Exhibit 10.30
XXX.XXX INC.
SERIES B CONVERTIBLE PARTICIPATING
PREFERRED STOCK PURCHASE AGREEMENT
SEPTEMBER 2, 1999
Index of Exhibits
-----------------
Schedule of Purchasers Exhibit A
Amended and Restated Certificate
of Incorporation Exhibit B
Third Amended and Restated Investors'
Rights Agreement Exhibit C
Second Amended and Restated
Stockholders' Agreement Exhibit D
Employee NonDisclosure and Exhibit E
Developments Agreement
Form of Legal Opinion Exhibit F
Joint Venture Letter of Intent Exhibit G
XXX.XXX INC.
SERIES B CONVERTIBLE PARTICIPATING PREFERRED STOCK
PURCHASE AGREEMENT
THIS SERIES B CONVERTIBLE PARTICIPATING PREFERRED STOCK PURCHASE AGREEMENT
(the "Agreement") is entered into as of this 2nd day of September, 1999, by and
among XXX.XXX INC., a Delaware corporation (the "Company"), and each of those
entities, severally and not jointly, whose names are set forth on the Schedule
of Purchasers attached hereto as Exhibit A (which entities are hereinafter
---------
collectively referred to as "Purchasers" and each individually as a
"Purchaser").
Recitals
WHEREAS, the Company has authorized the sale and issuance of an aggregate
of Fifteen Million Eight Hundred Seventy Seven Thousand Two Hundred Forty Nine
(15,877,249) shares of its Series B Convertible Participating Preferred Stock
(the "Shares");
WHEREAS, Purchasers desire to purchase the Shares on the terms and
conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Shares to Purchasers on
the terms and conditions set forth herein.
Now, Therefore, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
Section 1. Agreement to Sell and Purchase
1.1 Authorization of Shares. On or prior to the Closing Date (as defined
in Section 2 below), the Company shall have (i) duly authorized the sale and
issuance to Purchasers of the Shares and (ii) duly authorized and reserved a
sufficient number of shares of common stock of the Company, $.0001 par value
(the "Common Stock"), for issuance upon full conversion of the Shares (the
"Conversion Shares"). The Shares and the Conversion Shares shall have the
rights, preferences, privileges and restrictions set forth in the Amended and
Restated Certificate of Incorporation of the Company, in the form attached
hereto as Exhibit B (the "Certificate"). The Company has, or before the Closing
---------
Date will have, adopted and filed with the Secretary of State of the State of
Delaware the Certificate and will have taken all necessary corporate action for
the purpose of authorizing the sale or issuance of the Shares pursuant hereto.
1.2 Sale and Purchase. Subject to the terms and conditions hereof, at
the Closing (as hereinafter defined), the Company hereby agrees to issue and
sell to each Purchaser, severally and not jointly, and each Purchaser agrees to
purchase from the Company, severally and not jointly, the number of Shares set
forth opposite such Purchaser's name in Exhibit A, at a purchase price per Share
---------
equal to $5.6685, for the aggregate purchase price set forth in Exhibit A.
---------
-1-
Section 2. Closing, Delivery and Payment
2.1 Closing. The closing of the sale and purchase of the Shares under
this Agreement (the "Closing") shall take place at the offices of Xxxxxxx,
Xxxxxxx & Xxxxxxxx LLP, 00 Xxxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxx 00000 on the
later to occur of (i) September 15, 1999, (ii) the first business day following
the date on which the last to be fulfilled or waived of the conditions to the
Closing set forth in Sections 6.1 and 6.2 hereof have been fulfilled or waived
in accordance with this Agreement or (iii) at such other time or place as the
Company and Purchasers may mutually agree (such date is hereinafter referred to
as a "Closing Date").
2.2 Delivery. At the Closing, subject to the terms and conditions
hereof, the Company will deliver to the Purchasers stock certificates
representing the number of Shares to be purchased at the Closing by each
Purchaser (which shall be issued in such Purchaser's name), against payment of
the purchase price therefor by check payable to the order of the Company or by
wire transfer of immediately available funds to the bank account of the Company
designated by the Company.
Section 3. Representations and Warranties of the Company
Except as set forth on the Schedule of Exceptions delivered to the
Purchasers, the Company hereby represents and warrants to each Purchaser as
follows:
3.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement, the Third Amended and Restated Investors' Rights Agreement, in
the form attached hereto as Exhibit C (the "Investors' Rights Agreement"), and
---------
the Second Amended and Restated Stockholders' Agreement, in the form attached
hereto as Exhibit D (the "Stockholders' Agreement"), to issue and sell the
---------
Shares and the Conversion Shares and to carry out the provisions of this
Agreement, the Investors' Rights Agreement, the Stockholders' Agreement and the
Certificate and to carry on its business as presently conducted and as presently
proposed to be conducted. The Company is duly qualified and is authorized to do
business and is in good standing as a foreign corporation in all jurisdictions
in which the nature of its activities and of its properties (both owned and
leased) make such qualifications necessary, except for those jurisdictions in
which failure to do so would not have a material adverse effect on the Company
or its business. The Company owns no equity securities of any other corporation,
limited partnership or similar entity. The Company is not a participant in any
joint venture, partnership or similar arrangement. The Company has made
available to the Purchasers true, correct and complete copies of the Company's
Certificate of Incorporation and Bylaws, each as amended to date and presently
in effect.
3.2 Capitalization; Voting Rights. The authorized capital stock of the
Company, immediately prior to the Closing, will consist of (a) eight hundred
fifty million (850,000,000) shares of Common Stock, one hundred forty-two
million, nine hundred twenty-two thousand, eight hundred ten (142,922,810)
shares of which are issued and outstanding, thirty million, five hundred
seventy-seven thousand, five hundred (30,577,500) shares of which are currently
-2-
reserved for issuance pursuant to outstanding option agreements, and seven
hundred ninety-four thousand, four hundred sixty (794,460) shares of which will
be reserved in the future for issuance to key employees, consultants and others
affiliated with the Company pursuant to stock grant, stock purchase and/or
option plans or any other stock incentive program, arrangement or agreement
approved by the Company's Board of Directors and (b) one hundred fifty million
(150,000,000) shares of Preferred Stock (the "Preferred Stock"), 19,481,130 of
which are designated Series A Convertible Participating Preferred Stock, all of
which are issued and outstanding, and 15,877,249 of which are designated Series
B Convertible Participating Preferred Stock, none of which are issued and
outstanding. All issued and outstanding shares of the Company's Common Stock and
Preferred Stock (i) have been duly authorized and validly issued, (ii) are fully
paid and nonassessable, (iii) are free of liens and encumbrances created by the
Company and (iv) were issued in compliance with all applicable state and federal
laws concerning the issuance of securities. The rights, preferences, privileges
and restrictions of the Shares are as stated in the Certificate. The Conversion
Shares have been duly and validly reserved for issuance in sufficient number for
issuance upon full conversion of the Shares. Except as may be granted pursuant
to this Agreement and except as set forth above, there are no outstanding
options, warrants, puts, calls, rights (including conversion or preemptive
rights and rights of first refusal), proxy or stockholder agreements, or
agreements of any kind for the purchase or acquisition from the Company of any
of its securities or other restrictions on the incidents of ownership or
transfer created by statute, the charter documents of the Company or any
agreement to which the Company is a party or by which it is bound. The Shares
and the Conversion Shares have been duly authorized and, when issued in
compliance with the provisions of this Agreement and the Certificate, will be
validly issued (including, without limitation, issued in compliance with
applicable state and federal securities laws), fully paid and nonassessable and
will be free of any liens or encumbrances; provided, however, that the Shares
and the Conversion Shares may be subject to restrictions on transfer under state
and/or federal securities laws as set forth herein or as otherwise required by
such laws at the time transfer is proposed.
3.3 Authorization; Binding Obligations. All corporate action on the part
of the Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement, the Investors' Rights
Agreement and the Stockholders' Agreement, the performance of all obligations of
the Company hereunder and thereunder at the Closing and the authorization, sale,
issuance and delivery of the Shares pursuant hereto and the Conversion Shares
pursuant to the Certificate has been taken or will be taken prior to the
Closing. The Agreement, the Investors' Rights Agreement and the Stockholders'
Agreement, when executed and delivered, will be valid and binding obligations of
the Company enforceable against the Company, in accordance with their terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights; (ii) as limited by general principles of equity that restrict
the availability of specific performance, injunctive relief or other equitable
remedies; and (iii) to the extent that the enforceability of the indemnification
provisions of the Investors' Rights Agreement may be limited by applicable
federal and state securities laws. The sale of the Shares and the subsequent
conversion of the Shares into Conversion Shares are not and will not be subject
to any preemptive rights or rights of first refusal that have not been properly
waived or complied with.
-3-
3.4 Financial Statements; Subsidiaries. The Company's unaudited balance
sheet as of December 31, 1998 and unaudited statements of operations and cash
flows of the Company for the 12-month period ended December 31, 1998 and the
Company's unaudited balance sheet as of June 30, 1999 (the "Latest Balance
Sheet") and unaudited statements of operations and cash flows of the Company for
the six-month period ending June 30, 1999 (the "Financial Statements") delivered
to the Purchasers in connection with the investment contemplated hereby have
been prepared in accordance with generally accepted accounting principles
consistently applied (in the case of the Financial Statements, subject to normal
year-end adjustments and the absence of footnote disclosures) and fairly present
in all material respects the financial position and the results of operations of
the Company for the periods covered thereby, and the Company has no material
liabilities or obligations of any nature (absolute, accrued, contingent or
otherwise) that are not either reflected or fully reserved against on the Latest
Balance Sheet or incurred in the ordinary course of the business of the Company
subsequent to the date thereof. Since the date of the Latest Balance Sheet,
there has not been any material adverse change in the business, operations,
financial condition or business of the Company. The Company has no subsidiaries.
3.5 Agreements; Action.
(a) Except for agreements explicitly contemplated hereby, there are
no agreements, understandings or proposed transactions between the Company and
any of its officers, directors, affiliates or any affiliate thereof.
(b) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or to its knowledge by which it is bound which may
involve (i) obligations (contingent or otherwise) of, or payments to, the
Company (other than obligations of, or payments to, the Company arising in the
ordinary course of business), or (ii) the license of any patent, copyright,
trade secret or other proprietary right to or from the Company (other than
licenses arising from the purchase of "off the shelf" or other standard
products), or (iii) provisions restricting or affecting the development,
manufacture or distribution of the Company's products or services, or (iv)
indemnification by the Company with respect to infringements of proprietary
rights.
(c) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or any
other liabilities (other than with respect to dividend obligations,
distributions, indebtedness and other obligations incurred in the ordinary
course of business or as disclosed in the Financial Statements), (iii) made any
loans or advances to any person, other than ordinary advances for travel
expenses, or (iv) sold, exchanged or otherwise disposed of any of its assets or
rights, other than the sale of its inventory in the ordinary course of business.
3.6 Obligations to Related Parties. There are no obligations of the
Company to officers, directors, stockholders, or employees of the Company other
than (a) for payment of salary for services rendered, (b) reimbursement for
reasonable expenses incurred on behalf of the Company and (c) for other standard
employee benefits made generally available to all employees (including stock
option agreements outstanding under any stock option plan approved by the
-4-
Board of Directors of the Company). No officer, director or, to the best of the
Company's knowledge, stockholder, or any member of their immediate families, are
indebted to the Company or have any direct or indirect ownership interest in any
firm or corporation with which the Company is affiliated or with which the
Company has a business relationship, or any firm or corporation which competes
with the Company, except that officers, directors and/or stockholders of the
Company may own stock in publicly traded companies which may compete with the
Company. No such officer, director or stockholder, or any member of their
immediate families is, directly or indirectly, interested in any material
contract with the Company (other than such contracts as relate to any such
person's ownership of capital stock or other securities of the Company). The
Company is not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation.
3.7 Title to Properties and Assets; Liens, Etc. The Company has good and
marketable title to its properties and assets, and good title to its leasehold
estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance
or charge, other than (i) those resulting from taxes which have not yet become
delinquent, (ii) minor liens and encumbrances which do not materially detract
from the value of the property subject thereto or materially impair the
operations of the Company and (iii) those that have otherwise arisen in the
ordinary course of business. All facilities, machinery, equipment, fixtures,
vehicles and other properties owned, leased or used by the Company are in good
operating condition and repair and are reasonably fit and usable for the
purposes for which they are being used. The Company is in compliance with all
material terms of each lease to which it is a party or is otherwise bound.
3.8 Patents and Trademarks. The Company owns or possesses sufficient
legal rights to all patents, trademarks, service marks, trade names, copyrights,
trade secrets, information and other proprietary rights and processes necessary
for its business as now conducted and as proposed to be conducted, without any
known infringement of the rights of others. There are no outstanding options,
licenses or agreements of any kind relating to the foregoing, nor is the Company
bound by or a party to any options, licenses or agreements of any kind with
respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information and other proprietary rights and processes
of any other person or entity other than such licenses or agreements arising
from the purchase of "off the shelf" or standard products. The Company has not
received any communications alleging that the Company has violated or, by
conducting its business as proposed, would violate any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights of any other person or entity. The Company is not aware that
any of its employees is obligated under any contract (including licenses,
covenants or commitments or any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with their duties to the Company's business by the employees of the
Company, nor the conduct of the Company's business as proposed, will, to the
Company's knowledge, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any employee is now obligated. The Company
does not believe it is or will be necessary to utilize any inventions, trade
secrets or proprietary information of any of its employees made prior to their
employment by the Company, except for inventions, trade secrets or proprietary
information that have been assigned to the Company.
-5-
3.9 Compliance with Other Instruments. The Company is not in violation
or default of any term of its Certificate of Incorporation or Bylaws, or of any
provision of any mortgage, indenture, contract, agreement, instrument or
contract to which it is party or by which it is bound or of any judgment,
decree, order, writ or, to its knowledge, any statute, rule or regulation
applicable to the Company which, individually or in the aggregate, would
materially and adversely affect the business, assets, liabilities, financial
condition, operations or prospects of the Company. The execution, delivery, and
performance of and compliance with this Agreement and the related agreements,
and the issuance and sale of the Shares pursuant hereto and of the Conversion
Shares pursuant to the Certificate, will not, with or without the passage of
time or giving of notice, result in any such material violation, or be in
conflict with or constitute a default under any such term, or result in the
creation of any mortgage, pledge, lien, encumbrance or charge upon any of the
properties or assets of the Company or the suspension, revocation, impairment,
forfeiture or nonrenewal of any permit, license, authorization or approval
applicable to the Company, its business or operations or any of its assets or
properties.
3.10 Litigation. There is no action, suit, proceeding or investigation
pending or to the Company's knowledge currently threatened against the Company
that questions the validity of this Agreement, the Investors' Rights Agreement
or the Stockholders' Agreement or the right of the Company to enter into any of
such agreements, or to consummate the transactions contemplated hereby or
thereby, or which might result, either individually or in the aggregate, in any
material adverse change in the assets, condition, affairs or prospects of the
Company, financially or otherwise, or any change in the current equity ownership
of the Company, nor is the Company aware that there is any basis for the
foregoing. The foregoing includes, without limitation, actions pending or
threatened (or any basis therefor known to the Company) involving the prior
employment of any of the Company's employees, their use in connection with the
Company's business of any information or techniques allegedly proprietary to any
of their former employers, or their obligations under any agreements with prior
employers. The Company is not a party or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or which the Company intends to initiate.
3.11 Tax Returns and Payments. The Company has timely filed all tax
returns (federal, state and local) required to be filed by it. All taxes shown
to be due and payable on such returns, any assessments imposed, and to the
Company's knowledge all other taxes due and payable by the Company on or before
the Closing have been paid or will be paid prior to the time they become
delinquent. The Company has not been advised (i) that any of its returns,
federal, state or other, have been or are being audited as of the date hereof,
or (ii) of any deficiency in assessment or proposed judgment to its federal,
state or other taxes. The Company has no knowledge of any liability of any tax
to be imposed upon its properties or assets as of the date of this Agreement
that is not adequately provided for.
3.12 Employees. The Company has no collective bargaining agreements with
any of its employees. There is no labor union organizing activity pending or, to
the Company's knowledge, threatened with respect to the Company. No employee has
any agreement or contract, written or verbal, regarding his employment. To the
Company's knowledge, no employee of the Company, nor any consultant with whom
the Company has contracted, is in
-6-
violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such individual to
be employed by, or to contract with, the Company because of the nature of the
business to be conducted by the Company; and to the Company's knowledge the
continued employment by the Company of its present employees, and the
performance of the Company's contracts with its independent contractors, will
not result in any such violation. The Company has not received any notice
alleging that any such violation has occurred. No employee of the Company has
been granted the right to continued employment by the Company or to any material
compensation following termination of employment with the Company. The Company
is not aware that any officer or key employee, or that any group of key
employees, intends to terminate their employment with the Company, nor does the
Company have a present intention to terminate the employment of any officer, key
employee or group of key employees.
3.13 NonDisclosure and Developments Agreements. Each current employee and
officer of the Company has executed, or will execute prior to or at Closing, an
Employee NonDisclosure and Developments Agreement in the forms attached hereto
as Exhibit E. To the Company's knowledge, no current employee, officer or
---------
consultant of the Company has excluded works or inventions made prior to his or
her employment with the Company from his or her assignment of inventions
pursuant to such employee, officer or consultant's agreement. The Company, after
reasonable investigation, is not aware that any of its employees, officers or
consultants is in violation thereof and the Company will use its best efforts to
prevent any such violation.
3.14 Obligations of Management. Each officer of the Company is currently
devoting one hundred percent (100%) of his business time to the conduct of the
business of the Company. The Company is not aware of any officer or key employee
of the Company planning to work less than full time at the Company in the
future.
3.15 Registration Rights. Except as required pursuant to the Investors'
Rights Agreement, the Company is presently not under any obligation, and has not
granted any rights, to register (as defined in Section 1 of the Investors'
Rights Agreement) any of the Company's presently outstanding securities or any
of its securities that may hereafter be issued.
3.16 Compliance with Laws; Permits. The Company is not in violation of
any applicable statute, rule, regulation, order or restriction of any domestic
or foreign government or any instrumentality or agency thereof in respect of the
conduct of its business or the ownership of its properties which violation would
materially and adversely affect the business, assets, liabilities, financial
condition, operations or prospects of the Company. No governmental orders,
permissions, consents, approvals or authorizations are required to be obtained
and no registrations or declarations are required to be filed in connection with
the execution and delivery of this Agreement and the offer, issuance, sale and
delivery of the Shares or the Conversion Shares, or the other transactions to be
consummated at the Closing, as contemplated in this Agreement, except pursuant
to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the
rules promulgated thereunder (the "HSR Act"), and, except such as has been duly
and validly obtained or filed, or with respect to any filings that must be made
after the Closing, as will be filed in a timely manner. The Company has all
franchises, permits, licenses and any similar authority necessary for the
conduct of its business as now being conducted by it,
-7-
the lack of which, individually or in the aggregate, could materially and
adversely affect the business, properties, prospects or financial condition of
the Company and believes it can obtain, without undue burden or expense, any
similar authority for the conduct of its business as planned to be conducted.
3.17 Environmental and Safety Laws. The Company is not in violation of
any applicable statute, law or regulation relating to the environment or
occupational health and safety, and to its knowledge, no material expenditures
are or will be required in order to comply with any such existing statute, law
or regulation.
3.18 Offering Valid. Assuming the accuracy of the representations and
warranties of the Purchasers contained in Section 4.2 hereof, the offer, sale
and issuance of the Shares and the Conversion Shares will be exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and will have been registered or qualified (or are exempt
from registration and qualification) under the registration, permit or
qualification requirements of all applicable state securities laws. Neither the
Company nor any agent on its behalf has solicited or will solicit any offers to
sell or has offered to sell or will offer to sell all or any part of the Shares
to any person or persons so as to bring the sale of such Shares by the Company
within the registration provisions of the Securities Act or any state securities
laws.
3.19 Minute Books. The minute books of the Company provided to counsel
for the Purchasers contain a complete summary of all meetings of, and any
actions taken by, the directors and stockholders of the Company since the date
of the Company's incorporation.
3.20 Disclosure. The Company has fully provided the Purchasers with all
the information the Purchasers have requested for deciding whether to acquire
the Shares and the Conversion Shares and all the information that the Company
believes is reasonably necessary to enable the Purchasers to make such a
decision. The Certificate of Incorporation and Bylaws of the Company are in the
form provided to counsel for the Purchasers.
3.21 Year 2000 Compliance. The Company has reviewed the areas within its
business and operations which could be adversely affected by Year 2000 issues
and evaluated the costs associated with modifying and testing its systems for
the Year 2000. The Company does not believe that the cost of Year 2000
compliance for its internal information systems will be material to the Company
or that it will have a material adverse effect on the Company's business,
financial condition or results of operations.
3.22 Qualified Small Business. The Company qualifies as a "Qualified
Small Business" as defined in Section 1202(d) of the Code and covenants that so
long as its shares are held by the Purchasers (or a transferee in whose hands
the shares are eligible to qualify as Qualified Small Business Stock as defined
in Section 1202(c) of the Code), it will use its best efforts to cause the
shares to qualify as Qualified Small Business Stock.
-8-
Section 4. Representations and Warranties of the Purchasers
Each Purchaser hereby represents and warrants to the Company as follows
(such representations and warranties do not lessen or obviate the
representations and warranties of the Company set forth in this Agreement):
4.1 Requisite Power and Authority. Purchaser has all necessary power and
authority under all applicable provisions of law to execute and deliver this
Agreement, the Investors' Rights Agreement and the Stockholders' Agreement and
to carry out their provisions. All actions on the part of the Purchaser required
for the lawful execution and delivery of this Agreement, the Investors' Rights
Agreement and the Stockholders' Agreement have been or will be effectively taken
prior to the Closing. Upon their execution and delivery, this Agreement, the
Investors' Rights Agreement and the Stockholders' Agreement will be valid and
binding obligations of Purchaser, enforceable in accordance with their terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights, (ii) as limited by general principles of equity that restrict
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) to the extent that the enforceability of the indemnification
provisions of the Investors' Rights Agreement may be limited by applicable
federal and state securities laws.
4.2 Purchase Entirely For Own Account. The Shares will be acquired
solely for investment purposes, for the Purchaser's own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof.
4.3 Investment Experience. Purchaser is an "accredited investor" as
defined in Rule 501(a) under the Securities Act. Purchaser believes it has
acquired sufficient information about the Company to reach an informed decision
to purchase the Shares. Purchaser has such business and financial experience as
are required to give it the capacity to protect its own interests in connection
with the purchase of the Shares.
4.4 Restricted Securities. The Purchaser understands that the Shares are
being offered in a transaction not involving any public offering in the United
States within the meaning of the Securities Act, that such Shares have not been
registered under the Securities Act and that it may not resell, pledge or
otherwise transfer any such Shares except (A) pursuant to an effective
registration statement under the Securities Act, (B) in an offshore transaction
complying with Rule 904 of Regulation S under the Securities Act, or (C)
pursuant to another applicable exemption from registration.
4.5 Legends. The Purchaser understands that the Shares and any
securities issued in respect thereof or exchange therefor, may bear the
following legend until such time, if any, as the Shares or such securities may
be resold pursuant to Rule 144(k) under the Securities Act (or a comparable
successor provision).
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT
WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH
SALE OR DISTRIBUTION MAY BE
-9-
EFFECTED EXCEPT IN AN OFFSHORE TRANSACTION COMPLYING WITH THE PROVISIONS OF RULE
904 OF REGULATION S UNDER THE SECURITIES ACT OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN APPLICABLE EXEMPTION THEREFROM."
A Share certificate bearing the foregoing legend may be exchanged for a
certificate not bearing such legend upon certification by the transferor in form
reasonably satisfactory to the Company that the transfer of any such restricted
certificate has been made in accordance with Rule 904 under the Securities Act.
Section 5. Covenants
5.1 HSR Act Filings.
(a) The Purchasers shall make all filings required under the HSR
Act relating to the transactions contemplated by this Agreement and shall use
commercially reasonable efforts to cause any such required filings to be made
promptly after the date hereof.
(b) The Company shall make all filings required under the HSR Act
relating to the transactions contemplated by this Agreement and shall use
commercially reasonable efforts to cause any such required filings to be made
promptly after the date hereof.
(c) The parties will each use commercially reasonable efforts to
promptly furnish, or cause to be furnished, any information that may be required
by the Federal Trade Commission (the "FTC") or the Department of Justice (the
"DOJ") under the HSR Act in order for the requisite approvals for the purchase
and sale of the Shares and the consummation of the related transactions
contemplated by this Agreement to be obtained or any applicable waiting periods
to be terminated or expire; provided, however, that in the event the FTC or the
-------- -------
DOJ issues a "second request" in connection with any such filing, the parties
hereto will consult with each other in good faith regarding appropriate further
action, which shall be taken only to the extent agreed upon by all of the
parties.
5.2 Proceeds. The proceeds from the sale by the Company of the Shares
shall be used for the working capital needs of the Company and to repay
outstanding debt borrowed from the Bank of Nova Scotia.
5.3 Reservation of Common Stock. The Company will at all times reserve
and keep available, solely for issuance and delivery upon conversion of the
Shares, a sufficient number of shares of Common Stock to be issuable from time
to time upon such conversion.
5.4 International Joint Ventures. The Company hereby covenants and
agrees, and the Purchasers hereby covenant and agree to cause their applicable
affiliates to execute and deliver the binding Letter of Intent in the form
attached hereto as Exhibit G and the Term Sheets attached thereto, and to
---------
negotiate in good faith the definitive joint venture agreements (i) between the
Company and SOFTBANK Corporation with respect to a joint venture operation in
Japan, (ii) between the Company and eVentures with respect to a joint venture
operation in the United Kingdom and (iii) between the Company and @VISO with
respect to a joint venture operation in Continental Europe based upon the
principal terms set forth in the Letter of Intent,
-10-
attached hereto as Exhibit G, for the respective joint venture.
---------
5.5 Standstill Provisions. Commencing as of the Closing and for the
period until the fifth anniversary of the consummation of the Company's initial
public offering ("IPO") of shares of Common Stock, registered under the
Securities Act pursuant to a Registration Statement on Form S-1, Purchasers
(including all Softbank Entities) shall not acquire beneficial ownership of any
shares of Common Stock of the Company, any securities convertible into or
exchangeable for Common Stock, or any other right to acquire Common Stock,
except by way of stock dividends or other distributions or offerings made
available to holders of Series B Preferred Stock (or Common Stock issued upon
conversion thereof) generally, from the Company or any other person or entity,
without the prior written consent of the Company, which consent may be withheld
in its sole discretion, if such acquisition should cause the Purchasers
(including all Softbank Entities) to beneficially own more than thirty-two
percent (32%) of the Company's outstanding voting stock (assuming the full
conversion and exercise of all convertible and exercisable securities of the
Company held by the Purchasers and any other Softbank entities). Notwithstanding
anything to the contrary contained in the Investors' Rights Agreement, the
Purchasers' right of first offer under the Investors' Rights Agreement shall not
be applicable to the extent that exercising such right would cause the
Purchasers to violate this Section 5.5. "Softbank Entities" shall mean (i) any
direct or indirect, wholly owned subsidiary of SOFTBANK Corp. or of Purchaser,
or (ii) any affiliate (as such term is defined under Rule 144 under the
Securities Act) of such Purchaser (and any person or entity referred to in
clause (i) or (ii).
5.6 Staggered Board Designation. Immediately prior to the Company's
initial public offering, the Company shall adopt a staggered Board of Directors
comprised of three classes and shall appoint the Board designee of the
Purchasers to the class of directors standing for reelection in the third term.
5.7 Further Assurances. The Company and the Purchasers shall use their
respective reasonable efforts at any time and from time to time prior to, at and
after the Closing to execute and deliver to the applicable parties such further
documents and instruments and to take all such further actions as such other
parties to this Agreement reasonably may request to consummate the transactions
contemplated by this Agreement, the Certificate, the Stockholders' Agreement,
the Investors' Rights Agreement and the joint venture Letter of Intent.
Section 6. Conditions to Closing
6.1 Conditions to Purchasers' Obligations at the Closing. Purchasers'
obligations to purchase the Shares at the Closing are subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:
(a) Representations and Warranties True; Performance of
Obligations. The representations and warranties made by the Company in Section 3
hereof shall be true and correct in all material respects as of the Closing
Date.
-11-
(b) Performance of Obligations. The Company shall have performed
and complied with all agreements and conditions herein required to be performed
or complied with by the Company on or before the Closing Date.
(c) Reservation of Conversion Shares. The Conversion Shares
issuable upon full conversion of the Shares shall have been duly authorized and
reserved for issuance upon such conversion.
(d) Legal Investment. On the Closing Date, the sale and issuance of
the Shares and the proposed issuance of the Conversion Shares shall be legally
permitted by all laws and regulations to which Purchasers and the Company are
subject.
(e) Consents, Permits, and Waivers. The Company shall have obtained
any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement, the Investors'
Rights Agreement and the Stockholders' Agreement (except for such as may be
properly obtained subsequent to the Closing).
(f) Filing of Certificate. The Certificate shall have been filed
with the Secretary of State of the State of Delaware.
(g) Investors' Rights Agreement. An Investors' Rights Agreement,
substantially in the form attached hereto as Exhibit C, shall have been executed
---------
and delivered by the parties thereto.
(h) Stockholders' Agreement. A Stockholders' Agreement,
substantially in the form attached hereto as Exhibit D, shall have been executed
---------
and delivered by the parties thereto.
(i) Employee NonDisclosure and Developments Agreement. An Employee
NonDisclosure and Developments Agreement, substantially in the form attached
hereto as Exhibit E, shall have been executed and delivered by each officer or
---------
employee of the Company.
(j) Compliance Certificate. The Chief Executive Officer of the
Company shall deliver to the Purchasers at the Closing a certificate, dated the
Closing Date, certifying that the conditions specified in Sections 6.1(a) and
6.1(b) have been fulfilled.
(k) Legal Opinion. The Purchasers shall have received from legal
counsel to the Company an opinion addressed to them, dated as of the Closing
Date, in substantially the form attached hereto as Exhibit F.
---------
(l) Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated at the Closing hereby, all
documents and instruments incident to such transactions and all documents,
instruments and proceedings related to the Purchasers' business, technical and
legal due diligence shall be reasonably satisfactory in substance and form to
the Purchasers and their counsel, and the Purchasers and their counsel
-12-
shall have received all such counterpart originals or certified or other copies
of such documents as they may reasonably request.
(m) Board Composition. At the Closing, the Company's Board of
Directors shall consist of Xxxxxxx Xxxxxxx, Xxxxxx Xxxxxxx, Xxxx Xxxxxx, Xxxxx
Xxxxxxx, Xxxxx Xxxxxx, Xxxxxxx Xxxxxxx, Xxxxx Xxxxxx, Xxxxx Xxxxxxx and Xxxxxxx
Xxxxxxx.
(n) Waiting Period. Any waiting period applicable to the sale of
the Shares under the HSR Act shall have expired or been terminated.
(o) Joint Venture. The Company shall have executed and delivered
the Letter of Intent and accompanying Term Sheets for the international joint
ventures in substantially the form attached hereto as Exhibit G.
---------
(p) Related Transaction. The transactions contemplated in the Stock
Purchase Agreement, dated of even date, by and among, The Xxxxx X. Xxxx Separate
Property Trust U/D/T 8/2/95, Xxxxx X. Xxxx, Xxxxx Xxxxx, Xxxxxxx Xxxxx and the
purchasers listed on Exhibit A thereto, shall be consummated before or
concurrently with the consummation of the transactions contemplated in this
Agreement.
(q) Audited Financial Statements. The Purchasers shall have
received from the Company audited financial statements (for the periods filed in
the registration statement on Form S-1) prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved and that fairly present the financial position of the Company
at the respective dates and the results of operations and cash flow for the
periods indicated.
6.2 Conditions to Obligations of the Company. The Company's
obligation to issue and sell the Shares at the Closing is subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:
(a) Representations and Warranties True. The representations and
warranties made by the Purchasers in Section 4 hereof shall be true and correct
in all material respects as of the Closing Date.
(b) Performance of Obligations. Purchasers shall have performed and
complied with all agreements and conditions herein required to be performed or
complied with by Purchasers on or before the Closing Date.
(c) Filing of Certificate. The Certificate shall have been filed
with the Secretary of State of the State of Delaware.
(d) Investors' Rights Agreement. An Investors' Rights Agreement,
substantially in the form attached hereto as Exhibit C, shall have been executed
---------
and delivered by the Purchasers.
-13-
(e) Stockholders' Agreement. A Stockholders' Agreement,
substantially in the form attached hereto as Exhibit D, shall have been executed
---------
and delivered by the parties thereto.
(f) Consents, Permits, and Waivers. The Company shall have obtained
any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement, the Investors'
Rights Agreement and the Stockholders' Agreement (except for such as may be
properly obtained subsequent to the Closing).
(g) Waiting Period. Any waiting period applicable to the sale of
the Shares under the HSR Act shall have expired or been terminated.
(h) Joint Venture. The Purchasers, or their affiliates, as
applicable, shall have executed and delivered the Letter of Intent and the
accompanying Term Sheets for the international joint ventures in substantially
the form attached hereto as Exhibit G.
---------
(i) Related Transaction. The transactions contemplated in the Stock
Purchase Agreement, dated of even date, by and among, The Xxxxx X. Xxxx Separate
Property Trust U/D/T 8/2/95, Xxxxx X. Xxxx, Xxxxx Xxxxx, Xxxxxxx Xxxxx and the
purchasers listed on Exhibit A thereto, shall be consummated before or
concurrently with the consummation of the transactions contemplated in this
Agreement.
Section 7. Miscellaneous
7.1 Governing Law. This Agreement shall be governed in all respects by
the laws of the State of Delaware without regard to principles of conflict of
laws.
7.2 Survival. The representations, warranties, covenants and agreements
made herein shall survive for a period of four (4) years any investigation made
by any Purchaser and the closing of the transactions contemplated hereby. All
statements as to factual matters contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant hereto in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the Company hereunder solely as of the date of
such certificate or instrument.
7.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Shares from time to time.
7.4 Entire Agreement. This Agreement, the Exhibits and Schedules hereto,
including the Investors' Rights Agreement and the Stockholders' Agreement, and
the other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and no party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth herein and therein.
-14-
7.5 Severability. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
7.6 Amendment and Waiver.
(a) This Agreement may be amended or modified only upon the written
consent of the Company and holders of at least a majority of the Shares (treated
as if converted and including any Conversion Shares into which the Shares have
been converted that have not been sold to the public).
(b) The obligations of the Company and the rights of the holders of
the Shares and the Conversion Shares under the Agreement may be waived only with
the written consent of the holders of at least a majority of the Shares (treated
as if converted and including any Conversion Shares into which the Shares have
been converted that have not been sold to the public).
7.7 Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement, the Investors'
Rights Agreement, the Stockholders' Agreement or the Certificate, shall impair
any such right, power or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance thereafter occurring. It is further agreed
that any waiver, permit, consent or approval of any kind of character on any
Purchaser's part of any breach, default or noncompliance under this Agreement,
the Investors' Rights Agreement, the Stockholders' Agreement or under the
Certificate or any waiver on such party's part of any provisions or conditions
of the Agreement, the Investors' Rights Agreement, the Stockholders' Agreement,
or the Certificate must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, the Investors' Rights Agreement, the Stockholders' Agreement, the
Certificate, by law, or otherwise afforded to any party, shall be cumulative and
not alternative.
7.8 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified; (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
Company at the address as set forth on the signature page hereof and to
Purchaser at the address set forth on Exhibit A attached hereto or at such other
---------
address as the Company or Purchaser may designate by ten (10) days advance
written notice to the other parties hereto.
7.9 Titles and Subtitles. The titles of the sections and subsections of
the Agreement are for convenience of reference only and are not to be considered
in construing this Agreement.
7.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
-15-
7.11 Broker's Fees. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein. Each party hereto further agrees to
indemnify each other party for any claims, losses or expenses incurred by such
other party as a result of the representation in this Section 7.11 being untrue.
7.12 Expenses. The Company shall pay all costs and expenses that it
incurs with respect to the negotiation, execution, delivery and performance of
this Agreement and all of the transactions contemplated herein. The Company
shall reimburse the reasonable fees and expenses of counsel to the Purchasers,
not to exceed $50,000 in the aggregate, incurred in connection with the
negotiation, execution, delivery and performance of this Agreement and all of
the transactions contemplated herein, provided that the Company shall not be
obligated to pay any of the expenses incurred by the Purchasers or their
affiliates in the negotiation, execution, delivery and performance of the
International Joint Venture transactions.
7.13 Exculpation Among Purchasers. Each Purchaser acknowledges that it is
not relying upon any person, firm, or corporation, other than the Company and
its officers and directors, in making its investment or decision to invest in
the Company. Each Purchaser agrees that no Purchaser nor the respective
controlling persons, officers, directors, partners, agents, or employees of any
Purchaser shall be liable for any action heretofore or hereafter taken or
omitted to be taken by any of them in connection with the Shares and Conversion
Shares.
7.14 Specific Enforcement. Any Purchaser shall be entitled to specific
enforcement of its rights under this Agreement. Then Company acknowledges that
money damages would be an inadequate remedy for its breach of this Agreement and
consents to an action for specific performance or other injunctive relief in the
event of any such breach.
7.15 Attorney's Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
7.16 Waiver of Conflicts. Each party to this Agreement acknowledges that
Xxxxxxx, Phleger & Xxxxxxxx LLP, counsel for the Company, has in the past and
may continue to perform legal services for certain of the Purchasers in matters
unrelated to the transactions described in this Agreement, including the
representation of such Purchasers in venture capital financings. Accordingly,
each party to this Agreement hereby (i) acknowledges that they have had an
opportunity to ask for information relevant to this disclosure, (ii)
acknowledges that Xxxxxxx, Phleger & Xxxxxxxx LLP represented the Company in the
transaction contemplated by this Agreement and has not represented any
individual Purchaser or any individual shareholder or employee of the Company in
connection with such transaction, and (iii) gives its informed consent to the
representation by Xxxxxxx, Phleger & Xxxxxxxx LLP of certain of the Purchasers
in such unrelated matters and the representation by Xxxxxxx, Phleger & Xxxxxxxx
LLP of the Company in connection with this Agreement and the transactions
contemplated hereby.
-16-
7.17 Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE THE
SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-17-
In Witness Whereof, the parties hereto have executed the Series B
Convertible Participating Preferred Stock Purchase Agreement as of the date set
forth in the first paragraph hereof.
COMPANY:
XXX.XXX INC.
Address: 00 Xxxxxxxxx
Xxxxx Xxxxx, XX 00000
By: ___________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
PURCHASERS:
SOFTBANK Capital Advisors Fund LP SOFTBANK Capital Partners LP
By: SOFTBANK Capital Partners LLC By: SOFTBANK Capital Partners LLC
Its General Partner Its General Partner
By:____________________________ By:___________________________
Name:__________________________ Name:_________________________
Title:_________________________ Title:________________________
SOFTBANK Technology Advisors Fund LP SOFTBANK Technology Ventures IV LP
By: STV IV LLC By: STV IV LLC
Its General Partner Its General Partner
By:_____________________________ By:___________________________
Name:___________________________ Name:_________________________
Title:__________________________ Title:________________________
Seris B Convertible Participating Preferred Stock Purchase Agreement
SOFTBANK Technology Ventures V LP SOFTBANK Technology Advisors Fund V LP
By: SBTV V LLC By: SBTV V LLC
Its General Partner Its General Partner
By:_____________________________ By:_____________________________
Name: Xxxxxx Xxxxx Xxxxxxx Name: Xxxxxx Xxxxx Xxxxxxx
Title: Managing Director Title: Managing Director
SOFTBANK Technology Entrepreneurs Fund V LP
By: SBTV V LLC
Its General Partner
By:_____________________________
Name: Xxxxxx Xxxxx Xxxxxxx
Title: Managing Director
Series B Convertible Participating Preferred Stock Purchase Agreement
ePARTNERS
By: ___________________________
Name: ___________________________
Title: ___________________________
VIVENDI
By: ___________________________
Name: ___________________________
Title: ___________________________
Series B Convertible Participating Preferred Stock Purchase Agreement
Exhibit A
Series B Convertible Participating Preferred Stock Purchase Agreement
Aggregate
Purchase
Name and Address Shares Price
--------------------------------------------- ---------------- -----------------
SOFTBANK Capital Partners LP 10,207,063 $57,850,735.44
00 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxx Xxxxxx, XX 00000
SOFTBANK Capital Advisors Fund LP 148,079 $ 839,270.99
00 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxx Xxxxxx, XX 00000
SOFTBANK Technology Ventures IV LP 1,015,735 $ 5,757,693.85
000 X. Xxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
SOFTBANK Technology Advisors Fund LP 19,462 $ 110,320.35
000 X. Xxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
SOFTBANK Technology Ventures V LP 1,035,196 $ 5,868,008.53
000 X. Xxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
ePartners 2,070,393 $11,739,997.71
Xxxxxx Xxxxx
Xxxx Xxxxxxxx
Xxxxxx, XX0X0XX
XX
Vivendi 1,381,321 $ 7,829,998.21
00 Xxxxxx xx Xxxxxxxxx ---------------- -----------------
75380 Xxxxx Xxxxx
00 Xxxxxx
Total: 15,877,249 $89,996,025.08
================ ==================
Series B Convertible Participating Preferred Stock Purchase Agreement
Exhibit B
Amended And Restated Certificate Of Incorporation
Exhibit C
Investors' Rights Agreement
Exhibit D
Stockholders' Agreement
Exhibit E
Employee Nondisclosure and Developments Agreement and
Non-Competition Agreement
Exhibit F
Legal Opinion
EXHIBIT G
LETTER OF INTENT
