Exhibit 10.10
SERIES C CONVERTIBLE NON-VOTING
PREFERRED STOCK PURCHASE AGREEMENT
by and among
DEJA NEWS, INC.
and
THE PURCHASERS NAMED ON SCHEDULE I HERETO
Dated as of July 14, 1998
TABLE OF CONTENTS
TABLE OF CONTENTS 2
INDEX TO SCHEDULES 4
INDEX TO EXHIBITS 4
1. Authorization and Sale of Shares. 6
1A. Authorization. 6
1B. Sale of Shares. 6
1C. Separate Sales. 6
1D. Use of Proceeds. 6
1E. Subsequent Sales of Shares. 6
2. The Closing; Delivery of Shares; Closing Conditions. 7
2A. The Closing. 7
2B. Delivery of Shares and Purchase Price. 7
2C. Conditions to the Obligations of the Purchasers. 7
2D. Condition to the Obligations of the Company. 9
3. Representations and Warranties of the Company. As a material
inducement to each Purchaser to enter into this Agreement and to
purchase Shares, the Company represents and warrants to each Purchaser
as of the date hereof and as of the date of the Closing that, except
as set forth on the Disclosure Schedule attached as Schedule II hereto
and delivered concurrently herewith: 10
3A. Organization. 10
3B. Capitalization and Ownership;. 10
3C. No Subsidiaries. 12
3D. Authorization and Enforceability. 12
3E. Valid Issuance. 12
3F. No Violation of Laws or Agreement. 12
3G. No Undisclosed Liabilities. 13
3H. No Pending Litigation or Proceedings. 13
3I. Consents. 13
3J. Transactions with Related Parties. 13
(iii) other than the payment of compensation and the provision
of employee benefits as set forth on Schedule 3L to Schedule II,
the reimbursement of expenses or the grant of options under the
1997 Plan, has been engaged, since May 31, 1998, in any other
transaction with the Company. 13
3K. Compensation Arrangements; Officers and Directors. 13
3L. Employee Benefit Plans. 14
3M. Brokerage. 14
3N. Financial Statements. 14
3O. Business Carried on in Ordinary Course. 15
3P. Absence of Unusual Transactions. 15
3Q. Minute Books and Corporate Records. 16
3R. Accuracy of Books and Records. 16
3S. No Guarantees, etc. 16
3T. Employment Matters. 16
3U. Title to Property. 18
3V. Material Contracts. 18
3W. Tax and Government Returns. 18
3X. Compliance with Applicable Laws, etc. 19
3Y. Intellectual Property Rights. 19
3Z. Obligations of Management. 21
Each officer of the Company other than the Chairman of the Board
is currently devoting one hundred percent (100%) of such
officer's business time to the conduct of the business of the
Company. The Company is not aware of any officer or key employee
of the Company other than the Chairman of the Board planning to
work less than full time at the Company in the future. 21
3AA. Registration Rights; Rights of First Refusal; Preemptive 21
Rights.
3AB. Offering Valid. 21
3AC. Disclosure. 21
3AD. Open Text Preemptive Rights. 22
4. Representations and Warranties of the Purchasers. Each of the
Purchasers severally represents and warrants to the Company as of date
hereof and as of the date of the Closing, as follows: 22
4A. Investment. 22
4B. Authority. 22
4C. Accredited Investor. 22
4D. Access to Data. 22
4E. Brokerage. 22
5. [Intentionally Omitted.] 23
6. [Intentionally Omitted.] 23
7. [Intentionally Omitted.] 23
8. Transfer of Shares. 23
8A. Restrictions. 23
8B. Requirements for Transfer. 23
8C. Rule 144A Information. 24
9. Certain Definitions. 24
10. Miscellaneous. 25
10A. Successors and Assigns. 25
10B. Confidentiality. 25
10C. Survival of Representations and Warranties. 25
10D. Expenses. 26
10E. Notices. 27
10F. Entire Agreement. 29
10G. Amendments and Waivers. 29
10H. Counterparts. 29
10I. Headings. 29
10J. Severability. 29
10K. Governing Law. 29
10L. Further Assurances. 29
10M. Indemnification. 30
10N. Understanding Among Purchasers. 30
10O. Preemptive Rights. 30
INDEX TO SCHEDULES
Schedule I Schedule of Purchasers
Schedule II Deja News, Inc. Disclosure Schedule
INDEX TO EXHIBITS
Exhibit A Form of Third Amended and Restated Articles of Incorporation
Exhibit B Form of Opinion of Counsel to Company
Exhibit C Form of Second Amended and Restated Shareholders and Voting Agreement
Exhibit D Form of Amended and Restated Investors' Rights Agreement
SERIES C CONVERTIBLE NON-VOTING
PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES C CONVERTIBLE NON-VOTING PREFERRED STOCK PURCHASE
AGREEMENT (the "Agreement") dated as of July ___, 1998 is entered into by and
among Deja News, Inc., a Texas corporation (the "Company"), and the persons
listed on Schedule I hereto (each, a "Purchaser" and collectively, the
"Purchasers").
R E C I T A L S:
WHEREAS, the Company desires to sell, and the Purchasers desire to
purchase, shares of the Company's Series C Convertible Non-Voting Preferred
Stock, par value $0.001 per share (the "Series C Preferred Stock"); and
WHEREAS, the Company and the Purchasers desire to set forth certain
agreements and certain terms and conditions regarding the sale and purchase of
the Series C Preferred Stock and the relationship between the Company and the
Purchasers;
A G R E E M E N T:
NOW, THEREFORE, in consideration of the foregoing premises, the
respective representations, warranties and covenants contained herein, and
certain other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. Authorization and Sale of Shares.
1A. Authorization. The Company has, or before the Closing (as defined in Section
2A) will have, duly authorized the issuance and sale, pursuant to the terms of
this Agreement, of 9,142,388 shares of its Series C Preferred Stock having the
rights, restrictions, privileges and preferences set forth in the Company's
Fourth Amended and Restated Articles of Incorporation, the form of which is
attached as Exhibit A (the "Restated Articles"). The Company has, or before the
Closing (as defined in Section 2A) will have, adopted and filed the Restated
Articles with the Secretary of State of Texas.
1B. Sale of Shares. Subject to the terms and conditions of this Agreement, at
the Closing the Company will issue and sell to the Purchasers listed on Schedule
I, and the Purchasers listed on Schedule I will purchase from the Company, an
aggregate of up to 9,142,388 shares of Series C Preferred Stock at a purchase
price of $1.25 per share, with each such Purchaser purchasing the number of
shares of Series C Preferred Stock set forth opposite such Purchaser's name on
Schedule I hereto. The shares of Series C Preferred Stock being sold under this
Agreement and, unless the context otherwise requires, the shares of Common Stock
issued or issuable upon the conversion of such shares of Series C Preferred
Stock are referred to as the "Shares."
1C. Separate Sales. The Company's agreement with each Purchaser is a separate
agreement, and the sale of Shares to each Purchaser is a separate sale.
1D. Use of Proceeds. The Company may use the proceeds from the sale of the
Shares for working capital and general corporate purposes, in addition to such
other purposes as the Company's Board of Directors may hereafter approve.
1E. Subsequent Sales of Shares. At any time on or before the thirtieth day
following the Closing, the Company may sell additional shares of Series C
Preferred Stock to such persons as may be approved by the Board of Directors of
the Company (the "Subsequent Sale"). Any such Subsequent Sale shall be made on
substantially the same terms and conditions set forth in this Agreement (either
as an amendment to this Agreement or pursuant to a separate agreement), in each
case only with such changes from the documents entered into among the Company
and the Purchasers at the Closing of the transaction contemplated by this
Agreement as may be necessary or appropriate in connection with any such
Subsequent Sale; provided that any additional changes shall require the prior
approval of Xxxx-Xxxxx Inc., which approval shall not be unreasonably withheld.
2. The Closing; Delivery of Shares; Closing Conditions.
2A. The Closing. Subject to the satisfaction of the conditions set forth herein,
the closing of the issuance, sale and purchase of the Shares under Section 1B of
this Agreement (the "Closing") shall take place on July ___, 1998 at 10:00 a.m.,
Austin, Texas time, at the offices of Xxxxxxx, Phleger & Xxxxxxxx LLP, 000
Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx, or at such other place and time as
the Company and the Purchasers purchasing Shares at the Closing may specify in
writing.
2B. Delivery of Shares and Purchase Price. At the Closing, the Company will
deliver to each purchaser of Shares a certificate in the name of such purchaser
for the number of Shares being purchased by such purchaser at the Closing,
against payment to the Company of the purchase price for such Shares, by wire
transfer, check, cancellation of indebtedness, any combination of the foregoing,
or other method acceptable to the Company and the purchasers who will purchase
Shares at the Closing. In the event that payment by a Purchaser is made, in
whole or in part, by cancellation of indebtedness, then such Purchaser shall
surrender to the Company for cancellation at the Closing, any evidence of such
indebtedness or shall execute instruments evidencing such cancellation in form
and substance reasonably acceptable to the Company; and the Company shall
deliver to any Purchaser choosing to pay any part of the purchase price of such
Shares by cancellation of indebtedness, a check in the amount of any interest
accrued on such indebtedness until the date of the Closing, (unless such
interest is applied to the payment of the purchase price for the Shares
purchased).
2C. Conditions to the Obligations of the Purchasers. The obligation of each of
the Purchasers to purchase Shares at the Closing is subject to the fulfillment
or the waiver by such Purchaser of each of the following conditions on or before
the Closing:
(i) Accuracy of Representations and Warranties. Each
representation and warranty of the Company contained in part 3 shall be true on
and as of the Closing with the same effect as though such representation and
warranty had been made on and as of the date of the Closing.
(ii) Performance. The Company shall have performed and
complied with all agreements and conditions contained in this Agreement and the
Ancillary Agreements (as defined in subsection (iv) below) required to be
performed or complied with by the Company prior to or at the Closing.
(iii) Opinion of Counsel. Each Purchaser shall have received
an opinion from Xxxxxxx, Phleger & Xxxxxxxx LLP, counsel for the Company, dated
the date of the Closing addressed to the Purchasers purchasing Shares at the
Closing, and satisfactory in form and substance to the Purchasers and their
special counsel, substantially in the form attached as Exhibit B hereto.
(iv) Ancillary Agreements.
(A) The Second Amended and Restated Shareholders and
Voting Agreement attached hereto as Exhibit C (the "Shareholders Agreement")
shall have been executed and delivered by the Company, each of the Purchasers,
Xxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx. All such actions shall have been taken by
the Company and the Common Shareholders (as defined in the Shareholders
Agreement) as may be necessary to elect a Board of Directors of the Company (as
defined in the Shareholders Agreement), effective immediately following the
Closing, in accordance with the Shareholders Agreement.
(B) The Amended and Restated Investors' Rights Agreement
attached hereto as Exhibit D (the "Investors' Rights Agreement," and together
with the Shareholders Agreement, the "Ancillary Agreements") shall have been
executed and delivered by the Company, each of the Purchasers, Xxxxxx X. Xxxxxx
and Xxxxxx X. Xxxxxx.
(v) Certificates and Documents. The Company shall have
delivered to special counsel to the Purchasers:
(A) the Restated Articles certified by the Secretary of
State of Texas;
(B) certificates, as of the most recent practicable
dates (in any event within 10 days of the date of the Closing), as to the
corporate existence and good standing of the Company issued by the Secretary of
State of Texas and the Comptroller of Public Accounts of Texas, respectively;
(C) Bylaws, as amended, of the Company, certified by its
Secretary as of the date of the Closing;
(D) resolutions of the Board of Directors of the
Company, authorizing and approving all matters in connection with this
Agreement, the Ancillary Agreements and the transactions contemplated hereby and
thereby, certified by the Secretary of the Company as of the date of the
Closing; and
(E) such other documents relating to the transactions
contemplated in this Agreement and the Ancillary Agreements as any Purchaser may
reasonably request.
(vi) Compliance Certificate. The Company shall have delivered
to the Purchasers a certificate, executed by the chief executive officer of the
Company, dated the date of the Closing, certifying to the fulfillment of the
conditions specified in paragraphs 2C(i), (ii), (iv) and (v).
(vii) Other Matters. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and the
Ancillary Agreements and all documents and instruments incident to such
transactions shall be reasonably satisfactory in substance and form to the
Purchasers and their special counsel, and the Purchasers and their
special counsel shall have received all such counterpart originals or certified
or other copies of such documents as they may reasonably request.
2D. Condition to the Obligations of the Company. The obligations of the Company
to issue and sell the Shares to the Purchasers at the Closing are subject to
fulfillment, or the waiver by the Company, of each of the following conditions
on or before the Closing:
(i) Accuracy of Representations and Warranties. The
representations and warranties of the Purchasers contained in part 4 shall be
true on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the Closing.
(ii) Purchase Price. Each Purchaser shall have tendered at the
Closing full consideration for the purchase price of the Shares to be purchased
by such Purchaser.
(iii) Other Matters. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and the
Ancillary Agreements and all documents, and instruments incident to such
transactions shall be reasonably satisfactory in substance and form to the
Company and its counsel, and the Company and its counsel shall have received all
such counterpart originals or certified or other copies of such documents as
they may reasonably request.
3. Representations and Warranties of the Company. As a material inducement to
each Purchaser to enter into this Agreement and to purchase Shares, the Company
represents and warrants to each Purchaser as of the date hereof and as of the
date of the Closing that, except as set forth on the Disclosure Schedule
attached as Schedule II hereto and delivered concurrently herewith:
3A. Organization. The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Texas, and is duly qualified
and in good standing as a foreign corporation in each other jurisdiction in
which the location or nature of its property or the character of its business
makes such qualification necessary, except where the failure to be so qualified
would not materially adversely affect the business, financial condition,
prospects, properties or results of operations of the Company. The Company has
all requisite power and authority to own or lease its properties and assets as
now owned or leased and to carry on its business as and where now being
conducted and to consummate the transactions contemplated hereby. The copies of
the Company's articles of incorporation and its bylaws, each as amended to date,
which have been delivered to Purchasers are correct and complete and are in full
force and effect. There are no proceedings pending or contemplated for the
dissolution of the Company.
3B. Capitalization and Ownership;.
(i) Capital Stock. The Company's authorized capital stock
consists solely of the following:
(A) Common Stock. 100,000,000 shares of Common Stock,
par value $0.001 per share (the "Common Stock"), 12,752,500 shares of which are
currently outstanding and none of which are held in its treasury. The Company
has reserved (1) 7,861,265 shares of Common Stock for issuance pursuant to the
exercise of options issued or issuable under the Company's 1997 Stock
Option/Stock Issuance Plan (the "1997 Plan"); (2) 5,182,667 shares of Common
Stock for issuance upon conversion of Series A Preferred Stock (as defined
below); (3) 16,822,921 shares of Common Stock for issuance upon conversion of
the Series B Preferred Stock (including shares issuable upon exercise of the
Imperial Bank Warrants (as defined below)); (4) 244,350 shares of Common Stock
for issuance upon the exercise of the MedVen Warrants (as defined below); (5)
1,000,000 shares of Common Stock for issuance upon exercise of the Austin
Ventures/Prime Options (as defined below); (6) 4,166,668 shares of Common Stock
for issuance upon the exercise of the warrants held by holders of Series B
Preferred Stock dated November 14, 1997 (the "Series B Warrants"); and (7)
9,142,388 shares of Common Stock for issuance upon conversion of Series C
Preferred Stock.
(B) Preferred Stock. 29,852,309 shares of Preferred
Stock, par value $0.001 per share, of which (1) 3,887,000 have been designated
as "Series A Convertible Non-Voting Preferred Stock" (the "Series A Preferred
Stock") and all of which are issued and outstanding, (2) 16,822,921 have been
designated as "Series B Convertible Non-Voting Preferred Stock" (the "Series B
Preferred Stock"), 16,666,671 of which are issued and
outstanding, and 156,250 shares of which have been reserved for issuance upon
the exercise of the Imperial Bank Warrant (as defined below), and (3) 9,142,388
have been, or will be prior to the Closing, designated as Series C Preferred
Stock, none of which are issued and outstanding.
(ii) Prior Issuances. All of such outstanding shares have been
duly authorized, validly issued and are fully paid and nonassessable, were not
issued in violation of the terms of any agreement or other understanding binding
upon the Company, and were issued in compliance with all applicable federal and
state securities, or "blue-sky," laws and regulations.
(iii) Options; Warrants. There are no outstanding options,
warrants, rights, agreements, calls, commitments or demands of any character
relating to the capital stock of the Company and no securities convertible into
or exchangeable for any of such capital stock other than (A) options to purchase
up to 7,861,265 shares of Common Stock which have been granted or are available
for grant pursuant to the 1997 Plan; (B) those certain warrants each dated as of
December 2, 1997 granted to MedVen Development Corporation (the "MedVen
Warrant"), to purchase up to 194,350 shares of Common Stock at a price of $0.60
per share and up to 50,000 shares of Common Stock at a purchase price of
$1.03125 per share, respectively; (C) a warrant to purchase up to 156,250 shares
of Series B Preferred Stock at a price of $0.60 per share granted to Imperial
Bank dated October 15, 1997 (the "Imperial Bank Warrant"); (D) options to
purchase up to an aggregate of 1,000,000 shares of Common Stock at a purchase
price of $1.03125 granted to Austin Ventures IV-A, L.P., Austin Ventures IV-B,
L.P., Prime Enterprises II, L.P., and Enterprises & Transcommunications, L.P.
under that certain Stock Purchase Agreement dated as of August 30, 1996, as
amended (the "Austin Ventures/Prime Options"); (E) the Series B Warrants; (F)
the preemptive rights under the Investors' Rights Agreement; and (G) the rights
under the Shareholders Agreement.
(iv) No Redemptions. The Company has no obligation (contingent
or otherwise) to purchase, redeem or otherwise acquire any shares of its capital
stock or any interest therein.
(v) Shareholders. The current registered and beneficial
shareholders of the Company are as set forth in Schedule 3B of Schedule II.
3C. No Subsidiaries. The Company does not directly or indirectly own any stock
of, or any other interest in, any other corporation or business entity.
3D. Authorization and Enforceability. The execution, delivery and performance of
this Agreement and the Ancillary Agreements have been duly authorized by all
necessary corporate action on the part of the Company. This Agreement and the
Ancillary Agreements have been duly executed and delivered by the Company and
constitute the legal, valid and binding obligations of the Company enforceable
in accordance with their respective terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency or other laws relating to or affecting
creditors' rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding or action in equity or
at law). The issuance, sale and delivery of the Shares in accordance with this
Agreement, the issuance and delivery of the shares of Common Stock issuable upon
conversion of the Shares have been, or will be on or prior to the Closing, duly
authorized by all necessary corporate action on the part of the Company, and all
such Shares have been duly reserved for issuance.
3E. Valid Issuance. The shares of Series C Preferred Stock when so issued, sold
and delivered at Closing against payment therefor in accordance with the
provisions of this Agreement, the shares of Common Stock issuable upon
conversion of the shares of Series C Preferred Stock, when issued upon such
conversion in accordance with the Restated Articles, will be duly and validly
issued, fully paid and non-assessable. Upon delivery to the Purchasers at the
Closing of certificates representing the Shares in accordance herewith, the
Purchasers will acquire good and valid title to such Shares, free and clear of
all liens, claims, security interests, pledges, charges, preemptive rights,
rights of first refusal and options.
3F. No Violation of Laws or Agreement. The execution and delivery of this
Agreement and the Ancillary Agreements do not, and the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements and the
compliance with the terms, conditions and provisions of this Agreement and the
Ancillary Agreements by the Company will not (i) contravene any provision of the
Restated Articles or the Company's bylaws, as amended through the date hereof;
(ii) conflict with or result in a breach of or constitute a default (or an event
which might, with the passage of time or the giving of notice or both,
constitute a default) under any of the terms, conditions or provisions of any
indenture, mortgage, loan or credit agreement or any other agreement or
instrument to which the Company is a party or by which it or any of its assets
may be bound or affected, or any judgment or order of any court or governmental
department, commission, board, agency or instrumentality, domestic or foreign,
or any applicable law, rule or regulation; (iii) result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the Company's assets or give to others any interests or rights therein; (iv)
result in the maturation or acceleration of any liability or obligation of the
Company or give others the right to cause such a maturation or acceleration; or
(v) result in the termination of or loss of any material right (or give others
the right to cause such a termination or loss) under any agreement or contract
to which the Company is a party or by which it may be bound.
3G. No Undisclosed Liabilities. The Company has no material liability or
obligation of any nature, whether due or to become due, absolute, contingent or
otherwise, including liabilities for or in respect of federal, state and local
taxes and any interest or penalties relating thereto, except liabilities
incurred in the ordinary course of business and fully reflected as liabilities
on the Financial Statements (as defined below).
3H. No Pending Litigation or Proceedings. There are no actions, suits or
proceedings pending or, to the Company's knowledge, threatened against or
affecting the Company or any of its assets or affecting its issued capital or
the Shares, at law or in equity, by or before any court or governmental
department, agency or instrumentality. There are no outstanding judgments or
decrees or orders of any court or any governmental or administrative agency
against or affecting the Company, or any of its assets or businesses, or
affecting the Shares. The Company has not initiated and does not currently
intend to initiate any actions, suits or proceedings.
3I. Consents. Except (i) the filing of the Restated Articles with the Texas
Secretary of State, (ii) filings required or permitted pursuant to federal or
state securities laws which have been filed prior to Closing or will be filed in
due course after the Closing, (iii) consents or approvals of the holders of the
Series A Preferred Stock and/or Series B Preferred Stock and Common Stock which
are required to amend and restate the Ancillary Agreements, no consent, approval
or authorization of, or registration or filing with, any persons including any
governmental authority or other regulatory agency, is required in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
3J. Transactions with Related Parties. Since January 1, 1998, no Affiliate (as
defined in Section 9) of the Company or any person related to the Company,
including any director, officer and/or shareholder or any immediate family
member of, or corporation affiliated with (excluding the portfolio corporations
in which Austin Ventures and Prime New Ventures, as each is defined in part 9
below, have invested), the foregoing:
(i) has borrowed money or loaned money to the Company which
has not been repaid;
(ii) has any contractual or other claim, express or implied,
of any kind whatsoever against the Company;
(iii) other than the payment of compensation and the provision
of employee benefits as set forth on Schedule 3L to Schedule II, the
reimbursement of expenses or the grant of options under the 1997 Plan, has been
engaged, since May 31, 1998, in any other transaction with the Company.
3K. Compensation Arrangements; Officers and Directors. Schedule 3K to Schedule
II sets forth the following information:
(i) the names and current annual compensation, including any
bonus, if applicable, of all present officers and employees of the Company whose
current annual salary,
including any promised, expected or customary bonus, equals or exceeds $100,000,
together with a statement of the full amount of all remuneration paid by the
Company to each such person and to any director of the Company as of May 31,
1998;
(ii) a complete list of all holders of issued and outstanding
options under the 1997 Plan; and
(iii) the names and titles of all directors and officers of
the Company and of each trustee, fiduciary or plan administrator or each
employee benefit plan of the Company.
3L. Employee Benefit Plans. The only employee pension benefit plans (as defined
in Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), welfare benefit plans (as defined in Section 3(l) of ERISA),
bonus, stock purchase, stock ownership, stock option, deferred compensation,
incentive or other compensation plan or arrangements and other material employee
fringe benefit plans presently maintained by or contributed to by the Company,
other than a multi-employer plan as defined in Section 3(37) of ERISA, are those
listed in Schedule 3L to Schedule II (the "Benefit Plans"), a true and complete
copy of each of which has been furnished to Purchasers.
3M. Brokerage. The Company has not made any agreement or taken any other action
which might cause anyone to become entitled to a broker's fee or commission as a
result of the transactions contemplated hereunder.
3N. Financial Statements. The Company's Financial Statements (as defined below)
have been prepared in accordance with generally accepted accounting principles,
consistently applied during the respective periods indicated thereon, except
that the Financial Statements for the five months ended May 31, 1998 do not
contain all of the footnotes which may be required by generally accepted
accounting principles. The Financial Statements are complete and correct in all
material respects, are in accordance with the books and records of the Company
and present fairly the financial condition of the Company and:
(i) all the assets, liabilities (whether accrued, absolute,
contingent or otherwise) and the financial condition of the Company as of the
periods covered thereby; and
(ii) the sales, earnings and results of operations of the
Company for the periods covered thereby.
"Financial Statements" as used in this Agreement means the audited
financial statements of the Company for the year ended December 31, 1997 and the
unaudited financial statements of the Company for the five months ended May 31,
1998 (the "Balance Sheet Date"), consisting in each case of the balance sheet of
the Company and the accompanying statements of operations, for the periods
indicated thereon, true copies of which are attached to Schedule 3N to Schedule
III.
3O. Business Carried on in Ordinary Course. The Business has been carried on in
the ordinary course since the Balance Sheet Date and the Company has not, since
the Balance Sheet Date, sold or otherwise disposed of any of its assets except
in the ordinary course of business. Since the Balance Sheet Date there has been
no change in the Business, operations, affairs or condition of the Company,
financial or otherwise, or arising as a result of any legislative or regulatory
change, revocation of any license or right to do business, fire, explosion,
accident, casualty, labor problem, flood, drought, riot, storm, act of God or
otherwise, except changes occurring in the ordinary course of business and
which, in the aggregate, have not materially adversely affected and will not
materially adversely affect the Business, operations, affairs or financial
condition of the company. "Business" of the Company as used in this Agreement
means the business of electronic communications, including research or retrieval
services pertaining thereto, and the development of computer software in
connection with the foregoing.
3P. Absence of Unusual Transactions. Since the Balance Sheet Date, the Company
has not:
(i) transferred, assigned, sold or otherwise disposed of any
of the assets shown in the balance sheet contained in the Financial Statements
except in the ordinary and usual course of business;
(ii) except as disclosed in the Financial Statements suffered
an operating loss or any extraordinary loss, or waived any rights of substantial
value, or entered into any commitment or transaction not in the ordinary and
usual course of business where such loss, rights, commitment or transaction is
or would be material in relation to the Company or the Business, as the case may
be;
(iii) mortgaged, pledged, subjected to lien, granted a
security interest in or otherwise encumbered any of the Company's assets;
(iv) declared or paid any dividends;
(v) incurred any indebtedness except in the ordinary course of
business; or
(vi) authorized or agreed or otherwise become committed to do
any of the foregoing.
3Q. Minute Books and Corporate Records. The corporate records and minute books
of the Company contain complete and accurate minutes of all meetings of, and
copies of all bylaws and resolutions passed by, the directors and shareholders
of the Company since its incorporation; all such meetings were duly called and
held, all such bylaws and resolutions were duly passed and the share certificate
books, registers of shareholders, registers of transfers, and other corporate
registers of the Company are complete and accurate in all material respects.
There is in existence neither a shareholders' agreement nor a unanimous
shareholders' agreement governing the affairs of the Company or the
relationships, rights and duties of its shareholders save and except for the
1995 Voting Trust Agreement (the "Voting Trust"), a complete and correct copy of
which has been provided to the Purchasers, which grants to Xxxxxx X. Xxxxxx the
right to vote the Common Stock subject thereto in accordance with the terms of
such agreement and the Shareholders Agreement.
3R. Accuracy of Books and Records. The books and records, financial and
otherwise, of the Company fairly and correctly set out and disclose in all
material respects the financial position of the Company as of the date hereof
and all material financial transactions of the Company have been accurately
recorded in such books and records.
3S. No Guarantees, etc. The Company is not a party to or bound by any agreement
of guarantee, indemnification, assumption or endorsement or any like commitment
of the obligations, liabilities (contingent or otherwise) or indebtedness of any
other person, corporation or other entity, except in the ordinary course of
business.
3T. Employment Matters. (i) The Company is not a party to any written or oral
employment, service, union, pension, deferred profit sharing, benefit, bonus or
other similar agreement or arrangement and none of such agreements contains any
specific agreement as to notice of termination or severance pay in lieu thereof.
The Company is not in arrears in the payment of any contribution or assessment
required to be made to any such plan as in effect, whether such payment is
deferred, contingent or otherwise. The Company does not have any employees who
cannot be dismissed on reasonable notice. To the Company's knowledge, it is not
aware of the impending resignation or termination of employment of any officer.
(ii) The Company has not made any agreements with any labor
union or employee association or made commitments to or conducted negotiations
with any labor union or employee association with respect to any future
agreements. The Company is not required to recognize any union or employee
association representing the employees or any agent having bargaining rights for
the employees.
(iii) To the Company's knowledge, it is not liable for any
damages to any employee or former employee resulting from the violation of any
applicable employment law or employment agreement, nor to the Company's
knowledge is any employee in violation of any of its past employment agreements.
The Company is not presently intending to hire or is not
otherwise in negotiation with any potential employee, consultant or other
service provider who may be subject to restrictive covenants resulting from any
previous employment or engagement nor are any existing employees, consultants or
service providers of the Company subject to restrictive covenants resulting from
prior employment or engagements with other persons.
3U. Title to Property. The Company is the owner of all of its property with good
and marketable title thereto, free and clear of any mortgage, lien, charge,
security interest, adverse claim or other encumbrance whatsoever. The Company
neither owns or has any interest in, nor is a party to any agreement to purchase
any real property. All facilities, equipment, fixtures, vehicles and other
properties owned, leased or used by the Company are in normal operating
condition and repair and are reasonably fit and able for the purposes for which
they are being used.
3V. Material Contracts. A list of the Company's outstanding agreements, leases,
contracts, insurance agreements or commitments, whether written or oral, of any
nature or kind whatsoever, which involve the payments or obligations in excess
of $50,000, is set forth in Schedule 3V to Schedule II.
3W. Tax and Government Returns. The Company has duly filed in a timely manner
all tax returns required to be filed by it (including any and all tax elections
available to the Company in relation to such tax returns) and all information
returns as to which the nonfiling or late filing could result in interest or
penalties, has made complete and accurate disclosure in such returns and has
paid all taxes shown on such returns as being due and payable and has also paid
all assessments and reassessments and all other taxes, governmental charges,
penalties, interest and fines due and payable by the Company up to the date
hereof. The Company has made adequate reserve for the taxes which are payable
during the current fiscal period for which tax returns are not yet required to
be filed. There are no agreements, waivers or other arrangements providing for
an extension of time with respect to the assessment or reassessment of income
tax or the filing of any tax return by, or payment of any tax by, or levying of
any governmental charge against, the Company. There are no actions, audits,
assessments, reassessments, suits, proceedings, investigations or claims now
threatened or pending against the Company in respect of taxes or governmental
charges or any matters under discussion with any governmental authority relating
to taxes or governmental charges asserted by any such authority. The Company has
never been the subject of an audit. The Company has withheld from each payment
made by it the amount of all taxes and other deductions required to be withheld
therefrom and has paid the same to the proper taxing or other authority within
the time prescribed under any applicable legislation or regulation. The Company
has not filed a consent pursuant to Section 341(f) of the Internal Revenue Code
of 1986, as amended (the "Code"), relating to collapsible corporations.
3X. Compliance with Applicable Laws, etc. The Company has conducted and is
conducting its Business in compliance with all applicable laws, rules and
regulations of each jurisdiction in which its Business is carried on and is not
in breach of any such laws, rules or regulations and is duly licensed,
registered or qualified in each jurisdiction in which the Company owns or leases
its assets or carries on the Business, except as would not have a material
adverse effect, to enable the Business to be carried on as now conducted and its
property and assets to be owned, leased and operated, and all such licenses,
registrations and qualifications are valid and subsisting and in good standing
an none of the same contains any burdensome term, provision, condition or
limitation which has or may have a material adverse effect on the operation of
the Business.
3Y. Intellectual Property Rights.
(i) Schedule 3Y to Schedule II lists and contains a
description of all patents, patent applications and registrations, trademarks,
trademark applications and registrations, copyrights, copyright applications and
registrations, trade names and industrial designs, domestic or foreign, owned or
used by the Company or relating to the operation of the Business, and all other
intellectual property owned or used by the Company or relating to the Business
other than copies of standard commercial programs available to the general
public and properly licensed to the Company by the producer thereof (all of the
foregoing being collectively called the "Intellectual Property").
(ii) The Company has good and valid title to all of the
Intellectual Property, free and clear of any and all encumbrances, except in the
case of any Intellectual Property licensed to the Company. Complete and correct
copies of all agreements whereby any rights in any of the Intellectual Property
have been granted or licensed to the Company have been provided to the
Purchasers. No royalty or other fee is required to be paid by the Company to any
other person in respect of the use of any of the Intellectual Property except
disclosed in Schedule 3Y to Schedule II. The Company has used commercially
reasonable efforts to protect its rights in the Intellectual Property. The
Company has the exclusive right to use all of the Intellectual Property and has
not granted any license or other rights to any other person in respect of the
Intellectual Property. Complete and correct copies of all agreements whereby any
rights in any of the Intellectual Property have been granted or licensed by the
Company to any other person have been provided to the Purchasers.
(iii) Other than the right of a non-assigning party to consent
to an assignment of an agreement as provided in such agreement, to the Company's
knowledge, there are no restrictions on the ability of the Company or any
successor to or assignee from the Company to use and exploit all rights in the
Intellectual Property. All statements contained in all applications for
registration of the Intellectual Property were true and correct as of the date
of such applications. Each of the trademarks and trade names in the Intellectual
Property is in use. None of the rights of the Company in the Intellectual
Property will be impaired or affected adversely in any material respect by the
transactions contemplated by this Agreement.
(iv) To the Company's knowledge, the conduct of the Business
and the use of the Intellectual Property does not infringe, and the Company has
not received any material notice, complaint, threat or claim alleging
infringement of, any patent, trademark, trade name, copyright, industrial
design, trade secret or other Intellectual Property or proprietary right of any
other person, and the conduct of the Business does not include any activity
which may constitute "passing-off."
(v) The Intellectual Property of the Company is, in the
opinion of management, sufficient for the Company to carry on its Business and
the Company does not require any additional Intellectual Property in order to
carry on such Business.
(vi) To the Company's knowledge no third party licensor is
subject to any order under the United States Bankruptcy Code.
(vii) Each current and, to the knowledge of the Company,
former employee of the Company has executed the Company's standard form of
Proprietary Information and Non-Disclosure Agreement.
(viii) The Company is not aware that any of its employees is
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with their duties to
the Company or that would conflict with the Company's business as proposed to be
conducted. Neither the execution nor delivery of this Agreement, nor the
carrying on of the Company's business by the employees of the Company, nor the
conduct of the Company's business as proposed, will, to the Company's knowledge,
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any contract, covenant or instrument under which
any employee is now obligated. The Company does not believe it is or will be
necessary to utilize any inventions, trade secrets or proprietary information of
any of its employees made prior to their employment by the Company, except for
inventions, trade secrets or proprietary information that have been assigned to
the Company.
3Z. Obligations of Management. Each officer of the Company other than the
Chairman of the Board is currently devoting one hundred percent (100%) of such
officer's business time to the conduct of the business of the Company. The
Company is not aware of any officer or key employee of the Company other than
the Chairman of the Board planning to work less than full time at the Company in
the future.
3AA. Registration Rights; Rights of First Refusal; Preemptive Rights. Except as
required pursuant to the Investors' Rights Agreement, the Company is presently
not under any obligation, and has not granted any rights, to register any of the
Company's presently outstanding securities or any of its securities that may
hereafter be issued. Except as set forth in the Prior Investors' Rights
Agreement, no other person has any right of first offer or preemptive right with
respect to issuances by the Company of its equity securities.
3AB. Offering Valid. Assuming the accuracy of the representations and warranties
of the Purchasers contained in part 4 hereof, the offer, sale and issuance of
the Shares will be exempt from the registration requirements of the Securities
Act of 1933, as amended (the "Securities Act"), and will have been registered or
qualified (or are exempt from registration and qualification) under the
registration, permit or qualification requirements of all applicable state
securities laws. Neither the Company nor any agent on its behalf has solicited
or will solicit any offers to sell, or has offered to sell, or will offer to
sell, all or any part of the Shares to any person or persons so as to bring the
sale of such Shares by the Company within the registration provisions of the
Securities Act.
3AC. Disclosure. The representations and warranties of the Company included in
this Agreement, the Disclosure Schedule and the Ancillary Agreements are true
and correct and do not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements contained in such
representations and warranties not misleading. The Company shall not be deemed
to have made to any Purchaser any representation or warranty other than as
expressly made by the Company in part 3 hereof. Without limiting the generality
of the foregoing, and notwithstanding any express representations and warranties
made by the Company in part 3 hereof, the Company makes no representation or
warranty to any Purchaser with respect to:
(i) any projections, estimates or budgets heretofore delivered
to or made available to a Purchaser of future revenues, expenses or expenditures
or future results of operations, provided such projections, estimates or budgets
were made in good faith by the Company and the Company has a reasonable basis
therefor; or
(ii) except as expressly covered by a representation and
warranty contained in part 3 hereof, any other information or documents
(financial or otherwise) made available to a Purchaser or its counsel,
accountants or advisers with respect to the Company.
3AD. Open Text Preemptive Rights. The Company has received notice dated July 6,
1998 from Open Text Corporation relating to the waiver of its preemptive rights
with respect to the Sale of Series C Preferred Stock contemplated hereby. Such
notice has been provided to counsel for Xxxx-Xxxxx Inc.
4. Representations and Warranties of the Purchasers. Each of the Purchasers
severally represents and warrants to the Company as of date hereof and as of the
date of the Closing, as follows:
4A. Investment. Such Purchaser is acquiring the Shares for its own account for
investment and not with a view to, or for sale in connection with, any
distribution thereof, nor with any present intention of distributing or selling
the same and, except as contemplated by this Agreement and the Exhibits hereto,
such Purchaser has no present or contemplated agreement, undertaking,
arrangement, obligation, indebtedness, or commitment providing for the
disposition thereof. Such Purchaser acknowledges the restrictions on transfer of
Shares of the Company set forth in part 8 of this Agreement.
4B. Authority. Such Purchaser has full power and authority to enter into and to
perform this Agreement in accordance with its terms. Any Purchaser which is a
corporation, limited liability company, partnership, trust or other entity
represents that it has not been organized, reorganized or recapitalized
specifically for the purpose of investing in the Company.
4C. Accredited Investor. Such Purchaser has substantial experience in evaluating
the merits and risks of its investment in the Company. Such Purchaser is an
"accredited investor" as such term is defined in Rule 501 promulgated under the
Securities Act.
4D. Access to Data. During the course of this transaction and prior to the
Closing, Purchasers have had the opportunity to ask questions of and receive
answers from the Company concerning this investment, and the opportunity to
obtain any information necessary to verify the financial data and business of
the Company.
4E. Brokerage. No broker, finder, agent or similar intermediary has acted on
behalf of such Purchaser in connection with the transactions contemplated by
this Agreement and there are no brokerage commissions, finder's fees or similar
compensation in connection therewith based on any arrangement or agreement made
by or on behalf of such Purchaser.
5. [Intentionally Omitted.]
6. [Intentionally Omitted.]
7. [Intentionally Omitted.]
8. Transfer of Shares.
8A. Restrictions. The restrictions on the sale or transfer of Shares set forth
in this part 8 shall cease to apply to such Shares (i) upon any sale of such
Shares pursuant to the Investors' Rights Agreement, Section 4(1) of the
Securities Act or Rule 144 under the Securities Act or (ii) at such time as such
Shares become eligible for sale under Rule 144(k) under the Securities Act.
8B. Requirements for Transfer.
(i) The Shares shall not be sold or transferred unless either
(a) such sale or transfer first shall have been registered under the Securities
Act, or (b) the Company first shall have been furnished with an opinion of legal
counsel, reasonably satisfactory to the Company, to the effect that such sale or
transfer is exempt from the registration requirements of the Securities Act.
(ii) Notwithstanding the foregoing, no registration or opinion
of counsel shall be required for (a) a transfer by a Purchaser which is a
partnership to a partner of such partnership, or to the estate of any such
partner, if the transferee agrees in writing to be subject to the terms of this
part 8 and the Shareholders Agreement to the same extent as if such partner were
an original Purchaser hereunder, or (b) a transfer made in accordance with Rule
144 under the Securities Act.
(iii) Legends. In addition to any other legends which may be
required by law or any Ancillary Agreement, each certificate representing Shares
shall bear legends substantially in the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL SUCH SHARES ARE REGISTERED UNDER SUCH ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY IS OBTAINED TO THE
EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED."
The foregoing legend shall be removed from the certificates representing any
Shares at the request of the holder thereof, at such time as they become
eligible for resale pursuant to Rule 144(k) under the Securities Act.
8C. Rule 144A Information. The Company shall, at all times during which it is
neither subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, nor exempt from reporting pursuant to Rule 12g3-2(b) under the
Exchange Act, upon the written request of any Purchaser, provide in writing to
such Purchaser and to any prospective transferee of any Shares of such Purchaser
the information concerning the Company described in Rule 144A(d)(4) under the
Securities Act ("Rule 144A Information"). Upon the written request of any
Purchaser, the Company shall cooperate with and assist such Purchaser or any
member of the National Association of Securities Dealers, Inc. PORTAL system in
applying to designate and thereafter maintain the eligibility of the Shares for
trading through PORTAL. The Company's obligations under this paragraph 8C shall
at all times be contingent upon receipt from the prospective transferee of
Shares of a written agreement to take all reasonable precautions to safeguard
the Rule 144A Information from disclosure to anyone other than persons who will
assist such transferee in evaluating the purchase of any Shares.
9. Certain Definitions.
"Affiliate" means with respect to any Person, a Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person, and, in the case of
an individual, includes any relative or spouse of such person, or any relative
of such spouse, who has the same home as such Person. The term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through the
ownership of voting securities, by contract or otherwise.
"Austin Ventures" means Austin Ventures IV-A, L.P., Austin Ventures
IV-B, L.P., and each of their respective Affiliates.
"Person" means an individual, a partnership, a corporation, 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.
"Subsidiary" means any corporation more than 50% of the outstanding
voting securities of which are owned by the Company or any Subsidiary, directly
or indirectly, or a partnership or limited liability company in which the
Company or any Subsidiary is a general partner or manager or holds interests
entitling it to receive more than 50% of the profits or losses of the
partnership or limited liability company.
"Prime New Ventures" means Prime Enterprises II, L.P., Enterprises &
Transcommunications, L.P., Prime VIII, L.P. and each of their respective
Affiliates.
10. Miscellaneous.
10A. Successors and Assigns. The rights and obligations of each Purchaser under
this Agreement may be assigned by such Purchaser to any Person to which Shares
are properly transferred by such Purchaser, and such transferee shall be deemed
a Purchaser for purposes of this Agreement, provided that the transferee
provides written notice of such assignment to the Company and otherwise complies
with all restrictions on transfers.
10B. Confidentiality. Each Purchaser agrees that it will keep confidential and
will not disclose or divulge any confidential, proprietary or secret information
which such Purchaser may obtain from the Company pursuant to financial
statements, reports and other materials submitted by the Company to such
Purchaser pursuant to this Agreement, the Ancillary Agreements or otherwise, or
pursuant to visitation or inspection rights granted under the Ancillary
Agreements, unless such information is known or until such information becomes
known, to the public; provided, however, that a Purchaser may disclose such
information (i) to its attorneys, accountants, consultants and other
professionals to the extent necessary to obtain their services in connection
with its investment in the Company, (ii) to any prospective purchaser of any
Shares from such Purchaser as long as such prospective purchaser agrees in
writing to be bound by the provisions of this paragraph 10B or (iii) to any
Affiliate of such Purchaser or to a partner or shareholder of such Purchaser.
10C. Survival of Representations and Warranties.
(i) Company. All representations and warranties of the Company
contained in this Agreement or contained in any Ancillary Agreement, certificate
or other document delivered or given pursuant to this Agreement shall survive
the Closing and, notwithstanding the Closing or any investigation made by or on
behalf of the Purchasers with respect thereto, shall continue in full force and
effect for the benefit of the Purchasers:
(a) for a period of 12 months from the date of the
Closing in respect of matters other than tax matters and other than matters
relating to title and due and proper issuance of the Shares and for fraud and
intentional misrepresentation;
(b) in respect of tax matters, unless resulting from any
misrepresentation made or fraud committed in filing a return or supplying
information for the purposes of any legislation imposing tax on the Company, for
the period commencing on the Closing date and ending on the date on which the
last applicable limitation period under any applicable income tax legislation
expires with respect to any taxation year which is relevant in determining any
liability under this Agreement with respect to tax matters; and
(c) there shall be no limit on the representations and
warranties relating to title and due and proper issuance of the Shares to the
Purchasers or relating to tax liabilities of the Company based on any
misrepresentation made or fraud committed in filing a return or supplying
information for purposes of any legislation imposing tax on the Company and any
claim in respect of the foregoing shall be made within such period and upon the
expiration of such period, the Company shall have no further liability to the
Purchasers hereunder with respect to any such representations or warranties.
(ii) Purchasers. The representations and warranties of the
Purchasers contained in this Agreement or in any Ancillary Agreement,
certificate or other document delivered or given pursuant to this Agreement
shall survive the Closing and, notwithstanding the Closing or any investigation
made by or on behalf of the Company, shall continue in full force and effect for
the benefit of the Company for a period of 12 months from the date of each the
Closing and any claim in respect thereof shall be made within such period and
upon the expiration of such period the Purchasers shall have no further
liability to the Company with respect to any such representations or warranties.
10D. Expenses.
(i) The Company agrees to pay and hold the Purchasers and
holders of the Shares harmless from liability for the payment of:
(a) the fees and expenses of Xxxxxx Godward LLP, special
counsel to the Xxxx-Xxxxx Inc., arising in connection with the negotiation and
execution of this Agreement, the Ancillary Agreements and the Restated Articles
and consummation of the transactions contemplated hereby, not to exceed in the
aggregate $30,000;
(b) the fees and expenses of Xxxxxx & Xxxx, L.L.P.,
special counsel to Austin Ventures, Prime New Ventures and Internet Capital
Group, LLC, not to exceed $10,000;
(c) the reasonable fees and expenses incurred with
respect to the interpretation of, or any amendments or waivers to this
Agreement, the Ancillary Agreements or the Restated Articles requested by the
Company (whether or not the same become effective);
(d) if a Purchaser or other holder of Shares desires to
sell or otherwise transfer any or all of the Shares held by it and counsel for
the Company declines to render a legal opinion to such Purchaser or holder,
without cost or expense to such Purchaser or holder, whether or not registration
under the Securities Act will be required for such sale or transfer, the
reasonable fees and expenses of counsel for such Purchaser or holder in
obtaining such an opinion;
(e) stamp and transfer taxes, excluding income taxes,
which may be payable with respect to the execution and delivery of this
Agreement or the issuance, delivery or acquisition of Shares or upon the
conversion of the Shares; and
(f) all costs of the Company's performance of and
compliance with this Agreement, the Ancillary Agreements and the Restated
Articles.
(ii) In any legal proceeding brought to enforce the provisions
of this Agreement, the Ancillary Agreements or the Restated Articles, a party
which substantially prevails in such proceeding shall be entitled to recover
reasonable attorneys fees and expenses from the party or parties which do not
substantially prevail.
10E. Notices. All notices, requests, consents, and other communications under
this Agreement shall be in writing and shall be delivered personally, by
facsimile transmission, by overnight delivery or other courier service, or by
first class certified or registered mail, return receipt requested, postage
prepaid:
(i) if to the Purchasers:
At the address set forth below such Purchasers' names on
Schedule I hereto.
with copies (which shall not constitute notice) to:
Xxxxxx Godward LLP
Five Palo Alto Square
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Attn: Xxxxxxx Xxxxxx, Esq.
Fax: (000) 000-0000
Xxxxxx & Xxxx, L.L.P.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxxxx Xxxx, Esq.
Fax: (000) 000-0000
(ii) if to the Company:
Deja News, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxx XX, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Mr. Xxx Xxxxxxx
Chief Executive Officer
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxx, Phleger & Xxxxxxxx LLP
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
Any party may, by not less than ten days notice given in accordance
with this Section to the other parties, designate another address or person for
receipt of notices hereunder. Notice given by personal delivery or courier
service shall be effective upon actual receipt. Notice given by telecopier shall
be confirmed by appropriate answer back and shall be effective upon actual
receipt if received during the recipient's normal business hours, or at the
beginning of the recipient's next business day after receipt if not received
during the recipient's normal business hours. Notice given by mail shall be
effective upon the earlier of actual receipt or 72 hours after having been
mailed.
10F. Entire Agreement. This Agreement, together with the Schedules hereto, the
Restated Articles and the Ancillary Agreements, embodies the entire agreement
and understanding among the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to such
subject matter.
10G. Amendments and Waivers. Except as otherwise expressly set forth in this
Agreement, any term of this Agreement may be amended and the observance of any
term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), with the written consent of
the Company and the holders of 75% of the Shares. Any amendment or waiver
effected in accordance with this paragraph 10G shall be binding upon each holder
of any Shares, each future holder of all such Shares and the Company. No waivers
of or exceptions to any term, condition or provision of this Agreement, in any
one or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such term, condition or provision.
10H. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of which together shall
be one and the same document.
10I. Headings. The headings of this Agreement are for convenience only and do
not constitute a part of this Agreement.
10J. Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
10K. Governing Law. The construction, validity and interpretation of this
Agreement will be governed by the internal laws of the State of Texas without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Texas or any other jurisdiction) that would cause the
application of the laws of ally jurisdiction other than the State of Texas.
10L. Further Assurances. Each party to this Agreement hereby covenants and
agrees, without the necessity of any further consideration, to execute and
deliver any and all such further documents and take any and all such other
actions as may be necessary and appropriate to carry out the intent and purposes
of this Agreement and to consummate the transactions contemplated hereby.
10M. Indemnification. The Company will indemnify each Purchaser and its agents
and representatives against, and hold each Purchaser and its agents and
representatives harmless from any and all, loss, claim, damage, action, suit,
proceeding, deficiency or expense, including any and all out-of-pocket costs,
including, without limitation, all reasonable legal and accounting fees relating
to, arising from or in connection with any misrepresentation or breach of a
warranty, agreement, covenant or obligation of the Company contained in this
Agreement, the Ancillary Agreements or the Restated Articles. The obligations of
the Company to indemnify the Purchasers set forth in this paragraph 10M shall
survive forever, subject only to the provisions of paragraph 10C.
10N. Understanding Among Purchasers. Each Purchaser acknowledges that it is not
relying upon any other Purchaser, or any officer, director, employee, agent,
partner or Affiliate of any such other Purchaser, in making its investment or
decision to invest in the Company or in monitoring such investment. Each
Purchaser agrees that no Purchaser nor any controlling person, officer,
director, shareholder, partner, agent or employee of any Purchaser shall be
liable for any action heretofore or hereafter taken or omitted to be taken by
any of them relating to or in connection with the Company or the Shares. Without
limiting the foregoing, no Purchaser (nor any of its Affiliates, officers,
directors, shareholders, partners, agents or employees) or other holder of any
Shares shall have any obligation, liability or responsibility whatsoever for the
accuracy, completeness or fairness of any or all information about the Company
or any Subsidiary or their respective properties, business or financial and
other affairs, acquired by such Purchaser or holder from the Company or any
Subsidiary or the respective officers, directors, employees, agents,
representatives, counsel or auditors of either, and in turn provided to another
Purchaser or holder, nor shall any such Purchaser (or such other Person) have
any obligation or responsibility whatsoever to provide any such information to
any other Purchaser (or such other Person) or holder or to continue to provide
any such information if any information is provided.
10O. Preemptive Rights. By its execution hereof, each of Austin Ventures, Prime
New Ventures and Internet Capital Group LLC hereby acknowledges and agrees that
the Shares being offered, or which may be purchased, pursuant to the provisions
of Section 1B above are in full and final satisfaction of any and all preemptive
rights, rights of first offer or other rights to acquire additional shares of
the capital stock of the Company in connection with the sale of Shares
hereunder. In particular and without limiting the generality of the foregoing,
by their execution hereof (i) Austin Ventures, Prime Enterprises II, L.P.,
Enterprises & Transcommunications, L.P. and Internet Capital Group LLC hereby
waive and forever discharge any rights to purchase any additional shares of
Series C Preferred Stock as a consequence of the failure of Open Text
Corporation to exercise its preemptive rights to purchase shares of Series
Preferred Stock at the Closing or in connection with the Subsequent Sale, if
any, and (ii) Austin Ventures and Internet Capital Group LLC hereby consent to
the assignment by Prime Enterprises II, L.P. of certain of their rights to
purchase shares of Series C Preferred Stock hereunder to Prime VIII, L.P. and
further waive any and all rights to acquire additional shares of Series C
Preferred Stock as a result of such assignment.
[Signature page follows.]
IN WITNESS WHEREOF, this Series C Convertible Non-Voting Preferred
Stock Purchase Agreement has been executed by the parties hereto as of the date
first written above.
COMPANY:
DEJA NEWS, INC.
By: /s/ Xxx Xxxxxxx
-----------------------------------------------
Xxx Xxxxxxx
President and Chief Executive Officer
PURCHASERS:
XXXX-XXXXX INC.
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
INTERNET CAPITAL GROUP, LLC
By: /s/ Xxxxxxx X. Xxx
-----------------------------------------------
Xxxxxxx X. Xxx
Managing Director
AUSTIN VENTURES IV-A, L.P.
By: AV Partners IV, L.P., Its General Partner
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------------
Xxxxxx X. Xxxxxxx
General Partner
AUSTIN VENTURES IV-B, L.P.
By: AV Partners IV, L.P., Its General Partner
By:
-----------------------------------------------
Xxxxxx X. Xxxxxxx
General Partner
ENTERPRISES & TRANSCOMMUNICATIONS, L.P.
By: Prime Enterprises, L.P.,
Its General Partner
By: Prime New Ventures Management, L.P.
Its General Partner
By: Prime II Management, L.P.,
Its General Partner
By: Prime II Management, Inc.
Its General Partner
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
PRIME ENTERPRISES II, L.P.
By: Prime New Ventures Management, L.P.,
Its General Partner
By: Prime II Management, L.P.,
Its General Partner
By: Prime II Management, Inc.
Its General Partner
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
PRIME VIII, L.P.
By: Prime SKA-I, LLC
Its General Partner
SCHEDULE I
SCHEDULE OF PURCHASERS
Purchaser Number of Shares Purchase Price
--------------------------------------------------------------------------------
Xxxx-Xxxxx Inc. 4,000,000 $ 5,000,000.00
Xxx Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attn: Xxxxx Xxxx
Senior Vice President
Internet Capital Group, LLC 2,775,879 $ 3,469,848.75
00 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxx
Managing Director
Austin Ventures IV-A, L.P. 557,417 $ 696,771.25
1300 Xxxxxxx Tower
000 X. Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx
General Partner
Austin Ventures IV-B, L.P. 1,169,456 $ 1,461,820.00
1300 Xxxxxxx Tower
000 X. Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx
General Partner
Enterprises & Trans- 123,520 $ 154,400.00
communications, L.P.
1700 One American Center
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxxxx
Prime Enterprises II, L.P. 36,480 $ 45,600.00
1700 One American Center
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxxxx
Prime VIII, L.P. 479,636 $ 599,545.00
-------------- --------------
1700 One American Center
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxxxx
TOTAL 9,142,388 $11,427,985.00
============== ==============
