Exhibit 10.12
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SECURITIES PURCHASE AGREEMENT
DATED AS OF DECEMBER 24, 1998
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TABLE OF CONTENTS
Page
Article I FILING; ISSUANCE AND RESERVATION; SALE OF THE SECURITIES.................................1
1.1 Filing of Certificate of Incorporation................................................1
1.2 Authorization of Issuance and Sale of Securities and Reservation of Shares............1
1.3 The Closings of the Sale of the Securities............................................1
Article II THE CLOSING.............................................................................2
2.1 The Closing...........................................................................2
2.2 Deliveries at the Closing.............................................................2
Article III REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................................3
3.1 Organization; Good Standing; Qualification and Power..................................3
3.2 Authorization.........................................................................3
3.3 Non-contravention.....................................................................4
3.4 Capitalization of the Company.........................................................4
3.5 Bankruptcy, Etc.......................................................................5
3.6 Legal Compliance......................................................................5
3.7 Intellectual Property.................................................................5
3.8 Commencement of Business..............................................................6
3.9 Offering Exemption....................................................................6
3.10 Brokers...............................................................................6
3.11 Registration Rights...................................................................7
3.12 Use of Proceeds.......................................................................7
3.13 Year 2000.............................................................................7
3.14 Section 1202 Compliance...............................................................7
3.15 No Actions............................................................................7
Article IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS........................................8
4.1 Experience............................................................................8
4.2 Investment............................................................................8
4.3 Rule 144..............................................................................8
4.4 No Public Market......................................................................8
4.5 Brokers or Finders....................................................................9
Article V ADDITIONAL AGREEMENTS....................................................................9
5.1 Affirmative and Negative Covenants of the Company.....................................9
5.2 Legal Existence Compliance, Etc......................................................10
5.3 Survival of Representations, Warranties and Agreements, Etc..........................10
5.4 Transaction Expenses and Taxes.......................................................11
Article VI MISCELLANEOUS..........................................................................11
6.1 No Third Party Beneficiaries.........................................................11
6.2 Entire Agreement.....................................................................11
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6.3 Successors and Assigns...............................................................11
6.4 Counterparts.........................................................................12
6.5 Notices..............................................................................12
6.6 Governing Law........................................................................12
6.7 Consent to Jurisdiction..............................................................13
6.8 Amendments and Waivers...............................................................13
6.9 Certain Definitions..................................................................13
6.10 Incorporation of Schedules and Exhibits..............................................16
6.11 Construction.........................................................................16
6.12 Interpretation.......................................................................16
6.13 Independence of Covenants and Representations and Warranties.........................16
6.14 Remedies.............................................................................17
6.15 Severability.........................................................................17
6.16 Exchanges: Lost, Stolen or Mutilated Certificates....................................17
6.17 Indemnity............................................................................17
6.18 Waiver of Jury Trial.................................................................18
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Annex I - Preferred Shares to be Purchased by the Purchasers
SCHEDULES
Schedule 3.4 - Agreements Relating to Capital Stock of Company
Schedule 3.6 - Permits
Schedule 3.7(a) - Intellectual Property
Schedule 3.7(b) - Infringement of Intellectual Property
Schedule 3.7(c) - Intellectual Property Filings
Schedule 3.8 - Contracts and Commitments
Schedule 3.10 - Brokers
EXHIBITS
Exhibit A - Form of Certificate of Incorporation
Exhibit B - Form of Registration Rights Agreement
Exhibit C - Form of Stockholders' Agreement
Exhibit D - Form of Opinion of Company Counsel
Exhibit E - Form of Officer's Certificate
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SECURITIES PURCHASE AGREEMENT, dated as of December
24, 1998, among ENTERSPECT CORPORATION, a Delaware corporation
(the "Company"), and the purchasers (the "Purchasers")
identified on Annex I.
The Company desires to sell to Purchaser and Purchaser desires to
purchase from the Company shares as set forth on ANNEX I hereto, (the "Preferred
Shares") of Series A Convertible Preferred Stock, $.001 par value of the Company
(the "Series A Preferred Stock"), having the designations, preferences and
rights set forth in the Amended and Restated Certificate of Incorporation of the
Company (the "Certificate of Incorporation") attached hereto as EXHIBIT A.
In consideration of the mutual promises herein made and in
consideration of the representations, warranties, and covenants herein
contained, the parties agree as follows:
ARTICLE I
FILING; ISSUANCE AND RESERVATION;
SALE OF THE SECURITIES
1.1 FILING OF CERTIFICATE OF INCORPORATION.
Immediately prior to the execution and delivery of this Agreement, the
Company will file with the Secretary of State of the State of Delaware the
Amended and Restated Certificate of Incorporation which, among other things, (i)
designates 6,400,000 shares of the Company's capital stock as Series A Preferred
Stock, and (ii) sets forth the terms, designations, powers, preferences and
relative, participating, optional and other special rights, and the
qualifications, limitations and restrictions, of the Series A Preferred Stock.
1.2 AUTHORIZATION OF ISSUANCE AND SALE OF SECURITIES AND RESERVATION OF
SHARES.
Subject to the terms and conditions hereof, the Company has authorized
(i) the issuance and sale to the Purchasers of the Preferred Shares at the
Closing, and (ii) the reservation of an aggregate of 6,400,000 shares (the
"Reserved Shares") of Common Stock for issuance upon any conversions of any of
the Preferred Shares.
1.3 THE CLOSINGS OF THE SALE OF THE SECURITIES.
At the Closing or a Subsequent Closing (as defined in Section 2.1
below), as the case may be, on the terms and subject to the conditions contained
herein, the Company shall issue, sell and deliver to each Purchaser, and each
Purchaser shall severally purchase from the Company, the Preferred Shares set
forth opposite its name on Annex I and each Purchaser shall deliver to the
Company, by wire transfer of immediately available funds to an account
designated by the Company, the purchase price for such Preferred Shares set
forth opposite each Purchaser's name on Annex I.
ARTICLE II
THE CLOSING
2.1 THE CLOSING.
The closing hereunder with respect to the issuance, sale and delivery
of the Preferred Shares (the "Closing") shall take place on December 24, 1998
(the "Closing Date"). Subsequent closings (each a "Subsequent Closing") may take
place up to sixty (60) days after the Closing.
2.2 DELIVERIES AT THE CLOSING.
(a) At the Closing, the Company shall deliver to the Purchasers
purchasing Preferred Shares at the Closing:
(i) one stock certificate registered in the name of each
Purchaser, representing that number of Preferred Shares being purchased
by such Purchaser as set forth on Annex I;
(ii) counterparts of each of the Registration Rights Agreement
and the Stockholders' Agreement in the form of EXHIBITS B and C,
respectively, attached hereto, duly executed by the Company;
(iii) an opinion dated as of the date hereof of OGK, counsel
to the Company, with respect to the matters set forth in EXHIBIT D; and
(iv) a certificate of the Secretary of the Company dated as of
the date hereof, certifying (A) that true and complete copies of the
Company's Fundamental Documents (as hereinafter defined), as in effect
on the date hereof, are attached to such certificate as EXHIBIT E; (B)
as to the incumbency and genuineness of the signatures of each officer
of the Company executing any of the Documents; and (C) the genuineness
of the resolutions of the Board of Directors (the "Board") of the
Company authorizing the execution, delivery and performance of the
Documents to which the Company is a party and the consummation of the
transactions contemplated thereby.
(b) At the Closing, each Purchaser shall deliver to the Company:
(i) the purchase price for the Preferred Shares being
purchased by each Purchaser on such date; and
(ii) counterparts of the Registration Rights Agreement and the
Stockholders Agreement, duly executed by such Purchaser.
(c) At each Subsequent Closing, the Company shall deliver to the
Purchaser:
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(i) one stock certificate registered in the name of each
Purchaser, representing that number of Preferred Shares being purchased
by such Purchaser as set forth on Annex I; and
(ii) counterparts of the Registration Rights Agreement and
Stockholders' Agreement.
(d) At each Subsequent Closing, each Purchaser purchasing Preferred
Shares at such Subsequent Closing shall deliver to the Company:
(i) the purchase price for the Preferred Shares being
purchased by each Purchaser on such date;
(ii) counterparts of the Registration Rights Agreement and
Stockholders' Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As a material inducement to the Purchasers to enter into and perform
their respective obligations under this Agreement, the Company represents and
warrants to each Purchaser as follows as of the Closing Date:
3.1 ORGANIZATION; GOOD STANDING; QUALIFICATION AND POWER.
The Company is duly organized, validly existing and in good standing
under the Laws of its jurisdiction of formation, has all requisite power to own,
lease and operate its assets and to carry on its business as presently being
conducted, and is qualified to do business and in good standing in every
jurisdiction in which the failure to so qualify or be in good standing could
have, individually or in the aggregate, a Material Adverse Effect on the
Company. The Company has delivered to the Purchasers true and complete copies of
its Fundamental Documents as in effect on the date hereof.
3.2 AUTHORIZATION.
(a) The Company has all requisite power and authority to execute and
deliver each Document to which it is a party and any and all instruments
necessary or appropriate in order to effectuate fully the terms and conditions
of each such Document and all related transactions and to perform its
obligations under each such Document. Each Document to which the Company is a
party has been duly authorized by all necessary action (corporate or otherwise)
on the part of the Company and each Document to which the Company is a party has
been duly executed and delivered by the Company, and constitutes the legal,
valid and legally binding obligation of the Company, enforceable in accordance
with its terms, except as enforceability thereof may be limited by any
applicable bankruptcy, reorganization, insolvency or other Laws affecting
creditors' rights generally or by general principles of equity.
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(b) The authorization, issuance, sale and delivery of the Preferred
Shares and the reservation of the Reserved Shares have been duly authorized by
all requisite action of the Company's Board and stockholders. As of the Closing,
the Preferred Shares and, upon their issuance, the Reserved Shares, will be
validly issued and outstanding, fully paid and nonassessable, with no personal
liability attaching to the ownership thereof, free and clear of any Liens
whatsoever and with no restrictions on the voting rights thereof and other
incidents of record and beneficial ownership pertaining thereto, in each case
other than pursuant to the Documents. The Issuance of the Preferred Shares, and,
when issued, the Reserved Shares, shall be free of all statutory pre-emptive
rights, if any.
3.3 NON-CONTRAVENTION.
The execution, delivery and performance by the Company of the Documents
to which it is a party, the consummation of the transactions contemplated
thereby and compliance with the provisions thereof, including the issuance, sale
and delivery of the Preferred Shares have not and shall not, and the issuance,
sale and delivery of the Reserved Shares shall not, (a) violate any Law to which
the Company, or any of its assets is subject, (b) violate any provision of the
Fundamental Documents of the Company, (c) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify or cancel, or require any notice
under any contract to which the Company is a party or by which any of the assets
of the Company is bound or (d) result in the imposition of any Lien upon any of
the assets of the Company. Other than state blue sky securities filings, the
Company has not been or is not required to give any notice to, make any filing
with, or obtain any authorization, consent or approval of any Governmental
Entity or any other Person for the valid authorization, issuance and delivery of
the Preferred Shares or any other Documents or for the valid authorization,
reservation, issuance and delivery of the Reserved Shares.
3.4 CAPITALIZATION OF THE COMPANY.
(a) Immediately upon consummation of the Closing, the authorized
capital stock of the Company shall consist of:
(i) 8,000,000 shares of preferred stock ("Preferred Stock") of
which 6,400,000 shares will be designated Series A Preferred Stock, all
of which designated shares, purchased on the Closing Date, will be
fully paid and nonassessable, with no liability attaching to the
ownership thereof; and
(ii) 22,000,000 shares of the Company's common stock ("Common
Stock"), of which (A) 6,332,485 shares will be issued and outstanding,
fully paid and nonassessable, (B) 4,000,000 shares will be reserved for
issuance pursuant to the Company's 1998 Stock Option Plan (the "Stock
Option Plan"), (C) 3,667,515 shares will be treasury shares, and (D)
6,400,000 shares will be reserved for issuance upon conversion of the
Preferred Shares.
(b) Except as contemplated by the Documents or otherwise set forth on
SCHEDULE 3.4, there are, and immediately after consummation of the Closing there
will be, no (i)
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outstanding warrants, options, agreements, convertible securities or other
commitments or instruments pursuant to which the Company is or may become
obligated to issue or sell any shares of its capital stock or other securities,
or (ii) preemptive or similar rights to purchase or otherwise acquire shares of
the capital stock or other securities of the Company pursuant to any provision
of Law, such Person's Fundamental Documents or any contract to which such Person
is a party.
3.5 BANKRUPTCY, ETC.
The Company is not involved in any Proceeding by or against the Company
as a debtor before any Governmental Entity under Title 11 of the United States
Code or any other insolvency or debtors' relief act, whether state or Federal,
or for the appointment of a trustee, receiver, liquidator, assignee,
sequestrator or other similar official for any part of the property of the
Company.
3.6 LEGAL COMPLIANCE.
The Company has not violated any provisions of its Charter or Bylaws,
and has complied, in all material respects, with all applicable Laws, Orders and
Permits, and no Proceeding is pending or, to the best knowledge of the Company,
threatened, alleging any failure to so comply. SCHEDULE 3.6 sets forth a list of
all Permits under which the Company is operating or bound. The Company has
furnished to the Purchasers true and complete copies of such Permits. Such
Permits (a) constitute all Permits used or required in the conduct of the
business of the Company as presently conducted, (b) are in full force and
effect, (c) have not been violated in any material respect and (d) are not
subject to any pending or, to the best knowledge of the Company, threatened
Proceeding seeking their revocation or limitation.
3.7 INTELLECTUAL PROPERTY.
(a) SCHEDULE 3.7(A) identifies all Intellectual Property used by the
Company in connection with the business of the Company. The Company has
sufficient title and ownership of all Intellectual Property necessary for its
business as currently conducted.
(b) Except as specifically set forth on SCHEDULE 3.7(B):
(i) the Company has not infringed upon or misappropriated any
Intellectual Property rights of third parties, and the Company has not
received any charge, complaint, claim, demand or notice alleging any
such infringement or misappropriation;
(ii) the Company has the right to use, sell, license and
dispose of, and has the right to bring actions for the infringement of,
all Intellectual Property necessary or required for the conduct of its
business as currently conducted and as proposed to be conducted; and
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(iii) no activity, service or procedure currently conducted or
proposed to be conducted by the Company violates or will violate any
agreement governing the use of Intellectual Property.
(c) SCHEDULE 3.7(C) contains a true and complete list of all
applications and filings made or taken pursuant to Federal, state, local and
foreign Laws by the Company to perfect or protect its interest in the
Intellectual Property, including, without limitation, all patents, patent
applications, trademarks, trademark applications, service marks and servicemark
applications.
3.8 COMMENCEMENT OF BUSINESS.
Except as set forth on SCHEDULE 3.8 and activities in connection with
the obtaining, ownership and maintenance of Intellectual Property (none of which
have resulted in any liability of the Company), (a) the Company has not (i)
carried on any business (other than with respect to (A) the organization of the
Company and (B) the execution and delivery of the Documents), (ii) had any
revenue or income, or (iii) entered into any written or oral contract,
agreement, understanding (except as disclosed in writing to the Purchasers),
lease, guaranty or other obligation, other than the Documents; (b) the Company
has no liabilities of any nature whatsoever (matured or unmatured, fixed or
contingent), except the expenses that it has paid or incurred in connection with
its incorporation and organization, the payment of legal expenses and other
miscellaneous expenses incident to its preoperating period and its operations
prior to the Closing; (c) the Company owns no interest in real property; (d) the
Company is not a party to or directly or indirectly bound by any indenture,
mortgage, deed of trust or other agreement or instrument relating to the
borrowing of money, and (e) the Company has never had and does not presently
have any subsidiaries and has never owned and does not presently own any capital
stock or other proprietary interest, directly or indirectly, in any corporation,
association, trust, partnership or joint venture or other entity.
3.9 OFFERING EXEMPTION.
Based in part upon and assuming the accuracy of the representations of
the Purchasers in Article VI, the offering, sale and issuance of the Preferred
Shares have been, are, and will be, exempt from registration under the
Securities Act, and such offering, sale and issuance is also exempt from
registration under applicable state securities and "blue sky" laws. The Company
has made all requisite filings and has taken or will take all action necessary
to be taken to comply with such state securities or "blue sky" laws. The
outstanding shares of Common Stock are duly authorized and issued, fully paid
and non-assessable and were issued in compliance with all applicable federal and
state securities laws.
3.10 BROKERS.
SCHEDULE 3.10 sets forth a true and complete list of each agent,
broker, investment banker, Person or firm who or which has acted on behalf, or
under the authority, of the Company (or its predecessors) or any of its
stockholders or will be entitled to any fee or commission directly or indirectly
from the Company or any of its stockholders or any Purchasers in connection with
any of the transactions contemplated hereby.
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3.11 REGISTRATION RIGHTS.
Immediately following the Closing, except as contemplated by the
Documents, no person has any right to cause the Company to effect the
registration under the Securities Act of any securities (including debt
securities) of the Company.
3.12 USE OF PROCEEDS.
The proceeds received by the Company from the sale of the Preferred
Shares shall be used by the Company for working capital and other general
corporate purposes.
3.13 YEAR 2000.
All of the Company's products, devices and programs are designed to be
used prior to, during and after the calendar year 2000 A.D., and such products,
devices and programs will operate during each such time period without error
relating to date data and date-dependent data, specifically including any error
relating to, or the program of, date data which represents or references
different centuries or more than one century, other than such errors which have
not had nor could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company's business as presently
conducted or as proposed to be conducted. Other than any of the following which
has not had nor could reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate, on the Company's business as presently
conducted or as proposed to be conducted, without limiting the generality of the
foregoing:
(a) Each such product, device or program will not abnormally end or
provide invalid or incorrect results as a result of date data, specifically
including date data which represents or references different centuries or more
than one century; and
(b) Each such product, device or program has been designed to ensure
year 2000 compatibility, including, but not limited to, date data century
recognition, calculations which accommodate same century and multi-century
formulas and date values and date data interface values that reflect the
century.
3.14 SECTION 1202 COMPLIANCE.
The Preferred Shares issuable hereunder and the Common Stock issuable
upon conversion thereof will constitute "qualified small business stock" within
the meaning of Section 1202 of the Code, as of the date of issuance.
3.15 NO ACTIONS.
There is no action, suit, investigation or proceeding(or any basis
therefor) pending against, or to the knowledge of the Company threatened against
or affecting the Company or any of its properties before any court of arbitrator
or any governmental body, agency, official or authority.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
As a material inducement to the Company to enter into and perform its
obligations under this Agreement, each Purchaser, severally and not jointly,
represents and warrants to the Company, as to itself only, as of the date
hereof, as follows:
4.1 EXPERIENCE.
Such Purchaser is an accredited investor within the meaning of
Regulation D promulgated by the Securities and Exchange Commission and, by
virtue of its experience in evaluating and investing in private placement
transactions of securities in companies similar to the Company, such Purchaser
is capable of evaluating the merits and risks of its investment in the Company
and has the capacity to protect its own interests. Such Purchaser has had access
to the Company's senior management and has had the opportunity to conduct such
due diligence review as it has deemed appropriate.
4.2 INVESTMENT.
Such Purchaser has not been formed solely for the purpose of making
this investment and such Purchaser is acquiring the Preferred Shares for
investment for its own account, not as a nominee or agent, and not with the view
to, or for resale in connection with, any distribution of any part thereof. Such
Purchaser understands that the Preferred Shares and the related Reserved Shares,
as applicable, to be acquired have not been registered under the Securities Act
or applicable state and other securities laws by reason of a specific exemption
from the registration provisions of the Securities Act and applicable state and
other securities laws, the availability of which depends upon, among other
things, the bona fide nature of the investment intent and the accuracy of the
respective Purchaser's representations as expressed herein.
4.3 RULE 144.
Such Purchaser acknowledges and understands that it must bear the
economic risk of this investment for an indefinite period of time because the
Preferred Shares must be held indefinitely unless subsequently registered under
the Securities Act and applicable state and other securities laws or unless an
exemption from such registration is available. Such Purchaser understands that
any transfer agent of the Company will issue stop-transfer instructions with
respect to the Preferred Shares and the related Reserved Shares, as applicable,
unless any transfer thereof is subsequently registered under the Securities Act
and applicable state and other securities laws or unless an exemption from such
registration is available.
4.4 NO PUBLIC MARKET.
Such Purchaser understands that no public market now exists for any of
the securities issued by the Company and that there is no assurance that a
public market will ever exist for the securities of the Company.
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4.5 BROKERS OR FINDERS.
Such Purchaser has not retained any investment banker, broker or finder
in connection with the purchase of the Preferred Shares. Such Purchaser will
severally and not jointly indemnify and hold the Company harmless against any
liability, settlement or expense arising out of, or in connection with, any such
claim.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 AFFIRMATIVE AND NEGATIVE COVENANTS OF THE COMPANY.
The Company agrees as follows:
(a) FINANCIAL INFORMATION. The Company will deliver the following
reports to each Qualified Purchaser:
(i) As soon as practicable after the end of each fiscal year,
and in any event within 120 days thereafter, consolidated balance
sheets of the Company, if any, as of the end of such fiscal year, and
consolidated statements of income and consolidated statements of
changes in cash flow of the Company and its Subsidiaries, if any, for
such fiscal year, prepared in accordance with GAAP and setting forth in
each case in comparative form the figures for the previous fiscal year
and the budgeted figures for the current fiscal year, all in reasonable
detail and audited by independent public accountants of national
standing commonly known as "Big 5" accountants selected by the Company,
together with a certificate of the Company executed by the chief
executive officer or principal financial or accounting officer of the
Company certifying that all covenants to be complied with by the
Company hereunder have been complied with (or setting forth in
reasonable detail any covenants that have not been so complied with).
(ii) As soon as practicable after the end of the first, second
and third quarterly accounting periods in each fiscal year of the
Company and in any event within 45 days thereafter, a consolidated
balance sheet of the Company and its Subsidiaries, if any, as of the
end of each such quarterly period, and consolidated statements of
income and consolidated statements of change in cash flow of the
Company for such period and for the current fiscal year to date,
prepared in accordance with GAAP (other than for accompanying notes),
subject to changes resulting from normal year-end audit adjustments,
and setting forth in each case in comparative form the figures for the
same periods of the previous fiscal year and the budgeted figures for
the current periods, all in reasonable detail and signed by the
principal financial or accounting officer of the Company.
(iii) promptly after the commencement or threatened
commencement thereof, notice of all actions, suits, investigations, and
proceedings before any court or governmental department, arbitration
panel, commission, board, bureau, agency or
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instrumentality, domestic or foreign, affecting the Company or any of
its subsidiaries other than ordinary and routine litigation covered
under the limits of existing insurance policies.
(iv) copies of all amendments to the Charter or Bylaws of the
Company.
(b) ADDITIONAL INFORMATION. The Company will deliver or provide to each
Qualified Purchaser such other information and data, including access to books
and records of the Company as any such holder may from time to time reasonably
request.
(c) RIGHTS OF INSPECTION. Each Qualified Purchaser shall have the right
to visit and inspect any of the properties of the Company and to discuss its
affairs, finances and accounts with its officers and auditors, all at such
reasonable times during normal business hours and as often as may be reasonably
requested.
(d) KEY-MAN INSURANCE. The Company, at its own expense, shall maintain
term life insurance in adequate amounts on key management employees in
accordance with the directions of the Board.
(e) INSURANCE. The Company shall maintain such other insurance with
such coverages and in such amounts as shall be determined by the Board of the
Company, including such insurance as the Board of the Company shall deem
necessary to protect the assets of the Company.
5.2 LEGAL EXISTENCE COMPLIANCE, ETC.
The Company shall maintain its existence as a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation.
The Company shall conduct its business in compliance in all material
respects with all permits and licenses issued by, and all statutes, rules,
regulations and orders of, and all restrictions imposed by, all governmental
authorities, domestic or foreign, federal or state, applicable to the conduct of
its business and the ownership of its property (including, without limitation,
applicable statutes, rules, regulations, orders and restrictions relating to
environmental, safety and other similar standards or controls).
The Company shall conduct its business in compliance in all material
respects with all licenses, agreements and contracts to which it is a party.
5.3 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS, ETC.
All representations and warranties hereunder shall survive the Closing
for a period of one year. Except as otherwise provided herein, all agreements
and/or covenants contained herein shall survive indefinitely until, by their
respective terms, they are no longer operative.
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5.4 TRANSACTION EXPENSES AND TAXES.
(a) The Company agrees to pay promptly up to $15,000 of the reasonable
out-of-pocket expenses, including reasonable attorneys' fees and expenses, of
the Purchasers arising in connection with the negotiation and execution of this
Agreement and the other Documents, the related due diligence and the
consummation of the transactions contemplated hereby and thereby.
(b) All sales, use, transfer, stamp (including documentary stamp taxes,
if any), excise, recording, income, capital gain, franchise and other similar
Taxes or governmental charges with respect to the securities issued pursuant
hereto shall be borne by the Company.
ARTICLE VI
MISCELLANEOUS
6.1 NO THIRD PARTY BENEFICIARIES.
Except as expressly provided herein, this Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns, personal representatives, heirs and
estates, as the case may be.
6.2 ENTIRE AGREEMENT.
This Agreement and the other Documents constitute the entire agreement
among the Parties and supersede any prior understandings, agreements or
representations by or among the Parties, written or oral, that may have related
in any way to the subject matter of any Document including, without limitation,
any letter of intent dated as of or prior to the date hereof, between the
Company and any Purchaser.
6.3 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors and permitted assigns. No Party may
assign either this Agreement or any of its rights, interests, or obligations
hereunder without the prior written approval of the other Parties; PROVIDED,
HOWEVER, that each Purchaser may assign any of its rights under any of the
Documents to (i) any Affiliate of such Purchaser, (ii) any Person who shall
acquire substantially all of the assets of such Purchaser or a majority in
voting power of the capital stock of such Purchaser (whether pursuant to a
merger, consolidation, stock sale or otherwise), (iii) any lender of such
Purchaser (or any agent therefor) for security purposes and the assignment
thereof by any such lender or agent to any Purchaser in connection with the
exercise by any such lender or agent of all of its rights and remedies as a
secured creditor with respect thereto and (iv) any Person to whom such Purchaser
shall transfer any Preferred Shares in accordance with the terms of the
Documents.
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6.4 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.
6.5 NOTICES.
All notices, requests, demands, claims, and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally, telecopied, sent by nationally recognized overnight
courier or mailed by registered or certified mail (return receipt requested),
postage prepaid, to the Parties at the following addresses (or at such other
address for a Party as shall be specified by like notice) or by E-Mail:
If to the Company, to:
Enterspect Corporation
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇
with a copy to:
▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to a Purchaser, to its E-mail address shown on Annex I:
All such notices and other communications shall be deemed to have been
given and received (i) in the case of personal delivery, on the date of such
delivery, (ii) in the case of delivery by telecopy, on the date of such
delivery, (iii) in the case of delivery by nationally recognized overnight
courier, on the third business day following dispatch, (iv) in the case of
mailing, on the seventh business day following such mailing and (v) in the case
of E-mail, 24 hours after sending.
6.6 GOVERNING LAW.
THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF
LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK, OR ANY
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OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF NEW YORK TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL
LAW OF THE STATE OF NEW YORK WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF
THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION'S CHOICE OF LAW OR CONFLICT OF
LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY
APPLY.
6.7 CONSENT TO JURISDICTION.
The Company agrees that any action or proceeding to enforce any right
arising out of this Agreement, may be commenced in the Supreme Court of New York
in New York County or in the United States District Court for the Southern
District of New York, and the Company consents to such jurisdiction, agrees that
venue will be proper in such courts in any such matter, agrees that New York
County is the most convenient forum for litigation in any such suit, action or
legal proceeding, and agrees that a summons and complaint commencing an action
or proceeding in any such court shall be properly served and shall confer
personal jurisdiction if served by registered or certified mail to the Company,
or as otherwise provided by the laws of the State of New York or the United
States. The Company agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
6.8 AMENDMENTS AND WAIVERS.
No amendment of any provision of this Agreement shall be valid unless
the same shall be in writing and signed by the Company and the holders of at
least 51% of the then outstanding Preferred Shares or Common Stock issued upon
conversion of the Preferred Shares. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
6.9 CERTAIN DEFINITIONS.
"AFFILIATE" means, with respect to any Person, any of (a) a director,
officer or stockholder holding 5% or more of the capital stock (on a fully
diluted basis) of such Person, (b) a spouse, parent, sibling or descendant of
such Person (or a spouse, parent, sibling or descendant of any director or
officer of such Person) and (c) any other Person that, directly or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, another Person. The term "control" includes, without
limitation, the possession, directly or indirectly, of the power to direct the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"CLOSING" shall have the meaning given in Article II.
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"CODE" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"DOCUMENTS" means this Agreement, the Registration Rights Agreement and
the Stockholders Agreement.
"FUNDAMENTAL DOCUMENTS" means the documents by which any Person (other
than an individual) establishes its legal existence or which govern its internal
affairs. For example, the "Fundamental Documents" of a corporation would be its
charter and by-laws.
"GAAP" means United States Generally Accepted Accounting Principles,
consistently applied.
"GOVERNMENTAL ENTITY" means any court, administrative agency, tribunal,
department, bureau or commission or other governmental authority or
instrumentality, domestic or foreign, Federal, state or local.
"INTELLECTUAL PROPERTY" means all industrial and intellectual property,
including, without limitation, (i) patents, patent applications, patent rights,
trademarks, trademark applications, copyrights, copyright applications,
know-how, certificates of public convenience and necessity, franchises,
licenses, proprietary processes and formulae, layouts, processes, inventions,
and (ii) all proprietary rights pertaining to any product or service
manufactured, sold, distributed or marketed, or used, employed or exploited in
the development, manufacture, license, sale, distribution, marketing or
maintenance thereof, and all documentation and media constituting, describing or
relating to the foregoing.
"LAW" means any constitution, law, statute, treaty, rule, directive,
requirement or regulation or Order of any Governmental Entity.
"LIABILITY" means any liability or obligation, whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated and whether due or to become due, regardless of when
asserted.
"LIEN" means any security interest, pledge, bailment (in the nature of
a pledge or for purposes of security), mortgage, deed of trust, the grant of a
power to confess judgment, conditional sale or title retention agreement
(including any lease in the nature thereof), charge, encumbrance, easement,
reservation, restriction, cloud, right of first refusal or first offer, option,
or other similar arrangement or interest in real or personal property.
"MATERIAL ADVERSE EFFECT" means, with respect to any Person, a material
adverse effect on the business, operations, assets, condition (financial or
otherwise), operating results, liabilities or prospects of such Person and its
Subsidiaries, if any, taken as a whole.
"ORDERS" means judgments, writs, decrees, injunctions, orders,
compliance agreements or settlement agreements of or with any Governmental
Entity or arbitrator.
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"PARTY" or "PARTIES" means the signatories hereto.
"PERMITS" means all permits, licenses, authorizations, registrations,
franchises, approvals, consents, certificates, variances and similar rights
obtained, or required to be obtained, from Governmental Entities.
"PERSON" shall be construed broadly and shall include an individual, a
partnership, a corporation, a limited liability company, an association, a joint
stock company, a trust, a joint venture, an unincorporated organization, or a
Governmental Entity (or any department, agency, or political subdivision
thereof).
"PROCEEDING" means any action, suit, proceeding, complaint, charge,
hearing, inquiry or investigation before or by a Governmental Entity or an
arbitrator.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement
dated as of the date hereof among the Company, the Purchasers and the other
parties thereto (if any), in form and substance reasonably satisfactory to the
Purchasers and attached hereto as EXHIBIT B.
"QUALIFIED PURCHASER" means any Person who acquires more than $500,000
worth of Series A Preferred Stock pursuant to this Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"SUBSIDIARY" means any corporation, partnership, limited liability
company or other business entity, with respect to which the Company (or any
Subsidiary thereof) has the power to vote or direct the voting of sufficient
securities to elect a majority of the directors.
"STOCKHOLDERS AGREEMENT" means the Stockholders' Agreement dated as of
the date hereof, among the Company, the Purchasers and the other parties thereto
(if any), in form and substance reasonably satisfactory to the Purchasers and
attached hereto as EXHIBIT C.
"TAX" as used in this Agreement, means any of the Taxes, and "Taxes"
means, with respect to any Person, (a) all income taxes (including any tax on or
based upon net income, gross income, income as specially defined, earnings,
profits or selected items of income, earnings or profits) and all gross
receipts, sales, use, ad valorem, transfer, franchise, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property or
windfall profits taxes, alternative or add-on minimum taxes, customs duties and
other taxes, fees, assessments or charges of any kind whatsoever, together with
all interest and penalties, additions to tax and other additional amounts
imposed by any taxing authority (domestic or foreign) on such Person (if any)
and (b) any liability for the payment of any amount of the type described in the
clause (a) above as a result of being a "transferee" (within the meaning of
Section 6901 of the Code or any other applicable Law) of another entity or a
member of an affiliated or combined group.
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6.10 INCORPORATION OF SCHEDULES AND EXHIBITS.
The Schedules and Exhibits identified in this Agreement are
incorporated herein by reference and made a part hereof.
6.11 CONSTRUCTION.
Where specific language is used to clarify by example a general
statement contained herein, such specific language shall not be deemed to
modify, limit or restrict in any manner the construction of the general
statement to which it relates. The language used in this Agreement shall be
deemed to be the language chosen by the Parties to express their mutual intent,
and no rule of strict construction shall be applied against any Party.
6.12 INTERPRETATION.
Accounting terms used but not otherwise defined herein shall have the
meanings given to them under GAAP. As used in this Agreement (including all
Schedules, Exhibits and amendments hereto), the masculine, feminine and neuter
gender and the singular or plural number shall be deemed to include the others
whenever the context so requires. References to Articles and Sections refer to
articles and sections of this Agreement. Similarly, references to Schedules and
Exhibits refer to schedules and exhibits, respectively, attached to this
Agreement. Unless the content requires otherwise, words such as "hereby,"
"herein," "hereinafter," "hereof," "hereto," "hereunder" and words of like
import refer to this Agreement. The article and section headings contained in
this Agreement are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
The representations, warranties, and covenants of the Company and the
Investors contained herein or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing for a period of one
year and shall in no way be affected by any investigation of the subject matter
hereof made by or on behalf of the Purchasers or the Company.
6.13 INDEPENDENCE OF COVENANTS AND REPRESENTATIONS AND WARRANTIES.
All covenants hereunder shall be given independent effect so that if a
certain action or condition constitutes a default under a certain covenant, the
fact that such action or condition is permitted by another covenant shall not
affect the occurrence of such default, unless expressly permitted under an
exception to such initial covenant. In addition, all representations and
warranties hereunder shall be given independent effect so that if a particular
representation or warranty proves to be incorrect or is breached, the fact that
another representation or warranty concerning the same or similar subject matter
is correct or is not breached will not affect the incorrectness of or a breach
of a representation and warranty hereunder.
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6.14 REMEDIES.
The Parties shall each have and retain all other rights and remedies
existing in their favor at Law or equity, including, without limitation, any
actions for specific performance and/or injunctive or other equitable relief
(including, without limitation, the remedy of rescission) to enforce or prevent
any violations of the provisions of this Agreement. Without limiting the
generality of the foregoing, the Company hereby agrees that in the event the
Company fails to convey any number of Preferred Shares or Reserved Shares, as
the case may be, to the Purchasers in accordance with the provisions of this
Agreement, the Purchasers' remedy at law may be inadequate. In such event, each
Purchaser shall have the right, in addition to all other rights and remedies it
may have, to specific performance of the obligations of the Company to convey
such number of Preferred Shares or Reserved Shares, as the case may be.
6.15 SEVERABILITY.
It is the desire and intent of the Parties that the provisions of this
Agreement be enforced to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular provision of this Agreement shall be adjudicated
by a court of competent jurisdiction to be invalid, prohibited or unenforceable
for any reason, such provision, as to such jurisdiction, shall be ineffective,
without invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
6.16 EXCHANGES: LOST, STOLEN OR MUTILATED CERTIFICATES.
Upon surrender by a holder of Series A Preferred Stock to the Company
of any certificate representing Series A Preferred Stock purchased or acquired
hereunder, the Company at its expense will issue in exchange therefor, and
deliver to the holder of Series A Preferred Stock, a new certificate or
certificates representing such shares, in such denominations as may be requested
by the holder of Series A Preferred Stock. Upon receipt of evidence satisfactory
to the Company of the loss, theft, destruction or mutilation of any certificate
representing any Series A Preferred Stock purchased or acquired by a holder of
Series A Preferred Stock hereunder, and in case of any such loss, theft or
destruction, upon delivery of any indemnity agreement satisfactory to the
Company, or in case of any such mutilation, upon surrender and cancellation of
such certificate, the Company at its expense will issue and deliver to such
holder a new certificate for such Series A Preferred Stock of like tenor, in
lieu of such lost, stolen or mutilated certificate.
6.17 INDEMNITY
The Company shall, for a period of one year, with respect to the
representations, warranties, covenants and agreements made by the Company herein
indemnify, defend and hold the Investors and the holders of Series A Preferred
Stock (and their respective shareholders,
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directors, officers, employees, agents, affiliates and controlling parties)
(each, an "Indemnified Party") harmless from and against all liability, loss or
damage, together with all reasonable costs and expenses related thereto
(including legal and accounting fees and expenses), arising from the untruth,
inaccuracy or breach of any such representations, warranties, covenants or
agreements of the Company contained in this Agreement or the assertion of any
claims relating to the foregoing. Without limiting the generality of the
foregoing, each Indemnified Party shall be deemed to have suffered liability,
loss or damage as a result of the untruth, inaccuracy or breach of any such
representations, warranties, covenants or agreements if such liability, loss or
damage shall be suffered by the Indemnified Party as a result of, or in
connection with, such untruth, inaccuracy or breach or any facts or
circumstances constituting such untruth, inaccuracy or breach. The Company shall
indemnify and hold harmless each Indemnified Party against any losses, claims,
damages or liabilities, joint or several, to which any of the foregoing persons
may become subject, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any violations by the
Company of the Securities Act or state securities or "blue sky" laws applicable
to the Company relating to action or inaction required of the Company in
connection with the Securities Act or registration or qualification under such
state securities or blue sky laws; and shall reimburse each such Indemnified
Party for any legal or any other expenses reasonably incurred by any of them in
connection with investigating or defending any such loss, claim, damage,
liability or action. In case any such action is brought against an Indemnified
Party, the Company will be entitled to participate in and assume the defense
thereof with counsel reasonably satisfactory to such Indemnified Party, and
after notice from the Company to such Indemnified Party of its election to
assume the defense thereof, the Company shall be responsible for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof, provided that if any Indemnified Party shall have reasonably
concluded that there may be one or more legal defenses available to such
Indemnified Party which conflict in any material respect with those available to
the Company, or that such claim or litigation involves or could have an effect
upon matters beyond the scope of the indemnity agreement provided in this
Section 6.17 the Company shall reimburse such Indemnified Party and shall not
have the right to assume the defense of such action on behalf of such
Indemnified Party and the Company shall reimburse such Indemnified Party and any
person controlling such Indemnified Party for that portion of the fees and
expenses of any counsel retained by the indemnified party which are reasonably,
related to the matters covered by the indemnity agreement provided in this
Section 6.17. The Company shall not make any settlement of any claims
indemnified against hereunder without the written consent of the Indemnified
Party or Parties, which consent shall not be unreasonably withheld.
6.18 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OTHER DOCUMENT.
* * * * *
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IN WITNESS WHEREOF, the Parties have executed this Securities Purchase
Agreement as of the date first above written.
ENTERSPECT CORPORATION
By:
-----------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
▇▇▇▇▇▇▇▇ PARTNERS, L.P.
by ▇▇▇▇▇▇▇▇ Partners, LLC,
its general partner
By:
-----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
▇▇▇▇▇▇▇▇ FOREIGN PARTNERS, L.P.
by ▇▇▇▇▇▇▇▇ Partners, LLC,
its general partner
By:
-----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
CROSS POINT VENTURE PARTNERS, L.P.
by:
------------------------------------,
its general partner
By:
-----------------------------------------
Name:
Title:
