<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
April 27, 2000
Date of Report (Date of earliest event reported)
U.S. Technologies Inc.
(Exact name of Registrant as Specified in Charter)
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Delaware 0-15960 73-1284747
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
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2001 Pennsylvania Avenue, NW, Suite 675, Washington, DC 20006
(Address of principal executive offices
including zip code)
(202) 466-3100
(Registrant's telephone number, including area code)
Not applicable
(Former name or address, if changed since last report)
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INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 2.
Effective April 12, 2000, U.S. Technologies Inc. a Delaware corporation (the
"Registrant"), completed its previously announced acquisition of Internet
incubator company E2Enet, Inc.("E2Enet") pursuant to the terms of that certain
Stock Exchange Agreement, dated as of February 21, 2000 (the "Exchange
Agreement"), entered into by and between the Registrant, E2Enet, and certain
E2Enet stockholders, as amended by the Amendment to Stock Exchange Agreement,
dated April 5, 2000, entered into by and between the Registrant, U.S.
Technologies Acquisition Sub, Inc., E2Enet, Northwood Ventures LLC ("Northwood
Ventures"), Northwood Capital Partners LLC ("Northwood Capital"), Jonathan J.
Ledecky ("Ledecky") and other E2Enet stockholders (the "Exchange Agreement
Amendment"; references to the Exchange Agreement herein mean such agreement as
so amended unless otherwise specifically indicated).
The Registrant's new voting Series B mandatorily convertible preferred shares
with an aggregate liquidation preference of $11.2 million were issued in
exchange for all of the outstanding capital stock of E2Enet. The Registrant
acquired E2Enet's stock and assumed its liabilities in connection with the
exchange. The preferred shares are to be converted into 56 million shares of
common stock after Registrant stockholders approve an amendment to the
Registrant's charter authorizing additional shares of common stock. As a result
of the merger between E2Enet and the Registrant's acquisition subsidiary,
E2Enet was merged into a wholly owned subsidiary of the Registrant and the
subsidiary's name was subsequently changed to E2Enet.
E2Enet has made early stage investments in several development stage
business-to-business (B2B) and business-to-consumer (B2C) e-commerce
businesses. The Registrant's merger of E2Enet resulted in the Registrant
indirectly owning equity interests in the following companies:
Buyline.net, Incorporated ("Buyline"). Buyline is a developer of B2B e-commerce
applications, and is developing a proprietary Internet software program
designed to be a universal platform for entry-level B2B e-commerce, linking
buyers and sellers. Buyline's application for RFP/RFQ technology (Request for
Proposal/Request for Quotation) will be used in a full range of on-line
advertising, on Internet-based directories, and in commercial web sites.
VIPRO Corporation ("Vipro"). Vipro is an Internet surety company, which
provides repair guarantees against viruses that harm computers. Vipro has
e-commerce relationships with a leading
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Internet utility company, a credit card association, one of the largest
warranty claims administrators in the world and over 170 Internet service
providers.
Urban Box Office Network, Inc. ("UBO"). UBO is a developer of networked
multi-media web sites that will provide e-commerce services to participants
interested in urban culture, information, entertainment and products.
OneMade, Inc. ("OneMade"). OneMade is a developer of an e-commerce community
that will serve participants in the arts, crafts, and hobby industries. OneMade
intends to connect wholesalers, retailers, consumers and artists in these
fields.
bluemercury, Inc. ("bluemercury"). bluemercury operates an e-commerce site for
upscale cosmetic products and accessories. It intends to pursue a "clicks and
bricks" strategy by also acquiring high-end cosmetic specialty retailers.
MEI Sofware Systems, Inc. ("MEI"). MEI provides customized software systems to
manage the databases of trade associations, professional associations,
fund-raising organizations and chambers of commerce.
In connection with the E2Enet acquisition, the Registrant entered into certain
additional agreements as called for by the Exchange Agreement. Registrant, USV
Partners, LLC ("USV Partners"), James V. Warren ("Warren"), Northwood Ventures,
Northwood Capital and Ledecky entered into a voting agreement regarding the
designation of nominees and election of members to the Registrant's board of
directors. The voting agreement provides that the number of directors on the
board shall be established at eight directors, composed of: a) four directors
designated by USV Partners, including C. Gregory Earls ("Earls") as Chairman
and Chief Executive Officer of the Registrant; b) two directors designated by
Ledecky; and c) two directors designated by Northwood Ventures and Northwood
Capital.
As previously announced, upon completion of the E2Enet acquisition, the board
was expanded to include, in addition to Earls and Warren, the following
individuals:
Sen. George J. Mitchell, former Senator from Maine and Senate Majority Leader;
Hon. William H. Webster, former Director of both the FBI and CIA, and is
currently a senior partner at the law firm of Milbank, Tweed, Hadley & McCloy;
Rick Rickertsen, partner at Thayer Capital;
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Hal Wilson and Peter Schiff, Managing Directors of Northwood Ventures and
Northwood Capital; and
Arthur Maxwell, president of Affordable Interior Systems, Inc.
USV Partners and Warren also agreed and provided a proxy for the benefit of
E2Enet stockholders who became Registrant stockholders, to vote in favor of
amending the Registrant's charter in order to increase the number of authorized
shares of common stock of the Registrant necessary for the Registrant's
Series A, B and C preferred shares to be fully converted into common stock
(the "Charter Amendment").
The Registrant, USV Partners, Northwood Capital, Northwood Ventures, Ledecky
and other holders of the Registrant's Series B and C preferred stock, entered
into an agreement regarding registration rights for the Series A, Series B,
and Series C preferred stock and common stock into which they are to be
converted. Collectively, the stockholders party to the agreement have the
right on three occasions to compel the Registrant to register their respective
shares at the expense of the Registrant and rights on other occasions to have
such registration effected at the expense of the holders. These stockholders
also have unlimited registration rights to be combined, at the Registrant's
expense, with certain registrations of any equity securities by the Registrant
(Piggyback Rights), subject to restrictions which might be imposed by an
underwriter for the sale of such shares.
The foregoing summaries do not comport to be complete. The relevant agreements
are exhibits hereto and incorporated herein by reference. See Item 7(c).
ITEM 5. OTHER EVENTS
In connection with and as a condition to completing the Registrant's
acquisition of E2Enet, on April 12, 2000, the Registrant completed the private
placement of $5,184,000 of voting Series C mandatorily convertible preferred
stock and USV Partners purchased an additional $1,250,000 of voting Series A
convertible preferred stock. The Registrant plans to seek to raise additional
capital through the offering of up to an
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additional $3,566,000 of Series C preferred shares.
All Series C preferred shares will automatically convert, once the Charter
Amendment is effective, into shares of the Registrant's common stock at $1.45
per share of common stock. USV Partners also intends to convert its Series A
preferred shares into shares of the Registrant's common stock when the Charter
Amendment is effective. USV Partners is an affiliate of Earls.
The new funds will be used primarily to finance payment of costs incurred and
liabilities assumed in connection with the E2Enet merger and related business
transactions, additional investments in new and existing Internet businesses
that focus on B2B commerce, and working capital requirements.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
At the present time, it is impractical to provide the
financial information relative to the E2Enet merger pursuant
to paragraph a4 and b2 of Item 7 of Current Report Form 8-K.
The Registrant will file such financial information under
cover of a Form 8-K/A within sixty days of the date of this
report.
(c) Exhibits.
2.1 Stock Exchange Agreement, dated February 21, 2000, among U.S.
Technologies Inc., E2Enet, Inc. and Certain Stockholders of
E2Enet, Inc.(incorporated by reference to Exhibit 2.1 to
Registrant's Report on Form 8-K filed February 28, 2000).
2.2 Amendment to the Stock Exchange Agreement, dated April 5,
2000, entered into by and between U.S. Technologies Inc.,
U.S. Technologies Acquisition Sub, Inc., E2Enet, Inc.,
Northwood Ventures LLC, Northwood Capital Partners LLC,
Jonathan J. Ledecky and other E2Enet, Inc. stockholders
(incorporated by reference to Exhibit 2.5 to the Registrant's
Form 10-K filed April 10, 2000).
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2.3 Voting Agreement, dated April 12, 2000, among U.S.
Technologies Inc., USV Partners, LLC, James V. Warren,
Northwood Ventures, LLC, Northwood Capital Partners, LLC and
Jonathan J. Ledecky.
2.4 Voting Agreement and Proxy, dated April 12, 2000, among USV
Partners, LLC, James V. Warren and C. Gregory Earls for the
benefit of the holders of the Registrant's Series B Preferred
Stock.
2.5 Amended and Restated Registration Rights Agreement, dated
April 12, 2000, among U.S. Technologies Inc., USV Partners,
LLC, Northwood Capital Partners LLC, Northwood Ventures LLC,
Jonathan J. Ledecky and certain other stockholders of U.S.
Technologies Inc.
4.1 Certificate of Designations, Preferences and Rights of Series
B Mandatorily Convertible Preferred Stock of U.S.
Technologies Inc.
4.2 Certificate of Designations, Preferences and Rights of Series
C Mandatorily Convertible Preferred Stock of U.S.
Technologies Inc.
99.1 Press Release of April 12, 2000, announcing completion of the
acquisition of E2Enet, Inc. and related financings.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
U.S. TECHNOLOGIES INC.
By: /s/ Gregory Earls
------------------------
Gregory Earls
Co-Chairman and Co-Chief
Executive Officer
Dated: April 27, 2000
Washington, DC
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INDEX TO EXHIBITS FILED HEREWITH
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Exhibit
Number Description
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2.3 Voting Agreement, dated April 12, 2000, among U.S.
Technologies Inc., USV Partners, LLC, James V. Warren,
Northwood Ventures, LLC, Northwood Capital Partners, LLC
and Jonathan J. Ledecky.
2.4 Voting Agreement and Proxy, dated April 12, 2000 among USV
Partners, LLC, James V. Warren and C. Gregory Earls for the
benefit of the holders of the Registrant's Series B Preferred
Stock.
2.5 Amended and Restated Registration Rights Agreement, dated April
12, 2000, among U.S. Technologies Inc., USV Partners, LLC,
Northwood Capital Partners LLC, Northwood Ventures LLC, Jonathan
J. Ledecky and certain other stockholders of U.S. Technologies,
Inc.
4.1 Certificate of Designations, Preferences and Rights of
Series B Mandatorily Convertible Preferred Stock of U.S.
Technologies Inc.
4.2 Certificate of Designations, Preferences and Rights of
Series C Mandatorily Convertible Preferred Stock of U.S.
Technologies Inc.
99.1 Press Release of April 12, 2000, announcing completion of
the acquisition of E2Enet, Inc. and related financings.
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<PAGE> 1
EXHIBIT 2.3
VOTING AGREEMENT
THIS VOTING AGREEMENT (the "Agreement") is made as of this
12th day of April, 2000, by and among U.S. Technologies Inc., a Delaware
corporation (the "Company"), USV Partners, LLC, a Delaware limited liability
company ("USV"), James V. Warren ("Warren"), Northwood Ventures LLC, a New York
limited liability company ("Northwood Ventures"), Northwood Capital Partners
LLC, a New York limited liability company ("Northwood Capital") and Jonathan J.
Ledecky ("Ledecky") (USV, Warren, Northwood Ventures, Northwood Capital and
Ledecky hereinafter referred to collectively as the "Shareholders").
RECITALS
WHEREAS, each of USV and Warren is the owner of certain
shares of the Company's common stock, par value $0.02 per share (the "Common
Stock"), the Company's Series A Convertible Preferred Stock, par value $0.02
per share (the "Series A Stock"), and/or warrants (the "Warrants") to purchase
shares (subject to adjustment pursuant to the terms thereof) of the Common
Stock;
WHEREAS, the Company has entered into a Stock Exchange
Agreement dated as of February 21, 2000, as amended by the Amendment to Stock
Exchange Agreement dated as of April 5, 2000 (together, the "Stock Exchange
Agreement"), with E2Enet, Inc. ("E2E"), U.S. Technologies Acquisition Sub, Inc.
and those persons (including Northwood Capital, Northwood Ventures and Ledecky)
who as of the closing of the merger contemplated therein (the "Closing") will
own, collectively, all of the issued and outstanding shares of the capital
stock of E2E (the "E2E Stockholders");
WHEREAS, pursuant to the Stock Exchange Agreement, the
Company is issuing to the E2E Stockholders at the Closing shares of the
Company's Series B Convertible Preferred Stock, par value $0.02 per share (the
"Series B Stock"), of which the majority will be owned, collectively, by
Northwood Capital, Northwood Ventures and Ledecky;
WHEREAS, the execution and delivery of this Agreement,
setting forth the agreement of the parties hereto with respect to the size and
composition of the Board of Directors of the Company (the "Board"), is a
condition to the Closing;
WHEREAS, the restated bylaws of the Company provide that the
Board shall consist of not less than one (1) nor more than fifteen (15)
members, and provides that the number of directors shall be determined by
resolution of the Board or by the shareholders of the Company at an annual
meeting; and
WHEREAS, the Shareholders desire to set forth their agreement
with respect to the designation of nominees to be elected to the Board and the
voting of shares of the Company's capital stock in the election of directors,
as set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and
covenants set forth herein, the Company and the Shareholders hereby agree as
follows:
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1. SHARES SUBJECT TO AGREEMENT. Each Shareholder agrees to hold all of
its or his shares of Common Stock, Series A Stock, Series B Stock, Common Stock
issuable upon exercise of the Warrants and upon conversion of the Series A
Stock and Series B Stock, and any and all securities of the Company legally or
beneficially acquired by each of the Shareholders after the date hereof
(hereinafter referred to as the "Voting Shares") subject to, and to vote the
Voting Shares in accordance with, the provisions of this Agreement.
2. BOARD OF DIRECTORS.
(a) Each of the Shareholders hereby agrees to vote all of its or
his Voting Shares and to take all other necessary or desirable actions within
its or his control, and the Company hereby agrees to take all necessary and
desirable actions within its control (including, without limitation, calling
special meetings of the Board and of its shareholders), so that: (i) the number
of directors on the Board shall be established at eight (8) directors; and (ii)
such Board shall be composed of (A) four (4) directors designated by USV,
including C. Gregory Earls as Chairman and Chief Executive Officer of the
Company; (B) two (2) directors designated by Ledecky; and (C) two (2) directors
designated by Northwood Ventures and Northwood Capital.
(b) The obligations of the Shareholders pursuant to this Section
2 shall include the shareholder vote, if any, to amend the Certificate of
Incorporation or Bylaws of the Company currently in effect as required to
effect the intent of this Agreement. In the event any director elected pursuant
to the terms hereof ceases to serve as a member of the Board, the Company and
the Shareholders agree to take all such action as is reasonable and necessary,
including the voting of Voting Shares by the Shareholders, to cause the
election or appointment of such other substitute person to the Board as may be
designated in accordance with the terms of this Agreement. The Company shall
promptly give the Shareholders written notice of any election to or appointment
of, or change in the composition of, the Board. Each of the Shareholders and
the Company agrees not to take any actions which would materially and adversely
affect the provisions of this Agreement and the intention of the parties with
respect to the composition of the Board as herein stated.
(c) Each of the Shareholders and the Company represents that it or
he has not granted and is not a party to any proxy, voting agreement or similar
arrangement which is inconsistent with or conflicts with the provisions of this
Agreement, and no holder of Voting Shares shall grant any proxy or become party
to any voting agreement or similar arrangement which is inconsistent with or
conflicts with the provisions of this Agreement.
3. TERMINATION. Unless earlier terminated by written agreement of the
Shareholders that have rights and obligations hereunder, this Agreement shall
terminate upon the third (3rd) anniversary hereof (it being agreed that no
Shareholder shall have any rights or obligations hereunder once such
Shareholder shall have sold at least half of the Voting Shares owned by it or
him immediately following the Closing).
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4. SUCCESSORS IN INTEREST.
(a) The provisions of this Agreement shall be binding upon all
transferees or assignees of the Voting Shares; provided, however, that
transferees or assignees that acquire Voting Shares through open-market,
non-negotiated transactions shall not be subject to the provisions of this
Agreement. The Company shall not permit the transfer of any of the Voting
Shares on its books or issue a new certificate representing any of the Voting
Shares unless and until the person to whom such security is to be transferred
shall have executed a written agreement, substantially in the form of this
Agreement, pursuant to which such person becomes a party to this Agreement and
agrees to be bound by all the provisions hereof as if such person were a
Shareholder on the date hereof; provided, however, that transferees or
assignees that acquire Voting Shares through open-market, non-negotiated
transactions shall not be subject to the provisions of this Agreement.
(b) In addition to any other legends that are required, either by
agreement or by federal or state securities laws, each certificate representing
any of the Voting Shares shall be marked by the Company with a legend reading
as follows:
THE SHARES EVIDENCED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
VOTING AGREEMENT DATED AS OF _________________, 2000, BY AND AMONG U.S.
TECHNOLOGIES INC. AND CERTAIN HOLDERS OF THE OUTSTANDING CAPITAL STOCK OF
SUCH CORPORATION (A COPY OF WHICH MAY BE OBTAINED FROM SUCH CORPORATION).
BY ACCEPTING ANY INTEREST IN SUCH SHARES, THE PERSON HOLDING SUCH INTEREST
SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL OF THE
PROVISIONS OF SUCH AGREEMENT.
5. ENFORCEABILITY. Each of the Shareholders and the Company expressly
agrees that this Agreement shall be specifically enforceable in any court of
competent jurisdiction in accordance with its terms.
6. NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by registered or certified
mail, postage prepaid, return receipt requested, or otherwise delivered by hand
or by messenger or sent by facsimile, addressed:
(a) if to the Company, to:
U.S. Technologies Inc.
c/o U.S. Viewing Corporation
2001 Pennsylvania Avenue, NW
Suite 675
Washington, DC 20006
Attn: C. Gregory Earls
Telephone: 202-466-3100
Facsimile: 202-466-4557
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(b) if to USV, to:
USV Partners, LLC
c/o U.S. Viewing Corporation
2001 Pennsylvania Avenue, N.W., Suite 675
Washington, D.C. 20006
Attn: C. Gregory Earls
Telephone: (202) 466-3100
Facsimile: (202) 466-4557
(c) if to Warren, to:
James V. Warren
c/o U.S. Technologies Inc.
6525 The Corners Parkway, Suite 300
Norcross, Georgia 30092
Telephone: (770) 613-0322
Facsimile: (770) 662-5228
(d) if to Northwood Ventures, to:
Northwood Ventures LLC
485 Underhill Boulevard, Suite 205
Syosset, NY 11791
Attn: Henry T. Wilson
Telephone: 516-364-5544
Facsimile: 516-364-0879
(e) if to Northwood Capital, to:
Northwood Capital Partners LLC
485 Underhill Boulevard, Suite 205
Syosset, NY 11791
Attn: Henry T. Wilson
Telephone: 516-364-5544
Facsimile: 516-364-0879
(f) if to Ledecky, to:
Jonathan J. Ledecky
1400 34th Street, N.W.
Washington, D.C. 20007
Telephone: 202-965-2020
Facsimile: 202-342-9090
or to such other address as any such party shall have furnished to the other
parties hereto in accordance with this Section 6. If notice is provided by
mail, notice shall be deemed to be given five (5) days following proper deposit
with the United States mail. If notice is delivered by hand or by messenger or
sent by facsimile, notice shall be deemed to be given upon receipt.
<PAGE> 5
7. DELAYS IN EXERCISING RIGHTS. No delay in exercising or failure to
exercise any right, power or remedy accruing to any party hereto upon any
breach or default of any other party under this Agreement shall impair any such
right, power or remedy, nor shall it be construed to be a waiver of any such
breach or default or an acquiescence therein, or of any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party hereto of any breach or default under this
Agreement, or any waiver on the part of any party hereto of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing or as provided in this
Agreement. All remedies, either under this Agreement or by law or otherwise
afforded to any party hereto, shall be cumulative and not alternative.
8. COUNTERPARTS. This Agreement may be executed in one or more
counterparts (including by facsimile), each of which shall constitute an
original enforceable against the party actually executing such counterpart, and
all of which together shall constitute one and the same instrument.
9. ADDITIONAL SHARES. In the event that subsequent to the date of this
Agreement any shares of capital stock or other securities of the Company are
issued on or in exchange for any of the Voting Shares by reason of any stock
dividend, stock split, consolidation of shares, reclassification or
consolidation involving the Company, such shares or other securities shall be
deemed to be covered by and subject to the terms of this Agreement.
10. SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement will continue in full force and effect
without said provision, and the parties hereto agree to replace such provision
with a valid and enforceable provision that will achieve, to the extent
possible, the economic, business and other purposes of such provisions.
11. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to its
principles of choice of law or conflict of laws.
12. ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement between any and among all of the parties hereto
regarding the subject matter hereof and supersedes all prior agreements with
regard to the subject matter hereof. Without limiting the generality of the
foregoing, each of the Company, USV and Warren hereby acknowledges and agrees
that this Agreement supersedes all prior agreements between any or among all of
the Company, USV and Warren (whether pursuant to the Investment Agreement dated
as of July 16, 1998, between the Company and USV, pursuant to the Management
Agreement dated as of November 29, 1999, among the Company, Warren and J.L.
(Skip) Moore, or otherwise) with regard to the subject matter hereof.
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this
Voting Agreement as of the date first written above.
U.S. TECHNOLOGIES INC. USV PARTNERS, LLC
By: USV Management, LLC
By: /s/ C. Gregory Earls By: /s/ C. Gregory Earls
----------------------------------- -------------------------------
C. Gregory Earls, Co-Chairman C. Gregory Earls, Sole Member
and Co-Chief Executive Officer
NORTHWOOD VENTURES LLC NORTHWOOD CAPITAL PARTNERS LLC
By: /s/ Henry T. Wilson By: /s/ Henry T. Wilson
----------------------------------- ----------------------------------
Henry T. Wilson, Managing Director Henry T. Wilson, Managing Director
/s/ James V. Warren /s/ Jonathan J. Ledecky
- -------------------------------------- ----------------------------------
JAMES V. WARREN JONATHAN J. LEDECKY
<PAGE> 1
EXHIBIT 2.4
VOTING AGREEMENT AND PROXY
THIS VOTING AGREEMENT (the "Agreement") is made as of this 12th day of
April, 2000, by and among USV Partners, LLC, a Delaware limited liability
company ("USV"), James V. Warren ("Warren") and C. Gregory Earls ("Earls"), in
favor of those persons (the "E2E Stockholders") who will own all of the issued
and outstanding shares of capital stock of E2Enet, Inc. ("E2E") at or prior to
the closing of the merger contemplated by the Stock Exchange Agreement dated as
of February 21, 2000, as amended by the Amendment to Stock Exchange Agreement
dated as of April 5, 2000, among E2E, U.S. Technologies Inc. (the "Company"),
U.S. Technologies Acquisition Sub, Inc. and the E2E Stockholders (as amended,
the "Stock Exchange Agreement").
RECITALS
WHEREAS, each of USV and Warren is the owner of certain shares of the
Company's common stock, par value $0.02 per share (the "Common Stock"), the
Company's Series A Convertible Preferred Stock, par value $0.02 per share (the
"Series A Stock"), and/or warrants (the "Warrants") to purchase shares (subject
to adjustment pursuant to the terms thereof) of the Common Stock;
WHEREAS, pursuant to the Stock Exchange Agreement, the Company is
issuing to the E2E Stockholders at the closing of the merger contemplated
therein (the "Closing") shares of the Series B Convertible Preferred Stock of
the Company, par value $0.02 per share (the "Series B Stock");
WHEREAS, as a condition to the Closing, the Company is raising
additional capital of at least $6,250,000, for which the Company will issue at
or following the Closing shares of its Series C Convertible Preferred Stock,
par value $0.02 per share (the "Series C Stock"), and additional shares of the
Series A Stock;
WHEREAS, it is contemplated in connection with the Stock Exchange
Agreement that the Series A Stock, Series B Stock, and Series C Stock will
convert automatically into shares of Common Stock (pursuant to the terms of
their respective certificates of designations) upon the availability of
authorized Common Stock for conversion;
WHEREAS, the Stock Exchange Agreement requires the Company, as
promptly as practicable after the Closing, to hold an annual meeting of its
shareholders to consider and vote on, among other things, amendment of the
Company's Restated Certificate of Incorporation dated December 3 1997, to
increase the number of shares of authorized Common Stock (the "Charter
Amendment"), which will enable the automatic conversion of the Series A Stock,
Series B Stock and Series C Stock into Common Stock;
WHEREAS, USV and Warren desire to vote for the Charter Amendment,
subject to the terms and conditions set forth herein; and
WHEREAS, USV, Warren and Earls desire to enter into an agreement to be
specifically enforceable against each of them pursuant to which they agree to
take the actions specified herein.
<PAGE> 2
NOW, THEREFORE, in consideration of the foregoing and the terms and
conditions set forth herein, USV, Warren and Earls agree as follows:
1. Voting Agreement. Each of USV and Warren agrees at the next duly
called shareholders' meeting of the Company called to consider, among other
things, approval of the Charter Amendment to vote any and all of its or his
shares of Common Stock, shares of Series A Stock, shares of Common Stock
issuable upon exercise of the Warrants and upon conversion of the Series A
Stock and other shares of capital stock and other securities of the Company,
whether now owned or hereafter acquired (the "Voting Shares"), in favor of the
Charter Amendment.
2. Irrevocable Proxy. In order to insure the voting of USV and Warren in
accordance with this Agreement, each of USV and Warren agrees to execute an
irrevocable proxy simultaneously with the execution hereof in the form of
Exhibit A attached hereto granting to Earls the right to vote, or to execute
and deliver shareholder written consents, in respect of all of its or his
Voting Shares. It is understood and agreed that such irrevocable proxy relates
solely to voting in favor of the Charter Amendment.
3. Changes in Common Stock. In the event that subsequent to the date of
this Agreement any shares of capital stock or other securities of the Company
are issued on or in exchange for any of the Voting Shares by reason of any
stock dividend, stock split, consolidation of shares, reclassification or
consolidation involving the Company, such shares or other securities shall be
deemed to be covered by and subject to the terms of this Agreement.
4. Representations of USV and Warren. Each of USV and Warren hereby
represents and warrants that (a) it or he is the record owner as of the date
hereof and owns and has the right to vote the number of Voting Shares set forth
opposite its or his name on Exhibit B attached hereto, (b) such number of
Voting Shares set forth opposite its or his name on Exhibit B constitutes all
of the shares of capital stock and other securities of the Company held by it
or him as of the date hereof, (c) it or he has full power to enter into this
Agreement and has not, prior to the date of this Agreement, executed or
delivered any proxy or entered into any other voting agreement or similar
arrangement other than one which has expired or terminated prior to the date
hereof or which is superseded by this Agreement and the irrevocable proxy
granted hereunder, and (d) it or he will not take any action inconsistent with
the purpose and provisions of this Agreement.
5. Enforceability. Each of USV, Warren and Earls expressly agrees that
this Agreement shall be specifically enforceable in any court of competent
jurisdiction in accordance with its terms against each of the parties hereto.
6. Termination. This Agreement shall terminate and be void and of no
effect upon shareholder approval of the Charter Amendment.
7. Indemnification. Each of USV and Warren hereby agrees jointly and
severally to indemnify, defend and hold harmless Earls from any and all claims,
liabilities, obligations or expenses he incurs (including attorneys' fees and
expenses) in connection with his being
<PAGE> 3
designated as and his actions in connection with carrying out his duties as
proxy for USV and Warren.
9. Proxy Holder. Earls hereby agrees to act as proxy for USV and Warren
subject to the terms and conditions set forth herein.
10. General Provisions.
(a) Other than the E2E Stockholders, this Agreement is intended for
the benefit of the Company, USV, Warren and Earls and their respective
successors and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
(b) This Agreement and the rights of the parties hereunder shall be
governed by and construed in accordance with the laws of the State of Delaware
without regard to its principles of choice of law or conflict of laws.
(c) This Agreement may be executed in one or more counterparts
(including by facsimile), each of which shall constitute an original
enforceable against the party actually executing such counterpart, and all of
which together shall constitute one and the same instrument.
(d) If any provision of this Agreement shall be declared void or
unenforceable by any court or administrative board of competent jurisdiction,
such provision shall be deemed to have been severed from the remainder of this
Agreement and this Agreement shall continue in all respects to be valid and
enforceable.
(e) No waivers of any breach of this Agreement extended by any party
hereto to any other party shall be construed as a waiver of any rights or
remedies of any other party hereto or with respect to any subsequent breach.
(f) Whenever the context of this Agreement shall so require, the use
of the singular number shall include the plural and the use of any gender shall
include all genders.
IN WITNESS WHEREOF, USV, Warren and Earls have executed this Agreement
as of the date first written above.
USV PARTNERS, LLC /s/ James V. Warren
By: USV MANAGEMENT, LLC -----------------------------------
JAMES V. WARREN
By: /s/ C. Gregory Earls /s/ C. Gregory Earls
--------------------------------- -----------------------------------
C. Gregory Earls C. GREGORY EARLS
Sole Member
<PAGE> 4
EXHIBIT A
IRREVOCABLE PROXY
U.S. TECHNOLOGIES INC.
KNOW ALL MEN BY THESE PRESENTS, that the undersigned (hereinafter referred
to as the "Shareholder"), agrees to and does hereby grant and convey to C.
Gregory Earls an irrevocable proxy pursuant to the provisions of Section 212 of
the Delaware General Corporation Law to vote, or to execute and deliver written
consents or otherwise act with respect to, all of the Voting Shares of the
Shareholder in accordance with the terms of that certain Voting Agreement made
as of ___________, 2000, among the Shareholder, certain other shareholders of
the Company and C. Gregory Earls (the "Voting Agreement") in connection with
the Charter Amendment. All capitalized terms used herein and not otherwise
defined shall have the respective meanings given to them in the Voting
Agreement. The Shareholder hereby affirms that this Proxy is given as a
condition of the Voting Agreement and as such is coupled with an interest and
is irrevocable.
It is further directed by the Shareholder that this Proxy shall be
exercised by C. Gregory Earls at the Company's next duly called annual or
special shareholders' meeting (the "Meeting"), and any adjournments thereof,
which considers the approval of the Charter Amendment by his voting the shares
represented hereby in accordance with the terms of the Voting Agreement. This
Proxy shall expire simultaneously with the termination of the Voting Agreement.
DATED this__________ day of _______________, 2000.
- -----------------------------
Signature
- -----------------------------
Print Name
INSTRUCTIONS: Print full legal name in the space provided. Sign exactly as
name is printed below signature line. When stock is issued
in two or more names, all should sign. If signing as attorney,
administrator, executor, trustee, guardian or other fiduciary,
give full title as such. A corporation should sign by
authorized officer.
<PAGE> 5
EXHIBIT B
VOTING SHARES
<TABLE>
<CAPTION>
Shareholder Shares Held
- ----------- -----------
<S> <C>
USV PARTNERS, LLC 500,000 SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION
OF WARRANT
625,000 SHARES OF SERIES A PREFERRED CONVERTIBLE STOCK
6,366,152 SHARES OF COMMON STOCK
JAMES V. WARREN 1,500,000 SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF OPTIONS
6,318,652 SHARES OF COMMON STOCK
</TABLE>
<PAGE> 1
EXHIBIT 2.5
===============================================================================
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
among
U.S. TECHNOLOGIES INC.,
USV PARTNERS, LLC,
NORTHWOOD CAPITAL PARTNERS LLC,
NORTHWOOD VENTURES LLC,
JONATHAN J. LEDECKY
and
CERTAIN OTHER SHAREHOLDERS
OF U.S. TECHNOLOGIES INC.
Dated as of April 12, 2000
===============================================================================
<PAGE> 2
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
This AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (the
"Agreement") is entered into as of this 12th day of April, 2000, by and among
U.S. Technologies Inc., a Delaware corporation (the "Company"), USV Partners,
LLC, a Delaware limited liability company ("USV"), Northwood Capital Partners
LLC, a New York limited liability company ("Northwood Capital"), Northwood
Ventures LLC, a New York limited liability company ("Northwood Ventures"),
Jonathan J. Ledecky ("Ledecky") and the other holders of shares of the capital
stock or other securities of the Company that are parties hereto, including
those that are added as parties by joinder (the "Other Preferred Holders")
(each of USV, Northwood Capital, Northwood Ventures, Ledecky and the Other
Preferred Holders, an "Investor," and together the "Investors").
WITNESSETH:
WHEREAS, USV is the owner of certain shares of the Company's Series A
Convertible Preferred Stock, par value $0.02 per share (the "Series A
Convertible Preferred Stock"), the Company's common stock, par value $0.02 per
share (the "Common Stock"), and warrants (the "Warrants") to purchase 500,000
shares (subject to adjustment pursuant to the terms thereof) of the Common
Stock;
WHEREAS, the Company has entered into a Stock Exchange Agreement
dated as of February 21, 2000, as amended by the Amendment to Stock Exchange
Agreement dated as of April 5, 2000 (together, the "Stock Exchange Agreement"),
with E2Enet, Inc. ("E2E"), U.S. Technologies Acquisition Sub, Inc. and those
persons (including Northwood Capital, Northwood Ventures and Ledecky) who as of
the closing of the merger contemplated therein (the "Closing") will own,
collectively, all of the issued and outstanding shares of the capital stock of
E2E (the "E2E Stockholders");
WHEREAS, pursuant to the Stock Exchange Agreement, the Company is
issuing to the E2E Stockholders at the Closing shares of the Company's Series B
Convertible Preferred Stock, par value $0.02 per share (the "Series B
Convertible Preferred Stock"), with an aggregate stated value equal to
$11,200,000;
WHEREAS, as a condition to the Closing, the Company is raising
additional capital of at least $6,250,000, for which the Company is issuing at
or following the Closing shares of the Company's Series C Convertible Preferred
Stock, par value $0.02 per share (the "Series C Convertible Preferred Stock"),
and additional shares of the Series A Convertible Preferred Stock;
WHEREAS, the Company and USV have entered into a Registration Rights
Agreement dated as of July 16, 1998 (the "USV Registration Rights Agreement"),
pursuant to which the Company agreed to register shares of Common Stock as set
forth therein; and
WHEREAS, in connection with the Company's execution of the Stock
Exchange Agreement and the transactions contemplated therein, the Company and
USV have agreed to amend and restate the USV Registration Rights Agreement, and
the Company has agreed, on the terms and conditions set forth herein, to
register shares of Common Stock as set forth below.
<PAGE> 3
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereto agree that the USV Registration Rights
Agreement shall be superseded and replaced in its entirety by this Agreement,
and the Parties hereto further agree as follows:
ARTICLE I. DEFINITIONS
1.1 Definitions. As used herein, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):
"Action or Proceeding" means any action, suit, arbitration, proceeding or
Governmental Authority investigation or audit.
"Advice" has the meaning given it in Section 3.2 of this Agreement.
"Affiliate" means any Person that, directly or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with the Person specified. For purposes of this definition, control of a Person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"Applicable Securities Authority" means the Commission or any other
Governmental Authority with which a registration statement or similar form must
be filed to issue securities under the Applicable Securities Laws.
"Applicable Securities Law" means each Law applicable to the purchase and
sale of securities of the Company, including, without limitation, the
Securities Act, the Exchange Act and "Blue Sky" laws and the rules and
regulations promulgated thereunder.
"Blocking Notice" has the meaning given it in Section 3.2 of this
Agreement.
"Business Day" means any Day other than a Saturday, Sunday or public
holiday or the equivalent for banks under the laws of Washington, DC.
"Commission" means the United States Securities and Exchange Commission or
any other U.S. federal agency at the time administering the Securities Act.
"Common Stock" has the meaning given it in the recitals.
"Company Registration Notice" means a request to include Registrable
Securities in a registration initiated by the Company pursuant to Section 2.3
hereof (a) made in writing, (b) by a Holder of Registrable Securities, and (c)
specifying the number of Registrable Securities to be offered for sale pursuant
to such registration (which may be any or all of the Registrable Securities
owned by such Holder).
"Day" means a calendar day.
"Demand Registration" means a registration pursuant to Section 2.1 hereof
and sale pursuant to such registration, under the Applicable Securities Laws,
of all or substantially all of the Registrable Securities that are the subject
of a Qualifying Request, which sale shall be made
<PAGE> 4
pursuant to a firm commitment underwritten secondary offering arranged for by
the Company, unless the requirement of a firm commitment underwriting is waived
in writing by the Holders of a majority of the Registrable Securities that are
the subject of such Qualifying Request.
"E2E Stockholders" has the meaning given it in the recitals.
"Exchange Act" means the United States Securities Exchange Act of 1934, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any court, panel, judge, board, bureau,
commission, agency or other entity, body or other Person exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to such government.
"Holder" means any Investor and any Transferee that has become a Party to
this Agreement by executing a joinder agreement in the form attached hereto as
Exhibit A.
"Indemnified Party" has the meaning given it in Section 5.3 of this
Agreement.
"Indemnifying Party" has the meaning given it in Section 5.3 of this
Agreement.
"Laws" means all laws, statutes, rules, regulations, ordinances and other
pronouncements having the effect of law in any country, or any state, province,
county, city or other political subdivision thereof.
"Order" means any writ, judgment, decree, injunction or similar order of
any Governmental Authority (in each case whether preliminary or final).
"Party" means a party to this Agreement.
"Person" means and includes any individual, partnership, joint venture,
corporation, trust, limited liability company, joint stock company,
unincorporated organization, association or other entity and includes any
Governmental Authority.
"Piggyback Notice" means a request to include Registrable Securities in a
registration pursuant to Section 2.2 hereof (a) made in writing, (b) by a
Holder of Registrable Securities, and (c) specifying the number of Registrable
Securities to be offered for sale pursuant to such registration (which may be
any or all of the Registrable Securities owned by such Holder) and the intended
disposition thereof.
"Preferred Shares" means the Series A Shares, Series B Shares and Series C
Shares.
"Qualifying Request" means a request for a Demand Registration (a) made in
writing, (b) by the Holder or Holders of Registrable Securities constituting
one third (1/3) of all Registrable Securities, (c) specifying the number of
Registrable Securities to be offered for sale pursuant to the Demand
Registration, and (d) specifying whether the Company is to arrange for a public
sale in a firm commitment underwritten secondary offering of the Registrable
Securities that are the subject of such request.
"Registering Shareholder" has the meaning given it in Section 2.2(a) of
this Agreement.
<PAGE> 5
"Registrable Security" means each share of Common Stock (a) into which a
Preferred Share is convertible, (b) for which a Warrant is exercisable, (c)
into which or for which any other security of the Company held by a Holder is
convertible or exercisable, (d) otherwise held by a Holder, and (e) received
with respect to a Preferred Share, Warrant, or Registrable Security pursuant to
any stock dividend, stock split, recapitalization or similar event; provided,
however, that (i) a Holder of Preferred Shares or of a Warrant or of any other
security of the Company convertible into or exercisable for Common Stock shall
be deemed to be the Holder of the Registrable Securities attributable to such
Preferred Shares or Warrant or other security; and (ii) any Registrable
Security will cease to be a Registrable Security when (A) such Registrable
Security has been transferred pursuant to an effective registration statement
or Rule 144 under the Securities Act or any comparable Applicable Securities
Law covering such Registrable Security (but not including any transfer exempt
from registration under any Applicable Securities Law), (B) such Registrable
Security is no longer held of record by a Holder, or (C) such Registrable
Security has ceased to be outstanding.
"Registration Statement" has the meaning given it in Section 3.1(a).
"Requesting Holder" has the meaning given it in Section 2.3(a) of this
Agreement.
"Requesting Piggyback Holder" has the meaning given it in Section 2.2(a)
of this Agreement.
"Securities Act" means the United States Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"Series A Convertible Preferred Stock" has the meaning given it in the
recitals.
"Series B Convertible Preferred Stock" has the meaning given it in the
recitals.
"Series C Convertible Preferred Stock" has the meaning given it in the
recitals.
"Series A Shares" means the shares of Series A Convertible Preferred Stock
purchased by USV and any additional or replacement shares of preferred or
common stock issued with respect to Series A Shares upon any stock dividend,
stock split, recapitalization or similar event.
"Series B Shares" means the shares of Series B Convertible Preferred Stock
acquired by the E2E Stockholders pursuant to the Stock Exchange Agreement and
any additional or replacement shares of preferred or common stock issued with
respect to Series B Shares upon any stock dividend, stock split,
recapitalization or similar event.
"Series C Shares" means the shares of Series C Convertible Preferred Stock
purchased by investors in the Company as contemplated by the Share Exchange
Agreement and any additional or replacement shares of preferred or common stock
issued with respect to Series C Shares upon any stock dividend, stock split,
recapitalization or similar event.
"Shareholder" means any holder of equity securities of the Company.
"Stock Exchange Agreement" has the meaning given it in the recitals.
<PAGE> 6
"Transfer" means, as applicable, (i) a sale, transfer, assignment, pledge,
hypothecation or other disposition or encumbrance of capital stock or an
interest therein, or (ii) to sell, transfer, assign, pledge, hypothecate or
otherwise dispose or encumber capital stock or an interest therein.
"Transferee" means any Person to which Registrable Securities are
Transferred by a Holder, in each case in accordance with the terms of such
securities or the certificate of designations, purchase agreement or other
document designating, evidencing or otherwise relating to such securities, as
the case may be.
"Warrants" has the meaning given it in the recitals.
1.2 Interpretation. Unless otherwise expressly provided herein, (a)
defined terms in the singular include the plural and vice versa, and the
masculine, feminine and neuter gender include all genders; (b) the words
"hereof," "herein" and "hereunder" and words of similar import refer to this
Agreement as a whole and not to any particular provision of this Agreement; (c)
the words "include," "includes," and "including" mean include, includes and
including "without limitation" and "without limitation by specification"; (d)
references to any Person shall be construed as a reference to such Person and
any permitted successors or assigns of such Person; (e) references to "consent"
shall mean prior consent evidenced in writing; (f) terms such as "satisfactory
to ______," "acceptable to _________," "in such manner as ______ may
determine," "to ______'s satisfaction," and phrases of similar import authorize
and permit such Party to approve, disapprove, act or decline to act, unless
otherwise specified herein, in its reasonable discretion without unreasonable
delay or condition; and (g) references to Sections refer to Sections of this
Agreement.
ARTICLE II. REGISTRATION RIGHTS
2.1 Demand Registrations. (a) Following the date that is six (6) months
after the date on which the Series B Shares and Series C Shares are converted
into Common Stock as contemplated by the Stock Exchange Agreement, the Holders
of Registrable Securities shall be entitled to require the Company to effect
from time to time Demand Registration of the Registrable Securities pursuant to
Qualifying Requests. If a Qualifying Request is made by fewer than all Holders
of Registrable Securities, copies of the Qualifying Request shall be
distributed by the Company to all Holders who are not Parties to such
Qualifying Request within five Business Days after it is received by the
Company. Each such Holder shall be entitled to join in the Qualifying Request
by delivering written notice to the Company within ten Business Days after its
receipt of a copy of the Qualifying Request from the Company. Such notice shall
specify the number of Registrable Securities that each such Holder elects to
include in the Qualifying Request and, if the Qualifying Request does not
already include such a requirement, whether such Holder requires the Company to
arrange for public sale in a firm commitment underwritten secondary offering of
the Registrable Securities that are the subject of the Qualifying Request.
(b) Within 90 Days after receiving a Qualifying Request from any
Holder of Registrable Securities, the Company shall (i) prepare and file a
registration statement under the Applicable Securities Laws covering the
Registrable Securities which are the subject of such request, (ii) use its best
efforts to cause such registration statement to become effective promptly
thereafter and (iii) take appropriate steps to complete all other requirements
for registration or qualification of the Registrable Securities under the
Applicable Securities Laws.
(c) The Company shall use its best efforts to arrange for public sale
in a firm commitment underwritten secondary offering of the Registrable
Securities that are the subject of
<PAGE> 7
a Qualifying Request delivered pursuant to Section 2.1(a), unless the
requirement of a firm commitment underwriting is waived in writing by a
majority of the Holders of the Registrable Securities that are subject to such
Qualifying Request. The Holders of a majority of the Registrable Securities
that are the subject of such Qualifying Request shall have the right to
designate the managing underwriter(s) of any such offering, subject to the
consent of the Company, which consent shall not be unreasonably withheld.
Except as the Holders having delivered or joined in a Qualifying Request may
consent in writing, the Company will not file with the Applicable Securities
Authority any other registration statement with respect to its Common Stock
(other than a registration effected on Form S-4, Form S-8 or any successor
forms thereto), whether for its own account or that of other stockholders, from
the date of receipt of the Qualifying Request until the completion of the
period of distribution of the Registrable Securities contemplated thereby.
(d) If the Company grants any demand registration rights to another
Person, the Company shall include within such demand registration rights an
obligation on behalf of such Person to notify the Company in writing of its
intent to exercise its demand registration rights at least 30 Days prior to
such exercise. Immediately after receipt of such notice but in no event later
than three Days after receipt thereof, the Company shall deliver a copy of such
notice to the Holders. If the Holders exercise their demand registration rights
hereunder prior to the exercise of the demand registration rights held by the
Person providing such notice, the Registrable Securities sought to be
registered by the Holders shall be included in the registration statement and
any associated offering prior to the securities sought to be registered by such
other Person.
2.2 "Piggyback" Registrations. (a) If at any time the Company proposes or
agrees to register any of its securities (other than securities registered on
Form S-4 or Form S-8 or any successor forms thereto) for the account of any
Shareholder (each a "Registering Shareholder"), then in each such case the
Company shall, not later than five Days after deciding or agreeing to register
such shares, give written notice thereof to each Holder of Registrable
Securities (which shall include a list of the jurisdictions in which the
Company intends to attempt to qualify such securities). If, within 30 Days of
the receipt by the Holders of any such written notice, any Holder (each a
"Requesting Piggyback Holder") delivers to the Company a Piggyback Notice,
subject to Section 2.4 hereof, the Company shall include in such registration
statement the Registrable Securities specified in such Piggyback Notice. The
Company shall have the right to designate the managing underwriter(s) of any
such offering, subject to the consent of the Registering Shareholders and the
Requesting Piggyback Holders, which consents shall not be unreasonably
withheld.
(b) If, at any time prior to the filing of a registration
statement in connection with a registration described in Section 2.2(a) above,
the Registering Shareholders withdraw their request for registration or the
Company determines for any reason either not to register any securities or to
delay registration of such securities, the Company may, at its election, give
written notice of such withdrawal by the Registering Shareholders or
determination by the Company to each Requesting Piggyback Holder and,
thereupon, in the case of a withdrawal by the Registering Shareholders or a
determination not to register by the Company, shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration. No registration effected under this Section 2.2 shall relieve the
Company of its obligations to effect any registration upon request under
Section 2.1, nor shall any registration hereunder be deemed to have been
effected pursuant to Section 2.1.
2.3 Company Registration. (a) If, at any time or from time to time, the
Company shall determine to register any of its securities for its own account,
the Company will promptly
<PAGE> 8
give the Holders of Registrable Securities written notice thereof (which shall
include a list of the jurisdictions in which the Company intends to attempt to
qualify such securities). If, within 30 Days of the receipt by the Holders of
any such written notice, any Holder (each a "Requesting Holder") delivers to
the Company a Company Registration Notice, subject to Section 2.4 hereof, the
Company shall include in such registration statement the Registrable Securities
specified in such Company Registration Notice.
(b) If, at any time after giving written notice of its intention to
register any securities and prior to filing of a registration statement in
connection with such registration, the Company shall determine for any reason
either not to register or to delay registration of such securities, the Company
may, at its election, give written notice of such determination to each
Requesting Holder and, thereupon, in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration. No registration effected under
this Section 2.3 shall relieve the Company of its obligations to effect any
registration upon request under Section 2.1, nor shall any registration
hereunder be deemed to have been effected pursuant to Section 2.1.
2.4 Managing Underwriter Cut-Backs. If any registration pursuant to this
Section 2 contemplates an underwritten offering and the managing underwriter(s)
advise the Company and the Holders requesting that the Company register
Registrable Securities pursuant to this Section 2 in writing that the inclusion
in the registration statement of some or all of the Registrable Securities
sought to be registered by such Holders creates a significant risk that the
price per share that such Holders and the Company will derive from such
registration will be adversely affected or that the number of shares or
securities sought to be registered is too large a number to be reasonably sold,
the Company will include in such registration statement such number of shares
or securities as the Company and such Holders are so advised in writing can be
sold in such offering without such an effect, as follows and in the following
order of priority:
(a) with respect to registrations pursuant to Section 2.1, first, the
Registrable Securities of each Holder that delivered or joined in a Qualifying
Request on a pro rata basis in proportion to the number of Registrable
Securities sought to be registered; and second, the number of shares or
securities sought to be registered by any other Shareholders who have a
contractual, incidental "piggyback" right to include such securities in the
registration statement;
(b) with respect to registrations pursuant to Section 2.2, first, the
securities sought to be registered by the Registering Shareholders; second, on
a pro rata basis in proportion to the number of Registrable Securities sought
to be registered, the Registrable Securities of each of the Requesting
Piggyback Holders; and third, the number of shares or securities sought to be
registered by any other Shareholders who have a contractual, incidental
"piggyback" right to include such securities in the registration statement; and
(c) with respect to registrations pursuant to Section 2.3, first, the
number of shares or securities sought to be registered by the Company; and
second, on a pro rata basis in proportion to the number of Registrable
Securities sought to be registered, the Registrable Securities of each of the
Requesting Holders.
2.5 Other Registration Rights. Except as provided herein, no Person has
any right of any nature to require the Company to register Common Stock of the
Company owned by such Person, and the Company shall not enter into any
agreement offering registration rights that are superior to the rights set
forth in Sections 2.1, 2.2 and 2.3 without the prior written consent of the
<PAGE> 9
Holders of a majority of the Registrable Securities, which consent shall not be
unreasonably withheld.
2.6 Conversion of Registrable Securities. Preferred Shares, Warrants and
other securities of the Company convertible into or exercisable for Common
Stock shall be deemed automatically converted into or exercised for their
corresponding Registrable Securities immediately before the sale of such
Registrable Securities pursuant to a Registration Statement. Any unpaid portion
or the exercise price for Registrable Securities attributable to the Warrants
or any other warrants shall be deducted from the proceeds of the sale and paid
to the Company at the closing of such sale. Upon such automatic conversion,
such converted or exercised Preferred Shares, Warrants and other securities of
the Company shall be deemed to be canceled and shall cease to be outstanding.
ARTICLE III. REGISTRATION PROCEDURES
3.1 Company Obligations. Whenever the Holders of Registrable Securities
have requested that any Registrable Securities be registered pursuant to this
Agreement, the Company will:
(a) prepare and furnish to the Holders drafts of each registration
statement to an Applicable Securities Authority pertaining to any securities of
the Company (each a "Registration Statement"), any prospectus, amendment or
supplement thereto and any document incorporated by reference therein, which
documents will be subject to the review and comments of each Holder as to
matters regarding such Holder; file each Registration Statement and use its
best efforts to cause such Registration Statement to become effective; notify
each Holder of Registrable Securities of the effectiveness of each Registration
Statement; and furnish to the Holders such number of copies of such
Registration Statement, each amendment and supplement thereto (including any
exhibits thereto), the prospectus included in such Registration Statement
(including each preliminary prospectus), the documents incorporated by
reference therein and such other documents as any Holder may reasonably
request;
(b) use its best efforts to maintain the effectiveness of each
registration statement filed pursuant to this Agreement, and take such other
steps as are required by Applicable Securities Laws to maintain the
registration or qualification in effect either (i) until such time as all
Registrable Securities registered pursuant to the registration statement have
been sold or (ii) for a period of 180 days, whichever is shorter. Each Holder
shall provide written notice to the Company within 15 Days after it has sold
all of its Registrable Securities registered pursuant to this Agreement;
(c) notify the Holders in writing of the occurrence of an event
requiring the preparation of a supplement or amendment to a prospectus and
promptly prepare and file with the Applicable Securities Authority any such
supplement or amendment;
(d) use its best efforts to register or qualify the Registrable
Securities registered pursuant to a Registration Statement under such other
Applicable Securities Laws as any Holder may reasonably request and do any and
all other acts which may be reasonably necessary or advisable to enable any
such Holder to consummate the disposition of its Registrable Securities under
such Applicable Securities Laws, except that the Company shall not be required
to qualify to do business as a foreign corporation, subject itself to taxation
or consent to general service of process in any jurisdiction where it is not
currently obligated to be so qualified, in accordance with and subject to the
terms and conditions contained herein;
<PAGE> 10
(e) cause all such Registrable Securities to be listed or quoted on
each securities exchange or market on which similar securities issued by the
Company are then listed;
(f) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of the applicable Registration
Statement;
(g) enter into such customary agreements (including underwriting
agreements in customary form) in order to expedite or facilitate the
disposition of such Registrable Securities;
(h) make available for inspection by any underwriter participating
in any disposition pursuant to a Registration Statement, and any attorney,
accountant or other agent retained by any such underwriter, all financial and
other records, pertinent corporate documents and properties of the Company, and
cause the Company's officers, directors, employees and independent accountants
to supply all information reasonably requested by any such underwriter,
attorney, accountant or agent in connection with such Registration Statement;
and
(i) otherwise use its best efforts to comply with all Applicable
Securities Laws.
3.2 Suspension of Effectiveness. At least five Business Days prior to any
disposition of Registrable Securities, a Holder shall advise the Company of the
dates on which such disposition is expected to commence and terminate, the
number of Registrable Securities expected to be sold, the method of disposition
and such other information as the Company may reasonably request in order to
supplement the related prospectus in accordance with the Applicable Securities
Laws. The Company may suspend dispositions under the registration statement and
notify the Holder that it may not sell the Registrable Securities pursuant to
any registration statement or prospectus (a "Blocking Notice") if (a) the
Company's management determines in its reasonable good faith judgment that the
Company's obligation to ensure that such registration statement and prospectus
are current and complete would require the Company to take actions that might
reasonably be expected to have a detrimental effect on any proposal,
negotiations or plan by the Company or any of its subsidiaries to engage in any
acquisition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer, reorganization or similar transaction or
(b) the Company determines that the registration statement, the prospectus, any
amendment or supplement thereto, or any document incorporated by reference
therein contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or requires the making of any additions to or changes in
the registration statement or the prospectus in order to make the statements
therein not misleading; provided that such suspension may not exceed 60 days.
Each Holder agrees by acquisition of the Registrable Securities that, upon
receipt of a Blocking Notice from the Company, such Holder shall not dispose
of, sell or offer for sale any Registrable Securities pursuant to a
registration statement until such Holder receives (a) copies of the
supplemented or amended prospectus, or a written determination from counsel for
the Company that such disclosure is not required due to subsequent events, (b)
notice in writing (the "Advice") from the Company that the use of the
prospectus may be resumed and (c) copies of any additional or supplemental
filings that are incorporated by reference in the prospectus. If so directed by
the Company in connection with any Blocking Notice, each Holder will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies, then in such Holder's possession of the prospectus covering such
Registrable Securities that was current immediately prior to the time of
receipt of such Blocking Notice. In the event the Company shall give any
Blocking Notice, the time regarding the effectiveness of a registration
statement set forth in Section 2.1 shall be extended by the number of Days
during the period from and including the
<PAGE> 11
date of the giving of such Blocking Notice to and including the date when the
Holder shall have received the copies of the supplemented or amended
prospectus, the Advice and any additional or supplemental filings that are
incorporated by reference in the prospectus or the supplemental prospectus, as
the case may be. Delivery of a Blocking Notice and the related suspension of
any registration statement in accordance with the terms of this Section 3.2
shall not constitute a default under this Agreement.
ARTICLE IV. REGISTRATION EXPENSES; HOLDBACK
4.1 Company Expenses. Except as provided in Section 4.2, all fees and
expenses incident to the Company's performance of or compliance with this
Agreement shall be borne by the Company, including, without limitation, the
following fees and expenses: (a) all Applicable Securities Authority,
self-regulatory organization, stock exchange and other registration and filing
fees and listing fees; (b) the fees and expenses of the Company's compliance
with securities or "Blue Sky" laws (including reasonable fees and disbursements
of counsel in connection with "Blue Sky" qualifications of the Registrable
Securities); (c) printing expenses; (d) all underwriting discounts and
commissions not attributable to the sale of Registrable Securities; (e) the
fees and disbursements of counsel for the Company and of one firm of counsel
for the selling Holders, collectively, in each relevant jurisdiction; (f) the
fees and expenses of independent certified public accountants; (g) the fees and
expenses of underwriters and other persons retained by the Company in
connection with a registration; (h) fees of transfer agents and registrars; and
(i) messenger and delivery expenses; provided, however, in connection with
Demand Registration pursuant to Section 2.1, the Company shall pay such fees
and expenses only with respect to the first three (3) times such right is
exercised (but provided that any registration at the Company's expense begun
pursuant to Section 2.1 that is subsequently withdrawn at the request of the
Holders of a majority of the Registrable Securities that are the subject of a
Qualifying Request shall not count toward the three (3) Demand Registrations at
the Company's expense if the Holders that delivered or joined in the Qualifying
Request reimburse the Company for all out-of-pocket expenses incurred by the
Company in connection with such withdrawn registration). In addition, the
Company shall pay its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit or quarterly review, the
expense of any liability insurance obtained by the Company, and the expenses
and fees for listing or authorizing for quotation the securities to be
registered on each securities exchange on which any Registrable Securities are
then listed or quoted.
4.2 Holder Expenses. The selling Holders shall pay all underwriting
discounts and commissions attributable to the sale of Registrable Securities
and all of the selling Holders' internal expenses incurred in connection with
any offering (including, without limitation, all salaries and expenses of the
selling Holders' officers and employees performing legal or accounting duties,
but excluding fees and expenses of the selling Holders' counsel that are
payable by the Company under Section 4.1).
4.3 Restrictions on Public Sale by Holder of Registrable Securities. To
the extent not inconsistent with applicable Law, each Holder whose securities
are included in a registration statement agrees not to effect any public sale
or distribution of the issue being registered or a similar security of the
Company, or any securities convertible into or exchangeable or exercisable for
such securities, including a sale pursuant to Rule 144 under the Securities
Act, during the 14 days prior to, and during the 90-day period beginning on,
the effective date of such registration statement (except as part of such
registration), if and to the extent requested by either the
<PAGE> 12
Company in the case of a non-underwritten public offering or if and to the
extent requested by the managing underwriter(s) in the case of an underwritten
public offering.
4.4 Restrictions on Public Sale by the Company and Others. The Company
agrees not to effect any public sale or distribution of any securities similar
to those being registered, or any securities convertible into or exchangeable
for such securities (other than any such sale or distribution of such
securities in connection with any merger or consolidation by either the Company
or any subsidiary thereof or in connection with the sale of the capital stock
or all or substantially all of the assets of any other Person or in connection
with an employee stock option plan or benefit plan), during the 14 days prior
to, and during the 90-day period beginning on, the effective date of any
registration statement in which the Holders are participating or the
commencement of a public distribution of the Registrable Securities.
ARTICLE V. INDEMNIFICATION; CONTRIBUTION
5.1 Indemnification by the Company. The Company agrees to indemnify and
hold harmless each Holder, each of such Holder's officers, directors, partners,
employees and agents, and each Person controlling any such Persons and, if
requested by any underwriter, such underwriter and each person who controls
such underwriter from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation, any
legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability
or action, and any of the foregoing incurred in settlement of any litigation,
commenced or threatened) arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in a Registration
Statement or prospectus contained therein or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
arising out of or based upon any violation by the Company of any Applicable
Securities Law applicable to the Company and relating to action or inaction by
the Company in connection with any registration, qualification or compliance
required hereunder, or arising out of or based upon the Company's breach of any
representation, warranty, covenant or agreement contained in this Agreement;
provided, however, that the Company shall not be liable in any such case to the
extent any of such losses, claims, damages, liabilities or expenses arise out
of, or are based upon, any such untrue statement or omission or allegation
thereof based upon information furnished in writing to the Company by such
Holder expressly for use therein. In addition to any other information
furnished in writing to the Company, expressly for use therein, by the Holder,
the information in the registration statement under the caption "Selling
Shareholders" (or any similarly captioned section containing the information
required pursuant to Item 507 of Regulation S-K promulgated pursuant to the
Securities Act) shall be deemed information furnished in writing to the Company
by the Holder; provided that the Company has complied with its obligations
pursuant to Section 3.1(a).
5.2 Indemnification by Holders. Each Holder agrees severally to indemnify
and hold harmless the Company, its directors and officers and each person, if
any, who controls the Company and, if requested by any underwriter, such
underwriter and each person who controls such underwriter to the same extent as
the foregoing indemnity from the Company, but only with respect to information
furnished in writing by such Holder, or on its behalf, expressly for use in a
Registration Statement or prospectus relating to Registrable Securities, any
amendment or supplement thereto or any preliminary prospectus, and provided
that the obligation of each Holder to indemnify will be several and not joint.
Each Holder's indemnity obligations under this
<PAGE> 13
Section 5.2 and contribution obligations under Section 5.4 shall be limited, in
the aggregate, to the net sales proceeds actually received by it in connection
with the applicable offering.
5.3 Conduct of Indemnification Proceedings. If any Action or Proceeding
(including any governmental investigation) shall be brought or asserted against
any Person entitled to indemnification under Section 5.1 or 5.2 above (an
"Indemnified Party") in respect of which indemnity may be sought from any Party
who has agreed to provide such indemnification (an "Indemnifying Party") and
the Indemnifying Party acknowledges in writing to the Indemnified Party that
the Indemnified Party is entitled to indemnity by the Indemnifying Party
hereunder, the Indemnifying Party shall assume the defense of such Action or
Proceeding, including the employment of counsel reasonably satisfactory to such
Indemnified Party, and shall assume the payment of all expenses. Such
Indemnified Party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Party unless (a) the
Indemnifying Party has agreed to pay such fees and expenses, or (b) such
Indemnified Party shall have been advised by counsel that there is an actual or
potential material conflict of interest on the part of counsel employed by the
Indemnifying Party to represent such Indemnified Party. If counsel advises the
Indemnified Party of such a conflict of interest, or if the Indemnifying Party
fails to acknowledge in writing that the Indemnified Party is entitled to
indemnity hereunder, the Indemnifying Party shall not have the right to assume
the defense of such Action or Proceeding on behalf of such Indemnified Party
and, upon written notice to the Indemnifying Party, the Indemnified Party may
employ separate counsel at the expense of the Indemnifying Party; it being
understood, however, that the Indemnifying Party shall not, in connection with
any one Action or Proceeding or separate but substantially similar or related
Actions or Proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (together with appropriate local counsel) at any
time for all such Indemnified Parties, which firm shall be designated in
writing by such Indemnified Parties. The Indemnifying Party shall not be liable
for any settlement of any such Action or Proceeding or any threatened Action or
Proceeding effected without its written consent, but if settled with its
written consent or if there be a final judgment for the plaintiff in any such
Action or Proceeding, the Indemnifying Party shall indemnify and hold harmless
such Indemnified Parties from and against any loss or liability (to the extent
stated above) by reason of such settlement or judgment. The failure of any
Indemnified Party to give prompt notice of a claim for indemnification
hereunder shall not limit the Indemnifying Party's obligations to indemnify
under this Agreement, except to the extent such failure is prejudicial to the
ability of the Indemnifying Party to defend the action. No Indemnifying Party,
in the defense of any such claim or litigation, shall, except with the consent
of each Indemnified Party, consent to entry of any judgment or enter into any
settlement unless (x) there is no finding or admission of any violation of any
rights of any Person and no effect on any other claims that may be made against
any Indemnified Party, (y) the sole relief provided is monetary damages that
are paid in full by the Indemnifying Party and (z) such judgment or settlement
includes as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
of such claim or litigation.
5.4 Contribution. If the indemnification provided for in this Article V is
unavailable to any Indemnified Party in respect of any losses, claims, damages,
liabilities or judgments referred to herein, then the Indemnifying Party, in
lieu of indemnifying such Indemnified Party, shall to the extent permitted by
applicable Law contribute to the amount paid or payable by such Indemnified
Party as a result of such losses, claims, damages, liabilities and judgments in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and the Indemnified Party on the other, in
connection with the matters which resulted in such
<PAGE> 14
losses, claims, damages, liabilities or judgments, as well as any other
relevant equitable considerations. The relative fault of any Indemnifying Party
on the one hand and of any Indemnified Party on the other shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by such Party, and the Parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. No person guilty of fraudulent
misrepresentation (within the meaning of subsection 11(f) of the Securities
Act) shall be entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation.
5.5 Survival. The indemnity and contribution agreements contained in this
Article V shall remain operative and in full force and effect with respect to
any sales of Registrable Securities made pursuant to a Registration Statement
regardless of (a) any termination of this Agreement, (b) any investigation made
by or on behalf of any Indemnified Party or by or on behalf of the Company, and
(c) the consummation of the sale or successive resale of the Registrable
Securities.
ARTICLE VI. MISCELLANEOUS
6.1 Rules 144 and 144A. The Company covenants that following the
registration of Registrable Securities it will file any reports required to be
filed by it under the Securities Act and the Exchange Act so as to enable
Holders holding Registrable Securities to sell such Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rules 144 and 144A under the Securities Act, as each
such Rule may be amended from time to time, or (b) any similar rule or rules
hereafter adopted by the Commission. Upon the request of any such Holder, the
Company will forthwith deliver to such Holder a written statement as to whether
it has complied with its obligation pursuant to this Section 6.1 to file any
reports required to be filed by it under the Securities Act and the Exchange
Act. In connection with any transfer pursuant to this Section 6.1, upon the
written request of the Company, the Holder shall furnish to the Company such
information so that the Company may ensure that the Holder has complied with
the limitations set forth in Rules 144 and 144A or any similar rule or rules
hereafter adopted by the Commission.
6.2 Dispute Resolution.
(a) All disputes, controversies, and claims directly or indirectly
arising out of or in relation to this Agreement or the validity,
interpretation, construction, performance, breach or enforceability of this
Agreement shall be finally, exclusively and conclusively settled by binding
arbitration, as provided in this Section 6.2, under the Commercial Arbitration
Rules of the American Arbitration Association (the "AAA") which are then in
effect.
(b) The arbitral tribunal shall be composed of three arbitrators, one
or whom shall be appointed by the Company, one of whom shall be appointed by
the Holders that are parties to the dispute, controversy or claim, and the
third of whom shall be appointed by the two arbitrators designated by the
parties. The arbitration proceedings shall be conducted in the English
language, and all documents not in English submitted by any party must be
accompanied by an English translation. The arbitration proceedings shall be
conducted and any arbitral award shall be made in Washington, D.C.
(c) The Parties agree: (i) that the arbitral tribunal shall have no
authority to award punitive damages or any damages other than those recoverable
in accordance with this
<PAGE> 15
Agreement (which may include reasonable attorneys' fees and other costs of
arbitration); (ii) to be bound by any arbitral award or Order resulting from
any arbitration conducted hereunder and that any such award or Order shall be a
reasoned award, shall be in writing, shall specify the factual and legal basis
for the award, and shall be final and binding; (iii) not to commence, procure,
participate in, or otherwise be involved as a party in any claim, Action or
Proceeding that might result in any Order concerning a dispute hereunder
(except for initiating Actions or Proceedings to obtain a judgment recognizing
or enforcing an arbitral award or Order and except for applications, claims,
Actions or Proceedings by the Parties seeking interim, interlocutory or other
provisional relief in any court having jurisdiction, but only on the ground
that the award to which the applicant may be entitled may be rendered
ineffectual without such provisional relief); (iv) that any monetary award
shall be made and payable in U.S. Dollars, in each case through a bank selected
by the recipient of the award, together with interest thereon at the lesser of
the one year London Interbank Offered Rate (LIBOR), as appearing in the Reuters
screen, plus five percent, or the maximum interest rate permissible under
applicable Law, from the date the award is granted to but excluding the date it
is paid in full; and (v) that judgment on any arbitral award or Order resulting
from an arbitration conducted under this Section 6.2 may be entered in any
court of competent jurisdiction having jurisdiction thereof or having
jurisdiction over any Party or any of its assets.
(d) The Company and the Holders hereby irrevocably waive and exclude
all rights of appeal, challenge, or recourse to any court from any arbitral
award or Order resulting from any arbitration conducted under this Section 6.2
(except for initiating Actions or Proceedings to obtain a judgment recognizing
or enforcing an arbitral award or Order and except for Actions or Proceedings
seeking interim, interlocutory or other provisional relief in any court having
jurisdiction, but only on the ground that the award to which the applicant may
be entitled may be rendered ineffectual without such provisional relief). Each
of the Parties to this Agreement hereby consents to the non-exclusive
jurisdiction of any court of competent jurisdiction in the State of Delaware
for all Actions or Proceedings to obtain a judgment recognizing or enforcing an
arbitral award or Order and waives any defense or opposition to such
jurisdiction.
(e) The arbitrators, in their discretion, may consolidate two or more
arbitrations or claims between any of the Parties arising pursuant to this
Agreement or any other agreement among the parties or to which the Holders or
Shareholders are a party into one arbitration, may terminate any such
consolidation and/or may establish other arbitration proceedings for different
claims that may rise in any one arbitration. Notwithstanding the foregoing, the
arbitrators shall consolidate arbitrations and/or claims if they determine that
it would be more efficient to consolidate such arbitrations and/or claims than
to continue them separately and (i) there are matters of fact or law that are
common to the arbitrations and/or claims to be consolidated, (ii) there are
related payment and performance obligations considered in the arbitrations
and/or claims to be consolidated, and/or (iii) there is a danger of
inconsistent awards.
(f) Each Party shall bear its own expenses in connection with the
arbitration provided in this Section 6.2, provided that the fees of the
arbitrators shall be divided equally between the Parties.
6.3 Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given, other than as mutually agreed upon
in writing by the Company and the Holders.
<PAGE> 16
6.4 Notices. Any notices or communications required or permitted hereunder
shall be in writing and shall be delivered by facsimile, courier, hand or first
class (registered or certified) mail to each Party at the address(es) indicated
for such Party on the signature pages to this Agreement. Any Party may, upon
written notice given in accordance with this Section 6.4 to the other Parties,
designate another address or Person for receipt of notices hereunder. All
notices, claims, demands and other communications hereunder shall be deemed
given (a) in the case of a facsimile transmission, when received by recipient
in legible form and sender has received an electronic confirmation of receipt
of the transmission; (b) in the case of delivery by a standard overnight
courier, upon the date of delivery indicated in the records of such courier;
(c) in the case of delivery by hand, when delivered by hand; or (d) in the case
of delivery by first class (registered or certified) mail, upon the expiration
of five (5) Business Days after the Day when mailed (postage prepaid, return
receipt requested).
6.5 Successors and Assigns; New Parties. A Holder may assign, without the
Company's consent, and shall be deemed to have assigned, such Holder's rights
and benefits with respect to the Registrable Securities that are transferred to
a Transferee. A Transferee that becomes bound by the terms of this Agreement by
its execution of a joinder agreement in the form attached hereto as Exhibit A
shall retain the rights and benefits of the transferor and become a Holder
under this Agreement. The Company may not assign any rights, benefits or
obligations under this Agreement without prior written consent of a majority of
the Holders. This Agreement shall inure to the benefit of and be binding upon
the permitted successors and assigns of the Company and the Holders.
6.6 Counterparts; Facsimile. This Agreement may be executed in any number
of identical counterparts and it shall not be necessary for each Party to
execute each of such counterparts, but when each has executed and delivered one
or more of such counterparts, the several parts, when taken together, shall be
deemed to constitute one and the same instrument, enforceable against each
Party in accordance with its terms. In making proof of this Agreement, it shall
not be necessary to produce or account for more than one such counterpart
executed by the Party against whom enforcement of this Agreement is sought.
Signatures transmitted by facsimile shall be binding as evidence of a Party's
agreement to be bound by the terms and conditions hereof.
6.7 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
6.8 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware without regard to
its principles of choice of law or conflict of laws.
6.9 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term of this Agreement, such provision shall be fully severable; this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never constituted a part of this Agreement; and the
remaining provisions of this Agreement shall remain in full force and effect
and shall not be affected by the illegal, invalid or unenforceable provision or
by its severance from this Agreement.
6.10 Entire Agreement. This Agreement is intended by the Parties as the
final expression of their agreement and is intended to be a complete and
exclusive statement of their agreement and understanding in respect of the
subject matter contained herein. This Agreement
<PAGE> 17
supersedes all prior agreements and understandings between the Parties with
respect to such subject matter, including without limitation the USV
Registration Rights Agreement, and all provisions of, rights granted under and
covenants made in the USV Registration Rights Agreement are hereby waived,
released and terminated in their entirety and shall have no further force or
effect.
6.11 Third Party Beneficiaries. Other than Indemnified Parties not a party
hereto, this Agreement is intended for the benefit of the Company, the Holders
and their respective successors and permitted assigns and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.
6.12 Obligations Several; Independent Nature of Each Holder's Rights. Each
obligation of any Holder is several and no such Holder shall be responsible for
the obligations of any other Holder. Nothing contained herein, and no action
taken by any Holder pursuant hereto, shall be deemed to constitute any Holders
as a partnership, an association, a joint venture or any other kind of entity.
Each Holder shall be entitled to protect and enforce its rights arising out of
this Agreement without notice to or the consent of any other Person, except as
specifically provided herein, and it shall not be necessary for any other such
Holder to be joined as an additional party in any proceeding for such purpose.
6.13 Nonwaiver. No course of dealing or delay or failure to exercise any
right, power or remedy hereunder on the part of any Holder shall operate as a
waiver of or otherwise prejudice such Holder's rights, powers or remedies.
6.14 Remedies. The Company and the Holders acknowledge that the remedies
at law in the event of any default or threatened default in the performance of
or compliance with any of the terms of this Agreement are not and will not be
adequate and that, to the fullest extent permitted by law and equity, such
terms may be specifically enforced by a decree for the specific performance of
any agreement contained herein or by an injunction against a violation of any
of the terms hereof or otherwise without requiring any bond or other security,
unless otherwise required by applicable law (which cannot be waived).
6.14 New Parties. During the term of this Agreement, the Company may, upon
the prior written consent of the Holders of a majority of the Registrable
Securities, permit any additional Person to become a party to this Agreement by
executing a joinder agreement in the form attached hereto as Exhibit A;
provided, however, that such consent shall not be required for the joinder of
any E2E Stockholder and any holder of Series C Shares that is not a party
hereto as of the date hereof.
6.15 Termination. All rights granted hereunder shall expire and this
Agreement shall terminate on the earlier of (i) the written consent of the
Holders, and (ii) the sixth (6th) anniversary of the date hereof.
<PAGE> 18
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
U.S. TECHNOLOGIES INC.
By: /s/ C. Gregory Earls
------------------------------------------
Name: C. Gregory Earls
Title: Co-Chairman and Co-CEO
Address: 3901 Roswell Road, Suite 300
Marietta, GA 30062
Phone: (770) 565-4311
Fax: (770) 565-8815
USV PARTNERS, LLC
By: USV MANAGEMENT, LLC
By: /s/ C. Gregory Earls
------------------------------------------
Name: C. Gregory Earls
Title: Sole Member
Address: c/o U.S. Viewing Corporation
2001 Pennsylvania Avenue, NW
Suite 675
Washington, DC 20006
Phone: (202) 466-3100
Fax: (202) 466-4557
<PAGE> 19
NORTHWOOD CAPITAL PARTNERS LLC
By: /s/ Henry T. Wilson
------------------------------------------
Name: Henry T. Wilson
Title: Managing Director
Address: 485 Underhill Boulevard
Suite 205
Syosset, NY 11791
Phone: (516) 364-5544
Fax: (516) 364-0879
NORTHWOOD VENTURES LLC
By: /s/ Henry T. Wilson
------------------------------------------
Name: Henry T. Wilson
Title: Managing Director
Address: 485 Underhill Boulevard
Suite 205
Syosset, NY 11791
Phone: (516) 364-5544
Fax: (516) 364-0879
/s/ Jonathan J. Ledecky
------------------------------------------
JONATHAN J. LEDECKY
Address: 1400 34th Street, N.W.
Washington, D.C. 20007
Phone: (202) 965-2020
Fax: (202) 342-9090
<PAGE> 20
EXHIBIT A
FORM OF JOINDER AGREEMENT
This Joinder Agreement (the "JOINDER AGREEMENT") is entered
into as of the date written below among the undersigned (the "JOINING PARTY")
and the parties to the Amended and Restated Registration Rights Agreement dated
as of the 12th day of April, 2000 (the "REGISTRATION RIGHTS AGREEMENT"), among
U.S. Technologies Inc., a Delaware corporation (the "COMPANY"), and certain
holders of the capital stock and other securities of the Company. Capitalized
terms used but not defined herein shall have the meanings given such terms in
the Registration Rights Agreement.
The Joining Party hereby acknowledges, agrees and confirms
that, by its execution of this Joinder Agreement, the Joining Party shall be
deemed to be a party to the Registration Rights Agreement and shall have all of
the rights and obligations of a "HOLDER" under the Registration Rights
Agreement. The Joining Party hereby ratifies, as of the date hereof, and agrees
to be bound by, all of the terms, provisions and conditions contained in the
Registration Rights Agreement.
This Joinder Agreement may be executed by facsimile.
IN WITNESS WHEREOF, the undersigned has executed this Joinder
Agreement as of this day ______ of _______________, 2000.
- -------------------------------
Name:
Address:
Telephone:
Facsimile:
<PAGE> 1
EXHIBIT 4.1
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF SERIES B MANDATORILY CONVERTIBLE PREFERRED STOCK
OF U.S. TECHNOLOGIES INC.
U.S. Technologies Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "CORPORATION"), by its
Co-Chief Executive Officer,
DOES HEREBY CERTIFY:
FIRST: That pursuant to authority expressly vested in the Board of
Directors of the Corporation by the provisions of its Restated Certificate of
Incorporation (the "CHARTER"), the Corporation's Board of Directors duly adopted
by unanimous written consent on April 6, 2000, the following resolution
providing for the designations and issuance of 112,000 shares of Series B
Mandatorily Convertible Preferred Stock, par value $0.02 per share:
RESOLVED, that this Board of Directors, pursuant to the
authority expressly vested in it by the provisions of the
Corporation's Restated Certificate of Incorporation and the
General Corporation Law of the State of Delaware, hereby
authorizes the issuance from time to time of a series of
preferred stock, par value $0.02 per share, of the Corporation
and hereby fixes the designation, voting powers, preferences
and relative, participating, optional and other rights and the
qualifications, limitations or restrictions thereof, in
addition to those set forth in said Restated Certificate of
Incorporation.
1. DESIGNATION AND AMOUNT
This series of preferred stock shall be designated as "Series B
Mandatorily Convertible Preferred Stock" and shall have a par value of $0.02 per
share (the "SERIES B PREFERRED"). The number of authorized shares constituting
the Series B Preferred shall be 112,000 shares. Shares of the Series B Preferred
shall have a stated value of $100.00 per share (the "STATED VALUE"). The
Corporation may issue fractional shares of the Series B Preferred. All equity
securities of the Corporation ranking as to dividends or distributions of assets
on Liquidation (as defined below) of the Corporation junior to the Series B
Preferred, including the Corporation's Common Stock, par value $0.02 per share
(the "COMMON STOCK"), are sometimes hereinafter referred to as "JUNIOR
SECURITIES."
2. LIQUIDATION PREFERENCE
In the event of any bankruptcy, liquidation, dissolution or winding up
of the Corporation, either voluntary or involuntary (a "LIQUIDATION"), each
holder of the Series B Preferred (the "PREFERRED B HOLDER") at the time thereof
shall be entitled to receive, prior and in preference to any distribution of any
of the assets or funds of the Corporation to the holders of the Common Stock or
other Junior Securities by reason of their ownership of such stock, an amount
per share of Series B
<PAGE> 2
Preferred equal to the Stated Value plus any accrued and unpaid dividends to the
date of Liquidation (or such lesser amount required by Section 4 of the
Corporation's Charter). If, upon a Liquidation, the assets and funds of the
Corporation legally available for distribution among the Preferred B Holders and
the holders of any other capital stock of the Corporation ranking, as to
Liquidation, on a parity with the Series B Preferred, including but not limited
to the Series A Convertible Preferred Stock and the Series C Mandatorily
Convertible Preferred Stock (the "PARITY STOCK"), shall be insufficient to pay
in full the Liquidation preference of the Series B Preferred and liquidating
payments on any Parity Stock (in either case, or such lesser amounts as required
by Section 4 of the Corporation's Charter), then no assets or funds shall be
distributed to the Preferred B Holders or to the holders of any Parity Stock
except to the extent that such assets or funds shall be distributed among the
Preferred B Holders and the holders of any Parity Stock ratably in accordance
with the respective amounts which would be payable upon Liquidation on the
Series B Preferred and any Parity Stock if all amounts payable thereon were
payable in full (or such lesser amounts as required by Section 4 of the
Corporation's Charter). Subject to the rights of the holders of shares of any
series or class or classes of stock ranking, as to Liquidation, senior to the
Series B Preferred, upon Liquidation, after payment of the Liquidation
preference of the Series B Preferred and Parity Stock determined pursuant to
this Section 2, the remaining assets of the Corporation legally available for
distribution shall be distributed ratably to the holders of Junior Securities,
including the Common Stock.
3. VOTING RIGHTS
(a) Prior to the Conversion Date (as defined below), the
Corporation shall not, without first obtaining the affirmative vote or written
consent of the holders of a majority of the shares of Series B Preferred then
outstanding, voting as a single class:
(i) repurchase, purchase or otherwise acquire any Common
Stock or other Junior Securities for any consideration (or pay or make available
any moneys, whether by means of a sinking fund or otherwise, for the repurchase
of any shares of Common Stock or other Junior Securities);
(ii) after the date that the first share of Series B
Preferred is issued, authorize or permit the Corporation or any of its
subsidiaries (A) to issue, other than to a Preferred B Holder, any equity
securities or securities convertible into or exchangeable for equity securities
or any securities granting the holder an option to acquire any such securities,
each at a price below the Current Market Price (as defined below), or (B) to
issue any stock of the Corporation with the same preference and priority as the
Series B Preferred or with a preference or priority senior to the Series B
Preferred;
(iii) authorize or effect, in a single transaction or
through a series of related transactions, a consolidation, merger or business
combination of the Corporation with any other Person, a spin-off or
recapitalization of the Corporation, the Liquidation of the Corporation or the
sale, lease, exchange or other transfer of all or substantially all of the
assets of the Corporation to any other Person, or the adoption of any plan for
the same;
(iv) amend, repeal, modify or supplement any provision of
the Charter, the Corporation's Bylaws in effect on the date hereof or any
successor articles of incorporation or bylaws, other than effecting the Charter
Amendment (as defined below);
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(v) amend, repeal, modify or supplement or in any other
manner affect or change the terms, designations, preferences or rights of the
Series B Preferred set forth herein;
(vi) authorize or permit the Corporation to (A) make an
assignment for the benefit of creditors, (B) file a petition in bankruptcy, (C)
petition or apply to any tribunal for appointment of a receiver, custodian or
any trustee for it or for a substantial part of its assets, or (D) commence any
proceeding under any bankruptcy, reorganization or arrangement or readjustment
of debt law or statute in any jurisdiction;
(vii) authorize or permit the Corporation to change
materially the type of business conducted by it or contemplated to be conducted
by it as of the date hereof;
(viii) authorize or permit the Corporation to enter into any
transaction with any affiliate (other than a wholly owned subsidiary) or
shareholder or authorize or permit the amendment, extension or renewal of such a
transaction other than on arm's-length terms; and
(ix) authorize or permit the Corporation to acquire any
equity interest in any other Person, other than (i) VIPRO Corporation ("VIPRO")
pursuant to that certain Stock Purchase Agreement, dated March 13, 2000, by and
among the Corporation, VIPRO, Northwood Ventures LLC and Northwood Capital
Partners LLC, and (ii) Buyline.net, Incorporated ("BUYLINE"), in connection with
the transactions contemplated by that certain Agreement in Principle, dated as
of February 28, 2000, between the Corporation and Buyline.
"Person" means and includes any individual,
partnership, joint venture, corporation, trust, limited liability company, joint
stock company, unincorporated organization, any government entity or any
political subdivision or agency thereof, or any other entity.
(b) Except as otherwise required by law, each Preferred B Holder
shall be entitled to vote on all other matters together with the holders of
shares of the Common Stock (including, for purposes of this Section 3(b), any
other securities of the Corporation that are entitled to vote with the holders
of shares of Common Stock) and not as a separate class, at any annual or special
meeting of stockholders of the Corporation, and may act by written consent in
the same manner as the Common Stock, in either case upon the following basis:
each Preferred B Holder shall be entitled to such number of votes as shall be
equal to the whole number of shares of Common Stock into which such holder's
aggregate number of shares of Series B Preferred are convertible (pursuant to
Section 4 hereof) immediately after the close of business on the record date
fixed for such meeting or the effective date of such written consent.
Notwithstanding the foregoing, the Preferred B Holders will not be entitled to
vote or take action at a meeting of the Corporation's stockholders, the purpose
of which includes the approval by the holders of Common Stock of an amendment to
the Corporation's Charter ("CHARTER AMENDMENT") to increase the number of shares
of Common Stock the Corporation is authorized to issue to an amount sufficient
to permit the conversion to Common Stock of all of the Corporation's
then-outstanding shares of all of its authorized and designated series of
convertible preferred stock, which includes the Series B Preferred, and any
other then-outstanding securities and options or similar rights issued by the
Corporation, which are convertible into or otherwise permit the holder thereof
to purchase or otherwise receive shares of Common Stock.
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4. MANDATORY CONVERSION
(a) MANDATORY CONVERSION. By virtue of the filing with and
acceptance of the Charter Amendment by the Secretary of State of the State of
Delaware and without any action on the part of the Preferred B Holders, as of
the date the Charter Amendment is filed with and accepted by the Secretary of
State of the State of Delaware (the "CONVERSION DATE"), all of the issued and
outstanding shares of the Series B Preferred shall be converted into Common
Stock. The number of shares of Common Stock into which each share of Series B
Preferred shall be converted shall be the product obtained by multiplying the
Conversion Rate then in effect (determined as provided in Section 4(b)) by the
number of shares of Series B Preferred being converted. The Corporation shall
take all such actions as are necessary to insure that the shares of Common Stock
issued with respect to such conversion shall be validly issued, fully paid and
non-assessable, free and clear of all taxes, liens, charges and encumbrances
with respect to the issuance thereof.
(b) CONVERSION RATE. The conversion rate for conversion of the
Series B Preferred (the "CONVERSION RATE") shall be the quotient obtained by
dividing the Stated Value by .20 (the "CONVERSION PRICE").
(c) PROCEDURES FOR MANDATORY CONVERSION.
(i) On the Conversion Date, the Corporation will mail to
each Preferred B Holder (A) a letter of transmittal, which shall specify the
Conversion Date and notify such holder that his, her or its shares of Series B
Preferred have been converted to Common Stock (the "CONVERSION NOTICE") and (B)
instructions, which shall specify the procedures for surrender of such holder's
certificates representing ownership of Series B Preferred ("PREFERRED
CERTIFICATES") in exchange for certificates representing ownership of Common
Stock ("COMMON STOCK CERTIFICATES"). Promptly after receipt of the Conversion
Notice, each Preferred B Holder shall surrender such holder's Preferred
Certificates, duly endorsed for transfer, at any time during normal business
hours, to the Corporation at its principal office or at such other office or
agency then maintained by it for such purpose and designated in the Conversion
Notice, accompanied by any instrument of transfer in form reasonably
satisfactory to the Corporation and to any conversion agent, duly executed by
the registered Preferred B Holder or by such holder's duly authorized attorney.
As promptly as practicable after the surrender for conversion of any Preferred
Certificates in the manner provided in the preceding sentence but in any event
within five (5) business days after receipt of the Preferred Certificates, the
Corporation will deliver or cause its transfer agent to deliver to the holder of
such Preferred Certificates Common Stock Certificates representing the aggregate
number of shares of Common Stock issuable upon such conversion, issued in such
name or names as such holder may direct. Such conversion shall be deemed to have
been made as of the Conversion Date, and all rights of the Preferred B Holder,
with respect to such holder's shares of Series B Preferred, shall cease at such
time and the person or persons in whose name or names the Preferred Certificates
are registered, or after delivery of the Preferred Certificates for conversion
pursuant hereto the person or persons in whose name or names the Common Stock
Certificates are to be issued, shall be treated for all purposes as having
become the record holder or holders thereof at such time.
(ii) The Corporation shall not be required to issue
fractional shares of Common Stock upon conversion of shares of Series B
Preferred. At the Corporation's discretion, in the event
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the Corporation determines not to issue fractional shares, then in lieu of any
fractional shares to which the Preferred B Holder would otherwise be entitled,
the Corporation shall pay cash equal to such fraction multiplied by the Current
Market Price (as defined below).
(iii) The issuance of Common Stock Certificates upon
conversion shall be made without charge for any issue, stamp or other similar
tax in respect of such issuance. However, if any such Common Stock Certificate
is to be issued in a name other than that of the holder of record of the shares
converted, the person or persons requesting the issuance thereof shall pay to
the Corporation the amount of any such tax which may be payable in respect of
any transfer involved in such issuance or shall establish, to the satisfaction
of the Corporation, that such tax has been paid or is not payable.
(iv) "CURRENT MARKET PRICE" means the average of the daily
Closing Prices per share of Common Stock for the fifteen (15) consecutive
trading days immediately prior to such date. The "Closing Price" per share of
Common Stock for each day shall be the last sale price, regular way, before 5:00
p.m., or in case no such sale takes place on such day, the average closing bid
and asked prices, regular way, in either case, as reported on the NASD OTC
Bulletin Board or any successor stock exchange or quotation system on which the
Common Stock is then primarily listed or traded. If on any such trading day or
days such securities are not quoted by any such organization, such trading day
or days shall be replaced for purposes of the foregoing calculation by the
requisite trading day or days preceding the commencement of such fifteen (15)
day trading day period on which such securities are so quoted.
(d) RESERVATION OF STOCK ISSUABLE UPON MANDATORY CONVERSION. Until
the Conversion Date, the number of authorized but unissued shares of Common
Stock shall not be sufficient to effect the conversion to Common Stock of all of
the outstanding shares of the Corporation's authorized and designated series of
convertible preferred stock, including the Series B Preferred, and the other
outstanding securities and options or similar rights issued by the Corporation,
which are convertible into or otherwise permit the holder thereof to purchase or
otherwise receive shares of Common Stock. The Corporation shall take any such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purpose, including, without limitation, approving
the Charter Amendment and taking other appropriate board action, submitting the
Charter Amendment to the Corporation's stockholders for their approval,
recommending the Charter Amendment and any other such increase to the
Corporation's stockholders, holding shareholders meetings, and soliciting votes
and proxies in favor of the Charter Amendment and any other such increase to
obtain the requisite shareholder approval.
(e) REORGANIZATION, MERGER OR SALE OF THE CORPORATION.
(i) Notwithstanding any other provision hereof, in case
of (A) any reorganization or any reclassification of the capital stock of the
Corporation or (B) any sale of the Corporation if such transaction does not
constitute a Liquidation, then, at the election of each Preferred B Holder,
concurrently with the consummation of such reorganization, reclassification or
sale of the Corporation, provision shall be made so that each share of Series B
Preferred shall thereafter be
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<PAGE> 6
convertible into the number of shares of stock or other securities or property
(including cash) to which a holder of the number of shares of Common Stock
deliverable upon conversion of such share of Series B Preferred would have been
entitled assuming conversion on the day immediately prior to the initial
announcement of the transaction or a proposed transaction that ultimately
resulted in the transaction. In any case, appropriate adjustment (as determined
by the Corporation's Board of Directors) shall be made in the application of the
provisions herein set forth with respect to the rights and interests thereafter
of the Preferred B Holders, to the end that the provisions set forth herein
shall thereafter be applicable, as nearly as equivalent as is practicable, in
relation to any shares of stock or the securities or property (including cash)
thereafter deliverable upon the conversion of the shares of Series B Preferred.
(ii) In case of any merger, consolidation,
reclassification or other similar reorganization, to the extent the Corporation
is not the surviving entity, the Series B Preferred shall be converted into or
exchanged for and shall become shares of the surviving corporation having, in
respect of the surviving corporation, substantially the same powers, preferences
and relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereon, that the Series B Preferred
has immediately prior to such transaction.
5. RESTRICTIONS ON DIVIDENDS, STOCK SPLITS AND DISTRIBUTIONS
The Corporation shall not at any time or from time to time after the
date that the first share of the Series B Preferred is issued until after the
Conversion Date: (i) declare or pay any dividends on or make other distributions
in respect of any of its capital stock, including, but not limited to, dividends
paid or payable in cash, the capital stock of the Corporation, or any other
property; (ii) effect a stock-split or any other subdivision of the outstanding
Common Stock; or (iii) effect a combination of the outstanding shares of Common
Stock into a smaller number of shares.
6. REMEDIES
(a) The Corporation acknowledges that the remedies at law of each
Preferred B Holder in the event of any failure of the Corporation in the
performance of or compliance with any of the terms hereof are not and will not
be adequate and that, to the fullest extent permitted by law and equity, such
terms may be specifically enforced by a decree for the specific performance of
any agreement contained herein or by an injunction against a violation of any of
the terms hereof or otherwise without requiring any holder to post a bond or
other security, unless otherwise required by applicable law.
(b) Any Preferred B Holder shall be entitled to recover from the
Corporation the reasonable attorneys' fees and expenses incurred by such holder
in connection with such holder's enforcement of any obligation of the
Corporation hereunder.
(c) No failure or delay on the part of any Preferred B Holder in
exercising any right, power or remedy hereunder or under applicable law or
otherwise 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 hereunder
or thereunder.
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<PAGE> 7
The remedies provided herein are cumulative and not exclusive of any remedies
provided by law or otherwise.
SECOND: That such determination of the designations, preferences and
the relative, participating, optional or other rights, and the qualifications,
limitations or restrictions thereof, relating to the Series B Preferred was duly
made by the Corporation's Board of Directors pursuant to the provisions of the
Corporation's Charter, and in accordance with the provisions of Section 151 of
the General Corporation Law of the State of Delaware, as amended.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, U.S. Technologies Inc. has caused this Certificate
of Designations to be executed this 7th day of April, 2000.
U.S. TECHNOLOGIES INC.
By: /s/ C. Gregory Earls
-----------------------------
C. Gregory Earls,
Co-Chief Executive Officer
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EXHIBIT 4.2
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF SERIES C MANDATORILY CONVERTIBLE PREFERRED STOCK
OF U.S. TECHNOLOGIES INC.
U.S. Technologies Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "CORPORATION"), by its
Co-Chief Executive Officer,
DOES HEREBY CERTIFY:
FIRST: That pursuant to authority expressly vested in the Board of
Directors of the Corporation by the provisions of its Restated Certificate of
Incorporation (the "CHARTER"), the Corporation's Board of Directors, duly
adopted by unanimous written consent on April 7, 2000, the following resolution
providing for the designations and issuance of 8,750 shares of Series C
Mandatorily Convertible Preferred Stock, par value $0.02 per share:
RESOLVED, that this Board of Directors, pursuant to the
authority expressly vested in it by the provisions of the
Corporation's Restated Certificate of Incorporation and the
General Corporation Law of the State of Delaware, hereby
authorizes the issuance from time to time of a series of
preferred stock, par value $0.02 per share, of the Corporation
and hereby fixes the designation, voting powers, preferences
and relative, participating , optional and other rights and
the qualifications, limitations or restrictions thereof, in
addition to those set forth in said Restated Certificate of
Incorporation.
1. DESIGNATION AND AMOUNT
This series of preferred stock shall be designated as "Series C
Mandatorily Convertible Preferred Stock" and shall have a par value of $0.02 per
share (the "SERIES C PREFERRED"). The number of authorized shares constituting
the Series C Preferred shall be 8,750 shares. Shares of the Series C Preferred
shall have a stated value of $1000 per share (the "STATED VALUE"). The
Corporation may issue fractional shares of the Series C Preferred. All equity
securities of the Corporation ranking as to dividends or distributions of assets
on Liquidation (as defined below) of the Corporation junior to the Series C
Preferred, including the Corporation's Common Stock, par value $0.02 per share
(the "COMMON STOCK"), are sometimes hereinafter referred to as "JUNIOR
SECURITIES."
2. LIQUIDATION PREFERENCE
In the event of any bankruptcy, liquidation, dissolution or winding up
of the Corporation, either voluntary or involuntary (a "LIQUIDATION"), each
holder of the Series C Preferred (the "PREFERRED C HOLDER") at the time thereof
shall be entitled to receive, prior and in preference to any distribution of any
of the assets or funds of the Corporation to the holders of the Common Stock or
<PAGE> 2
other Junior Securities by reason of their ownership of such stock, an amount
per share of Series C Preferred equal to the Stated Value plus any accrued and
unpaid dividends to the date of Liquidation (or such lesser amount required by
Section 4 of the Corporation's Charter). If, upon a Liquidation, the assets and
funds of the Corporation legally available for distribution among the Preferred
C Holders and the holders of any other capital stock of the Corporation ranking,
as to Liquidation, on a parity with the Series C Preferred, including but not
limited to the Series A Convertible Preferred Stock and the Series B Mandatorily
Convertible Preferred Stock (the "PARITY STOCK"), shall be insufficient to pay
in full the Liquidation preference of the Series C Preferred and liquidating
payments on any Parity Stock (in either case, or such lesser amounts as required
by Section 4 of the Corporation's Charter), then no assets or funds shall be
distributed to the Preferred C Holders or to the holders of any Parity Stock
except to the extent that such assets or funds shall be distributed among the
Preferred C Holders and the holders of any Parity Stock ratably in accordance
with the respective amounts which would be payable upon Liquidation on the
Series C Preferred and any Parity Stock if all amounts payable thereon were
payable in full (or such lesser amounts as required by Section 4 of the
Corporation's Charter). Subject to the rights of the holders of shares of any
series or class or classes of stock ranking, as to Liquidation, senior to the
Series C Preferred, upon Liquidation, after payment of the Liquidation
preference of the Series C Preferred and Parity Stock determined pursuant to
this Section 2, the remaining assets of the Corporation legally available for
distribution shall be distributed ratably to the holders of Junior Securities,
including the Common Stock.
3. VOTING RIGHTS
Except as otherwise required by law, each Preferred C Holder shall be
entitled to vote on all matters together with the holders of shares of the
Common Stock (including, for purposes of this Section 3, any other securities of
the Corporation that are entitled to vote with the holders of shares of Common
Stock) and not as a separate class, at any annual or special meeting of
stockholders of the Corporation, and may act by written consent in the same
manner as the Common Stock, in either case upon the following basis: each
Preferred C Holder shall be entitled to such number of votes as shall be equal
to the whole number of shares of Common Stock into which such holder's aggregate
number of shares of Series C Preferred are convertible (pursuant to Section 5
hereof) immediately after the close of business on the record date fixed for
such meeting or the effective date of such written consent. Notwithstanding the
foregoing, the Preferred C Holders will not be entitled to vote or take action
at a meeting of the Corporation's stockholders, the purpose of which includes
the approval by the holders of Common Stock of an amendment to the Corporation's
Charter ("CHARTER AMENDMENT") to increase the number of shares of Common Stock
the Corporation is authorized to issue to an amount sufficient to permit the
conversion to Common Stock of all of the Corporation's then-outstanding shares
of all of its authorized and designated series of convertible preferred stock,
which includes the Series C Preferred, and any other then-outstanding securities
and options or similar rights issued by the Corporation, which are convertible
into or otherwise permit the holder thereof to purchase or otherwise receive
shares of Common Stock.
4. MANDATORY CONVERSION
(a) MANDATORY CONVERSION. By virtue of the filing with and
acceptance of the Charter Amendment by the Secretary of State of the State of
Delaware and without any action on the part
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of the Preferred C Holders, as of the date the Charter Amendment is filed with
and accepted by the Secretary of State of the State of Delaware (the "CONVERSION
DATE"), all of the issued and outstanding shares of the Series C Preferred shall
be converted into fully-paid and nonassessable shares of Common Stock. The
number of shares of Common Stock into which each share of Series C Preferred
shall be converted shall be the product obtained by multiplying the Conversion
Rate then in effect (determined as provided in Section 4(b)) by the number of
shares of Series C Preferred being converted.
(b) CONVERSION RATE. The conversion rate for conversion of the
Series C Preferred (the "CONVERSION RATE") shall be the quotient obtained by
dividing the Stated Value by $1.45 (the "CONVERSION PRICE").
(c) PROCEDURES FOR MANDATORY CONVERSION.
(i) On the Conversion Date, the Corporation will mail to
each Preferred C Holder (A) a letter of transmittal, which shall specify the
Conversion Date and notify such holder that his, her or its shares of Series C
Preferred have been converted to Common Stock (the "CONVERSION NOTICE") and (B)
instructions, which shall specify the procedures for surrender of such holder's
certificates representing ownership of Series C Preferred ("PREFERRED
CERTIFICATES") in exchange for certificates representing ownership of Common
Stock ("COMMON STOCK CERTIFICATES"). Promptly after receipt of the Conversion
Notice, each Preferred C Holder shall surrender such holder's Preferred
Certificates, duly endorsed for transfer, at any time during normal business
hours, to the Corporation at its principal office or at such other office or
agency then maintained by it for such purpose and designated in the Conversion
Notice, accompanied by any instrument of transfer in form reasonably
satisfactory to the Corporation and to any conversion agent, duly executed by
the registered Preferred C Holder or by such holder's duly authorized attorney.
As promptly as practicable after the surrender for conversion of any Preferred
Certificates in the manner provided in the preceding sentence but in any event
within five (5) business days after receipt of the Preferred Certificates, the
Corporation will deliver or cause its transfer agent to deliver to the holder of
such Preferred Certificates, Common Stock Certificates representing the
aggregate number of shares of Common Stock issuable upon such conversion, issued
in such name or names as such holder may direct. Such conversion shall be deemed
to have been made as of the Conversion Date, and all rights of the Preferred C
Holder, with respect to such holder's shares of Series C Preferred, shall cease
at such time and the person or persons in whose name or names the Preferred
Certificates are registered, or after delivery of the Preferred Certificates for
conversion pursuant hereto the person or persons in whose name or names the
Common Stock Certificates are to be issued, shall be treated for all purposes as
having become the record holder or holders thereof at such time.
(ii) The Corporation shall not be required to issue
fractional shares of Common Stock upon conversion of shares of Series C
Preferred. At the Corporation's discretion, in the event the Corporation
determines not to issue fractional shares, then in lieu of any fractional shares
to which the Preferred C Holder would otherwise be entitled, the Corporation
shall pay cash equal to such fraction multiplied by the Current Market Price (as
defined below).
(iii) The issuance of Common Stock Certificates upon
conversion shall be made without charge for any issue, stamp or other similar
tax in respect of such issuance. However, if any
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such Common Stock Certificate is to be issued in a name other than that of the
holder of record of the shares converted, the person or persons requesting the
issuance thereof shall pay to the Corporation the amount of any such tax which
may be payable in respect of any transfer involved in such issuance or shall
establish, to the satisfaction of the Corporation, that such tax has been paid
or is not payable.
(iv) "Current Market Price" means the average of the daily
Closing Prices per share of Common Stock for the fifteen (15) consecutive
trading days immediately prior to such date. The "Closing Price" per share of
Common Stock for each day shall be the last sale price, regular way, before 5:00
p.m., or in case no such sale takes place on such day, the average closing bid
and asked prices, regular way, in either case, as reported on the NASD OTC
Bulletin Board or any successor stock exchange or quotation system on which the
Common Stock is then primarily listed or traded. If on any such trading day or
days such securities are not quoted by any such organization, such trading day
or days shall be replaced for purposes of the foregoing calculation by the
requisite trading day or days preceding the commencement of such fifteen (15)
day trading day period on which such securities are so quoted.
(d) RESERVATION OF STOCK ISSUABLE UPON MANDATORY CONVERSION. Until
the Conversion Date, the number of authorized but unissued shares of Common
Stock shall not be sufficient to effect the conversion to Common Stock of all of
the outstanding shares of the Corporation's authorized and designated series of
convertible preferred stock, including the Series C Preferred, and the other
outstanding securities and options or similar rights issued by the Corporation,
which are convertible into or otherwise permit the holder thereof to purchase or
otherwise receive shares of Common Stock. The Corporation shall take any such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purpose, including, without limitation, approving
the Charter Amendment and taking other appropriate board action, submitting the
Charter Amendment to the Corporation's stockholders for their approval,
recommending the Charter Amendment and any other such increase to the
Corporation's stockholders, holding shareholders meetings, and soliciting votes
and proxies in favor of the Charter Amendment and any other such increase to
obtain the requisite shareholder approval.
(e) REORGANIZATION, MERGER OR SALE OF THE CORPORATION.
(i) Notwithstanding any other provision hereof, in case
of (A) any reorganization or any reclassification of the capital stock of the
Corporation or (B) any sale of the Corporation if such transaction does not
constitute a Liquidation, then, at the election of each Preferred C Holder,
concurrently with the consummation of such reorganization, reclassification or
sale of the Corporation, provision shall be made so that each share of Series C
Preferred shall thereafter be convertible into the number of shares of stock or
other securities or property (including cash) to which a holder of the number of
shares of Common Stock deliverable upon conversion of such share of Series C
Preferred would have been entitled assuming conversion on the day immediately
prior to the initial announcement of the transaction or a proposed transaction
that ultimately resulted in the transaction. In any case, appropriate adjustment
(as determined by the Corporation's Board of Directors) shall be made in the
application of the provisions herein set forth with respect to the rights and
interests thereafter of the Preferred C Holders, to the end that the provisions
set forth herein shall
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<PAGE> 5
thereafter be applicable, as nearly as equivalent as is practicable, in relation
to any shares of stock or the securities or property (including cash) thereafter
deliverable upon the conversion of the shares of Series C Preferred.
(ii) In case of any merger, consolidation,
reclassification or other similar reorganization, to the extent the Corporation
is not the surviving entity, the Series C Preferred shall be converted into or
exchanged for and shall become shares of the surviving corporation having, in
respect of the surviving corporation, substantially the same powers, preferences
and relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereon, that the Series C Preferred
has immediately prior to such transaction.
5. RESTRICTIONS ON DIVIDENDS, STOCK SPLITS AND DISTRIBUTIONS
The Corporation shall not at any time or from time to time after the
date that the first share of the Series C Preferred is issued until after the
Conversion Date: (i) declare or pay any dividends on or make other distributions
in respect of any of its capital stock, including, but not limited to, dividends
paid or payable in cash, the capital stock of the Corporation, or any other
property; (ii) effect a stock-split or any other subdivision of the outstanding
Common Stock; or (iii) effect a combination of the outstanding shares of Common
Stock into a smaller number of shares.
SECOND: That such determination of the designations, preferences and
the relative, participating, optional or other rights, and the qualifications,
limitations or restrictions thereof, relating to the Series C Preferred, was
duly made by the Corporation's Board of Directors pursuant to the provisions of
the Corporation's Charter, and in accordance with the provisions of Section 151
of the General Corporation Law of the State of Delaware, as amended.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, U.S. Technologies Inc. has caused this Certificate
of Designations to be executed this 7th day of April, 2000.
U.S. TECHNOLOGIES INC.
By: /s/ C. Gregory Earls
--------------------------------
C. Gregory Earls,
Co-Chief Executive Officer
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<PAGE> 1
EXHIBIT 99.1
(BW)(DC-U.S.-TECHNOLOGIES)(USXX) U.S. Technologies Completes
Acquisition of Internet Incubator Company E2Enet, Inc. and
Private Placements of Preferred Stock
Business Editors/Hi-Tech Writers
WASHINGTON--(BUSINESS WIRE)--April 12, 2000--
Company to call Annual Meeting to Approve Charter Amendment
U.S. Technologies Inc. (NASDAQ BB:USXX) announced today that it has completed
the previously announced acquisition of Internet incubator company E2Enet, Inc.
("E2Enet"). As previously announced, E2Enet has made early stage investments in
several development stage business-to-business (B2B) and business-to-consumer
(B2C) e-commerce businesses. As previously disclosed, shares of the Company's
new voting Series B mandatorily convertible preferred stock with an aggregate
liquidation preference of $11.2 million were issued in exchange for all of the
outstanding capital stock of E2Enet. Those preferred shares are to be converted
into 56 million shares of common stock after Company stockholders approve an
amendment to the Company's charter authorizing additional shares of common
stock, all as previously announced.
U.S. Technologies also announced that it has completed the private placement of
more than $5,184,000 of voting Series C mandatorily convertible preferred stock.
U.S. Technologies anticipates raising additional capital through the further
issuance of the offering of Series C preferred shares in the coming weeks. All
Series C preferred shares will automatically convert, once the charter amendment
is effective, into shares of U.S. Technologies common stock at $1.45 per share
of common stock. USV Partners also purchased an additional $1,250,000 of voting
Series A convertible preferred stock. USV has committed to convert these and all
of its other Series A preferred shares into common stock when the charter
amendment is effective. "We are delighted that the E2Enet acquisition has closed
and that we were able to complete the U.S. Technologies private placement of new
Series C preferred shares," said Gregory Earls, U.S. Technologies Co-Chairman
and Co-CEO. "We are excited about the investment opportunities being presented
to U.S. Technologies and the progress that is being made by the companies in
which E2Enet has investments," said Earls
U.S. Technologies' acquisition of E2Enet includes equity ownership
interests in the following companies:
Buyline.net, Inc. ("Buyline"). Buyline is a developer of B2B e-commerce
applications, and is developing a proprietary Internet software program designed
to be a universal platform for entry-level B2B e-commerce, linking buyers and
sellers. Buyline's
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application for RFP/RFQ technology (Request for Proposal/Request for Quotation)
will be used in a full range of on-line advertising, on Internet based
directories, and in commercial web sites.
VIPRO Corporation ("Vipro"). Vipro is an Internet surety company, which
provides repair guarantees against viruses that harm computers. The Company has
e-commerce relationships with a leading Internet utility company, a credit card
association, one of the largest warranty claims administrators in the world and
over 170 Internet service providers.
Urban Box Office Network, Inc. ("UBO"). UBO is a developer of networked
multi-media web sites that will provide e-commerce services to participants
interested in urban culture, information, entertainment and products.
OneMade, Inc. ("OneMade"). OneMade is a developer of an e-commerce
community that will serve participants in the arts, crafts, and hobby
industries. OneMade intends to connect wholesalers, retailers, consumers and
artists in these fields.
bluemercury, Inc. ("bluemercury"). bluemercury operates an e-commerce
site for upscale cosmetic products and accessories. It intends to pursue a
"clicks and bricks" strategy by also acquiring high-end cosmetic specialty
retailers.
MEI Sofware Systems, Inc. ("MEI"). MEI provides customized software
systems to manage the databases of trade associations, professional
associations, fund-raising organizations and chambers of commerce.
The Company also confirmed that it will call an Annual Meeting for the
purpose of electing its new slate of Board of Directors, adopting the previously
described charter amendment, and any other appropriate business matters. The
Company expects to have completed all work and related filings necessary to
permit that meeting to be held this summer.
About U.S. Technologies
In addition to its ownership of E2Enet, U.S. Technologies provides
assembly services on an outsourcing basis to other companies and related
financial and management services. The Company currently operates an electronic
assembly and manufacturing facility in Texas, a furniture manufacturing plant in
California and a motorcycle assembly plant in Florida. U.S. Technologies can be
contacted at www.usxx.com.
This release contains "forward looking statements" concerning
prospective future events and results. Such prospective events include
acquisitions and investments, and prospects for such acquisitions and
investments. U.S. Technologies cautions that actual developments and results may
differ materially from its
<PAGE> 3
prospective future events. There can be no assurance that the conditions
necessary to completing any prospective event will occur. Additional investments
by the Company or an unrelated person either in any company that is a part of
the investment portfolio of the Company's proposed Internet incubator or in such
incubator provide no assurance that such portfolio company or such incubator
will succeed or that the Company's or the incubator's investments will be
recovered or profitable. The Company's assets and operations, including results
of operations, would be affected materially by either occurrence of any such
event or the failure of any such event to occur, by the extent to which it and
portfolio companies continue to have access to financing sources on reasonable
terms in order to pursue its and their business plans, by the success or failure
of the business plans of its Internet incubator and the portfolio companies, by
economic conditions generally and particularly in the developing e-commerce
market, by competition and technological changes in its and the portfolio
companies' industries and businesses, and by the results of its and the
portfolio companies operations if and when operating.
