Initiating Holders shall so advise all Holders of
Registrable Securities whose securities would otherwise be underwritten pursuant
hereto, and the number of shares of Registrable Securities that may be included
in the registration and underwriting shall be allocated among all such Holders
in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities and other securities which they held at the time of the
request for registration made by the Initiating Holders pursuant to Section
8.5(a). No Registrable Securities or any other securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be
included in such registration. If any Holder of Registrable Securities, officer,
director or Other Shareholder who has requested inclusion in such registration
as provided above disapproves of the terms of the underwriting, such person may
elect to withdraw therefrom by written notice to the Company, the underwriter
and the Initiating Holders. The securities so withdrawn shall also be withdrawn
from registration. If the underwriter has not limited the number of Registrable
Securities or other securities to be underwritten, the Company may include its
securities for its own account in such registration if the underwriter so agrees
and if the number of Registrable Securities and other securities which would
otherwise have been included in such registration and underwriting will not
thereby be limited.
8.6 COMPANY REGISTRATION.
(a) If the Company shall determine to register any of its
securities either for its own account or the account of a security holder or
holders exercising their respective demand registration rights, other than a
registration for an initial public offering of the Common Stock, a registration
relating solely to employee benefit plans, or a registration relating solely to
a Commission Rule 145 transaction, or a transaction under a succession rule or
regulation to Commission Rule 145, or a registration on any registration form
which does not permit secondary sales or does not include
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substantially the same information as would be required to be included in a
registration statement covering the sale of Registrable Securities, the Company
will:
(i) promptly give to each Holder written notice thereof (which
shall include a list of the jurisdictions in which the Company intends
to attempt to qualify such securities under the applicable blue sky or
other state securities laws); and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities
specified in a written request or requests, made by any Holder within
fifteen days after receipt of the written notice from the Company
described in clause (i) above, except as set forth in Section 8.6(b)
below. Such written request may specify all or a part of a Holder's
Registrable Securities.
(b) UNDERWRITING. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting other
than the initial public offering of the Common Stock, the Company shall so
advise the Holders as a part of the written notice given pursuant to Section
8.6(a)(i). In such event the right of any Holder to registration pursuant to
Section 8.6 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 securities through such underwriting shall (together with the Company and
the Other Shareholders distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for underwriting by the Company, PROVIDED that such
underwriting agreement shall not provide for indemnification or contribution
obligations on the part of Holders greater than the obligations of the Holders
pursuant to Section 8.10(b). Notwithstanding any other provision of this Section
8.6, if the underwriter determines that marketing factors require a limitation
on the number of shares to be underwritten, and (a) if such registration is the
first registered offering of the Company's securities to the public and is for
the Company's own account, the underwriter may (subject to the allocation
priority set forth below) exclude from such registration and underwriting some
or all of the Registrable Securities which would otherwise be underwritten
pursuant hereto, and (b) if such registration is other than the first registered
offering of the sale of the Company's securities to the public for the Company's
account, the underwriter may limit the number of Registrable Securities to be
included in the registration and underwriting to not less than 50% of the
securities included therein (based on aggregate market values). The Company
shall so advise all holders of securities requesting registration, and the
number of shares of securities that are entitled to be included in the
registration and underwriting shall be allocated in the following manner. The
securities of the Company held by officers and directors of the Company (other
than Registrable Securities) shall be excluded from such registration and
underwriting to the extent required by such limitation, and, if a limitation on
the number of shares is still required, the number of shares that may be
included in the registration and underwriting shall be allocated among all such
Holders and Other Shareholders in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities and other securities which they
held at the time the Company gives the notice specified in Section 8.6(a)(i),
PROVIDED that if such registration is other than the first registered offering
of the sale of the Company's securities to the public for the Company's account,
the number of Registrable
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Securities permitted to be included therein shall in any event be at least 50%
of the securities included therein (based on aggregate market values). If any
Holder of Registrable Securities or any officer, director or Other Shareholder
disapproves of the terms of any such underwriting, he may elect to withdraw
therefrom by written notice to the Company and the underwriter. Any Registrable
Securities or other securities excluded or withdrawn from such underwriting
shall be withdrawn from such registration.
8.7 EXPENSES OF REGISTRATION. All Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to this Section 8 shall be borne by the Company, and all Selling
Expenses shall be borne by the holders of the securities so registered pro rata
on the basis of the number of their shares so registered; PROVIDED, however,
that the Company shall not be required to pay any Registration Expenses if, as a
result of the withdrawal of a request for registration by Initiating Holders
(other than due to a material adverse change in the business of the Company or
any refusal to proceed based upon the advice of counsel that the registration
statement, or any prospectus contained therein, contains 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 light of the
circumstances then existing), the registration statement does not become
effective, in which case the Holders and Other Shareholders requesting
registration shall bear such Registration Expenses pro rata on the basis of the
number of their shares so included in the registration request, and PROVIDED,
FURTHER, that such registration shall not be counted as a registration pursuant
to Section 8.5(a)(ii)(B).
8.8 REGISTRATION ON FORM S-3 OR FORM SB-2. The Company shall
use its best efforts to qualify for registration on Form S-3 or Form SB-2 or any
comparable or successor form or forms; and to that end the Company shall
register (whether or not required by law to do so) the Common Stock under the
Exchange Act in accordance with the provisions of that Act following the
effective date of the first registration of any securities of the Company on
Form S-1 or any comparable or successor form or forms. After the Company has
qualified for the use of Form S-3 or Form SB-2, in addition to the rights
contained in the foregoing provisions of this Section 8, the Holders of
Registrable Securities shall have the right to request registrations on Form S-3
or Form SB-2 (such requests shall be in writing and shall state the number of
shares of Registrable Securities to be disposed of and the intended methods of
disposition of such shares by such Holder or Holders) PROVIDED that the Company
shall not be obligated to effect any such registration pursuant to this Section
8.8 more than twice in any one year.
8.9 REGISTRATION PROCEDURES. In the case of each registration
effected by the Company pursuant to Section 8, the Company will keep each Holder
advised in writing as to the initiation of each registration and as to the
completion thereof. At its expense, the Company will:
(a) Keep such registration effective for a period of one
hundred twenty days or until the Holder or Holders have completed the
distribution described in the registration statement relating thereto, whichever
first occurs; provided, however, that (i) such 120-day period shall be extended
for a period of time equal to the period the Holder refrains from selling any
securities included in such registration in accordance with provisions in
Section 8.15 hereof; and (ii) in the case of any registration of Registrable
Securities on Form S-3 which are intended to be offered on a continuous
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or delayed basis, such 120-day period shall be extended, if necessary, to keep
the registration statement effective until all such Registrable Securities are
sold, PROVIDED that Rule 415, or any successor rule under the Securities Act,
permits an offering on a continuous or delayed basis, and PROVIDED, FURTHER,
that applicable rules under the Securities Act governing the obligation to file
a post-effective amendment permit, in lieu of filing a post-effective amendment
which includes any prospectus required by Section 10(a)(3) of the Securities
Act, the incorporation by reference of information contained in periodic reports
filed pursuant to Section 13 or 15(d) of the Exchange Act in the registration
statement;
(b) Furnish such number of prospectuses and other documents
incident thereto as a Holder from time to time may reasonably request;
(c) In connection with any underwritten offering pursuant to a
registration statement filed pursuant to Section 8.5 hereof, enter into an
underwriting agreement reasonably necessary to effect the offer and sale of
Common Stock, provided such underwriting agreement contains customary
underwriting provisions and provided further that if the underwriter so requests
the underwriting agreement will contain customary contribution provisions on the
part of the Company; and
(d) Obtain a comfort letter from the Company's independent
public accountants in customary form and covering such matters of the type
customarily covered by comfort letters and an opinion from the Company's counsel
in customary form and covering such matters of the type customarily covered in a
public issuance of securities, in each case addressed to the Holders.
8.10 INDEMNIFICATION.
(a) The Company will, and hereby does, indemnify each Holder,
each of its officers, directors and partners, and each person controlling such
Holder, with respect to which registration, qualification or compliance has been
effected pursuant to this Section 8, and each underwriter, if any, and each
person who controls any underwriter, 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 prospectus, offering circular or other 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, or any violation by the
Company of the Securities Act or any rule or regulation thereunder applicable to
the Company and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance, and will
reimburse each such Holder, each of its officers, directors and partners, and
each person controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and 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 based upon written
information furnished to the Company by such Holder or underwriter and stated to
be specifically for use therein.
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(b) Each Holder and Other Shareholder will, if Registrable
Securities held by him are included in the securities as to which such
registration, qualification or compliance is being effected, indemnify the
Company, each of its directors and officers and each underwriter, if any, of the
Company's securities covered by such a registration statement, each person who
controls the Company or such underwriter within the meaning of the Securities
Act and the rules and regulations thereunder, each other such Holder and Other
Shareholder and each of their officers, directors and partners, and each person
controlling such Holder or Other Shareholder, 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, and will reimburse the Company and such Holders, Other
Shareholders, directors, officers, partners, persons, underwriters or control
persons 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) is
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 such Holder or Other Shareholder and stated to be specifically
for use therein; PROVIDED, however, that the obligations of such Holders and
Other Shareholders hereunder shall be limited to an amount equal to the proceeds
to each such Holder or Other Shareholder of securities sold as contemplated
herein.
(c) Each party entitled to indemnification under this Section
8.10 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, but the failure of any Indemnified Party to give notice shall not
relieve the Indemnifying Party of its obligation under this Section 8.10. The
Indemnifying Party will be entitled to participate in, and to the extent that it
may elect by written notice delivered to the Indemnified Party promptly after
receiving the aforesaid notice from such Indemnified Party, at its expense to
assume, the defense of any such claim or any litigation resulting therefrom,
with counsel reasonably satisfactory to such Indemnified Party, PROVIDED that
the Indemnified Party may participate in such defense at its expense,
notwithstanding the assumption of such defense by the Indemnifying Party, and
PROVIDED, FURTHER, that if the defendants in any such action shall include both
the Indemnified Party and the Indemnifying Party and the Indemnified Party shall
have reasonably concluded that there may be legal defenses available to it
and/or other Indemnified Parties which are different from or additional to those
available to the Indemnifying Party, the Indemnified Party or Parties shall have
the right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of such
Indemnified Party or Parties and the fees and expenses of such counsel shall be
paid by the Indemnifying Party. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as
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shall be reasonably required in connection with defense of such claim and
litigation resulting therefrom.
8.11 INFORMATION BY HOLDER. Each Holder of Registrable
Securities, and each Other Shareholder holding securities included in any
registration, shall furnish to the Company such information regarding such
Holder or Other Shareholder and the distribution proposed by such Holder or
Other Shareholder as the Company may reasonably request in writing and as shall
be reasonably required in connection with any registration, qualification or
compliance referred to in this Section 8.
8.12 LIMITATIONS ON REGISTRATION OF ISSUES OF SECURITIES. From
and after the date of this Agreement, the Company shall not enter into any
agreement with any holder or prospective holder of any securities of the Company
giving such holder or prospective holder the right to require the Company to
initiate any registration of any securities of the Company, PROVIDED that this
Section 8.12 shall not limit the right of the Company to enter into any
agreements with any holder or prospective holder of any securities of the
Company giving such holder or prospective holder the right to require the
Company, upon any registration of any of its securities, to include, among the
securities which the Company is then registering, securities owned by such
holder. Any right given by the Company to any holder or prospective holder of
the Company's securities in connection with the registration of securities shall
be conditioned such that it shall be subordinate to the rights of the Holders
provided in this Agreement.
8.13 RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Commission which may permit the
sale of the Restricted Securities to the public without registration, the
Company agrees to:
(a) make and keep public information available as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
from and after ninety days following the effective date of the first
registration under the Securities Act filed by the Company for an offering of
its securities to the general public;
(b) file with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Exchange Act at any time after it has become subject to such reporting
requirements; and
(c) so long as a Purchaser owns any Restricted Securities,
furnish to the Purchaser forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of Rule 144 (at any
time from and after ninety days following the effective date of the first
registration statement filed by the Company for an offering of its securities to
the general public), and of the Securities Act and the Exchange 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, and such other reports and
documents so filed as a Purchaser may reasonably request in availing itself of
any rule or regulation of the Commission allowing a Purchaser to sell any such
securities without registration.
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8.14 TRANSFER OR ASSIGNMENT OF REGISTRATION RIGHTS. The rights
to cause the Company to register Your securities granted to You by the Company
under Sections 8.6 and 8.8 may be transferred or assigned by You to a transferee
or assignee of any of Your Restricted Securities, PROVIDED that the Company is
given written notice by You at the time of or within a reasonable time after
such transfer or assignment, stating the name and address of such transferee or
assignee and identifying the securities with respect to which such registration
rights are being transferred or assigned, and PROVIDED, FURTHER, that the
transferee or assignee of such rights is not deemed by the board of directors of
the Company, in its reasonable judgment, to be a competitor of the Company; and
PROVIDED, FURTHER, that the transferee or assignee of such rights assumes the
obligations of such Purchaser under this Section 8.
8.15 "MARKET STAND-OFF" AGREEMENT. You agree, if requested by
the Company and an underwriter of Common Stock (or other equity securities) of
the Company, not to sell or otherwise transfer or dispose of any Common Stock
(or other equity securities) of the Company held by You during the 180 day
period following the effective date of a registration statement of the Company
filed under the Securities Act, provided that:
(a) such agreement only applies to the first such registration
statement of the Company including securities to be sold on its behalf to the
public in an underwritten offering; and
(b) all Holders, Other Shareholders and officers and directors
and other shareholders of the Company holding in excess of 1% of the outstanding
Common Stock (on an as-converted basis) of the Company enter into similar
agreements.
Such agreement shall be in writing in a form satisfactory to
the Company and such underwriter. The Company may impose stop-transfer
instructions with respect to the shares (or securities) subject to the foregoing
restriction until the end of such ninety-day period.
SECTION 9
MISCELLANEOUS
9.1 GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of Florida.
9.2 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive (i) any investigation made by any Purchaser
and (ii) the Closing.
9.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto; provided, however, the Company may not assign its rights
hereunder.
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9.4 THIRD PARTIES. Unless expressly stated herein to the
contrary, nothing in this Agreement, whether express or implied, is intended to
confer any rights or remedies under or by reason of this Agreement on any person
other than the parties hereto and their respective legal representatives,
successors and permitted assigns. Nothing in this Agreement is intended to
relieve or discharge the obligation or liability of any third persons to any
party to this Agreement, nor shall any provision give any third persons any
right of subrogation or action over or against any party to this Agreement.
9.5 ENTIRE AGREEMENT; AMENDMENT. This Agreement (including the
Schedules and Exhibits hereto) and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof. Neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated, except by a
written instrument signed by the Company and the holders of a majority of the
Shares sold under this Agreement, and in the case of Section 7.3 and Section 8,
the holders of a majority of the Series A Preferred, the Series D Preferred and
the Series D-1 Preferred.
9.6 NOTICES, ETC. All notices and other communications
required or permitted hereunder shall be in writing and shall be mailed by
certified mail, postage prepaid, or delivered either by hand or by messenger,
addressed, if to the Company, to the address set forth at the beginning of this
Agreement, and if to a Purchaser, as indicated on the Schedule of Purchaser
attached hereto, or at such other address as the Company or a Purchaser shall
have furnished in writing.
9.7 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to any holder of any Preferred, upon any breach
or default of the Company under this Agreement, shall impair any such right,
power or remedy of such holder nor shall it be construed to be a waiver of any
such breach or default, or an acquiescence therein, or of or in any similar
breach or default thereafter occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any holder of any breach or default under this
Agreement, or any waiver on the part of any holder of any provisions or
conditions of this Agreement must be made in writing and shall be effective only
to the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
9.8 SEPARABILITY. In case any provision of the Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
9.9 AGENT'S FEES.
(a) The Company hereby agrees to indemnify and to hold You
harmless from and against any liability for commission or compensation in the
nature of an agent's fee to any broker or other person or firm (and the costs
and expenses of defending against such liability or asserted liability) arising
from any act by the Company or any of its employees or representatives.
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(b) You (i) represent and warrant that You have retained no
finder or broker in connection with the transactions contemplated by this
Agreement and (ii) hereby agree to indemnify and to hold the Company harmless
from any liability for any commission or compensation in the nature of an
agent's fee to any broker or other person or firm (and the costs and expenses of
defending against such liability or asserted liability) for which You, or any of
Your employees or representatives, are responsible.
9.10 EXPENSES. The Company shall bear its own expenses and
legal fees incurred on its behalf with respect to this Agreement and the
transactions contemplated hereby, and the Company will pay up to a total of
$10,000 of the fees, charges and disbursements relating to certain fees incurred
by Purchaser.
9.11 TITLES AND SUBTITLES. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
9.12 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one and the same instrument. Confirmation of execution
by electronic transmission of a facsimile signature page shall be binding upon
any party so confirming.
[Signatures contained on following page]
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[Signature Page to Series E Stock Purchase Agreement]
IN WITNESS WHEREOF, the parties have caused their respective
duly authorized representatives to execute this Agreement effective as of the
date first written above.
DALEEN TECHNOLOGIES, INC.
By: /S/ JAMES DALEEN
--------------------------------------------
Name: James Daleen
Title: Chief Executive Officer
ACCEPTED AND AGREED TO:
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
By: /S/ DOUGLAS SCHRIER
- ----------------------------------------
Name: DOUGLAS SCHRIER
Title: SENIOR VICE PRESIDENT ACQUISITIONS
[Signature Page to Series E Preferred Stock Purchase Agreement]
