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EXHIBIT 10.10
PURCHASE AGREEMENT
Dated as of October 15, 1999
by and
among
CKG ▇▇▇▇▇.▇▇▇, INC.
(d/b/a Phase2Media),
HACHETTE FILIPACCHI INTERACTIONS S.A.
and
VECTOR CAPITAL II, L.P.
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PURCHASE AGREEMENT
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PURCHASE AGREEMENT (this "Agreement") dated as of October 15, 1999 by
and among CKG ▇▇▇▇▇.▇▇▇, Inc. (d/b/a Phase2Media), a Delaware corporation (the
"Company") with an office at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇, Hachette Filipacchi Interactions S.A., a French corporation ("Hachette")
with an office at ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ Levallois-Perret Cedex, France,
and Vector Capital II, L.P, a Delaware limited partnership ("Vector") with an
office at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
W I T N E S S E T H:
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WHEREAS, pursuant to that certain Securities Purchase Agreement (the
"Securities Purchase Agreement"), dated as of August 16, 1999, by and among the
Company, Vector and each of the parties listed on Schedule A and Schedule B
attached thereto, the Company issued pursuant to the "Initial Closing", as that
term is defined in the Securities Purchase Agreement, an aggregate of (i) 3,798
shares of the Company's Series A Redeemable Preferred Stock, par value $.001 per
share (the "Series A Preferred Stock"), and (ii) 11,668,300 shares of the
Company's Series B Convertible Preferred Stock, par value $.001 per share (the
"Series B Preferred Stock"), for an aggregate purchase price of $4,220,000 and;
WHEREAS, pursuant to Section 1.2 of the Securities Purchase Agreement,
up to One Million Seven Hundred and Eighty Thousand Dollars ($1,780,000) of the
Company's "Securities" (as that term is defined in the Securities Purchase
Agreement) that were not purchased at the Initial Closing may be purchased by
parties designated by Vector at any time in one or more closings within ninety
(90) days subsequent to the Initial Closing, which subsequent closings are
defined as "Supplemental Initial Closings" under the Securities Purchase
Agreement; and
WHEREAS, Vector has agreed to designate Hachette to effect a
Supplemental Initial Closing, and Hachette desires to effect a Supplemental
Initial Closing, with respect to the entire One Million Seven Hundred and Eighty
Thousand Dollars ($1,780,000) of the Company's Securities that were not sold by
the Company at the Initial Closing;
NOW, THEREFORE, in consideration of the premises and of the respective
representations and warranties hereinafter set forth and the respective
covenants and agreements contained herein and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Unless expressly set forth herein to the contrary, all capitalized
terms set forth herein shall have the meanings assigned to them in the
Securities Purchase Agreement.
2. The Company agrees to issue and sell to Hachette, and Hachette agrees
to purchase from the Company, an aggregate of (i) 1,602 shares of the Company's
Series A
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Preferred Stock, and (ii) 4,921,700 shares of the Company's Series B Preferred
Stock (the Series A Preferred Stock and Series B Preferred Stock are hereinafter
collectively referred to as the "Preferred Stock"). As full and total
consideration for the purchase of the Preferred Stock, Hachette shall pay to the
Company One Million Seven Hundred and Eighty Thousand Dollars ($1,780,000) (the
"Purchase Price").
3. Upon the execution and delivery on the date hereof, and the
satisfaction of all of the terms and conditions set forth herein no later than
the date hereof, Hachette shall be deemed to be an "Investor" under the
Securities Purchase Agreement and all references to an Investor and Investors
under the Securities Purchase Agreement shall be deemed to include Hachette.
4. Hachette, in its capacity as an Investor, hereby affirms that all of
the representations and warranties set forth in Section 3 of the Securities
Purchase Agreement are true and correct as of the date hereof. In addition,
Hachette represents and warrants that Hachette is a wholly owned subsidiary of
Hachette Filipacchi Presse S.A., a French corporation, which, in turn, is a
wholly owned subsidiary of Hachette Filipacchi Medias S.A., a French public
company.
5. The Company hereby affirms that, subject to the proviso set forth at
the end of this Section 5, all of the representations and warranties set forth
in Section 2 of the Securities Purchase Agreement, and all of the Schedules
delivered by the Company under Section 2 of the Securities Purchase Agreement ,
are true and correct as of the date hereof and all of such Schedules shall be
deemed to be re-delivered to Hachette as of the date hereof; provided, however
that it is expressly agreed by the Company and Hachette that each of Sections
2.1, 2.4, 2.9, 2.10, 2.12, 2.14 and 2.22 are hereby modified by the new
Schedules 2.1, 2.4, 2.9, 2.10, 2.12, 2.14 and 2.22 annexed hereto, which shall
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be deemed to replace the Schedules 2.1, 2.4, 2.9, 2.10, 2.12, 2.14 and 2.22
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delivered at the Initial Closing.
6. The obligation of the Company to consummate the Supplemental Initial
Closing is conditioned upon satisfaction, or the waiver by the Company, of all
of the following conditions on or before the date hereof:
(a) Hachette shall have satisfied each of Sections 5.1, 5.3, 5.5 and
5.6 of the Securities Purchase Agreement.
(b) Hachette shall have entered into Amendment No. 1 to the First
Amended and Restated Securityholders' Agreement of even date hereof by and among
the Company, Hachette, Vector and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, in his capacity as the
Common Stockholders ("Amendment No. 1 to the First Amended and Restated
Securityholders' Agreement").
(c) Hachette shall have entered into the First Amended and Restated
Registration Rights Agreement (the "Amended Registration Rights Agreement") by
and among
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the Company, each of the persons listed on the Schedule of Investors attached
thereto as Schedule 1 and each of the persons listed on the Schedule of Series C
Investors attached thereto as Schedule 2 by executing and delivering a signature
page with respect to such Amended Registration Rights Agreement.
(d) Hachette shall have executed and delivered the Securities Purchase
Agreement by executing and delivering a signature page with respect thereto.
(e) Hachette shall have delivered to the Company, either by wire
transfer or certified check drawn on a commercial bank located in New York City,
the Purchase Price.
7. The obligation of Hachette to effect the Supplemental Initial Closing is
conditioned upon satisfaction, or the waiver by Hachette, of all of the
following conditions on or before the date hereof:
(a) The Company shall have satisfied each of Sections 6.1, 6.2, 6.3,
6.4, 6.5, 6.6, 6.9, 6.10, 6.11, 6.13 and 6.14 of the Securities Purchase
Agreement.
(b) The Company shall have entered into Amendment No. 1 to the First
Amended and Restated Securityholders' Agreement.
(c) The Company shall have amended the Certificate of Designations,
Preferences and Rights of the Series B Preferred Stock in the form annexed
hereto.
(d) The Company shall have delivered stock certificates for the
Preferred Stock, each issued in the name of Hachette containing the legends set
forth in accordance with Section 7.1 of the "Securityholders' Agreement" (as
that term is defined in Section 11 below).
8. The Company represents and warrants that the closing conditions
provided for in each of Sections 6.7, 6.8, 6.12, 6.15, 6.17, 6.18 and 6.19 of
the Securities Purchase Agreement have heretofore been satisfied.
9. Vector hereby acknowledges and agrees that Hachette shall be the sole
Investor with respect to the Supplemental Initial Closing for all of the One
Million Seven Hundred Eighty Thousand Dollars ($1,780,000) as provided in
Section 1.2 of the Securities Purchase Agreement.
10. In the event that the Company reaches the Gross Margin Milestone,
Hachette shall purchase 29.67% of the Securities to be acquired by the Investors
at the Second Closing subject to the terms and conditions of Sections 1.2 and
6.16 of the Securities Purchase Agreement. In the event that the Company has
not reached the Gross Margin Milestone, Vector and the Company agree that
Hachette shall nonetheless have the right to purchase up to 29.67% of the
Securities that the Investors are entitled to purchase at the Second Closing,
subject to the terms and conditions of Section 1.2 and 6.16 of the Securities
Purchase Agreement, regardless of
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whether Vector or any other Investors exercise their right to purchase the
Securities that the Investors are entitled to purchase at the Second Closing
(subject to all of the terms and conditions of Sections 1.2 and 6.16 of the
Securities Purchase Agreement).
11. In the event that Vector (x) shall consent to an amendment to any of
the Securities Purchase Agreement, the Amended Securityholders' Agreement (as
defined below), or the Amended Registration Rights Agreement, in accordance with
the applicable provisions of each of the foregoing agreements, (y) shall consent
to an amendment to either the Company's Certificate of Incorporation or the
Company's By-Laws in accordance with applicable law, the provisions of such
governing documents or as otherwise permitted pursuant to the Amended
Securityholders' Agreement, or (z) shall enter into an agreement or arrangement
the effect of which is an amendment or change to any such documents (any such
amendment, agreement or arrangement being an "Amendment") and, in connection
therewith, Vector receives or becomes entitled to receive any direct or indirect
economic or other benefit (collectively, the "Benefit"), Vector shall share any
such Benefit ratably with all of the Investors; provided, however, that in the
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event that Vector provides cash consideration to the Company or any third party
in connection with an Amendment, then Vector's obligation hereunder to share
such Benefit with any Investor shall be subject to such Investor paying its pro
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rata share of such cash consideration; provided, further however, in the event
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Vector provides consideration other than cash in connection with such Amendment,
no Investor shall be required to pay or provide any consideration other than its
pro rata share of any cash consideration in order to participate ratably in such
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Benefit. No Amendment shall be valid unless Vector complies with the terms of
this Section 11.
12. Vector agrees that it shall provide to Hachette copies of all notices
that Vector shall send to the Company, simultaneously by like means, pursuant to
each of the Securities Purchase Agreement, the First Amended and Restated
Securityholders' Agreement dated as of August 26, 1999 by and among the Company,
Vector, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, R. ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and each of the parties listed on Schedule A and
Schedule B attached thereto (the "Amended Securityholders' Agreement") and the
Amended Registration Rights Agreement. The Company agrees that it shall
promptly provide to Hachette copies of all notices that the Company receives
from Vector, and that it shall send to Hachette, simultaneously by like means,
copies of all notices that the Company delivers to Vector, pursuant to each of
the Securities Purchase Agreement, the Amended Securityholders' Agreement and
the Amended Registration Rights Agreement. Copies of all such notices shall be
provided to Hachette at the following address:149, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
Levallois-Perret Cedex, France.
13. The Company has prepared and delivered to Hachette, and Hachette
expressly acknowledges receipt of, revised projected pro forma financial
information and financial forecasts of the Company (the "Revised Pro Forma
Information"), a copy of which is attached hereto as Exhibit 1. The Revised Pro
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Forma Information has been prepared in good faith by management of the Company
based on certain assumptions, believed to be reasonable by
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management and reflect management's best good faith estimate of the Company's
future prospects at the time such Revised Pro Forma Information was prepared.
The Company does not represent or warrant that the results reflected in the
Revised Pro Forma Information will be achieved. However, based upon the Revised
Pro Forma Information, management currently believes that it is more likely that
the Company will not attain the Gross Margin Milestone on or before January 31,
2000 as opposed to attaining the Gross Margin Milestone on or before January 31,
2000.
14. Miscellaneous.
(a) The interpretation and construction of this Agreement, and all
matters relating hereto, shall be governed by the laws of the State of New York
applicable to agreements executed and to be performed solely within such State.
(b) Except as otherwise required by law, none of the parties hereto
shall issue any press release or make any other public statement, in each case
relating to, connected with or arising out of this Agreement or the matters
contained herein. Any statement so issued or made shall require the reasonable
prior approval of the other parties hereto as to the contents and the manner of
presentation and publication thereof.
(c) This Agreement may not be transferred, assigned, pledged or
hypothecated by any party hereto, other than by operation of law. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
(d) This Agreement may be executed in one or more original or
facsimile counterparts, all of which taken together shall constitute one
instrument.
(e) This Agreement, including the other documents referred to herein,
the Securities Purchase Agreement and the Amended Securityholders' Agreement
contain the entire understanding of the parties hereto with respect to the
subject matter contained herein and therein and supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
(f) This Agreement may not be changed orally, but only by an agreement
in writing signed by the parties hereto.
(g) In case any provision in this Agreement shall be held invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions hereof will not in any way be affected or impaired thereby.
(h) Each party hereto intends that this Agreement shall not benefit or
create any right or cause of action in or on behalf of any Person other than the
parties hereto.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the day and year first above written.
COMPANY:
CKG ▇▇▇▇▇.▇▇▇, Inc.
(d/b/a Phase2Media)
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
_________________________________
CEO/Chairman
HACHETTE FILIPACCHI
INTERACTIONS S.A.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
_________________________________
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: General Counsel - International
SOLELY WITH RESPECT TO THE
PROVISIONS OF SECTIONS 9, 10, 11 AND
12 HEREOF:
VECTOR CAPITAL II, L.P.
By: Vector Capital Partners II, LLC, as General
Partner
/s/ ▇▇▇▇ ▇▇▇▇▇▇
____________________________________
By: ▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Member
