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EXHIBIT 10.2
SUBSCRIPTION AGREEMENT
BETWEEN
INTERLAND, INC.
AND
MICROSOFT CORPORATION
DATED DECEMBER 24, 1999
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SUBSCRIPTION AGREEMENT
THIS AGREEMENT (this "Agreement") is entered into as of December 24,
1999 by and between Interland, Inc., a Georgia corporation (the "Company") and
Microsoft Corporation, a Washington corporation ("Investor").
WHEREAS, the Company desires to issue and sell to the
Investor, and the Investor desires to subscribe for and acquire from the
Company, a substantial equity interest in the Company, upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements hereinafter set forth, the parties hereto agree
as follows:
DEFINITIONS
For all purposes of this Agreement, certain capitalized terms
specified in Exhibit A shall have the meanings set forth in that Exhibit A,
except as otherwise expressly provided.
SALE AND PURCHASE OF SHARES
2.1. SALE AND PURCHASE OF SHARES
On the basis of the representations, warranties and
agreements contained herein, and subject to the terms and conditions hereof,
the Company agrees to issue and sell to the Investor, and the Investor is
subscribing for and agrees to purchase from the Company, an aggregate of
2,300,000 shares of Series A Convertible Participating Preferred Stock, no par
value per share ("Series A Stock"), having the rights, preferences and other
terms set forth on Exhibit B hereto, at a price per share of Series A Stock of
$2.18 for an aggregate purchase price of $5,014,000. In addition, the Company
hereby agrees to issue to Investor a warrant to purchase 506,000 shares of
Common Stock (the "Warrant"), in form and substance of Exhibit C hereto, with
an exercise price of $5.80 per share.
2.2 CLOSING
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The closing of the sale and purchase of the shares of Series A Stock
and the issuance of the Warrant shall take place simulanteously with the
Company's receipt by wire transfer of immediately available funds in the amount
of $5,014,000 from the Investor, as payment in full for the share of Series A
Stock subscribed for and being purchase by the Investor hereunder (the
"Closing"). At the Closing, the Company shall issue and deliver to the Investor
(i) a stock certificate or certificates in definitive form, registered in the
Investor's name, representing the Series A Stock, and (ii) the Warrant
registered in the Investor's name.
2.3. SALE AND PURCHASE OF ADDITIONAL SHARES
At the Second Closing (as defined below), and on the terms and subject
to the conditions set forth in this Agreement, the Company shall issue, sell
and deliver to the Investor, and the Investor hereby subscribes for and shall
purchase and accept from the Company, the number of shares (the "Additional
Shares") of Common Stock of the Company equal to the number obtained by
dividing (A) $7,500,000 by (B) a number equal to the lesser of (i) the midpoint
of the expected range of offering prices reflected on the Company's first
filing with the Securities and Exchange Commission of a registration statement
covering the sale of its Common Stock and (ii) the actual price to the public
in such offering, and rounding the number obtained thereby to the nearest whole
number. In addition, the Company shall issue an additional warrant to the
Investor (the "Additional Warrant") at the Second Closing, in form and
substance of Exhibit C hereto, to purchase up to that number of shares of
Common Stock equal to 75% of the number of Additional Shares purchased by the
Investor at the Second Closing with an exercise price per share equal to the
purchase price per share paid by the Investor at the Second Closing to purchase
the Additional Shares.
2.4. PURCHASE PRICE AND PAYMENT FOR ADDITIONAL SHARES.
In consideration of the sale of the Additional Shares to the Investor,
the Investor shall pay to the Company at the Second Closing the aggregate
purchase price of $7,500,000.00 (the "Purchase Price"). The Purchase Price
shall be paid in cash by wire transfer of immediately available federal funds
to an account designated in writing by the Company.
2.5. SECOND CLOSING.
The closing of the transactions contemplated in Section 2.3 and
Section 2.4 hereof (the "Second Closing") shall take place at the offices of
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▇▇▇▇▇▇▇, at 10:00 a.m., Atlanta time, on the day after the Company's
registration statement is declared effective and the offering made pursuant
thereto is priced. The date on which the Second Closing takes place is herein
referred to as the "Second Closing Date". At
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the Second Closing (i) the Company shall deliver to the Investor the executed
stock certificate representing the Additional Shares duly issued in the name of
the Investor and the Additional Warrant, and (ii) the Investor shall deliver
the Purchase Price to Company.
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor hereby represents and warrants to the Company as
follows:
3.1. ORGANIZATION AND STANDING
The Investor is duly organized, validly existing and in good
standing under the laws of the state or jurisdiction of its formation and has
the full and unrestricted power and authority to enter into this Agreement and
to carry out the transactions contemplated hereby.
3.2. AUTHORIZATION
The execution, delivery and performance by the Investor of
this Agreement and all other Documents contemplated hereby, the fulfillment of
and the compliance with the respective terms and provisions hereof and thereof,
and the consummation by the Investor of the transactions contemplated hereby
and thereby have been duly authorized, and will not: (a) conflict with, or
violate any term or provision of the Investor's certificate or articles of
incorporation, its bylaws or other governing documents or (b) conflict with, or
result in any breach of, or constitute a default under, any Agreement to which
the Investor is a party or by which such Investor is bound. No other action is
necessary for the Investor to enter into this Agreement and all other Documents
contemplated hereby and to consummate the transactions contemplated hereby and
thereby.
3.3. BINDING OBLIGATION
Each Document to be executed by the Investor pursuant hereto,
when executed and delivered in accordance with the provisions hereof, shall be
a valid and binding obligation of the Investor, enforceable in accordance with
its terms, shall be in full force and effect and shall constitute a legal,
valid and binding obligation of, and shall be legally enforceable against, the
Investor, and, to the Investor's Knowledge, the other parties thereto (except
as enforceability may be limited or affected by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar laws and
equitable principles now or hereafter in effect and affecting the rights and
remedies of creditors generally).
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3.4. NO REGISTRATION UNDER THE SECURITIES ACT
The Investor understands that the Series A Stock, the
Warrant, the Additional Shares, and the Additional Warrant to be purchased by
it at the Closing or the Second Closing pursuant to the terms of this
Agreement, and the Common Stock of the Company into which the Series A Stock,
the Warrant and the Additional Warrant are convertible, have not and will not
be registered under the Securities Act or any state securities laws and will be
issued in reliance upon exemptions contained in the Securities Act or
interpretations thereof and in the applicable state securities laws, and cannot
be offered for sale, sold or otherwise transferred unless the Series A Stock
being acquired hereunder or the Common Stock of the Company into which the
Series A Stock, the Warrant and the Additional Warrant are convertible
subsequently are so registered or qualify for exemption from registration under
the Securities Act.
3.5. ACQUISITION FOR INVESTMENT
The Series A Stock, the Warrant, the Additional Shares and
the Additional Warrant, and the Common Stock issuable upon conversion of the
Series A Stock, the Warrant and the Additional Warrant, respectively, are being
acquired under this Agreement by the Investor in good faith solely for its own
account, for investment and not with a view toward distribution within the
meaning of the Securities Act. The Series A Stock, the Warrant, the Additional
Shares and the Additional Warrant will not be offered for sale, sold or
otherwise transferred by the Investor without either registration or exemption
from registration under the Securities Act and any applicable state securities
laws (and the delivery of investment representation letters and legal opinions
reasonably satisfactory to the Company, as reasonably requested by the
Company).
3.6. EVALUATION OF MERITS AND RISKS OF INVESTMENT
The Investor has knowledge and experience in financial and
business matters such that it is capable of evaluating the merits and risks of
its investment in the Series A Stock, the Warrant, the Additional Shares and
the Additional Warrant being acquired hereunder. The Investor is an "accredited
investor" within the meaning of Rule 501(a) under the Securities Act. The
Investor understands and is able to bear any economic risks associated with
such investment (including, without limitation, the necessity of holding the
Series A Stock, the Warrant, the Additional Shares, and the Additional Warrant
for an indefinite period of time, inasmuch as the Series A Stock, the Warrant,
the Additional Shares, and the Additional Warrant have not been registered
under the Securities Act or any state securities laws).
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3.7. ADDITIONAL INFORMATION
The Investor acknowledges that it has been afforded the
opportunity to ask questions and receive answers concerning the Company and to
obtain additional information that it has requested to verify the accuracy of
the information contained herein. Notwithstanding the foregoing, nothing
contained herein shall operate to modify or limit in any respect the
representations and warranties of the Company or to relieve it from any
obligations to the Investor for breach thereof or the making of misleading
statements of material fact or the omission of material facts in connection
with the transactions contemplated herein.
3.8. STOCK CERTIFICATE LEGEND
Each Investor acknowledges and agrees that each certificate
representing the Series A Stock, the Warrant, the Additional Shares and the
Additional Warrant and the Common Stock issuable upon conversion thereof shall
bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
SURVIVAL OF REPRESENTATIONS
4.1. SURVIVAL OF REPRESENTATIONS
All representations, warranties, covenants, and other
Agreements made by any party to this Agreement herein or pursuant hereto shall
also be deemed made on and as of the Closing Date as though such
representations, warranties, covenants, indemnities and other Agreements were
made on and as of such date, and all the representations, warranties,
covenants, indemnities and other Agreements shall survive the Closing Date for
a period of two years.
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MISCELLANEOUS
5.1. ADDITIONAL ACTIONS AND DOCUMENTS
After Closing, each of the parties hereto hereby agrees to
take or cause to be taken such further actions, to execute, deliver and file or
cause to be executed, delivered and filed such further Documents, and will
obtain such consents, as may be necessary or as may be reasonably requested in
order to fully effectuate the purposes, terms and conditions of this Agreement.
5.2. NO BROKERS
Each of the parties hereto represents and warrants to the
other parties (and to each of them) that such party has not engaged any broker,
finder or agent in connection with the transactions contemplated by this
Agreement and has not incurred (and will not incur) any unpaid liability to any
broker, finder or agent for any brokerage fees, finders' fees or commissions,
with respect to the transactions contemplated by this Agreement. Each party
agrees to indemnify, defend and hold harmless each of the other parties from
and against any and all claims asserted against such parties for any such fees
or commissions by any persons purporting to act or to have acted for or on
behalf of the indemnifying party.
5.3. JURY WAIVER
THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN AN ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR ANY OF THE
TRANSACTIONS OR AGREEMENTS CONTEMPLATED HEREBY.
5.4. PUBLICITY
Neither the Investor nor the Company shall issue any press release or
make any public disclosure regarding the transaction contemplated hereby unless
such press release or public disclosure is approved by those parties expressly
mentioned by name in the press release in advance. Notwithstanding the
foregoing, each of the parties hereto may, in documents required to be filed by
it with the SEC or other regulatory bodies, make such statements with respect
to the transactions contemplated hereby as each may be advised by counsel as
legally necessary or advisable and may make such disclosure as it is advised by
its counsel as required by law.
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5.5. EXPENSES
Subject to the provisions of this SECTION 5.5, each party
hereto shall pay its own expenses incident to this Agreement and the
transactions contemplated hereunder, including all legal and accounting fees
and disbursements.
5.6. ASSIGNMENT
The Investor shall have the right to assign its rights and
obligations under this Agreement, in whole or in part, to any Affiliate of
Investor or to designate any of its Affiliates (to the extent permitted by Law)
to receive directly the shares of Series A Stock to be purchased hereunder or
to exercise any of the rights of the Investor, or to perform its obligations,
provided that such assignee shall have been deemed to have made the
representations and warranties contained in Article 3 hereof. The Company shall
not assign its rights and obligations under this Agreement, in whole or in
part, whether by operation of law or otherwise, without the prior written
consent of the Investor, and any such assignment contrary to the terms hereof
shall be null and void and of no force and effect. In no event shall the
assignment by the Company or the Investor of its rights or obligations under
this Agreement, whether before or after the Closing, release the Company or the
Investor from their respective liabilities and obligations hereunder.
5.7. ENTIRE AGREEMENT; AMENDMENT
This Agreement, including the other Documents referred to
herein or Furnished pursuant hereto, constitutes the entire Agreement among the
parties hereto with respect to the transactions contemplated herein, and it
supersedes all prior oral or written Agreements, commitments or understandings
with respect to the matters provided for herein. No amendment or modification
of this Agreement shall be valid or binding unless set forth in writing and
duly executed and delivered by the Company and the Investor.
5.8. WAIVER
No delay or failure on the part of any party hereto in
exercising any right, power or privilege under this Agreement or under any
other Documents Furnished in connection with or pursuant to this Agreement
shall impair any such right, power or privilege or be construed as a waiver of
any default or any acquiescence therein. No single or partial exercise of any
such right, power or privilege shall preclude the further exercise of such
right, power or privilege, or the exercise of any other right, power or
privilege. No waiver shall be valid against any party hereto unless made in
writing and signed by the party against whom enforcement of such waiver is
sought and then only to the extent expressly specified therein.
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5.9. SEVERABILITY
If any part of any provision of this Agreement or any other
agreement or document given pursuant to or in connection with this Agreement
shall be invalid or unenforceable in any respect, such part shall be
ineffective to the extent of such invalidity or unenforceability only, without
in any way affecting the remaining parts of such provision or the remaining
provisions of this Agreement.
5.10. GOVERNING LAW
This Agreement, the rights and obligations of the parties hereto, and any
claims or disputes relating thereto, shall be governed by and construed in
accordance with the laws of the State of Georgia (excluding the choice of law
rules thereof).
5.11. NOTICES
All notices, demands, requests, or other communications which
may be or are required to be given, served, or sent by any party to any other
party pursuant to this Agreement shall be in writing and shall be hand
delivered, sent by overnight courier or mailed by first-class, registered or
certified mail, return receipt requested, postage prepaid, or transmitted by
telecopy addressed as follows:
(i) If to Investor:
Microsoft Corporation
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (___) ___-____
Attention: ________________
(ii) If to the Company:
Interland, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Each party may designate by notice in writing a new address to which any
notice, demand, request or communication may thereafter be so given, served or
sent. Each notice, demand, request, or communication which shall be hand
delivered, sent, mailed or telecopied in the manner described above, shall be
deemed sufficiently given, served, sent, received or delivered for all purposes
at such time as it is delivered to the addressee (with the return receipt, the
delivery receipt, or (with respect to a telecopy) the answerback or
confirmation being deemed conclusive, but not exclusive, evidence of such
delivery) or at such time as delivery is refused by the addressee upon
presentation.
5.12. HEADINGS
Section headings contained in this Agreement are inserted for
convenience of reference only, shall not be deemed to be a part of this
Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
5.13. EXECUTION IN COUNTERPARTS
To facilitate execution, this Agreement may be executed in as
many counterparts as may be required. It shall not be necessary that the
signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart; but it shall be
sufficient that the signature of, or on behalf of, each party, or that the
signatures of the persons required to bind any party, appear on one or more of
the counterparts. All counterparts shall collectively constitute a single
agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than a number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
5.14. LIMITATION ON BENEFITS
The covenants, undertakings and agreements set forth in this
Agreement shall be solely for the benefit of, and shall be enforceable only by,
the parties hereto and their respective successors, heirs, executors,
administrators, legal representatives and permitted assigns (including
specifically, without limitation, any third party transferees acquiring shares
of Series A Stock purchased by the Investor pursuant hereto).
5.15. BINDING EFFECT
Subject to any provisions hereof restricting assignment, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors, heirs, executors, administrators, legal
representatives and assigns.
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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement,
or have caused this Agreement to be duly executed on their behalf, as of the
day and year first hereinabove set forth.
THE COMPANY:
INTERLAND, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
THE INVESTOR
MICROSOFT CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
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Its: Senior Vice President, Chief
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Financial Officer
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EXHIBIT A
TO SUBSCRIPTION AGREEMENT
DATED AS OF DECEMBER , 1999
DEFINITIONS
"ADDITIONAL SHARES" means the shares of Common Stock acquired
by the Investor at the Second Closing.
"ADDITIONAL WARRANT" means the warrant issued to the Investor
at the Second Closing.
"AFFILIATE" means: (a) with respect to a person, any member
of such person's family; (b) with respect to an entity, any officer, director,
stockholder, partner or investor of or in such entity or of or in any Affiliate
of such entity; and (c) with respect to a person or entity, any person or
entity which directly or indirectly, through one or more intermediaries,
Controls, is Controlled by, or is under common Control with such person or
entity.
"AGREEMENT" means any concurrence of understanding and
intention between two or more persons (or entities) with respect to their
relative rights and/or obligations or with respect to a thing done or to be
done (whether or not conditional, executory, express, implied, in writing or
meeting the requirements of contract), including, without limitation,
contracts, leases, promissory notes, covenants, easements, rights of way,
covenants, commitments, arrangements and understandings.
"CLAIMS" means all demands, claims, actions or causes of
action, assessments, losses, damages (including, without limitation, diminution
in value), liabilities, costs and expenses, including, without limitation,
interest, penalties and reasonable attorneys' fees and disbursements.
"CLOSING" means the Closing of the sale of shares of Series A
Stock and the Warrant to the Investor under this Agreement.
"COMMON STOCK" means the Company's Common Stock, no par value
per share.
"COMPANY" means Interland, Inc., a Georgia corporation.
"CONTROL" means possession, directly or indirectly, of power
to direct or cause the direction of management or policies (whether through
ownership of voting securities, by Agreement or otherwise).
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"DOCUMENTS" means any paper or other material (including,
without limitation, computer storage media) on which is recorded (by letters,
numbers or other marks) information that may be evidentially used, including,
without limitation, legal opinions, mortgages, indentures, notes, instruments,
leases, Agreements, insurance policies, reports, studies, Financial Statements
(including, without limitation, the notes thereto), other written financial
information, schedules, certificates, charts, maps, plans, photographs,
letters, memoranda and all similar materials.
"EXHIBIT" means an exhibit attached to the Agreement.
"FURNISHED" means supplied, delivered or provided in any way,
including through attorneys, employees or officers.
"INVESTOR" means Microsoft Corporation, a Washington
corporation.
"KNOWLEDGE" means to the actual knowledge of the party making
the representation, and, in the case of the Company, "Knowledge" shall mean the
actual Knowledge of the officers and directors of the Company.
"LAWS" means all foreign, federal, state and local statutes,
laws, ordinances, regulations, rules, resolutions, orders, determinations,
writs, injunctions, awards (including, without limitation, awards of any
arbitrator), judgments and decrees applicable to the specified persons or
entities and to the businesses and Assets thereof (including, without
limitation, Laws relating to securities registration and regulation; the sale,
leasing, ownership or management of real property; employment practices, terms
and conditions, and wages and hours; building standards, land use and zoning;
safety, health and fire prevention; and environmental protection, including
Environmental Laws).
"PERSON" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization or entity, government or
department or agency of a government.
"SECOND CLOSING" means the closing of the sale of the
Additional Shares and the Additional Warrant to the Investor under this
Agreement.
"SECTION" means a Section (or a subsection) of this
Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as
amended, and all Laws promulgated pursuant thereto or in connection therewith.
"SERIES A STOCK" means the Company's Series A Convertible
Participating Preferred Stock, no par value per share.
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"SHARES" means the Series A Stock being purchased by the
Investor pursuant to the terms of this Agreement.
"SUBSIDIARY" means a corporation or other entity of which at
least 50% of the outstanding securities or other interests having rights to
vote or otherwise exercise Control are held, directly or indirectly, by the
Company.
"WARRANT" means the warrant to purchase shares of Common
Stock issued to the Investor at the Closing.
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