EXECUTION COPY
▇▇▇▇▇.▇▇▇ INC.
SERIES E CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES E CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (the
"Agreement") is made as of May 4, 1999 (the "Effective Date"), by and among
▇▇▇▇▇.▇▇▇ Inc., a Delaware corporation (the "Company"), and the investors set
forth on EXHIBIT A hereto (the "Investors").
R E C I T A L S:
WHEREAS, the Company desires to sell to the Investors, and the Investors
desire to purchase from the Company, shares of Series E Convertible Preferred
Stock ("Series E Stock") and, if applicable, shares of Series A-IV Convertible
Preferred Stock ("Series A-IV Stock"), on the terms and subject to the
conditions contained herein.
NOW, THEREFORE, the parties hereto, intending to be bound hereby, do
agree as follows:
1. PURCHASE AND SALE OF SHARES.
1.1 CERTIFICATE OF INCORPORATION. The Company shall file
with the Secretary of State of the State of Delaware on or before the Closing
(as defined below) the Third Restated Certificate of Incorporation of the
Company in the form attached hereto as EXHIBIT B (collectively, as amended and
restated, and together with all Certificates of Designations which may become of
record, the "Certificate of Incorporation").
1.2 PURCHASE AND SALE. Subject to the terms and conditions
of this Agreement, each Investor agrees to purchase, and the Company agrees to
sell and issue to each Investor, at the Closing, at a price per share of $10.00,
that number of shares of the Company's Series E Stock and, if applicable, Series
A-IV Stock (collectively, the "Shares"), opposite each Investor's name and for
the aggregate purchase price set forth on EXHIBIT A hereto.
1.3 CLOSING. Subject to the conditions set forth herein, the
purchase and sale of the Shares shall take place on May 28, 1999 at such place
and time as the Company and the Investors acquiring in the aggregate more than
half of the Shares to be sold pursuant hereto mutually agree upon, or at such
other place and time as the Company and the Investors acquiring in the aggregate
more than half of the Shares to be sold pursuant hereto mutually agree upon (the
"Closing"). At the Closing, the Company shall deliver to each Investor a
certificate representing the Shares which such Investor is purchasing at the
Closing against payment of the purchase price for such Shares by wire transfer
or check payable to the Company.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY TO THE INVESTORS.
The Company hereby represents and warrants to the Investors as of the Effective
Date as follows:
2.1 CORPORATE ORGANIZATION AND AUTHORITY. The Company:
(a) is a corporation duly organized, validly existing,
authorized to exercise all its corporate powers, rights and privileges, and is
in good standing in the State of Delaware;
(b) has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now
conducted and as currently proposed to be conducted and possesses all business
licenses, franchises, and other governmental requirements, except where such a
failure would not have a Material Adverse Effect (as defined below); and
(c) is duly qualified and authorized to transact
business and is in good standing as a foreign corporation in each jurisdiction
in which the failure to so qualify would have a Material Adverse Effect.
2.2 CAPITALIZATION.
(a) The authorized capital stock of the Company
immediately prior to the Closing shall consist of:
(i) 2,500,000 shares of Series A Convertible Preferred Stock,
par value $.01 per share, of which 1,666,666 shares of Series A-I Convertible
Preferred Stock, 200,000 shares of Series A-II Convertible Preferred Stock, and
150,000 shares of Series A-III Convertible Preferred Stock are issued and
outstanding; and 300,000 of which are designated as shares of Series A-IV Stock,
none of which are issued and outstanding;
(ii) 500,000 shares of Series B Convertible Preferred Stock,
par value $.01 per share, of which 472,000 shares are issued and outstanding;
(iii) 533,340 shares of Series C Convertible Preferred Stock,
par value $.01 per share, of which 533,334 shares are issued and outstanding;
(iv) 800,000 shares of Series D Convertible Preferred Stock,
par value $.01 per share, of which 666,136 shares are issued and outstanding;
(v) 1,999,999 shares of Series E Stock, none of which are
issued and outstanding;
-2-
(vi) 666,661 shares of undesignated preferred stock, issuable
in series, none of which are issued and outstanding; and
(vii) 11,500,000 shares of common stock, par value $.01 per
share (the "Common Stock"), of which 1,340,530 shares are issued and
outstanding.
The Company has duly reserved (i) 1,550,000 shares of Common Stock for
issuance by the Company pursuant to the terms of the Company's 1997 Stock Option
Plan and (ii) 500,000 shares of Common Stock for issuance by the Company
pursuant to the terms of the Company's 1999 Stock Option Plan.
The Company has duly reserved sufficient shares of Common Stock for
issuance upon (i) conversion of the Series A Convertible Preferred Stock, the
Series B Convertible Preferred Stock, the Series C Convertible Preferred Stock,
the Series D Convertible Preferred Stock, and the Series E Stock and (ii)
exercise of: that certain Warrant dated November 10, 1997 issued by the Company
to Straight Arrow Publishers Company, L.P., that certain Warrant dated January
1, 1999 issued by the Company to Source Enterprises, Inc., that certain Warrant
to be issued by the Company to ▇▇ ▇▇▇▇▇ Securities Corporation pursuant to the
engagement letter regarding the placement of the Company's securities dated
December 18, 1998, and those certain Warrants dated March 17, 1999 issued by the
Company to the investors under those certain Note and Warrant Purchase
Agreements dated as of March 17, 1999.
The Company has duly reserved sufficient shares of Series E Stock for
issuance upon conversion of those certain Convertible Promissory Notes in the
aggregate principal amount of $3,995,000, which are convertible into
approximately 400,000 shares of Series E Stock at the Closing.
(b) Except as set forth on SCHEDULE 2.2 hereto and in
the Certificate of Incorporation and the Bylaws of the Company (the "Bylaws")
(in each case as amended and in effect as of the Closing), there are no
preemptive or similar rights to purchase or otherwise acquire shares of the
capital stock of the Company pursuant to any provision of law, or any agreement
to which the Company is a party. Except as set forth on SCHEDULE 2.2 hereto,
there is, to the knowledge of the Company, no agreement, restriction, or
encumbrance (such as a right of first refusal, right of first offer, proxy,
voting agreement, voting trust, registration rights agreement, stockholders'
agreement, etc.) with respect to the voting or the pending or unconsummated sale
of any shares of capital stock of the Company (whether outstanding or issuable
upon conversion or exercise of outstanding securities) other than any such
agreement, restriction, or encumbrance which has expired or been terminated
prior to the date hereof. Except as set forth on SCHEDULE 2.2 hereto, the
transactions contemplated by this Agreement will not trigger any anti-dilution
protection provisions given by the Company to any person or entity (including,
without limitation, any stockholder, lender, warrant holder, lessor and/or
licensee). Except as set forth on SCHEDULE 2.2 hereto, there are no contracts
with respect to the pending or unconsummated issuance, sale or transfer by the
Company of any equity securities or other securities of the Company.
-3-
2.3 SUBSIDIARIES. Except for the Company's ownership of all
of the outstanding capital stock of JAMtv Interactive Services Corporation, an
Illinois corporation ("JISC"), and Tunes Acquisition Corp., a Delaware
corporation ("T Sub") (JISC and T Sub sometimes are referred to herein as the
"Subsidiaries"), and as set forth on SCHEDULE 2.3 hereto, the Company does not
directly or indirectly own any interest in any other corporation, partnership,
joint venture or other business association or entity. JISC is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Illinois and has all requisite corporate power and authority to own,
operate and lease its properties and assets and to carry on its business as it
is now being conducted. T Sub is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to own, operate and lease its properties
and assets and to carry on its business as it is now being conducted. Each of
the Subsidiaries is duly qualified to do business and is in good standing in
each jurisdiction in which the failure to so qualify would have a Material
Adverse Effect. All outstanding shares of capital stock of each of the
Subsidiaries are validly issued, fully paid and nonassessable and are owned by
the Company free and clear of any liens, claims or encumbrances. Except as set
forth on SCHEDULE 2.3 hereto, there are no agreements, rights of first refusal,
options or other rights to acquire any of the capital stock of either of the
Subsidiaries.
2.4 AUTHORIZATION. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution, delivery and performance of all obligations under this
Agreement, the Certificate of Incorporation, the Registration Rights Agreement
and the Stockholders' Agreement and for the issuance and delivery of the Shares
and the Common Stock issuable upon conversion of the Shares has been taken (or
will be taken prior to the Closing), and this Agreement, the Registration Rights
Agreement and the Stockholders' Agreement constitute legally binding and valid
obligations of the Company, enforceable in accordance with their terms, except
as certain indemnification provisions may be limited by principles of public
policy, enforceability may be limited by applicable laws relating to bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally and except as such enforceability is
subject to general principles of equity.
2.5 VALIDITY OF SHARES. The Shares, when issued, sold and
delivered in accordance with the terms and for the consideration expressed in
this Agreement, shall be duly and validly issued, fully paid and non-assessable
and, based in part upon the representations and warranties of the Investors in
this Agreement, will be issued in compliance with applicable federal and state
securities laws, and the Common Stock issuable upon conversion of the Shares has
been duly and validly reserved and, when issued in compliance with the
provisions of the Certificate of Incorporation, will be duly and validly issued,
fully paid and nonassessable and issued in compliance with applicable federal
and state securities laws as presently in effect. Except as set forth on
SCHEDULE 2.2 hereto, the Shares and the Common Stock issuable upon conversion of
the Shares are and will be free and clear of all liens, claims and encumbrances,
respectively, other than
-4-
those created by, or imposed upon, the holders thereof through no action of
the Company; PROVIDED, HOWEVER, that the Shares and the Common Stock issuable
upon conversion of the Shares shall be subject to restrictions on transfer
under applicable securities laws. Neither the Company nor any holder of the
Shares shall be subject to any preemptive or similar right with respect
thereto, except as set forth herein, the Stockholders' Agreement, or on
SCHEDULE 2.2 hereto.
2.6 NO CONFLICT WITH OTHER INSTRUMENTS. The execution,
delivery and performance of this Agreement, the Registration Rights Agreement
and the Stockholders' Agreement will not result in any violation of, be in
conflict with, or constitute a default under, with or without the passage of
time or the giving of notice: (i) any provision of the Certificate of
Incorporation or the Bylaws or any provision of the charter documents of either
Subsidiary; (ii) any provision of any judgment, decree or order to which the
Company or either Subsidiary is a party or by which the Company or either
Subsidiary or any of their property is bound; (iii) any Contract to which the
Company or either Subsidiary is a party or by which the Company or either
Subsidiary or any of their property is bound; or (iv) any statute, rule or
governmental regulation applicable to the Company or either Subsidiary.
2.7 FINANCIAL STATEMENTS. Attached as SCHEDULE 2.7 hereto
are the audited consolidated financial statements of the Company for the fiscal
years ending December 31, 1998 and December 31, 1997, and the unaudited
consolidated financial statements of the Company for the months ended January
31, 1999, February 28, 1999 and March 31, 1999, consisting of consolidated
balance sheets as of the end of each of such periods and consolidated statements
of income for such periods and as of the dates indicated (collectively, the
"Financial Statements"). The Financial Statements have been prepared in
accordance with generally accepted accounting principles consistently applied,
present fairly the financial position of the Company and the Subsidiaries as of
the dates indicated, present fairly the results of the Company's and the
Subsidiaries' operations for the periods then ended, and are in accordance with
the books and records of the Company and each Subsidiary, which have been
properly maintained and are complete and correct in all material respects.
2.8 ABSENCE OF CHANGES. Except as set forth on SCHEDULE 2.8
hereto, since December 31, 1998, there has not been:
(a) any material adverse change in the business,
assets, liabilities, results of operations, condition (financial or otherwise),
or prospects of the Company and the Subsidiaries (when viewing the Company and
the Subsidiaries together as a whole), or any circumstances or development which
would reasonably be expected to give rise to such a change (a "Material Adverse
Effect"); provided that the parties agree and acknowledge that neither the
Company's losses nor negative cash flows since December 31, 1998 incurred at a
rate reasonably comparable to the fourth quarter of 1998 shall constitute a
Material Adverse Effect;
-5-
(b) any indebtedness incurred by the Company or either
Subsidiary for borrowed money in excess of $50,000;
(c) any assets or property of the Company or either
Subsidiary having a value in excess of $50,000 made subject to any lien, claim,
charge, security interest, mortgage, pledge, or other encumbrance;
(d) any waiver of any material right of the Company or
either Subsidiary, or the cancellation of any material debt or claim held by the
Company or either Subsidiary having a value in excess of $50,000;
(e) any payment of dividends on, or other
distributions with respect to, or any direct or indirect redemption or
acquisition of, any shares of the capital stock of the Company or either
Subsidiary or any agreement or commitment therefor;
(f) any issuance of any stock, bonds or other
securities of the Company or either Subsidiary or any agreement or commitment
therefor;
(g) any sale, assignment or transfer of any tangible
or intangible assets of the Company or either Subsidiary except in the ordinary
course of business;
(h) any loan by the Company or either Subsidiary to
any officer, director, employee, consultant or stockholder of the Company or
either Subsidiary or any agreement or commitment therefor (other than advances
to such persons in the ordinary course of business in connection with travel,
travel-related, entertainment, and other reimbursable business expenses);
(i) any damage, destruction or loss (whether or not
covered by insurance) having a Material Adverse Effect;
(j) any increase in the compensation paid or payable
to any officer or director of the Company or either Subsidiary;
(k) any change in the accounting methods, practices or
policies followed by the Company or either Subsidiary or any change in
depreciation or amortization policies or rates theretofore adopted;
(l) any material amendment to or termination of any
Contract (as defined below);
(m) any disclosure of trade secrets (the disclosure of
which has had or reasonably could be expected to cause a Material Adverse
Effect) other than in the ordinary course of business, other than pursuant to a
confidentiality agreement, and other than to officers, directors, employees,
authorized agents, and other representatives of the Company or either
Subsidiary; or
-6-
(n) any resignation or threatened resignation of any
officer or director of the Company or either Subsidiary.
2.9 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth
on SCHEDULE 2.9 hereto and for liabilities which in the aggregate do not exceed
$50,000, neither the Company nor either Subsidiary has any obligations or
liabilities of any nature (matured or unmatured, fixed or contingent) other than
(i) obligations disclosed or provided for in the Financial Statements, and
(ii) obligations or liabilities incurred by the Company or either Subsidiary in
the ordinary course of business since December 31, 1998, none of which either
individually or in the aggregate has been or would be reasonably expected to
have a Material Adverse Effect.
2.10 NO VIOLATION OF LAW. Except as set forth on SCHEDULE
2.10 hereto, neither the Company nor either Subsidiary is or has been (by virtue
of any past or present action, omission to act, contract to which they are a
party or any occurrence or state of facts whatsoever) in violation in any
material respect of any applicable local, state or federal law, ordinance,
regulation, order, injunction or decree, or any other requirement of any
governmental body, agency or authority or court binding on it, or relating to
its property or business, nor, to the knowledge of the Company, will the Company
or either Subsidiary hereafter suffer or incur any loss, liability, penalty or
expense, which reasonably could be expected to cause a Material Adverse Effect,
by virtue of any such violation set forth on SCHEDULE 2.10 hereto.
2.11 LITIGATION. Except as set forth on SCHEDULE 2.11 hereto,
there is no litigation, claims, suits, actions, investigations, indictments or
information, proceedings or arbitrations, grievances or other procedures
(including grand jury investigations, actions or proceedings), product liability
or workers' compensation suits, actions or proceedings pending, or to the
knowledge of the Company, threatened, before any court, commission, arbitration
tribunal, or judicial, governmental or administrative department, body, agency
administrator or official, grand juror, or any other official forum for the
resolution of grievances, against the Company or either Subsidiary or involving
any of their properties or business. Further, there are no judgments, orders,
writs, injunctions, decrees, indictments or information, grand jury subpoenas or
civil investigative demands, plea agreements, stipulations or awards (whether
rendered by a court, commission, arbitration tribunal or judicial, governmental
or administrative department, body, agency administrator or official, grand jury
or any other official forum for the resolution of grievances) against the
Company or either Subsidiary or involving any of their properties or business.
Except as set forth on SCHEDULE 2.11 hereto, there is no action, suit,
proceeding, or formal investigation by the Company or either Subsidiary
currently pending or which the Company or either Subsidiary presently intends to
initiate.
2.12 PROPERTIES, TITLE, LIENS AND ENCUMBRANCES. Neither the
Company nor either Subsidiary owns or leases any real property except as set
forth on SCHEDULE 2.12 hereto. Except as set forth on SCHEDULE 2.12 hereto, the
Company and each Subsidiary have good and valid title to all of their tangible
properties and assets, subject
-7-
to no mortgage, pledge, lien, security interest, conditional sale agreement,
encumbrance or charge other than those which arise in the ordinary course of
business and will not cause a Material Adverse Effect. All of the Company's
and each Subsidiary's tangible assets and properties are, in all material
respects, in satisfactory condition and repair for the requirements of the
Company's and each Subsidiary's business as presently conducted and as
proposed to be conducted.
2.13 PATENTS AND OTHER PROPRIETARY RIGHTS. SCHEDULE 2.13
hereto contains a full and complete list of all patents and patent applications,
trademark registrations, applications for registration of trademarks, service
▇▇▇▇ registrations, applications for registration of service marks, and
registered copyrights applied for or registered in the name of the Company or
either Subsidiary. The Company and each Subsidiary have entered into agreements
with each of their officers, employees, and consultants providing the Company or
either Subsidiary, as the case may be, to the extent permitted by law, with
title and ownership to patents, patent applications, trade secrets, and
inventions conceived, developed, reduced to practice by or at the direction of
such person, solely or jointly, during the period of employment by the Company
or either Subsidiary.
Except as described on SCHEDULE 2.13:
(a) The Company and each Subsidiary own or possess
adequate licenses or other rights to use all patents, patent applications,
trademark registrations, applications for registration of trademarks, service
▇▇▇▇ registrations, applications for registration of service marks, trade
secrets, trade names, copyrights, inventions, drawings, designs, licenses,
concepts, computer programs, technical data, customer lists, proprietary rights
and processes, proprietary know-how or information, or other rights with respect
thereto (collectively referred to as "Proprietary Rights"), used in the business
of the Company and each Subsidiary, and the same are sufficient to conduct their
business as they have been conducted and are now being conducted. The current
operations of the Company and each Subsidiary do not infringe or misappropriate,
and, to the knowledge of the Company, no third party has asserted to the Company
or either Subsidiary that such operations infringe or misappropriate any
Proprietary Right of any third party.
(b) There are no claims, disputes, actions,
proceedings, suits or appeals pending against the Company or either Subsidiary
with respect to any Proprietary Rights of the Company or either Subsidiary and,
to the knowledge of the Company, none has been threatened against the Company or
either Subsidiary. The Company does not have knowledge of any facts which would
reasonably serve as a basis for any claim that the Company or either Subsidiary
does not have the right to use all Proprietary Rights necessary for the
development, manufacture, use, sale or other disposition of any or all products
or services presently being used, furnished or sold in the conduct of the
business of the Company or either Subsidiary or currently proposed to be used,
furnished or sold in the business of the Company or either Subsidiary.
-8-
(c) To the knowledge of the Company, the Proprietary
Rights of the Company and each Subsidiary have not been infringed upon by
others.
(d) There are no outstanding licenses for the
Proprietary Rights of the Company and each of the Subsidiaries, nor is the
Company or either Subsidiary bound by restrictive covenants or agreements of any
kind with respect to the Proprietary Rights of any third party.
(e) To the knowledge of the Company, none of the
Company's or either Subsidiary's employees is obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with such employee's duties to the Company.
(f) To the knowledge of the Company, neither the
execution nor delivery of this Agreement, nor the carrying on of the Company's
or either Subsidiary's business by the employees of the Company and each
Subsidiary, nor the conduct of the Company's or either Subsidiary's business as
proposed, will conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any agreement or restrictive
covenant or any judgment, decree or order of any court or administrative agency
under which any of such employees is now obligated.
2.14 TAXES. Except as set forth on SCHEDULE 2.14 hereto, all
federal, state, local and foreign tax returns and reports required to be filed
by the Company and each Subsidiary have been filed, and all taxes, interest,
assessments or deficiencies, fees and other governmental charges upon the
Company and each Subsidiary, or upon any of their properties, income or
franchises, shown in such returns and on assessments received by the Company or
either Subsidiary to be due and payable or claimed to be due and payable by any
governmental authority, have been paid (other than taxes the validity of which
are being contested in good faith and which are identified on SCHEDULE 2.14
hereto). Neither the Company nor either Subsidiary has executed or filed with
any taxing authority any agreement, waiver or consent for the extension of the
period for assessment or collection of any taxes or the audit of any tax returns
or reports. Neither the Company nor either Subsidiary is a party to any pending
action or proceeding, nor, to the knowledge of the Company, is any such action
or proceeding threatened by any governmental authority for the assessment or
collection of taxes, interest, penalties, assessments or deficiencies, and no
claim for assessment or collection of taxes, interest, penalties, assessments or
deficiencies has been asserted against the Company or either Subsidiary. No
material issue has been raised by any federal, state, local or foreign taxing
authority in connection with an audit or examination of the tax returns,
reports, business or properties of the Company or either Subsidiary which has
not been settled or resolved. Neither the Company nor either Subsidiary has
agreed to extend the statute of limitations with respect to any tax period or
the review or audit of any tax return. Neither the Company nor either
Subsidiary has made or agreed (or been required) to make any adjustment or
change in accounting method other than in accordance with generally accepted
accounting principles (which adjustments or changes have not, individually or
-9-
in the aggregate, been material). No material special charges, penalties,
fines, liens, or similar encumbrances have been asserted against the Company
or either Subsidiary with respect to the payment or failure to pay any taxes
which have not been paid or received without further liability to the Company
or either Subsidiary. Proper and accurate amounts have been withheld by the
Company and each Subsidiary from their employees for all periods in
compliance with the withholding provisions of applicable federal, state and
local tax laws.
2.15 CONTRACTS. The Company has provided or made available to
netWorth Partners I, LLC ("netWorth") and its counsel true and complete copies
of each contract of the Company and each Subsidiary, the termination or
expiration of which reasonably could be expected to cause a Material Adverse
Effect, and each such material contract is set forth on SCHEDULE 2.15 hereto
(the "Contracts"). Except as set forth on SCHEDULE 2.15 hereto, no third party
has notified the Company or either Subsidiary of any claim, dispute or
controversy with respect to any of the Contracts nor has the Company or either
Subsidiary received notice or warning of alleged nonperformance, delay in
delivery or other noncompliance by the Company or either Subsidiary with respect
to their obligations under any of the Contracts, nor, to the knowledge of the
Company, are there any facts which exist reasonably indicating that any of the
Contracts may be totally or partially terminated or suspended by the other
parties thereto other than by their stated terms. Except as set forth on
SCHEDULE 2.15 hereto, neither the Company nor either Subsidiary has entered into
any agreement containing covenants limiting the right of the Company or either
Subsidiary to compete in any business or with any person. The Contracts are
legally binding, valid, and in full force and effect with respect to the Company
and each Subsidiary, as the case may be, and to the knowledge of the Company,
the other parties thereto. Except as set forth on SCHEDULE 2.15 hereto, neither
the Company nor either Subsidiary is in violation of any term or provision of
any Contract.
2.16 NO DEFAULTS OR CONFLICTS. Neither the Company nor either
Subsidiary is in violation of any term or provision of its Certificate of
Incorporation, Bylaws or other charter documents, or any term or provision of
any judgment to which the Company or either Subsidiary is a party, by which the
Company or either Subsidiary is bound in any respect or under which the Company
or either Subsidiary has any rights.
2.17 INSURANCE. The Company and each of the Subsidiaries has
policies of insurance that are valid and binding and in full force and effect,
with all premiums due thereon paid, in sufficient coverages and amounts that are
reasonable and consistent with good industry practices. Neither the Company nor
either Subsidiary has received any notice of cancellation or termination in
respect of any such policy or is in default thereunder.
2.18 PRIOR REGISTRATION RIGHTS. The Company is under no
contractual obligation to register under the Securities Act of 1933, as amended
(the "Securities Act"), any of its presently outstanding securities or any of
its securities that may subsequently be issued except as provided in the
Registration Rights Agreement.
-10-
2.19 EMPLOYEE COMPENSATION OR BENEFIT PLANS. Except as set
forth on SCHEDULE 2.19 hereto, (i) neither the Company nor either Subsidiary is
a party to or bound by any currently effective employment contracts, deferred
compensation agreements, bonus plans, incentive plans, profit sharing plans,
retirement or other employee compensation agreements, (ii) neither the Company
nor either Subsidiary has ever maintained or contributed to any employee benefit
plan subject to the Employee Retirement Income Security Act of 1974 ("ERISA"),
and (iii) neither the Company nor either Subsidiary has ever contributed to any
"multi-employer plan" as such term is defined in ERISA. Subject to applicable
law and to the terms of any employment agreements set forth on SCHEDULE 2.19
hereto, the employment of each officer and employee of the Company and each
Subsidiary is terminable at the will of the Company and each Subsidiary, as the
case may be.
2.20 EMPLOYEE RELATIONS. The Company and each Subsidiary have
satisfactory relations with their respective employees. The employees of the
Company and each Subsidiary are not represented by any labor unions and, to the
Company's knowledge, no union organization campaign is in progress. The Company
is not aware that any officers of the Company (including, without limitation,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇) or either Subsidiary
intend to terminate their employment.
2.21 BROKERS AND FINDERS. Except as set forth on SCHEDULE
2.21 hereto, neither the Company nor either Subsidiary has incurred, or will
incur, directly or indirectly, any liability for any brokerage or finders' fees
or agents commissions or any similar charges in connection with this Agreement
or any transaction contemplated hereby.
2.22 TRANSACTIONS WITH AFFILIATES. Except for transactions
relating to purchases of warrants, convertible debt, and shares of the capital
stock of the Company, regular salary payments, bonuses, options, and fringe
benefits under an individual's compensation package with the Company or either
Subsidiary, and except as set forth on SCHEDULE 2.22 hereto, none of the
officers, employees, directors or stockholders of the Company or either
Subsidiary ("affiliates") is a party to any transaction with the Company or
either Subsidiary. There have been no assumptions or guarantees by the Company
or either Subsidiary of any obligations of such affiliates.
2.23 CORPORATE DOCUMENTS. The Certificate of Incorporation
and Bylaws of the Company, as amended, are in the forms set forth as EXHIBITS
C-1 and C-2, respectively. The Certificate of Incorporation and Bylaws of each
Subsidiary, as amended, are in the forms provided to netWorth and its counsel.
The minute books of the Company and each Subsidiary heretofore provided by the
Company to netWorth and its counsel for inspection contain full, complete and
accurate records of all meetings and other corporate actions taken by the
directors and stockholders of the Company and each Subsidiary.
-11-
2.24 REQUIRED CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state, or local governmental authority or other person
or entity, on the part of the Company or either Subsidiary, is required in
connection with the consummation of the transactions contemplated by this
Agreement, except for the consent or approval of the Company's board of
directors and stockholders (which will be obtained prior to Closing) and such
qualifications or filings under applicable federal and state securities laws as
may be required in connection with the transactions contemplated by this
Agreement, which qualification or filings will be made on a timely basis.
2.25 ENVIRONMENTAL REGULATIONS. The Company and each
Subsidiary have met and continue to meet all applicable local, state, federal
and national environmental regulations in all material respects and have
disposed of their waste products and effluents, if any, and/or have caused
others to dispose of such waste products and effluents, if any, in compliance
with all applicable state, local, federal and national environmental regulations
and in such a manner that: (1) no harm has resulted or is expected to result to
any of their respective employees or properties or to any other person or
entities or their properties, and (ii) the Company and each Subsidiary have
incurred no liability with respect thereto.
2.26 YEAR 2000 COMPLIANCE.
(a) The Company has provided to netWorth and its
counsel a true and correct copy of the Company's year 2000 compliance plan (the
"Y2K Plan"). The Company will make commercially reasonable efforts to complete
the tasks outlined in the Y2K Plan on or prior to December 31, 1999.
(b) The Company's and each Subsidiary's proprietary
computer systems and software products (exclusive of any computer systems and
software products licensed from third parties) developed or acquired by the
Company and each Subsidiary are Y2K Compliant. The Company expects the
above-referenced computer systems and software products to be Y2K Compliant
before, on and after January 1, 2000.
(c) The Company has solicited from its third party
vendors Y2K Compliance certification of the Mission Critical Systems licensed by
the Company and each Subsidiary from third party vendors. As of the date
hereof, the Company has received responses from (or responses have been made
available via website by) all such third party vendors of Mission Critical
Systems. Where any such vendor has responded with a certification of its Y2K
Compliance for any Mission Critical System, the Company is not aware of any
facts that would contradict such certification. Where any such vendor has
responded with a failure of certification of its Y2K Compliance for any Mission
Critical System, the Company has made, or will make commercially reasonable
efforts to make, such Mission Critical System Y2K Compliant or has replaced, or
will make commercially reasonable efforts to replace, such Mission Critical
Systems with Y2K Compliant systems.
-12-
(d) "Mission Critical Systems" means computer systems
and software products owned or licensed by the Company, the failure of which
could reasonably be expected to cause (i) the Company's principal websites to
become inaccessible by their users for a period of twenty-four (24) hours or
longer, or (ii) a default pursuant to Section 19(a) of that certain Affiliation
Agreement dated November 10, 1997 between the Company and Straight Arrow
Publishers Company, L.P.
(e) "Y2K Compliant" means the ability: (i) to process
any date rollover, (ii) to process calculations or computations regardless of
the dates used in such calculations whether before, on or after January 1, 2000,
(iii) to accept and respond to two (2) digit year date input in a manner that
resolves any ambiguities as to the century to which such two (2) digit year date
input relates in an appropriate manner, and (iv) to store and display date data
in a manner that is unambiguous as to the century to which such two (2) digit
year date input relates.
2.27 AFFILIATION AGREEMENT WITH STRAIGHT ARROW PUBLISHERS
COMPANY, L.P. Simultaneously with the Closing, that certain Affiliation
Agreement between the Company and Straight Arrow Publishers Company, L.P. dated
as of November 10, 1997 shall have been extended for a "Renewal Term," under and
as defined therein, of five (5) years commencing on November 10, 2000.
2.28 FULL DISCLOSURE. No statement by the Company contained
in this Agreement, or the attached exhibits or schedules or any written
statement or certificate furnished or to be furnished to any of the Investors
pursuant to this Agreement or in connection with the transactions contemplated
hereby when read together contains any untrue statement of a material fact or
omits to state any material fact necessary to make the statements contained
therein or herein, in view of the circumstances under which they were made, not
misleading.
3. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS TO THE COMPANY.
Each Investor, severally and not jointly, hereby represents and warrants to the
Company as of the Effective Date as follows:
3.1 AUTHORIZATION. When executed and delivered by the
Investor, and assuming the execution and delivery by the Company, this
Agreement, the Registration Rights Agreement and the Stockholders' Agreement,
will constitute a valid and legally binding obligation of the Investor,
enforceable in accordance with its terms except as certain indemnification
provisions may be limited by principles of public policy, enforceability may be
limited by applicable laws relating to bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally and except as such enforceability is subject to general principles of
equity. The Investor has full power and authority to enter into this Agreement,
the Registration Rights Agreements and the Stockholders' Agreement.
3.2 NO CONFLICT WITH OTHER INSTRUMENTS. The execution,
delivery and performance of this Agreement, the Registration Rights Agreement
and the Stockholders'
-13-
Agreement will not result in any violation of, be in conflict with, or
constitute a default under, with or without the passage of time or the giving
of notice: (i) any provision of any of charter documents of any Investor;
(ii) any provision of any judgment, decree or order to which any Investor is
a party or by which any Investor or its property is bound; or (iii) any
statute, rule or governmental regulation applicable to any Investor.
3.3 BROKERS AND FINDERS. None of the Investors has retained
any investment banker, broker, or finder in connection with the transactions
contemplated by this Agreement.
4. SECURITIES LAWS.
4.1 SECURITIES LAWS REPRESENTATIONS AND COVENANTS OF THE
INVESTORS.
(a) This Agreement, the Registration Rights Agreement
and the Stockholders' Agreement, are made with the Investors in reliance upon
each Investor's representation to the Company, which by each Investor's
execution of this Agreement each Investor hereby confirms, that the Shares to be
received by each Investor will be acquired for investment for such Investor's
own account, not as a nominee or agent, and not with a view to the direct or
indirect sale or distribution of any part thereof, and that each Investor has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, each Investor further
represents that such Investor has no contract, undertaking, agreement or
arrangement with any person to sell, transfer, or grant participations to such
person or to any third person, with respect to any of the Shares. Each of the
Investors represents and warrants to the Company that each office of such
Investor in which its investment decision was made, and the principal place of
business of such Investor (or principal residence if such Investor is an
individual), is located at the address or addresses set forth beneath its name
on EXHIBIT A hereto.
(b) Each Investor understands and acknowledges that
the Shares it is acquiring hereunder are deemed to be "restricted securities"
under the Securities Act as the offering of the Shares pursuant to this
Agreement will not be registered under the Securities Act or under any state
securities or "blue sky" laws on the grounds that the offering and sale of
securities contemplated by this Agreement are exempt from registration pursuant
to Section 4(2) of the Securities Act and such state securities or "blue sky"
laws, and that the Company's reliance upon such exemptions is predicated upon
the Investors' representations set forth in this Agreement.
(c) Unless the Shares are registered under the
Securities Act, each Investor covenants that in no event will such Investor
dispose of any of the Shares other than pursuant to Rule 144 ("Rule 144") or
Rule 144A promulgated by the Securities and Exchange Commission ("Commission")
under the Securities Act (or any similar or analogous rule), if available,
unless and until (i) the Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a statement of
the circumstances surrounding the proposed disposition, and (ii) if requested
-14-
by the Company, the Investor shall have furnished the Company with an opinion
of counsel satisfactory in form and substance to the Company and the
Company's counsel to the effect that (x) such disposition will not require
registration under the Securities Act and (y) appropriate action necessary
for compliance with the Securities Act and any applicable state, local or
foreign law has been taken. Each certificate evidencing the Shares
transferred as above provided shall bear the appropriate restrictive legend
set forth in Section 4.2 below, except that such certificate shall not bear
such legend if the transfer was made in compliance with Rule 144 (pursuant to
a provision of such rule not requiring such legend) or if the opinion of
counsel referred to above is to the further effect that such legend is not
required in order to establish compliance with any provisions of the
Securities Act.
(d) Each Investor represents that: (i) the Investor is
an "Accredited Investor" as that term is defined in Regulation D promulgated by
the Commission under the Securities Act and has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of the Investor's prospective investment in the Shares. If other than an
individual, such Investor also represents that, if it has been organized for the
purpose of acquiring the Shares, all of the equity owners of the Investor are
"Accredited Investors"; (ii) the Investor has received all the information
requested by it from the Company and considered necessary or appropriate for
deciding whether to purchase the Shares and has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of the offering and sale of the Shares and the other transactions
contemplated herein; (iii) the Investor has the ability to bear the economic
risks of such Investor's prospective investment in the Shares; and (iv) the
Investor is able, without materially impairing its financial condition, to hold
the Shares for an indefinite period of time and to suffer complete loss on its
investment.
4.2 LEGENDS.
(a) All certificates for the Shares shall bear the
following legends:
The securities represented by this certificate were issued in a
transaction exempt from registration under the Securities Act of
1933 (as then in effect), and in reliance upon the holder's
representation that such securities were being acquired for
investment and not for resale. No transfer of such securities
may be made on the books of the Company unless accompanied by an
opinion of counsel, satisfactory to the Company, that such
transfer may be effected without registration under the
Securities Act of 1933 (as amended) or that such securities have
been so registered under a registration statement which is in
effect at the date of such transfer.
-15-
The sale, assignment, pledge, encumbrance or other transfer of
the securities represented by this certificate is subject to the
provisions of an Amended and Restated Stockholders' Agreement,
dated as of May 4, 1999, among the Company and the Stockholders
named therein, a copy of which is on file at the principal
executive office of the Company.
(b) The certificates evidencing the Shares shall also
bear any legend required pursuant to any other state, local or foreign law
governing such securities.
4.3 BLUE SKY COMPLIANCE. The Company will use its best
efforts to qualify the Shares for offer and sale to each Investor under, or to
ensure the availability of exemptions from the registration or qualification
requirements of, all applicable state securities or blue sky laws.
5. CONDITIONS OF INVESTORS' OBLIGATIONS AT THE CLOSING. The
obligations of the Investors under this Agreement to purchase the Shares at the
Closing are subject to the fulfillment at or before the Closing of each of the
following conditions, any of which may be waived in writing by netWorth:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 2 shall be true, correct and
complete on and as of the Closing with the same effect as if made on and as of
the Closing.
5.2 PERFORMANCE. The Company shall have performed or
fulfilled all agreements, obligations and conditions contained herein required
to be performed or fulfilled by the Company before the Closing.
5.3 BLUE SKY COMPLIANCE. The offer and sale of the Shares to
the Investors shall be in compliance with all applicable state securities or
blue sky laws.
5.4 BOARD OF DIRECTORS. The Certificate of Incorporation and
Bylaws shall provide for a Board of seven (7) members, and immediately upon the
Closing the Board of Directors will consist of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, ▇▇. as the director designated by netWorth.
5.5 PROCEEDINGS SATISFACTORY. All corporate and legal
proceedings taken by the Company in connection with the transactions
contemplated by this Agreement and all documents and papers relating to such
transactions shall be satisfactory to the Investors, in the reasonable exercise
of the judgment of the Investors. The Company shall have delivered to the
Investors a certificate dated as of the Closing, signed by an officer of the
Company, certifying that the conditions set forth in Sections 5.1 and 5.2 have
been satisfied.
-16-
5.6 LEGAL OPINION. At or before Closing, netWorth shall have
received an opinion from ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to the Company,
substantially in the form of EXHIBIT C.
5.7 REGISTRATION RIGHTS AGREEMENT. The Company and the
Investors shall have entered into the Amended and Restated Registration Rights
Agreement in the form attached hereto as EXHIBIT D (the "Registration Rights
Agreement").
5.8 STOCKHOLDERS' AGREEMENT. The Company, the Investors and
the other stockholders of the Company shall have entered into the Amended and
Restated Stockholders' Agreement in the form attached hereto as EXHIBIT E (the
"Stockholders' Agreement").
5.9 AGREEMENT WITH STRAIGHT ARROW PUBLISHERS COMPANY, L.P.
Simultaneously with the Closing, that certain Affiliation Agreement with
Straight Arrow Publishers Company, L.P. ("Rolling Stone") dated as of November
10, 1997 shall have been extended for a "Renewal Term," under and as defined
therein, of five (5) years commencing on November 10, 2000, and Rolling Stone
shall have acknowledged the foregoing extension in writing.
5.10 APPROVAL OF MELLON VENTURES, ▇.▇. ▇▇▇▇▇▇ Ventures, L.P.
shall have received the approval of its General Partner to enter into this
Agreement and to consummate the transactions contemplated hereby.
5.11 SMALL BUSINESS CONCERN. The Company shall execute and
deliver the documents attached hereto as EXHIBIT F concerning its status as a
"small business concern" within the meaning of Section 121.301(c) of Title 13 of
the United States Code of Federal Regulations.
6. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT THE CLOSING. The
obligations of the Company under this Agreement are subject to (a) the
representations and warranties of the Investors contained in Sections 3 and 4
having been satisfied and being true, correct and complete on and as of the
Closing with the same effect as if made on and as of the Closing, and (b)
obtaining the consent of the board of directors and the consent, in accordance
with the General Corporation Law of the State of Delaware, of the stockholders
of the Company to the adoption of the Certificate of Incorporation and the
execution and delivery of this Agreement, the Registration Rights Agreement, and
the Stockholders' Agreement.
7. MISCELLANEOUS.
7.1 SURVIVAL OF WARRANTIES. The warranties and
representations of the parties contained in or made pursuant to this Agreement
shall survive the execution and delivery of this Agreement and the Closing.
-17-
7.2 NOTICES. All notices, demands or other communications
hereunder shall be in writing and shall be deemed given when delivered
personally, three business days after mailing if mailed by certified mail,
return receipt requested, one business day after delivery by sender to reputable
overnight courier service, or one business day after telecopied, telegraphed or
telexed (transmission confirmed), or otherwise actually delivered (i) if to the
Company, at ▇▇▇▇▇.▇▇▇ Inc., ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (with a copy to ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
facsimile number: 312-360-6575), and (ii) if to any Investor, at such Investor's
address as set forth on EXHIBIT A, or at such other address as the Company or
such Investor may designate in writing to the other parties.
7.3 SEVERABILITY AND GOVERNING LAW. Should any Section or
any part of a Section within this Agreement be rendered void, invalid or
unenforceable by any court of law for any reason, such invalidity or
unenforceability shall not void or render invalid or unenforceable any other
Section or part of a Section in this Agreement. This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware
applicable to contracts entered into and wholly to be performed within the State
of Delaware by Delaware residents.
7.4 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
7.5 CAPTIONS AND SECTION HEADINGS; KNOWLEDGE. Section titles
or captions contained in this Agreement are inserted as a matter of convenience
and for reference purposes only, and in no way define, limit, extend or describe
the scope of this Agreement or the intent of any provision hereof. As used in
this Agreement, the term "to the knowledge of the Company" shall refer to the
knowledge or awareness of the officers of the Company and shall be deemed for
all purposes to include the knowledge or awareness which any such officer would
have obtained after making a good faith inquiry of those employees of the
Company with principal and/or day-to-day operational responsibility with respect
to a particular matter.
7.6 SINGULAR AND PLURAL, ETC. Whenever the singular number
is used herein and where required by the context, the same shall include the
plural, and the neuter gender shall include the masculine and feminine genders.
7.7 AMENDMENTS AND WAIVERS. This Agreement may be amended
only by a written instrument signed by the Company and by the Investors owning
at least 66.67% of the outstanding shares of Common Stock issued or issuable
upon conversion of the Shares. No failure to exercise and no delay in
exercising, on the part of any party, any right, remedy, power or privilege
hereunder, shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
-18-
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law. The failure of any party to insist upon a strict performance of
any of the terms or provisions of this Agreement, or to exercise any option,
right or remedy herein contained, shall not be construed as a waiver or as a
relinquishment for the future of such term, provision, option, right or remedy,
but the same shall continue and remain in full force and effect. No waiver by
any party of any term or provision of this Agreement shall be deemed to have
been made unless expressed in writing and signed by such party.
7.8 SUCCESSORS AND ASSIGNS. All rights, covenants and
agreements of the parties contained in this Agreement shall, except as otherwise
provided herein, be binding upon and inure to the benefit of their respective
successors and assigns.
7.9 EXPENSES. Upon the Closing, payment shall be made by the
Company to (i) ▇▇▇▇▇▇ & Bird LLP, counsel to netWorth, for the fees and expenses
incurred in connection with the transactions contemplated by this Agreement,
(ii) netWorth, for other fees and expenses they incurred in connection with the
transactions contemplated by this Agreement, and (iii) Sidley & Austin, counsel
to the GSCP Stockholders (as defined in the Registration Rights Agreement), for
the fees and expenses incurred in connection with the transactions contemplated
by this Agreement; provided that the Company shall not be required to pay more
than an aggregate of $40,000 for such fees and expenses under Section 7.9(i).
7.10 FURTHER ASSURANCES. Each party hereto agrees to do all
acts and to make, execute and deliver such written instruments as shall from
time to time be reasonably required to carry out the terms and provisions of
this Agreement.
7.11 PUBLIC ANNOUNCEMENTS. The Company and the Investors will
consult with each other before issuing any press release or making any public
statement with respect to this Agreement and the transactions contemplated
hereby and, except as may be required by applicable law, will not issue any such
press release or make any such public statement prior to such consultation.
7.12 RIGHT OF FIRST OFFER. Subject to the terms and
conditions specified in this Section 7.12, each time the Company proposes to
offer any shares of, or securities convertible into or exercisable for any
shares of, any class of its capital stock ("New Shares"), the Company shall
first make an offering of such New Shares to each Investor holding more than
300,000 shares of Preferred Stock (for purposes of this Section 7.12, a "Major
Holder"), subject to adjustments for stock dividends, stock splits,
reclassifications and the like, in accordance with the following provisions:
(a) The Company shall give notice (the "Notice") to all Major
Holders stating (i) its bona fide intention to offer such New Shares, (ii) the
number of such New Shares to be offered, and (iii) the price and terms, if any,
upon which it proposes to offer such New Shares.
-19-
(b) By written notice to the Company, within 15 calendar days
after the giving of the Company's Notice, a Major Holder may elect to purchase
or obtain, at the price and on the terms specified in the Notice, up to that
portion of such New Shares which equals the proportion that the number of shares
of Common Stock issued and held and issuable upon conversion of the Preferred
Stock then held by such Major Holder bears to the total number of shares of
Common Stock of the Company then outstanding (assuming full conversion of all
convertible securities) ("Pro Rata Share").
(c) If all New Shares referred to in the Notice which Major
Holders are entitled to obtain pursuant to Subsection 7.12(b) are not elected to
be obtained as provided in Subsection 7.12(b) hereof, the Company may, during
the 60-day period following the expiration of the 15-day period provided in
Subsection 7.12(b) hereof, offer the remaining unsubscribed portion of such New
Shares to any person or persons at a price not less than, and upon terms no more
favorable than, those specified in the Notice. If the Company does not enter
into an agreement for the sale of the New Shares within such 60-day period, the
rights provided to Major Holders hereunder shall be deemed to be revived and
such New Shares shall not be offered unless first reoffered to the Major Holders
in accordance herewith.
(d) The right of first offer in this Section 7.12 shall not
be applicable to:
(i) shares of Common Stock issuable or issued to
employees, advisors, consultants or outside directors of the Company
directly or pursuant to a stock option plan or restricted stock plan
approved by the Board of Directors of the Company;
(ii) securities issued or issuable upon conversion of
the securities set forth in Section 2.2 hereof; or
(iii) securities issued or issuable in connection with a
merger, acquisition or consolidation.
(e) The right of first offer set forth in this Section 7.12
may not be assigned or transferred, except that such right is assignable by each
Major Holder to any wholly-owned subsidiary or parent of, or to any corporation
or entity that is, within the meaning of the Securities Act, controlling,
controlled by or under common control with, any such Major Holder.
(f) All rights of first offer granted under this Section 7.12
shall automatically terminate immediately prior to the closing of the Company's
initial public offering of securities (and such right of first offer shall not
apply to such offering).
(e) For purposes of this Section 7.12, "Preferred Stock"
means the Company's Series A Convertible Preferred Stock, Series B Convertible
Preferred Stock,
-20-
Series C Convertible Preferred Stock, Series D Convertible Preferred Stock
and Series E Stock.
-21-
IN WITNESS WHEREOF, the parties hereto have executed this Series E
Convertible Preferred Stock Purchase Agreement as of the day and year first
above written.
THE COMPANY:
▇▇▇▇▇.▇▇▇ INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: Chief Financial Officer
--------------------------------
INVESTORS:
NETWORTH PARTNERS I, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
--------------------------------
Title: Authorized Person
--------------------------------
GS CAPITAL PARTNERS II, L.P. , a Delaware
limited partnership
By: GS Advisors, L.P., its general
partner
By: GS Advisors, Inc., its general
partner
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Its: Vice President
----------------------------------
GS CAPITAL PARTNERS II OFFSHORE, L.P., a
limited partnership organized under the
laws of the Cayman Islands
By: GS Advisors II (Cayman), L.P., its
general partner
By: GS Advisors II, Inc., its general
partner
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Its: Vice President
----------------------------------
-▇▇-
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇. ▇▇▇▇▇▇▇▇▇▇▇ GMBH, a
company organized under the laws of
Germany
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Its: Registered Agent
----------------------------------
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Its: Managing Director
----------------------------------
STONE STREET FUND 1997, L.P., a Delaware
limited partnership
By: Stone Street Asset Corp., General
Partner
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Its: Vice President
----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, L.P., a Delaware
limited partnership
By: Stone Street Asset Corp., Managing
General Partner
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Its: Vice President
----------------------------------
-23-
IN WITNESS WHEREOF, each of the parties hereto has executed this Series E
Convertible Preferred Stock Purchase Agreement as of the day and year first
above written.
SBIC PARTNERS II, L.P.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇.▇.,
General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Office of the President
-24-
IN WITNESS WHEREOF, each of the parties hereto has executed this Series E
Convertible Preferred Stock Purchase Agreement as of the day and year first
above written.
THE BENAROYA COMPANY, LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Title: Manager
--------------------------------
-25-
IN WITNESS WHEREOF, each of the parties hereto has executed this Series E
Convertible Preferred Stock Purchase Agreement as of the day and year first
above written.
IT CAPITAL LTD.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Title: Managing Director
--------------------------------
-26-
IN WITNESS WHEREOF, each of the parties hereto has executed this Series E
Convertible Preferred Stock Purchase Agreement as of the day and year first
above written.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
-27-
IN WITNESS WHEREOF, each of the parties hereto has executed this Series E
Convertible Preferred Stock Purchase Agreement as of the day and year first
above written.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
-28-
IN WITNESS WHEREOF, each of the parties hereto has executed this Series E
Convertible Preferred Stock Purchase Agreement as of the day and year first
above written.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-29-
IN WITNESS WHEREOF, each of the parties hereto has executed this Series E
Convertible Preferred Stock Purchase Agreement as of the day and year first
above written.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇
-30-
IN WITNESS WHEREOF, each of the parties hereto has executed this Series
E Convertible Preferred Stock Purchase Agreement as of the day and year first
above written.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
-31-
IN WITNESS WHEREOF, each of the parties hereto has executed this Series
E Convertible Preferred Stock Purchase Agreement as of the day and year first
above written.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-32-
IN WITNESS WHEREOF, each of the parties hereto has executed this Series
E Convertible Preferred Stock Purchase Agreement as of the day and year first
above written.
NEW SUMMIT PARTNERS
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Title: Partner
--------------------------------
-33-
IN WITNESS WHEREOF, each of the parties hereto has executed this Series
E Convertible Preferred Stock Purchase Agreement as of the day and year first
above written.
AMERICAN HIGH GROWTH EQUITIES RETIREMENT
TRUST
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Title: Trustee
--------------------------------
-34-
IN WITNESS WHEREOF, each of the parties hereto has executed this Series
E Convertible Preferred Stock Purchase Agreement as of the day and year first
above written.
C.B. EQUITIES RETIREMENT TRUST
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Title: Trustee
--------------------------------
-35-
IN WITNESS WHEREOF, each of the parties hereto has executed this Series
E Convertible Preferred Stock Purchase Agreement as of the day and year first
above written.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
-36-
IN WITNESS WHEREOF, each of the parties hereto has executed this Series
E Convertible Preferred Stock Purchase Agreement as of the day and year first
above written.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-37-
IN WITNESS WHEREOF, each of the parties hereto has executed this Series
E Convertible Preferred Stock Purchase Agreement as of the day and year first
above written.
TUNABLE SIMON, L.L.C.
By: IPPnet, L.L.C., its managing member
By: IPP99 PRIVATE EQUITY, L.L.C.,
its managing member
By: WESKIDS III, L.L.C., its
managing member
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇, its Vice
President and CFO
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
-38-
IN WITNESS WHEREOF, each of the parties hereto has executed this Series
E Convertible Preferred Stock Purchase Agreement as of the day and year first
above written.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-39-
IN WITNESS WHEREOF, each of the parties hereto has executed this Series
E Convertible Preferred Stock Purchase Agreement as of the day and year first
above written.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-40-
