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EXHIBIT 2(k)(iii)
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into as of the 15th day of June,
1995, by and among Virtus Corporation, a North Carolina corporation (the
"Company"), and Southeast Interactive Technology Fund I, LLC, a North Carolina
limited liability company ("Investor").
WHEREAS, the Company and Investor have reached certain agreements with
regard to the purchase of certain securities of the Company by Investor.
NOW, THEREFORE, in consideration of the promises, covenants and
matters hereinafter set forth, the parties mutually covenant, contract and
agree, each with the other, as follows:
1. PURCHASE AND SALE.
(a) Sale of Stock. Subject to the terms and conditions hereof,
and in reliance on the representations and warranties contained herein, the
Company hereby agrees to issue and sell to Investor, and Investor hereby agrees
to purchase from the Company, Twenty Four Thousand Three Hundred Ninety
(24,390) shares (the "Shares") of Class E Convertible Preferred Stock, par
value $.01 per share (the "Preferred Stock"), each of which shares of Preferred
Stock is convertible into one (1) share of Common Stock, par value $.01 per
share (the "Common Stock"), of the Company, for the purchase price of Twenty
Dollars and Fifty Cents ($20.50) per share, for a total purchase price of Four
Hundred Ninety Nine Thousand Nine Hundred Ninety Five ($499,995) Dollars.
(b) Closing. The Closing shall be held on a mutually agreeable
date not later than June 15, 1995 at the offices of Xxxxxx Xxxxxxxx, 0000 Xxxx
Xxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx Xxxxxxxx 00000, at 9:00 a.m. or on such
other date and at such other time and place as the parties may mutually agree.
At the Closing, Investor shall pay the Company the full purchase price of the
Shares in cash, by certified or bank cashier's check or by wire transfer to an
account designated in writing by the Company. At the Closing, the Company
shall deliver to Investor a stock certificate or certificates registered in
Investor's name representing the number of Shares purchased in form and
substance acceptable to Investor, and shall also deliver the documents
described in Section 2 hereof.
(c) Additional Investment. Investor has expressed an interest in
purchasing additional shares of capital stock of the Company, and the Company
has expressed an interest in discussing with Investor in the future the sale of
additional shares of capital stock of the Company to Investor. In light of the
foregoing, the Company has included in its authorized capital
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additional shares of Preferred Stock of the same class sold to Investor
pursuant to this Agreement. Neither the Company nor Investor is making any
commitment to such any future sale or purchase of capital stock of the Company
and any such sale or purchase shall be on terms, including price, to be
negotiated at the time of sale of the additional shares of capital stock.
Investor expressly conditions any such purchase by it on continuing progress by
the Company in hiring a Chief Executive Officer.
2. CONDITIONS OF CLOSING.
The obligation of Investor to purchase and pay for the Shares as set
forth under Section 1 hereunder at the Closing is subject to the fulfillment to
Investor's reasonable satisfaction or waiver in writing by Investor, on or
before the dates specified herein, of the following conditions:
(a) Representations and Warranties Correct; Performance of
Obligations. The representations and warranties made by the Company in Section
3 hereof and in any statement, certificate, schedule, exhibit or other document
delivered pursuant to this Agreement or in connection with the transaction
contemplated hereby shall be true and correct when made, and shall be true and
correct on the Closing Date with the same force and effect as if they had been
made on and as of said date; the Company's business and assets shall not have
been adversely affected prior to the Closing Date; and the Company shall have
performed all agreements, obligations and conditions herein required to be
performed or observed by it on or prior to the Closing Date.
(b) Reservation and Issuance of Shares. The Company shall have:
(i) duly amended its Articles of Incorporation to authorize for issuance the
Shares having the rights and preferences provided in the Articles of Amendment
of Articles of Incorporation in the form of Exhibit A hereto, which shall have
been filed with the office of the Secretary of State of the State of North
Carolina prior to closing; and (ii) reserved for issuance upon conversion of
the Shares, one (1) share of its Common Stock for each Share issued, which
number shall automatically be adjusted as required to equal the number of
shares of Common Stock issuable upon conversion of the Shares from time to
time.
(c) Due Diligence Review. Investor shall have completed its due
diligence review of the books, records, operations and business of the Company
and based on such review Investor shall have determined to purchase the Shares
as contemplated by this Agreement.
(d) Registration Rights Agreement. Investor shall have become a
party to the Registration Rights Agreement attached hereto as Exhibit B.
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(e) Opinion of Counsel. Investor shall have received from Xxxxxx
Xxxxxxxx, L.L.P. legal counsel for the Company, an opinion as of the Closing
Date in the form of Exhibit C hereto.
(f) Delivery of Closing Documents. Investor shall have received
the following closing documents, in form and substance satisfactory to Investor
and its counsel:
1. This Agreement, duly executed by the Company.
2. An executed copy of the Registration Rights Agreement.
3. Certificates representing the Shares being purchased
by Investor at the Closing.
4. The opinion of counsel in the form described in
subsection 2(e) hereof.
5. Certificate of the Secretary of State of North
Carolina as to the good standing of the Company as of
a date recent to the Closing Date.
6. Copies of the Articles of Incorporation and Bylaws of
the Company, as amended to date, certified by the
Secretary of the Company to be true and correct.
7. Copies of resolutions of the Board of Directors of
the Company authorizing the transactions contemplated
by this Agreement, which resolutions shall have been
certified by the Secretary of the Company to be true,
correct and complete and in full force and effect.
8. Any and all other documents, certificates, and
assurances which may be reasonably requested by
Investor.
(g) At least a majority (on an as-converted basis) of the holders
of each of the following classes of securities of the Company shall have
separately shall have waived in writing any and all preemptive rights and
rights of first refusal with respect to the shares to be sold to Investor:
Class A Convertible Preferred Stock, Class B Convertible Preferred Stock, Class
C Convertible Preferred Stock and Class D Convertible Preferred Stock.
(h) The Board of the Company shall have appointed Xxxxx Xxxxxx as
director, subject to the closing of the transactions contemplated by this
Agreement.
(i) Motorola, Inc. shall have executed and delivered to the
Company prior to the Closing a document converting all principal and accrued
interest outstanding on the March 14, 1995 $200,000
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demand note into shares of Class E Convertible Preferred Stock of the Company,
at a price of $20.50 per share provided that any such conversion may be
contingent upon receipt by the Company of at least $499,995 of gross proceeds
from the sale of its capital stock. Such document shall be in form and
substance reasonably satisfactory to Investor.
(j) The Company shall have obtained any and all consents, permits
and waivers necessary for consummation of the transactions contemplated by this
Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to Investor that, as of the
date hereof:
(a) Organization and Good Standing; Corporate Power. The Company
is a corporation duly organized and validly existing under the laws of the
State of North Carolina, and is in good standing under such laws, and is
qualified and authorized to do business in, and in good standing as a foreign
corporation in, all other states in which such qualification or authorization
is necessary for the conduct of the business in which the Company is now
engaged, and in which the failure to so qualify would have a material adverse
effect on the Company, and has all necessary licenses and permits required by
all governmental authorities to carry on such business and which the failure to
obtain would have a material adverse effect on the Company. The Company has
all requisite legal and corporate power to own, lease and operate its property
and assets, to carry on its business as presently conducted, to enter into this
Agreement, to sell and issue the Shares and to carry out and perform its
obligations under the terms of this Agreement.
(b) Authorization. The execution and delivery of this Agreement,
and the Registration Rights Agreement and the sale and issuance to Investor of
the Shares as herein provided, have been duly authorized by all necessary
corporate action of the Company so that when issued and delivered (i) the
Shares will from and after the time of issuance be duly and validly authorized
and issued, fully-paid and nonassessable, and the Common Stock to be issued
upon conversion of the Shares will from and after the time of issuance be duly
and validly authorized and issued, fully paid and non-assessable, and (ii)
neither the execution and delivery of this Agreement nor the issuance of the
Shares, or shares of Common Stock to be issued pursuant to conversion of the
Shares, will be in contravention of law, or of any judgment, decree, statute,
order, rule or regulation applicable to the Company or of its Articles of
Incorporation, Bylaws or any other contract, agreement or instrument to which
the Company may be a party or to which its property is or may be subject. Each
of this Agreement and the Registration Rights Agreement constitute legal, valid
and binding obligations of the Company and the other parties thereto (other
than Investor) enforceable in accordance with each of their respective terms.
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(c) Litigation. There is no investigation or litigation or any
proceeding before any court, commission or other administrative authority
pending, or, to the knowledge of the Company, any basis therefor or threat
thereof, against the Company, or its officers or directors which involves the
possibility of any judgment or liability, not fully covered by insurance,
which, in any case or in the aggregate, would materially and adversely affect
(i) any of the business, prospects, operations, property and assets of the
Company, (ii) the right of the Company to conduct its business as now engaged,
or (iii) the ability of the Company to perform its obligations under this
Agreement.
(d) Consents and Approvals. No consent or approval of,
authorization of, or qualification or filing with, any governmental agency or
authority or any other person or entity is required in connection with the
execution, delivery or performance of this Agreement (or any agreement or
obligation contemplated hereby) by the Company, except for filing a Form D with
the Securities and Exchange Commission after sale of the Shares, and filing the
Amendment of the Articles of Incorporation with the Secretary of State of the
State of North Carolina prior to sale of the Shares.
(e) Untrue Statements. Neither this Agreement nor any other
agreement, schedule, report, certificate, or any other document furnished to
Investor by the Company or on its behalf in connection herewith contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein and therein not misleading.
There is no material fact known to the Company relating to its business,
finances, or operations that has not been disclosed to Investor by the Company.
The representations contained herein shall not apply to any projections or pro
forma financial statements furnished to Investor, provided, however, that the
Company represents and warrants such projections or pro forma financial
statements are made in good faith and with belief in the reasonableness of all
assumptions made in connection therewith.
(f) Compliance with Law and Other Instruments. The Company is not
in violation of any instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to it, the violation of which might have a
material adverse effect on the business, prospects, affairs, operations or
condition of the Company. The execution, delivery and performance of this
Agreement and the taking of the actions contemplated hereby will not result in
any violation of, be in conflict with, or constitute a default under any of the
foregoing or result in the creation of any mortgage, lien, charge or
encumbrance upon any of the properties or assets of the Company pursuant to any
of the foregoing. None of the foregoing materially adversely affects or in the
future may (insofar as the Company can now foresee based on facts known to it
on the date hereof) materially adversely
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affect the business, prospects, operations, affairs or condition of the Company
or any of its properties or assets.
(g) Brokerage Fees. There are no claims or potential claims
against the Company or any of its officers, directors or shareholders, for
brokerage commissions, finders' fees, or other similar compensation in
connection with the transactions contemplated by this Agreement based on any
arrangement or agreement made by or on behalf of the Company or such officer,
director or shareholder.
(h) Related Parties. Xxxxx Xxxxx, the President and Chief
Executive Officer of the Company, is a consultant to the advisor of Investor.
The Company conducts ongoing business with One Room Systems, Inc., a company
affiliated with Xxx Xxxxx, a member of the advisors to Investor. To the
knowledge of the Company, the Company has had no other dealings with the
Investor or any persons or entities associated with the Investor.
(i) Tax Credit Status. The Company is qualified as a "qualified
business venture" pursuant to Section 105-163.013 (b) of the General Statutes
of North Carolina.
(j) Affiliations. The Company has no subsidiaries and does not
own or control any shares of stock or any other investments in any partnership,
corporation, limited liability company or other organization.
(k) Good Title to Properties and Assets. The Company has good
title to all the properties and assets used in its business or described in its
internal financial records, and to all patents, trademarks, trademark rights,
trade names, copyrights, licenses and other intellectual property either
developed by or assigned to the Company for its use, subject to no lien,
mortgage, pledge, reservation of rights, restrictions, security interest,
encumbrance or change of any kind except as disclosed to Investor.
(l) Tax Matters. The Company has completed and duly filed in
correct form with the appropriate United States, state and local governmental
agencies and with the appropriate foreign countries and political subdivisions
thereof, all tax returns and reports required to be filed, and such returns and
reports are accurate and complete in all material respects.
(m) ERISA. The Company has no employee benefit plans subject to
the Employee Retirement Income Security Act of 1974 ("ERISA").
(n) Financial Statements. The unaudited financial statements
of the Company dated December 31, 1994 are true, complete and correct and were
prepared in accordance with generally accepted accounting principles
consistently applied. Since December 31, 1994, there has not been any material
adverse change in the financial condition, results of operations,
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properties, assets, liabilities or business of the Company, except those
reflected in the unaudited financial statements of the Company dated April 30,
1995 or those disclosed to Investor. The unaudited balance sheet of the
Company dated April 30, 1995 reflects all issued capital stock of the Company
as of April 30, 1995.
4. REPRESENTATIONS AND WARRANTIES OF INVESTOR.
Investor hereby represents and warrants to the Company that, as of the
date hereof:
(a) Organization and Good Standing. Investor is a limited
liability company duly organized and validly existing under the laws of the
State of North Carolina and is in good standing under such laws.
(b) Power. Investor has all requisite power to enter into this
Agreement and to carry out and perform its obligations under the terms of this
Agreement.
(c) Authorization. All action on the part of Investor necessary
for the performance of Investor's obligations hereunder has been taken or will
be taken prior to the Closing. This Agreement is a valid and binding
obligation of Investor, enforceable in accordance with its terms, subject to
laws of general application relating to bankruptcy, insolvency and the relief
of debtors and the availability or lack of availability of specific performance
and other equitable remedies;.
(d) Securities Laws. Investor is purchasing the Securities for
its own account for investment purposes only and not with a view to, or for
resale in connection with, any "distribution" thereof for purposes of the
Securities Act of 1933, as amended and understands the following.
(i) No federal or state agency has made any finding or
determination as to the fairness of this offering for investment, nor
any recommendation or endorsement of the Shares.
(ii) There is no public market for the Shares or any of
the company's securities and there is no certainty that such a market
will ever develop. There can be no assurance that Investor will be
able to sell or dispose of the Shares. Moreover, no assignment, sale,
transfer, exchange or other disposition of the Shares can be made
other than in accordance with all applicable securities laws. It is
understood that in order not to jeopardize the offering's exempt
status under Section 4(2) and Regulation D of the Securities Act of
1933, as amended (the "Securities Act") and the state securities law,
any transferee may be required to fulfill certain investor suitability
requirements.
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(iii) Investor has such knowledge and experience in
financial and business matters that it is capable of evaluating
the merits and risks of investment in the Company and of making
an informed investment decision.
(iv) Investor has the capacity to protect its own interest
in connection with this transaction by reason of its prior personal or
business relationships with the Company or its officers or directors
or its business or financial experience.
(v) Investor understands that because the Shares have not
been registered under the Securities Act or applicable state
securities laws, Investor cannot dispose of any or all of the Shares
unless such Shares are subsequently registered under the Securities
Act, and/or applicable state securities laws, or exemptions from such
registration are available. Investor acknowledges and understands it
has no right to require the Company to register the Shares, except as
provided in the Registration Rights Agreement in the form of Exhibit B.
Investor is aware that the Company may not accomplish a public
offering of its stock. Investor further understands that the Company,
as a condition to the transfer of any of the Shares, may require that
the request for transfer be accompanied by opinion of counsel
reasonably satisfactory to the Company, inform and substance
reasonably satisfactory to the Company and preceded by prior written
notice, to the effect that the proposed transfer does not result in
violation of the Securities Act or applicable state securities laws,
unless such transfer is covered by an effective registration
statement under the Securities Act and compliance with all applicable
state securities laws or an exemption or exemptions from registration
is or are available. Investor understands that each certificate
representing the Shares and any securities issued upon conversion of
the shares or on account of ownership thereof will bear the following
legend or one substantially similar thereto:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state. These
securities have been acquired for investment and not with a view to
distribution or resale, and may not be sold, mortgaged, pledged,
hypothecated or otherwise transferred without an effective
registration statement for such shares under the Securities Act and
applicable state securities laws, or an opinion of counsel reasonably
satisfactory to the corporation that registration is not required
under the Securities Act and applicable state securities laws. The
securities are also subject to certain rights of first refusal of the
corporation and other contractual restrictions on transfer.
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(vi) Investor is organized under the laws of the State of
North Carolina, its principal offices are located in the State of
North Carolina and all decisions relating to purchase of the Shares
have occurred solely in North Carolina.
5. COVENANTS OF THE COMPANY
The Company may use the proceeds of the sale of the Shares
contemplated hereby for any corporate purpose consistent with budgets approved
by the Board of Directors of the Company, but may not use such proceeds (i) to
repay any outstanding indebtedness of the Company to Motorola, Inc. or (ii) to
pay more than 50% of the deferred compensation of certain management employees
of the Company reflected on the balance sheet of the Company dated April 30,
1995. The Company shall use the proceeds of the sale of the Shares
contemplated hereby for the following purposes (i) the reasonable and
documented expenses of Investor incurred to negotiate and close the sale of the
Shares contemplated hereby, including the fees and expenses of its legal
counsel, (ii) up to $5,000 to a vendor, mutually acceptable to the Company and
Investor, for a summary video to be produced by Investor covering Virtus'
markets, products, management and potential and (iii) the reasonable fees and
expenses of legal counsel to the Company incurred in connection with sale of
the Shares contemplated hereby.
Until closing of the Sale of the Company (as defined in Section 8
hereof) or an Initial Public Offering (as defined in Section 6(a) hereof) by
the Company, the Company covenants and agrees that for so long as Investor
owns, beneficially or of record, the Shares, or the Common Stock issuable upon
conversion of the Shares:
(a) Reports and Information. The Company shall furnish to
Investor the following reports:
(i) Annual Reports. Commencing the fiscal year ending
December 31, 1995, as soon as available and in any event within 90 days after
the end of each fiscal year, consolidated and consolidating financial
statements of the Company including a balance sheet as of the end of such
fiscal year and statements of income and retained earnings and of sources and
applications of funds for such fiscal year, prepared in reasonable detail and
in accordance with generally accepted accounting principles consistently
applied. The Company shall have such financial statements audited and upon
completion of the audit shall furnish to the Investor the opinion thereon of a
recognized firm of independent certified public accountants as may be selected
by the Board of Directors of the Company.
(ii) Interim Reports. As soon as available, and in any
event within 45 days after the end of the first three quarter of each of the
Company's fiscal years beginning with the quarter ended March 31, 1995,
consolidated and consolidating financial
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statements of the Company including a cash flow statement, a balance sheet as
of the end of such accounting period and statements of income and retained
earnings and of sources and applications of funds for such accounting period
and for the period from the beginning of such fiscal year to the end of such
accounting period, and setting for in comparative form the figures for the
corresponding periods of the preceding fiscal year, prepared in reasonable
detail and in accordance with generally accepted accounting principles
consistently applied and certified as correct by the president and chief
financial officer of the Company.
(iii) Monthly Reports. As soon as available, and in any
event within 30 days after the end of each month beginning after March 31,
1995, consolidated and consolidating financial statements of the Company
including cash flow statement and a balance sheet as of the end of the month
will be prepared in reasonable detail in accordance with generally acceptable
accounting principles consistently applied and certified as correct by the
president and chief financial officer of the Company. The management of the
Company will include with each monthly report comments on progress and problems
facing the Company.
(iv) Other. Promptly upon request, such other financial
information and data as Investor may from time to time reasonably request.
(v) SEC Filings, Etc. Upon completion of an Initial
Public Offering (as defined in Section 6(a) hereof) by the Company, the
obligation to provide Investor with the reports set forth in subsections (i),
(ii), (iii) and (iv) of this Section 5(a) shall terminate. Promptly upon their
becoming available (and in no event later than the ten days after release to
the public) copies (without duplication) of all financial statements, reports,
press releases, notices and proxy statements sent by the Company to its
security holders and all annual, periodic or special reports or registration
statements filed by the Company with the Commission, and all other material
communication sent by the Company to its security holders or filed by the
Company with the Commission.
(b) Other Information. The Company shall furnish promptly to
Investor any information related to this Agreement or any other agreements with
Investor or any other documents executed in connection with this Agreement as
Investor may reasonably request regarding the Company's operations, business
affairs, financial condition, or any of the Company's covenants, agreements
and/or undertakings under this Agreement or any of the other agreements or
documents, provided the Company is not restricted from doing so by law, rule,
regulation or contractual provisions.
(c) Board Observer Status and Board Information. If at any time
the Articles of Incorporation do not permit the holders of the class of
Preferred Stock purchased by Investor pursuant to
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this Agreement to vote as a separate class to elect at least one member of the
Board of Directors of the Company, a person designated by Investor, and
reasonably acceptable to the Company, shall have the right to attend all
meetings of the Board of Directors of the Company and to receive at
approximately the same time as nonofficer members of the Board of Directors (i)
all information provided to such nonofficer members of the Board of Directors
of the Company and (ii) all written consents of the Board of Directors of the
Company. The Company may require such observer to execute a reasonable
confidentiality agreement.
(d) Issuance of Additional Class E Shares. The Company will not
issue more than 48,779 shares of Class E Convertible Preferred Stock without
the prior consent of a majority of the holders of Class E Convertible Preferred
Stock if, after the issuance of such shares in excess of 48,779, Investor would
hold less than a majority of the issued and outstanding shares of Class E
Convertible Preferred Stock.
6. RIGHTS OF FIRST REFUSAL AND TRANSFER RESTRICTIONS.
(a) Rights of Shareholders. If, at any time prior to the first
registration under the Securities Act of 1933 and sale of the Company's Common
Stock having proceeds to the Company (net of underwriting discounts, fees and
all offering expenses) of at least Five Million ($5,000,000.00) Dollars, (the
"Initial Public Offering") the Company proposes to issue (except in a
transaction described in subsection 6(b)) any capital stock or any security
convertible into or having rights to purchase its capital stock, the Company
shall first comply with the following:
(i) The Company shall first offer in writing to sell to
the holders of Common Stock issued upon conversion of Convertible Preferred
Stock of any class and holders of Convertible Preferred Stock of any class
(collectively the "Shareholders") pro rata in proportion to their ownership of
Common Stock issued upon conversion of, and shares of Common Stock then
issuable upon conversion of, the shares of Convertible Preferred Stock
purchased by the Shareholders ("Ownership Interest"). Such offer shall
describe such securities and specify the quantity, the price and the payment
terms. If within ten (10) days after receipt of such offer one or more of the
Shareholders, accept the same in writing as to the portion referred to above or
any lesser amount as such Shareholders may specify to the Company, upon the
terms specified.
(ii) After expiration of the 10-day period specified in
clause (i) above, the Company shall then offer in writing to sell as securities
not purchased pursuant to such clause to the Shareholders, who have indicated
their desire to purchase all the shares allocable to them pursuant to
subsection (i) above, at the price and on the payment terms specified in such
subsection. If such Shareholders desire to purchase more than the total of such
securities being offered, such Shareholders may be limited to the
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purchase of a portion of such securities proportionate to its Ownership
Interest compared to the Ownership Interest of other Shareholders desiring to
purchase the securities being offered by the Company. If within ten (10) days
after receipt of such offer the Shareholders accept the same in writing as to
the portion referred to above or any lesser amount, then the Company shall sell
such portion of such securities, or such lesser amount as the Shareholders
shall specify to the Shareholders.
(iii) If the offers to sell are rejected, or all are not
accepted within the time periods specified in clauses (i) and (ii) above, the
Company shall be free to sell up to the quantity of such securities not agreed
by the Shareholders to be purchased by them (or up to all such securities in
the event such offer is rejected or is not accepted within applicable time
periods after it has been made by the Company), at a price not less favorable
to the Company than that specified in such offer and on payments terms no less
favorable to the Company than those specified in such offer. However, if such
sale is not consummated within ninety (90) days after the date an offer
pursuant to this subsection 6(a) was made, the Company shall not sell such
securities without again complying with this Section.
(b) Excluded Transactions. The following transactions shall be
excluded from the restrictions of subsection 7(a):
(i) Any issuance to an employee of the Company of Common
Stock of the Company or options or other rights to purchase Common Stock as
part of a bona fide compensation plan approved by the Board of Directors prior
to the date of this Agreement or subsequent thereto by the affirmative vote
required by this Agreement.
(ii) Any issuance of Common Stock upon the conversion of
any shares of the Convertible Preferred Stock; and
(iii) Any issuance of shares of capital stock or rights to
acquire shares of capital stock of the Company to any corporate partner for a
cash investment by that corporate partner if the issuance is also accompanied
by a transaction between the Company and the corporate partner involving the
technology and/or products of the Company and/or the corporate partner,
provided the Board of Directors determines such transaction is in the best
interest of the Company.
(c) Rights of the Company. In the event Investor desires to sell
or otherwise transfer any shares of Stock, at any time prior to an Initial
Public Offering by the Company, Investor shall first notify the Company in
writing of the identity of the purchaser or other transferee and the material
terms and conditions of sale, including the number of securities to be sold,
price and payment terms.
If within thirty (30) days after the notice of sale or other transfer
is received by the Company, the Company determines the
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purchaser or other transferee is a competitor of the Company, which
determination shall be made by the Board of Directors of the Company, the
Company may prohibit the proposed sale or transfer to such purchaser or other
transferee. Any determination made by the Board of Directors in good faith
shall be final and biding.
If within thirty (30) days after the notice of sale or transfer is
received by the Company, the Company notifies Investor in writing it desires to
purchase all the securities to be sold or transferred by Investor, Investor
shall sell such shares to the Company on the same terms and conditions as
specified in the notice sent to the Company by Investor. The Company may
assign its right to purchase such securities to one or more persons or entities
in its sole discretion. The Company shall complete such purchase within sixty
(60) days after receipt of notice of sale or transfer by the Company.
In the event within thirty (30) days after receipt, by the Company, of
the notice of sale or transfer, the Company neither (i) notifies Investor in
writing the purchaser or transferee has been deemed to be a competitor of the
Company, nor (ii) notifies Investor in writing the Company and/or its
assignee(s) desire to purchase all the securities to be sold or transferred,
Investor shall be free to sell or transfer the securities on the terms and
conditions specified in its notice to the Company to the Person specified in
such notice subject to compliance with applicable securities laws and
regulations or pursuant to an exemption therefrom and Section 4 of this
Agreement. If such sale or transfer is not consummated within ninety (90) days
after the Company received notice of the proposed sale or transfer from
Investor, Investor may not sell or transfer such securities without again
complying with this Section.
The Company shall have no right to purchase Stock to be sold or
transferred to any Person that, directly or indirectly, owns or controls, or is
owned or controlled by, or is under common control with, Investor or to any
Subsidiary of Investor (a "Investor Affiliate").
Any purchaser or transferee of Stock shall agree as a condition to
consummation of such sale or transfer that any subsequent sale or transfer of
the Stock shall be subject to the rights of the Company set forth in this
Section 6.
The restrictions on transfer of securities contained herein are in
addition to, and not in lieu of, restrictions pursuant to applicable law.
7. GENERAL
The parties hereto further warrant, covenant, contract and agree each
with the other as follows:
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(a) Entire Agreement. This Agreement, the Exhibits and Schedules
hereto and other documents referred to herein constitute the entire
understanding among the parties with respect to the subject matter hereof and
they supersede all prior negotiations, understandings, correspondence,
undertakings, promises, representations and agreements, whether oral or
written, in connection with the subject matter hereof.
(b) Survival of Agreements and Representatives and Warranties.
All agreements, representations and warranties contained herein or made in
writing by the Company in connection herewith, to the extent applicable, shall
survive the execution and delivery of this Agreement and shall continue until
all Stock ceases to be outstanding unless specifically limited to a shorter
time by the terms of this Agreement.
(c) Binding Effect. All covenants, representations, warranties
and other stipulations in this Agreement, the Proprietary Information and
Inventions Agreements, or the Noncompetition Agreements, given by or on behalf
of any of the parties hereto, shall bind and inure to the benefit of the
respective successors, heirs, personal representatives and permitted assigns of
the parties hereto.
(d) Notices. Except in cases where oral or other notice is
permitted by this Agreement, all notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
given (a) when hand delivered, including delivery by messenger or courier
service (or if delivery is refused, at the time of refusal), to the address set
forth below, (b) when received or refused as evidenced by the postal receipt if
sent by United States mail as Certified Mail, Return Receipt Requested, with
proper postage prepaid, addressed as set forth below or (c) when received as
evidenced by the transmission report of the telefax machine of the transmitting
party acknowledging a good transmission if sent by telefax to the number set
forth below:
(i) If to the Company:
Virtus Corporation
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxx
Telefax Number: 000-000-0000
(ii) If to the Investor:
Southeast Interactive Technology Fund
0000 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx Xxxxxxxx 00000
Telefax Number: 000-000-0000
Any of the parties may change its mailing address or telecopy number,
by giving notice to the other party pursuant to
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this Section 9(f) as long as the mailing address and telecopy number is within
the United States of America.
(e) Governing Law. This Agreement shall be governed in all
respects by the laws of the State of North Carolina.
(f) Headings. The descriptive section headings herein have been
inserted for convenience only and shall not be deemed to limit or otherwise
affect the construction of any provisions hereof.
(g) Multiple Originals. The Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
(h) Assignment. Neither this agreement, nor any interest herein
or any rights hereunder, shall be signed by either party without the prior
written consent of the other party.
(i) Waiver. Failure or delay on the part of either party to
exercise any right, remedy, power, privilege or option hereunder which is not
subject to an express time limitation with respect to exercise shall not
operate or be construed to operate as a waiver thereof. A waiver, to be
effective, must be in writing and be signed by the party making the waiver. No
written waiver of any term or condition of this Agreement shall operate or be
construed to operate as a waiver of any other term or condition, nor shall any
written waiver of any breach or default operate or be construed to operate as a
waiver of any other breach or default or of the same type of breach or default
on a subsequent occasion or operate or be construed to operate as a continuing
waiver.
(j) Amendment. This Agreement may not be modified, altered nor
amended in any manner whatsoever, except by another written agreement executed
by the parties.
(k) Severability. If any of the articles, paragraphs, sections
and/or clauses of this Agreement is declared by judicial interpretation or
construction or otherwise to be null, void and/or unenforceable in any respect,
such article, paragraph, section and/or clause shall be deemed to be eliminated
from this Agreement, but the other parts of this Agreement shall remain in full
force and effect; provided, however, if the elimination of any part of this
Agreement materially affects any right, benefit, option or privilege of either
party, the parties agree to negotiate in good faith to replace such part with a
substitute valid and enforceable part that achieves the intent and purpose of
the eliminated part.
(l) Except as provided by law, each party shall secure advance
written approval from the other of the decision to issue and the content of any
statement regarding or mentioning the
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16
other party to the public or press, whether in writing or otherwise. This
provision shall not be deemed to have been breached if the disclosing party
acting on the advice of its securities or other regulatory counsel makes
disclosures to investors or to any governmental or other regulatory agency or
organization.
8. DEFINITIONS.
For the purpose of this Agreement, the following terms shall have the
following meanings:
(a) "Person" shall include both the singular and the plural and
shall mean any individual, partnership, corporation, trust, unincorporated
organization, or government or department or agency thereof.
(b) "Sale of the Company" shall mean transfer of more than fifty
percent (50%) of the voting capital stock of the Company to a person or persons
who are not currently holders of capital stock of the Company or the transfer
of all or substantially all of the assets of the Company, whether by means of
sale, merger or otherwise.
(c) "Stock" shall mean the shares of Preferred Stock sold pursuant
to this Agreement and shares of Common Stock issued or issuable upon conversion
of such Shares and all other securities of the Company issued on account of
ownership thereof.
(d) "Subsidiary" shall mean any corporation with respect to which
Investor or the Company, as the case may be, owns, directly or indirectly, a
majority of the voting shares, or shares or other interest entitling Investor
or the Company, as the case may be, to elect a majority of the Board of
Directors.
(e) to the extent not specifically defined herein, any accounting
term used herein shall have the meaning ordinarily accorded to it under
generally accepted accounting principles consistently applied.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
SOUTHEAST INTERACTIVE VIRTUS CORPORATION
TECHNOLOGY FUND I, L.L.C.
By: By:
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Title: Title:
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