SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D**
Under the Securities Exchange Act of 1934
(Amendment No. )*
Arinco Computer Systems Inc.
(Name of Issuer)
Common Stock, Par Value $0.01 Per Share
(Title of Class of Securities)
040397101
(Cusip Number)
Michael R. Gleason
201 Main Street, Suite 1955
Fort Worth, Texas 76102
(817)335-6999
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 28, 2000
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 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).
**The total number of shares reported herein is 32,000,000 shares, which
constitutes approximately 65.4% of the 48,959,000 of the Common Stock deemed
outstanding pursuant to Rule 13d-3(d)(1)(i) under the Act. Unless otherwise
stated, all ownership percentages set forth herein assume that there are
48,959,000 shares outstanding.
<PAGE>
1. Name of Reporting Person:
Culmen Technology Partners, L.P.
2. Check the Appropriate Box if a Member of a Group:
(a) / /
(b) / X /
3. SEC Use Only
4. Source of Funds: OO-Partnership Contributions
5. Check box if Disclosure of Legal Proceedings is Required Pursuant
to Items 2(d) or 2(e):
/ /
6. Citizenship or Place of Organization: Texas
7. Sole Voting Power: 28,000,000
Number of
Shares
Beneficially 8. Shared Voting Power: -0-
Owned By
Each
Reporting 9. Sole Dispositive Power: 28,000,000
Person
With
10. Shared Dispositive Power: -0-
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
32,000,000 (1)
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares:
/ /
13. Percent of Class Represented by Amount in Row (11): 65.4% (2)
14. Type of Reporting Person: PN
- -----------------
(1) Includes 4,000,000 shares of the Common Stock that may be acquired upon
the conversion of 100,000 shares of the Issuer's Series B Convertible
Preferred Stock. Each share of the Series B Convertible Preferred
Stock is entitled to a number of votes equal to the number of shares of
the Common Stock into which it is convertible from time to time.
Except as required by law or as specifically provided in the
Certificate of Designation, the holders of the Series B Preferred Stock
and the Common Stock will vote together as a single class. As of the
date hereof, a share of the Issuer's Series B Convertible Preferred
Stock may be converted into 40 shares of the Common Stock.
(2) Assumes, pursuant to Rule 13d-3(d)(1)(i), that there are 48,959,000
shares of the Common Stock outstanding.
<PAGE>
ITEM 1. SECURITY AND ISSUER.
This statement relates to shares of the Common Stock, par value
$0.01 per share (the "Common Stock"), of Arinco Computer Systems Inc. (the
"Issuer"). The principal executive offices of the Issuer are located at
1650 University Boulevard, N.E., Suite 5-100, Albuquerque, New Mexico 87102.
ITEM 2. IDENTITY AND BACKGROUND.
(a) Pursuant to Regulation 13D-G of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Act"), this Schedule 13D Statement is hereby filed by Culmen Technology
Partners, L.P., a Texas limited partnership ("Culmen" or the "Reporting
Person"). Additionally, pursuant to Instruction C to Schedule 13D,
information is included herein with respect to the following persons
(collectively, the "Controlling Persons"): CTP, Inc., a Delaware corporation
("CTP") and Michael R. Gleason ("Gleason"). The Reporting Person and the
Controlling Persons are sometimes hereinafter collectively referred to as
the "Item 2 Persons."
(b)-(c)
Reporting Person
Culmen is a Texas limited partnership, the principal business and
purpose of which are to buy, sell, exchange or otherwise acquire, hold,
invest in, and deal with the common stock of the Issuer and hold other
securities of the Issuer that constitute proceeds thereof. The principal
address of the Reporting Person, which also serves as its principal office,
is 201 Main Street, Suite 1955, Fort Worth, Texas 76102.
Controlling Persons
Pursuant to Instruction C to Schedule 13D of the Act, information
with respect to the Controlling Persons is set forth below.
CTP is a Delaware corporation, the principal business of which is
serving as the general partner of the Reporting Person and activities
related thereto. The principal address of CTP, which also serves as its
principal office, is 103 Foulk Road, Suite 202, Wilmington, Delaware 19803.
Gleason is the President and sole Director of CTP, as well as the
Managing Partner of the Culmen Group. The Culmen Group has investments in
oil and gas production, real estate, public and private equity and fixed
income securities and media. Gleason also represents Seven Network
Australia in the United States. He serves as Vice President of Seven
Network (U.S.).
(d) None of the entities or persons identified in this Item 2
has, during the last five years, been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors).
(e) None of the entities or persons identified in this Item 2
has, during the last five years, been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding 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.
(f) All of the natural persons identified in this Item 2 are
citizens of the United States of America.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The source and amount of the funds used or to be used by the
Reporting Person to purchase the shares is set forth below.
SOURCE OF FUNDS AMOUNT OF FUNDS
Other (1) $ 8,000,000.00 (2)
(1) Contributions from partners.
(2) This figure represents the total amount expended in purchasing the
Issuer's Series B Convertible Preferred Stock as described in Item 5(c).
ITEM 4. PURPOSE OF TRANSACTION.
Under a Securities Purchase Agreement, dated March 28, 2000, by
and among the Issuer, Pangea Internet Advisors LLC, Culmen and certain other
persons and entities (the "Purchase Agreement") (a) the Reporting Person
purchased shares of the Issuer's Series B Convertible Preferred Stock (the
"Series B Stock") as described in Item 5(c), and (b) the Issuer has agreed
to reincorporate in Delaware and change its name to Pangea Internet, Inc.
Following the sale and issuance of the Series B Stock, the Issuer's primary
activity will be to acquire and operate enterprises that are, or propose to
be, engaged in businesses relating primarily to the internet, e-commerce and
related technologies. The Issuer's new management team will identify,
investigate, structure and negotiate the terms of the acquisitions of such
businesses and will then oversee and actively manage them. The Purchase
Agreement is more fully described in Item 6 herein and a copy of the
Purchase Agreement is attached hereto as Exhibit 99.1.
The Reporting Person intends to review continuously its position
in the Issuer. Depending on future evaluations of the business prospects of
the Issuer and upon other developments, including, but not limited to,
general economic and business conditions and money market and stock market
conditions, the Reporting Person may determine to increase or decrease its
equity interest in the Issuer by acquiring additional shares of the Common
Stock (or securities convertible or exercisable into shares of the Common
Stock) or by disposing of all or a portion of its holdings, subject to any
applicable legal and contractual restrictions on its ability to do so.
Gleason has been elected to the Issuer's Board of Directors as
representative of the Reporting Person.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a)
Reporting Person
Culmen
The aggregate number of shares of the Common Stock that Culmen
owns beneficially, pursuant to Rule 13d-3 of the Act, is 32,000,000 which
constitutes approximately 65.4% of the 48,959,000 shares of the Common Stock
deemed outstanding pursuant to Rule 13d-3(d)(1)(i). Culmen owns 28,000,000
shares of the Common Stock, such shares being acquired upon conversion of
700,000 shares of the Series B Stock, and 100,000 shares of the Series B
Stock, each such share of Series B Stock being convertible into 40 shares of
the Common Stock.
Controlling Persons
The aggregate number of shares of the Common Stock that each of
(1) CTP, as the sole general partner of the Reporting Person, and (2)
Gleason, as the President and sole Director of CTP, own beneficially,
pursuant to Rule 13d-3 of the Act, is 32,000,000 which constitutes
approximately 65.4% of the 48,959,000 shares of the Common Stock deemed
outstanding pursuant to Rule 13d-3(d)(1)(i). Such beneficial ownership is
comprised of 28,000,000 shares of the Common Stock acquired upon conversion
of 700,000 shares of the Series B Stock, and 100,000 shares of the Series B
Stock, each such share of Series B Stock being convertible into 40 shares of
the Common Stock.
To the best of the knowledge of the Reporting Person, other than
as set forth above, none of the persons named in Item 2 herein is the
beneficial owner of any additional shares of the Common Stock.
(b) Culmen, CTP and Gleason have voting or dispositive power over
28,000,000 shares of the Common Stock. Culmen, CTP and Gleason also own
100,000 shares of the Series B Stock, each such share of the Series B Stock
being entitled to a number of votes equal to the number of shares of the
Common Stock into which it is convertible from time to time. Except as
required by law or as specifically provided in the Certificate of
Designation, the holders of the Series B Preferred and the Common Stock will
vote together as a single class. As of the date hereof, a share of the
Issuer's Series B Convertible Preferred Stock may be converted into 40
shares of Common Stock.
(c) On March 28, 2000, pursuant to a private placement offering
by the Issuer of an aggregate of 4,000,000 shares of the Series B Stock,
Culmen purchased directly from the Issuer 800,000 shares of the Series B
Stock. Culmen paid $8,000,000 for such Series B Stock and immediately
converted 700,000 shares of such Series B Stock into 28,000,000 shares of
the Common Stock. Culmen's remaining 100,000 shares of the Series B Stock
are currently convertible into shares of the Common Stock at a ratio of 40
shares of the Common Stock for each share of the Series B Stock.
Except as set forth above, the Reporting Person has not effected
any transactions in shares of the Common Stock during the past 60 days.
(d) The Reporting Person affirms that no person other than those
persons named in Item 2 has the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, the shares of
the Common Stock owned by such Reporting Person.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Culmen is party to the Purchase Agreement. In connection with the
Purchase Agreement, Culmen also entered into a registration rights agreement
(the "Registration Rights Agreement"), a form of which is attached as
Exhibit A to the Purchase Agreement. The description contained herein of
the Purchase Agreement, the Registration Rights Agreement and certain other
exhibits to the Purchase Agreement is not, and does not purport to be,
complete and is qualified in its entirety by reference to the Purchase
Agreement which, together with its exhibits, is attached hereto as Exhibit
99.1.
Purchase Agreement
As described under Item 5(c) above, the Reporting Person purchased
800,000 shares of the Series B Stock on March 28, 2000 pursuant to the
Purchase Agreement and immediately converted 700,000 shares of such Series B
Stock into 28,000,000 shares of the Common Stock. The remaining 100,000
shares of Series B Stock purchased by the Reporting Person are currently
convertible into shares of the Common Stock at a rate of 40 shares of the
Common Stock for each share of the Series B Stock, based on a conversion
price of $0.25 per share, which is subject to adjustment as set forth in the
Certificate of Designation relating to the Series B Stock (the "Certificate
of Designation"), a copy of which is attached as Exhibit C to the Purchase
Agreement.
As set forth in Section 7.1 of the Purchase Agreement, the Issuer
has agreed to take all steps within its power that may be necessary or
desirable in order to cause the jurisdiction of incorporation of the Issuer
to be changed to Delaware (the "Delaware Reincorporation"), as expeditiously
as possible, including, without limitation, taking all necessary action as
may be required under New Mexico and Delaware law to merge the Issuer into
Pangea, filing any required proxy solicitation materials with the Securities
and Exchange Commission in connection therewith, soliciting any stockholder
approval required therefor (including the holding of a stockholders
meeting), recommending to the stockholders that they approve the Delaware
Reincorporation, and making any required state filings. As set forth in
Section 7.1 of the Purchase Agreement, certain stockholders of the Issuer
have agreed to vote all of their shares of the Common Stock in favor of the
foregoing proposals and have granted an irrevocable proxy to the Issuer for
the purpose of approving such proposals.
After the sale and issuance of the Series B Stock, the Issuer's
primary activity will be to acquire and operate enterprises that are, or
propose to be, engaged in businesses relating primarily to the internet, e-
commerce and related technologies. The Issuer's new management team will
identify, investigate, structure and negotiate the terms of the acquisitions
of such businesses and will then oversee and actively manage them.
Registration Rights Agreement
The Registration Rights Agreement entitles the Reporting Person to
certain rights with respect to the registration of shares of the Common
Stock under the Securities Act of 1933 (the "Securities Act"). At any time
and from time to time after March 28, 2001, one or more holders of more than
25% of the shares of the Issuer's Registrable Securities (as defined in the
Registration Rights Agreement) then outstanding (Culmen currently holds less
than 25% of the shares of the Issuer's Registrable Securities) may make a
written request of the Issuer for registration under the Securities Act of
all or any part of its holdings of the Series B Stock, and specify the
intended method or methods of disposition thereof, including by means of a
shelf registration pursuant to Rule 415 under the Securities Act (but only
if the Issuer is then eligible to use Form S-2 or S-3, or any successor
forms). 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
securityholders, Culmen is entitled to notice of, and to include shares in,
such registration.
Certificate of Designation
The Certificate of Designation provides the holders of the Series
B Stock a number of votes equal to the number of shares of the Common Stock
into which it is convertible from time to time. The Series B Stock
purchased by the Reporting Person is currently convertible into shares of
the Common Stock at a rate of 40 shares of the Common Stock for each share
of the Series B Stock. Except as required by law or as specifically
provided in the Certificate of Designation, the holders of the Series B
Stock and the Common Stock will vote together as a single class. Each share
of the Series B Stock is convertible, at the option of the holder thereof,
at any time after the date of issuance of such share. Each share of the
Series B Stock is automatically convertible (i) immediately prior to the
closing of the first firmly underwritten public offering of the Common Stock
of the Issuer that occurs after March 28, 2000, and (ii) upon the conversion
of a number of shares of the Series B Stock which when added to all shares
of the Series B Stock previously converted at any time equals 60% of the
number of shares of the Series B Stock issued pursuant to the Purchase
Agreement. The shares of the Series B Stock are redeemable (i) at the
option of the Issuer in whole or in part at any time and from time to time
after March 28, 2000, and (ii) at the option of the holders of at least 50%
of the shares of the Series B Stock issued pursuant to the Purchase
Agreement if the Charter Amendment (as defined in the Certificate of
Designation) has not occurred prior to December 31, 2000. In both cases the
redemption price is $10.00 per share, plus all dividends accrued and unpaid
(including interest, if any) on such Series B Stock up to the date fixed for
redemption. The shares of the Series B Stock have a liquidation preference
of the greater of (i) the sum of $10.00 plus any declared but unpaid
dividends and (ii) the amount such share would be entitled to receive on an
"as if converted" basis.
Except as set forth herein or in the Exhibits filed herewith,
there are no contracts, arrangements, understandings or relationships with
respect to shares of the Common Stock owned by the Item 2 Persons.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 99.1 -- Securities Purchase Agreement, dated as of March
28, 2000, by and among the Issuer, Pangea Internet Advisors LLC,
Culmen and certain other persons and entities.
Exhibit 99.2 -- Limited Partnership Agreement of Culmen Technology
Partners, L.P.
<PAGE>
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: April 6, 2000
CULMEN TECHNOLOGY PARTNERS, L.P.
By: CTP, Inc.,
general partner
By: /s/ Michael R. Gleason
Michael R. Gleason, President
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
99.1 Securities Purchase Agreement, dated as of March 28, 2000, by and
among the Issuer, Pangea Internet Advisors LLC, Culmen and certain
other persons and entities.
99.2 Limited Partnership Agreement of Culmen Technology Partners, L.P.
<PAGE>
SECURITIES PURCHASE AGREEMENT, dated as of March 9, 2000, by and
between Arinco Computer Systems Inc., a corporation organized under the laws
of New Mexico (the "Company") and Pangea Internet Advisors LLC, a Delaware
limited liability company ("Pangea" and, together with its permitted
assignees, the "Purchasers").
WHEREAS, the Company desires to issue to the Purchasers, and the
Purchasers desire to purchase from the Company, (i) up to an aggregate of
4,000,000 shares of the Company's Series B Convertible Preferred Stock, par
value $.10 per share (the "Preferred Stock"), and (ii) Warrants to purchase
the Specified Number (defined below) of shares of the Company's Common
Stock, par value $.01 per share (the "Common Stock"), upon the terms and
subject to the conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"Actions or Proceedings" has the meaning assigned to that term in
Section 8.1.
"Affiliate" has the meaning ascribed to such term in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act.
"Agreement" means this Agreement, as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"Avery Noncompete" has the meaning assigned to that term in
Section 7.5.
"Board" means the Board of Directors of the Company.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in the City of New York are authorized
or required by law or executive order to close.
"Certificate of Designations" means the Certificate of
Designations substantially in the form attached hereto as Exhibit C.
"Closing" has the meaning assigned to that term in Section 2.4.
"Closing Date" has the meaning assigned to that term in
Section 2.4.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act.
"Commitments" has the meaning assigned to that term in
Section 3.13.
"Common Stock" means the Common Stock, par value $.01 per share,
of the Company or any other shares of common stock into which the Common
Stock may be converted pursuant to the Delaware Reincorporation or
otherwise.
"Commonly Controlled Entity" means any entity which is under
common control with the Company within the meaning of Code section 414(b),
(c), (m), (o) or (t).
"Company" means Arinco Computer Systems Inc., a New Mexico
corporation, and any successor thereof by merger or otherwise.
"Company Liabilities" has the meaning assigned to that term in
Section 5.8.
"Contingent Obligation" means, as applied to any Person, any
direct or indirect liability of that Person with respect to any
Indebtedness, lease, dividend, guaranty, letter of credit or other
obligation (the "primary obligation") of another Person (the "primary
obligor"), including, without limitation, any obligation of such Person,
whether or not contingent, (a) to purchase, repurchase or otherwise acquire
such primary obligations or any property constituting direct or indirect
security therefor, or (b) to advance or provide funds (i) for the payment
or discharge of any such primary obligation, or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain
the net worth or solvency or any balance sheet item, level of income or
financial condition of the primary obligor or (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of
any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (d) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; provided, however, that the Company shall be deemed not to have a
Contingent Obligation by virtue of its guaranty of obligations of a
Subsidiary that, except for shares held by nominees, is wholly owned by the
Company. The amount of any Contingent Obligation shall be deemed to be the
stated amount of such Contingent Obligation or, if there is no such stated
amount, an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made or, if
not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by the Company in good faith.
"Contractual Obligations" means, as to any Person, any provision
of any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument to which
such Person is a party or by which it or any of its property is bound.
"Delaware Reincorporation" has the meaning assigned to that term
in Section 7.1.
"Disclosure Letter" has the meaning assigned to that term in
Article 5.
"Environmental Laws" means any federal, state, territorial,
provincial or local law, common law doctrine, rule, order, decree,
judgment, injunction, license, permit or regulation relating to
environmental matters, including those pertaining to land use, air, soil,
surface water, ground water (including the protection, cleanup, removal,
remediation or damage thereof), public or employee health or safety or any
other environmental matter, together with any other laws (federal, state,
territorial, provincial or local) relating to emissions, discharges,
releases or threatened releases of any contaminant including, without
limitation, medical, biological, biohazardous or radioactive waste and
materials, into ambient air, land, surface water, groundwater, person,
property or structures, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transportation, discharge or handling of any contaminant, including without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. 9601 et seq.), the Hazardous Material
Transportation Act (49 U.S.C. 1801 et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. 6901 et seq.), the Federal Water Pollution
Control Act (33 U.S.C. 1251 et seq.), the Clean Air Act (42 U.S.C. 1251
et seq.), the Toxic Substances Control Act (15 U.S.C. 2601 et seq.), and
the Occupational Safety and Health Act (29 U.S.C. 651 et seq.), as such
laws have been amended or supplemented and any analogous future federal, or
present or future state or local laws, statutes and regulations promulgated
thereunder.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"Forbes Noncompete" has the meaning assigned to that term in
Section 7.5.
"GAAP" means generally accepted accounting principles in the
United States in effect from time to time.
"Governmental Authority" means the government of any nation,
state or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"Hazardous Materials" means (i) any "hazardous waste" or "solid
waste" as defined by the Resource Conservation and Recovery Act of 1976, as
amended, and regulations promulgated thereunder; (ii) any "hazardous
substance" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and regulations
promulgated thereunder; (iii) any "pollutant" or "toxic pollutant" or "oil"
as defined in the Clear Water Act, as amended, and regulations promulgated
thereunder; (iv) asbestos; (v) polychlorinated biphenyls; and (vi) any
waste oils.
"Indebtedness" means, as to any Person, (a) all obligations of
such Person for borrowed money (including, without limitation,
reimbursement and all other obligations with respect to surety bonds,
letters of credit and bankers' acceptances, whether or not matured),
(b) all obligations to pay the deferred purchase price of property or
services, except trade accounts payable and accrued liabilities arising in
the ordinary course of business, (c) all interest rate and currency swaps
and similar agreements under which payments are obligated to be made,
whether periodically or upon the happening of a contingency, (d) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement
in the event of default are limited to repossession or sale of such
property), (e) all obligations under leases which have been or should be,
in accordance with GAAP, recorded as capital leases, (f) all indebtedness
secured by any Lien (other than Liens in favor of lessors under leases
other than leases included in clause (e)) on any property or asset owned or
held by that Person regardless of whether the indebtedness secured thereby
shall have been assumed by that Person or is non-recourse to the credit of
that Person, and (g) any Contingent Obligation.
"Indemnified Party" has the meaning assigned to that term in
Section 8.5.
"Indemnifying Party" has the meaning assigned to that term in
Section 8.5.
"Intellectual Property" means all of the following as they exist
in all jurisdictions throughout the world, in each case, to the extent
owned by, licensed to, or otherwise used by the Company:
(i) patents, patent applications, and other patent rights
(including any divisions, continuations, continuations-in-part,
substitutions, or reissues thereof, whether or not patents are issued
on any such applications and whether or not any such applications are
modified, withdrawn, or resubmitted);
(ii) trademarks, service marks, trade dress, trade names, brand
names, Internet domain names, designs, logos, or corporate names,
whether registered or unregistered, and all registrations and
applications for registration thereof;
(iii) copyright registrations and applications for
registration thereof and non-registered copyrights;
(iv) trade secrets, concepts, ideas, designs, research processes,
procedures, techniques, methods, know-how, data, mask works,
discoveries, inventions, modifications, extensions, improvements, and
other proprietary rights (whether or not patentable or subject to
copyright, mask work, or trade secret protection); and
(v) computer software programs, including, without limitation,
all source code, object code, and documentation related thereto,
licensed to or from the Company.
"Investment Company Act" has the meaning assigned to that term in
Section 5.10.
"Liabilities" has the meaning assigned to that term in
Section 9.1.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or preference, priority
or other security interest or preferential arrangement of any kind or
nature whatsoever (including, without limitation, those created by, arising
under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under a capitalized lease obligation,
or any financing lease having substantially the same economic effect as any
of the foregoing).
"Newco" has the meaning assigned to that term in Section 7.1.
"Pangea" means Pangea Internet Advisors LLC, Delaware limited
liability company.
"Person" means any individual, firm, corporation, limited
liability company, partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, governmental authority (or
an agency or political subdivision thereof) or other entity of any kind,
and shall include any successor (by merger or otherwise) of such entity.
"Preferred Stock" means the Series B Convertible Preferred Stock,
par value $.10 per share, of the Company or any other shares of preferred
stock into which the Series B Convertible Preferred Stock may be converted
pursuant to the Delaware Reincorporation or otherwise.
"Purchasers" means, as of the date hereof, Pangea and, at such
time as Pangea has assigned any part of its obligations to purchase Shares
or Warrants to an assignee who has agreed to assume those obligations, the
term "Purchasers" also shall include such assignees.
"Reduced Share Number" has the meaning assigned to that term in
Section 3.13.
"Registration Rights Agreement" means the Registration Rights
Agreement substantially in the form attached hereto as Exhibit A.
"Representative" has the meaning assigned to that term in
Section 2.5.
"Requirements of Law" means, as to any Person, any statute, law,
treaty, rule or regulation or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable or binding upon such
Person or any of its property or to which such Person or any of its
property is subject.
"SEC Documents" has the meaning assigned to that term in
Section 5.8.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
"Shares" has the meaning assigned to that term in Section 2.1,
subject to Section 3.16.
"Shares Purchase Price" has the meaning assigned to that term in
Section 2.1.
"Solvent" means, with respect to any Person, that the fair
saleable value of the assets and property of such Person is, on the date of
determination, greater than the total amount of liabilities (including
contingent and unliquidated liabilities) of such Person as of such date and
that, as of such date, such Person is able to pay all liabilities of such
Person as such liabilities mature. In computing the amount of contingent
or liquidated liabilities at any time, such liabilities will be computed as
the amount which, in light of all the facts and circumstances existing at
such time, represents the amount that is probable to become an actual or
matured liability.
"Specified Number" means a number of shares of Common Stock equal
to 20% of the total number of shares of Common Stock outstanding on a fully
diluted basis as of the date of issuance of the Warrants, assuming (i) the
issuance of all of the Shares issuable hereunder, (ii) the exercise of the
Warrants and (iii) the exercise of all outstanding employee options, if
any.
"Subsidiary" means, with respect to any Person, a corporation,
partnership or other entity of which 50% or more of the voting power of the
voting equity securities or equity interest, or rights to profits, is
owned, directly or indirectly, by such Person. Unless otherwise qualified,
all references to a "Subsidiary" or to "Subsidiaries" in this Agreement
shall refer to a Subsidiary or Subsidiaries of the Company.
"Tax" or "Taxes" has the meaning assigned to that term in
Section 5.16.
"Tax Returns" has the meaning assigned to that term in
Section 5.16.
"Transaction Documents" shall mean each of this Agreement, the
Shares, the Warrants, the Certificate of Designations and the Registration
Rights Agreement.
"Warrants" means the warrants, substantially in the form of
Exhibit B, to be purchased by certain of the Purchasers designated by
Pangea, entitling the holders thereof to purchase initially up to the
Specified Number of shares of Common Stock, as such number may be adjusted
from time to time in accordance with the terms thereof.
"Warrants Purchase Price" has the meaning assigned to that term
in Section 2.3.
ARTICLE 2
PURCHASE AND SALE
2.1 Purchase and Sale of Shares. Subject to the terms and
conditions set forth herein, the Company agrees that it will issue and sell
to the Purchasers, and the Purchasers agree, severally and not jointly,
that they will acquire from the Company, at the Closing, an aggregate of
4,000,000 shares of Preferred Stock (the "Shares"). The number of Shares
committed to be purchased hereunder by each Purchaser will be as set forth
on Schedule I, which will be prepared by Pangea and attached to this
Agreement on or prior to the Closing Date. The per share purchase price
for the Shares will be $10.00 (the "Shares Purchase Price").
2.2 Preferred Stock Terms. The terms of the Preferred Stock
shall be as set forth in the Certificate of Designations.
2.3 Purchase and Sale of Warrants. Subject to the terms and
conditions set forth herein, the Company agrees that it will sell to those
Purchasers designated by Pangea, and such Purchasers agree, severally and
not jointly, that they will acquire from the Company, at the Closing, the
Warrants. The allocation of the number of Warrants among the Purchasers
will be as set forth on Schedule I. The aggregate purchase price for the
Warrants will be $100,000 (the "Warrants Purchase Price"). 20% of the
Warrants will have an exercise price of $.25 per share, 30% of the Warrants
will have an exercise price of $.50 per share, 30% of the Warrants will
have an exercise price of $.75 per share and 20% of the Warrants will have
an exercise price of $1.00 per share.
2.4 Closing. The closing of the purchase and sale of the Shares
(the "Closing") shall take place at the offices of Paul, Weiss, Rifkind,
Wharton & Garrison, 1285 Avenue of the Americas, New York, New York 10019-
6064, at 10:00 a.m., New York City time, on the third Business Day to occur
following the satisfaction (or waiver by the party entitled to the benefit
thereof) of each of the conditions set forth in Articles 3 and 4, or on
such other date and at such other time and place as the Company and Pangea
may agree (the "Closing Date"). At the Closing, subject to the terms and
conditions set forth herein, the Company shall sell Shares to the
Purchasers acquiring such Shares by delivering to such Purchasers duly
executed certificates representing the Shares to be sold at such Closing,
registered in the name of the Purchaser acquiring such Shares, with
appropriate issue stamps, if any, affixed at the expense of the Company,
free and clear of any Lien, and such Purchasers shall purchase such Shares
for the Shares Purchase Price. At the Closing, subject to the terms and
conditions set forth herein, the Company shall also sell the Warrants to
those Purchasers designated by Pangea by delivering to such Purchasers duly
executed certificates representing the Warrants in the name of the
Purchaser acquiring such Warrants, free and clear of any Lien, and such
Purchasers shall purchase the Warrants for the Warrants Purchase Price.
The Shares Purchase Price and the Warrants Purchase Price shall be paid in
cash by wire transfer to a bank account agreed to by the Company and
Pangea.
2.5 Purchasers' Representative. Each Purchaser hereby appoints
Pangea as such Purchaser's representative (the "Representative"), to do any
and all things and to execute any and all documents, in such Purchaser's
name, place and stead, in any way which such Purchaser could do if
personally present, in connection with any closing of the transactions
contemplated by this Agreement and the other Transaction Documents,
including, without limitation, the ability to waive any condition to the
obligation of such Purchaser to purchase Shares or Warrants on any Closing
Date (which Pangea may do in its sole discretion) and otherwise determine
that the such conditions have been satisfied. The Company shall be
entitled to rely upon the foregoing as being binding upon the Purchasers.
ARTICLE 3
CONDITIONS TO THE OBLIGATION
OF THE PURCHASERS TO CLOSE
The obligation of the Purchasers to purchase Shares or Warrants
on the Closing Date shall be subject to the satisfaction or waiver (by the
parties entitled to the benefit thereof) of the following conditions:
3.1 Representations and Warranties True. The representations
and warranties of the Company contained in Article 5 shall be true and
correct in all material respects at and as of the Closing Date (and after
giving effect to the transactions contemplated hereby) as if made at and as
of such date.
3.2 Compliance with this Agreement. The Company shall have
performed and complied with its agreements and conditions set forth or
contemplated herein that are required to be performed or complied with by
the Company on or before the Closing Date.
3.3 Officer's Certificate. The Purchasers shall have received a
certificate, dated the Closing Date and signed by the President or a Vice-
President of the Company, certifying that the conditions set forth in
Sections 3.1 and 3.2 have been satisfied on and as of such date.
3.4 Secretary's Certificate. The Purchasers shall have received
a certificate, dated the Closing Date and signed by the Secretary or an
Assistant Secretary of the Company, certifying the truth and correctness of
attached copies of the Certificate of Incorporation and By-laws of the
Company and resolutions of the Board of Directors of the Company, in effect
as of the Closing Date, approving the transactions contemplated by this
Agreement and the other Transaction Documents.
3.5 Documents. The Purchasers shall have received copies of
such documents as they reasonably may request in connection with the sale
of the Shares and Warrants and the other transactions contemplated hereby,
all in form and substance reasonably satisfactory to Pangea.
3.6 Purchase Permitted by Applicable Laws; Legal Investment.
The acquisition of and payment for the Shares and Warrants to be purchased
on the Closing Date and the consummation of the other transactions
contemplated hereby (i) shall not be prohibited by any applicable law or
governmental regulation and (ii) shall be permitted by the laws and
regulations of the jurisdictions to which they are subject.
3.7 Opinion of Counsel. The Purchasers shall have received the
opinion of Thad H. Turk, Esquire, counsel to the Company, dated the Closing
Date, in form and substance reasonably satisfactory to Pangea.
3.8 Approval of Counsel to the Purchaser. All actions and
proceedings hereunder and all documents required to be delivered by the
Company hereunder or in connection with the consummation of the other
transactions contemplated hereby, and all other related matters, shall have
been reasonably acceptable to Paul, Weiss, Rifkind, Wharton & Garrison,
special counsel to the Purchasers, as to their form and substance.
3.9 No Material Adverse Change. There shall have been no
material adverse change, nor shall any such change be threatened, in the
assets, business, properties, operations or financial or other condition of
the Company since December 31, 1999.
3.10 Registration Rights Agreement. The Company shall have duly
executed and delivered to the Purchasers the Registration Rights Agreement
substantially in the form of Exhibit A, which shall be in full force and
effect.
3.11 Certificate of Incorporation and By-Laws of the Company. No
amendments to the Certificate of Incorporation or By-Laws of the Company as
in effect on the date hereof shall have been effected on or prior to the
Closing Date.
3.12 No Litigation. No action, suit, proceeding, claim or
dispute shall have been brought or otherwise arisen at law, in equity, in
arbitration or before any Governmental Authority against the Company which
would, if adversely determined, in the reasonable opinion of Pangea
(i) have a material adverse effect on the assets, business, properties or
financial or other condition of the Company, or (ii) have a material
adverse effect on the ability of the Company to perform its obligations
under this Agreement or any of the other Transaction Documents. No
injunction, writ, temporary restraining order, decree or any order of any
nature shall have been issued by any court or other Governmental Authority
purporting to enjoin or restrain the execution, delivery and performance of
this Agreement or any of the other Transaction Documents.
3.13 Funding Commitments. On or prior to the Closing Date,
Pangea shall have received firm commitments (the "Commitments"), from
financially sophisticated investors in an aggregate amount equal to not
less than $40,000,000, and such investors shall have become parties to this
Agreement as "Purchasers" hereunder on or prior to the Closing Date;
provided, that if such Commitments are less than $40,000,000 but equal to
at least $30,000,000, (i) the condition set forth in this Section 3.13
shall be deemed to have been satisfied, and (ii) the term "Shares" shall be
deemed to mean that number of shares of Preferred Stock equal to (x) such
Commitments divided by (y) the Shares Purchase Price (the "Reduced Share
Number").
3.14 Board Representation; Executive Officers. The following
individuals shall have become directors of the Board effective as of the
Closing Date: James M. Dubin, Cary S. Fitchey, Michael Gleason and William
E. Lipner. The following officers shall have been appointed effective as
of the Closing Date: Michael Gleason - Chairman; Cary S. Fitchey - Chief
Executive Officer and President; William Avery - Executive Vice President;
David M. Roberts - Senior Vice President; William P. O'Donnell - Senior
Vice President; and Frederick G. Noell - Senior Vice President.
3.15 Certificate of Designations. The Company shall have filed
the Certificate of Designations with the State Corporation Commission of
the State of New Mexico.
3.16 Assets. The Company shall own no assets other than cash and
government securities.
3.17 Office Services Agreement. The Company shall have duly
executed and delivered to Pangea an Office Services Agreement in a form to
be reasonably agreed to by the parties, which shall be in full force and
effect.
3.18 Annual Report. The Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1999 as filed with the Commission
shall be substantially in the form of the Company's draft Form 10-KSB dated
March 8, 2000, delivered to Pangea on March 9, 2000.
3.19 New Start. The Company shall have divested itself of all
interest in New Start, Inc. or shall have dissolved it.
ARTICLE 4
CONDITIONS TO THE OBLIGATION
OF THE COMPANY TO CLOSE
The obligations of the Company to issue and sell the Shares and the Warrants
on the Closing Date shall be subject to the satisfaction or waiver by
it of the following conditions:
4.1 Representations and Warranties True. The representations and
warranties of the Purchasers contained in Article 6 shall be true and
correct in all material respects at and as of the Closing Date (and after
giving effect to the transactions contemplated hereby) as if made at and as
of such date.
4.2 Compliance with this Agreement. The Purchasers shall have
performed and complied with all of their agreements and conditions set forth
or contemplated herein that are required to be performed or complied with by
the Purchasers on or before the Closing Date.
4.3 Issuance Permitted by Applicable Laws. The issuance of the
Shares and Warrants by the Company to be issued on the Closing Date and the
consummation of the transactions contemplated hereby (i) shall not be
prohibited by any applicable law or governmental regulation and (ii) shall
be permitted by the laws and regulations of the jurisdictions in which the
transactions are subject.
4.4 Approval of Counsel to the Company. All actions and
proceedings hereunder and all documents required to be delivered by the
Purchasers hereunder or in connection with the consummation of the
transactions contemplated hereby, and all other related matters, shall have
been reasonably acceptable to
Thad H. Turk, Esquire, counsel to the Company, as to their form and
substance.
4.5 No Litigation. No injunction, writ, temporary restraining
order, decree or any order of any nature shall have been issued by any court
or other Governmental Authority purporting to enjoin or restrain the
execution, delivery and performance of this Agreement or any of the other
Transaction Documents.
ARTICLE 5
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchasers as
follows, except as set forth in the corresponding Section of the "Disclosure
Letter" delivered to the Purchasers simultaneously herewith (for purposes of
this Article 5 the term "Company" shall include its wholly-owned subsidiary,
New Start, Inc., except where the context otherwise requires):
5.1 Corporate Existence and Power. The Company:
(a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization;
(b) has (i) full corporate power and authority and (ii) all
governmental licenses, authorizations, consents and approvals to own and
operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently, or is currently proposed to
be, engaged;
(c) is duly qualified as a foreign corporation, licensed and
in good standing under the laws of each jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires such
qualification; and
(d) is in compliance with (i) its Certificate of
Incorporation and By-Laws or other organizational or governing documents and
(ii) all Requirements of Law; except, in the case of (b)(ii), (c) or (d)(ii)
of this Section 5.1, to the extent that the failure to do so, individually
or in the aggregate, would not have a material adverse effect on the assets,
business, operations, properties or financial or other condition of the
Company.
5.2 Corporate Authorization; No Contravention.
(a) The execution, delivery and performance by the Company
of this Agreement and the other Transaction Documents, and the transactions
contemplated hereby and thereby (such transactions to include, for purposes
of this Agreement, among other things, the issuance of the Shares, the
issuance of the Warrants, and the issuance of Common Stock upon the exercise
of the Warrants);
(i) is within the Company's corporate power and
authority and has been duly authorized by all necessary corporate
action;
(ii) does not contravene the terms of the Certificate of
Incorporation or By-Laws or other organizational or governing documents
of the Company, or any amendment thereof; and
(iii) will not violate any order or decree directly
relating to the Company.
(b) The Company has delivered to the Purchasers complete and
correct copies of the Company's Certificate of Incorporation and By-Laws, in
each case, as amended to the date of this Agreement.
5.3 Governmental Authorization; Third Party Consents. No
approval, consent, exemption, authorization, or other action by, or notice
to, or filing with, any Governmental Authority or any other Person, is
necessary or required in connection with the execution, delivery or
performance by the Company or enforcement against the Company of this
Agreement or any of the other Transaction Documents, or the transactions
contemplated hereby or thereby.
5.4 Binding Effect. This Agreement has been duly executed and
delivered by the Company, and at the Closing the other Transaction Documents
will be, duly executed and delivered by the Company, and this Agreement
constitutes the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, and at the
Closing the other Transaction Documents will constitute the legal, valid and
binding obligations of the Company enforceable against the Company in
accordance with their respective terms.
5.5 No Legal Bar. Neither the execution, delivery and
performance of this Agreement or any of the other Transaction Documents nor
the issuance of the Shares or the Warrants will violate any Requirement of
Law. The Company is not a party to any agreement granting any registration
rights to any Person that are inconsistent with the rights to be granted to
the Purchasers in the Registration Rights Agreement.
5.6 Litigation. There are no actions, suits, investigations,
proceedings, claims or disputes pending, or to the best knowledge of the
Company, threatened, at law, in equity, in arbitration or before any
Governmental Authority against the Company:
(a) with respect to this Agreement or any of the other
Transaction Documents or any of the transactions contemplated hereby or
thereby; or
(b) which would, if adversely determined, (i) have a
material adverse effect on the assets, business, properties, operations or
financial or other condition of the Company or (ii) have a material adverse
effect on the ability of the Company to perform its obligations under this
Agreement or any of the other Transaction Documents. No injunction, writ,
temporary restraining order, decree or any order of any nature has been
issued by any court or other Governmental Authority purporting to enjoin or
restrain the execution, delivery and performance of this Agreement or any of
the other Transaction Documents.
5.7 No Default or Breach. The Company is not in default under or
with respect to any Contractual Obligation in any respect, which,
individually or together with all such defaults, would be materially adverse
to the assets, business, properties, operations or financial or other
condition of the Company or which could materially adversely affect the
ability of the Company to perform its obligations under this Agreement or
any of the other Transaction Documents.
5.8 SEC Documents.
(a) The Company has filed all reports, schedules, forms,
statements and other documents required to be filed with the Commission by
the Company since January 1, 1996 (collectively, "SEC Documents") on a
timely basis. As of their respective dates, the SEC Documents did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. All of the consolidated financial statements of the Company
contained in the SEC Documents (i) complied as to form with applicable
accounting requirements and the published rules and regulations of the
Commission with respect thereto, (ii) have been prepared in accordance with
GAAP consistently applied throughout the periods indicated (subject, in the
case of the unaudited interim statements, to normal year-end audit
adjustments) and (iii) present fairly in all material respects the financial
position, results of operations and the related changes in financial
position as at the dates and for the periods indicated.
(b) The Company has no material direct or indirect
Indebtedness, liability or obligation, whether known or unknown, fixed or
unfixed, contingent or otherwise, and whether or not of a kind required by
GAAP to be set forth on a financial statement (collectively "Company
Liabilities"), other than (i) Company Liabilities fully and adequately
reflected in the financial statements included in the SEC Documents filed
prior to the date hereof, (ii) Company Liabilities as set forth in Section
5.8 of the Disclosure Letter, and (iii) Company Liabilities incurred in the
ordinary course of business.
5.9 No Material Adverse Change. Since December 31, 1999, there
has not been any event or development that has had, or could reasonably be
expected to have, a material adverse effect on the assets, business,
properties, operations or financial or other condition of the Company.
5.10 Operations of the Company. Except as contemplated by the
Transaction Documents or otherwise consented to by Pangea, since
December 31, 1999, the Company has not:
(a) declared or paid any dividend or declared or made any
other distributions of any kind to its stockholders, or made any direct or
indirect redemption, retirement, purchase or other acquisition of any shares
of its capital stock;
(b) incurred any Indebtedness for borrowed money;
(c) waived any material right under any contract or other
agreement of the type required to be set forth on any section to the
Disclosure Letter;
(d) made any change in its accounting methods or practices
or made any change in depreciation or amortization policies or rates adopted
by it;
(e) increased the compensation of any officer or other key
employee of the Company;
(f) made any loan or advance to any of its stockholders,
officers, directors, employees, consultants, agents or other
representatives, or made any other loan or advance;
(g) sold, abandoned or made any other disposition of any of
its properties or assets or made any acquisition of all or any part of the
properties, capital stock or business of any other Person;
(h) taken any action that would cause it to be required to
register as an "investment company" within the meaning of the Investment
Company Act of 1940, as amended (the "Investment Company Act");
(i) amended its Certificate of Incorporation or By-laws or
agreed to change in any manner the rights of its outstanding capital stock
or the character of its business;
(j) issued any shares of its Common Stock or any securities
convertible, exchangeable or exercisable into Common Stock;
(k) engaged in any other material transaction; or
(l) agreed to do any of the foregoing.
5.11 Capitalization. As of the date hereof, the Company's
authorized capital stock consists of 45,000,000 shares of Common Stock,
4,958,234 shares of which are issued and outstanding and 50,000 shares of
which are held in treasury, and 5,000,000 shares of "blank check" preferred
stock, none of which are issued and outstanding. All of the issued and
outstanding shares of the Company's capital stock have been duly authorized
and validly issued and are fully paid and non-assessable. As of the date of
this Agreement there are no existing options, warrants, calls, commitments
or agreements of any character to which the Company is a party or by which
it is bound calling for the issuance or sale of shares of its respective
capital stock or securities convertible into or exchangeable for shares of
such capital stock. All of the outstanding shares of capital stock of the
Company have been duly authorized and are fully paid, non-assessable and
free of preemptive rights. The Shares and the Warrants are duly authorized,
and, when issued upon payment of the Shares Purchase Price and the Warrants
Purchase Price therefor, will be fully paid and non-assessable. Except as
provided for or in the Transaction Documents, there are no options, warrants
or other rights to purchase shares of capital stock or other securities of
the Company, nor is the Company obligated in any manner to issue shares of
its capital stock or other securities. Except as contemplated hereby and
for relevant state and federal securities laws, there are no restrictions on
the Company's ability to transfer shares of capital stock of the Company.
5.12 Subsidiaries. Except for New Start, Inc., the Company does
not have any Subsidiaries. The Company owns all of the issued and
outstanding capital stock of the Subsidiaries, free and clear of all Liens.
All of such shares of capital stock are duly authorized, validly issued,
fully paid and non-assessable, and were issued in compliance with the
registration and qualification requirements of all applicable federal, state
and foreign securities laws. There are no options, warrants, conversion
privileges, subscription or purchase rights or other rights presently
outstanding to purchase or otherwise acquire any authorized but unissued,
unauthorized or treasury shares of capital stock or other securities of, or
any proprietary interest in, any of the Subsidiaries, and there is no
outstanding security of any kind convertible into or exchangeable for such
shares or proprietary interest.
5.13 Investment Company. Neither the Company nor any Person
controlling the Company is an "investment company" within the meaning of the
Investment Company Act.
5.14 Environmental Matters.
(a) The property, assets and operations of the Company
comply with all applicable Environmental Laws, except to the extent that
failure to comply with such Environmental Laws would not have a material
adverse effect on the assets, business, properties or financial or other
condition of the Company.
(b) None of the Company nor the property, assets or
operations of the Company is the subject of any federal, state or local
investigation evaluating whether any remedial action is needed to respond to
a release of any Hazardous Materials into the environment or is in
contravention of any federal, state or local law, order or regulation that
is likely to have a materially adverse effect on the assets, business,
properties or financial or other condition of the Company.
(c) The Company has not received any notice or claim, nor
are there pending, threatened or reasonably anticipated lawsuits against
them, with respect to violations of an Environmental Law or in connection
with any release of any Hazardous Materials into the environment.
(d) The Company does not have any contingent liability which
is material to the Company in connection with any release of any Hazardous
Materials into the environment.
5.15 Real Properties.
(a) The Company does not own or lease any real property.
(b) The Company does not own or hold, and is not obligated
under or a party to, any option, right of first refusal or other contractual
right to purchase, acquire, sell or dispose of any real property or any
portion thereof or interest therein.
5.16 Taxes.
(a) The Company has paid or caused to be paid, or
established reserves that the Company reasonably believes to be adequate in
all material respects for all federal, state, county, local, foreign and
other taxes (including income, profits, premium, estimated, excise, sales,
use, value added, occupancy, gross receipts, franchise, ad valorem,
severance, capital levy, production, inventory and merchandise, capital
stock, tollgate, asset and license, net worth, transaction, transfer,
withholding, employment, unemployment compensation, payroll-related and real
and personal property taxes, taxes on services and import duties and other
governmental charges and assessments), whether or not measured in whole or
in part by net income, and including all deficiencies, additions to tax,
interest and penalties with respect thereto, and including expenses
associated with contesting any proposed adjustment related to any of the
foregoing (collectively, "Taxes" or, individually, a "Tax") required to be
paid by it through the date hereof, and no such Taxes shall be payable by it
in connection with the consummation of the transactions contemplated by this
Agreement.
(b) The Company has filed when due with the appropriate
Governmental Authorities all returns, estimates, reports and forms relating
to Taxes ("Tax Returns") required to be filed by it through the date hereof.
(c) No penalties or other charges are or will become due
with respect to the late filing of any Tax Return of the Company required to
be filed on or before the Closing Date in the ordinary course of the
Company's business.
(d) The Company has not been nor is it currently being
audited by any taxing authority. There is no unassessed Tax deficiency or
audit proposed or threatened against the Company. No extension of time with
respect to any date on which any Tax Return was or is to be filed by the
Company is in force, and no waiver or agreement is in force for the
extension of time for the assessment or payment of any tax.
(e) Prior to the date of this Agreement, the Company has not
made any payments, is not obligated to make any payments, and is not a party
to any agreement that under certain circumstances could obligate it to make
any payments that will not be deductible under Code Section 280G or would
constitute compensation in excess of the limitation set forth in Section
162(m) of the Code.
(f) Section 5.16 of the Disclosure Letter sets forth all
material Tax elections made by the Company that are in effect with respect
to the Company for the fiscal year ended December 31, 1998 and the fiscal
year ending December 31, 1999.
(g) Except as set forth in Section 5.16 of the Disclosure
Letter, the Company has not agreed or are required to make any adjustments
under section 481(a) of the Code by reason of a change in accounting method
or otherwise.
(h) The Company has not at any time filed a consent pursuant
to section 341(f)(1) of the Code, or agreed to have section 341(f)(2) of the
Code apply to any dispositions of "subsection (f) assets" (as such term is
defined in section 341(f)(4) of the Code).
(i) The Company is not a party to any Tax allocation,
sharing, or similar agreement. The Company has not been a member of an
affiliated group filing a consolidated federal income tax return (other than
a group the common parent of which was the Company).
5.17 ERISA. The Company does not have any existing plan, policy,
program or arrangement providing for compensation, severance, bonus, profit-
sharing, stock options or other stock-related compensation or other forms of
incentive or deferred compensation, insurance coverage, health or medical
benefits, or retirement benefits (including pension, health, medical or
other similar benefits).
5.18 Intellectual Property. The Company does not own or license
any Intellectual Property.
5.19 Contractual Obligations. There are no Contractual
Obligations to which the Company is a party or by or to which any of them or
any of their properties may be bound or subject.
5.20 Anti-Dilution Protection. Except as contemplated in the
Transaction Documents, no holder of shares of Common Stock (or securities
convertible into or exchangeable or exercisable for any of the foregoing)
has any rights to purchase or receive additional or other securities upon
the occurrence of an event that might dilute such holder's percentage
interest in the Company (other than rights with respect to equitable
adjustments in the event of a stock dividend, stock split, share combination
or similar occurrences).
5.21 Private Offering. No form of general solicitation or general
advertising was used by the Company or, to its knowledge, its
representatives in connection with the offer or sale of the Shares or the
Warrants. No registration of the Shares or the Warrants pursuant to the
provisions of the Securities Act or any state securities or "blue sky" laws
will be required by the offer, sale or issuance of the Shares or the
Warrants pursuant to this Agreement. The Company agrees that neither it,
nor anyone acting on its behalf, will offer or sell the Shares or the
Warrants or any other security so as to require the registration of the
Shares or the Warrants pursuant to the provisions of the Securities Act or
any state securities or "blue sky" laws, unless such securities are so
registered.
5.22 Solvency. On and as of such Closing Date, after giving
effect to the transactions contemplated in this Agreement, the Company will
be Solvent.
5.23 Contracts Affecting Stockholders. Other than the Transaction
Documents, the Company is not a party to any stockholders agreement, voting
trust agreement, registration rights agreement or other contract to which
the Common Stock or any other capital stock of the Company is bound by,
subject to or entitled to the benefit of or to which any of the existing
stockholders is bound by, subject to or entitled to the benefit of as a
result of its ownership of the Common Stock or any other interest in the
Company.
5.24 Employment and Labor Matters.
(a) Except as disclosed in Section 5.24 of the Disclosure
Letter, neither the Company nor any Commonly Controlled Entity is a party to
any collective bargaining agreements and there are no labor unions or other
organizations representing, purporting to represent, or attempting to
represent, any employee of the Company or any Commonly Controlled Entity.
(b) Neither the Company nor any Commonly Controlled Entity
has violated any provision of federal or state law or any governmental rule
or regulation, or any order, decree, judgment arbitration award of any
court, arbitrator or any government agency regarding the terms and
conditions of employment of employees, former employees or prospective
employees or other labor related matters, including, without limitation,
laws, rules, regulations, orders, rulings, decrees, judgments and awards
relating to discrimination, fair labor standards and occupational health and
safety, wrongful discharge or violation of the personal rights of employees,
former employees or prospective employees.
5.25 Related Party Transactions. Except as set forth in
Section 5.26 of the Disclosure Letter, none of the officers, directors or
Affiliates of the Company:
(a) owns, directly or indirectly, any interest in (excepting
less than 1% stock holdings for investment purposes in securities of
publicly held and traded companies), or is an officer, director, employee or
consultant of, any Person which is, or is engaged in business as, a
competitor, lessor, lessee, supplier, distributor, sales agent or customer
of the Company;
(b) owns, directly or indirectly, in whole or in part, any
property that the Company use in the conduct of their business;
(c) is or has been a party to any Contractual Obligations
with the Company; or
(d) has any actions, causes of action, suits, claims,
complaints, demands, litigations or legal, administrative or arbitral
proceedings or investigations whatsoever against, or owes any amount to, the
Company.
5.26 Broker's, Finder's or Similar Fees. Except as set forth
herein, there are no brokerage commissions, finder's fees or similar fees or
commissions payable in connection with the transactions contemplated hereby
based on any agreement, arrangement or understanding with the Company, or
any action taken by the Company.
5.27 Full Disclosure. No statement by the Company contained in
this Agreement or any of the other Transaction Documents, or by the Company
in any document, certificate, notice or consent delivered to the Purchasers
in connection with the purchase and sale of the Shares and the Warrants at
or prior to the Closing, contains (or will contain) an untrue statement of a
material fact or omits (or will omit) to state a material fact required to
be stated therein or necessary to make the statements made, in light of the
circumstances in which made, not materially false or misleading.
ARTICLE 6
REPRESENTATIONS AND
WARRANTIES OF THE PURCHASERS
Each Purchaser (as to itself) represents and warrants to, and
covenants and agrees with, the Company as follows:
6.1 Existence and Power; Share Ownership. Such Purchaser:
(a) if not a natural person, is duly organized and validly
existing under the laws of the jurisdiction of its organization;
(b) if not a natural person, has the power and authority to
own and operate its property, to lease the property it operates as lessee
and to conduct the business in which it is currently, or is currently
proposed to be, engaged; and
(c) other than as disclosed in the Addendum executed by such
Purchaser, owns no shares of Common Stock or any rights to acquire Common
Stock as of the date hereof.
6.2 Authorization; No Contravention. The execution, delivery and
performance by such Purchaser of this Agreement and the other Transaction
Documents to which it is a party:
(a) is within such Purchaser's power and authority and has
been duly authorized by all necessary action;
(b) if not a natural person, does not contravene the terms
of such Purchaser's organizational documents, or any amendment thereof;
(c) will not violate, conflict with or result in any breach
or contravention of or the creation of any Lien under, and Contractual
Obligation of such Purchaser, or any order or decree directly relating to
such Purchaser; and
(d) does not require approval, consent, exemption,
authorization or other action by, or notice to, or filing with, any
Governmental Authority or any other Person, other than those that have been
obtained or made on or prior to the applicable Closing.
6.3 Binding Effect. Each of this Agreement and the other
Transaction Documents to which it is a party has been duly executed and
delivered by such Purchaser, and constitutes the legal, valid and binding
obligation of such Purchaser enforceable against it in accordance with its
terms.
6.4 No Legal Bar. The execution, delivery and performance of
this Agreement and the other Transaction Documents to which it is a party by
such Purchaser will not violate any Requirement of Law.
6.5 Purchase for Own Account. The Shares and Warrants to be
acquired by such Purchaser pursuant to this Agreement are being acquired for
such Purchaser's own account and with no intention of distributing or
reselling such securities or any part thereof in any transaction that would
be in violation of the securities laws of the United States of America, or
any state, without prejudice, however, to the rights of such Purchaser at
all times to sell or otherwise dispose of all or any part of the Shares or
Warrants under an effective registration statement under the Securities Act,
or under an exemption from such registration available under the Securities
Act. If such Purchaser should in the future decide to dispose of any of the
Shares or Warrants, such Purchaser understands and agrees that it may do so
only in compliance with the Securities Act and applicable state securities
laws, as then in effect, and that stop-transfer instructions to that effect,
where applicable, will be in effect with respect to such securities. Each
Purchaser agrees to the imprinting, so long as required by law, of a legend
on certificates representing all of the Shares and Warrants to the following
effect: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS
OF SUCH ACT OR SUCH LAWS.
6.6 Sophistication. Such Purchaser, by reason of its business
and financial experience, and the business and financial experience of those
persons that may have been retained to advise it with respect to its
investment in the Shares, together with such advisors, has such knowledge
and experience in business and financial matters to be capable of evaluating
the merits and risks of the prospective investment and to make an informed
investment decision. Such Purchaser acknowledges that it has been afforded
the opportunity (i) to ask such questions as it has deemed necessary of, and
to receive answers from, representatives of the Company concerning the terms
and conditions of the offering of the Shares and Warrants and the merits and
risks of investing in such securities and (ii) to obtain such additional
information which the Company possesses or can acquire without unreasonable
effort or expense that is necessary to verify the accuracy and completeness
of the information heretofore provided to it; provided, however, that the
availability of the foregoing opportunity shall not in any way affect,
diminish or derogate from the representations and warranties made or deemed
made to the Purchasers by the Company hereunder or the Purchasers' right to
rely thereon.
6.7 Broker's, Finder's or Similar Fees. Except as otherwise set
forth in this Agreement, there are no brokerage commissions, finder's fees
or similar fees or commissions payable in connection with the transactions
contemplated hereby based on any agreement, arrangement or understanding
with such Purchaser.
6.8 Additional Representations. Such Purchaser understands that
the offer and sale of the Shares and the Warrants has not been and will not
be registered under the Securities Act, by reason of the issuance of such
securities by the Company in a transaction exempt from the registration
requirements of the Securities Act. Such Purchaser is an accredited
investor, as such term is defined in Rule 501 of Regulation D under the
Securities Act.
ARTICLE 7
AFFIRMATIVE COVENANTS
The Company hereby covenants and agrees that:
7.1 Reincorporation in Delaware. As soon as practicable
following the Closing Date, the Company shall take all steps within its
power that may be necessary or desirable in order to cause the jurisdiction
of incorporation of the Company to be changed to Delaware (the "Delaware
Reincorporation"), as expeditiously as possible, including, without
limitation, taking all necessary action as may be required under New Mexico
and Delaware law to merge the Company into a newly-formed Delaware company
to be named Pangea Internet, Inc. ("Newco"), filing any required proxy
solicitation materials with the Commission in connection therewith,
soliciting any stockholder approval required therefor (including the holding
of a stockholders meeting), recommending to the stockholders that they
approve the Delaware Reincorporation, and making any required state filings.
In connection with any stockholder vote to approve the Delaware
Reincorporation, the Company shall direct the individuals designated as
proxies in the Company's proxy materials to vote all shares of Common Stock
and Preferred Stock for which the Company has received proxies (unless
otherwise directed by the stockholder submitting such proxy), in favor of
the Delaware Reincorporation. Newco's certificate of incorporation shall
provide for a sufficient number of authorized shares of Common Stock to
permit the reservation of Common Stock required by Section 7.2.
7.2 Reservation of Common Stock. Upon consummation of the
Delaware Reincorporation, the Company shall at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of
issue or delivery upon conversion of the Shares or exercise of the Warrants,
such number of shares of Common Stock as shall then be issuable or
deliverable upon the conversion of all outstanding Shares and the exercise
of all outstanding Warrants. Such shares of Common Stock shall, when issued
or delivered in accordance with the terms of the Preferred Stock or
Warrants, as the case may be, be duly and validly issued and fully paid as
non-assessable. The Company shall issue the Common Stock issuable upon
conversion of the Shares or exercise of the Warrants upon the proper
conversion of the Shares or exercise of the Warrants in accordance with the
provisions thereof, and shall otherwise comply with the terms thereof.
7.3 Inspection. The Company will permit the Purchasers and their
respective representatives to make such investigation of the properties,
businesses and operations of the Company, and such examination of the books,
records and financial condition of the Company as they may reasonably
request. Any such investigation and examination shall be conducted at
reasonable times and under reasonable circumstances and the Company shall
cooperate fully therewith. To the extent the Purchasers are advised that
any information obtained from the exercise of the Purchasers' rights
hereunder, and not previously known to the Purchasers, is to be treated in a
confidential manner, the Purchasers shall treat such information as
confidential unless otherwise required by law.
7.4 No Solicitation. Except as provided in this Agreement and
the other Transaction Documents, until the Closing days from the date hereof
none of the Company shall, directly or indirectly (through representatives
or otherwise), solicit, actively encourage, participate in or initiate
discussions or negotiations with, or provide any information to, any person
or group (other than the Purchasers or any designee of the Purchasers)
concerning any merger, consolidation, business combination or
recapitalization involving the Company, the issuance of 5% or greater
interest in the equity or voting power of the Company, or the sale of all or
any substantial part of the business and properties of the Company;
provided, however, that the foregoing shall not prohibit the Company from
participating in discussions and negotiations and furnishing information to
any party following the receipt of an unsolicited proposal from any such
party if the Board in good faith determines that such proposal is more
favorable to the Company's stockholders than the transactions contemplated
by the Transaction Documents and, after consultation with outside counsel
having expertise in the relevant legal principles, that the failure to
engage in such discussions or negotiations or to provide such information
would result in a breach by the Board of its fiduciary duties.
7.5 Additional Covenants. The Company shall not make any
acquisitions or take any action (a) until November 13, 2002, which would
cause Walter A. Forbes, as an investor in the Company, to violate the Forbes
Noncompete or (b) until February 28, 2001, which would cause William Avery,
as an officer and investor in the Company, to violate the Avery Noncompete.
"Forbes Noncompete" means the restrictions in Exhibit II of Annex B of that
certain agreement, dated July 28, 1998, between Walter A. Forbes and Cendant
Corporation, a true copy of which has been provided by Pangea to the
Company. "Avery Noncompete" means the restrictions in that certain non-
competition agreement, dated February 21, 1995, between William Avery and
CUC International Inc., as incorporated by reference in that certain
agreement, dated December 28, 1998, between William Avery and Cendant
Corporation, true copies of which have been provided by Pangea to the
Company.
7.6 Reverse Stock Splits. For a period of six (6) months after
the Closing, and except to the extent necessary to meet the minimum bid
price for listing on The Nasdaq National Market ("NASDAQ") or to maintain
listing on the NASDAQ, for a period of six (6) months thereafter, the
Company shall not effect any reverse stock split of the Common Stock.
7.7 Insurance. Not later than the Closing, the Company shall
have obtained directors and officers insurance and general liability
insurance that is reasonably satisfactory to Pangea.
7.8 Further Assurances. Each of the parties hereto agrees to use
its reasonable efforts to take, or cause to be taken, all action and to do,
or cause to be done, all things necessary, proper or advisable to consummate
and make effective the transactions contemplated by the Transaction
Documents, to not take any action that would cause its representations and
warranties not to be true as of the Closing Date and shall use its
reasonable efforts promptly to obtain all waivers, permits, consents and
approvals and to effect all registration, filings and notices with or to
third parties or governmental or public bodies or authorities which are
necessary or desirable in connection with the transactions contemplated by
the Transaction Documents. Nothing contained in this Section shall require
any party to pay any money to any third party other than filing fees or
similar costs or expenses that may be required or imposed by governmental
authorities.
7.9 Assets. If the Company is unable to liquidate its equity
interests in Realco, Inc. prior to the Closing, Pangea and its affiliates
will purchase such equity interests from the Company.
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification by the Company. The Company agrees to
indemnify and hold harmless the Purchasers and their Affiliates and their
respective officers, directors, agents, members, employees and partners to
the fullest extent permitted by law from and against any and all losses,
claims, damages, expenses (including reasonable fees, disbursements and
other charges of counsel) or other liabilities ("Liabilities") resulting
from (i) any breach of any representation, warranty or covenant of the
Company in this Agreement or (ii) any legal, administrative or other actions
(including actions brought by any equity holders of the Company or
derivative actions brought by any Person claiming through the Company or in
the Company's name), proceedings or investigations (whether formal or
informal) (collectively, "Actions or Proceedings"), or written threats
thereof, based upon, relating to or arising out of this Agreement or the
other Transaction Documents, the transactions contemplated hereby or
thereby, or any indemnified person's role therein; provided, however that
the Company shall not be liable under this Section 8.1 (i) for any amount
paid in settlement of claims without the Company's consent (which consent
shall not be unreasonably withheld), (ii) any Liabilities arising out of a
claim or action brought by a Purchaser against another Purchaser or (iii) to
the extent that it is finally judicially determined that such Liabilities
resulted primarily from the willful misconduct, bad faith or gross
negligence of such indemnified party.
8.2 Indemnification by the Purchasers. Each Purchaser agrees to
indemnify and hold harmless the Company and its Affiliates and their
respective officers, directors, agents, members, employees and partners to
the fullest extent permitted by law from and against any and all Liabilities
resulting from any breach of any representation, warranty or covenant of
such Purchaser in this Agreement or provided, however, that such Purchaser
shall not be liable under this Section 8.2: (x) for any amount paid in
settlement of claims without the consent of the Purchaser (which consent
shall not be unreasonably withheld); (y) to the extent that it is finally
judicially determined that such Liabilities resulted primarily from the
willful misconduct, bad faith or gross negligence of such indemnified party.
8.3 Indemnification to Pangea. The Company agrees to indemnify
and hold harmless Pangea and its officers, directors, agents, members,
employees and partners to the full extent permitted by law from and against
any and all Liabilities resulting from any misstatements of a material fact
contained in any private offering materials in connection with the private
offering contemplated by this Agreement or any omission to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading.
8.4 Contribution. If the indemnification provided for in this
Article 8 shall for any reason be held by a court to be unavailable to an
indemnified party in respect of any loss, claim, damage or liability, or any
action in respect thereof, then, in lieu of the amount paid or payable under
Section 8.1, 8.2 or 8.3, the indemnified party and the indemnifying party
under Section 8.1, 8.2 or 8.3 shall contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating the same), (i) in such
proportion as is appropriate to reflect the relative fault of the
indemnifying and indemnified parties which resulted in such loss, claim,
damage or liability, or action or proceeding in respect thereof, with
respect to the statements or omissions which resulted in such loss, claim,
damage or liability, or action or proceeding in respect thereof, as well as
any other relevant equitable considerations or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as shall be appropriate to reflect the relative benefits received
by the indemnifying and indemnified parties from the offering of the Shares,
provided, that for purposes of clause (i) or (ii), no party shall be
required to contribute any amount in excess of the amount such party would
have been required to pay to an indemnified party if the indemnity under
Section 8.1, 8.2 or 8.3, as applicable, was available. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. As among parties who are
guilty of such fraudulent misrepresentation, such parties' obligations to
contribute as provided in this Section 8.4 are several and not joint. In
addition, no person shall be obligated to contribute hereunder any amounts
in payment for any settlement of any action or claim effected without such
person's consent, which consent shall not be unreasonably withheld.
8.5 Notification. Each party entitled to indemnification under
Section 8.1, 8.2 or 8.3 hereof (an "Indemnified Party") will, promptly after
the receipt of notice of the commencement of any action or other proceeding
against such Indemnified Party, or any other event or occurrence in respect
of which indemnity may be sought from the party obligated to provide such
indemnification under Section 8.1, 8.2 or 8.3 hereof (an "Indemnifying
Party"), notify the Indemnifying Party in writing thereof. The failure of
any Indemnified Party so to notify an Indemnifying Party shall not relieve
such Indemnifying Party from any liability which it may have to such
Indemnified Party (i) other than pursuant to this Article 8 or (ii) under
this Article 8 unless, and only to the extent that, such omission results in
actual prejudice to such Indemnifying Party. In case any such action or
other proceeding shall be brought against any Indemnified Party and it shall
notify the Indemnifying Party of the commencement thereof, such Indemnifying
Party shall be entitled to participate therein and, to the extent that it
may wish, to assume the defense thereof, with counsel reasonably
satisfactory to such Indemnified Party; provided, however, that any
Indemnified Party may, at its own expense, retain separate counsel to
participate in such defense. Notwithstanding the foregoing, in any action
or proceeding in which both an Indemnifying Party and an Indemnified Party
is, or is reasonably likely to become, a party, such Indemnified Party shall
have the right to employ separate counsel reasonably acceptable to the
Indemnifying Party (in terms of such counsel's experience) at the
Indemnifying Party's expense and to control its own defense of such action
or proceeding if, in the reasonable opinion of counsel to such Indemnified
Party, (a) there are or may be legal defenses available to such Indemnified
Party or to other Indemnified Parties that are different from or additional
to those available to the Indemnifying Party or (b) any conflict or
potential conflict exists between the Indemnifying Party and such
Indemnified Party that would make such separate representation advisable;
provided, however, that in no event shall the Indemnifying Party be required
to pay fees and expenses under this Article 8 for more than one firm of
attorneys in any jurisdiction in any one legal action or group of related
legal actions. The Indemnifying Party will not, without the prior written
consent of the Indemnified Party, settle, compromise or consent to the entry
of any judgment in any pending or threatened claim, action or proceeding
relating to the matters contemplated hereby (if any Indemnified Party is a
party thereto or has been actually threatened to be made a party thereto)
unless such settlement, compromise or consent includes an unconditional
release of each Indemnified Party from all liability arising or that may
arise out of such claim, action or proceeding. The rights accorded to
Indemnified Parties hereunder shall be in addition to any rights that any
Indemnified Party may have at common law, by separate agreement or
otherwise.
8.6 Expense Reimbursement. In connection with the obligation of
an Indemnifying Party to indemnify an Indemnified Party for expenses
pursuant to Section 8.1, 8.2 or 8.3 above, the Indemnifying Party shall
reimburse each Indemnified Party for all such expenses (including reasonable
fees, disbursements and other charges of counsel) as they are incurred by
such Indemnified Party; provided, however, that if an Indemnified Party is
reimbursed hereunder for any expenses, such reimbursement of expenses shall
be refunded to the extent that the Indemnified Party was not entitled to be
indemnified therefore pursuant to Section 8.1, 8.2 or 8.3, as the case may
be.
8.7 Registration Rights Agreement. Notwithstanding anything to
the contrary in this Article 8, the indemnification and contribution
provisions of the Registration Rights Agreement shall govern any claim made
with respect to registration statements filed pursuant thereto or sales made
thereunder.
ARTICLE 9
TERMINATION
9.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by the mutual written consent of the parties hereto;
(b) by the Purchasers or the Company, if the Closing shall
not have occurred on or prior to 60 days from the date hereof; provided that
the right to terminate this Agreement pursuant to this Section 9.1(b) shall
not be available to any party whose failure to perform any of its
obligations under this Agreement results in the failure of such condition;
(c) by the Purchasers, in the event the Company breaches in
any material respect any of its representations, warranties, covenants or
other agreements contained in this Agreement which breach is not susceptible
of cure or, if susceptible of cure, has not been cured within 30 days after
the giving of written notice to the Company; and
(d) by the Company, in the event the Purchasers breach in
any material respect any of their representations, warranties, covenants or
other agreements contained in this Agreement which breach is not susceptible
of cure or, if susceptible of cure, has not been cured within 30 days after
the giving of written notice to the Purchasers.
9.2 Procedure for the Effect of Termination. In the event this
Agreement is terminated by the Purchasers, on the one hand, or by the
Company, on the other hand, pursuant to Section 9.1, written notice of such
termination shall forthwith be given to the other party and this Agreement
shall terminate and the transactions contemplated hereby shall be abandoned
without any further action. If this Agreement is terminated as provided
herein, no party hereto shall have any liability or further obligation to
any other party under the terms of this Agreement except with respect to the
willful breach by any party hereto and except that the provisions of this
Section 9.2 and Article 10 shall survive the termination of this Agreement.
ARTICLE 10
MISCELLANEOUS
10.1 Survival of Provisions. All of the representations and
warranties made herein shall survive the execution and delivery of this
Agreement, any investigation by or on behalf of the Purchasers or any
Affiliate, acceptance of the Shares and payment therefor, or termination of
this Agreement and shall terminate on the 90th day following the delivery to
the Purchasers of audited financial statements of the Company covering one
full year following the Closing.
10.2 Expenses. If the Closing occurs, the Company shall reimburse
Pangea and the Purchasers for all of their legal fees and expenses incurred
in connection with the transactions contemplated hereby.
10.3 Notices. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested,
telecopier, courier services or personal delivery to the following
addresses, or to such other addresses as shall be designated from time to
time by a party in accordance with this Section 10.2:
(a) if to the Purchasers or Pangea:
Pangea Internet Advisors LLC
20 Dayton Avenue
Greenwich, CT 06830
Attention: Cary S. Fitchey
Telephone No.: (203) 661-4431
Telecopier No.: (203) 661-1331
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: James M. Dubin, Esq.
Telephone No.: (212) 373-3000
Telecopier No.: (212) 757-3990
and
Richard & O'Neil, LLP
885 Third Avenue
New York, New York 10022-4873
Attention: Craigh Leonard, Esq.
Telephone No.: (212) 207-1222
Telecopier No.: (212) 750-9022
(b) if to the Company:
Arinco Computer Systems Inc.
1650 University Boulevard, N.E.
Suite 5-100
Albuquerque, New Mexico 87102
Attention: James A. Arias
Telephone No.: (505) 242-4561
Telecopier No.: (505) 242-6788
with a copy to:
Thad H. Turk, Esq.
4804 College Heights Dr., N.W.
Albuquerque, New Mexico
Telephone: (505) 899-8193
Facsimile: (505) 899-5792
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; one Business
Day after delivery to a courier, if delivered by commercial overnight
courier service; five Business Days after being deposited in the mail,
postage prepaid, if mailed; and when receipt is acknowledged, if telecopied.
10.4 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of the
parties hereto. Pangea may assign any of its rights under this Agreement as
a "Purchaser" to one or more financially sophisticated investors who is
reasonably acceptable to the Company and who is an "accredited investor" as
defined in Rule 501 of Regulation D under the Securities Act. The
Purchasers may assign any of their rights under this Agreement to any of
their Affiliates or to any institutional investor to whom the Shares or
Warrants (or any portion thereof) are transferred. The Company may not
assign any of its rights hereunder without the consent of Pangea. Except as
provided in Article 8, no Person other than the parties hereto and their
permitted assignees is intended to be a beneficiary of this Agreement.
10.5 Waiver and Amendment.
(a) No failure or delay on the part of the Company, Pangea
or any Purchaser in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. The remedies provided
for herein are cumulative and are not exclusive of any remedies that may be
available to the Company, Pangea or the Purchasers at law, in equity or
otherwise.
(b) Subject to Section 2.4, this Agreement may not be
amended without the consent of each party hereto.
10.6 Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
10.7 Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning
hereof.
10.8 Governing Law. This Agreement has been negotiated, executed
and delivered in the State of New York and shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such State.
10.9 Jurisdiction. Each party to this Agreement hereby
irrevocably agrees that any legal action or proceeding arising out of or
relating to this Agreement or any agreements or transactions contemplated
hereby may be brought in the courts of the State of New York or of the
United States of America for the Southern District of New York and hereby
expressly submits to the personal jurisdiction and venue of such courts for
the purposes thereof and expressly waives any claim of improper venue and
any claim that such courts are an inconvenient forum. Each party hereby
irrevocably consents to the service of process of any of the aforementioned
courts pursuant to a contractual provision in any such suit, action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to the address set forth in Section 10.2, such service to
become effective ten days after such mailing.
10.10 Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way
impaired, unless the provisions held invalid, illegal or unenforceable shall
substantially impair the benefits of the remaining provisions hereof.
10.11 Rules of Construction. Unless the context otherwise
requires, "or" is not exclusive, and references to sections or subsections
refer to sections or subsections of this Agreement.
10.12 Remedies. If a breach of this Agreement occurs and is
continuing, any Purchaser may pursue any available remedy by proceeding at
law or in equity to enforce the performance (including, without limitation,
the specific performance) of any provision of this Agreement. A Purchaser
may maintain a proceeding even if it does not possess any of the Shares or
Warrants or does not produce any of them in the proceeding. Except as
otherwise provided by law, a delay or omission by any Purchaser in
exercising any right or remedy accruing upon any such breach shall not
impair the right or remedy or constitute a waiver of or acquiescence in any
such breach. No remedy is exclusive of any other remedy. All available
remedies are cumulative.
10.13 Entire Agreement. This Agreement, together with the
exhibits and schedules hereto and the other Transaction Documents, is
intended by the parties as a final expression of their agreement and
intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter
contained herein and therein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
or therein. This Agreement, together with the exhibits and schedules hereto
and the other Transaction Documents, supersede all prior agreements and
understandings among the parties with respect to such subject matter.
10.14 Publicity. Except as may be required by applicable law,
no party hereto shall issue a publicity release or announcement or otherwise
make any public disclosure concerning this Agreement or the transactions
contemplated hereby, without prior approval by the other parties hereto. If
any announcement is required by law to be made by a party hereto, prior to
making such announcement such party will deliver a draft of such
announcement to the other parties and shall give the other parties an
opportunity to comment thereon.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be executed and delivered by their respective officers
hereunto duly authorized as of the date first above written.
ARINCO COMPUTER SYSTEMS INC.
By: /s/ James A. Arias
JAMES A. ARIAS, President and
Chief Executive Officer
PANGEA INTERNET ADVISORS LLC
By: /s/ Cary S. Fitchey
CARY S. FITCHEY, Managing
Director
ADDENDUM
This Addendum forms part of the Securities Purchase Agreement
entered into by and between Arinco Computer Systems Inc. and Pangea Internet
Advisors LLC as of March 9, 2000 (the "Securities Purchase Agreement"). The
undersigned hereby agrees that, as of the date hereof, the undersigned shall
become a "Purchaser" under the Securities Purchase Agreement, as defined
therein, that the representations and warranties made in the Securities
Purchase Agreement as to the Purchasers are true as to the undersigned and
that the terms and conditions of the Securities Purchase Agreement shall be
binding upon and inure to the benefit of the undersigned.
The undersigned represents and warrants to Arinco Computer Systems
Inc. that, except as described below, the undersigned owns no shares of
Arinco Common Stock or rights to acquire such Common Stock.
IN WITNESS WHEREOF, the undersigned has caused this Addendum to be
duly executed and delivered as of this _____ day of _____________, 2000.
[PURCHASER]
By:
Name:
Title:
Execution Copy
SECURITIES PURCHASE AGREEMENT
By and Between
ARINCO COMPUTER SYSTEMS INC.
and
PANGEA INTERNET ADVISORS LLC
______________________________
Dated as of March 9, 2000
______________________________
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS 13
1.1 Definitions 13
ARTICLE 2 PURCHASE AND SALE 19
2.1 Purchase and Sale of Shares 19
2.2 Preferred Stock Terms 20
2.3 Purchase and Sale of Warrants 20
2.4 Closing 20
2.5 Purchasers' Representative 20
ARTICLE 3 CONDITIONS TO THE OBLIGATION OF THE PURCHASERS TO CLOSE 21
3.1 Representations and Warranties True 21
3.2 Compliance with this Agreement 21
3.3 Officer's Certificate 21
3.4 Secretary's Certificate 21
3.5 Documents 21
3.6 Purchase Permitted by Applicable Laws; Legal Investment 21
3.7 Opinion of Counsel 22
3.8 Approval of Counsel to the Purchaser 22
3.9 No Material Adverse Change 22
3.10 Registration Rights Agreement 22
3.11 Certificate of Incorporation and By-Laws of the Company 22
3.12 No Litigation 22
3.13 Funding Commitments 22
3.14 Board Representation; Executive Officers 23
3.15 Certificate of Designations 23
3.16 Assets 23
3.17 Office Services Agreement 23
3.18 Annual Report 23
3.19 New Start 23
ARTICLE 4 CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSE 23
4.1 Representations and Warranties True 23
4.2 Compliance with this Agreement 24
4.3 Issuance Permitted by Applicable Laws 24
4.4 Approval of Counsel to the Company 24
4.5 No Litigation 24
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE COMPANY 24
5.1 Corporate Existence and Power 24
5.2 Corporate Authorization; No Contravention 25
5.3 Governmental Authorization; Third Party Consents 25
5.4 Binding Effect 26
5.5 No Legal Bar 26
5.6 Litigation 26
5.7 No Default or Breach 26
5.8 SEC Documents 26
5.9 No Material Adverse Change 27
5.10 Operations of the Company 27
5.11 Capitalization 28
5.12 Subsidiaries 29
5.13 Investment Company 29
5.14 Environmental Matters 29
5.15 Real Properties 30
5.16 Taxes 30
5.17 ERISA 31
5.18 Intellectual Property 31
5.19 Contractual Obligations 31
5.20 Anti-Dilution Protection 31
5.21 Private Offering 32
5.22 Solvency 32
5.23 Contracts Affecting Stockholders 32
5.24 Employment and Labor Matters 32
5.25 Related Party Transactions 33
5.26 Broker's, Finder's or Similar Fees 33
5.27 Full Disclosure 33
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS 33
6.1 Existence and Power; Share Ownership. 33
6.2 Authorization; No Contravention 34
6.3 Binding Effect 34
6.4 No Legal Bar 34
6.5 Purchase for Own Account 34
6.6 Sophistication 35
6.7 Broker's, Finder's or Similar Fees 35
6.8 Additional Representations 35
ARTICLE 7 AFFIRMATIVE COVENANTS 36
7.1 Reincorporation in Delaware 36
7.2 Reservation of Common Stock 36
7.3 Inspection 36
7.4 No Solicitation 37
7.5 Additional Covenants 37
7.7 Insurance 38
7.8 Further Assurances 38
ARTICLE 8 INDEMNIFICATION 38
8.1 Indemnification by the Company 38
8.2 Indemnification by the Purchasers 39
8.3 Indemnification to Pangea 39
8.4 Contribution 39
8.5 Notification 40
8.6 Expense Reimbursement 41
8.7 Registration Rights Agreement 41
ARTICLE 9 TERMINATION 41
9.1 Termination 41
9.2 Procedure for the Effect of Termination 42
ARTICLE 10 MISCELLANEOUS 42
10.1 Survival of Provisions 42
10.2 Expenses 42
10.3 Notices 42
10.4 Successors and Assigns 43
10.5 Waiver and Amendment 44
10.6 Counterparts 44
10.7 Headings 44
10.8 Governing Law 44
10.9 Jurisdiction 44
10.10 Severability 38
10.11 Rules of Construction 45
10.12 Remedies 45
10.13 Entire Agreement 45
10.14 Publicity 45
Schedule I Purchasers; Allocation of Shares and Warrants
EXHIBITS
Exhibit A Form of Registration Rights Agreement
Exhibit B Form of Warrant
Exhibit C Form of Certificate of Designations
Exhibit A
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of March 28, 2000, by and
among ARINCO COMPUTER SYSTEMS INC., a New Mexico corporation (the
"Company"), Pangea Internet Advisors LLC, a Delaware limited liability
company ("Pangea"), and the Persons (the "Purchasers") party to the
Securities Purchase Agreement (defined below) as "Purchasers" (collectively
with Pangea, the "Holders").
This Agreement is made in connection with the Securities Purchase
Agreement, dated as of March 9, 2000, by and among the Company and the
Purchasers (the "Securities Purchase Agreement"), pursuant to which the
Company has agreed to issue and sell to the Purchasers shares of the
Company's Series B Convertible Preferred Stock, par value $.10 per share
(the "Preferred Stock"), and Warrants ("Warrants") to purchase shares of the
Company's Common Stock, par value $.01 per share (the "Common Stock"). In
order to induce the Holders to purchase the shares of Preferred Stock and
the Warrants, the Company has agreed to grant registration rights with
respect to the Registrable Securities (defined below) as set forth in this
Agreement. Capitalized terms used herein and not otherwise defined shall
have the respective meanings given them in Section 12.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
1. Registration on Request.
(a) Request. Except as otherwise provided in this
Section 1, at any time and from time to time after the first anniversary of
the date hereof, upon the written request of one or more Initiating Holders
requesting that the Company effect a registration under the Securities Act
of all or any part of such Initiating Holders' Registrable Securities, and
specifying the intended method or methods of disposition thereof, the
Company will promptly, but in any event within ten (10) days after receipt
of such written request, give written notice of such requested registration
to all holders of Registrable Securities, and thereupon will use its best
efforts to effect, as reasonably expeditiously as practicable, the
registration under the Securities Act, including by means of a shelf
registration pursuant to Rule 415 under the Securities Act if so requested
in such request (but in the case of a shelf registration only if the Company
is then eligible to use Form S-2 or S-3 (or any successor forms) for such a
shelf registration), of:
(i) the Registrable Securities which the Company has
been so requested to register by such Initiating Holder(s), for
disposition in accordance with the intended method or methods of
disposition stated in such request, and
(ii) all other Registrable Securities which the
Company has been requested to register by the holders thereof by
written request delivered to the Company within thirty (30) days after
the giving of such written notice by the Company (which request shall
specify the intended method or methods of disposition thereof),
all to the extent necessary to permit the disposition (in accordance with
the intended methods thereof as aforesaid) of the Registrable Securities so
to be registered; provided that the reasonably anticipated aggregate price
to the public of such offering would be at least $5,000,000; and provided
further that any holder of Registrable Securities to be included in any such
registration, by written notice to the Company within ten (10) days after
its receipt of a copy of a notice from the managing underwriter delivered
pursuant to Section 4(a) may withdraw such request and, upon receipt of such
notice of the withdrawal of such request from holders comprising the
Requisite Holders, the Company may elect not to effect such registration;
and provided further, that the Company shall not be required to pay
Registration Expenses in connection with a registration request pursuant to
this Section 1 if such request is withdrawn by the Requisite Holders.
(b) Number of Registrations. The Company shall not be
required to effect more than three (3) registrations, plus three (3)
additional registrations if the Company is then eligible to use Form S-3
(for a total of six (6)), pursuant to this Section 1.
(c) Registration Statement Form. Registrations under this
Section 1 shall be on such appropriate registration form of the Commission
(i) as shall be requested by the Requisite Holders (provided that the
Company is then eligible to use such form) and (ii) as shall permit the
disposition of such Registrable Securities in accordance with the intended
method or methods of disposition specified in the request for their
registration.
(d) Effective Registration Statement. A registration
requested pursuant to this Section 1 shall not be deemed to have been
effected (i) unless a registration statement with respect thereto has become
effective, (ii) if the registration does not remain effective for a period
of at least ninety (90) days (or, with respect to any registration statement
filed pursuant to Rule 415 under the Securities Act, for a period of at
least nine (9) months) or, in either case if earlier, until all the
Registrable Securities requested to be registered in connection therewith
are sold or withdrawn by the participating Holders, (iii) if, after it has
become effective, such registration is subject to any stop order, injunction
or other order or requirement of the Commission or other governmental agency
or court for any reason not attributable to actions taken by the holders of
Registrable Securities, or (iv) if the conditions to closing specified in
the purchase agreement or underwriting agreement entered into in connection
with such registration are not satisfied and no such closing occurs, other
than by reason of some act or omission by the holders of the Registrable
Securities that were to have been registered.
(e) Registration of Other Securities. Whenever the Company
shall effect a registration pursuant to this Section 1, no securities other
than Registrable Securities shall be included among the securities covered
by such registration unless (i) holders of Registrable Securities requesting
registration thereof pursuant to Section 1, representing not less than 50%
of the Registrable Securities with respect to which registration has been
requested, shall have consented in writing to the inclusion of such other
securities or (ii) such inclusion would not have the effect of reducing the
amount of Registrable Securities included in such registration.
(f) Postponement. The Company shall be entitled to postpone
for a reasonable period of time (but not exceeding sixty (60) days) the
filing of any registration statement otherwise required to be prepared and
filed by it pursuant to this Section 1 if the Company determines, in its
reasonable judgment, that such registration and offering would interfere
with any material financing, acquisition, corporate reorganization or other
material transaction involving the Company and promptly gives the holders of
Registrable Securities requesting registration thereof pursuant to this
Section 1 written notice of such determination, containing a general
statement of the reasons for such postponement and an approximation of the
anticipated delay. The Company may not postpone a filing pursuant to this
Section 1(f) more than once in any twelve-month period. If the Company
shall so postpone the filing of a registration statement, holders of
Registrable Securities requesting registration thereof pursuant to
Section 1, representing not less than 15% of the Registrable Securities with
respect to which registration has been requested and constituting not less
than 50% of the Initiating Holders, shall have the right to withdraw the
request for registration by giving written notice to the Company within
thirty (30) days after receipt of the notice of postponement and, in the
event of such withdrawal, such request shall not be counted for purposes of
the registrations to which holders of Registrable Securities are entitled
pursuant to Section 1.
(g) Limitations on Registration on Request. Notwithstanding
anything in this Section 1 to the contrary, the Company shall not be
required to effect a registration pursuant to this Section 1 within the six
(6)-month period occurring immediately subsequent to the effectiveness
(within the meaning of Section 1(d) hereof) of a registration statement
filed pursuant to this Section 1.
2. Incidental Registration.
(a) Incidental Rights. If the Company at any time proposes
to register, on any form which may be used for the registration of
Registrable Securities other than Form S-4 or Form S-8 (or any successor or
similar forms then in effect), any of its securities under the Securities
Act (other than pursuant to Section 1), whether or not pursuant to
registration rights granted to other holders of its securities and whether
or not for sale for its own account, in a manner which would permit
registration of Registrable Securities for sale to the public under the
Securities Act, it will give written notice to all holders of Registrable
Securities of its intention to do so and of such holders' rights under this
Section 2; such notice to be given to all such holders at least twenty (20)
days prior to the filing of such proposed registration statement. Upon the
written request of any such holder (a "Requesting Holder") made within
fifteen (15) days after the giving of any such notice (which request shall
specify the Registrable Securities intended to be disposed of by such holder
and the intended method or methods of disposition thereof), the Company will
use its best efforts to effect the registration under the Securities Act of
all Registrable Securities which the Company has been so requested to
register by the Requesting Holders, to the extent necessary to permit the
disposition (in accordance with the intended methods thereof as aforesaid)
of the Registrable Securities so to be registered. With respect to an
underwritten offering, prior to the effective date of any registration
statement filed in connection with a registration described in this
Section 2, promptly upon notification to the Company from the managing
underwriter of the price at which the Registrable Securities requested to be
registered pursuant to this Section 2 are to be sold, the Company shall
advise each Requesting Holder of such price, and if such price is below the
price which any Requesting Holder shall have indicated to be acceptable to
such Requesting Holder, such Requesting Holder shall then have the right to
withdraw its request to have its Registrable Securities included in such
registration statement.
(b) Not Deemed a Demand Registration. No registration
effected pursuant to this Section 2 shall be deemed to have been effected
pursuant to Section 1.
(c) Holdback. If the Company previously shall have received
a request for registration pursuant to Section 1 or this Section 2, and if
such previous registration shall not have been withdrawn or abandoned, the
Company will not effect any registration of any of its securities under the
Securities Act (other than on Form S-4 or Form S-8 or a successor form),
whether or not for sale for its own account, until a period of ninety (90)
days shall have elapsed from the effective date of such previous
registration.
(d) Discontinuance. Notwithstanding anything to the
contrary in this Section 2, the Company shall have the right to discontinue
any registration under this Section 2 at any time prior to the effective
date of such registration, if the registration of other securities giving
rise to such registration under this Section 2 is discontinued; but no such
discontinuation shall preclude an immediate or subsequent request for
registration pursuant to Section 1 or 2.
3. Registration Procedures. If and whenever the Company is
required to use its best efforts to effect the registration of any
Registrable Securities under the Securities Act as provided in Section 1 or
Section 2, the Company will promptly:
(a) prepare and (in any event within ninety (90) days after
the end of the period within which requests for registration may be given to
the Company) file with the Commission the requisite registration statement
to effect such registration and thereafter use its best reasonable efforts
promptly to cause such registration statement to become effective; provided
that the Company may discontinue any registration of its securities which
are not Registrable Securities at any time prior to the effective date of
the registration statement relating thereto;
(b) prepare and file with the Commission such amendments,
post-effective amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities
covered by such registration statement until the earlier of (i) such time as
all of such Registrable Securities have either been disposed of in
accordance with the intended methods of disposition by the sellers thereof
set forth in such registration statement or the sale thereof has been
abandoned by such sellers and (ii) ninety (90) days after the effective date
of such registration statement, except with respect to any such registration
statement filed pursuant to Rule 415 (or any successor Rule) under the
Securities Act, in which case such period shall be one year;
(c) furnish as soon as available to each seller of
Registrable Securities covered by such registration statement such number of
copies of such drafts and final versions of such registration statement and
of each such amendment, post-effective amendment and supplement thereto (in
each case including all exhibits), such number of copies of such drafts and
final versions of the prospectus contained in such registration statement
(including each preliminary prospectus and any summary prospectus), any
other prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, such documents, if
any, incorporated by reference in such registration statement or prospectus,
and such other documents, as such seller or such holder may reasonably
request;
(d) use its commercially reasonably efforts to register or
qualify all Registrable Securities covered by such registration statement
under such other securities or blue sky laws of such jurisdictions as each
seller thereof shall reasonably request, to keep such registration or
qualification in effect for so long as such registration statement remains
in effect, and take any other action which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of the securities owned by such seller, except that the
Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this clause (d) be obligated to be so
qualified or to consent to general service of process in any such
jurisdiction;
(e) cooperate with the sellers of such Registrable
Securities to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold, which securities shall not
bear any restrictive legends indicating that the securities have not been
registered under the Securities Act and shall be in a form eligible for
deposit with The Depository Trust Company; and enable such Registrable
Securities to be in such denominations and registered in such names as such
sellers may request at least two (2) business days prior to any sale of
Registrable Securities;
(f) furnish to each seller of Registrable Securities upon
request a copy of (i) an opinion of counsel for the Company, dated the
effective date of such registration statement (or, if such registration
involves an underwritten public offering, dated the date of the closing
under the underwriting agreement), covering substantially the same matters
with respect to such registration statement (and the prospectus included
therein) as are customarily covered in opinions of issuer's counsel in
underwritten public offerings of securities and (ii) a "comfort" letter
signed by the independent public accountants who have certified the
Company's financial statements included or incorporated by reference in such
registration statement, covering substantially the same matters with respect
to such registration statement (and the prospectus included therein) and,
with respect to events subsequent to the date of such financial statements,
as are customarily covered in accountants' comfort letters delivered to the
underwriters in underwritten public offerings of securities and such other
financial matters as the Requisite Holders or the underwriters, as the case
may be, may reasonably request, subject to the delivery by such seller to
such independent public accountants of such documents as are reasonable and
customary in transactions of this nature;
(g) promptly notify each seller of such Registrable
Securities, and (if requested by any such seller) confirm such advice in
writing, (i) when the prospectus or any prospectus supplement or post-
effective amendment has been filed and, with respect to the registration
statement or any post-effective amendment, when the same has become
effective, (ii) of any request by the Commission for amendments or
supplements to the registration statement or the prospectus or for
additional information, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the registration statement or the
initiation of any proceedings for that purpose and (iv) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purpose;
(h) promptly notify each seller of Registrable Securities
covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, upon
discovery that, or upon the happening of any event as a result of which, the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under
which they were made, and at the request of any such seller or holder
promptly prepare and furnish to such seller or holder a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers or prospective
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
the light of the circumstances under which they were made;
(i) use its reasonable commercial efforts to obtain the
withdrawal of any order suspending the effectiveness of the registration
statement at the earliest possible time;
(j) otherwise comply with all applicable rules and
regulations of the Commission, and make available to its securities holders,
as soon as reasonably practicable, an earnings statement covering the period
of at least twelve months, but not more than eighteen (18) months, beginning
with the first full calendar month after the effective date of such
registration statement, which earning statement shall satisfy the provisions
of Section 11(a) of the Securities Act;
(k) furnish to each such seller prior to the filing thereof
a copy of any amendment or supplement to such registration statement or
prospectus and shall not file any thereof to which any such seller shall
have reasonably objected on the grounds that such amendment or supplement
does not comply in all material respects with the requirements of the
Securities Act or the rules or regulations thereunder;
(l) provide and cause to be maintained a transfer agent and
a registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of such
registration statement;
(m) cause all Registrable Securities covered by such
registration statement to be listed on each securities exchange or approved
for quotation on any inter-dealer quotation system on which similar
securities issued by the Company are then listed or quoted;
(n) cause its subsidiaries and affiliates to take all action
necessary or advisable to effect the registration of the Registrable
Securities contemplated hereby, including preparing and filing any required
financial information; and
(o) provide a CUSIP number for all Registrable Securities,
not later than the effective date of the applicable registration statement.
The Company may require each holder of Registrable Securities which will be
included in such registration (i) to furnish the Company such information
relating to such holder as the Company may reasonably request and as is
required by applicable laws or regulations, and (ii) to provide the Company
with written confirmation that such holder will comply with applicable
securities laws and regulations, and provide the Company with such further
information necessary for the Company to abide by applicable laws and
regulations, in such form as the Company may reasonably request.
4. Underwritten Offerings.
(a) Requested Underwritten Offerings. If requested by the
Initiating Holders for any underwritten offering of Registrable Securities
pursuant to a registration requested under Section 1, the Company will use
its commercially reasonable efforts to enter into a firm commitment
underwriting agreement with the underwriters for such offering, such
agreement to be reasonably satisfactory in substance and form to the
underwriters and to contain such representations and warranties by the
Company and such other terms as are generally prevailing in such agreements,
including, without limitation, indemnities to the effect and to the extent
provided in Section 8. The holders of Registrable Securities to be
distributed by such underwriters shall be parties to such underwriting
agreement and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of,
the Company to and for the benefit of such underwriters shall also be made
to and for the benefit of such holders of Registrable Securities. Except as
set forth in this Agreement, no holder of Registrable Securities shall be
required (i) to make any representations or warranties to or agreements with
the Company or the underwriters other than representations, warranties or
agreements regarding such holder, such holder's Registrable Securities and
such holder's intended method of distribution and any other representation
required by law or (ii) to indemnify (or contribute with respect to an
indemnifiable claim) the Company or any underwriters of the Registrable
Securities, except as set forth in Section 8. Notwithstanding the
foregoing, if the managing underwriter of such underwritten offering shall
advise the Company in writing (with a copy to the holders of Registrable
Securities requesting such registration) that, in its opinion the total
number of shares which the holders of Registrable Securities and, if
applicable, any other holders of securities of the Company or the Company
propose to be included in such registration is sufficiently large to
materially and adversely affect the success of such offering (such writing
to state the basis of such opinion and the approximate number of such
securities which may be included in such offering without such effect), then
the amount of securities to be offered for the accounts of holders of
Registrable Securities shall be reduced pro rata (in accordance with the
number of Registrable Securities requested to be included in such
registration) to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount recommended by such
managing underwriter; provided that if securities are being offered for the
account of other Persons as well as the Company, the amount of such
securities shall be reduced prior to any reduction of the amount of
securities to be offered for the accounts of holders of Registrable
Securities. Any holder of Registrable Securities to be included in such
registration may withdraw its request to have its securities so included by
notice to the Company promptly after receipt of a copy of a notice from the
managing underwriter pursuant to this Section 4(a).
(b) Incidental Underwritten Offerings. If the Company at
any time proposes to register any of its securities under the Securities Act
as contemplated by Section 2, whether or not pursuant to registration rights
granted to other holders of its securities and whether or not for sale for
its own account, and such securities are to be distributed by or through one
or more underwriters, the Company will, if requested by any holder of
Registrable Securities as provided in Section 2 and subject to the
provisions of this Section 4(b), use its best efforts to arrange for such
underwriters to include all the Registrable Securities to be offered and
sold by such holder among the securities to be distributed by such
underwriters; provided that if the managing underwriter of such underwritten
offering shall advise the Company in writing (with a copy to the holders of
Registrable Securities requesting such registration) that, in its opinion
the total number of shares which the Company, the holders of Registrable
Securities and any other holders of securities of the Company propose to be
included in such registration is sufficiently large to materially and
adversely affect the success of such offering (such writing to state the
basis of such opinion and the approximate number of such securities which
may be included in such offering without such effect), then after inclusion
of the number of securities to be sold by the Company for its own account in
such registration, the amount of securities to be offered for the accounts
of holders of Registrable Securities shall be reduced pro rata (in
accordance with the number of Registrable Securities requested to be
included in such registration) to the extent necessary to reduce the total
amount of securities to be included in such offering to the amount
recommended by such managing underwriter; provided that if securities are
being offered for the account of other Persons as well as the Company, such
reduction shall not represent a greater fraction of the number of securities
intended to be offered by holders of Registrable Securities than the
fraction of similar reductions imposed on such other Persons over the amount
of securities they intended to offer. Any holder of Registrable Securities
to be included in such registration may withdraw its request to have its
securities so included by notice to the Company promptly after receipt of a
copy of a notice from the managing underwriter pursuant to this
Section 4(b). The holders of Registrable Securities to be distributed by
such underwriters shall be parties to the underwriting agreement between the
Company and such underwriters and may, at their option, require that any or
all of the representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such underwriters shall
also be made to and for the benefit of such holders of Registrable
Securities. Except as set forth in this Agreement, no holder of Registrable
Securities shall be required (i) to make any representations or warranties
to or agreements with the Company or the underwriters other than customary
representations, warranties or agreements regarding such holder, such
holder's Registrable Securities and such holder's intended method of
distribution and any other representation required by law or (ii) to
indemnify (or contribute with respect to an indemnifiable claim) the Company
or any underwriters of the Registrable Securities, except as set forth in
Section 8.
(c) Holdback Agreements. Each holder of Registrable
Securities agrees, if so required by the managing underwriter, not to effect
any public sale or distribution of securities of the Company of the same
class as the securities included in such registration statement, during the
seven (7) days prior to the date on which any underwritten registration has
become effective and the ninety (90) days thereafter, except as part of such
underwritten registration or to the extent that such holder is prohibited by
applicable law from agreeing to withhold Registrable Securities from sale or
is acting in its capacity as a fiduciary or an investment adviser. The
Company agrees not to effect any public sale or distribution of its equity
securities or securities convertible into or exchangeable or exercisable for
any of such securities during the seven (7) days prior to and the ninety
(90) days after any underwritten registration pursuant to Section 1 or 2 has
become effective, except as part of such underwritten registration (other
than on Form S-4 or Form S-8 or a successor form).
(d) Selection of Underwriters. If a requested registration
pursuant to Section 1 involves an underwritten offering, the underwriter or
underwriters thereof shall be selected by the Company, which selection shall
be subject to the approval of the Requisite Holders. If an incidental
registration pursuant to Section 2 involves one or more underwriters, the
underwriter or underwriters shall be selected by the Company.
5. Preparation; Reasonable Investigation. In connection with
the preparation and filing of each registration statement registering
Registrable Securities under the Securities Act, the Company will give the
holders of Registrable Securities on whose behalf such Registrable
Securities are to be so registered, and their underwriters, if any, and
their respective counsel the opportunity to participate in the preparation
of such registration statement, each prospectus included therein or filed
with the Commission, and each amendment thereof or supplement thereto, and
will give each of them such access to its books and records and such
opportunities to discuss the business of the Company with its officers and
the independent public accountants who have certified its financial
statements as shall be necessary, in the opinion of such holders and such
underwriters or their respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act.
6. Rights of Requesting Holders. If any registration statement
refers to any Requesting Holder by name or otherwise as the holder of any
securities of the Company, such holder shall have the right to require
(a) the insertion therein of language, in form and substance reasonably
satisfactory to such holder, to the effect that, if true, the holding by
such holder of such securities does not necessarily make such holder a
"controlling person" of the Company within the meaning of the Securities Act
or (b) in the event that such reference to such holder by name or otherwise
is not required by the Securities Act or any rules and regulations
promulgated thereunder, the deletion of the reference to such holder.
7. Registration Expenses. The Company will, whether or not any
registration pursuant to this Agreement shall become effective, pay all
Registration Expenses incident to its performance under or compliance with
this Agreement promptly as such Registration Expenses are incurred.
8. Indemnification and Contribution.
(a) The Company will, and hereby does, indemnify and hold
harmless, in the case of any registration statement filed pursuant to
Section 1 or 2, each seller of any Registrable Securities covered by such
registration statement and each other Person who participates as an
underwriter in the offering or sale of such securities and each other
Person, if any, who controls such seller or any such underwriter within the
meaning of the Securities Act, and their respective directors, officers,
partners, agents and Affiliates, against any losses, claims, damages or
liabilities, joint or several, to which such seller or underwriter or any
such director, officer, partner, agent, Affiliate or controlling person may
become subject under the Securities Act or otherwise, including, without
limitation, the reasonable fees and expenses of legal counsel, insofar as
such losses, claims, damages or liabilities (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such securities
were registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances in which they were made not
misleading, and the Company will reimburse such seller or underwriter and
each such director, officer, partner, agent, Affiliate and controlling
Person for any legal or any other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, liability,
action or proceeding; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out
of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such seller or underwriter, as
the case may be, specifically stating that it is for use in the preparation
thereof; and provided, further, that the Company shall not be liable to any
Person who participates as an underwriter in the offering or sale of
Registrable Securities or any other Person, if any, who controls such
underwriter within the meaning of the Securities Act, in any such case to
the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of such Person's
failure to send or give a copy of the final prospectus, as the same may be
then supplemented or amended, to the Person asserting an untrue statement or
alleged untrue statement or omission or alleged omission at or prior to the
written confirmation of the sale of Registrable Securities to such Person if
such statement or omission was corrected in such final prospectus and such
final prospectus was required to be delivered to such Person. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such seller or any such director,
officer, partner, agent, Affiliate or controlling person and shall survive
the transfer of such securities by such seller.
(b) As a condition to including any Registrable Securities
in any registration statement, the Company shall have received an
undertaking satisfactory to it from each prospective seller of such
Registrable Securities, to indemnify and hold harmless (in the same manner
and to the same extent as set forth in Section 8(a)) the Company, each other
prospective seller, and each director of the Company, each officer of the
Company and each other Person, if any, who participates as an underwriter in
the offering or sale of such securities and each other Person who controls
the Company or any such underwriter within the meaning of the Securities
Act, with respect to any statement or alleged statement in or omission or
alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus, contained therein, or
any amendment or supplement thereto, if such statement or alleged statement
or omission or alleged omission was made in reliance upon and in conformity
with written information furnished to the Company by such seller
specifically stating that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement; provided, however, that the liability
of such indemnifying party under this Section 8(b) shall be limited to the
amount of proceeds received by such indemnifying party in the offering
giving rise to such liability. Such indemnity shall remain in full force
and effect, regardless of any investigation made by or on behalf of the
Company or any such director, officer or controlling person and shall
survive the transfer of such securities by such seller.
(c) Promptly after receipt by an indemnified party of notice
of the commencement of any action or proceeding involving a claim referred
to in Section 8(a) or (b), such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give written
notice to the latter of the commencement of such action; provided, however,
that the failure of any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its obligations under the
preceding subdivisions of this Section 8, except to the extent that the
indemnifying party is actually prejudiced by such failure to give notice.
In case any such action is brought against an indemnified party the
indemnifying party shall be entitled to participate in and, unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, to
assume the defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable
costs of investigation. In the event a bona fide conflict of interest
between the indemnified and indemnifying parties exists, the indemnifying
party hereunder shall only be responsible for the payment of reasonable fees
and expenses of a single counsel for the indemnified parties hereunder. No
indemnifying party shall be liable for any settlement of any action or
proceeding effected without its written consent, which consent shall not be
unreasonably withheld. No indemnifying party shall, without the consent of
the indemnified party, which consent shall not be unreasonably withheld,
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 or which requires action other than the
payment of money by the indemnifying party.
(d) Contribution. If the indemnification provided for in
this Section 8 shall for any reason be held by a court to be unavailable to
an indemnified party under Section 8(a) or (b) hereof in respect of any
loss, claim, damage or liability, or any action in respect thereof, then, in
lieu of the amount paid or payable under Section 8(a) or (b), the
indemnified party and the indemnifying party under Section 8(a) or (b) shall
contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating the same), (i) in such proportion as is appropriate to reflect
the relative fault of the Company and the prospective sellers of Registrable
Securities covered by the registration statement which resulted in such
loss, claim, damage or liability, or action or proceeding in respect
thereof, with respect to the statements or omissions which resulted in such
loss, claim, damage or liability, or action or proceeding in respect
thereof, as well as any other relevant equitable considerations or (ii) if
the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as shall be appropriate to reflect the relative
benefits received by the Company and such prospective sellers from the
offering of the securities covered by such registration statement, provided,
that for purposes of clause (i) or (ii), the relative benefits received by
the prospective sellers shall be deemed not to exceed the amount of proceeds
received by such prospective sellers and no holder of Registrable Securities
shall be required to contribute any amount in excess of the amount such
holder would have been required to pay to an indemnified party if the
indemnity under clause (a) of this Section 8 was available. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any Person who
was not guilty of such fraudulent misrepresentation. As among sellers who
are guilty of such fraudulent misrepresentation, such sellers' obligations
to contribute as provided in this Section 8(d) are several in proportion to
the relative value of their respective Registrable Securities covered by
such registration statement and not joint. In addition, no Person shall be
obligated to contribute hereunder any amounts in payment for any settlement
of any action or claim effected without such Person's consent, which consent
shall not be unreasonably withheld.
(e) Indemnification and contribution similar to that
specified in the preceding subdivisions of this Section 8 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or other qualification
of securities under any federal or state law or regulation of any
governmental authority other than the Securities Act.
(f) An indemnifying party shall make payments of all amounts
required to be made pursuant to the foregoing provisions of this Section 8
to or for the account of the indemnified party from time to time promptly
upon receipt of bills or invoices relating thereto or when otherwise due or
payable; provided that the indemnified party shall reimburse the
indemnifying party for any payments made with the stated purpose of
satisfying the requirements of this clause (f) which were not required to be
made by this Section 8.
9. Registration Rights to Others. The Company hereby represents
to the holders of Registrable Securities that the rights granted herein do
not conflict with the rights, if any, granted to any other holder of
securities of the Company. If the Company shall at any time provide to any
holder of any securities of the Company rights with respect to the
registration of such securities under the Securities Act, such rights shall
not be in conflict with any of the rights provided in this Agreement to the
holders of Registrable Securities. The Company shall provide to the holders
of Registrable Securities copies of any agreements which purport to grant
rights with respect to the registration of any of the Company's securities
to any holder or prospective holder thereof promptly upon executing the
same.
10. Nominees for Beneficial Owners. For purposes of this
Agreement, in the event that any Registrable Securities are held by a
nominee for the beneficial owner thereof, the beneficial owner thereof may,
at its election, be treated as the holder of such Registrable Securities for
purposes of any request or other action by any holder or holders of
Registrable Securities pursuant to this Agreement or any determination of
any number or percentage of shares of Registrable Securities held by any
holder or holders of Registrable Securities contemplated by this Agreement.
If the beneficial owner of any Registrable Securities so elects, the Company
may require assurances reasonably satisfactory to it of such owner's
beneficial ownership of such Registrable Securities.
11. Rule 144. So long as the Company shall be required to file
reports under the Exchange Act, the Company shall take all actions
reasonably necessary to enable holders of Registrable Securities to sell
such securities without registration under the Securities Act within the
limitation of the provisions of Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission, including, without limitation, filing
on a timely basis all reports required to be filed pursuant to the Exchange
Act. Upon the request of any holder of Registrable Securities, the Company
will deliver to such holder a written statement as to whether it has
complied with such requirements.
12. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"Affiliate" means any Person controlling, controlled by or under
common control with the Person in question. As used herein, "control" means
the beneficial ownership of at least a majority of the equity interests of a
Person entitling the owner of such interests to direct the policies and
operations of such Person.
"Commission" means the Securities and Exchange Commission and any
successor federal agency having similar powers.
"Common Stock" means the Common Stock, par value $0.1 per share,
of the Company, together with any stock into which such Common Stock shall
have been changed or any stock resulting from any reclassification of such
Common Stock, and all other stock of any class or classes (however
designated) of the Company the holders of which have the right, without
limitation as to amount, either to all or to a share of the balance of
current dividends and liquidating dividends after the payment of dividends
and distributions on any shares entitled to preference.
"Company" shall have the meaning assigned such term in the
introductory paragraph of this Agreement and shall include any successor by
merger or otherwise.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
"Holders" shall have the meaning assigned to such term in the
introductory paragraph of this Agreement.
"Initiating Holders" means, as of any date of determination, any
holder or holders of Registrable Securities holding individually or in the
aggregate more than 25% of the shares of Registrable Securities then
outstanding.
"Person" means an individual, a partnership, a limited liability
company, a joint venture, a corporation, a trust, an association, an
organization, a business, an unincorporated organization or a government or
political subdivision thereof or agency thereof or other entity of any kind.
"Registrable Securities" means any shares of Common Stock
(i) issued upon conversion of shares of Preferred Stock sold by the Company
pursuant to the Securities Purchase Agreement, (ii) issued or issuable upon
exercise of the Warrants, or (iii) issued or issuable with respect to any of
the securities referred to in clauses (i) or (ii) by way of a dividend or
stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or antidilution protection or
otherwise. As to any particular Registrable Security, such security shall
cease to be a Registrable Security when (x) a registration statement with
respect to the sale of such security shall have become effective under the
Securities Act and such security shall have been disposed of in accordance
with such registration statement, (y) such security shall have been sold as
permitted by Rule 144 (or any successor provision) under the Securities Act
or (z) such security, once issued, shall have ceased to be outstanding.
"Registration Expenses" means all expenses incident to the
Company's performance of or compliance with Sections 1 and 2, including,
without limitation, all registration and filing fees, all fees of national
securities exchanges or the National Association of Securities Dealers,
Inc., all fees and expenses of complying with securities or blue sky laws,
all word processing, duplicating and printing expenses, messenger and
delivery expenses, the fees and disbursements of counsel for the Company and
of its independent public accountants, including the expenses of "cold
comfort" letters required by or incident to such performance and compliance,
any fees and disbursements of underwriters customarily paid by issuers or
sellers of securities (excluding any underwriting discounts or commissions
with respect to the Registrable Securities, which shall not be paid by the
Company) and the reasonable fees and expenses of one counsel to the selling
holders of Registrable Securities (selected by selling holders of
Registrable Securities representing a majority of the Registrable Securities
covered by such registration); provided, however, that in the event the
Company shall, in accordance with Section 2(d), not register any securities
with respect to which it had given written notice of its intention to so
register to holders of Registrable Securities, all of the costs of the type
(and subject to any limitation to the extent) set forth in this definition
and incurred by Requesting Holders in connection with such registration
shall be deemed Registration Expenses.
"Requesting Holders" shall have the meaning assigned to such term
in Section 2 hereof.
"Requisite Holders" means, with respect to any registration of
Registrable Securities by the Company pursuant to this Agreement, any holder
or holders of a majority of the Registrable Securities requested to be
registered.
"Securities Act" means the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Securities Purchase Agreement" shall have the meaning assigned
such term in the recitals of this Agreement.
"Warrants" shall have the meaning assigned to such term in the
recitals of this Agreement.
13 Miscellaneous.
(a) Remedies. Each holder of Registrable Securities, in
addition to the rights provided herein and at law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss
incurred by reason of a breach by the Company of the provisions of this
Agreement and hereby agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) Adjustments Affecting Registrable Securities. The
Company will not take any action, or permit any change to occur, with
respect to the Registrable Securities which would adversely affect the
ability of the holders of Registrable Securities to include such Registrable
Securities in a registration undertaken pursuant to the terms of this
Agreement.
(c) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given unless the Company has obtained the
written consent of holders of a majority of the Registrable Securities.
(d) Notices. All notices and other communications provided
for or permitted hereunder shall be made in writing by hand-delivery,
registered first-class mail, or air courier guaranteeing overnight delivery:
(i) if to a holder of Registrable Securities, at
the most current address given by such holder to the Company in
accordance with the provisions of this Section 13(d); and
(ii) if to the Company, at Arinco Computer Systems
Inc., 1650 University Boulevard, N.E., Suite 5-100, Albuquerque, New
Mexico 87102, Attention: CEO; or at such other address, notice of which
is given in accordance with the provisions of this Section 13(d).
All such notices and communications shall be deemed to have been
duly given at the time delivered by hand, if personally delivered; five (5)
business days after being deposited in the mail, postage prepaid, if mailed;
and on the next business day if timely delivered to an air courier
guaranteeing overnight delivery.
(e) Assignment. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and, with
respect to the Company, its respective successors and permitted assigns and,
with respect to the Holders, any subsequent holder of any Registrable
Securities who agrees in writing to assume the obligations of a holder of
Registrable Securities hereunder (a copy of which agreement shall be
delivered promptly to the Company), subject to the provisions respecting the
minimum numbers of percentages of shares of Registrable Securities required
in order to be entitled to certain rights, or take certain actions,
contained herein. This Agreement may not be assigned by the Company without
the prior written consent of the holders of a majority of the Registrable
Securities at the time such consent is requested. The Purchasers (and not
any other holder of Registrable Securities or any other Person) shall be
permitted, in connection with the transfer or disposition of Registrable
Securities, to impose conditions or constraints on the ability of the
transferee, as a holder of Registrable Securities, to request a registration
pursuant to Section 1 and shall provide the Company with copies of such
conditions or constraints and the identity of such transferees.
(f) Calculation of Percentage Interests in Registrable
Securities. For purposes of this Agreement, all references to a percentage
of the Registrable Securities shall be calculated based upon the number of
shares of Registrable Securities outstanding at the time such calculation is
made, assuming, if applicable, the exercise, conversion or exchange of the
Company's securities into Registrable Securities in accordance with the
terms of such securities.
(g) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same Agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH
STATE.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
(k) Certain Distributions. The Company shall not at any
time make a distribution on or with respect to the Common Stock (including
any such distribution made in connection with a consolidation or merger in
which the Company is the resulting or surviving corporation and such
Registrable Securities are not changed or exchanged) of securities of
another issuer if holders of Registrable Securities are entitled to receive
such securities in such distribution as holders of Registrable Securities
and any of the securities so distributed are registered under the Securities
Act, unless the securities to be distributed to the holders of Registrable
Securities are also registered under the Securities Act.
(l) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and
therein. There are no restrictions, promises, warranties or undertakings,
other than those set forth or referred to herein and therein. This
Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, each of the undersigned has executed this
Registration Rights Agreement as of the date first above written.
ARINCO COMPUTER SYSTEMS INC.
By:
Name:
Title:
PANGEA INTERNET ADVISORS LLC
By:
Name:
Title:
PURCHASERS:
James M. Allwin
William Avery
Lance Bakrow
L.A. Bay Investments, LLC
Sun Valley Investments
VBM Equities, LLC
Harry Chandler
Davis Capital, LLC
SGII, LLC
Steve J. Gilbert
Turtle Holdings LLC
Grant Gregory
Grant Gregory Jr.
Wayne Huizenga
Walnut Associates I, LLC
Michael J. Levitt
William Lipner
JCK (US), Ltd.
Community Property LLC
Robert W. Matschullat
The Matschullat 1996 Children's Trust
Charles Moore
Robert A. Nielsen
Charles D. Peebler Jr.
Robert P. Rittereiser
Clayton J. Rohrbach, III
The Rohrbach 1991 Children's Trust
Stanley Rumbough, Jr.
Pemaxrina Investors, LLC
Westmark Industries, LLC
Riva Capital, LLC
Steven J. Simmons
James L. Tullis
Linda A. Tullis
Sara D. Tullis
John L. Tullis
Elisabeth P. Tullis
TNRT, LLC
Robert C. Wright
Arthur Bellows
B&B Investments
Kenneth Fadner
Trevor Traina
John Todd Buchanan Traina
Culmen Technology Partners, L.P.
Sterling Payot Capital LP
Morton H. Meyerson
Metropolis Venture Partners
Wamtech Investments Inc.
L.I.I., LLC
New River Capital Partners
North Atlantic Smaller Companies Investment Trust Plc.
American Opportunity Trust
Trident North Atlantic Fund
Trident Holdings Limited
Oryx International Growth Fund
Trident Private Equity
JO Hambro Capital Management Ltd A/c B
JO Hambro Capital Management Ltd A/c C
JO Hambro Capital Management Ltd A/c A
Antares Investment Partners
Arthur A. Bushkin
Arthur Dodge
PW-Pangea LLC
Allen & Co., Inc.
Charles F. Fitchey
Ken Gestal
H. Leland Getz
Gillian Gamsy
Terry Glen
Fred Green
Craig Herron
Steven Kotler
Robert Warren Lautz
Craigh Leonard
John Maxwell
Financial Performance Corporation
Daniel Nissan
Fred Rosen
Jack Schneider
Kirk Shelton
Stanley S. Shuman
Dolphin II LLC
Charles Schley
Ed Sim
Ned Carlson
Robert T. Tucker
Roberts Family Revocable Trust, dated____
IPO Partners
Jonathan Avery
Byron Avery
Tom Avery
Laura M. Forbes Carlin
Scott Carlin
Alison L. Forbes
Elise Ebert
Frank Gallagi
Kathleen Shepphird
John Sculley
Anthony L. Bucci
Stephen Roberts
Matthew Ohrnstein
Caran Establishment
Lawrence Utzig
Deloris Utzig
Lixuan An
Wiley Buchanan, III Trust
Mario Gobbo
FG II Seed Fund LLC
Alis & Co.
Cary S. Fitchey
Walter A. Forbes
St. Croix Investments, LLC
Edmund Hajim
By: PANGEA INTERNET ADVISORS LLC
Attorney-in-Fact
By:
Name: Cary S. Fitchey
Title: Managing Director
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
by and among
ARINCO COMPUTER SYSTEMS INC.
and the Persons referred to herein
_______________________
March 28, 2000
_______________________
Table of Contents
Page
1. Registration on Request 1
2. Incidental Registration 3
3. Registration Procedures 4
4. Underwritten Offerings 8
5. Preparation; Reasonable Investigation 10
6. Rights of Requesting Holders 11
7. Registration Expenses 11
8. Indemnification and Contribution 11
9. Registration Rights to Others 14
10. Nominees for Beneficial Owners 14
11. Rule 144 15
12. Definitions 15
13. Miscellaneous 17
Exhibit B
NEITHER THIS WARRANT NOR ANY SECURITIES ISSUABLE UPON THE EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
WARRANT NO. __
WARRANT
TO PURCHASE SHARES OF COMMON STOCK,
PAR VALUE $.01 PER SHARE,
OF
ARINCO COMPUTER SYSTEMS INC.
THIS IS TO CERTIFY THAT ______________________,1/ or its
registered assigns, is the owner of ______ Warrants (as defined below), each
of which entitles the registered holder thereof to purchase from ARINCO
COMPUTER SYSTEMS INC., a New Mexico corporation (the "Company"), one fully
paid, duly authorized and non-assessable share of Common Stock, par value
$.01 per share, of the Company (the "Common Stock"), at any time prior to
5:00 p.m., New York City time, on ____________, 2005 (the "Expiration
Date"), at an exercise price of $[ ] per share (as adjusted, the
"Exercise Price"), all on the terms and subject to the conditions
hereinafter set forth.
The number of shares of Common Stock issuable upon exercise of
each such Warrant (the "Number Issuable") and the Exercise Price is subject
to adjustment from time to time pursuant to the provisions of Section 2 of
this Warrant Certificate. The Warrants evidenced by this Certificate are
part of a series of warrants to purchase initially up to _________ shares of
Common Stock (the "Warrants") issued pursuant to a Securities Purchase
Agreement (the "Securities Purchase Agreement"), dated as of March ___,
2000, by and among the Company and Pangea Internet Advisors LLC ("Pangea").
Capitalized terms used herein but not otherwise defined have the
meanings given them in Section 11.
Section 1. Exercise of Warrant. Subject to the last paragraph
of this Section 1, the Warrants evidenced hereby may be exercised, in whole
or in part, by the registered holder hereof at any time on or prior to the
Expiration Date, upon delivery to the Company at its principal executive
office in the United States of America, of (a) this Warrant Certificate,
(b) a written notice stating that such holder elects to exercise all or a
specified number of the Warrants evidenced hereby in accordance with the
provisions of this Section 1 and specifying the name or names in which such
holder wishes the certificate or certificates for shares of Common Stock to
be issued and (c) payment of the Exercise Price for the shares of Common
Stock issuable upon exercise of such Warrants (collectively, the "Warrant
Exercise Documentation"). Such payment shall be made (A) in cash or by
certified or official bank check payable to the order of the Company
or by wire transfer of funds to an account designated by the Company for
such purpose or (B) by a Cashless Exercise (defined below). In connection
with a Cashless Exercise, the number of Warrants being exercised shall
be canceled in exchange for the issuance of such number of shares of Common
Stock equal to the product of (x) the number of shares of Common Stock for
which such Warrant would otherwise then be nominally exercised if payment
of the Exercise Price as of the date of exercise were being made in cash
and (y) the Cashless Exercise Ratio. An exercise of Warrants in accordance
with clause (B) of the immediately preceding sentence is herein referred to
as a "Cashless Exercise." All provisions of this Warrant Certificate shall
be applicable with respect to an exercise pursuant to a Cashless Exercise
for less than the full number of Warrants represented hereby.
As promptly as practicable, and in any event within five Business
Days after receipt of the Warrant Exercise Documentation, the Company shall
deliver or cause to be delivered (i) certificates representing the number of
validly issued, fully paid and non-assessable shares of Common Stock
specified in the Warrant Exercise Documentation, (ii) if applicable, cash in
lieu of any fraction of a share, as hereinafter provided, and (iii) if less
than the full number of Warrants evidenced hereby are then being exercised,
a new Warrant Certificate or Certificates, of like tenor, for the number of
Warrants evidenced by this Warrant Certificate less the number of Warrants
then being exercised. Such exercise shall be deemed to have been made at
the close of business on the date of delivery of the Warrant Exercise
Documentation so that the Person entitled to receive shares of Common Stock
upon such exercise shall be treated for all purposes as having become the
record holder of such shares of Common Stock at such time. No such
surrender shall be effective to constitute the Person entitled to receive
such shares as the record holder thereof while the transfer books of the
Company for the Common Stock are closed for any purpose (but not for any
period in excess of five days); but any such surrender of this Warrant
Certificate for exercise during any period while such books are so closed
shall become effective for exercise immediately upon the reopening of such
books, as if the exercise had been made on the date this Warrant Certificate
was surrendered and for the Number Issuable of Common Stock specified in the
Warrant Exercise Documentation and at the Exercise Price in effect at the
date of such surrender.
The Company shall pay all expenses in connection with, and all
taxes and other governmental charges (other than income taxes of the holder)
that may be imposed in respect of, the issue or delivery of any shares of
Common Stock issuable upon the exercise of the Warrants evidenced hereby.
The Company shall not be required, however, to pay any tax or other charge
imposed in connection with any transfer involved in the issue of any
certificate for shares of Common Stock in any name other than that of the
registered holder of the Warrants evidenced hereby.
In connection with the exercise of any Warrants evidenced hereby,
no fractions of shares of Common Stock shall be issued, but in lieu thereof
the Company shall pay a cash adjustment in respect of such fractional
interest in an amount equal to such fractional interest multiplied by the
Current Market Price per share of Common Stock on the Business Day which
next precedes the date of exercise. If more than one such Warrant shall be
exercised by the holder thereof at the same time, the number of full shares
of Common Stock issuable on such exercise shall be computed on the basis of
the total number of Warrants so exercised.
Section 2. Adjustments.
(a) Adjustment of Number Issuable. The Number Issuable
shall be subject to adjustment from time to time as follows:
(i) In case the Company shall at any time or from time
to time after the Issue Date:
(A) pay a dividend or make any other distribution
on the outstanding shares of Common Stock in capital stock (which,
for purposes of this Section 2 shall include, without limitation,
any options, warrants or other rights to acquire capital stock) of
the Company;
(B) subdivide the outstanding shares of Common
Stock into a larger number of shares;
(C) combine the outstanding shares of Common Stock
into a smaller number of shares; or
(D) issue any shares of its capital stock in a
reclassification of the Common Stock;
then, and in each such case, the Number Issuable and the Exercise Price
in effect immediately prior to such event shall be adjusted (and any
other appropriate actions shall be taken by the Company) so that the
holder of the Warrants evidenced hereby thereafter exercised shall be
entitled to receive the number of shares of Common Stock or other
securities of the Company which such holder would have owned or had
been entitled to receive upon or by reason of any of the events
described above at the same aggregate Exercise Price, had such Warrants
been exercised immediately prior to the happening of such event. An
adjustment made pursuant to this clause 2(a)(i) shall become effective
retroactively (x) in the case of any such dividend or distribution, to
a date immediately following the close of business on the record date
for the determination of holders of shares of Common Stock entitled to
receive such dividend or distribution, or (y) in the case of any such
subdivision, combination or reclassification, to the close of business
on the date upon which such corporate action becomes effective.
(ii) In case the Company shall at any time or from time
to time after the Issue Date distribute to all holders of shares of its
Common Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the resulting or
surviving corporation and the Common Stock is not changed or exchanged)
cash, evidences of indebtedness of the Company or another issuer,
securities of the Company or another issuer or other assets (excluding
dividends or other distributions of shares of Common Stock or other
capital stock for which adjustment is made under Section 2(a)(i) or
rights or warrants to subscribe for or purchase securities of the
Company (excluding those in respect of which adjustments in the Number
Issuable is made pursuant to Section 2(a)(i)), then, and in each such
case, the Number Issuable then in effect shall be adjusted by
multiplying the Number Issuable in effect immediately prior to the date
of such distribution by a fraction (x) the numerator of which shall be
the Current Market Price per share of Common Stock on the record date
referred to below and (y) the denominator of which shall be such
Current Market Price per share of Common Stock less the then Fair
Market Value (as determined in good faith by the Board of Directors of
the Company, a certified resolution with respect to which shall be
mailed to the holder of the Warrants evidenced hereby) of the portion
of the cash, evidences of indebtedness, securities or other assets so
distributed or of such subscription rights or warrants applicable to
one share of Common Stock (but such denominator not to be less than
one); and the Exercise Price in effect immediately prior to such event
shall be adjusted so that the holder of the Warrants pays the same
aggregate Exercise Price. Such adjustment shall be made whenever any
such distribution is made and shall become effective retroactively to a
date immediately following the close of business on the record date for
the determination of stockholders entitled to receive such
distribution.
(iii) In the event that any convertible or
exchangeable securities, options, warrants or other rights, the
issuance of which shall have given rise to an adjustment pursuant to
this Section 2(a) ("Convertible Securities"), shall have expired or
terminated without the exercise thereof and/or if there shall have been
an increase, with the passage of time or otherwise, in the price
payable upon the exercise or conversion thereof or a decrease in the
number of shares of Common Stock issuable upon the exercise or
conversion thereof, then the Number Issuable hereunder and the Exercise
Price shall be readjusted (but to no greater extent then originally
adjusted) on the basis of (A) eliminating from the computation of the
Number Issuable as of the time of the issuance of the Convertible
Securities any shares of Common Stock corresponding to such Convertible
Securities as shall have expired or terminated, (B) treating the
additional shares of Common Stock, if any, actually issued or issuable
pursuant to the previous exercise of such Convertible Securities as
having been issued for the consideration actually received and
receivable therefor and (C) treating any of such Convertible Securities
which remain outstanding as being subject to exercise or conversion on
the basis of such exercise or conversion price as shall be in effect at
such time.
(iv) Upon any increase or decrease in the Number
Issuable and Exercise Price, then, and in each such case, the Company
promptly shall deliver to each registered holder of Warrants at least
five Business Days prior to effecting any transaction which would
result in such increase or decrease a notice thereof, together with a
certificate, signed by the Chief Executive Officer or a Vice-President
and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Company, setting forth in reasonable detail
the event requiring the adjustment and the method by which such
adjustment was calculated and specifying the increased or decreased
Number Issuable and Exercise Price then in effect following such
adjustment.
(b) Reorganization, Reclassification, Consolidation, Merger
or Sale of Assets. In case of any capital reorganization or
reclassification or other change of outstanding shares of Common Stock
(other than a change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a subdivision or
combination), or in case of any consolidation or merger of the Company with
or into another Person (other than a consolidation or merger in which the
Company is the resulting or surviving person and which does not result in
any reclassification or change of outstanding Common Stock), or in case of
any sale or other disposition to another Person of all or substantially all
of the assets of the Company (any of the foregoing, a "Transaction"), the
Company, or such successor or purchasing Person, as the case may be, shall
execute and deliver to each holder of the Warrants evidenced hereby at least
five Business Days prior to effecting any of the foregoing Transactions a
certificate that the holder of each such Warrant then outstanding shall have
the right thereafter to exercise such Warrant into the kind and amount of
shares of stock or other securities (of the Company or another issuer) or
property or cash receivable upon such Transaction by a holder of the number
of shares of Common Stock into which such Warrant could have been exercised
immediately prior to such Transaction. Such certificate shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 2. If, in the case of any such
Transaction, the stock, other securities, cash or property receivable
thereupon by a holder of Common Stock includes shares of stock or other
securities of a Person other than the successor or purchasing Persons and
other than the Company, which controls or is controlled by the successor or
purchasing Person or which, in connection with such Transaction, issues
stock, securities, other property or cash to holders of Common Stock, then
such certificate also shall be executed by such Person, and such Person
shall, in such certificate, specifically assume the obligations of such
successor or purchasing Person and acknowledge its obligations to issue such
stock, securities, other property or cash to holders of the Warrants upon
exercise thereof as provided above. The provisions of this Section 2(b)
similarly shall apply to successive Transactions.
Section 3. Notice of Certain Events. In case at any time or from
time to time the Company shall declare any dividend or any other
distribution to the holders of its Common Stock, or shall authorize the
granting to the holders of its Common Stock of rights or warrants to
subscribe for or purchase any additional shares of stock of any class or any
other right, or shall authorize the issuance or sale of any other shares or
rights which would result in an adjustment to the Number Issuable pursuant
to Section 2(a) or there shall be any capital reorganization or
reclassification of the Common Stock of the Company or consolidation or
merger of the Company with or into another Person, or any sale or other
disposition of all or substantially all the assets of the Company, or there
shall be a voluntary or involuntary dissolution, liquidation or winding up
of the Company, then, in any one or more of such cases the Company shall
mail to each holder of the Warrants evidenced hereby at such holder's
address as it appears on the transfer books of the Company, as promptly as
practicable but in any event at least 30 days prior to the applicable date
hereinafter specified, a notice stating (a) the date on which a record is to
be taken for the purpose of such dividend, distribution, rights or warrants
or, if a record is not to be taken, the date as of which the holders of
Common Stock of record to be entitled to such dividend, distribution, rights
or warrants are to be determined, (b) the date on which such dividends,
distribution, rights or warrants are made or issued or (c) the date on which
such reclassification, consolidation, merger, sale, conveyance, dissolution,
liquidation or winding up is expected to become effective; provided that in
the case of any event to which Section 2(b) applies, the Company shall give
at least ten Business Days' prior written notice as aforesaid. Such notice
also shall specify the date as of which it is expected that the holders of
Common Stock of record shall be entitled to exchange their Common Stock for
shares of stock or other securities or property or cash deliverable upon
such reorganization, reclassification, consolidation, merger, sale,
conveyance, dissolution, liquidation or winding up.
Section 4. Certain Covenants. The Company covenants and agrees
that all shares of capital stock of the Company which may be issued upon the
exercise of the Warrants evidenced hereby will be duly authorized, validly
issued and fully paid and non-assessable. Beginning upon consummation of
the Delaware Reincorporation (as defined in the Securities Purchase
Agreement), the Company shall at all times reserve and keep available for
issuance upon the exercise of the Warrants, such number of its authorized
but unissued shares of Common Stock as will from time to time be sufficient
to permit the exercise of all outstanding Warrants, and shall take all
action required to increase the authorized number of shares of Common Stock
if at any time there shall be insufficient authorized but unissued shares of
Common Stock to permit such reservation or to permit the exercise of all
outstanding Warrants.
Section 5. Registered Holder. The person in whose name this
Warrant Certificate is registered shall be deemed the owner hereof and of
the Warrants evidenced hereby for all purposes. The registered holder of
this Warrant Certificate, in its capacity as such, shall not be entitled to
any rights whatsoever as a stockholder of the Company, except as herein
provided.
Section 6. Transfer of Warrants. Any transfer of the rights
represented by this Warrant Certificate shall be effected by the surrender
of this Warrant Certificate, along with the form of assignment attached
hereto, properly completed and executed by the registered holder hereof, at
the principal executive office of the Company in the United States of
America, together with an appropriate investment letter, if deemed
reasonably necessary by counsel to the Company to assure compliance with
applicable securities laws. Thereupon, the Company shall issue in the name
or names specified by the registered holder hereof and, in the event of a
partial transfer, in the name of the registered holder hereof, a new Warrant
Certificate or Certificates evidencing the right to purchase such number of
shares of Common Stock as shall be equal to the number of shares of Common
Stock then purchasable hereunder.
Section 7. Denominations. The Company covenants that it will, at
its expense, promptly upon surrender of this Warrant Certificate at the
principal executive office of the Company in the United States of America,
execute and deliver to the registered holder hereof a new Warrant
Certificate or Certificates in denominations specified by such holder for an
aggregate number of Warrants equal to the number of Warrants evidenced by
this Warrant Certificate.
Section 8. Replacement of Warrants. Upon receipt of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant Certificate (which evidence, in the case of an institutional
holder of Warrants, shall consist of a letter from such holder to such
effect) and, in the case of loss, theft or destruction, upon delivery of an
indemnity reasonably satisfactory to the Company (which indemnity, in the
case of an institutional holder of Warrants, shall consist of an unsecured
letter of indemnity from such holder), or, in the case of mutilation, upon
surrender and cancellation thereof, the Company will issue a new Warrant
Certificate of like tenor for a number of Warrants equal to the number of
Warrants evidenced by this Warrant Certificate.
Section 9. Governing Law. THIS WARRANT CERTIFICATE SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES
SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
Section 10. Rights Inure to Registered Holder. The Warrants
evidenced by this Warrant Certificate will inure to the benefit of and be
binding upon the registered holder thereof and the Company and their
respective successors and permitted assigns. Nothing in this Warrant
Certificate shall be construed to give to any Person other than the Company
and the registered holder thereof any legal or equitable right, remedy or
claim under this Warrant Certificate, and this Warrant Certificate shall be
for the sole and exclusive benefit of the Company and such registered
holder. Nothing in this Warrant Certificate shall be construed to give the
registered holder hereof any rights as a holder of shares of Common Stock
until such time, if any, as the Warrants evidenced by this Warrant
Certificate are exercised in accordance with the provisions hereof.
Section 11. Definitions. For the purposes of this Warrant
Certificate, the following terms shall have the meanings indicated below:
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in the City of New York are authorized
or required by law or executive order to close.
"Cashless Exercise Ratio" means a fraction, the numerator of which
is the excess of the Current Market Price per share of Common Stock on the
date of exercise over the Exercise Price per share and the denominator of
which is the Current Market Price per share of Common Stock on the date of
exercise.
"Current Market Price" per share shall mean, on any date specified
herein for the determination thereof, (a) the average daily Market Price of
the Common Stock for those days during the period of 20 days, ending on such
date, on which the national securities exchanges were open for trading, and
(b) if the Common Stock is not then listed on a national securities exchange
or quoted in the over-counter market, the Market Price on such date.
"Exercise Price" shall have the meaning given it in the first
paragraph hereof.
"Expiration Date" shall have the meaning given it in the first
paragraph hereof.
"Fair Market Value" shall mean the amount which a willing buyer,
under no compulsion to buy, would pay a willing seller, under no compulsion
to sell, in an arm's-length transaction.
"Issue Date" shall mean _________, 2000.
"Market Price" shall mean, per share of Common Stock, on any date
specified herein: (a) the closing price per share of the Common Stock on
such date published in The Wall Street Journal or, if no such closing price
on such date is published in The Wall Street Journal, the average of the
closing bid and asked prices on such date, as officially reported on the
principal national securities exchange on which the Common Stock is then
listed or admitted to trading; or (b) if the Common Stock is not then listed
or admitted to trading on any national securities exchange but is designated
as a national market system security by the NASD, the last trading price of
the Common Stock on such date; or (c) if there shall have been no trading on
such date or if the Common Stock is not so designated, the average of the
reported closing bid and asked price of the Common Stock, on such date as
shown by NASDAQ and reported by any member firm of The New York Stock
Exchange, Inc. selected by the Company; or (d) if none of (a), (b) or (c) is
applicable, the Fair Market Value per share determined in good faith by the
Board of Directors of the Company based on an opinion of a nationally
recognized investment banking firm unaffiliated with either the Company or
the holders of the Warrants, chosen by the Company (who shall bear the
expense thereof) and acceptable to the holder of this Warrant Certificate.
"NASD" shall mean the National Association of Securities Dealers,
Inc.
"NASDAQ" shall mean the Nasdaq Stock Market.
"Number Issuable" shall have the meaning given it in the second
paragraph hereof.
"Person" shall mean any individual, corporation, limited liability
company, partnership, trust, incorporated or unincorporated association,
joint venture, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
"Securities Purchase Agreement" shall have the meaning given it in
the second paragraph hereof.
"Warrant Exercise Documentation" shall have the meaning given it
in Section 1 hereof.
Section 12. Notices. All notices, demands and other
communications provided for or permitted hereunder shall be made in writing
and shall be by registered or certified first-class mail, return receipt
requested, or personal delivery, (a) if to the holder of a Warrant, at such
holder's last known address appearing on the books of the Company; and
(b) if to the Company, at its principal executive office in the United
States located at 1650 University Boulevard, N.E., Suite 5-100, Albuquerque,
New Mexico 87102, Attention: CEO, or such other address as shall have been
furnished to the party given or making such notice, demand or other
communication. All such notices and communications shall be deemed to have
been duly given: when delivered, if delivered by hand or by overnight
courier service; and three Business Days after being deposited in the mail,
postage prepaid, if mailed.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed as of the Issue Date.
ARINCO COMPUTER SYSTEMS INC.
By:
Name:
Title:
[Form of Assignment Form]
[To be executed upon assignment of Warrants]
The undersigned hereby assigns and transfers this Warrant
Certificate to ____________________ whose Social Security Number or Tax ID
Number is _________________ and whose record address is
_____________________________________, and irrevocably appoints
________________ as agent to transfer this security on the books of the
Company. Such agent may substitute another to act for such agent.
Signature:
Signature Guarantee:
Date:
Exhibit C
STATEMENT PURSUANT TO SECTION 53-11-16 OF THE
NEW MEXICO BUSINESS CORPORATION ACT
Statement of establishing and designating a series of preferred
shares, and fixing and determining the relative rights and preferences
thereof pursuant to Section 15-11-16 of the New Mexico Business Corporation
Law.
A. Name of the Corporation. The name of the corporation is
Arinco Computer Systems Inc. (the "Corporation").
B. Copy of Resolution. Pursuant to the authority conferred upon
the Board of Directors by the Certificate of Incorporation of the
Corporation, as amended, and pursuant to the provisions of Section 53-11-16
of the Business Corporation Act of the State of New Mexico, the Board of
Directors of the Corporation duly adopted Resolutions establishing and
designating a series of 4,000,000 shares of preferred stock, which
Resolutions are as follows:
"RESOLVED, that pursuant to the authority expressly granted and
vested in the Board of Directors of the Corporation in accordance with the
provisions of the Corporation's Certificate of Incorporation, a series of
preferred stock of the Corporation be, and it hereby is, created and given
the distinctive designation of "Series B Convertible Preferred Stock" (the
"Series B Preferred"), such series to consist of 4,000,000 shares of the par
value of $0.10 per share, the relative rights and preferences of which shall
be as follows:
Rights, Preferences and Restrictions of Series B Preferred. The
rights, preferences, privileges and restrictions granted to and imposed on
the Series B Preferred are as set forth below in Sections 1 through 8.
1. Dividends. The holders of the Series B Preferred shall be
entitled to receive, out of any funds legally available therefor, such
dividends as may be declared from time to time by the Board of Directors of
the Corporation provided that no dividend or distribution shall be declared
or paid on any shares of the Common Stock of the Corporation (the "Common
Stock") unless at the same time an equivalent dividend or distribution is
declared or paid, as the case may be, on all outstanding shares of Series B
Preferred and provided further that any dividend or distribution on Series
B Preferred shall be payable at the same rate per share as would be payable
on the shares of Common Stock which the holder of the Series B Preferred
would be entitled to receive if he had converted the shares of Series B
Preferred into Common Stock pursuant to Section 4 hereof immediately prior
to the record date of such dividend or distribution.
2. Liquidation Preference. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation (each
a "Distribution Event"):
(a) Series B Preferred Preference. The holders of the
Series B Preferred shall be entitled to receive with respect to such
Distribution Event pro rata in accordance with the shares of Series B
Preferred then held by them, prior and in preference to any distribution of
any of the assets or surplus funds of the Corporation to the holders of the
Common Stock by reason of their ownership of such shares, an amount equal to
the greater of (i) the aggregate of the Original Issue Price (as defined
below) for all such shares of Series B Preferred plus an amount equal to all
declared but unpaid dividends on such shares of Series B Preferred and
(ii) the amount that the holders of Series B Preferred would be entitled to
receive if all such shares of Series B Preferred had been converted into
Common Stock pursuant to Section 4 hereof immediately prior to the record
date for the distributions relating to the Distribution Event. If the
assets and funds thus distributed among the holders of the Series B
Preferred shall be insufficient to permit the payment to such holders of the
full aforesaid preferential amount, then the entire assets and funds of the
Corporation legally available for distribution shall be distributed among
the holders of the Series B Preferred pro rata in accordance with the shares
of Series B Preferred then held by them. The "Original Issue Price" of the
Series B Preferred shall be $10.00 per share (as adjusted for any stock
dividend, stock splits, recapitalization, reorganizations and other similar
transactions with respect to the Series B Preferred).
(b) Reorganization, Merger or Sale of Assets. Neither a
consolidation or a merger of the Corporation with or into any other
corporation or corporations nor the sale of all or substantially all of the
assets of the Corporation shall be deemed to be a liquidation, dissolution
or winding up within the meaning of this Section 2.
3. Voting Rights. Except as otherwise provided herein or
required by law, each share of Series B Preferred shall be entitled to the
number of votes equal to the number of shares of Common Stock into which
the Series B Preferred could be converted pursuant to Section 4 hereof as
of the record date for the determination of the stockholders entitled to
vote on such matter or, if no record date is established, as of the date
such vote is taken, and the holders of Series B Preferred shall vote share
for share with the holders of the Common Stock without distinction as to
class and shall not be entitled to vote separately as a class or series of
a class. Nothing set forth in this Section 3 shall be construed as a
waiver of the right of the holders of the Series B Preferred to vote as a
class when specifically entitled to do so pursuant to Section 3 herein.
The voting rights of the Series B Preferred shall include, but not be
limited to, the right to vote on the Charter Amendment (as hereinafter
defined).
4. Conversion. The holders of the Series B Preferred have
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series B Preferred
shall be convertible, at the option of the holder thereof, at any time after
the date of issuance of such share at the office of the Corporation or any
transfer agent for the Series B Preferred, into such number of fully paid
and nonassessable shares of Common Stock (the "Conversion Rate") as is
determined by dividing the Original Issue Price by the Conversion Price,
determined as hereinafter provided, in effect at the time of the conversion.
The price at which shares of Common Stock shall be deliverable upon
conversion (the "Conversion Price") for the Series B Preferred shall
initially be $0.25 per share of Common Stock. Such initial Conversion Price
shall be subject to adjustment as hereinafter provided.
(b) Automatic Conversion. Each share of Series B Preferred
shall automatically be converted into shares of Common Stock at the then
effective Conversion Rate of such stock (i) immediately prior to the closing
of the first firmly underwritten public offering of Common Stock of the
Corporation that occurs after March [__], 2000 and that is pursuant to a
registration statement filed with, and declared effective by, the Securities
and Exchange Commission (or any other federal agency at the time
administering the Securities Act of 1933, as amended (the "Act")) under the
Act, covering the offer and sale of Common Stock to the public at a public
offering price per share (before deductions for underwriter commissions and
expenses) of not less than four times the then prevailing Conversion Price
and that results in proceeds to the Corporation (before deduction for
underwriter commissions and expenses) of at least $10,000,000 (a "Qualified
Offering"), and (ii) upon the conversion of a number of shares of Series B
Preferred which when added to all shares of Series B Preferred previously
converted at any time equals at least 60% of the number of shares of Series
B Preferred issued pursuant to a Securities Purchase Agreement (the
"Securities Purchase Agreement") dated March [__], 2000 between the
Corporation and Pangea Internet Advisors LLC. Upon such automatic
conversion, any declared but unpaid dividends shall be paid in accordance
with the provisions of Section 4(c). In the event of the automatic
conversion of the Series B Preferred upon a Qualified Offering, the
person(s) entitled to receive the Common Stock issuable upon such conversion
of Series B Preferred shall not be deemed to have converted such Series B
Preferred until immediately prior to the closing of such sale of securities.
Notwithstanding the foregoing provisions of this Section 4(b), no automatic
conversion of the Series B Preferred shall be effected unless and until such
conversion will not violate any laws, rules, regulations, orders or other
legal requirements of any governing body or until the Charter Amendment
shall have occurred, and such automatic conversion shall be held in abeyance
pending compliance with any such requirements, provided that the holders of
Series B Preferred will use their best efforts to comply with such
requirements.
(c) Mechanics of Conversion. Before any holder of Series B
Preferred shall be entitled to convert the same into full shares of Common
Stock and to receive certificates therefor, such holder shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
Corporation or of any transfer agent for the Series B Preferred, and shall
give written notice to the Corporation at such office that such holder
elects to convert the same. In the event of an automatic conversion
pursuant to Section 4(b), the outstanding shares of Series B Preferred shall
be converted automatically without any further action by the holders of such
shares and whether or not the certificates representing such shares are
surrendered to the Corporation or its transfer agent. The Corporation is
not obligated to issue certificates evidencing the shares of Common Stock
issuable upon such automatic conversion unless the certificates evidencing
such shares of Series B Preferred are either delivered to the Corporation or
its transfer agent as provided above, or the holder notifies the Corporation
or its transfer agent that such certificates have been lost, stolen or
destroyed and executes an agreement satisfactory to the Corporation to
indemnify the Corporation from any loss incurred by it in connection with
such certificates. The Corporation shall, as soon as practicable after such
delivery, or such agreement and indemnification in the case of a lost
certificate, issue and deliver at such office to such holder of Series B
Preferred, a certificate or certificates for the number of shares of Common
Stock to which the holder shall be entitled as aforesaid and a check payable
to the holder in the amount of any cash amounts payable as the result of a
conversion into fractional shares of Common Stock. Thereupon, the
Corporation shall promptly pay in cash or, to the extent sufficient funds
are not then legally available therefor, in Common Stock (at the Common
Stock's fair market value determined by the Board of Directors as of the
date of such conversion), any declared but unpaid dividends on the shares of
Series B Preferred being converted. Such conversion shall be deemed to have
been made immediately prior to the close of business on the date of such
surrender of the shares of Series B Preferred to be converted, or in the
case of automatic conversion on the date of closing of a Qualified Offering
or the date on which more than 60% of the originally issued Series B
Preferred have been converted into Common Stock and the person or persons
entitled to receive the shares of Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such
shares of Common Stock on such date.
(d) Fractional Shares. In lieu of any fractional shares to
which the holder of Series B Preferred would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price. Whether or not fractional shares are issuable
upon such conversion shall be determined on the basis of the total number of
shares of Series B Preferred of each holder at the time converting into
Common Stock and the number of shares of Common Stock issuable upon such
aggregate conversion.
(e) Adjustment of Conversion Price. The Conversion Price of
the Series B Preferred shall be subject to adjustment from time to time as
follows:
(i) If the number of shares of Common Stock outstanding
at any time after the date hereof is increased by a stock dividend payable
in shares of Common Stock or by a subdivision or split-up of shares of
Common Stock, then, on the date such payment is made or such change is
effective, the Conversion Price of the Series B Preferred shall be
appropriately decreased so that the number of shares of Common Stock
issuable on conversion of any shares of the Series B Preferred shall be
increased in proportion to such increase of outstanding shares.
(ii) If the number of shares of Common Stock outstanding
at any time after the date hereof is decreased by a combination of the
outstanding shares of Common Stock, on the effective date of such
combination, the Conversion Price of the Series B Preferred shall be
appropriately increased so that the number of shares of Common Stock
issuable on conversion of any shares of the Series B Preferred shall be
decreased in proportion to such decrease in outstanding shares.
(iii)In case, at any time after the date hereof, of any
capital reorganization, or any reclassification of the stock of the
Corporation (other than as a result of a stock dividend or subdivision,
split-up or combination of shares), or the consolidation or merger of the
Corporation with or into another person (other than a consolidation or
merger in which the Corporation is the continuing entity and which does not
result in any change in the Common Stock), the shares of the Series B
Preferred shall, after such reorganization, reclassification, consolidation,
merger, sale or other disposition, be convertible into the kind and number
of shares of stock or other securities or property of the Corporation or
otherwise to which such holder would have been entitled if immediately prior
to such reorganization, reclassification, consolidation, merger, sale or
other disposition such holder had converted its shares of the Series B
Preferred into Common Stock.
(iv) In case any event shall occur as to which the other
provisions of this subsection (e) are not strictly applicable but the
failure to make any adjustment would not fairly protect the conversion
rights of the holders of Series B Preferred set forth in this Section 4 in
accordance with the essential intent and principles hereof, then, in each
such case, the Corporation at its expense shall appoint a firm of
independent public accountants of recognized national standing (which may be
the regular auditors of the Corporation), which shall give its opinion as to
the adjustment, if any, on a basis consistent with the essential intent and
principles established in this Section 4, necessary to preserve, without
dilution, the conversion rights of the holders of Series B Preferred set
forth in this Section 4. Upon receipt of such opinion, the Corporation will
promptly mail a copy thereof to the holders of Series B Preferred and shall
make the adjustments described therein.
(v) The provisions of clauses (i), (ii) and (iii) shall
similarly apply to successive events of the type described therein. All
calculations under this Section 4(e) shall be made to the nearest cent or to
the nearest one hundredth (1/100) of a share, as the case may be.
(f) Minimal Adjustments. No adjustment in the Conversion
Price for any Series B Preferred need be made if such adjustment would
result in a change in the Conversion Price of less than 1%. Any adjustment
of less than 1% which is not made shall be carried forward and shall be made
at the time of and together with any subsequent adjustment which, on a
cumulative basis, amounts to an adjustment of 1% or more in the Conversion
Price.
(g) No Impairment. The Corporation will not through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to
be observed or performed hereunder by the Corporation, but will at all times
in good faith assist in the carrying out of all the provisions of this
Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of
Series B Preferred against impairment. This provision shall not restrict
the Corporation's right to amend its Certificate of Incorporation with the
requisite shareholder consent.
(h) Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Conversion Rate for Series B
Preferred pursuant to this Section 4, the Corporation at its expense shall
promptly compute such adjustment or readjustment in accordance with the
terms hereof and prepare and furnish to each holder of Series B Preferred a
certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. The
Corporation shall, upon written request at any time of any holder of Series
B Preferred, furnish or cause to be furnished to such holder a like
certificate setting forth (i) all such adjustments and readjustments, (ii)
the Conversion Rate at the time in effect, and (iii) the number of shares of
Common Stock and the amount, if any, of other property which at the time
would be received upon the conversion of such holder's shares of Series B
Preferred.
(i) Notices of Record Date and Proposed Liquidation
Distribution. In the event of any taking by the Corporation of a record of
the holders of any class of securities for the purpose of determining the
holders thereof who are entitled to receive any dividend (other than a cash
dividend) or other distribution, any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities
or property or to receive any other right, the Corporation shall mail to
each holder of Series B Preferred at least 30 days prior to such record
date, a notice specifying the date on which any such record is to be taken
for the purpose of such dividend or distribution or right, and the amount
and character of such dividend, distribution or right. In the event of a
liquidation distribution pursuant to Section 2 hereof, the Corporation shall
mail to each holder of Series B Preferred at least 30 days prior to the
record date applicable to such distribution a notice (i) certifying as to
(x) the anticipated aggregate proceeds available for distribution to holders
of Series B Preferred and Common Stock, (y) the amount expected to be
distributed pursuant to Section 2 in respect of each share of each
outstanding series of Series B Preferred and each share of Common Stock and
(z) the amount expected to be distributed pursuant to Section 2 in respect
of each share of outstanding Series B Preferred if the holder of Series B
Preferred converted such share of Series B Preferred into Common Stock
immediately prior to the liquidation distribution and (ii) stating that in
connection with such liquidation distribution the holders of shares of
Series B Preferred may prior to such liquidation distribution convert their
shares of Series B Preferred into Common Stock at the applicable Conversion
Rate.
(j) Notices. Any notice required by the provisions of this
Section 4 to be given to the holder of shares of the Series B Preferred
shall be deemed given if deposited in the United States mail, postage
prepaid, and addressed to each holder of record at such holder's address
appearing on the Corporation's books.
(k) Payment of Taxes. The Corporation will pay all taxes
(other than taxes based upon income) and other governmental charges that may
be imposed with respect to the issue or delivery of shares of Common Stock
upon conversion of shares of Series B Preferred, excluding any tax or other
charge imposed in connection with any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that in which shares
of Series B Preferred so converted were registered.
5. Redemption.
(a) Optional Redemption by Corporation. The shares of the
Series B Preferred are redeemable at the option of the Corporation in whole
or in part at any time and from time to time after March [__], 2001, at a
redemption price of $10.00 per share plus an amount equal to the dividends
accrued and unpaid (including interest, if any) thereon to the redemption
date. In case only a part of the Series B Preferred Stock at the time
outstanding is to be redeemed, the shares selected shall be allocated among
all of the holders of the Series B Preferred at the time outstanding in
proportion to their respective holdings. At least 30 days in advance of the
date designated for any redemption pursuant to this paragraph (a), the
Corporation shall mail or deliver notices of such redemption to the holders
of record of the shares so to be redeemed at their respective addresses as
shown on the books of the Corporation.
(b) Redemption at Option of Holders. If the Charter
Amendment has not occurred prior to December 31, 2000, then at any time
after December 31, 2000 and prior to the Charter Amendment the Corporation
shall, upon the written request (a "Redemption Request") of the holders of
at least 50% of the shares of Series B Preferred issued pursuant to the
Securities Purchase Agreement, redeem all of the then outstanding shares of
the Series B Preferred at the redemption price of $10.00 per share, plus all
dividends accrued and unpaid (including interest, if any) on such Series B
Preferred up to the date fixed for redemption, upon giving the notice
hereinafter provided. "Charter Amendment" means an amendment to the
Corporation's Certificate of Incorporation providing for an increase in the
number of shares of Common Stock that the Corporation is authorized to issue
so that the number thereof is at least equal to the sum of (i) the number of
shares of Common Stock that were outstanding or reserved for issuance
immediately prior to the issuance of any share of Series B Preferred
pursuant to the Securities Purchase Agreement plus (ii) the number of shares
of Common Stock that would be required to be issued immediately after the
issuance of all shares of Series B Preferred issued pursuant to the
Securities Purchase Agreement if all such shares of Series B Preferred were
converted at such time plus (iii) the number of shares of Common Stock
issuable pursuant to the terms of all warrants referred to in the Securities
Purchase Agreement. Not less than 30 days after receipt of a Redemption
Request, a notice specifying the time and place fixed for redemption of the
Series B Preferred shall be given by mail or delivered to the holders of
record of the shares of Series B Preferred Stock selected for redemption at
their respective addresses as shown on the books of the Corporation. The
time so fixed for redemption shall be not less than 30 days after the date
of such notice.
(c) Effect of Redemption. Upon such date as the Board of
Directors shall designate for payment of the redemption price (unless the
Corporation shall default in the payment of the redemption price set forth
in the Redemption notice), the shares of Series B Preferred redeemed shall
cease to be deemed outstanding and the holders of certificates therefor
shall have no voting or other rights with respect to such shares except the
right to receive the moneys payable upon such redemption from the
Corporation, without interest thereon, upon surrender (and endorsement, if
required by the Corporation) of their applicable stock certificates. Upon
redemption of the Series B Preferred in the manner set forth herein, the
Series B Preferred Stock so redeemed by the Corporation shall be cancelled,
shall not be reissued and shall cease to be a part of the authorized shares
of the Corporation.
(d) Limitation on Redemption and Dividends. The option and
obligation of the Corporation to redeem shares of the Series B Preferred
Stock under paragraphs (a) and (b) hereof, shall be subject to the
restrictions imposed by applicable law or any provision of any agreement now
or hereafter existing relating to the indebtedness of the Corporation for
borrowed money, unless such provision shall be waived. In the event that
the Corporation shall fail to redeem any shares of Series B Preferred Stock
required to be redeemed under paragraph (b) hereof, then, until such shares
are redeemed, dividends shall accrue on all shares at a rate equal to 10%
compounded semi-annually from the date such redemption price is required to
be paid to the date payment is made.
6. Covenants. In addition to any other rights provided by law,
o long as any shares of Series B Preferred shall be outstanding, the
Corporation shall not, without first obtaining the affirmative vote or
written consent of the holders of not less than a majority of such
outstanding shares of Series B Preferred:
(a) Certificate and Bylaws. Amend or repeal any provision
of, or add any provision to, this Corporation's Certificate of Incorporation
or Bylaws if such action would adversely alter or change the preferences,
rights, privileges or powers of, or the restrictions provided for the
benefit of, such shares of Series B Preferred, voting as a class;
(b) Authorized Shares. Increase or decrease the authorized
number of shares of Series B Preferred or increase or decrease the
authorized number of shares of preferred stock of the Corporation;
(c) Senior Securities. Make any authorization or any
designation, whether by reclassification or otherwise, of any new class or
series of stock or any other securities convertible into equity securities
of the Corporation ranking senior to the Series B Preferred in right of
redemption, liquidation preference, voting or dividends or any increase in
the authorized or designated number of any such class or series; or
(d) Distribution. Redeem or repurchase any shares of Common
Stock (except for acquisitions of Common Stock by the Corporation pursuant
to agreements which permit the Corporation to repurchase such shares upon
termination of services to the Corporation or its affiliates).
7. Status of Converted Stock. In the event any shares of
Series B Preferred shall be converted pursuant to Section 4 hereof, the
shares so converted shall be cancelled and shall not be issuable by the
Corporation, and any declared but unpaid dividends (whether or not
declared) with respect to such converted shares shall be cancelled. The
Certificate of Incorporation of the Corporation may be appropriately
amended from time to time to effect the corresponding reduction in the
Corporation's authorized capital stock.
8. Absence of Charter Amendment. To the extent that the rights
of the holders of Series B Preferred set forth in Sections 1, 2 and 3
depend upon or relate to the number of shares of Common Stock into which
the Series B Preferred may be converted from time to time, such rights
shall be construed as if the Corporation has at all times a sufficient
number of shares of Common Stock authorized and reserved for issuance to
satisfy such conversion rights notwithstanding the fact that a sufficient
number of such shares of Common Stock may not be authorized and reserved
because of the failure of the Charter Amendment to have been effected or
for any other reason."
C. Date of Adoption. The above resolutions were duly adopted on
March [___], 2000.
D. Due Adoption. The above resolutions were duly adopted by the
Corporation's Board of Directors.
IN WITNESS WHEREOF, the undersigned has executed this document
this ____ day of _______________ and affirms that the facts contained herein
are true under penalty of perjury.
ARINCO COMPUTER SYSTEMS INC.
By:
Name:
Title:
ATTEST:
Name:
Title: Secretary
<PAGE>
LIMITED PARTNERSHIP AGREEMENT
OF
CULMEN TECHNOLOGY PARTNERS, L.P.
This Limited Partnership Agreement ("Agreement") of Culmen Technology
Partners, L.P. is made and entered into effective as of the ___ day of
March, 2000 (the "Effective Date"), by and among CTP, Inc., a Delaware
corporation ("CTP"), as the general partner and, as limited partners, each
person whose name is subscribed to a signature page of this Agreement,
designated as a limited partner, and whose signature page is executed by the
General Partner (as herein defined). The general partner and the limited
partners are sometimes referred to herein individually as a "Partner" and
collectively as the "Partners".
WITNESSETH:
For and in consideration of the mutual covenants set forth herein and
for other good and valuable consideration, the adequacy, receipt, and
sufficiency of which are hereby acknowledged the Partners hereby agree as
follows:
ARTICLE I
ORGANIZATION AND PURPOSE
Section 1.01. Formation of Limited Partnership. The Partners hereby
agree to become partners and to form a limited partnership (the
"Partnership") pursuant to Article 6132a-1 Tex. Rev. Civ. Stat. Ann., known
as the Texas Revised Limited Partnership Act (the "Act"). CTP shall be the
general partner and is hereinafter sometimes referred to as the "General
Partner". Those persons executing this Agreement as limited partners shall
be the limited partners and are hereinafter sometimes referred to
individually as a "Limited Partner" or collectively as the "Limited
Partners".
Section 1.02. Name. The name of the Partnership shall be Culmen
Technology Partners, L.P. All business and affairs of the Partnership shall
be conducted solely under, and all Partnership Assets (as that term is
defined in Section 1.04) shall be held solely in, such name unless otherwise
determined by the General Partner.
Section 1.03. Effective Date and Term. The Partnership shall be in
effect for a term beginning on the Effective Date and shall continue under
this Agreement (as amended from time to time) until dissolved upon the
occurrence of an event that causes the dissolution of the Partnership in
accordance with the provisions of this Agreement (unless continued as
provided herein), and thereafter to the extent provided by applicable law,
until wound up and terminated as provided herein.
Section 1.04. Purposes and Scope of Business. The business and
purposes of the Partnership are to buy, sell, exchange or otherwise acquire,
hold, invest in, and deal with the common stock and/or preferred stock of
Arinco Computer Systems, Inc. (the "Company") and hold other securities of
the Company that constitute proceeds thereof. Subject to the terms and
conditions of this Agreement, the Partnership shall have the power and
authority to do all such other acts and things as may be necessary,
desirable, expedient, convenient for, or incidental to, the furtherance and
accomplishment of the foregoing objectives and purposes and for the
protection and benefit of the Partnership. The assets of the Partnership,
whether now or hereafter owned, are hereinafter sometimes referred to as the
"Partnership Assets".
Section 1.05. Documents. The General Partner is hereby authorized to
execute a certificate of limited partnership of the Partnership
("Certificate of Limited Partnership") in accordance with the Act and cause
the same to be filed in the office of the Secretary of State of the State of
Texas in accordance with the provisions of the Act. The Partnership shall
promptly execute and duly file with the proper offices in each state in
which the Partnership may conduct the activities hereinafter authorized, one
or more certificates as required by the laws of each such state in order
that the Partnership may lawfully conduct the business, purposes, and
activities herein authorized in each such state, and the Partnership shall
take any other action or measures necessary in such state or states for the
Partnership to conduct such activities.
Section 1.06. Principal Place of Business. The principal place of
business of the Partnership shall be 201 Main Street, Suite 1955, Fort
Worth, Texas 76102 or at such other place or places as may be approved by
the General Partner. The General Partner shall be responsible for
maintaining at the Partnership's principal place of business those records
required by the Act to be maintained there.
Section 1.07. Registered Agent and Office. The Registered Agent (as
defined in the Act) for the Partnership shall be Michael R. Gleason. The
Registered Office (as defined in the Act) of the Partnership shall be 201
Main Street, Suite 1955, Fort Worth, Texas 76102.
Section 1.08. Certain Definitions.
(a) "Accounting Date" shall mean the close of business on the date of
(i) the acquisition of an additional interest (including contributions by
the Partners in a manner other than in accordance with their then existing
Percentage Interests) in the Partnership by any new or existing Partner in
exchange for more than a de minimis capital contribution, (ii) the
distribution by the Partnership to a Partner (including, without limitation,
distributions pursuant to Section 4.09(b) and the redemption of all or a
portion of a Partner's interest pursuant to Section 6.02 hereof) of more
than a de minimis amount of Partnership Assets (including cash) unless such
distribution is to all Partners in accordance with their Percentage
Interests, and (iii) the termination of the Partnership for federal income
tax purposes pursuant to Section 708(b)(1)(B) of the Code (as defined
herein).
(b) "Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday, and Friday which is not a day on which commercial banks are
authorized or required to be closed under the laws of the State of Texas.
(c) "Net Income" shall mean, with respect to the Partnership at the close
of each fiscal year, the excess of all income and gain for such fiscal year
over the aggregate of all expenses, deductions, and losses for such fiscal
year.
(d) "Net Value" of any Partnership Asset shall be its Value (determined in
(f) below) less the sum of (i) all debt of the Partnership directly related
to such Partnership Asset (such as, for securities, the margin debt thereon)
and (ii) a pro rata share (as among all Values of all Partnership Assets) of
all general debt of the Partnership not otherwise provided for under (i)
above.
(e) "Valuation Date" shall mean any date that the Partnership Assets are
valued for any reason.
(f) "Value" of (i) any security shall be:
(A) for marketable securities listed on a national
securities exchange or authorized for trading on the National
Market System Quotations, the last sales price on the
Valuation Date, or in the absence of a sale on such date, the
last bid price on the Valuation Date;
(B) for marketable securities traded in the over-the-counter
market and reported in the National Association of Securities
Dealers' Automated Quotation System, the closing bid price on
the Valuation Date as reported by such system;
(C) for securities not specified in (A) or (B) above, and
for which prices are regularly quoted (on a daily basis) by
at least two independent recognized dealers, the most recent
market prices as reported by such dealers; and
(D) for all other securities, the cost of or such other
value as reasonably determined by the General Partner.
Foreign securities listed on a recognized exchange shall be
included in (A) above; those regularly reported on a
recognized automated quotation system shall be included in
(B) above; and those regularly quoted (on a daily basis) by
at least two independent recognized dealers shall be included
in (C) above.
(ii) any other Partnership Asset shall be the market value of such
Partnership Asset as of the Valuation Date as reasonably determined by
the General Partner.
ARTICLE II
OPERATIONS
Section 2.01. Management of Partnership.
(a) The right to manage, control, and conduct the business and affairs
of the Partnership shall be vested solely in the General Partner. The
Limited Partners shall not participate in the control of the Partnership and
under no circumstances may any Limited Partner sign for or bind the
Partnership. Without limiting the generality of the foregoing, and
notwithstanding anything to the contrary contained in this Agreement, the
General Partner shall have the exclusive authority to act for and on behalf
of the Partnership, and no third party shall ever be required to inquire
into the authority of the General Partner to take such action on behalf of
the Partnership. Except as expressly limited in this Agreement, the General
Partner shall have the rights, authority, and powers of general partners
with respect to the Partnership business and the Partnership Assets as set
forth in the Act as in effect upon the Effective Date of this Agreement.
The General Partner shall not be required to devote its full time and
attention to the business of the Partnership, but only such time as it deems
necessary for the proper conduct of the Partnership's affairs.
(b) The General Partner shall not be authorized to cause the Partnership
to borrow money or otherwise incur obligations for the account of the
Partnership, or pledge or encumber all or any portion of the Partnership
Assets as security for indebtedness or otherwise, without the Approval of
the Partners (as defined herein).
(c) As used in this Agreement, "Approved by the Partners", "Approval
of the Partners", and other similar capitalized terms shall mean the
approval or consent of Partners holding a majority of the Percentage
Interests in the Partnership. If any Partner or Partners holding a majority
of the Percentage Interests in the Partnership approve of, consent to, or
otherwise take any action requiring Approval of the Partners, such action
shall neither require any further polling of any other Partners, nor require
any further approval, consent, or action of any other Partners.
Section 2.02. Affiliated Transactions. The General Partner shall have
the right to cause the Partnership to enter into contracts or otherwise deal
with any Partner or affiliate of any Partner in any capacity, including,
without limitation, in connection with the financing, management, and
development of the Partnership Assets, except that the terms of any such
arrangement shall be commercially reasonable and competitive with amounts
that would be paid to third parties on an "arms-length" basis.
Section 2.03. Expenses. The Partnership shall pay or reimburse the
General Partner and the Tax Matters Partner (as defined in Section 2.05) for
all direct, out-of-pocket expenses incurred by it with respect to its duties
to the Partnership under this Agreement, including, without limitation,
salaries, in-house and outside accounting expenses, insurance premiums
attributable directly to the Partnership, in-house and outside legal fees,
and other direct costs associated with the formation and operation of the
Partnership.
Section 2.04. Exculpations; Indemnities.
(a) Neither the Partners, the Tax Matters Partner, their affiliates
nor any of their respective shareholders, officers, directors, partners,
members, managers, employees or agents (individually a "Covered Person")
shall be liable to the Partnership, any Partner, or any other person for any
act or omission (including any negligent act or omission) taken or suffered
by such Covered Person in good faith and in the belief that such act or
omission is in or is not opposed to the best interests of the Partnership,
provided, that such act or omission is not fraud, willful misconduct, or a
knowing violation of this Agreement by such Covered Person. No Covered
Person shall be liable to the Partnership, any Partner, or any other person
for any action taken by any other Partner, nor shall any Covered Person be
liable to the Partnership, any other Partner, or any other person for any
action of any employee or agent of the Covered Person, provided, such action
is within the scope of the purposes of the Partnership and the Covered
Person seeking exculpation satisfies the parameters of the preceding
sentence.
(b) To the fullest extent allowed or permitted under any provision of
applicable law, including, without limitation, the Act, the Partnership
shall indemnify, defend, and hold harmless each Partner, its affiliates and
their respective shareholders, officers, directors, partners, members,
managers, employees or agents (individually an "Indemnitee") to the extent
of the Partnership Assets, from and against any losses, expenses, judgments,
fines, settlements, and damages incurred by the Partnership or such
Indemnitee arising out of any claim based upon acts (including, without
limitation, negligent acts or omissions) performed or omitted to be
performed by the Partnership or such Indemnitee in connection with the
business of the Partnership, including, without limitation, costs, expenses,
and attorneys' fees expended in the settlement or defense of any such claim.
All decisions of the Partnership concerning any action allowed or permitted
under applicable law concerning the indemnity of any person or entity by the
Partnership shall be made as Approved by the Partners.
Section 2.05. Tax Matters Partner. The General Partner shall act as
the "Tax Matters Partner" for federal income tax purposes. The Tax Matters
Partner shall mean the Partner (a) designated as the "tax matters partner"
within the meaning of Section 6231(a)(7) of the Internal Revenue Code of
1986, as amended from time to time (or any corresponding provisions of
succeeding law, collectively the "Code") and (b) whose responsibilities as
Tax Matters Partner include, where appropriate, commencing on behalf of the
Partnership certain judicial proceedings regarding Partnership federal
income tax items and informing all Partners of any administrative or
judicial proceeding involving federal income taxes. In exercising its
responsibilities as Tax Matters Partner, the General Partner shall have the
final decision making authority with respect to all federal income tax
matters involving the Partnership. Any direct out-of-pocket expense
incurred by the Tax Matters Partner in carrying out its responsibilities and
duties under this Agreement shall be allocated to and charged to the
Partnership as an expense of the Partnership for which the Tax Matters
Partner shall be reimbursed.
ARTICLE III
FINANCING
Section 3.01. Capital Contributions.
(a) Each Partner agrees to contribute (the "Initial Capital
Contributions") to the capital of the Partnership the amount in cash set
forth on such Partner's signature page attached hereto.
(b) If at any time the General Partner determines, in its sole
discretion, that additional funds are needed for (i) any direct
out-of-pocket costs and expenses incurred by the Partnership in connection
with the formation, financing, and operation of the Partnership, or (ii) the
normal day-to-day business and affairs of the Partnership or for any other
Partnership purpose as determined in the sole discretion of the General
Partner, then from time to time the General Partner may make a written call
for such funds ("Call"). Within thirty (30) days after the General Partner
gives written notice of the Call, the Partners may, but shall not be
obligated to, make additional capital contributions to the Partnership, pro
rata in accordance with their Percentage Interests (with each such
contribution being referred to as an "Additional Capital Contribution"). If
any Partner elects not to deliver (the "Non-Contributing Partner") to the
General Partner for the use of the Partnership his or its pro rata portion
of any Call (with such portion not being contributed being referred to
herein as the "Defaulted Amount") within the time prescribed above, the
other Partners shall have the right, but not the obligation, without further
notice, to advance for his or its own Capital Account all or a portion of
the Defaulted Amount (with any Partner contributing a portion of the
Defaulted Amount being referred to as a "Contributing Partner"); provided,
however, that if more than one Partner desires to be a Contributing Partner
and to advance a portion of the Defaulted Amount, then unless otherwise
agreed among the Contributing Partners, each such Contributing Partner shall
only advance his or its pro rata portion, in accordance with relative
Percentage Interests, of the Defaulted Amount as among all Contributing
Partners. Each Partner shall have the right to contribute his or its pro
rata portion of any Additional Capital Contributions (except to the extent
such Additional Capital Contribution is provided from a New Partner as part
of his or its initial contribution to the capital of the Partnership) pro
rata in accordance with his or its then existing Percentage Interest in
order to maintain such Partner's Percentage Interest in the Partnership.
Section 3.02. Capital Accounts. The amount of a Partner's capital
account ("Capital Account") in the Partnership shall be determined in
accordance with Regulations Section 1.704-1(b)(2)(iv), including by:
(a) crediting to such account (i) all contributions to the Partnership
made by or on behalf of such Partner or his or its predecessor in interest,
including the fair market value of any property contributed (less any
liabilities assumed by the Partnership or to which any property may be
subject) and (ii) all gains and income of the Partnership allocated to such
Partner or his or its predecessor in interest; and
(b) debiting to such account (i) all distributions from the
Partnership made to or on behalf of such Partner or his or its predecessor
in interest, including the fair market value of any property distributed
(less any liabilities assumed by the Partner or to which any property may be
subject) and (ii) all losses and deductions of the Partnership allocated to
such Partner or his or its predecessor in interest.
Section 3.03. Adjustment for Fair Market Value of Assets.
(a) The value of all Partnership Assets on the books of the
Partnership shall be adjusted by the General Partner to equal their
respective Values as of each Accounting Date, or if such Accounting Date is
not a Business Day, then as of the last Business Day prior to such
Accounting Date.
(b) Immediately before any distribution under Section 6.02, the
Capital Accounts of all the Partners shall be adjusted pursuant to Section
4.04(a) to reflect the aggregate net adjustment as if the Partnership
recognized gain and loss equal to the amount of such net adjustment.
Section 3.04. Limited Liability of Limited Partners. Except as
provided in Section 4.10 but notwithstanding any other provision contained
in this Agreement to the contrary, the liability of each Limited Partner for
any of the debts, losses, or obligations of the Partnership shall be limited
to the amount of the sum of such Limited Partner's capital contributions
pursuant to Section 3.01 hereof. Accordingly, except as provided in Section
4.10, no Limited Partner shall be obligated to provide additional capital to
the Partnership or its creditors by way of contribution, loan, or otherwise
beyond the amount of the capital contributions required of such Limited
Partner pursuant to Section 3.01 hereof. Except as provided in the Act, no
Limited Partner shall have any personal liability whatsoever, whether to the
Partnership or any third party, for the debts of the Partnership or any of
its losses beyond the amount of the Limited Partner's capital contributions.
Section 3.05. Treatment of Capital Contributions. Except as provided
in this Agreement to the contrary, no Partner shall be entitled to interest
on his or its contributions to the capital of the Partnership nor shall any
Partner be entitled to demand the return of all or any part of such
contributions to the capital of the Partnership.
Section 3.06. Benefits of Agreement. Nothing in this Agreement, and,
without limiting the generality of the foregoing, in this Article III,
expressed or implied, is intended or shall be construed to give to any
creditor of the Partnership or to any creditor of any Partner or any other
person or entity whatsoever, other than the Partners and the Partnership,
any legal or equitable right, remedy, or claim under or in respect of this
Agreement or any covenant, condition, or provision herein contained, and
such provisions are and shall be held to be for the sole and exclusive
benefit of the Partners and the Partnership.
ARTICLE IV
ACCOUNTING, ALLOCATIONS, AND CURRENT DISTRIBUTIONS
Section 4.01. Percentage Interests. Except as adjusted pursuant to
Section 4.02, for purposes of allocating profits and losses in accordance
with Section 4.04 and for purposes of distributions under Section 4.09, each
Partner shall have the percentage interest in the Partnership (collectively
the "Percentage Interests" and individually, a "Percentage Interest") set
forth on such Partner's signature page attached hereto.
Section 4.02. Adjustments to Percentage Interests.
(a) If (i) any Partner elects to become a Contributing Partner under
Section 3.01(b) and contributes a share of the Defaulted Amount, (ii) more
than a de minimis contribution is made other than pro rata by Percentage
Interests, as among the Partners, (iii) a New Partner is admitted to the
Partnership in accordance with Section 5.05, or (iv) a distribution is made
to a Partner in accordance with Section 4.09(b) or 6.02 (with each such
event described in Section 4.02(a)(i), (ii), (iii) or (iv) being referred to
as an "Adjusting Event"), then the Percentage Interests of the Partners
shall be immediately adjusted such that the Percentage Interest of each
Partner equals a fraction, expressed as a percentage, in which the numerator
equals the Current Value (as defined in Section 4.02(b)) of such Partner's
interest in the Partnership, and the denominator equals the Net Value of the
Partnership Assets (as defined in Section 4.02(b)). If the Percentage
Interests of any Partners are adjusted pursuant to this Section 4.02(a), no
Partner shall have the right to modify, rectify, or undo such adjustments
thereafter, and such adjustments shall be made without the need for any
further act or writing to effect any such adjustment. Each Partner hereby
appoints the General Partner as his or its duly authorized agent and
attorney-in-fact for purposes of preparing and executing any amendments to
this Agreement necessary or desirable to reflect any adjustment of
Percentage Interests under this Section 4.02(a). The rights granted to any
Partner under this Section 4.02 shall be such Partner's sole and exclusive
remedy for seeking relief with respect to any Adjusting Event.
(b) For purposes of this Agreement, the "Net Value of the Partnership
Assets" shall mean the Net Value of all of the Partnership Assets at the
time the Adjusting Event occurs, as determined by the General Partner in its
sole discretion, and such Net Value of the Partnership Assets shall include
the value of the contributions made in connection with the Adjusting Event.
The "Current Value" of any Partner's interest in the Partnership shall be a
dollar amount equal to the sum of (i) an amount equal to such Partner's
Percentage Interest immediately prior to the Adjusting Event multiplied by
the Net Value of the Partnership Assets determined above excluding the net
fair market value (as determined by the General Partner) of any
contributions associated with the Adjusting Event, plus (ii) the net fair
market value (as determined by the General Partner) of any contributions
made by such Partner associated with the Adjusting Event. Each Partner's
Percentage Interest shall be immediately adjusted to reflect such valuation
by the General Partner, effective as of the date of such Adjusting Event.
Section 4.03. Tax Status and Reports.
(a) Notwithstanding any provision contained in this Agreement to the
contrary, solely for federal income tax purposes, each of the Partners
hereby recognizes that the Partnership will be subject to all provisions of
Subchapter K of the Code; provided, however, that the filing of United
States Partnership Returns of Income shall not be construed to extend the
purposes of the Partnership or expand the obligations or liabilities of the
Partners.
(b) The General Partner or, at its discretion, an accountant
("Accountant") selected by the General Partner shall prepare or cause to be
prepared all tax returns and statements, if any, that must be filed on
behalf of the Partnership with any taxing authority and shall timely file
such returns or statements.
Section 4.04. Allocations.
(a) For accounting and federal and (if any) state income tax purposes,
all income, deductions, credits, gains and losses shall be allocated to the
Partners pro rata in accordance with their respective Percentage Interests.
(b) Notwithstanding subsection (a) above, any loss or deductions
attributable to any Partnership recourse liability (as defined in
Regulations Section 1.752-1(a)(i)) ("Recourse Debt") must be specially
allocated to any Partner who bears the economic risk of loss with respect to
the Recourse Debt to which such loss or deductions are attributable. If any
allocations are made to any Partner pursuant to the foregoing sentence, then
after any allocations required by Sections 4.05 and 4.06 hereof have been
made but prior to allocations pursuant to Section 4.04(a), income shall be
allocated to such Partner until on a cumulative basis an aggregate amount of
income equal to such cumulative deductions and losses has been allocated to
each such Partner.
Section 4.05. Certain Book Value/Tax Differences. In accordance with
Section 704(c) of the Code and the applicable Regulations thereunder,
income, gain, loss, deduction, and tax depreciation with respect to any
property contributed to the capital of the Partnership, or with respect to
any property which has a book value different than its adjusted tax basis,
shall, solely for income tax purposes, be allocated among the Partners so as
to take into account any variation between the adjusted tax basis of such
property to the Partnership and the book value of such property.
Section 4.06. Minimum Gain and Income Offsets.
(a) Definitions.
(i) "Partner Minimum Gain" shall be "partner nonrecourse
debt minimum gain," as defined in Regulations Section
1.704-2(i)(2) and determined in accordance with Regulations
Sections 1.704-2(i)(3) and 1.704-2(k).
(ii) "Partner Nonrecourse Debt" has the meaning set forth in
Regulations Sections 1.704-2(b)(4) and 1.704-2(i).
(iii)"Partner Nonrecourse Deduction" has the meaning set
forth in Regulations Section 1.704-2(i).
(iv) "Partnership Minimum Gain" has the meaning set forth in
Regulations Section 1.704-2(d) and shall be determined in
accordance with the provisions of Regulations Section 1.704-2(k).
(v) "Regulations" means the temporary and permanent Income
Tax Regulations promulgated under the Code, as such regulations
may be amended from time to time (including corresponding
provisions of succeeding Regulations).
(b) Minimum Gain.
(i) Notwithstanding any other provision of this Agreement to the
contrary, if the Partnership Minimum Gain on the last day of any fiscal
year is less than the Partnership Minimum Gain on the last day of the
immediately preceding fiscal year, then (before any other allocation of
Partnership items for such year under this Agreement, other than as
provided in paragraph (ii) below) there shall be specially allocated to
each Partner items of Partnership income and gain for such year (and,
if necessary, subsequent fiscal years) in an amount equal to such
Partner's share of the net decrease in Partnership Minimum Gain
(determined in accordance with Regulations Section 1.704-2(g)). The
items to be so allocated shall be determined in accordance with
Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2)(i) and (iii).
This Section 4.06(b)(i) is intended to comply with the minimum gain
chargeback requirement in Regulations Section 1.704-2(f) and shall be
interpreted consistently therewith.
(ii) Subsequent to any allocations under Section 4.06(b)(i) above,
other than allocations of gain from the disposition of property subject
to Partner Nonrecourse Debt, if Partner Minimum Gain on the last day of
any fiscal year is less than the Partner Minimum Gain on the last day
of the immediately preceding fiscal year, then, except as provided
herein, each Partner shall be specially allocated items of Partnership
income and gain for such year (and, if necessary, subsequent fiscal
years) in an amount equal to that Partner's share, if any, (determined
in accordance with Regulations Section 1.704-2(i)(4)) of the net
decrease in Partner Minimum Gain (such net decrease to be determined in
a manner consistent with the provisions of Regulations Section
1.704-2(d) and 1.704-2(g)(3)). The items to be so allocated shall be
determined in accordance with the provisions of Regulations Sections
1.704-2(i)(4) and 1.704-2(j)(2)(ii) and (iii). Notwithstanding the
foregoing, no such special allocations of income and gain shall be made
to the extent that the net decrease in Partner Minimum Gain described
above arises because the liability ceases to be Partner Nonrecourse
Debt due to a conversion, refinancing, or other change in the debt
instrument that causes it to become partially or wholly a nonrecourse
liability within the meaning of Regulations Section 1.752-1(a)(2).
This Section 4.06(b)(ii) is intended to comply with the chargeback and
other provisions of Regulations Section 1.704-2(i) and shall be
interpreted consistently therewith.
(c) Qualified Income Offset. Notwithstanding any other provision of
this Agreement, if during any fiscal year any Partner (i) is allocated
pursuant to Code Section 706(d) or Regulations Section 1.751-1(b)(2)(ii) any
loss, items of loss, deductions, or Code Section 705(a)(2)(B) expenditures,
(ii) is distributed any cash or property from the Partnership and such
distributions exceed offsetting increases to such Partner's Capital Account
that are reasonably expected to occur during such year, or (iii) receives
any other adjustment, allocation, or distribution described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5), or (6) and, as a result of such
adjustment, allocation, or distribution, such Partner has a Qualified Income
Offset Amount (as hereinafter defined), then items of income and gain
(including gross income) for such fiscal year or other period (and, if
necessary, subsequent fiscal years) shall (prior to any allocation pursuant
to Section 4.04 hereof) be allocated to such Partner in an amount equal to
his Qualified Income Offset Amount; provided, however, that any allocation
of income or gain shall be required under this sentence only if and to the
extent that such Partner would have a Qualified Income Offset Amount after
all other allocations provided for in this Agreement have been tentatively
made as if Sections 4.06(b) and (c) were not contained herein. As used
herein, the term "Qualified Income Offset Amount" for a Partner means the
excess, if any, of (x) the negative balance a Partner has in its Capital
Account following the adjustment, allocation, or distribution described in
the preceding sentence, over (y) the maximum amount that it is obligated (or
is deemed to be obligated) to restore to the Partnership upon liquidation as
determined in accordance with Regulations Sections 1.704-2(f), (g), and (i).
This Section 4.06(c) is intended to satisfy the provisions of Regulations
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.
Section 4.07. Accounting.
(a) The fiscal year of the Partnership shall end on the last day of
December of each year.
(b) The books of account of the Partnership shall be kept and
maintained at all times at the principal place of business of the
Partnership or at such other place or places approved by the General
Partner. The books of account shall be maintained according to federal
income tax principles using the accrual method of accounting, consistently
applied, and shall show all items of income and expense.
(c) If requested by any Partner, the General Partner shall cause a
balance sheet of the Partnership dated as of the end of the fiscal year and
a related statement of income or loss for the Partnership for such fiscal
year to be prepared by the Accountant and furnished, at the expense of the
Partnership, to each of the Partners on an annual basis, within ninety (90)
days after the close of each fiscal year.
(d) Each Partner shall have the right at reasonable times and upon
reasonable advance notice during usual business hours to audit, examine, and
make copies of or extracts from the books of account of the Partnership.
Such right may be exercised through any agent or employee of such Partner
designated by him or it or by an independent certified public accountant
designated by such Partner. Each Partner shall bear all expenses incurred
in any examination made on behalf of such Partner.
Section 4.08. Bank Accounts. Funds of the Partnership shall be
deposited in a Partnership account or accounts in the bank or banks as
selected by the General Partner. Withdrawals from bank accounts shall only
be made by the General Partner or such other parties as may be approved by
the General Partner.
Section 4.09. Current Distributions to Partners.
(a) Except as provided in Section 6.06 in connection with the
liquidation and termination of the Partnership or as may be provided in
accordance with subsection (b) below or Section 6.02, the General Partner
shall distribute funds at such times and in such amounts as it may
determine, in its sole discretion, provided that such funds shall be
distributed by the General Partner to the Partners in accordance with their
respective Percentage Interests at the time of the distribution. The General
Partner, with Approval of the Partners, may distribute undivided interests
in Partnership Assets in-kind, provided, that such distribution shall be
otherwise made in accordance with this Section 4.09(a).
(b) Subject to subsection (c) below but notwithstanding any other
provision in this Agreement to the contrary, if requested in writing by any
Partner, the General Partner shall distribute (subject to the availability
of distributable cash as determined by the General Partner is its sole and
absolute discretion) funds to such requesting Partner in an amount equal to
the product of (i) the highest federal income tax rates for an individual
residing in the State of Texas (taking into account any offsets allowed by
one authority for taxes paid to another authority), multiplied by (ii) the
total amount of Net Income allocated to such Partner for the prior fiscal
year of the Company. The amount of the tax distribution otherwise permitted
by this Section 4.09(b) shall be reduced by the aggregate amount or value of
distributions to such Partner pursuant to Section 4.09(a) or Section 6.02
during the prior fiscal year of the Partnership, and shall otherwise be
subject to any applicable restrictions on distributions to Partners in this
Agreement, the Act, the Code, or otherwise. The General Partner shall not
cause the Partnership to incur debt in order to obtain sufficient cash to
make a tax distribution to a Partner under this Section 4.09(b).
(c) In determining the amount of funds to distribute pursuant to this
Section 4.09, the General Partner may consider such factors as the need to
allocate funds to any reserves for Partnership contingencies or any other
Partnership purposes that the General Partner deems necessary or
appropriate.
Section 4.10. Tax Withholding.
(a) If at any time requested by the General Partner, each Partner and
each Substituted Partner (as defined in Section 5.03) shall deliver to the
Partnership (i) an affidavit, certificate, or other document (in form
specified in Treasury Regulations promulgated under Sections 1441-1446 of
the Code or otherwise) in form satisfactory to the General Partner that the
applicable Partner is not a "foreign person" within the meaning of the
applicable section of the Code or otherwise subject to withholding under the
provisions of any federal, state, local, foreign or other law, (ii) a
withholding certificate issued by the United States Internal Revenue Service
("IRS") pursuant to any section of the Code under which a withholding
certificate may be issued by the IRS, (iii) any other certificate that the
General Partner may reasonably request with respect to any such laws, (iv)
any other form reasonably requested by the General Partner relating to any
Partner's status under any applicable law, and/or (v) a copy of any tax
return or similar document of the applicable Partner that the General
Partner may reasonably request with respect to any such law.
(b) To the extent that any person (including without limitation the
Partnership or the General Partner) is required by any applicable law to
withhold or to make tax payments on behalf of or with respect to amounts
distributed or distributable to, items allocated or allocable to, or
otherwise for any Partner (each a "Tax Liability"), the General Partner may
cause the Partnership to make such tax payments (each a "Tax Advance") as so
required. At least ten (10) days, if commercially possible, prior to making
a Tax Advance on behalf of or with respect to a Partner, the General Partner
shall first notify such affected Partner. All Tax Advances made or deemed
made on behalf of a Partner from any amount not otherwise distributable to
such Partner shall be deemed to be a recourse loan to such Partner by the
Partnership and shall be due and payable immediately after such Tax Advance
is made by the Partnership, and if not repaid within three (3) days after
the Tax Advance is made by the Partnership, the Tax Advance shall bear
interest beginning on such third day at a rate equal to the lesser of (i)
fifteen percent (15%) per annum or (ii) the maximum rate permitted by law
until repaid.
(c) Notwithstanding anything to the contrary contained herein or in
any other agreement between or among Partners, each Partner hereby agrees to
indemnify, defend, and hold harmless the Partnership, the General Partner,
their respective Affiliates, and any other person who directly or indirectly
makes a Tax Advance or corresponding payment on behalf of such Partner from
and against any Tax Liability of or with respect to such Partner, at any
time, and this indemnity and hold harmless provision shall survive this
Agreement and the termination of the Partnership; provided however, that the
General Partner and its Affiliates shall not be indemnified hereunder for
any Tax Liabilities to the extent any of them has withheld or withdrawn
funds from the Partnership for purposes of making Tax Advances to satisfy
such Tax Liabilities, and misappropriated or converted the funds so withheld
or withdrawn. In the event of any claimed over-withholding, such Partner
shall be limited to an action against the applicable government agencies for
refund and hereby waives any claim or right of action against the General
Partner or the Partnership on account of such withholding.
(d) A payment to the Partnership or otherwise by a Partner with
respect to any Tax Advance relating to such Partner shall not be deemed to
be a capital contribution by such Partner and will in no way be considered
in the calculations used to determine distributions under this Agreement.
The General Partner may, and is hereby authorized to, withhold from any
distributions or payments otherwise due to a Partner from the Partnership
under this Agreement the amount of any Tax Advance made on behalf of such
Partner that as of such date has neither been repaid to the Partnership nor
been previously offset hereunder, and any amount withheld under this Section
4.10 shall be deemed for all purposes of this Agreement to have been
distributed or paid to such Partner. If any Partner does not repay any Tax
Advance within thirty (30) days of the General Partner giving such Partner a
written final demand for payment, then such Partner's Percentage Interest
may be forfeited in the sole discretion of the General Partner, and each
Partner hereby grants the General Partner power of attorney, which shall
survive each Partner's disability, to execute all documents to reflect such
forfeiture; provided, however, that the applicable Partner shall remain
liable to the Partnership or other Partners, as applicable, on a recourse
basis for the full amount of the Tax Advance unpaid plus accrued, unpaid
interest. Any Partner who does not repay a Tax Advance after a written
final demand has been given by the General Partner shall pay, in addition to
the Tax Advance and applicable interest, all expenses, including without
limitation reasonable attorneys fees, incurred by the Partnership, the
General Partner, and/or any other Partner in collecting the Tax Advance plus
interest and/or pursuing any other remedy provided in this Section 4.10 and
otherwise in this Agreement.
Section 4.11. Changes in Percentage Interests. If a Partner's
Percentage Interest changes during any fiscal year, the allocations to be
made pursuant to this Agreement shall be made in accordance with Section 706
of the Code, using any convention permitted by Section 706 of the Code and
the Regulations promulgated thereunder and selected by the General Partner
so as to equitably effectuate the allocations of this Article IV.
ARTICLE V
ASSIGNMENT
Section 5.01. Prohibited Transfers. Except as specifically provided
in this Article V, no Limited Partner may sell, transfer, assign, mortgage,
hypothecate, or otherwise encumber or permit or suffer any encumbrance of
all or any part of his or its interest in the Partnership unless prior
written consent is obtained from the General Partner, and no General Partner
may sell, transfer, assign, mortgage, hypothecate, or otherwise encumber or
permit or suffer any encumbrance of all or any part of his or its interest
in the Partnership without obtaining prior written Approval of the Partners.
Any attempt so to transfer or encumber any such interest shall be null and
void, ab initio. The Partners will be excused from accepting the
performance of and rendering performance to any person other than the
Partner hereunder (including any trustee or assignee of or for such Partner)
as to whom such prior written consent has not been rendered.
Section 5.02. Further Restrictions on Transfer.
(a) In the event of any assignment or transfer permitted under this
Article, the interest so assigned or transferred shall remain subject to all
terms and provisions of this Agreement; the assignee or transferee shall be
deemed, by accepting the interest so assigned or transferred, to have
assumed all the obligations hereunder relating to the interests or rights so
assigned or transferred and shall agree in writing to the foregoing if
requested by the General Partner. Any transferee or assignee of the
interest of a Partner shall be entitled only to receive distributions
hereunder until such transferee or assignee has been admitted as a
Substituted Partner; provided, however, that such transferee or assignee
shall be subject to the Additional Capital Contribution provisions of
Article III and that the Percentage Interest of such transferee or assignee
shall be subject to reallocation pursuant to Section 4.02 in the event of an
Adjusting Event. Until such transferee or assignee (other than an existing
Partner) is admitted to the Partnership as a Substituted Partner, the
Partner transferring all or any portion of his or its interest to such
assignee or transferee shall remain primarily and directly liable for the
performance of all his or its obligations under this Agreement. After the
admission of such assignee or transferee as a Substituted Partner, such
transferor Partner shall only be primarily and directly liable under this
Agreement or otherwise for any obligations or liabilities accruing prior to
the effective time of the admission of such Substituted Partner, unless such
transferor Partner is released in writing from such obligations or
liabilities by the General Partner and such release is Approved by the
Partners.
(b) Any Partner making or offering to make a transfer of all or any
part of his or its interest in the Partnership shall indemnify and hold
harmless the Partnership and all other Partners from and against any costs,
damages, claims, suits, or fees suffered or incurred by the Partnership or
any such other Partner arising out of or resulting from any claims by the
transferee of such Partnership interest or any offerees of such Partnership
interest in connection with such transfer or offer.
Section 5.03. Substituted Partner. An assignee or transferee (other
than an existing Partner) of the interest of a Partner may be admitted as a
substitute partner ("Substituted Partner") only with the written consent of
the General Partner, which such consent shall be granted or denied in the
sole discretion of the General Partner. Unless the assignee is already a
General Partner, any assignee of a Partnership interest to whose admission
such consent is given shall become and shall have only the rights and duties
of a Limited Partner and the assigned Partnership interest shall thereafter
be a Limited Partner's interest. Upon the receipt by the General Partner of
an appropriate supplement to this Agreement pursuant to which such
Substituted Partner agrees to be bound by all the terms and provisions of
this Agreement, the General Partner shall reflect the admission of a
Substituted Partner and the withdrawal of the transferring Partner, if
appropriate, by preparing a supplemental exhibit, dated as of the date of
such admission and withdrawal, and by filing it with the records of the
Partnership. Any Substituted Partner shall, if required by the General
Partner, prior to such admission, also execute any other documents requested
by the General Partner, including, without limitation, an irrevocable power
of attorney in form satisfactory to the General Partner appointing the
General Partner as such person's attorney-in-fact with full power to
execute, swear to, acknowledge, and file all certificates and other
instruments necessary to carry out the provisions of this Agreement,
including, without limitation, such undertakings as the General Partner may
require for the payment of all fees and costs necessary to effect any such
transfer and admission. Upon admission, such Substituted Partner shall be
subject to all provisions of this Agreement in the place and stead of his
assignor as if the Substituted Partner originally was a party to this
Agreement.
Section 5.04. Basis Adjustment. The Tax Matters Partner may cause, in
its sole and absolute discretion, the Partnership to elect pursuant to
Section 754 of the Code and the Regulations thereunder to adjust the basis
of the Partnership Assets as provided by Sections 743 or 734 of the Code and
the Regulations thereunder.
Section 5.05. Admission of Additional Partners.
(a) A new Partner (each a "New Partner") may be admitted to the
Partnership by the General Partner. Such New Partner shall (i) be admitted
for fair value, as determined by the General Partner in its reasonable
discretion and in a manner consistent with the reallocation of Percentage
Interests set forth in Section 4.02 and (ii) execute an appropriate
supplement to this Agreement pursuant to which he agrees to be bound by all
the terms and provisions of this Agreement.
(b) Upon the receipt of the supplement described in Section 5.05(a),
the General Partner shall reflect the admission of the New Partner and the
reallocation of Percentage Interests in the records of the Partnership. The
admission of a New Partner shall not cause the dissolution of the
Partnership.
Section 5.06. Other Restricted Transfers. Notwithstanding any other
provision herein to the contrary, unless prior written consent is given by
the General Partner, no transfer of any interest in the Partnership may be
made to any person who is related (within the meaning of Regulations Section
1.752-4(b)) to any lender of the Partnership whose loan constitutes a
nonrecourse liability of the Partnership.
ARTICLE VI
WITHDRAWAL, DISSOLUTION, LIQUIDATION, AND TERMINATION
Section 6.01. Withdrawal. Except as provided in Section 6.02 below,
no Limited Partner shall at any time retire or withdraw from the Partnership
without obtaining the prior written consent of the General Partner and no
General Partner shall at any time retire or withdraw from the Partnership
without obtaining the prior written Approval of the Partners. Retirement or
withdrawal by any Partner in contravention of this Section 6.01 shall
subject such Partner to liability for all damages caused any other Partner
(other than a Partner who is, at the time of such withdrawal, in default
under this Agreement) by such retirement or withdrawal and the consequential
dissolution of the Partnership. Any notice of withdrawal must be in
writing.
Section 6.02. Redemption of Limited Partnership Interests. Any
Partner (a "Redeeming Partner") may, at any time and upon written notice to
the General Partner, request that the Partnership distribute to such Partner
non-cash assets of the Partnership with a value not to exceed the lesser of
(a) such Partner's pro rata portion, based on its relative Percentage
Interest, of the Net Value of the Partnership Assets, or (b) the amount of
such Partner's Capital Account, each as determined at the time of such
distribution. Any distribution under this Section 6.02 shall be made only
upon the consent of the General Partner, which consent shall not be
unreasonably withheld. Unless the General Partner's consent is withheld,
within a reasonable period following the receipt of written notice from the
Redeeming Partner the General Partner shall cause the Partnership to
distribute to the Redeeming Partner assets with a Net Value requested by the
Redeeming Partner subject to the restrictions set forth herein. The General
Partner shall observe all applicable restrictions on the transfer of such
assets and shall withhold its consent to a distribution of such assets if
such distribution would be prohibited under any applicable transfer
restriction. All costs and expenses, including, without limitation,
reasonable brokers' and attorneys' fees, incurred in connection with the
distribution of Partnership assets under this Section 6.02 shall be paid by
the Redeeming Partner. Any distribution under this Section 6.02 shall
constitute an Adjusting Event under Section 4.02(a) and the Percentage
Interests of the Partners shall be adjusted in accordance therewith. In the
event that a Redeeming Partner retains a portion of its interest in the
Partnership after such distribution, the remaining portion of such Redeeming
Partner's interest shall remain subject to the provisions of this Agreement.
In the event that a Partner's entire Capital Account is redeemed pursuant to
distributions under this Section 6.02, such Partner shall be deemed to
withdraw from the Partnership as a Partner.
Section 6.03. Dissolution of the Partnership. Notwithstanding any
provision in the Act to the contrary, the Partnership shall be dissolved
only upon the occurrence of any of the following:
(a) The withdrawal, as defined in the Act, of a General Partner,
unless:
(i) the remaining General Partner, if any, elects in writing
within ninety (90) days after such event to reconstitute the
Partnership, to continue as the General Partner, and to continue the
Partnership and its business, or
(ii) there is no remaining General Partner, then within ninety
(90) days after such event, those Limited Partners holding a majority
of the Percentage Interests in the Partnership agree to appoint in
writing a successor General Partner, as of the date of the withdrawal
of the General Partner, and agree to continue the Partnership and the
business of the Partnership, and such successor General Partner agrees
in writing to accept such election;
(b) The sale or other disposition, not including an exchange, of
substantially all of the assets of the Partnership (except under
circumstances where all or a portion of the purchase price is payable after
the closing of the sale or other disposition, in which case the Partnership
shall dissolve upon the final payment of such purchase price);
(c) December 31, 2050, unless extended by the consent of all Partners;
or
(d) Subject to any obligations of the Partnership, when Approved by
the Partners.
Section 6.04. Continuation of Partnership. If the Partnership is
continued as provided in Section 6.03, then, as of the date of withdrawal,
the General Partner with respect to which an event of withdrawal under
Section 6.03 has occurred (or his or its estate or successor in interest)
(the "Withdrawing General Partner") shall have none of the powers of a
General Partner under this Agreement or applicable law and shall have only
the rights and powers of an assignee of a Partner hereunder to share in any
Partnership profits, losses, gains, and distributions in accordance with his
or its Percentage Interest and shall have no other rights or powers of a
Partner hereunder; provided, however, that any Withdrawing General Partner
shall be subject to the Additional Capital Contribution provisions of
Article III and that the Percentage Interest of such Withdrawing General
Partner shall be subject to reallocation under Section 4.02 in the event of
any Adjusting Event.
Section 6.05. Death, etc. of a Limited Partner; Divorce of a Partner.
(a) The death, disability, withdrawal, termination (in the case of a
Limited Partner that is a partnership or a trust), dissolution (in the case
of a Limited Partner that is a corporation or limited liability company),
retirement, or adjudication as a bankrupt of a Limited Partner (the
"Withdrawing Limited Partner") shall not dissolve the Partnership, but,
subject to the provisions of Section 6.05(b), the rights of such Withdrawing
Limited Partner to share in the profits and losses of the Partnership and to
receive distributions of Partnership funds shall, upon the happening of such
an event, pass to the Withdrawing Limited Partner's estate, legal
representative, or successors in interest, as the case may be, subject to
this Agreement, and the Partnership shall continue as a limited partnership.
(b) Upon the occurrence of an event described in Section 6.05(a), the
General Partner shall, in its sole discretion, elect to either continue the
Partnership business (i) with the successors, assigns, heirs, devises,
beneficiaries, estate, or other transferee of such Withdrawing Limited
Partner (collectively, the "Distributees") as provided in Section 6.05(c) or
(ii) with the Partnership purchasing the interest of such Withdrawing
Limited Partner from all of his or its Distributees as provided in Section
6.05(d).
(c) If the General Partner elects to proceed pursuant to Section
6.05(b)(i), the Distributees of such Withdrawing Limited Partner shall
succeed to his or its interest in the Partnership, shall be admitted as
Limited Partners if approved by the General Partner in its sole discretion,
and shall be bound by the terms and provisions of the Agreement; provided,
however, if the interest of such Withdrawing Limited Partner passes, either
at the time of an occurrence described in Section 6.05(a) or subsequent
thereto, to more than one Distributee, then within sixty (60) days after the
distribution to more than one Distributee, the Distributees shall appoint
one person, firm, or corporation as the agent of and for such Distributees
(the "Agent"). Such Agent shall be responsible for collecting, receiving,
and making all payments and Additional Capital Contributions required under
this Agreement, shall vote the entire interest of the Distributees if such
vote is required by this Agreement, the Act, or applicable law and shall
perform all other obligations of such Distributees performable by reason of
or arising from their interest in the Partnership as Limited Partners;
provided, that the Agent shall not be admitted as a Partner of the
Partnership nor shall such Agent be entitled to exercise any voting rights
hereunder unless such rights are approved by the General Partner in its sole
discretion. All payments and/or disbursements due to the Distributees for
or arising from their interest in the Partnership shall be deemed to have
been validly made to such Distributees by paying the same to such Agent. In
the event that the Distributees for any reason fail to designate such agent
in writing in the manner and within the time prescribed and fail to cure
such default after ten (10) days written notice from the General Partner to
correct such default, the General Partner shall retain any funds or property
otherwise distributable to such Distributees under this Agreement and shall
appoint an Agent of and for the Distributees. To the fullest extent allowed
by applicable law, the defaulting Distributees will indemnify, defend, and
hold harmless such Agent, the General Partner, and the Partners from and
against any losses, expenses, judgments, fines, settlements, and damages
incurred by any of them with respect to the provisions of this Section
6.05(c).
(d) If the General Partner elects to proceed pursuant to Section
6.05(b)(ii), then the General Partner shall cause the Partnership to
purchase the interest of such Withdrawing Limited Partner in the Partnership
from his or its Distributees at a price equal to the Current Value of such
interest, determined as though the effective date of the withdrawal of such
Withdrawing Limited Partner were an Adjusting Event.
(e) If, upon the divorce of any individual Partner, the spouse of any
such Partner receives an interest in the Partnership pursuant to the terms
of any divorce property settlement agreement, divorce decree, or otherwise,
then the Partnership shall have the right, as determined by the General
Partner, to purchase the interest of such spouse in the Partnership at a
price equal to the Current Value of such interest, determined as though the
effective date of such divorce were an Adjusting Event.
Section 6.06. Liquidation and Termination of the Partnership.
(a) Upon dissolution of the Partnership unless continued pursuant to
Section 6.03, the Partnership shall be terminated as rapidly as business
circumstances will permit. At the direction of the General Partner, or a
Partner Approved by the Partners if the dissolution of the Partnership is
caused by the withdrawal of the General Partner (the General Partner or the
other Partner, as the case may be, being herein called the "Terminating
Partner"), a full accounting of the assets and liabilities of the
Partnership shall be taken and a statement of the Partnership Assets and a
statement of each Partner's Capital Account shall be furnished to all
Partners as soon as is reasonably practicable. The Terminating Partner
shall take such action as is necessary so that the Partnership's business
shall be terminated, its liabilities discharged, and its assets distributed
as hereinafter described. The Terminating Partner may sell all of the
Partnership Assets or, if Approved by the Partners, distribute the
Partnership Assets in kind by distributing to each Partner an undivided
interest in each such Partnership Asset; provided, however, that the
Terminating Partner shall ascertain the Net Value of the Partnership Assets
by appraisal or other reasonable means of all Partnership Assets remaining
unsold and each Partner's Capital Account shall be charged or credited, as
the case may be, as if such Partnership Assets had been sold at the Net
Value of the Partnership Assets and the income, gains, losses, deductions,
and credits realized thereby had been allocated to the Partners in
accordance with Article IV hereof. A reasonable period of time shall be
allowed for the orderly termination of the Partnership to minimize the
normal losses of a liquidation process.
(b) After the payment of all expenses of liquidation and of all debts
and liabilities of the Partnership in such order or priority as provided by
law (including any debts or liabilities to Partners, who shall be treated as
secured or unsecured creditors, as may be the case, to the extent permitted
by law, for sums loaned to the Partnership, if any, as distinguished from
capital contributions) and after all resulting items of Partnership income,
gain, credit, loss, or deduction are credited or debited to the Capital
Accounts of the Partners in accordance with Articles III and IV hereof, all
remaining Partnership Assets shall then be distributed among the Partners in
accordance with their relative positive Capital Account balances. Upon
termination, a Partner may not demand and receive cash in return for such
Partner's capital contributions and no Partner shall have any obligation to
restore any deficit that may then exist in that Partner's Capital Account.
Section 6.07. General Partners Not Personally Liable. No General
Partner nor any affiliate of any General Partner shall be personally liable
for the return of the Capital Contributions of any Partner, and such return
shall be made solely from available Partnership Assets, if any, and each
Limited Partner hereby waives any and all claims it may have against any
General Partner or any such affiliate in this regard.
Section 6.08. Provisions Cumulative. All provisions of this Agreement
relating to the dissolution, liquidation, and termination of the Partnership
shall be cumulative to the extent not inconsistent with other provisions
herein; that is, the exercise or use of one of the provisions hereof shall
not preclude the exercise or use of any other provision of this Agreement to
the extent not inconsistent therewith.
ARTICLE VII
GENERAL
Section 7.01. Competing Business. Notwithstanding anything to the
contrary contained in or inferable from this Agreement, the Act, or any
other statute or principle of law, neither the Partners nor any of their
shareholders, directors, officers, employees, partners, agents, family
members, or affiliates (each a "Partner Affiliate") shall be prohibited or
restricted in any way from investing in or conducting, either directly or
indirectly, and may invest in and/or conduct, either directly or indirectly,
businesses of any nature whatsoever, including the ownership and operation
of businesses or properties similar to or in the same geographical area as
those held by the Partnership. Any investment in or conduct of any such
businesses by a Partner or any Partner Affiliate shall not give rise to any
claim for an accounting by the other Partners or the Partnership or any
right to claim any interest therein or the profits therefrom.
Section 7.02. LIMITED PARTNER REPRESENTATIONS. NOTWITHSTANDING
ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY, EACH LIMITED PARTNER
HEREBY REPRESENTS AND WARRANTS TO THE PARTNERSHIP, THE GENERAL PARTNER, AND
TO EACH OFFICER, DIRECTOR, SHAREHOLDER, CONTROLLING PERSON, AND AGENT OF THE
GENERAL PARTNER THAT: (a) THE INTEREST IN THE PARTNERSHIP OF SUCH LIMITED
PARTNER IS ACQUIRED FOR INVESTMENT PURPOSES ONLY FOR HIS OR ITS OWN ACCOUNT
AND NOT WITH A VIEW TO OR IN CONNECTION WITH ANY DISTRIBUTION, REOFFER,
RESALE, OR OTHER DISPOSITION NOT IN COMPLIANCE WITH THE SECURITIES ACT OF
1933, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER (THE "1933 ACT")
AND APPLICABLE STATE SECURITIES LAWS; (b) SUCH LIMITED PARTNER, ALONE OR
TOGETHER WITH HIS OR ITS REPRESENTATIVES, POSSESSES SUCH EXPERTISE,
KNOWLEDGE, AND SOPHISTICATION IN FINANCIAL AND BUSINESS MATTERS GENERALLY,
AND IN THE TYPE OF TRANSACTIONS IN WHICH THE PARTNERSHIP PROPOSES TO ENGAGE
IN PARTICULAR, THAT HE OR IT IS CAPABLE OF EVALUATING THE MERITS AND
ECONOMIC RISKS OF ACQUIRING AND HOLDING HIS OR ITS PARTNERSHIP INTEREST, AND
THAT HE OR IT IS ABLE TO BEAR ALL SUCH ECONOMIC RISKS NOW AND IN THE FUTURE;
(c) SUCH LIMITED PARTNER HAS HAD ACCESS TO ALL OF THE INFORMATION WITH
RESPECT TO THE INTEREST ACQUIRED BY HIM OR IT UNDER THIS AGREEMENT THAT HE
OR IT DEEMS NECESSARY TO MAKE A COMPLETE EVALUATION THEREOF AND HAS HAD THE
OPPORTUNITY TO QUESTION THE GENERAL PARTNER CONCERNING SUCH INTEREST; (d)
SUCH LIMITED PARTNER'S DECISION TO ACQUIRE HIS OR ITS INTEREST FOR
INVESTMENT HAS BEEN BASED SOLELY UPON THE EVALUATION MADE BY HIM OR IT; (e)
SUCH LIMITED PARTNER IS AWARE THAT HE OR IT MUST BEAR THE ECONOMIC RISK OF
HIS OR ITS INVESTMENT IN THE PARTNERSHIP FOR AN INDEFINITE PERIOD OF TIME
BECAUSE INTERESTS IN THE PARTNERSHIP HAVE NOT BEEN REGISTERED UNDER THE 1933
ACT OR UNDER THE SECURITIES LAWS OF ANY STATES, AND, THEREFORE, CANNOT BE
SOLD UNLESS SUCH INTERESTS ARE SUBSEQUENTLY REGISTERED UNDER THE 1933 ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE; (f) SUCH LIMITED PARTNER IS AWARE THAT ONLY THE PARTNERSHIP
CAN TAKE ACTION TO REGISTER SUCH INTEREST IN THE PARTNERSHIP AND THE
PARTNERSHIP IS UNDER NO SUCH OBLIGATION AND DOES NOT PROPOSE TO ATTEMPT TO
DO SO; AND (g) SUCH LIMITED PARTNER IS AWARE THAT THIS AGREEMENT PROVIDES
RESTRICTIONS ON THE ABILITY OF A LIMITED PARTNER TO SELL, TRANSFER, ASSIGN,
MORTGAGE, HYPOTHECATE, OR OTHERWISE ENCUMBER HIS OR ITS INTEREST IN THE
PARTNERSHIP.
Section 7.03. Notice.
(a) All notices, demands, or requests provided for or permitted to be
given pursuant to this Agreement must be in writing.
(b) All notices, demands, and requests to be sent to a Partner, any
Distributee(s) (or their Agent) of the interest of a Partner, or any
Substituted Partner pursuant to this Agreement shall be deemed to have been
properly given or served if: (i) personally delivered, (ii) deposited
prepaid for next day delivery by Federal Express, or other similar overnight
courier services, addressed to such Partner, (iii) deposited in the United
States mail, addressed to such Partner, prepaid and registered or certified
with return receipt requested, or (iv) transmitted via telecopier or other
similar device to the attention of such Partner, all at the address or
telecopy number for such Partner set forth on such Partner's signature page
attached hereto (as may be changed in accordance with subsection (d) below).
(c) All notices, demands, and requests so given shall be deemed
received: (i) when personally delivered, (ii) twenty-four (24) hours after
being deposited for next day delivery with an overnight courier, (iii)
forty-eight (48) hours after being deposited in the United States mail, or
(iv) twelve (12) hours after being telecopied or otherwise transmitted and
receipt has been confirmed.
(d) The Partners, any Substituted Partners, and their respective
Distributee(s)(or their Agent) shall have the right from time to time, and
at any time during the term of this Agreement, to change their respective
addresses and each shall have the right to specify as his or its address any
other address within the United States of America by giving to the other
parties at least thirty (30) days written notice thereof, in the manner
prescribed in Section 7.03(b); provided, however, that to be effective, any
such notice must be actually received (as evidenced by a return receipt).
(e) All distributions to any Partner shall be made at the address to
which notices are to be sent unless otherwise specified in writing by such
Partner.
Section 7.04. Amendments. Amendments and supplements may be made to
or restatements made of this Agreement or the Certificate of Limited
Partnership (or any exhibits or schedules attached to any of them), from
time to time by the General Partner, without the consent of any of the other
Partners, to admit Substituted Partners, to reflect the removal and
replacement of the General Partner, to reflect adjustments to the Percentage
Interests of the Partners following an Adjusting Event, to reflect other
transfers, assignments, admissions, withdrawals, conversions, or removals
authorized by this Agreement, or to effect any non-material amendments to
this Agreement or the Certificate of Limited Partnership. Any and all other
amendments to this Agreement and the Certificate of Limited Partnership may
be made upon the approval of those Partners holding ninety percent (90%) of
the Percentage Interests in the Partnership.
Section 7.05. Powers of Attorney. Each Limited Partner hereby
constitutes and appoints the General Partner, with full power of
substitution, as his or its true and lawful attorney-in-fact and empowers
and authorizes such attorney, in the name, place, and stead of such Limited
Partner, to make, execute, sign, swear to, acknowledge, and file in all
necessary or appropriate places all documents (and all amendments or
supplements to or restatements of such documents necessitated by valid
amendments to or actions permitted under this Agreement) relating to the
Partnership and its activities, including, without limitation: (a) any
amendments to this Agreement approved as provided herein, (b) the
Certificate of Limited Partnership and any amendments thereto, under the
laws of the State of Texas or in any other state or jurisdiction in which
such filing is deemed advisable by the General Partner, (c) any
applications, forms, certificates, reports, or other documents, or
amendments thereto which may be requested or required by any federal, state,
or local governmental agency, securities exchange, securities association,
self-regulatory organization, or similar institution and which are deemed
necessary or advisable by the General Partner, (d) any other instrument
which may be required to be filed or recorded in any state or county or by
any governmental agency, or which the General Partner deems advisable to
file or record, including, without limitation, certificates of assumed name
and documents to qualify foreign limited partnerships in other
jurisdictions, (e) any documents which may be required to effect the
continuation of the Partnership, the admission of New Partners, Substituted
Partners, or Distributees, the withdrawal of any Partner, the purchase of
the interest in the Partnership of any ex-spouse of a Partner, or the
dissolution and termination of the Partnership, (f) any and all reports,
schedules, certificates, forms and other documents, including, but not
limited to, Schedules 13D and 13F, Forms 3 and 4, and any other such forms
as may be required to be filed by the Partnership under the Securities
Exchange Act of 1934, Federal Reserve U-1s, notes, drafts, credit or loan
agreements, financing statements, security agreements, bank resolutions, and
any and all other documents and instruments as may be necessary or desirable
in the sole discretion of the attorney so acting, all in carrying out the
purposes of the Partnership, (g) making certain elections contained in the
Code or state law governing taxation of limited partnerships, and (h)
performing any and all other ministerial duties or functions necessary for
the conduct of the business of the Partnership. Each Limited Partner hereby
ratifies, confirms, and adopts as his own, all actions that may be taken by
such attorney-in-fact pursuant to this Section 7.05. Each Limited Partner
acknowledges that this Agreement permits certain amendments to be made and
certain other actions to be taken or omitted to be taken by less than all of
the Partners if approved in accordance with the provisions hereof. By their
execution hereof, each Limited Partner also grants the General Partner a
power of attorney to execute any and all documents necessary to reflect any
action that is approved in accordance with the provisions hereof. This
power of attorney is coupled with an interest and shall continue
notwithstanding the subsequent incapacity or death of the Limited Partner.
Each Limited Partner shall execute and deliver to the General Partner an
executed and appropriately notarized power of attorney in such form
consistent with the provisions of this Section 7.05 as the General Partner
may request.
Section 7.06. GOVERNING LAWS AND VENUE. THIS AGREEMENT IS MADE IN
FORT WORTH, TARRANT COUNTY, TEXAS, AND THE RIGHTS AND OBLIGATIONS OF THE
PARTNERS HEREUNDER SHALL BE INTERPRETED, CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. ALL MATTERS LITIGATED BY,
AMONG, OR BETWEEN ANY OF THE PARTNERS THAT INVOLVE THIS AGREEMENT, THE
RELATIONSHIP OF THE PARTNERS, OR ANY RELATED DOCUMENTS OR MATTERS HEREUNDER
SHALL BE BROUGHT ONLY IN FORT WORTH, TARRANT COUNTY, TEXAS.
Section 7.07. Rule of Construction. The general rule of construction
for interpreting a contract, which provides that the provisions of a
contract should be construed against the party preparing the contract, is
waived by the parties. Each party acknowledges that he or it was
represented by separate legal counsel in this matter who participated in the
preparation of this Agreement or he or it had the opportunity to retain
counsel to participate in the preparation of this Agreement but chose not to
do so.
Section 7.08. Entire Agreement. This Agreement, including all
exhibits to this Agreement and, if any, exhibits to such exhibits, contains
the entire agreement among the parties relative to the matters contained in
this Agreement.
Section 7.09. Waiver. No consent or waiver, express or implied, by
any Partner to or for any breach or default by any other Partner in the
performance by such other Partner of his or its obligations under this
Agreement shall be deemed or construed to be a consent or waiver to or of
any other breach or default in the performance by such other Partner of the
same or any other obligations of such other Partner under this Agreement.
Failure on the part of any Partner to complain of any act or failure to act
of any of the other Partners or to declare any of the other Partners in
default, regardless of how long such failure continues, shall not constitute
a waiver by such Partner of his or its rights hereunder.
Section 7.10. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the
application of such provisions to other persons or circumstances shall not
be affected thereby, and the intent of this Agreement shall be enforced to
the greatest extent permitted by law.
Section 7.11. Binding Agreement. Subject to the restrictions on
transfers and encumbrances set forth in this Agreement, this Agreement shall
inure to the benefit of and be binding upon the undersigned Partners and
their respective legal representatives, successors, and assigns. Whenever,
in this Agreement, a reference to any party or Partner is made, such
reference shall be deemed to include a reference to the legal
representatives, successors, and assigns of such party or Partner.
Section 7.12. Tense and Gender. Unless the context clearly indicates
otherwise, the singular shall include the plural and vice versa. Whenever
the masculine, feminine, or neuter gender is used inappropriately in this
Agreement, this Agreement shall be read as if the appropriate gender was
used.
Section 7.13. Captions. Captions are included solely for convenience
of reference and if there is any conflict between captions and the text of
this Agreement, the text shall control.
Section 7.14. Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original for all
purposes and all of which when taken together shall constitute a single
counterpart instrument. Executed signature pages to any counterpart
instrument may be detached and affixed to a single counterpart, which single
counterpart with multiple executed signature pages affixed thereto
constitutes the original counterpart instrument. All of these counterpart
pages shall be read as though one and they shall have the same force and
effect as if all of the parties had executed a single signature page.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
The undersigned has executed and delivered this Limited Partnership
Agreement of Culmen Technology Partners, L.P. in Fort Worth, Texas, to be
effective as of the Effective Date.
GENERAL PARTNER
CTP, INC., a Delaware corporation
103 Foulk Road
Suite 202 By: /s/ Michael R. Gleason
Wilmington, Delaware 19803 Michael R. Gleason, President
Phone:
Fax:
Tax ID#:
Initial Capital Contribution: $80,000.00
Percentage Interest: 1.000%
The undersigned has executed and delivered this Limited Partnership
Agreement of Culmen Technology Partners, L.P. in Fort Worth, Texas, to be
effective as of the Effective Date.
LIMITED PARTNER
CULMEN INVESTMENTS, L.P., a Texas
limited partnership
201 Main Street By: MPK Equities Incorporated,
Suite 1955 general partner
Fort Worth, Texas 76102
Phone: By: /s/ Michael R. Gleason
Fax: Michael R. Gleason,
Tax ID#: President
Initial Capital Contribution: $6,445,001.00
Percentage Interest: 80.5625125%
The above-named Limited Partner hereby is admitted to the Partnership.
CTP, Inc., general partner
By: /s/ Michael R. Gleason
Michael R. Gleason, President
The undersigned has executed and delivered this Limited Partnership
Agreement of Culmen Technology Partners, L.P. in Fort Worth, Texas, to be
effective as of the Effective Date.
LIMITED PARTNER
/s/ Michael R. Gleason
Michael R. Gleason
201 Main Street
Suite 1955
Fort Worth, Texas 76102
Phone:
Fax:
Tax ID#:
Initial Capital Contribution: $1,000,000.00
Percentage Interest: 12.5%
The above-named Limited Partner hereby is admitted to the
Partnership.
CTP, Inc., general partner
By: /s/ Michael R. Gleason
Michael R. Gleason, President
Michael R. Gleason, President
The undersigned has executed and delivered this Limited Partnership
Agreement of Culmen Technology Partners, L.P. in Fort Worth, Texas, to be
effective as of the Effective Date.
LIMITED PARTNER
/s/ Ed Borgerding
Ed Borgerding
Phone:
Fax:
Tax ID#:
Initial Capital Contribution: $100,000.00
Percentage Interest: 1.25%
The above-named Limited Partner hereby is admitted to the
Partnership.
CTP, Inc., general partner
By: /s/ Michael R. Gleason
Michael R. Gleason, President
The undersigned has executed and delivered this Limited Partnership
Agreement of Culmen Technology Partners, L.P. in Fort Worth, Texas, to be
effective as of the Effective Date.
LIMITED PARTNER
PRIME PARTNERS ASSET INC.
By: /s/ Hsieh Fu-Hua
Hsieh Fu-Hua, Director
Phone:
Fax:
Tax ID#:
Initial Capital Contribution: $100,000.00
Percentage Interest: 1.25%
The above-named Limited Partner hereby is admitted to the Partnership.
CTP, Inc., general partner
By: /s/ Michael R. Gleason
Michael R. Gleason, President
The undersigned has executed and delivered this Limited Partnership
Agreement of Culmen Technology Partners, L.P. in Fort Worth, Texas, to be
effective as of the Effective Date.
LIMITED PARTNER
/s/ Elizabeth Khoo
Elizabeth Khoo
22 Belmont Road
Singapore 269866
Phone:
Fax:
Tax ID#:
Initial Capital Contribution: $100,000.00
Percentage Interest: 1.25%
The above-named Limited Partner hereby is admitted to the
Partnership.
CTP, Inc., general partner
By: /s/ Michael R. Gleason
Michael R. Gleason, President
The undersigned has executed and delivered this Limited Partnership
Agreement of Culmen Technology Partners, L.P. in Fort Worth, Texas, to be
effective as of the Effective Date.
LIMITED PARTNER
/s/ Douglas D. Flowers
Douglas D. Flowers
Phone:
Fax:
Tax ID#:
Initial Capital Contribution: $25,000.00
Percentage Interest: 0.3125%
The above-named Limited Partner hereby is admitted to the
Partnership.
CTP, Inc., general partner
By: /s/ Michael R. Gleason
Michael R. Gleason, President
The undersigned has executed and delivered this Limited Partnership
Agreement of Culmen Technology Partners, L.P. in Fort Worth, Texas, to be
effective as of the Effective Date.
LIMITED PARTNER
/s/ John Weiser
John Weiser
Phone:
Fax:
Tax ID#:
Initial Capital Contribution: $25,000.00
Percentage Interest: 0.3125%
The above-named Limited Partner hereby is admitted to the
Partnership.
CTP, Inc., general partner
By: /s/ Michael R. Gleason
Michael R. Gleason, President
The undersigned has executed and delivered this Limited Partnership
Agreement of Culmen Technology Partners, L.P. in Fort Worth, Texas, to be
effective as of the Effective Date.
LIMITED PARTNER
/s/ Andrew Ang
Andrew Ang
Phone:
Fax:
Tax ID#:
Initial Capital Contribution: $25,000.00
Percentage Interest: 0.3125%
The above-named Limited Partner hereby is admitted to the
Partnership.
CTP, Inc., general partner
By: /s/ Michael R. Gleason
Michael R. Gleason, President
The undersigned has executed and delivered this Limited Partnership
Agreement of Culmen Technology Partners, L.P. in Fort Worth, Texas, to be
effective as of the Effective Date.
LIMITED PARTNER
/s/ George C. Lamb, III
George C. Lamb, III
Phone:
Fax:
Tax ID#:
Initial Capital Contribution: $25,000.00
Percentage Interest: 0.3125%
The above-named Limited Partner hereby is admitted to the
Partnership.
CTP, Inc., general partner
By: /s/ Michael R. Gleason
Michael R. Gleason, President
The undersigned has executed and delivered this Limited Partnership
Agreement of Culmen Technology Partners, L.P. in Fort Worth, Texas, to be
effective as of the Effective Date.
LIMITED PARTNER
/s/ Carl Navarre
Carl Navarre
Phone:
Fax:
Tax ID#:
Initial Capital Contribution: $25,000.00
Percentage Interest: 0.3125%
The above-named Limited Partner hereby is admitted to the
Partnership.
CTP, Inc., general partner
By: /s/ Michael R. Gleason
Michael R. Gleason, President
The undersigned has executed and delivered this Limited Partnership
Agreement of Culmen Technology Partners, L.P. in Fort Worth, Texas, to be
effective as of the Effective Date.
LIMITED PARTNER
/s/ F. Richard Bernasek
F. Richard Bernasek
201 Main Street, Suite 2500
Fort Worth, Texas 76102
Phone:
Fax:
Tax ID#:
Initial Capital Contribution: $10,000.00
Percentage Interest: 0.125%
The above-named Limited Partner hereby is admitted to the
Partnership.
CTP, Inc., general partner
By: /s/ Michael R. Gleason
Michael R. Gleason, President
The undersigned has executed and delivered this Limited Partnership
Agreement of Culmen Technology Partners, L.P. in Fort Worth, Texas, to be
effective as of the Effective Date.
LIMITED PARTNER
/s/ Orv Peterson
Orv Peterson
Phone:
Fax:
Tax ID#:
Initial Capital Contribution: $10,000.00
Percentage Interest: 0.125%
The above-named Limited Partner hereby is admitted to the
Partnership.
CTP, Inc., general partner
By: /s/ Michael R. Gleason
Michael R. Gleason, President
The undersigned has executed and delivered this Limited Partnership
Agreement of Culmen Technology Partners, L.P. in Fort Worth, Texas, to be
effective as of the Effective Date.
LIMITED PARTNER
/s/ Austin Long
Austin M. Long, III
Phone:
Fax:
Tax ID#:
Initial Capital Contribution: $8,333.00
Percentage Interest: 0.1041625%
The above-named Limited Partner hereby is admitted to the
Partnership.
CTP, Inc., general partner
By: /s/ Michael R. Gleason
Michael R. Gleason, President
The undersigned has executed and delivered this Limited Partnership
Agreement of Culmen Technology Partners, L.P. in Fort Worth, Texas, to be
effective as of the Effective Date.
LIMITED PARTNER
/s/ Charles Preston
Charles Preston
Phone:
Fax:
Tax ID#:
Initial Capital Contribution: $8,333.00
Percentage Interest: 0.1041625%
The above-named Limited Partner hereby is admitted to the
Partnership.
CTP, Inc., general partner
By: /s/ Michael R. Gleason
Michael R. Gleason, President
The undersigned has executed and delivered this Limited Partnership
Agreement of Culmen Technology Partners, L.P. in Fort Worth, Texas, to be
effective as of the Effective Date.
LIMITED PARTNER
/s/ Jim E. Griffin, Jr.
Jim E. Griffin, Jr.
Phone:
Fax:
Tax ID#:
Initial Capital Contribution: $8,333.00
Percentage Interest: 0.1041625%
The above-named Limited Partner hereby is admitted to the
Partnership.
CTP, Inc., general partner
By: /s/ Michael R. Gleason
Michael R. Gleason, President
The undersigned has executed and delivered this Limited Partnership
Agreement of Culmen Technology Partners, L.P. in Fort Worth, Texas, to be
effective as of the Effective Date.
LIMITED PARTNER
/s/ Craig Nickels
Craig Nickels
Phone:
Fax:
Tax ID#:
Initial Capital Contribution: $5,000.00
Percentage Interest: 0.0625%
The above-named Limited Partner hereby is admitted to the
Partnership.
CTP, Inc., general partner
By: /s/ Michael R. Gleason
Michael R. Gleason, President
