STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is executed as of the
11th day of June, 1999, by and among Xxxxxxxxx.xxx, Inc., a Delaware corporation
("Webstakes," the "Company" or the "Seller"), and the parties listed on Exhibit
A (each, a "Purchaser" and collectively, the "Purchasers").
BACKGROUND:
WHEREAS, Webstakes has amended its Certificate of Incorporation pursuant
to the Certificate of Amendment attached hereto as Exhibit B (the "Certificate
of Amendment"), which amendment created a new series of preferred stock, Class B
Convertible Redeemable Preferred Stock (the "Class B Preferred Stock");
WHEREAS, the Purchasers desire to purchase from the Company 6,666,667
shares of Class B Preferred Stock with the rights, preferences and powers as set
forth in the Certificate of Amendment;
WHEREAS, the Purchasers and the Seller will enter into a registration
rights agreement (the "Registration Rights Agreement") and a shareholders'
agreement (the "Shareholders' Agreement") in connection with this transaction
(together with all other documents and instruments to be executed or delivered
in connection with this Agreement, including but not limited to the Exhibits
attached hereto and the transactions contemplated hereby and thereby, the
"Transaction Documents").
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, the parties agree as
follows:
AGREEMENTS:
1. Agreement to Sell and Buy.
1.1 Purchase and Sale of Shares. The Company agrees to sell to the
Purchasers and the Purchasers agree to buy from the Company the number of shares
of Class B Preferred Stock indicated opposite each Purchaser's name on Exhibit A
(collectively, the "Shares").
1.2 Purchase Price. The consideration to be paid for each of the Shares is
$6.00 per share or a total of $40,000,002 in immediately available funds at the
closing of the purchase and sale (the "Transaction"). Of this amount,
$24,000,000 shall be wired at the direction of, and on behalf of, the Company,
directly to the account of Stone Investments, Inc. ("Stone") to satisfy the
obligation of the Company to repurchase shares owned by Stone pursuant to the
Purchase Agreement attached hereto as Exhibit E.
2. The Closing. The completion of the purchase and sale (the "Closing") will be
held at 10:00 a.m. on June 11, 1999; provided, however, that if any of the
conditions specified in Sections 5 and 6 are not met by such date, the Closing
will be held at 10:00 a.m. on the second Business Day following satisfaction of
the last of such conditions to be met. The date on which the Closing is actually
held is called the "Closing Date". A "Business Day" is a day other than a
Saturday, Sunday, or other day on which national banks in the State of New York
are permitted to be closed.
3. Representations and Warranties
The Company hereby represents and warrants to the Purchasers as follows:
3.1 Organization, Standing and Qualification. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of its incorporation and has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as now
being conducted. The Company is duly qualified or licensed and in good standing
to do business in each jurisdiction in which its property is owned, leased or
operated or the nature of its business makes such qualification necessary. A
true and correct copy of the Certificate of Amendment is attached hereto as
Exhibit B, and a true and correct copy of the Company's bylaws (the "Bylaws") is
attached hereto as Exhibit C, which in each case shall be in full force and
effect as of the Closing Date. Such copies contain all amendments through the
Closing Date.
3.2 Authority. The Company has the capacity, authority and power to
execute, deliver and perform this Agreement and the Transaction Documents and to
consummate the transactions contemplated hereby and thereby. The Company and its
Board of Directors has duly authorized the execution, delivery and performance
of this Agreement, including, without limitation, the sale of the Shares in
accordance with the terms and conditions set forth herein. This Agreement has
been duly and validly executed and delivered by the Company and constitutes the
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with its terms.
3.3 Capitalization. All of the shares of capital stock of the Company are
owned of record and beneficially by the persons and in the amounts set forth on
Schedule 3.3 attached hereto, and to the best knowledge of the Company, are free
and clear of all mortgages, pledges, security interests, assignments, claims,
liens or other encumbrances (collectively, a "Lien" or the "Liens"). Immediately
prior to the Closing, the authorized and issued capital of the Company consisted
of 50,000,000 shares of common stock ("Common Stock") authorized, of which
5,714,184 shares are issued and outstanding and 661,735 shares are reserved for
issuance upon exercise of outstanding options and warrants; 50,000 shares of
Class A Convertible Redeemable Preferred Stock, par value $100 per share (the
"Class A Preferred Stock"), of which 50,000 shares were issued and outstanding
and all of which have been repurchased by the Company and cancelled simultaneous
with the sale of the Class B shares hereunder; 6,700,000 shares of Class B
Preferred Stock, of which no shares are issued and outstanding (other than as
offered to the Purchasers pursuant to this Agreement); and 1,000,000 shares of
Class C Preferred Stock, $.01 par value, of which no shares are issued and
outstanding. Except as set forth in the immediately preceding sentence and on
Schedule 3.3, the Company does not have any (i) issued or outstanding (A) shares
of capital stock or issued share capital of the Company, or (B) securities
convertible into or exchangeable or exercisable for, or any options, warrants,
calls, puts, subscriptions or other rights (preemptive or otherwise) to acquire,
directly or indirectly, any shares of capital stock of the Company, (ii)
agreements or contractual commitments, whether written or oral, relating to the
Company's capital stock or obligating the Company to issue, sell, repurchase,
redeem or otherwise acquire any shares of the Company's capital stock or any
such securities, options, warrants, calls, puts, subscriptions or other rights,
(iii) Liens relating to any of the Company's capital stock, (iv) rights or
contractual commitments (whether written or oral) that give any person or entity
other than the Company any right to reserve or exercise any benefits or rights
similar to any rights enjoyed
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by or accruing to the holder of shares of capital stock of the Company or (v)
rights or contractual commitments (whether written or oral) to provide funds to
or make any investment in any other person or entity. All of the issued and
outstanding shares of the Company's Common Stock and Class A Preferred Stock are
duly authorized, validly issued, fully paid and nonassessable.
3.4 Subsidiaries. Except as described on Schedule 3.4, the Company does
not presently own, have any investment or interest in, or control, directly or
indirectly, any subsidiaries, associations, or other business entities. The
Company is not a participant in any joint venture, partnership, limited
liability company or similar enterprise.
3.5 Validity of Class B Preferred Stock and Common Stock. The Class B
Preferred Stock when issued, sold and delivered in accordance with the terms and
for the consideration set forth in this Agreement, shall be duly and validly
issued (including, without limitation, compliance with applicable federal and
state securities laws), fully-paid and non-assessable, free and clear of all
Liens. The shares of Common Stock issuable upon conversion of the Class B
Preferred Stock (the "Conversion Shares") upon issuance in accordance with the
Certificate of Amendment shall be duly and validly issued (including, without
limitation, issued in compliance with all applicable federal and state
securities laws), fully paid and non-assessable, free and clear of all Liens.
3.6 Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement or the Transaction Documents, the consummation of the
transactions contemplated hereby or thereby nor compliance by the Company with
any of the provisions hereof or thereof will (i) conflict with or result in a
breach of the charter, bylaws or other constitutive documents of the Company,
(ii) conflict with or result (with or without notice or lapse of time or both)
in a default (or give rise to any right of reimbursement, termination,
cancellation, modification or acceleration) under any of the provisions of any
note, bond, lease, mortgage, indenture, license, franchise, permit, agreement or
other instrument or obligation to which the Company is a party, or by which the
Company or the properties or assets of the Company may be bound or affected,
except for such conflict, breach or default as to which requisite waivers or
consents are described in Schedule 3.6 and are required to be obtained prior to
Closing, (iii) violate any law, statute, rule or regulation or order, writ,
injunction, judgment or decree (each, an "order") applicable to the Company or
the properties or assets of the Company, (iv) result in the creation or
imposition of any Lien upon any property or assets used or held in connection
with the business of the Company or (v) result in a change of control,
assignment or similar event which would conflict with or result in termination,
acceleration of obligations, imposition of additional obligations or loss of
rights or the breach of the Company's charter, bylaws or other constitutive
documents, any contract, license, lease, note, bond, mortgage, indenture,
agreement, investment or arrangement of any kind. Except as set forth in
Schedule 3.6, no consent or approval by, or any notification of or filing with,
or other action of any person or entity (governmental or private) is required in
connection with the execution, delivery and performance by the Company of this
Agreement or any Transaction Document. There is no proceeding (as defined in
Section 3.16) pending or, to the knowledge of the Company, threatened against
the Company or any of its respective assets or properties that seeks to prevent
the consummation of the transactions contemplated herein or in any Transaction
Document.
3.7 Books and Records. The minute books and other similar records of the
Company made available to the Purchasers prior to the execution of this
Agreement contain a true, correct and complete record of all actions taken at
all meetings and by all written consents
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in lieu of meetings of the stockholders, the board of directors and committees
of the board of directors of the Company. The stock transfer ledger and other
similar records of the Company made available to the Purchasers prior to the
execution of this Agreement accurately reflect all record transfers prior to the
execution of this Agreement in the capital stock of the Company. "Books and
Records" means, collectively, all files, documents, instruments, papers, books
and records relating to the business or the condition of the Company, including
financial statements, tax returns and related work papers and letters from
accountants, budgets, pricing guidelines, ledgers, journals, deeds, title
policies, minute books, stock certificates and books, corporate seals, stock
transfer ledgers, contracts, licenses, customer lists, computer files and
programs, retrieval programs, operating data and plans and environmental studies
and plans.
3.8 Financial Statements; Certain Financial Information.
(a) The Company has previously delivered to the Purchasers true and
complete copies of the following financial statements: (i) the unaudited balance
sheet of the Company as of March 31, 1999 and the related statement of income of
the Company for the three-month period then ended (such balance sheet as of
March 31, 1999 is referred to herein as the "March 31, 1999 Balance Sheet") and
(ii) the audited balance sheets of the Company as of December 31, 1998 and the
related statements of income, stockholders' equity and cash flows of the Company
for the 12 months ended December 31, 1998, reviewed by PricewaterhouseCoopers
LLC (such financial statements described in clauses (i) and (ii) collectively,
the "Financial Statements"). Each balance sheet included in the Financial
Statements is true, complete and correct and presents fairly the financial
position of the Company as of the respective date of such balance sheets and
each of the statements of income, retained earnings, and cash flows included in
the Financial Statements is true, complete and correct and presents fairly the
results of operations and cash flows of the Company for the periods set forth
therein, in each case in accordance with generally accepted accounting
principles ("GAAP"), except as otherwise noted therein, and in each case were
compiled from the Books and Records regularly maintained by management and used
to prepare financial statements of the Company in accordance with the principles
stated therein. The Company has maintained the Books and Records in a manner
sufficient to permit the preparation of financial statements in accordance with
GAAP. The Books and Records fairly reflect the income, expenses, assets and
liabilities of the Company and provide a fair and accurate basis for the
preparation of the Financial Statements.
(b) There were no liabilities or obligations of any nature (whether
known or unknown, absolute, accrued, fixed, contingent, liquidated, unliquidated
or otherwise, and whether due or to become due) which were required to be, in
accordance with GAAP, and were not shown or provided for on the balance sheets
of the Company included in the Financial Statements to which such liabilities or
obligations related. All reserves established by the Company are reflected on
the March 31, 1999 Balance Sheet and are adequate and are stated in accordance
with GAAP. There are no loss contingencies that are required to be accrued by
Statement of Financial Accounting Standard No. 5 of the Financial Accounting
Standards Board which are not provided for on such balance sheets.
3.9 Absence of Undisclosed Liabilities. Except as disclosed on Schedule
3.9, the Company does not, and as a result of the transactions contemplated
herein will not, have any indebtedness, liabilities or obligations of any nature
(whether known or unknown, absolute, accrued, fixed, contingent liquidated,
unliquidated or otherwise, and whether due or to become due), except for the
indebtedness, liabilities and obligations (i) reflected on the March 31, 1999
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Balance Sheet (including the notes thereto); (ii) incurred in the ordinary
course of business consistent with past practice since the date of the March 31,
1999 Balance Sheet and which do not exceed, in the aggregate, $200,000; and
(iii) pursuant to any contract set forth in Schedule 3.9 and not required to be
set forth on the March 31, 1999 Balance Sheet (including the notes thereto) in
accordance with GAAP.
3.10 Changes. Except as set forth in the schedules corresponding to the
subparts of this Section 3.10 or the draft registration statement attached
hereto as Exhibit D (the "Registration Statement"), since the date of the
Financial Statements, the Company has not:
(a) made any material change in its business or operations or in the
manner of conducting its business;
(b) suffered any event, violation or other matter that would have a
material adverse effect on the business, condition, assets, liabilities,
operations, financial condition, properties or prospects of the Company (a
"Material Adverse Effect"), and no fact or condition exists or is contemplated
or threatened that to the knowledge of the Company, might reasonably be expected
to cause a Material Adverse Effect in the future;
(c) suffered any material casualty loss (whether or not insured) or
condemnation or other taking;
(d) entered into any employment or consulting contract or commitment
(whether oral or written) or compensation arrangement or employee benefit plan,
or changed or committed to change (including any change pursuant to any bonus,
pension, profit-sharing or other plan, commitment, policy or arrangement) the
compensation payable or to become payable to any of its officers, directors,
employees, agents or consultants, or made any pension, retirement,
profit-sharing, bonus or other employee welfare or benefit payment or
contribution with a total value with respect to any one employee in excess of
$100,000;
(e) declared, paid or made, or set aside for payment or making, any
dividend or other distribution in respect of its common stock or other capital
stock or securities, or directly or indirectly redeemed, purchased or otherwise
acquired any of its common stock or other capital stock or securities or
subdivided or in any way, or changed any of the terms or provisions of its
common stock or other capital stock or securities (other than as contemplated by
this Agreement);
(f) paid (except for business payables incurred and paid in the
ordinary course of business consistent with past practice), loaned or advanced
any amount to or in respect of, or sold, transferred or leased any property or
assets (real, personal or mixed, tangible or intangible) to, or entered into,
amended or waived any rights under any transactions, agreements or arrangements
with or for the benefit of, any shareholder or any of their respective
affiliates, associates or family members of any shareholder or any of the
Company's officers or directors or any affiliate or associate of its officers or
directors;
(g) made or proposed any change in any accounting or tax principles,
practices or methods, including its accounts payable or accounts receivable
practices and terms (including reserves), except for such changes which are both
required by GAAP or by law and set forth in Schedule 3.10;
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(h) incurred any liability (whether known or unknown, absolute,
accrued, fixed, contingent, liquidated, unliquidated or otherwise, and whether
due or to become due), except for current liabilities reflected on the March 31,
1999 Balance Sheet or incurred after the date of the March 31, 1999 Balance
Sheet in the ordinary course of business consistent with past practice and not
exceeding $100,000 in the aggregate;
(i) canceled or waived rights with respect to any debts or other
obligations owed to or claims held by the Company (including the settlement of
any claims or litigation or other proceeding);
(j) accelerated or delayed collection of notes or accounts
receivable generated by the business in advance of or beyond their regular due
dates or the dates when the same otherwise would have been collected ;
(k) terminated or amended or suffered the termination or amendment
of any contract pursuant to which the Company would receive from any Person or
pay to any Person more than $100,000 in any calendar year or disposed of or
permitted to lapse any item of Company Intellectual Property Rights (as
hereinafter defined);
(l) made any capital expenditures or commitments for additions to
property, plant or equipment constituting capital assets, except as reflected on
the March 31, 1999 Balance Sheet;
(m) incurred any indebtedness, other than in the ordinary course of
business consistent with the past practices; or
(n) agreed, whether in writing or otherwise, to take any action
described in this Section 3.10 or any action which, if taken after the date of
this Agreement, would constitute a breach under this Agreement.
3.11 Real Property. The Company has never owned, nor will own as of the
Closing Date, any real property or any option to acquire any real property.
3.12 Leases. All leases of real property as to which the Company is the
lessee or sublessee (the "Leased Real Property"), or personal property as to
which the Company is the lessee or sublessee, have been provided to the
Purchasers and all such leases are in full force and effect, are enforceable
against the Company and the other parties thereto and have not been modified or
amended. There exists no default by the Company under any of such leases or, to
the knowledge of the Company, by any other party thereto, nor any event which,
with the giving of notice or the passage of time or both, would constitute an
event of default by the Company or any other party thereunder.
3.13 Title to Assets. The Company has good, valid and marketable title to
all of the assets shown on the March 31, 1999 Balance Sheet or acquired since
the date of the March 31, 1999 Balance Sheet except for assets sold in the
ordinary course of business consistent with past practice since the date of the
March 31, 1999 Balance Sheet not exceeding in the aggregate $100,000. Except as
set forth in Schedule 3.13, such assets are free and clear of any Lien.
3.14 Intellectual Property Rights
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(a) To the knowledge of the Company after due inquiry: (i) the
Company owns or has sufficient legal rights to all patents, trademarks, service
marks, trade names, copyrights, trade secrets, information, proprietary rights
and processes necessary for its business as now conducted and as proposed to be
conducted ("Company Intellectual Property Rights"), and (ii) the operation of
its business does not, and would not, conflict with or constitute an
infringement of any intellectual property or proprietary rights of any third
party.
(b) There are no outstanding options, licenses or agreements of any
kind relating to the matters listed in subsection 3.14(a), nor is the Company
bound by or a party to any options, licenses or agreements of any kind with
respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, proprietary rights and processes of any
other person or entity.
(c) The Company has not received any notice or other communications
alleging and has no reason to believe that the Company has violated or infringed
upon or, by conducting its business as proposed, would violate or infringe upon
any of the patents, trademarks, service marks, trade names, copyrights or trade
secrets or any proprietary rights of any other person or entity.
(d) 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 the use of such employee's best
efforts to promote the interests of the Company or that would conflict with the
Company's business as proposed to be conducted.
(e) 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 such employee is now obligated.
(f) The Company does not believe it is or will be necessary to
utilize any inventions of any of its employees (or people it currently intends
to hire) made prior to their employment by the Company.
3.15 Contracts. The Company is not in default under any agreement (whether
written or oral) or instrument to which it is a party (a "Contract") and there
has been no event that with the giving of notice or the passage of time, or
both, would constitute such a default or, to the knowledge of the Company, any
default, or event that with the giving of notice, the passage of time or both,
would constitute such a default, by any other party thereto, existing with
respect to any such Contract except for such defaults which, in the aggregate,
would result in loss or liability to the Company of no more than $5,000, and the
Company has not received notice that any party to any such Contract intends to
terminate, amend, not renew or cancel any such Contract. Each of the Contracts
is in full force and effect and constitutes a legal, valid and binding
obligation of the Company and the other parties thereto, enforceable in
accordance with its terms. All material Contracts have been previously furnished
to the Purchasers and are adequately described in, and will be filed as exhibits
to, the Registration Statement.
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3.16 Litigation. There are no, nor have there been for the five years
prior to the date of this Agreement any, (i) investigations pending or, to the
knowledge of the Company, threatened, affecting or potentially affecting the
Company or the business of the Company, (ii) actions, causes of action, claims,
suits, proceedings, arbitrations, mediations or other alternative dispute
resolution procedures, orders, writs, injunctions or decrees (each, a
"proceeding") entered against, involving, pending or, to the knowledge of the
Company, threatened against the Company or any stockholder, in each case
affecting or potentially affecting the operations of the Company, the business,
assets, properties or prospects of the Company at law or in equity, or before or
by any governmental entity, and (iii) existing or prior facts, circumstances or
conditions that could form the basis for a proceeding against the Company or any
stockholder that would affect or potentially affect the operations of the
Company, or the business, assets, properties or prospects of the Company.
Neither the Company nor any stockholder of the Company is in default with
respect to any order of any governmental entity.
3.17 Insurance. All insurance policies are in full force and effect and no
notice of cancellation or termination has been received by the Company with
respect to any such policy. All such policies are sufficient for compliance with
all requirements of law and of all Contracts to which the Company is a party or
otherwise bound and are valid, outstanding, enforceable and, to the knowledge of
the Company, collectible policies. The Company believes that its insurance
coverage is adequate in relation to its current and anticipated business. The
Company is not aware of any pending or threatened claims against the Company for
personal injury, product liability or property damage.
3.18 Employee Benefit Plan. With respect to any employee benefit plan and
any collective bargaining agreement or any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, stock appreciation right, retirement, vacation,
severance, disability, death benefit hospitalization, medical, worker's
compensation, disability, supplementary unemployment benefits, or other plan,
arrangement or understanding (whether or not legally binding) or any employment
agreement providing compensation or benefits to any employee, of the Company or
any ERISA Affiliate who provides or provided services in respect of the business
of the Company or any beneficiary thereof and entered into, maintained or
contributed to, as the case may be, by the Company or any ERISA Affiliate (each,
a "Plan" or collectively, the "Plans"), there are no proceedings (other than
routine claims for benefits) pending, or, to the knowledge of the Company,
threatened, with respect to any Plan or the assets of any Plan, and the Company
does not have any knowledge of any facts which could give rise to any such
actions, claims, lawsuits or arbitrations (other than routine claims for
benefits). The Company has satisfied all funding, compliance and reporting
requirements for all Plans. With respect to each Plan, the Company has paid all
contributions (including employee salary reduction contributions) and all
insurance premiums that have become due and any such expense accrued but not yet
due has been properly reflected in the Financial Statements. Each Plan has been
operated in accordance with its terms and complies with all applicable laws.
"ERISA Affiliate" means (i) any corporation which at any time on or before the
date hereof is or was a member of the same controlled group of corporations
(within the meaning of section 414(b) of the Internal Revenue Code of 1986 as
amended (the "Code")) as the Company; (ii) any partnership, trade or business
(whether or not incorporated) which at any time on or before the date hereof is
or was under common control (within the meaning of section 414(c) of the Code
with the Company; and (iii) any entity which at any time on or before the date
hereof is or was a member of the same affiliated service group (within the
meaning of section 414(m) of the Code) as either the
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Company, any corporation described in clause (i) or any partnership, trade or
business described in clause (ii).
3.19 Tax Matters. (a) All Federal, state, local and foreign tax returns
and tax reports required to be filed on or prior to the date hereof by the
Company have been or will be filed or a valid request for extension has been or
will be filed with respect thereto, on a timely basis (including any extensions)
with the appropriate governmental agencies in all jurisdictions in which such
returns and reports are required to be filed. All such returns and reports are
and will be true, correct and complete in all material respects and disclose all
taxes required to be paid by the Company. All Federal, state, local and foreign
income, profits, franchise, sales, use, occupation, property, excise, employment
and other taxes (including interest, penalties and withholdings of tax) due from
and payable by the Company on or prior to the date hereof have been or will be
fully paid on a timely basis or have been adequately reserved for on the March
31, 1999 Balance Sheet. The Company is not currently the beneficiary of any
extension of time within which to file any tax return. There are no Liens for
taxes upon the assets of the Company except for statutory liens for current
taxes not yet due.
(b) No issues have been raised with the Company or, to the best of
the Company's knowledge, any stockholder by the IRS or any other taxing
authority in connection with any tax return or report filed by the Company or
any stockholder relating to the Company and there are no issues which, either
individually or in the aggregate, could result in any liability for tax
obligations of the Company or any stockholder relating to periods ending on or
before December 31, 1998 in excess of the accrued liability for taxes shown on
the March 31, 1999 Balance Sheet. No waivers of statutes of limitations have
been given or requested with respect to the Company. The Company has not
received notice that it may be subject to an audit by any Federal, State, local
or foreign tax authority.
3.20 Environmental Matters. (a) The operations of the Company comply with
all applicable federal, state, local, and foreign laws, codes, regulations,
requirements, directives, orders and common law, and all administrative or
judicial interpretations thereof that may be enforced by any governmental
entity, other Person or court, relating to pollution, the protection of human
health, the protection of the environment or the emission, discharge, disposal,
transportation, Release or threatened Release of materials in or into the
environment, including the Occupational Safety and Health Act ("Environmental
Laws"). "Release" means release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the
environment or into or out of any property, including the movement of
Contaminants through or in the air, soil, surface water, groundwater or Leased
Real Property or other property. "Contaminant" means any pollutant contaminant,
chemical or industrial, hazardous or toxic material or waste for which liability
or standards of conduct are imposed under Environmental Laws, and includes
asbestos or asbestos-containing materials, PCBs, and petroleum, oil or petroleum
or oil products or derivatives.
(b) The Company has obtained all environmental, health and safety
governmental permits necessary for the operation of the business of the Company,
and all such governmental permits are in full force and effect and will not be
revoked, suspended or otherwise adversely affected by the consummation of the
transactions contemplated hereby. The Company is in compliance with all terms
and conditions of such governmental permits.
3.21 Labor Relations; Employees. There is no labor strike, dispute,
slowdown, stoppage or lockout pending, affecting, or, to the knowledge of the
Company, threatened
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against the Company and during the last five years there has not been any such
action and there are no existing or prior facts, circumstances or conditions
that may lead to such an action. There are no union claims to represent the
employees of the Company nor have there been any such claims within the last
five years. There is no written or oral contract, commitment, agreement
understanding or other arrangement with any labor organization or multi-employer
or union benefit or pension fund, nor work rules or practices agreed to with any
labor organization or employee association, applicable to employees of the
Company, nor is the Company a party to or bound by any collective bargaining or
similar agreement. The Company has not engaged in any unfair labor practices as
defined in the National Labor Relations Act or other applicable law, ordinance
or regulation and the Company is, and has for the past three years been, in
compliance in all material respects with all applicable laws respecting
employment and employment practices, terms and conditions of employment, wages,
hours of work and occupational safety and health. There is no unfair labor
practice charge or complaint against the Company pending or, to the knowledge of
the Company, threatened before the National Labor Relations Board or any similar
state or foreign agency and there are no existing or prior facts, circumstances
or conditions that could reasonably be expected to form the basis therefor.
There is no grievance pending or, to the knowledge of the Company, threatened
against the Company arising out of any collective bargaining agreement or other
grievance procedure and there are no existing or prior facts, circumstances or
conditions that could reasonably be expected to form the basis therefor. There
are no charges with respect to or relating to the Company pending or, to the
knowledge of the Company, threatened before the Equal Employment Opportunity
Commission or any other governmental entity responsible for the prevention of
unlawful employment practices and there are no existing or prior facts,
circumstances or conditions that could reasonably be expected to form the basis
therefor. The Company has not received notice of the intent of any governmental
entity responsible for the enforcement of labor or employment laws to conduct an
investigation with respect to or relating to the Company and, to the knowledge
of the Company, no such investigation is in progress. No complaints, lawsuits or
other proceedings are pending or, to the knowledge of the Company, threatened in
any forum by or on behalf of any present or former employee of the Company, any
applicant for employment or class of the foregoing alleging breach of any
express or implied contract for employment, any law governing employment or the
termination thereof or other discriminatory, wrongful or tortious conduct in
connection with any employment relationship.
3.22 Compliance with Law. The Company has complied for the past five years
and is presently complying with all applicable laws (whether statutory or
otherwise), rules, regulations, orders, ordinances, judgments, decrees or other
pronouncements having the effect of any of the foregoing, of all governmental
entities having jurisdiction (collectively, "Laws"), including the Federal
Occupational Safety and Health Act and all laws relating to the safe conduct of
business and environmental protection and conservation, the Civil Rights Act of
1964 and any applicable health, sanitation, fire, safety, labor, zoning and
building laws. The Company has not received written notification of any asserted
present or past failure by the Company to so comply with the Laws and, to the
knowledge of the Company, there are no existing or prior facts, circumstances or
conditions that could form the basis for such notification or assertion. The
representations of this Section 3.22 are intended to be in addition to and not
as a qualification of any other Section in this Article III.
3.23 Government Permits. The Company owns, holds or possesses all
licenses, franchises, permits, privileges, immunities, approvals and other
authorizations from all governmental entities which are necessary to entitle it
to own or lease, operate and use its
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assets and to carry on and conduct the business of the Company substantially as
currently conducted (herein collectively called "governmental permits"). Such
governmental permits are in full force and effect, no violations are or have
been recorded in respect thereof, no proceeding is pending or, to the knowledge
of the Company, threatened, to revoke or limit any thereof or to affect the
rights of the Company under any thereof, the Company is not aware of any such
proceeding, and none of such governmental permits will be revoked, suspended or
otherwise adversely affected by the consummation of the transactions
contemplated hereby.
3.24 Brokers or Finders. The Company will not have any obligation to pay
any broker's, finder's, investment banker's, intermediary's, financial advisor's
or similar fees in connection with this Agreement or the transactions
contemplated herein.
3.25 Disclosure. The representations and warranties by the Company in this
Agreement and the Transaction Documents and the statements contained in any
other schedules, certificates, documents, exhibits and agreements referred to
herein or otherwise furnished or to be furnished by the Company to the
Purchasers pursuant to this Agreement and the transactions contemplated hereby,
including the Registration Statement, do not and will not contain any untrue
statement of a material fact and do not and will not omit to state any material
fact necessary to make the statements herein or therein, in light of the
circumstances under which such statements were made, not misleading.
3.26 Year 2000 Compliance. The computer systems of the Company (including
without limitation all software, hardware, workstations and related components,
automated devices, embedded chips and other date sensitive equipment) are Year
2000 Compliant or will be Year 2000 Compliant by June 30, 1999. The term "Year
2000 Compliant" (and derivative forms thereof) as used herein means that the
computer systems (1) are capable of recognizing, processing, managing,
representing, interpreting and manipulating correctly date related data for
dates earlier and later than January 1, 2000, including, but not limited to,
calculating, comparing, sorting, storing, tagging and sequencing, without
resulting in or causing logical or mathematical errors or inconsistencies in any
user-interface functionalities or otherwise, including data input and retrieval,
data storage, data fields, calculations, reports, processing, or any other input
or output, (2) have the ability to provide date recognition for any data element
without limitation (including, but not limited to, date-related data represented
without a century designation, date-related data whose year is represented by
only two digits and date fields assigned special values), (3) have the ability
to automatically function into and beyond the year 2000 without human
intervention and without any change in operations associated with the advent of
the year 2000, (4) have the ability to correctly interpret data, dates and time
into and beyond the year 2000, (5) have the ability not to produce noncompliance
in existing information, nor otherwise corrupt such data into and beyond the
year 2000, (6) have the ability to correctly process after January 1, 2000 data
containing dates before that date, and (7) have the ability to recognize all
"leap years," including February 29, 2000. The computer systems have the ability
to properly interface and will continue to properly interface with internal and
external applications and systems of third parties with whom the Company
exchanges data electronically (including without limitation, customers, clients,
suppliers, service providers, subcontractors, processors, converters, shippers,
warehousemen, outsourcers, data processors, regulatory agencies and banks)
whether or not they have achieved Year 2000 Compliance. The Company has inquired
of all such third parties whose lack of Year 2000 Compliance could reasonably
expect to have a material impact on the Company or its operations and all such
third parties have represented that they are Year 2000 Compliant or will be Year
2000 Compliant by June 30, 1999.
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3.27 Registration Statement. The Registration Statement and any
preliminary prospectus contained therein, at the time of filing thereof, will
conform in all material respects to the requirements of the Securities Act of
1933 (the "Securities Act") and the rules and regulations promulgated thereunder
(the "Rules and Regulations"). When the Registration Statement becomes effective
(the "Effective Date") and at all times subsequent thereto and when any
post-effective amendment to the Registration Statement becomes effective or any
amendment or supplement to the prospectus is filed with the Commission, (i) the
Registration Statement and prospectus, and any amendments or supplements
thereto, will contain all statements which are required to be stated therein by,
and will comply in all material respects with the requirements of, the
Securities Act and the Rules and Regulations and (ii) neither the Registration
Statement nor the prospectus, nor any amendment or supplement thereto, will
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading.
3.28 Foreign Corrupt Practices Act. The Company has not at any time during
the last five years (i) made any unlawful contribution to any candidate for
foreign office, or failed to disclose fully any contribution in violation of law
or (ii) made any payment to any foreign, United States or state governmental
officer or official, or other person charged with similar public or quasi-public
duties, other than payments required or permitted by the laws of the United
States.
3.29 No Failure to Fund. There have been no Failure to Fund or Events of
Default as such terms are defined in the January 20, 1999 Stock Purchase
Agreement between Webstakes and Stone.
3.30 Stone Agreements. Except as set forth in Schedule 3.30 and as
referenced in Sections 5(f), (h), (l) and (m), there are no contracts,
agreements, understandings or arrangements, whether written or oral, of any kind
or nature whatsoever, between the Company and Stone or any of Stone's
principals, officers, directors, stockholders, employees or affiliates. With
respect to those arrangements set forth on Schedule 3.30, such arrangements were
negotiated at arms-length, are at least as favorable to the Company as could be
obtained from unaffiliated parties and are terminable by the Company at will
without resulting in a breach, default or violation of such arrangements.
3.31 No Unpaid Dividends. With respect to the Class A Preferred Stock,
there are no dividends owed or accrued thereunder.
4. Representations of the Purchasers. Each Purchaser hereby represents and
warrants with respect to such Purchaser, the following:
(a) The Purchaser is an entity validly existing and in good standing
under the laws of its state of formation.
(b) This Agreement has been duly authorized, executed, and delivered
by the Purchaser and is a valid and binding obligation of the Purchaser,
enforceable in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally and by general equitable principles (regardless of
whether enforcement is sought in equity or at law), including, without
limitation, principles
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regarding good faith and fair dealing and rules of law governing the
availability of equitable remedies.
(c) The Purchaser is acquiring the Shares for its own account for
investment and not with a view to, or for resale in connection with, any
distribution thereof within the meaning of the Securities Act.
(d) The Purchaser understands that the Shares are "restricted" and
have not been registered under the Securities Act or any blue sky or other state
securities law or regulation (hereinafter collectively referred to as "blue sky
laws") in reliance, in part, upon the representations, warranties, and covenants
of the Purchaser contained herein. The Purchaser also understands that it cannot
offer for sale, sell or transfer the Shares unless such offer, sale, or transfer
of the Shares has been registered under the Securities Act and under any
applicable blue sky laws or unless an exemption from such registration is
available with respect to any such proposed offer, sale, or transfer. The
Purchaser further understands that Webstakes is not under any obligation to
register the Shares in the future (other than as provided in the Transaction
Documents). The Purchaser understands that a restrictive legend may be placed on
certificates representing any or all of the Shares and that transfer of any or
all of the Shares may be refused by Webstakes or its transfer agent, if any,
unless the Shares for which transfer is sought are registered under the
Securities Act and all other applicable federal securities or blue sky laws and
all rules and regulations under the Securities Act and such laws are satisfied
or unless the Purchaser provides information satisfactory to Webstakes that such
registration is not required.
(e) The Purchaser understands that a significant portion of the
proceeds received by the Company from the sale of the Shares hereunder will be
used to repurchase shares of Common Stock and shares of Class A Preferred Stock
from another shareholder and hereby consents to such use of proceeds.
(f) The Purchaser is an "accredited investor" as such term is
defined in Rule 501 promulgated under the Securities Act.
5. Purchasers' Conditions to Closing. The agreement of the Purchasers to proceed
with the Transaction and the Closing are conditioned on the following:
(a) Certificates representing the Shares are delivered to the
Purchasers, free and clear of all liens, claims, and encumbrances other than
those created by the Purchasers, imposed by applicable federal or state
securities laws, or arising under the Shareholders' Agreement.
(b) The representations and warranties of the Company made in this
Agreement and in the Transaction Documents are true and correct in all material
respects as of the Closing Date and the Company has performed all covenants and
agreements and satisfied all conditions to be performed or satisfied at or prior
to Closing.
(c) All necessary approvals of the Board of Directors and
stockholders of the Company and covenants and approvals of third parties have
been obtained.
(d) Xxxxxx Xxxxx, Xxx Xxxxxxx, Xxx Xxxxxxx and Xxxxx Xxxxx have
executed the Shareholders' Agreement.
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(e) The Purchasers shall have received the opinion, in form and
substance satisfactory to the Purchasers and counsel for the Purchasers, dated
as of the Closing Date, of Xxxx Xxxxx Xxxx & XxXxxx LLP, counsel to Webstakes.
(f) The Stock Purchase Agreement between the Company and Stone in
the form attached hereto as Exhibit E, shall have been executed and delivered by
both parties and the agreements referenced therein to be terminated have, in
fact, been terminated.
(g) The filing of the Certificate of Amendment, in the form attached
hereto as Exhibit B, in Delaware shall have occurred and proof of such filing
shall have been delivered to the Purchasers.
(h) The Release and Standstill Agreement, in the form attached
hereto as Exhibit F, shall have been executed by Stone and its principals and
affiliates thereof, and any Trust, including the trustees thereof, created to
vote, dispose of or act as custodian or fiduciary for any securities of the
Company beneficially owned by Stone and/or its principals and/or affiliates
thereof, and certified copies thereof shall have been delivered to the
Purchasers.
(i) The Sponsorship Agreement between Excite, Inc. and the Company
and the Services Agreement between MatchLogic, Inc. and the Company shall have
been executed by the respective parties thereto.
(j) The Registration Rights Agreement, in the form attached hereto
as Exhibit G, shall have been executed by the Company and shall have been
delivered to the Purchasers.
(k) On or before the Closing Date, the Purchasers and counsel to the
Purchasers, shall have received such further documents, certificates and
schedules or instruments relating to the business, corporate, legal and
financial affairs of Webstakes and any of its stockholders as they shall have
heretofore reasonably requested.
(l) Stone shall have consented to (i) the filing of the Certificate
of Amendment attached as Exhibit B; and (ii) the issuance of the Class B
Preferred Stock and the other transactions as contemplated by this Agreement and
the Transaction Documents.
(m) The resignation of Xxxxx Xxxxxxx from the Board of Directors
shall have been delivered.
6. Webstakes' Conditions to Closing. The agreement of Webstakes to proceed with
the Transaction and the Closing are conditioned on the following:
(a) The consideration specified in Section 1.2 has been (i) received
by Xxxx Xxxxx Xxxx & XxXxxx LLP, counsel to Webstakes, as escrow agent (the
"Escrow Agent") pursuant to that certain escrow agreement by and among
Webstakes, the Escrow Agent and the Purchasers named therein attached hereto as
Exhibit H; such consideration has been (ii) disbursed to Webstakes and the other
parties thereto in accordance with Section 2 of the Escrow Agreement; and (iii)
those Purchasers who are not parties to the Escrow Agreement have generated wire
transfers in the amount set forth opposite such Purchaser's name on Exhibit A
hereto, except that Primus Capital Fund IV Limited Partnership and Primus
Executive Fund Limited Partnership (together, "Primus") shall fund their
respective portions of the
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consideration set forth on Exhibit A within 10 days of the date hereof. The
obligation of Primus to fund hereunder shall be irrevocable upon the Closing.
(b) The representations and warranties of the Purchasers made in
this Agreement are true and correct in all material respects as of the Closing
Date.
7. Agreements to Cause Conditions to be Met. Each of the parties agrees to use
commercially reasonable best efforts to cause the conditions to the Closing to
be met.
8. Covenants of the Company
8.1 The proceeds from the issuance and sale of the Shares received by the
Company will be used by the Company for the purchase of all outstanding shares
of Common Stock and Class A Preferred Stock held by Stone with payment therefor
as directed by the Company pursuant to Section 1.2 of this Agreement, working
capital and other general corporate purposes, which may include, without
limitation, one or more of the following as determined by the Company in its
sole discretion: administration, marketing, obtaining capital and other
equipment, and sales in accordance with the budgets and/or projections
previously submitted to Purchasers.
8.2 For a period of one (1) year following the Closing, the Company will
not change the nature of its business activity if such change would render the
Company "ineligible" as provided in Section 107.720 of Title 13 of the Federal
Regulations.
8.3 So long as Prospect Street Ventures, Inc. or any of its affiliates
("PSV") holds any Shares, the Company will at all times comply with the
non-discrimination requirements of Sections 112, 113 and 117 of Title 13 of the
Federal Regulations.
8.4 So long as PSV holds any Shares, within sixty (60) days after the end
of each fiscal year of the Company, and at such other times as PSV may
reasonably request in writing to the Company, the Company will deliver to PSV
such economic impact information as needed by PSV, in PSV's good faith judgment
and as is consistent with the customary nature of similar reports required by
law to be filed by PSV regarding the economic impact of PSV's financing of the
Company in order to comply with Section 107.630(e) of Title 13 of the Federal
Regulations, specifying the full-time equivalent jobs created or retained in
connection with such investment, and the impact of such financing on the
Company's business in terms of profits and with respect to taxes paid by the
Company and its employees. The Company will promptly provide PSV upon a request
in writing to the Company, specifying in such written request the nature of such
required information in reasonable detail, such information as PSV reasonably
requests, in order to permit PSV to comply with PSV's obligations under the
Small Business Act and the regulations promulgated thereunder and related
thereto. Any submission of financial information pursuant to this Section 8.4
shall be under cover of a certificate executed by the Company's President, Chief
Executive Officer, Chief Financial Officer or Treasurer, certifying that such
information (i) relates to the Company and (ii) to the Company's knowledge is
accurate.
8.5 The Company shall file the Registration Statement with the Securities
and Exchange Commission, no later than 5:00 p.m. (EST) on the Closing Date and
shall make application to the National Association of Securities Dealers, Inc.
and any stock exchanges
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upon which the Company's securities will be listed or quoted promptly
thereafter. The Company covenants and agrees that it will use its best efforts
to cause the Registration Statement and any amendment thereof to become
effective as promptly as possible. The Company will promptly prepare and file
with the Commission any amendments or supplements to the Registration Statement
or prospectus which may be necessary to correct any statements or omissions, if,
at any time when a prospectus is required to be delivered under the Securities
Act, any event shall have occurred as a result of which the prospectus or any
other prospectus relating to any securities of the Company as then in effect
would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
8.6 Director Designees; Observers. (a) The Company will, at the request of
Purchasers holding a majority in interest of either the Class B Preferred Stock
or the Common Stock into which it is converted, during the shorter of (i) the
period that is five years from the date hereof or (ii) the period that is three
years from the date of the consummation of an initial public offering of any
securities of the Company (an "IPO"), appoint two designees of such Purchasers
to the Board of Directors of the Company, and use its best efforts to nominate
and cause to be elected and reelected to the Board of Directors of the Company
such designees or any other designees of the Purchasers as they may direct from
time to time during such three or five year period, as the case may be,
including upon the existence of any vacancy created with respect to any such
Purchaser designees or, at the request of Purchasers holding a majority in
interest of either the Series A Preferred Stock or the Common Stock into which
it is converted, to withdraw and substitute any Purchaser designee. The Company
will give such designees notice of all meetings of the Board of Directors of the
Company at the same time and in the same manner that directors are notified and
will provide compensation to such designees as set forth for members of the
Board of Directors of the Company generally or, if applicable, as set forth for
independent members of the Board of Directors of the Company, and will reimburse
such designee for all expenses incurred in attending such meetings, including,
but not limited to, food, transportation and lodging.
(b) The Company will, at the request of any Purchaser that has
purchased $5 million or more of the Class B Preferred Stock hereunder, whether
or not converted, for the shorter of (i) the period that is five years from the
date hereof or (ii) the period that is three years from the date of the
consummation of an IPO, permit an agent of any such Purchaser to attend all
meetings of the Board of Directors of the Company as a non-voting observer
(unless an employee of such Purchaser or such Purchasers' affiliate has been
designated to the Board of Directors of the Company pursuant to Section 8.6
hereof). The Company will give such agent notice of all meetings of the Board of
Directors of the Company at the same time and in the same manner that directors
are notified and will reimburse such agent for all expenses incurred in
attending such meetings, including, but not limited to, food, transportation and
lodging.
8.7 Election of Directors. The Company shall cause the election of
Xxxxxxxxxx Xxxx and Xxxx Xxxxxx as members of the board of directors of the
Company with terms ending in 2002 (each a "Class III Director") immediately upon
consummation of an IPO or as a otherwise directed by XL Ventures, LLC and The
Travelers Insurance Company, respectively.
8.8 Amendment to Certificate of Incorporation. As soon as practicable
following the Closing, the Company will cause to be filed an amendment to its
Certificate of Incorporation which eliminates the Class A Preferred Stock.
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8.9 Payments to Excite, Inc. and MatchLogic, Inc. Simultaneously with the
Closing, the Company shall pay Excite, Inc. and MatchLogic, Inc., the aggregate
sum of $3,185,129.48 pursuant to the terms of two agreements entered into by the
Company with each of Excite, Inc. and MatchLogic, Inc.
9. No Public Announcement; Confidentiality. The parties agree to use reasonable
efforts to circulate drafts of proposed press releases or other announcements
regarding this Agreement or the Transaction in advance of publication and to
provide all parties the opportunity to comment on such proposed announcements or
releases. No party shall use the name of any other party in any announcement
without the prior written consent of such party unless, in the opinion of such
party's counsel, it is required to do so to comply with applicable laws or
regulations. The Purchasers understand that the materials furnished to the
Purchasers in connection with the negotiation of the Transaction contain
confidential and proprietary information concerning Webstakes. The Purchasers
agree to maintain the confidential nature of all such information (except as
required by law or governmental regulation or in connection with enforcement of
purchasers rights or claims under this Agreement or the Transaction Documents),
agree not to use any such confidential information for any reason other than in
connection with the Transaction, and agree to return all copies of the
disclosure materials and any other materials that contain confidential
information of the Company that was obtained in connection with the negotiation
of the Transaction if this Agreement is terminated for any reason, unless, in
the opinion of counsel for the Purchasers, retention of such confidential
information is required by law or necessary in connection with any claim or
proceeding, including any proceeding against the Company. The obligations with
respect to confidentiality shall cease with respect to any information that
ceases to be confidential other than as a result of a breach of the Purchasers'
obligations hereunder. The obligations with respect to confidentiality shall
survive the termination of this Agreement.
10. Binding Obligation. The parties agree that this Agreement is a binding
agreement that shall govern the Transaction.
11. Indemnification.
11.1 Indemnification by the Company. From and after the Closing, the
Company shall indemnify and hold harmless each Purchaser, its affiliates, and
their respective directors, officers, employees, shareholders, partners, agents,
successors and assigns (collectively, "Purchaser Claimants" and individually, a
"Purchaser Claimant") from and defend each of them from and against any and all
demands, claims, actions, liabilities, losses, costs, damages or expenses
whatsoever (including without limitation reasonable attorneys' fees and
expenses) (collectively, "Claims") asserted against, imposed upon or incurred by
any of the Purchaser Claimants resulting from or arising out of (i) any
inaccuracy or breach of any representation or warranty of the Company contained
herein or in the Transaction Documents and/or (ii) any breach of any covenant or
obligation of the Company contained herein or in the Transaction Documents. A
Purchaser Claimant's right to indemnification shall not be limited or affected
in anyway by any pre-Closing investigation by the Purchasers or their
representatives.
11.2 Indemnification by the Purchaser. From and after the Closing, each
Purchaser shall, severally and not jointly, indemnify and hold the Company and
its affiliates, directors, officers, employees, shareholders, partners, agents,
successors and assigns (collectively, the "Issuer Claimants" and individually,
an "Issuer Claimant") harmless from and defend each of them from
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and against any and all claims asserted against, imposed upon or incurred by any
of the Issuer Claimants resulting from or arising out of any inaccuracy or
breach of any representation or warranty of such Purchaser in Section 4 hereof.
11.3 Terms and Conditions of Indemnification.
The respective obligations and liabilities of the Company and the
Purchasers (each, an "Indemnifying Party") to indemnify pursuant to this Section
11 shall be subject to the following terms and conditions:
(a) The party seeking to be indemnified (the "Indemnified Party")
shall give the Indemnifying Party prompt written notice of any such claim. The
Indemnified Party's failure to give prompt notice, however, shall not serve to
eliminate or limit the Indemnified Party's right to indemnification hereunder
except to the extent such failure materially prejudices the rights of the
Indemnifying Party.
(b) Promptly after receipt by an Indemnified Party of notice of the
commencement of such action, suit or proceeding for which such Indemnified Party
is entitled to indemnification under this Section 11, such Indemnified Party
will notify the Indemnifying Party of the commencement thereof in writing; but
the failure so to notify the Indemnifying Party (i) will not relieve it from any
liability under Sections 11.1 and 11.2 above except to the extent such
Indemnifying Party has been materially prejudiced by such failure (including,
without limitation, that such failure results in the forfeiture by the
Indemnifying Party of substantial rights and defenses) and (ii) will not, in any
event, relieve the Indemnifying Party from any obligations to any Indemnified
Party other than the indemnification obligation provided in Sections 11.1 and
11.2 above. In case any such action is brought against any Indemnified Party,
and it notifies the Indemnifying Party of the commencement thereof, the
Indemnifying Party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other Indemnifying Party similarly notified,
to assume the defense thereof, with counsel reasonably satisfactory to such
Indemnified Party; provided, however, that if (i) the Indemnifying Party has
failed to assume the defense thereof and employ such counsel or (ii) the named
parties to any such action (including any impleaded parties) include both the
Indemnifying Party and the Indemnified Party and the Indemnifying Party and the
Indemnified Party shall have been advised by counsel that representation of such
Indemnifying Party and such Indemnified Party by the same counsel would be
inappropriate under applicable standards of professional conduct due to
differing interests between them, then, in each such case, the Indemnifying
Party shall not have the right to direct the defense of such action on behalf of
such Indemnified Party or parties and such Indemnified Party or parties shall
have the right to select separate counsel to defend such action on behalf of
such Indemnified Party of its election so to assume the defense thereof and the
reasonable approval by such Indemnified party of counsel appointed to defend
such action, the Indemnifying Party will not be liable to such Indemnified Party
under this Section 11 for any legal or other expenses, other than reasonable
costs of investigation, subsequently incurred by such Indemnified Party in
connection with the defense thereof, unless (i) the Indemnified Party shall have
employed separate counsel in accordance with the proviso to the immediately
preceding sentence (it being understood, however, that in connection with such
action the Indemnifying Party shall not be liable for the expenses of more than
one separate counsel (in addition to local counsel) in any one action or
separate but substantially similar actions in the same jurisdiction arising out
of the same general allegations or circumstances, designated by the Indemnified
Parties, (ii) the Indemnifying Party has authorized in writing the employment of
counsel for the Indemnified Party at the expense of the Indemnifying Party or
(iii) the
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Indemnifying Party shall have failed to assume promptly after notice of the
institution of such action the defense of such action or retain counsel
reasonably satisfactory to the Indemnified Party. After such notice from the
Indemnifying Party to such Indemnified Party, the Indemnifying Party will not be
liable for the costs and expenses of any settlement of such action effected by
such Indemnified Party without the consent of the Indemnifying Party, which
consent shall not be unreasonably withheld or delayed.
(c) The Indemnified Party shall be kept fully informed by the
Indemnifying Party of such action, suit or proceeding at all stages thereof,
whether or not it is represented by counsel. The Indemnifying Party shall, at
the Indemnifying Party's expense, make available to the Indemnified Party and
its attorneys and accountants all books and records of the Indemnifying Party
relating to such proceedings or litigation, and the parties hereto agree to
render to each other such assistance as they may reasonably require of each
other in order to ensure the proper and adequate defense of any such action,
suit or proceeding.
(d) The Indemnifying Party shall make no settlement of any claims
which such Indemnifying Party has undertaken to defend, without the Indemnified
Party's consent unless the Indemnifying Party fully indemnifies the Indemnified
Party for all losses, there is no finding or admission of violation of law by,
or effect on any other claims that may be made against the Indemnified Party and
the relief granted in connection therewith requires no action on the part of and
has no effect on the Indemnified Party. However, in the event the Indemnifying
party shall not offer reasonable assurances as to its financial capacity to
satisfy any final judgment or settlement, the Indemnified Party may assume the
defense and dispose of the claim, after 30 days prior written notice to the
Indemnifying party.
11.4 Survival. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company or its officers and
of the Purchasers set forth in this Agreement or the Transaction Documents, or
made by or on behalf of them, respectively, pursuant to this Agreement or the
Transaction Documents shall remain in full force and effect, regardless of any
investigation made by or on behalf of the Company, any of its officers or
directors or any of its affiliates, the Purchasers or any of their respective
affiliates and shall survive the closing hereof or thereof.
12. Notices. All notices, requests, demands, and other communications hereunder
will be in writing and will be personally delivered, delivered by facsimile or
courier service, or mailed, certified with first class postage prepaid, to the
address set forth below the signature of the party to this Agreement. Each such
notice, request, demand, or other communication will be deemed to have been
given (whether actually received or not) on the date of actual delivery thereof,
if personally delivered or delivered by facsimile transmission (if receipt is
confirmed at the time of such transmission by telephone or
facsimile-machine-generated confirmation), or on the third Business Day
following the date of mailing, if mailed in accordance with this Section 12, or
on the day specified for delivery to the courier service (if such day is one on
which the courier service will give normal assurances that such specified
delivery will be made). Any notice, request, demand, or other communication
given otherwise than in accordance with this Section 12 will be deemed to have
been given on the date actually received. Any party may change its address for
purposes of this Section 12 by giving written notice of such change to all other
parties in the manner hereinabove provided. Whenever any notice is required to
be given by law or by this Agreement, a written waiver thereof, signed by the
Person entitled to notice, whether before or after the time stated therein, will
be deemed equivalent to the giving of that notice.
-19-
13. Severability. If any provision of this Agreement is held to be illegal,
invalid or unenforceable under present or future laws effective during the term
hereof, such provision will be fully severable and this Agreement will be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part of this Agreement; the remaining provisions of this
Agreement will remain in full force and effect and will not be affected by the
illegal, invalid or unenforceable provision or by its severance from this
Agreement. Furthermore, in lieu of each such illegal, invalid, or unenforceable
provision, there will be added automatically as a part of this Agreement a
provision as similar in terms to such illegal, invalid, or unenforceable
provision as may be possible and be legal, valid, and enforceable.
14. Entirety; Amendments and Waivers. This Agreement (including any Exhibits and
Schedules hereto and the documents delivered pursuant hereto, including any
ancillary agreements) constitutes the entire understanding between the parties
with respect to the subject matter hereof and supersedes all prior agreements or
understandings relating to the subject matter hereof (but excluding any
confidentiality agreement executed in connection with the transaction) and may
be modified or amended only by an instrument in writing executed by each of the
parties hereto sought to be bound by such modification or amendment. Any party
may waive any of the conditions contained herein or any of the obligations of
any other party hereunder, but any such waiver will be effective only if in
writing and signed by the party waiving such conditions or obligations.
15. Section Headings. The Section headings contained in this Agreement are for
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
16. Governing Law and Venue. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY
CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR
ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF DELAWARE. EACH PARTY HEREBY IRREVOCABLY
SUBMITS TO THE PERSONAL JURISDICTION OF THE STATE COURTS LOCATED IN DELAWARE AND
AGREES THAT ANY LITIGATION BETWEEN THE PARTIES WILL BE FILED IN STATE COURTS
LOCATED IN DELAWARE.
17. Expenses. Each party hereto will bear its own legal and other expenses
incurred in connection with the preparation, execution and performance of this
Agreement.
18. Attorney's Fees. If any action is brought to enforce or interpret the terms
of this Agreement (including through arbitration), the prevailing party will be
entitled to reasonable legal fees, costs, and necessary disbursements in
addition to any other relief to which such party may be entitled.
-20-
19. Counterparts. This Agreement may be executed in any number of counterparts
and will be effective when each party hereto has executed at least one
counterpart, with the same effect as if all signing parties had signed the same
document. All counterparts will be construed together and evidence only one
agreement, which, notwithstanding the actual date of execution of any
counterpart, will be deemed to be dated the day and year first written above. In
making proof of this Agreement, it will not be necessary to account for a
counterpart executed by any party other than the party against whom enforcement
is sought or to account for more than one counterpart executed by the party
against whom enforcement is sought.
20. Execution by Facsimile. The manual signature of any party hereto that is
transmitted to any other party by facsimile will be deemed for all purposes to
be an original signature.
21. Non-Waiver; Rights are Cumulative. Neither a failure of a party to this
Agreement to exercise any power reserved to it in this Agreement or to insist
upon compliance by any other party hereto with any obligation or condition in
this Agreement nor any custom or practice of the parties at variance with the
terms hereof will constitute a waiver of such first party's rights to demand
exact compliance with the terms of this Agreement. Waiver by a party to this
Agreement of any particular default will not affect or impair such party's right
with respect to any subsequent default of the same or of a different nature; nor
will any delay, forbearance, or omission of such party to exercise any power or
right arising out of any breach or default by any other party hereto of any of
the terms, provisions, or covenants of this Agreement affect or impair such
first party's rights; nor will such constitute a waiver by such first party of
any rights hereunder or rights to declare any subsequent breach or default.
Subsequent acceptance by a party to this Agreement of any performance or
payments due to it hereunder will not be deemed to be a waiver by such first
party of any preceding breach by any other party of any terms, provisions,
covenants, or conditions of this Agreement. Except as otherwise expressly set
forth in this Agreement, each party's rights under this Agreement are cumulative
and neither the existence of, nor the exercise or enforcement by a party of, any
right or remedy under this Agreement will preclude the exercise or enforcement
by such party of any other right or remedy under this Agreement or law.
22. No Strict Construction. This Agreement is the result of substantial
negotiations among the parties and their counsel and has been prepared by their
joint efforts. Accordingly, the fact that counsel to one party or another may
have drafted this Agreement or any portion hereof is immaterial and this
Agreement will not be strictly construed against any party.
23. Construction. Whenever the context requires, the gender of all words used in
this Agreement includes the masculine, feminine and neuter.
[THIS SPACE LEFT BLANK INTENTIONALLY.]
-21-
Executed on the date or dates indicated below, to be effective as of the
date first written above.
XXXXXXXXX.XXX, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
Date:_____________________________, 1999
XL VENTURES, LLC
By: XL Ventures (Delaware), Inc.
Its Managing Member
________________________________________
By: Xxxx X. Xxxxxxxx
Deputy Chairman
Date:_____________________________, 1999
AT HOME CORPORATION, a Delaware
corporation
By:_____________________________________
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President,
Business Affairs
Date: June , 0000
XXXXXXXX XXXXXX NYC DISCOVERY FUND,
L.P.
By: PROSPECT STREET DISCOVERY
FUND, INC., its general partner
By:_____________________________________
Name:___________________________________
Title:__________________________________
Date:_____________________________, 1999
CHANCELLOR PRIVATE CAPITAL
PARTNERS III, L.P.
BY: CPCP Associates, L.P., its General
Partner
BY: INVESCO Private Capital, Inc., its
General Partner
By:_____________________________________
Name:___________________________________
Title:__________________________________
Date:_____________________________, 1999
CHANCELLOR PRIVATE CAPITAL OFFSHORE
PARTNERS II, L.P.
By: CPCO Associates, L.P., its
Investment General Partner
By: INVESCO Private Capital, Inc., its
General Partner
By:_____________________________________
Name:___________________________________
Title:__________________________________
CHANCELLOR PRIVATE CAPITAL OFFSHORE
PARTNERS I, C.V.
By: Chancellor KME IV Partner, L.P., its
Investment General Partner
By: INVESCO Private Capital, Inc., its
General Partner
By:_____________________________________
Name:___________________________________
Title:__________________________________
CITIVENTURE 96 PARTNERSHIP, L..P.
By: INVESCO Private Capital, Inc., its
Investment Advisor
By:_____________________________________
Name:___________________________________
Title:__________________________________
XXXXXXXXX FAMILY FUND, LLC
________________________________________
Name: Xxxxxx Xxxxxxxxx, Manager
Date: June , 1999
XXXXX CAPITAL ARCHON PARTNERS L.P.
By: Xxxxx Capital Inc.
By:_____________________________________
Xxxx Xxxxxxx, President
ALPINE SPECTRUM INVESTORS, LLC
By:_____________________________________
By:_____________________________________
PRIMUS CAPITAL FUND IV LIMITED
PARTNERSHIP
By: Primus Venture Partners IV Limited
Partnership, its General Partner
By: Primus Venture Partners IV, Inc.,
its General Partner
By:_____________________________________
Name:___________________________________
Title:__________________________________
PRIMUS EXECUTIVE FUND LIMITED
PARTNERSHIP
By: Primus Venture Partners IV Limited
Partnership, its General Partner
By: Primus Venture Partners IV, Inc.,
its General Partner
By:_____________________________________
Name:___________________________________
Title:__________________________________
THE TRAVELERS INSURANCE COMPANY
By:_____________________________________
Name:___________________________________
Title:__________________________________
Date:_____________________________, 1999
NATIONAL BROADCASTING COMPANY, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
Date:_____________________________, 1999
MS CUBED, LLC
By:_____________________________________
Name:___________________________________
Title:__________________________________
Date:_____________________________, 1999
DRAKE & CO. FOR THE ACCOUNT OF
CITIVENTURE III
By:_____________________________________
Name:___________________________________
Title:__________________________________
Date:___________________________________
MAMARONECK CAPITAL LLC
By:_____________________________________
Name:___________________________________
Title:__________________________________
Date:___________________________________
WINSTON PARTNERS, L.P. XXX XXXXXX
By: Chatterjee Fund Management, L.P., ________________________________________
its general partner
Date:___________________________________
Address for notices:
By:______________________________
000 X. 00xx Xxxxxx Xxx. #00X
Date:____________________________ Xxx Xxxx, XX 00000
Address for notices:
XXXXX XXXXXXX
c/o The Chatterjee Group
000 Xxxxxxx Xxxxxx Xxxxx 0000 ________________________________________
Xxx Xxxx, XX 00000
Date:___________________________________
Address for notices:
00 Xxxx Xxxx Xxxx
XXXXXXX PARTNERS II LLC Xxxxxxxxx, XX 00000
By: Chatterjee Advisors LLC, its
Manager
XXXX XXXXX
By:______________________________ ________________________________________
Date:____________________________ Date:___________________________________
Address for notices:
Address for notices:
000 Xxxx 00xx Xxxxxx Xxx. #0X
c/o The Chatterjee Group Xxx Xxxx, XX 00000
000 Xxxxxxx Xxxxxx Xxxxx 0000
Xxx Xxxx, XX 00000
XXXXX XXXXXX
XXXXXXX PARTNERS II LDC
________________________________________
By:______________________________
Date:___________________________________
Date:____________________________
Address for notices:
Address for notices:
000 Xxxx 00xx Xxxxxx
x/x Xxxxx Xxx. 00X
Kaya Flamboyan 9 Xxx Xxxx, XX 00000
Willemstad, Curacao
Netherlands Antilles
XXXXXXXXX-XXXXX PARTNERS III, L.P.
By: Xxxxxxxxx-Xxxxx Managing
Partner III, L.L.C., Its general
partner
By:_____________________________________
Name: Xxxxx X. Xxxxx
Title: Authorized Person
Date:___________________________________
CHANNEL-WEBSTAKES, LLC
By: Xxxxxxxxx Partners Management
Company LLC, Its Managing Member
By:_____________________________________
Name: Xxxxx X. Xxxxx
Title: Authorized Person
Date:___________________________________
I WIN INVESTORS, LLC
By:_____________________________________
Name: Xxxxxx Xxxxxxx
Title:
WPG SOFTWARE FUND, L.P.
By: Xxxxx Xxxx & Xxxxx, LLC, Its
General Partner
By:_____________________________________
Name:
Title
WPG INSTITUTIONAL SOFTWARE FUND, L.P.
By: Xxxxx Xxxx & Xxxxx, LLC, Its
General Partner
By:_____________________________________
Name:
Title
WPG NETWORKING FUND, L.P.
By: Xxxxx Xxxx & Xxxxx, LLC, Its
General Partner
By:_____________________________________
Name:
Title
CA CAPITAL MANAGEMENT LTD.
By:_____________________________________
Name:
Title: Its Attorney in Fact
EXHIBIT A
Investor List
Dollar Investment Number of Shares
----------------- ----------------
XL Ventures, LLC $ 7,000,000 1,166,667
At Home Corporation 7,000,000 1,166,667
Chancellor Private Capital Partners III, L.P. 496,962 82,827
Chancellor Private Capital Offshore Partners II, L.P. 818,586 136,431
Chancellor Private Capital Offshore Partners I, C.V. 75,738 12,623
Citiventure 96 Partnership, L.P. 1,945,314 324,219
MS Cubed LLC 750,000 125,000
Mamaroneck Capital LLC 99,996 16,666
Drake & Co. for the Account of Citiventure III 813,402 135,567
Prospect Street NYC Discovery Fund L.P. 5,000,000 833,333
Xxxxxxxxx-Xxxxx Partners III, L.P. 1,000,000 333,333
Channel-Webstakes, LLC 1,200,000
Winston Partners, L.P. 700,000 116,667
Winston Partners II LLC 700,000 116,667
Winston Partners II LDC 500,000 83,333
Xxx Xxxxxx 58,000 9,667
Xxxxx Xxxxxxx 15,000 2,500
Xxxx Xxxxx 12,000 2,000
Xxxxx Xxxxxx 15,000 2,500
The Travelers Insurance Company 5,000,000 833,333
Primus Capital Fund IV Limited Partnership 2,880,000 480,000
Primus Executive Fund Limited Partnership 120,000 20,000
Xxxxx Capital Archon Partners L.P. 1,000,000 166,667
I Win Investors, LLC 500,000 83,333
Alpine Spectrum Investors LLC 500,000 83,333
Xxxxxx Xxxxxxxxx 1,000,000 166,667
National Broadcasting Company, Inc. 1,000,000 166,667
WPG Software Fund, L.P. 114,000
WPG Institutional Software Fund L.P. 248,800
WPG Networking Fund L.P. 27,200
CA Capital Management Ltd. 10,000
TOTAL 39,999,998 6,666,667
=========== =========
EXHIBIT B
AMENDED CERTIFICATE OF INCORPORATION
State of Delaware
Office of the Secretary of State PAGE 1
I, XXXXXX X. XXXXX, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "NETSTAKES, INC.", CHANGING ITS NAME FROM "NETSTAKES, INC." TO
"XXXXXXXXX.XXX, INC.", FILED IN THIS OFFICE ON THE ELEVENTH DAY OF JUNE, A.D.
1999, AT 4:49 O'CLOCK P.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.
[SEAL] /s/ Xxxxxx X. Xxxxx
--------------------------------------
Xxxxxx X. Xxxxx, Secretary of State
2630943 8100 AUTHENTICATION: 9801109
991236369 DATE: 06-14-99
EXHIBIT C
BYLAWS OF XXXXXXXXX.XXX, INC.
BY-LAWS
of
NETSTAKES, INC.
(a Delaware corporation)
(the "Corporation")
Amended and Restated as of June 2, 1999
TABLE OF CONTENTS
By-Laws
Page
----
ARTICLE I STOCKHOLDERS
1.01 Annual Meetings....................................... 1
1.02 Special Meetings...................................... 1
1.03 Notice of Annual and Special Meetings................. 1
1.04 Quorum................................................ 1
1.05 Voting................................................ 2
1.06 Procedure at Stockholders' Meetings................... 2
1.07 Action Without Meeting................................ 2
ARTICLE II DIRECTORS
2.01 Number, Election and Term of Office................... 3
2.02 Annual Meetings....................................... 3
2.03 Regular Meetings...................................... 3
2.04 Special Meetings...................................... 3
2.05 Notice of Annual and Special Meetings................. 3
2.06 Quorum and Manner of Acting........................... 3
2.07 Action Without Meeting................................ 4
2.08 Participation by Conference Telephone................. 4
2.09 Resignations.......................................... 4
2.10 Removal of Directors.................................. 4
2.11 Vacancies............................................. 4
2.12 Compensation of Directors............................. 5
2.13 Committees............................................ 5
2.14 Personal Liability of Directors....................... 5
ARTICLE III OFFICERS AND EMPLOYEES
3.01 Executive Officers.................................... 6
3.02 Additional Officers; Other Agents and Employees....... 6
3.03 The Chairman.......................................... 6
3.04 The Chief Executive Officer........................... 6
3.05 The President......................................... 6
3.06 The Vice Presidents................................... 7
3.07 The Secretary and Assistant Secretaries............... 7
3.08 Treasurer and Assistant Treasurers.................... 7
3.09 Vacancies............................................. 8
3.10 Delegation of Duties.................................. 8
ARTICLE IV SHARES OF CAPITAL STOCK
4.01 Share Certificates.................................... 8
4.02 Transfer of Shares.................................... 8
4.03 Transfer Agents and Registrars........................ 9
4.04 Lost, Stolen, Destroyed or Mutilated Certificates..... 9
4.05 Regulations Relating to Shares........................ 9
4.06 Holders of Record..................................... 9
4.07 Fixing of Record Date................................. 9
ARTICLE V LOANS, NOTES, CHECKS, CONTRACTS AND OTHER INSTRUMENTS
5.01 Notes, Checks, etc.................................... 10
5.02 Execution of Instruments Generally.................... 10
5.03 Proxies in Respect of Stock or Other Securities
of Other Corporations............................... 10
ARTICLE VI GENERAL PROVISIONS
6.01 Offices............................................... 10
6.02 Corporate Seal........................................ 10
6.03 Fiscal Year........................................... 11
ARTICLE VII VALIDATION OF CERTAIN CONTRACTS....................... 11
ARTICLE VIII AMENDMENTS............................................ 11
-ii-
BY-LAWS
ARTICLE I
STOCKHOLDERS
Section 1.01. Annual Meetings. Annual meetings of the stockholders shall
be held on such date and at such time and place as may be fixed by the Board of
Directors and as set forth in the notice of the meeting.
Section 1.02. Special Meetings. Special meetings of the stockholders may
be called at any time, for the purpose or purposes set forth in the call, by the
President, the Board of Directors or the holders of at least one-fifth of all
the shares of any class outstanding and entitled to vote thereat, by delivering
a written request to the Secretary. At any time, upon the written request of any
person or persons who have duly called a special meeting, it shall be the duty
of the Secretary to fix the date of the meeting, to be held not more than 75
days after receipt of the request, and to give due notice thereof. Special
meetings shall be held at such place and at such time and date as the Board of
Directors shall determine and as set forth in the notice of the meeting.
Section 1.03. Notice of Annual and Special Meetings. Except as otherwise
expressly required by law, notice of each meeting of stockholders, whether
annual or special, shall be given at least 10 and not more than 60 days prior to
the date on which the meeting is to be held to each stockholder of record
entitled to vote thereat by delivery of a notice thereof to him personally or by
sending a copy thereof through the U.S. mail or by overnight delivery service or
telegram, charges prepaid, to his address appearing on the records of the
Corporation. Each such notice shall specify the place, day and hour of the
meeting and, in the case of a special meeting, shall briefly state the purpose
or purposes for which the meeting is called. A written waiver of notice, signed
by the person or persons entitled to such notice, whether before or after the
date and time fixed for the meeting shall be deemed the equivalent of such
notice. Neither the business to be transacted at nor the purpose of the meeting
need be specified in a waiver of notice of such meeting.
Section 1.04. Quorum. A stockholders' meeting duly called shall not be
organized for the transaction of business unless a quorum is present. At any
meeting the presence in person or by proxy of stockholders entitled to cast at
least a majority of the votes which all stockholders are entitled to cast on the
particular matter shall constitute a quorum for the purpose of considering such
matter, except as otherwise expressly provided by law or by the Certificate of
Incorporation or By-Laws of the Corporation. The stockholders present at a duly
organized meeting can continue to do business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum. If a meeting
cannot be organized because a quorum has not attended, those present may adjourn
the meeting from time to time to such time (not more than 30 days after the next
previously adjourned meeting) and place as they may determine, without notice
other than by announcement at the meeting of the time and place of the adjourned
meeting; and in the case of any meeting called for the election of directors,
those who attend the second of such adjourned meetings, provided they are
entitled to
cast at least one-third of the votes entitled to be cast on any matter to be
considered at the meeting, shall nevertheless constitute a quorum for the
purpose of electing directors.
Section 1.05. Voting. At every meeting of stockholders, each holder of
record of issued and outstanding stock of the Corporation entitled to vote at
such meeting shall be entitled to vote in person or by proxy and, except where a
date has been fixed as the record date for the determination of stockholders
entitled to notice of or to vote at such meeting, no holder of record of a share
of stock which has been transferred on the books of the Corporation within 10
days next preceding the date of such meeting shall be entitled to notice of or
to vote at such meeting in respect of such share so transferred. Resolutions of
the stockholders shall be adopted, and any action of the stockholders at a
meeting upon any matter shall be taken and be valid, only if at least a
plurality of the votes cast with respect to such resolutions or matter are cast
in favor thereof, except as otherwise expressly provided by law or by the
Certificate of Incorporation or By-Laws of the Corporation. The Chairman of the
Board (if one has been elected and is present) shall be chairman, and the
Secretary (if present) shall act as secretary, at all meetings of the
stockholders. In the absence of the Chairman of the Board, the President shall
be chairman; and in the absence of both of them, the chairman shall be
designated by the Board of Directors or if not so designated shall be elected by
the stockholders present; and in the absence of the Secretary, an Assistant
Secretary shall act as secretary of the meeting.
Section 1.06. Procedure at Stockholders' Meetings. The organization of
each meeting of the stockholders, the order of business thereat and all matters
relating to the manner of conducting the meetings shall be determined by the
chairman of the meeting or, in the chairman's absence, by a person designated by
the chairman or, if no person is so designated, by a person designated by a
majority of the directors present, whose decisions may be overruled only by
majority vote (which shall not be by ballot) of the stockholders present and
entitled to vote at the meeting in person or by proxy. Meetings shall be
conducted in a manner designed to accomplish the business of the meeting in a
prompt and orderly fashion and to be fair and equitable to all stockholders, but
it shall not be necessary to follow Xxxxxxx' Rules of Order or any other manual
of parliamentary procedure.
Section 1.07. Action Without Meeting. Unless otherwise provided by the
Certificate of Incorporation, any action required to be taken at any annual or
special meeting of stockholders, or any action which may be taken at any annual
or special meeting, may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted, and such written consent is delivered to the Corporation by delivery
to its registered office in Delaware, its principal place of business or an
officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing,
but failure to do so shall not void the action.
-2-
ARTICLE II
DIRECTORS
Section 2.01. Number, Election and Term of Office. The number of directors
which shall constitute the full Board of Directors shall be determined by
resolution of the board of directors or by the stockholders at the annual
meeting. Each director shall hold office for the term for which he is elected
and thereafter until his successor is duly elected or until his prior death,
resignation or removal. Directors need not be stockholders.
Section 2.02. Annual Meetings. Annual meetings of the Board of Directors
shall be held each year at the same place as and immediately after the annual
meeting of stockholders or at such other place and time as shall theretofore
have been determined by the Board. At its regular annual meeting, the Board of
Directors shall organize itself and elect the officers of the Corporation for
the ensuing year, and may transact any other business.
Section 2.03. Regular Meetings. Regular meetings of the Board of Directors
may be held at such intervals and at such time and place as shall from time to
time be determined by the Board. After there has been such determination and
notice thereof has been once given to each person then a member of the Board of
Directors, regular meetings may be held at such intervals and time and place
without further notice being given to directors who have been given at least one
such notice.
Section 2.04. Special Meetings. Special meetings of the Board of Directors
may be called at any time by the Board, by the Chairman of the Board, by the
President or by any two directors to be held on such day and at such time and
place as shall be specified by the person or persons calling the meeting.
Section 2.05. Notice of Annual and Special Meetings. Except as otherwise
expressly required by law, notice of the annual meeting of the Board of
Directors need not be given. Except as otherwise expressly required by law,
notice of every special meeting of the Board of Directors specifying the place,
date and time thereof shall be given to each director by being mailed on at
least the third day prior to the date of the meeting, by being sent by telegraph
or overnight delivery service or given personally or by telephone at least 24
hours prior to the time of the meeting. A written waiver of notice of a meeting,
signed by the person or persons entitled to such notice, whether before or after
the date and time stated therein fixed for the meeting, shall be deemed the
equivalent of such notice, and attendance of a director at a meeting shall
constitute a waiver of notice of such meeting except when the director attends
the meeting for the express purpose of objecting, when he enters the meeting, to
the transaction of any business because the meeting is not lawfully called or
convened.
Section 2.06. Quorum and Manner of Acting. At all meetings of the Board of
Directors, except as otherwise expressly provided by law or by the Certificate
of Incorporation or By-Laws of the Corporation, the presence of a majority of
the full Board shall be necessary and sufficient to constitute a quorum for the
transaction of business. If a quorum is not present at any meeting, the meeting
may be adjourned from time to time by a majority of the directors present
-3-
until a quorum as aforesaid shall be present, but notice of the time and place
to which such a meeting is adjourned shall be given to any directors not present
either by being sent by telegraph or given personally or by telephone at least
eight hours prior to the time of reconvening. Resolutions of the Board of
Directors shall be adopted, and any action of the Board at a meeting upon any
matter shall be taken and be valid, only with the affirmative vote of at least a
majority of the directors present at the meeting, except as otherwise provided
herein. The Chairman of the Board (if one has been elected and is present) shall
be chairman, and the Secretary (if present) shall act as secretary, at all
meetings of the Board. In the absence of the Chairman of the Board, the
President shall be chairman, and in the absence of both of them the directors
present shall select a member of the Board of Directors to be chairman; and in
the absence of the Secretary, the chairman of the meeting shall designate any
person to act as secretary of the meeting.
Section 2.07. Action Without Meeting. Any action required or permitted to
be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if a consent in writing, setting forth the
actions so taken, shall be signed by all members of the Board or such committee,
as the case may be, and such written consent is filed with the minutes of
proceedings of the Board or committee.
Section 2.08. Participation by Conference Telephone. Members of the Board
of Directors of the Corporation, or any committee designated by the Board, may
participate in a meeting of the Board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
by such means shall constitute presence in person at such meeting.
Section 2.09. Resignations. A director may resign by submitting his
written resignation to the Chairman of the Board (if one has been elected) or
the Secretary. Unless otherwise specified therein, the resignation of a director
need not be accepted to make it effective and shall be effective immediately
upon its receipt by such officer or as otherwise specified therein. If the
resignation of a director specifies that it shall be effective at some time
later than receipt, until that time the resigning director shall be competent to
act on all matters before the Board of Directors, including filling the vacancy
caused by such resignation.
Section 2.10. Removal of Directors. The entire Board of Directors or any
individual director may be removed at any time with or without cause by the
holders of a majority of the shares then entitled to vote at an election of
directors. The vacancy or vacancies caused in the Board of Directors by such
removal may, but need not, be filled by such stockholders at the same meeting or
at a special meeting of the stockholders called for that purpose.
Section 2.11. Vacancies. Any vacancy that shall occur in the Board of
Directors by reason of death, resignation, removal, increase in the number of
directors or any other cause whatever shall, unless filled as provided in
Section 2.10 of this Article II, be filled by a majority of the then members of
the Board, whether or not a quorum, and each person so elected shall be a
director until he or his successor is elected by the stockholders at a meeting
called for the purpose of electing directors, or until his prior death,
resignation or removal.
-4-
Section 2.12. Compensation of Directors. The Corporation may allow
compensation to its directors for their services, as determined from time to
time by resolution adopted by the Board of Directors.
Section 2.13. Committees. The Board of Directors may, by resolution
adopted by a majority of the full Board, designate one or more committees
consisting of directors to have and exercise such authority of the Board in the
management of the business and affairs of the Corporation as the resolution of
the Board creating such committee may specify and as is otherwise permitted by
law. The Board of Directors may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. In the absence or disqualification of any member
of such committee or committees, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another director to act at the meeting in the
place of such absent or disqualified member.
Section 2.14. Personal Liability of Directors.
(a) To the fullest extent that the laws of the State of Delaware, as the
same exist or may hereafter be amended, permit elimination of the personal
liability of directors, no director of this Corporation shall be personally
liable to this Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director.
(b) The provisions of this Section 2.14 shall be deemed to be a contract
with each director of this Corporation who serves as such at any time while this
Section 2.14 is in effect, and each such director shall be deemed to be serving
as such in reliance on the provisions of this Section 2.14. Any amendment or
repeal of this Section 2.14 or adoption of any By-Law of this Corporation or
other provision of the Certificate of Incorporation of this Corporation which
has the effect of increasing director liability shall operate prospectively only
and shall not affect any action taken, or any failure to act, by a director of
this Corporation prior to such amendment, repeal, By-Law or other provision
becoming effective.
ARTICLE III
OFFICERS AND EMPLOYEES
Section 3.01. Executive Officers. The Executive Officers of the
Corporation shall be the President and a Secretary and may include a Chairman of
the Board, a Chief Executive Officer, one or more Vice Presidents as the Board
of Directors may from time to time determine, and a Treasurer all of whom shall
be elected by the Board of Directors. Any two or more offices may be held by the
same person. Each Executive Officer shall serve at the pleasure of the Board,
and shall hold office until the next succeeding annual meeting of the Board of
Directors and thereafter until his successor is duly elected and qualifies, or
until his earlier death, resignation or removal.
-5-
Section 3.02. Additional Officers; Other Agents and Employees. The Board
of Directors may from time to time appoint or hire such additional officers,
assistant officers, agents, employees and independent contractors as the Board
deems advisable; and the Board or the President shall prescribe their duties,
conditions of employment and compensation. Subject to the power of the Board of
Directors, the President may employ from time to time such other agents,
employees, and independent contractors as he may deem advisable for the prompt
and orderly transaction of the business of the Corporation, and he may prescribe
their duties and the conditions of their employment, fix their compensation and
dismiss them, without prejudice to their contract rights, if any.
Section 3.03. The Chairman. If there shall be a Chairman of the Board, he
shall be elected from among the directors, shall preside at all meetings of the
stockholders and of the Board. He shall have authority to sign all checks, all
certificates of stock, conveyances of real estate, and any other instruments in
writing requiring a signature, and shall have such other powers and duties as
from time to time may be prescribed by the Board.
Section 3.04. The Chief Executive Officer. The Chief Executive Officer
shall be the head of the Corporation and in the recess of the Board of Directors
shall have the general control and management of all the business and affairs of
the Corporation. He shall also exercise such further powers and perform such
other duties as may from time to time be conferred upon or assigned by the
By-laws or the Board of Directors. He shall make annual reports and submit the
same to the Board of Directors and also to the stockholders at their annual
meeting, showing the condition and the affairs of the Corporation. He shall from
time to time make such recommendations to the Board of Directors and any other
committee as he thinks proper and shall bring before the Board of Directors and
any other committee such information as may be required, relating to the
business and property of the Corporation. In case of the absence or disability
of the Chief Executive Officer and as and to the extent directed by the Chief
Executive Officer, the President shall fulfill the duties of the Chief Executive
Officer.
Section 3.05. The President. The President shall exercise such powers and
duties as from time to time may prescribed in these By-Laws or by the Chief
Executive Officer or the Board of Directors. He shall have authority to sign all
checks, all certificates of stock, conveyances of real estate, and any other
instruments in writing requiring a signature. In case of the absence or
disability of the Chief Executive Officer and as and to the extent directed by
the Chief Executive Officer, the President shall fulfill the duties of the Chief
Executive Officer.
Section 3.06. The Vice Presidents. The Vice Presidents may be given, by
the Chairman of the Board or by resolution of the Board of Directors, general
executive powers, subject to the control of the President, concerning one or
more or all segments of the operations of the Corporation. The Vice Presidents
shall exercise such further powers and duties as from time to time may be
prescribed in these By-Laws or by the Board of Directors, the Chief Executive
Officer or the President. At the request of the President or in his absence or
disability, the senior Vice President shall exercise all the powers and duties
of the President.
-6-
Section 3.07. The Secretary and Assistant Secretaries. It shall be the
duty of the Secretary (a) to keep or cause to be kept an original or duplicate
record of the proceedings of the stockholders and the Board of Directors, and a
copy of the Certificate of Incorporation and of the By-Laws; (b) to attend to
the giving of notices of the Corporation as may be required by law or these
By-Laws; (c) to be custodian of the corporate records and of the seal of the
Corporation and see that the seal is affixed to such documents as may be
necessary or advisable; (d) to have charge of the stock books of the
Corporation, and a share register, giving the names of the stockholders in
alphabetical order, and showing their respective addresses, the number and
classes of shares held by each, the number and date of certificates issued for
the shares, and the date of cancellation of every certificate surrendered for
cancellation; and (e) to exercise all powers and duties incident to the office
of Secretary, and such other powers and duties as may be prescribed by the Board
of Directors, the President or the Chief Executive Officer from time to time.
The Secretary by virtue of his office shall be an Assistant Treasurer. The
Assistant Secretaries shall assist the Secretary in the performance of his
duties and shall also exercise such further powers and duties as from time to
time may be assigned to them by the Board of Directors, the President or the
Secretary. At the direction of the Secretary or in his absence or disability,
the President, the Chief Executive Officer, the Treasurer or an Assistant
Secretary shall perform the duties of the Secretary.
Section 3.08. The Treasurer and Assistant Treasurers. The Treasurer shall
have custody of all the funds and securities of the Corporation. He shall
collect all moneys due the Corporation and deposit such moneys to the credit of
the Corporation in such banks, trust companies, or other depositories as may
have been duly designated by the Board of Directors. He shall endorse for
collection on behalf of the Corporation, checks, notes, drafts and other
documents, and may sign and deliver receipts, vouchers and releases of liens
evidencing payments made to the Corporation. Subject to Section 5.01 of these
By-Laws, he shall cause to be disbursed the funds of the Corporation by payment
in cash or by checks or drafts upon the authorized depositories of the
Corporation. He shall have charge of the books and accounts of the Corporation.
He shall perform all acts incident to the office of the Treasurer and such other
duties as may be prescribed by the Board of Directors, the President or the
Chief Executive Officer. The Treasurer by virtue of his office shall be an
Assistant Secretary. The Assistant Treasurers shall assist the Treasurer in the
performance of his duties and shall also exercise such further powers and duties
as from time to time may be assigned to them by the Board of Directors, the
President or the Treasurer. At the direction of the Treasurer or in his absence
or disability, the President, the Chief Executive Officer, the Secretary or an
Assistant Treasurer shall perform the duties of Treasurer.
Section 3.09. Vacancies. Vacancy in any office or position by reason of
death, resignation, removal, disqualification, disability or other cause, shall
be filled in the manner provided in this Article III for regular election or
appointment to such office.
Section 3.10. Delegation of Duties. The Board of Directors may in its
discretion delegate the powers and duties, or any of them, of any officer to any
other person whom it may select.
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ARTICLE IV
SHARES OF CAPITAL STOCK
Section 4.01. Share Certificates. Every holder of stock in the Corporation
shall be entitled to a certificate or certificates, to be in such form as the
Board of Directors may from time to time prescribe, signed by the Chairman of
the Board, the President or any Vice President and by the Treasurer or any
Assistant Treasurer or the Secretary or any Assistant Secretary. The signatures
of such officers may be facsimiles. Each such certificate shall set forth the
name of the registered holder thereof, the number and class of shares and the
designation of the series, if any, which the certificate represents. The Board
of Directors may, if it so determines, direct that certificates for shares of
stock of the Corporation be signed by a transfer agent or registered by a
registrar or both, in which case such certificates shall not be valid until so
signed or registered.
In case any officer of the Corporation who shall have signed, or whose
facsimile signature shall have been used on, any certificate for shares of stock
of the Corporation shall cease to be such officer, whether because of death,
resignation, removal or otherwise, before such certificate shall have been
delivered by the Corporation, such certificate shall nevertheless be deemed to
have been adopted by the Corporation and may be issued and delivered as though
the person who signed such certificate or whose facsimile signature shall have
been used thereon had not ceased to be such officer.
Section 4.02. Transfer of Shares. Transfers of shares of stock of the
Corporation shall be made only on the books of the Corporation by the registered
holder thereof or by his attorney thereunto authorized by an instrument duly
executed and filed with the Corporation, and on surrender of the certificate or
certificates for such shares properly endorsed or accompanied by properly
executed stock powers and evidence of the payment of all taxes imposed upon such
transfer. Except as provided in Section 4.04 of this Article IV, every
certificate surrendered for transfer shall be cancelled and no new certificate
or certificates shall be issued in exchange for any existing certificate until
such existing certificate shall have been so cancelled.
Section 4.03. Transfer Agents and Registrars. The Board of Directors may
appoint any one or more qualified banks, trust companies or other corporations
organized under any law of any state of the United States or under the laws of
the United States as agent or agents for the Corporation in the transfer of the
stock of the Corporation and likewise may appoint any one or more such qualified
banks, trust companies or other corporations as registrar or registrars of the
stock of the Corporation.
Section 4.04. Lost, Stolen, Destroyed or Mutilated Certificates. New
certificates for shares of stock may be issued to replace certificates lost,
stolen, destroyed or mutilated upon such terms and conditions, which may but
need not include the giving of a satisfactory bond or other indemnity, as the
Board of Directors may from time to time determine.
Section 4.05. Regulations Relating to Shares. The Board of Directors shall
have power and authority to make such rules and regulations not inconsistent
with these By-Laws or
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with law as it may deem expedient concerning the issue, transfer and
registration of certificates representing shares of stock of the Corporation.
Section 4.06. Holders of Record. The Corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder and
owner in fact thereof and shall not be bound to recognize any equitable or other
claim to or interest in such shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise expressly
provided by the laws of the State of Delaware.
Section 4.07. Fixing of Record Date. The Board of Directors may fix a
record date which does not precede the date on which the resolution fixing such
record date is adopted,
(a) in order to determine the stockholders entitled to notice of or to
vote at any meeting of stockholders provided such record date is not less than
ten or more than sixty days prior to the date of any such meeting;
(b) in order to determine the stockholders entitled to consent to
corporate action in writing without a meeting provided such record date is not
more than ten days after the date on which the resolution fixing such record
date is adopted; and
(c) in order to determine the stockholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
provided such record date is not more than sixty days prior to such action.
In such case, only such stockholders as shall be stockholders of record on
the date so fixed shall be entitled to notice of, or to vote at, such meeting or
to receive payment of such dividend, or to receive such allotment of rights, or
to exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the Corporation after any record date fixed as aforesaid.
ARTICLE V
LOANS, NOTES, CHECKS,
CONTRACTS AND OTHER INSTRUMENTS
Section 5.01. Notes, Checks, etc. All notes, drafts, acceptances, checks,
endorsements (other than for deposit) and all evidences of indebtedness of the
Corporation whatsoever shall be signed by such officers or agents and shall be
subject to such requirements as to countersignature or other conditions as the
Board of Directors from time to time may designate. Facsimile signatures on
checks may be used unless prohibited by the Board of Directors.
Section 5.02. Execution of Instruments Generally. Except as provided in
Section 5.01 of this Article V, all contracts and other instruments requiring
execution by the Corporation
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may be executed and delivered by the Chief Executive Officer, the President, any
Vice President or the Treasurer, and authority to sign any such contracts or
instruments, which may be general or confined to specific instances, may be
conferred by the Board of Directors upon any other person or persons. Any person
having authority to sign on behalf of the Corporation may delegate, from time to
time, by instrument in writing, all or any part of such authority to any person
or persons if authorized so to do by the Board of Directors.
Section 5.03. Proxies in Respect of Stock or Other Securities of Other
Corporations. Unless otherwise provided by the Board of Directors, the Chairman
of the Board, the Chief Executive Officer or the President may from time to time
appoint an attorney or attorneys or an agent or agents of the Corporation to
exercise in the name and on behalf of the Corporation the powers and rights
which the Corporation may have as the holder of stock or other securities in any
other corporation to vote or consent in respect of such stock or other
securities, may instruct the person or persons so appointed as to the manner of
exercising such powers and rights and may execute or cause to be executed in the
name and on behalf of the Corporation and under its corporate seal or otherwise
all such written proxies or other instruments as he may deem necessary or proper
in order that the Corporation may exercise its said powers and rights.
ARTICLE VI
GENERAL PROVISIONS
Section 6.01. Offices. The registered office of the Corporation shall be
at 0000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000. The Corporation may have other
offices, within or without the State of Delaware, at such place or places as the
Board of Directors may from time to time determine or the business of the
Corporation may require.
Section 6.02. Corporate Seal. The Board of Directors shall prescribe the
form of a suitable corporate seal, which shall contain the full name of the
Corporation and the year and state of incorporation. Such seal may be used by
causing it or a facsimile or reproduction thereof to be affixed to or placed
upon the document to be sealed.
Section 6.03. Fiscal Year. Unless otherwise determined by the Board of
Directors, the fiscal year of the Corporation shall end on December 31 of each
year.
ARTICLE VII
VALIDATION OF CERTAIN CONTRACTS
Section 7.01. No contract or other transaction between the Corporation and
another person shall be invalidated or otherwise adversely affected by the fact
that any one or more stockholders, directors or officers of the Corporation
(i) is pecuniarily or otherwise interested in, or is a stockholder,
director, officer, or member of, such other person, or
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(ii) is a party to, or is in any other way pecuniarily or otherwise
interested in, the contract or other transaction, or
(iii) is in any way connected with any person pecuniarily or otherwise
interested in such contract or other transaction, provided the fact of such
interest shall be disclosed or known to the Board of Directors or the
stockholders, as the case may be, and in any action of the stockholders or of
the Board authorizing or approving any such contract or other transaction, any
and every stockholder or director may be counted in determining the existence of
a quorum with like force and effect as though he were not so interested, or were
not such a stockholder, director, member or officer, or were not such a party,
or were not so connected. Such director, stockholder or officer shall not be
liable to account to the Corporation for any profit realized by him from or
through any such contract or transaction approved or authorized as aforesaid. As
used herein, the term "person" includes a corporation, partnership, firm,
association or other legal entity.
ARTICLE VIII
AMENDMENTS
Section 8.01. These By-Laws may be amended, altered and repealed, and new
by-laws may be adopted, by the stockholders or the Board of Directors of the
Corporation at any regular or special meeting. No provision of these By-Laws
shall vest any property or contract right in any stockholder.
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EXHIBIT D
DRAFT REGISTRATION STATEMENT
[INTENTIONALLY OMITTED]
EXHIBIT E
PURCHASE AGREEMENT BETWEEN XXXXXXXXX.XXX, INC.
AND STONE INVESTMENTS, INC.
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is executed as of the 14th
day of June, 1999, by Xxxxxxxxx.xxx, Inc., a Delaware corporation formerly known
as Netstakes, Inc. ("Webstakes" or the "Company"), and Stone Investments, Inc.,
a Delaware corporation ("Stone").
BACKGROUND:
X. Xxxxx is the owner of 1,714,608 shares of common stock, par value $0.01
per share, of Webstakes (the "Common Stock") and 50,000 shares of Class A
Convertible Redeemable Preferred Stock, par value $100.00 per share, of
Webstakes that are convertible into Common Stock (the "Preferred Stock").
B. Webstakes desires to purchase from Stone, and Stone is wilting to sell
to Webstakes, all of the Common Stock and Preferred Stock that Stone owns.
Therefore, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, the parties agree as
follows:
AGREEMENTS:
1. Agreement to Sell and Buy. Webstakes agrees to buy from Stone, and
Stone agrees to sell to Webstakes, 1,714,608 shares of Common Stock and 50,000
shares of Preferred Stock (collectively, the "Shares").
2. Purchase Price. The consideration to be paid for the Shares is $24
million in immediately available funds at the closing of the purchase and sale
(the "Transaction").
3. The Closing. The Closing will be held simultaneously with the execution
of this Agreement. The date on which the Closing is actually held is called the
"Closing Date".
4. Representations and Warranties of Webstakes. Webstakes hereby
represents and warrants to Stone as follows:
(a) Organization, Standing and Qualification. Webstakes is a
corporation duly incorporated, validly existing, and in good standing under the
laws of the State Delaware and has all requisite corporate power and authority
to own, lease, and operate its properties and to carry on its business as now
being conducted. Webstakes is duly qualified or licensed and in good standing to
do business in each jurisdiction in which its property is owned, leased, or
operated or the nature of its business makes such qualification necessary.
(b) Authority. Webstakes has the capacity, authority, and power to
execute, deliver, and perform this Agreement and all other agreements,
instruments, and documents contemplated hereby or executed in connection
herewith that are to be executed by it (collectively with this Agreement, the
"Company Transaction Documents") and to consummate the transactions contemplated
hereby and thereby. Webstakes and its Board of Directors have duly authorized
the execution, delivery, and performance of this Agreement, including, without
limitation the purchase of the Shares in accordance with the terms and
conditions set forth herein. This Agreement has been duly and validly executed
and delivered by Webstakes and constitutes the legal, valid, and binding
obligations of Webstakes, enforceable against Webstakes in accordance with its
terms except as such enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, fraudulent transfer, reorganization, moratorium, and
other similar laws relating to or affecting creditors' rights generally and by
general equitable principles (regardless of whether enforcement is sought in
equity or at law), including, without limitation, principles regarding good
faith and fair dealing and rules of law governing the availability of equitable
remedies.
(c) Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement or any of the other Company Transaction Documents,
the consummation of the transactions contemplated hereby or thereby nor
compliance by the Company with any of the provisions hereof or thereof will (i)
conflict with or result in a breach of the charter, bylaws, or other
constitutive documents of the Company, (ii) conflict with or result (with or
without notice or lapse of time or both) in a default (or give rise to any right
of reimbursement, termination, cancellation, modification, or acceleration)
under any of the provisions of any note, bond, lease, mortgage, indenture,
license, franchise, permit, agreement, or other instrument or obligation to
which the Company is a party or by which the Company or the properties or assets
of the Company may be bound or affected, except for such conflict, breach, or
default as to which requisite waivers or consents are described in Schedule 4
and are required to be obtained prior to Closing, (iii) violate any law,
statute, rule or regulation or order, writ, injunction, judgment, or decree
(each, an "Order") applicable to the Company or the properties or assets of the
Company, (iv) result in the creation imposition of any mortgage, pledge,
security interest, assignment, claim, lien, or other encumbrance (each, a
"Lien") upon any property or assets used or held in connection with the business
of the Company, or (v) result in a change of control, assignment, or similar
event that would conflict with or result in termination of, acceleration of
obligations under, imposition of additional obligations under, or loss of rights
under, or the breach of, the Company's charter, bylaws or other constitutive
documents, any contract, license, lease, note, bond, mortgage, indenture,
agreement, investment, or arrangement of any kind. Except as set forth in
Schedule 4, no consent or approval by, or any notification of or filing with, or
other action of any person or entity (governmental or private) is required in
connection with the execution, delivery, and performance by the Company of this
Agreement or any other Company Transaction Document. There is no action, cause
of action, claim, suit, proceeding, arbitration, mediation, or other alternative
dispute resolution procedure, order, writ, injunction, or decree (each, a
"Proceeding") pending or, to the knowledge of the Company, threatened against
the Company or any of its respective assets or properties that seeks to prevent
the consummation of the transactions contemplated herein or in any other Company
Transaction Document.
2
(d) Stated Capital; No Fraudulent Transfer. The Company has
sufficient stated capital to consummate the transactions contemplated by this
Agreement. The transactions contemplated by this Agreement will not impair the
capital of the Company. The Company is solvent and able to pay its debts as they
become due and does not intend to incur debts beyond their ability to pay them
as they become due. As a result of the transactions contemplated hereby, the
Company will not be rendered insolvent, will not be unable to pay its debts as
they become due, and will not have assets that are unreasonably small in light
of the business and transactions in which the Company is engaged or intends to
engage. In the transactions contemplated by this Agreement, the Company is
receiving a reasonably equivalent exchange of value.
5. Representations of Stone. Stone hereby represents and warrants to
Webstakes the following:
(a) Organization; Standing. Stone is a corporation validly existing
and in good standing under the laws of the state of Delaware.
(b) Authority. Stone has the capacity, authority, and power to
execute, deliver, and perform this Agreement and all other agreements,
instruments, and documents contemplated hereby or executed in connection
herewith that are to be executed by it (collectively with this Agreement, the
"Stone Transaction Documents" and, together with the Company Transaction
Documents, the "Transaction Documents") and to consummate the transactions
contemplated hereby and thereby. Stone and its Board of Directors has duly
authorized the execution, delivery, and performance of this Agreement,
including, without limitation, the sale of the Shares in accordance with the
terms and conditions set forth herein. This Agreement has been duly and validly
executed and delivered by Stone and constitutes the legal, valid, and binding
obligations of Stone, enforceable against Stone in accordance with its terms
except as such enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, fraudulent transfer, reorganization, moratorium, and
other similar laws relating to or affecting creditors' rights generally and by
general equitable principles (regardless of whether enforcement is sought in
equity or at law), including, without limitation, principles regarding good
faith and fair dealing and rules of law governing the availability of equitable
remedies.
(c) Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement or any of the other Stone Transaction Documents, the
consummation of the transactions contemplated hereby or thereby nor compliance
by Stone with any of the provisions hereof or thereof will (i) conflict with or
result in a breach of the charter, bylaws, or other constitutive documents of
Stone, (ii) conflict with or result (with or without notice or lapse of time or
both) in a default (or give rise to any right of reimbursement, termination,
cancellation, modification, or acceleration) under any of the provisions of any
note, bond, lease, mortgage, indenture, license, franchise, permit, agreement,
or other instrument or obligation to which Stone is party or by which Stone or
the properties or assets of Stone may be bound or affected, (iii) violate any
Order applicable to Stone or the properties or assets of Stone, or (iv) result
in the creation or imposition of any Lien upon any property or assets used or
held in connection with the business of Stone. No consent or approval by, or any
notification of or filing with, or other action of any person or entity
(governmental or private) is required in connection with the execution,
delivery, and performance by Stone of this Agreement or any other Stone
3
Transaction Document. There is no Proceeding pending or, to the knowledge of
Stone, threatened against Stone or any of its respective assets or properties
that seeks to prevent the consummation of the transactions contemplated herein
or in any other Stone Transaction Document.
(d) Good Title. Stone has good title to the Shares, free and clear
of all Liens other than those arising under securities laws and that certain
Option Agreement dated as of January 20, 1999, executed by the Company and Stone
(the "Xxxxxxx Option Agreement").
6. Stone's Conditions to Closing. The agreement of Stone to proceed with
the transactions contemplated hereby and the Closing are conditioned on the
following:
(a) The consideration specified in Paragraph 2 has been delivered to
Stone. Generation of a wire transfer in the amount of the consideration to be
delivered to the account specified by Stone shall be deemed satisfaction of this
condition; provided, however, that if the consideration is not actually received
by Stone, Stone shall not be deemed to have waived any of its rights to receive
such consideration.
(b) The representations and warranties of the Company made in this
Agreement and in the other Company Transaction Documents are true and correct in
all material respects as of the Closing Date and the Company has performed all
covenants and agreements and satisfied all conditions to be performed or
satisfied by it at or prior to Closing.
(c) All necessary approvals of the Board of Directors and
stockholders of the Company and covenants and approvals of third parties of the
type described in Subparagraph 4(c) (including those listed on Schedule 4) have
been obtained.
(d) Stone has received the opinion, in form and substance
satisfactory to Stone and counsel for Stone, dated as of the Closing Date, of
Xxxx Xxxxx Xxxx & XxXxxx LLP, counsel to Webstakes.
(e) The Company has executed and delivered a Release in the form
attached as Exhibit A and a Release in the form attached as Exhibit B.
(f) The Company has executed and delivered an agreement in form and
substance satisfactory to Stone pursuant to which (i) the Xxxxxxx Option
Agreement, (ii) that certain Registration Rights Agreement (the "Registration
Rights Agreement") dated as of January 20, 1999, executed by Webstakes and
Stone; (iii) that certain Shareholders' Agreement (the "Shareholders'
Agreement") dated as of January 20, 1999, executed by Webstakes, Stone, and
Xxxxxx Xxxxx, Xxxxxx Xxxxxxx, Xxxxxx Xxxxxxx, and Xxxxx Xxxxx, (iv) that certain
Preferred Stock Purchase Agreement (the "Preferred Stock Purchase Agreement")
dated as of January 20, 1999, executed by Webstakes and Stone, and (v) that
certain Loan and Security Agreement (the "Loan and Security Agreement") dated as
of September 20, 1997, executed by Webstakes and Stone are terminated and of no
further force or effect.
4
7. Webstakes' Conditions to Closing. The agreement of Webstakes to proceed
with the transactions contemplated hereby and the Closing are conditioned on the
following:
(a) Certificates representing the Shares, free and clear of all
Liens other than those arising under securities laws, have been duly delivered
by Stone either duly endorsed or accompanied by stock powers sufficient to
transfer title to the Shares to Webstakes.
(b) The representations and warranties of Stone made in this
Agreement are true and correct in all material respects as of the Closing Date.
(c) All necessary approvals of the type described in Subparagraph
5(c) have been obtained.
(d) The Release and Standstill Agreement, in the form attached as
Exhibit C, has been executed by Stone and the specified principals and
affiliates of Stone and the principals of Stone.
(e) Stone has executed and delivered an agreement in form and
substance satisfactory to the Company pursuant to which (i) the Xxxxxxx Option
Agreement, (ii) the Registration Rights Agreement, (iii) the Shareholders'
Agreement, (iv) the Preferred Stock Purchase Agreement, and (v) the Loan and
Security Agreement are terminated and of no further force or effect.
8. Agreements to Cause Conditions to be Met. Each of the parties agrees to
use commercially reasonable best efforts to cause the conditions to the Closing
to be met.
9. No Public Announcement; Confidentiality. Unless and until the
transactions contemplated hereby are consummated, neither Stone nor Webstakes
will make any formal announcement of the transactions contemplated hereby to
third parties without the prior written consent of the other parties hereto
unless required by applicable law. Each party agrees that any proposed public
announcement pertaining to the transactions contemplated hereby will be
coordinated with the approval of the other parties prior to the publication of
such announcement; provided, however, that nothing contained herein shall impair
Stone or the Company from complying with applicable law.
10. Binding Obligation. The parties agree that this Agreement is a binding
agreement that shall govern the transactions contemplated hereby.
5
11. Indemnification.
(a) Indemnification by the Company. From and after the Closing, the
Company shall indemnify and hold harmless Stone, its affiliates, and their
respective directors, officers, employees shareholders, partners, agents,
successors and assigns (collectively, "Stone Claimants" and individually, a
"Stone Claimant") from and defend each of them from and against any and all
demands, claims, actions, liabilities, losses, costs, damages or expenses
whatsoever (including without limitation reasonable attorneys' fees and
expenses) (collectively, "Claims") asserted against, imposed upon or incurred by
any of the Stone Claimants resulting from or arising out of (i) any inaccuracy
or breach of any representation or warranty of the company contained herein or
in the other Company Transaction Documents and/or (ii) any breach of any
covenant or obligation of the Company contained herein or in the other Company
Transaction Documents. A Stone Claimant's right to indemnification shall not be
limited or affected in anyway by any pre-Closing investigation by Stone or its
representatives.
(b) Indemnification by Stone. From and after the Closing, Stone shall
indemnify and hold the Company and its affiliates, directors, officers,
employees, shareholders, partners, agents, successors and assigns (collectively,
the "Issuer Claimants" and individually, an "Issuer Claimant") harmless from and
defend each of them from and against any and all claims asserted against,
imposed upon or incurred by any of the Issuer Claimants resulting from or
arising out of (i) any inaccuracy or breach of any representation or warranty of
Stone contained herein or in the other Stone Transaction Documents and/or (ii)
any breach of any covenant or obligation of Stone contained herein or in the
other Stone Transaction Documents. An Issuer Claimant's right to indemnification
shall not be limited or affected in anyway by any pre-Closing investigation by
the Company or its representatives.
(c) Terms and Conditions of Indemnification.
The respective obligations and liabilities of the Company and Stone
(each, an "indemnifying party") to indemnify pursuant to this Paragraph 11 shall
be subject to the following terms and conditions:
(i) The party seeking to be indemnified (the "Indemnified Party")
shall give the indemnifying party prompt written notice of any such claim. The
Indemnified Party's failure to give prompt notice, however, shall not serve to
eliminate or limit the Indemnified Party's right to indemnification hereunder
except to the extent such failure materially prejudices the rights of the
indemnifying party.
(ii) Promptly after receipt by an Indemnified Party of notice of the
commencement of such action, suit, or proceeding for which such Indemnified
Party is entitled to indemnification under this Paragraph 11, such Indemnified
Party will notify the indemnifying party of the commencement thereof in writing;
but the failure to so notify the indemnifying party (i) will not relieve it from
any liability under paragraphs (a) or (b) above except to the extent such
indemnifying party has been materially prejudiced by such failure (including,
without limitation, that such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses) and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any Indemnified
Party other than the indemnification obligation provided in Subparagraphs 11(a)
6
and (b) above. In case any such action is brought against any Indemnified Party
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel reasonably satisfactory to such
Indemnified Party; provided, however, that if (A) the indemnifying party has
failed to assume the defense thereof and employ such counsel or (B) the named
parties to any such action (including any impleaded parties) include both the
indemnifying party and the Indemnified Party and the indemnifying party and the
Indemnified Party shall have been advised by counsel that representation of such
indemnifying party and such Indemnified Party by the same counsel would be
inappropriate under applicable standards of professional conduct due to
differing interests between them, then, in each such case, the indemnifying
party shall not have the right to direct the defense of such action on behalf of
such Indemnified Party or parties and such Indemnified Party or parties shall
have the right to select separate counsel to defend such action on behalf of
such Indemnified Party of its election so to assume the defense thereof and the
reasonable approval by such Indemnified party of counsel appointed to defend
such action, the indemnifying party will not be liable to such Indemnified Party
under this Paragraph 11 for any legal or other expenses, other than reasonable
costs of investigation, subsequently incurred by such Indemnified Party in
connection with the defense thereof, unless (A) the Indemnified Party shall have
employed separate counsel in accordance with the proviso to the immediately
preceding sentence (it being understood, however, that in connection with such
action the indemnifying party shall not be liable for the expenses of more than
one separate counsel (in addition to local counsel) in any one action or
separate but substantially similar actions in the same jurisdiction arising out
of the same general allegations or circumstances, designated by the Indemnified
Parties, (B) the indemnifying party has authorized in writing the employment of
counsel for the Indemnified Party at the expense of the indemnifying party or
(C) the indemnifying party shall have failed to assume promptly after notice of
the institution of such action the defense of such action or retain counsel
reasonably satisfactory to the Indemnified Party. After such notice from the
indemnifying party to such Indemnified Party, the indemnifying party will not be
liable for the costs and expenses of any settlement of such action effected by
such Indemnified Party without the consent of the indemnifying party, which
consent shall not be unreasonably withheld or delayed.
(iii) The Indemnified Party shall be kept fully informed by the
indemnifying party of such action, suit, or proceeding at all stages thereof,
whether or not it is represented by counsel. The indemnifying party shall, at
the indemnifying party's expense, make available to the Indemnified Party and
its attorneys and accountants all books and records of the indemnifying party
relating to such proceedings or litigation, and the parties hereto agree to
render to each other such assistance as they may reasonably require of each
other in order to ensure the proper and adequate defense of any such action,
suit, or proceeding.
(iv) The indemnifying party shall, without Indemnified Party's
consent, make no settlement of any claims that the indemnifying party has
undertaken to defend unless the indemnifying party fully indemnifies the
Indemnified Party for all Losses, there is no finding or admission of violation
of law by, or effect on any other claims that may be made against the
Indemnified Party and the relief granted in connection therewith requires no
action on the part of and has no effect on the Indemnified Party. However, in
the event the indemnifying party shall not offer reasonable assurances as to
its financial capacity to satisfy any final judgment or
7
[ILLEGIBLE] and dispose of the claim after 30 days prior written notice to the
indemnifying party.
(d) Survival. The respective representations, warranties, agreements,
covenants and indemnities of the Company and Stone set forth in this Agreement
or any of the other Transaction Documents, respectively, pursuant to this
Agreement or the other Transaction Documents shall remain in full force and
effect, regardless of any investigation made by or on behalf of the Company, any
of its officers or directors, or any of its affiliates, Stone, any of its
officers or directors, or any of its affiliates and shall survive the Closing.
The covenants contained in Paragraph 9 shall survive any termination or
cancellation of this Agreement.
12. Notices. All notices, requests, demands, and other communications
hereunder will be in writing and will be personally delivered, delivered by
facsimile or courier service, or mailed, certified with first class postage
prepaid, to the address set forth below the signature of the party to this
Agreement. Each such notice, request, demand, or other communication will be
deemed to have been given (whether actually received or not) on the date of
actual delivery thereof, if personally delivered or delivered by facsimile
transmission (if receipt is confirmed at the time of such transmission by
telephone or facsimile-machine-generated confirmation), or on the third Business
Day following the date of mailing, if mailed in accordance with this Paragraph,
or on the day specified for delivery to the courier service (if such day is one
on which the courier service will give normal assurances that such specified
delivery will be made). Any notice, request, demand, or other communication
given otherwise than in accordance with this Paragraph will be deemed to have
been given on the date actually received. Any party may change its address for
purposes of this Paragraph by giving written notice of such change to all other
parties in the manner hereinabove provided. Whenever any notice is required to
be given by law or by this Agreement, a written waiver thereof, signed by the
person or entity entitled to notice, whether before or after the time stated
therein, will be deemed equivalent to the giving of that notice. A "Business
Day" is a day other than a Saturday, Sunday, or other day on which national
banks in the State of New York are permitted to be closed.
13. Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provision will be fully severable and this Agreement will
be construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part of this Agreement; the remaining provisions of this
Agreement will remain in full force and effect and will not be affected by the
illegal, invalid or unenforceable provision or by its severance from this
Agreement. Furthermore, in lieu of each such illegal, invalid, or unenforceable
provision, there will be added automatically as a part of this Agreement a
provision as similar in terms to such illegal, invalid, or unenforceable
provision as may be possible and be legal, valid, and enforceable.
14. Entirety; Amendments and Waivers. This Agreement (including any
Exhibits hereto and the documents delivered pursuant hereto, including any
ancillary agreements) constitutes the entire understanding between the parties
with respect to the subject matter hereof and supersedes all prior agreements or
understandings relating to the subject matter hereof (but excluding any
confidentiality agreement executed in connection with the transactions
contemplated hereby) and may be modified or amended only by an instrument in
writing executed by each of the parties hereto sought to be bound by such
modification or amendment.
8
Any party may waive any of the conditions contained herein or any of the
obligations of any other party hereunder, but any such waiver will be effective
only if in writing and signed by the party waiving such conditions or
obligations.
15. Paragraph Headings. The Paragraph headings contained in this Agreement
are for reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
16. Governing Law and Venue. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING
EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE
OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE
LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE. EACH PARTY HEREBY
IRREVOCABLY SUBMITS TO THE PERSONAL JURISDICTION OF THE STATE COURTS LOCATED IN
DELAWARE AND AGREES THAT ANY LITIGATION BETWEEN THE PARTIES WILL BE FILED IN
STATE COURTS LOCATED IN DELAWARE.
17. Expenses. Each party hereto will bear its own legal and other expenses
incurred in connection with the preparation, execution and performance of this
Agreement.
18. Attorney's Fees. If any action is brought to enforce or interpret the
terms of this Agreement (including through arbitration), the prevailing party
will be entitled to reasonable legal fees, costs, and necessary disbursements in
addition to any other relief to which such party may be entitled.
19. Limits on Damages. In no event will any party have any liability to
any other party with respect to the transactions contemplated hereby other than
liability for actual direct damages. Therefore, no party to this Agreement shall
be entitled, as a result of the transactions contemplated hereby or any breach
or default of any other party, to consequential, punitive, exemplary, special,
indirect, extraordinary, or other damages that are not actual direct damages.
20. Counterparts. This Agreement may be executed in any number of
counterparts and will be effective when each party hereto has executed at least
one counterpart, with the same effect as if all signing parties had signed the
same document. All counterparts will be construed together and evidence only one
agreement, which, notwithstanding the actual date of execution of any
counterpart, will be deemed to be dated the day and year first written above. In
making proof of this Agreement, it will not be necessary to account for a
counterpart executed by any party other than the party against whom enforcement
is sought or to account for more than one counterpart executed by the party
against whom enforcement is sought.
21. Execution by Facsimile. The manual signature of any party hereto that
is transmitted to any other party by facsimile will be deemed for all purposes
to be an original signature.
9
22. Non-Waiver; Rights are Cumulative. Neither a failure of a party to
this Agreement to exercise any power reserved to it in this Agreement or to
insist upon compliance by any other party hereto with any obligation or
condition in this Agreement nor any custom or practice of the parties at
variance with the terms hereof will constitute a waiver of such first party's
rights to demand exact compliance with the terms of this Agreement. Waiver by a
party to this Agreement of any particular default will not affect or impair such
party's right with respect to any subsequent default of the same or of a
different nature; nor will any delay, forbearance, or omission of such party to
exercise any power or right arising out of any breach or default by any other
party hereto of any of the terms, provisions, or covenants of this Agreement
affect or impair such first party's rights; nor will such constitute a waiver by
such first party of any rights hereunder or rights to declare any subsequent
breach or default. Subsequent acceptance by a party to this Agreement of any
performance or payments due to it hereunder will not be deemed to be a waiver by
such first party of any preceding breach by any other party of any terms,
provisions, covenants, or conditions of this Agreement. Except as otherwise
expressly set forth in this Agreement, each party's rights under this Agreement
are cumulative and neither the existence of, nor the exercise or enforcement by
a party of, any right or remedy under this Agreement will preclude the exercise
or enforcement by such party of any other right or remedy under this Agreement
or law.
23. No Strict Construction. This Agreement is the result of substantial
negotiations among the parties and their counsel and has been prepared by their
joint efforts. Accordingly, the fact that counsel to one party or another may
have drafted this Agreement or any portion hereof is immaterial and this
Agreement will not be strictly construed against any party.
24. Construction. Whenever the context requires, the gender of all words
used in this Agreement includes the masculine, feminine and neuter.
[THIS SPACE LEFT BLANK INTENTIONALLY.
10
Executed on the date or dates indicated below, to be effective as of the
date first written above.
XXXXXXXXX.XXX, INC.
By: /s/ Xxxxxx Xxxxx
---------------------------------------
Name: Xxxxxx Xxxxx
-------------------------------------
Title: CEO
------------------------------------
Date: June 14 , 1999
-------------------------------
STONE INVESTMENTS, INC.
By: /s/ [ILLEGIBLE]
---------------------------------------
Name: [ILLEGIBLE]
-------------------------------------
Title: Vice President
------------------------------------
Date: June 14 , 1999
-------------------------------
11
EXHIBIT F
RELEASE AND STANDSTILL AGREEMENT FROM STONE INVESTMENTS, INC.
EXECUTION COPY
RELEASE AND STANDSTILL AGREEMENT
AGREEMENT made as of the 14th day of June 1999, by and among
Xxxxxxxxx.xxx, Inc. (formerly Netstakes, Inc.), a Delaware corporation with
offices at 00 Xxxx x0xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Company"), the
investors listed on Schedule A attached hereto (the "Institutional Investors"),
Stone Investments, Inc., a Delaware corporation, with offices at 0000 Xxxxx
Xxxxxxx Xxxxxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000 ("Stone") and Xxxxx X.
Xxxxxxx, an individual, whose address is c/o Stone ("Xxxxxxx") and Xxxxx X.
Fail, an individual, whose address is c/o Stone ("Fail") (Xxxxxxx and Fail
collectively referred to herein as the "Stone Principals").
WITNESSETH
WHEREAS, the Company and Stone are parties to that certain Stock
Purchase Agreement, dated as of the date of this Agreement (the "Stone
Repurchase Agreement"), whereby the Company has agreed to purchase 50,000 shares
of Class A Convertible Redeemable Preferred Stock of the Company held by Stone
and 1,714,608 shares of Common Stock of the Company held by Stone (collectively,
the "Stone Shares").
WHEREAS, the Company and the Institutional Investors are parties to
that certain Stock Purchase Agreement, dated as of the date of this Agreement
(the "Purchase Agreement"), whereby the Institutional Investors have agreed to
purchase 6,666,667 shares of Class B Convertible Redeemable Preferred Stock of
the Company (the "Preferred Shares").
WHEREAS, as an inducement to the Institutional Investors to enter
into the Purchase Agreement, and as a condition to the consummation of the
transactions contemplated by the Purchase Agreement, the Company and Stone have
entered into this Agreement intending to be bound by the terms and conditions
hereinafter set forth and intending that the Institutional Investors become
third party beneficiaries of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto agree as follows:
1. Indemnification and Release (a) Each of Stone, the Stone
Principals and their Affiliates, and their respective officers, directors,
stockholders, partners, agents, representatives successors, assigns and
transferees (collectively, the "Stone Parties") hereby forever releases,
forgives and discharges any claim, cause of action or potential claim that it or
they may have or have had or might have in the future against (i) the Company
and/or the Institutional Investors arising out of or in connection with the
transactions contemplated by the Purchase Agreement or (ii) the Institutional
Investors arising out of or in connection with the
transactions contemplated by the Stone Repurchase Agreement or (iii) the Company
arising out of or in connection with the Stone Repurchase Agreement as it
relates to the value of the Stone Shares being repurchased, and any actual or
alleged act, omission, transaction, practice, conduct, occurrence or other
matter relating to any of the foregoing, including, but not limited to any
subsequent increase in value of, or other event affecting, the Preferred Shares
or the other equity securities of the Company. Without limiting the generality
of the foregoing, the claims, causes of action and potential claims released
include (A) any claim of fraud, fraudulent inducement, coercion, duress, breach
of contract (express or implied), intentional or negligent misrepresentation,
intentional interference with contract, detrimental reliance, and similar
actions whether codified or under common law; (B) any claim for compensatory or
punitive damages; (C) any claim for attorneys' fees, costs, disbursements and
the like; and (D) any and all claims for pay for past service, compensation or
other remuneration of any type. Further, for purposes of this Paragraph 1(a)
references to the Company and the Institutional investors shall include their
respective directors, officers, employees, stockholders, agents, successors,
assigns and Affiliates; provided, however, that the Company shall not be deemed
an Affiliate of any Institutional Investor or of Stone or any Stone Principal.
For purposes of this Agreement, the term "Affiliate" means, with respect to any
person or entity, any other person or entity that directly or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common
control with, such person or entity (but does not include the Company) and the
term "control" means the possession, direct or indirect, of the power to direct
or cause the direction of management and policies of a person, whether through
the ownership of voting securities, by contract or otherwise.
(b) Each of the Institutional Investors and their respective
officers, directors, stockholders, partners, employees, agents, representatives,
Affiliates (which shall not include the Company), successors, assigns and
transferees (collectively, the "Institutional Parties") hereby forever releases,
forgives and discharges any claim, cause of action or potential claim that it or
they may have or have had or might have in the future against Stone arising
solely with respect to the value of the Preferred Shares being or becoming less
than that paid under the Purchase Agreement, other than as a result of fraud,
breach of contract (express or implied), or intentional or negligent
misrepresentation by Stone or its Affiliates that occurred on or before the date
of this Agreement.
2. Covenant Not to Xxx. (a) Each of the Stone Parties further agrees
that, to the extent permitted by law, each will not, at any time hereafter,
commence, maintain, prosecute, participate in as a party, permit to be filed by
any other person on such party's behalf (to the extent it is within such party's
control), or assist in the commencement or prosecution of, as an advisor,
witness (unless compelled by legal process or court order, provided, in each
case, such party must give prompt notice to the other that such demand has been
made of such party) or otherwise, any action or proceeding of any kind, judicial
or administrative (on such party's own behalf, on behalf of any other person
and/or on behalf of or as a member of any alleged class of persons), in any
court, agency, investigative or administrative body against the other party or
any released person with respect to any actual or alleged act, omission,
transaction, practice, conduct, occurrence or any other matter which
2
such party released pursuant to Paragraph 1(a) of this Agreement. Each of the
Stone Parties further represent that, as of the date of execution of this
Agreement, none of such persons has taken any action encompassed by this
Paragraph 2(a) or, if commenced prior to said date, such action has been
terminated. If, notwithstanding the foregoing promises, any of the Stone Parties
violates this Paragraph 2(a), the Stone Parties shall jointly and severally
indemnify and hold harmless each of the Company and the Institutional Investors
or any released person from and against any and all demands, assessments,
judgments, costs, damages, losses and liabilities and attorneys' fees and other
expenses which result from, or are incidents to, such violation.
(b) Each of the Institutional Parties further agrees that, to
the extent permitted by law, each will not, at any time hereafter, commence,
maintain, prosecute, participate in as a party, permit to be filed by any other
person on such party's behalf (to the extent it is within such party's control),
or assist in the commencement or prosecution of, as an advisor, witness (unless
compelled by legal process or court order, provided, in each case, such party
must give prompt notice to the other that such demand has been made of such
party) or otherwise, any action or proceeding of any kind, judicial or
administrative (on such party's own behalf, on behalf of any other person and/or
on behalf of or as a member of any alleged class of persons), in any court,
agency, investigative or administrative body against the other party or any
released person with respect to any actual or alleged act, omission,
transaction, practice, conduct, occurrence or any other matter which such party
released pursuant to Paragraph 1(b) of this Agreement. Each of the Institutional
Parties further represent that, as of the date of execution of this Agreement,
none of such persons has taken any action encompassed by this Paragraph 2(b),
or, if commenced prior to said date, such action has been terminated. If,
notwithstanding the foregoing promises, any of the Institutional Parties
violates this Paragraph 2(b), the Institutional Parties shall jointly and
severally indemnify and hold harmless Stone from and against any and all
demands, assessments, judgments, costs, damages, losses and liabilities and
attorneys' fees and other expenses which result from, or are incidents to, such
violation.
3. Standstill Provisions.
For a period commencing on the date hereof and ending on the date
which is three years from the date of this Agreement:
(a) Each of Stone and any Stone Principal or any entity
controlled by any of them (it being understood that entities in which Stone or a
Stone Principal may serve on the board of directors and/or maintain an ownership
interest are not necessarily controlled by Stone or such Stone Principal)
(collectively, the "Stone Control Group") agrees, as a current or future record
or beneficial stockholder, to vote or cause to be voted all voting equity of the
Company beneficially owned by any of them in the manner recommended to
stockholders by the Board of Directors of the Company.
(b) Unless the prior written consent of the Board of Directors
of the Company has been obtained, each member of the Stone Control Group agrees
that such
3
member shall not, and shall cause any other entity deemed a member of the Stone
Control Group over which it exerts control not to:
(i) solicit proxies or become a "participant" in a
"solicitation" (as such terms are defined in Regulation 14A under the
Securities Exchange Act of 1934 (the "Exchange Act")) in opposition to the
recommendation of the Board of Directors of the Company with respect to
any matter; or
(ii) deposit any Common Stock or other voting securities
of the Company in a voting trust or subject them to a voting agreement or
other instrument of similar effect, except as set forth in this Agreement;
or
(iii) acquire or permit any entity under its control to
acquire or offer to acquire or agree to acquire, directly or indirectly,
by purchase or otherwise, any voting securities of the Company; or
(iv) join a partnership, limited partnership, syndicate,
or other group for the purpose of acquiring, holding or disposing of
voting securities of the Company within the meaning of Section 13(d) of
the Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"); or
(v) initiate, propose or otherwise solicit stockholders
for any matter at any time, or induce or attempt to induce any other
person to initiate any stockholder proposal or a tender offer for shares
of the Company's securities or any change of control of the Company, or
for the purpose of convening a stockholder's meeting of the Company; or
(vi) take any action by written consent in lieu of a
meeting of stockholders.
(c) Each member of the Stone Control Group acknowledges and
agrees that an appropriate legend shall be placed on any shares of the Company
held by him or it or hereafter acquired and instructions shall be given to the
transfer agent of the Company's securities reflecting the provisions of this
Paragraph 3.
4. Representation by Counsel; Interpretation.
(a) Each of the parties hereto have consulted with independent
legal counsel of their choice before signing this Agreement, as well as the
Purchase Agreement or Stone Repurchase Agreement, as appropriate. Each of the
parties hereto further acknowledges that they have carefully read this Agreement
and such other agreements in their entirety; that they have had an adequate
opportunity to consider this Agreement and such other agreements and to consult
with any advisors of their choice about them; that they have consulted
independent counsel of their choice who has answered to their satisfaction all
questions
4
regarding this Agreement and such other agreements; that they understand all the
terms of this Agreement and their significance; that they knowingly and
voluntarily assent to all the terms and conditions contained herein; and that
they are signing this Agreement voluntarily and of their own free will.
(b) In the interpretation of this Agreement, whether by a
court or otherwise, no weight or presumption shall be given or ascribed by
virtue of the drafting of this Agreement by one party or the other; both parties
shall be deemed to have contributed to the drafting of this Agreement equally.
5. Governing Law. This Agreement shall be deemed to have been made
and fully performed in the State of New York and shall be governed by and
construed in accordance with the laws of the State of New York without regard to
conflict of law rules thereof. Any action, suit or proceeding arising out of, or
in connection with, this Agreement shall be adjudicated in a court of competent
jurisdiction located in the State of New York. The parties hereto
unconditionally waive any right to a trial by jury and any objection which
either of them may now or hereafter have to the establishment of venue as
aforementioned or that any action, suit or proceeding has been brought in an
inconvenient forum.
6. Notices. All notices required or permitted to be given by either
party hereunder, including notice of change of address, shall be in writing and
delivered by hand, or mailed, postage prepaid, certified or registered mail,
return receipt requested, to the other party at such party's address as set
forth above.
7. Survival. The provisions of Paragraphs 1, 2, 3, 4 and 5 of this
Agreement shall survive the expiration, termination or cancellation of this
Agreement.
8. Miscellaneous.
(a) Entire Agreement. This Agreement constitutes the entire
Agreement among the parties with respect to the subject matter hereof and
supersedes any and all prior oral or written agreements and understandings.
There are no oral promises, conditions, representations, understandings,
interpretations or terms of any kind as conditions or inducements to the
execution hereof or in effect among the parties. This Agreement may not be
amended, and no provision hereof shall be waived, except by a writing signed by
all of the parties hereto, or in the case of a waiver, by the party waiving
compliance therewith, which states that it is intended to amend or waive a
provision of this Agreement. Any waiver of any rights or failure to act in a
specific instance shall relate only to such instance and shall not be construed
as an agreement to waive any rights or failure to act in any other instance,
whether or not similar.
(b) Severability. Should any provision of this Agreement be
held by a court of competent jurisdiction to be unenforceable or prohibited by
an applicable law, this Agreement shall be considered divisible as to such
provision, which shall be inoperative, and
5
the remainder of this Agreement shall be valid and binding as though such
provision were not included herein.
(c) Successors and Assigns. This Agreement shall inure to the
benefit of, and be binding upon, the parties hereto, including the Institutional
Investors, and their respective successors and assigns (other than, for purposes
of Paragraph 3 only, those persons or entities not deemed a member of the Stone
Control Group).
(d) Headings. All headings in this Agreement are for
convenience only and are not intended to affect the meaning of any provision
hereof.
(e) Counterparts. This Agreement may be executed in two or
more counterparts with the same effect as if the signatures to all such
counterparts were upon the same instrument, and all such counterparts shall
constitute but one instrument.
6
IN WITNESS WHEREOF, each of the undersigned have caused the
execution of this Agreement by is duly authorized officers as of the day and
year first written above.
XXXXXXXXX.XXX, INC.
By: /s/ [ILLEGIBLE]
----------------------------------------------
Name: [ILLEGIBLE]
Title: President
STONE INVESTMENTS, INC., on behalf of itself and
its directors and officers
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
/s/ Xxxxx X. Xxxxxxx
------------------------------------------------
XXXXX X. XXXXXXX
------------------------------------------------
XXXXX X. FAIL
7
IN WITNESS WHEREOF, each of the undersigned have caused the
execution of this Agreement by its duly authorized officers as of the day and
year first written above.
XXXXXXXXX.XXX, INC.
By:
----------------------------------------------
Name:
Title:
STONE INVESTMENTS, INC., on behalf of itself and
its directors and officers
By:
----------------------------------------------
Name:
Title:
------------------------------------------------
XXXXX X. XXXXXXX
/s/ Xxxxx X. Fail
------------------------------------------------
XXXXX X. FAIL
7
EXHIBIT G
REGISTRATION RIGHTS AGREEMENT AMONG XXXXXXXXX.XXX, INC. AND
THE PURCHASERS
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of June 14, 1999, by Xxxxxxxxx.xxx, Inc., a Delaware corporation
(together with its successors, the "Company") and each of the parties listed on
Exhibit A attached hereto (each, a "Purchaser," collectively, the "Purchasers").
BACKGROUND:
A. The Company desires to sell to each of the Purchasers, and each
of the Purchasers is willing to purchase from the Company, certain shares of
Class B Convertible Redeemable Preferred Stock, par value $.01 per share as set
forth on Exhibit A hereto (such class of stock being called the "Preferred
Stock").
B. The Preferred Stock is convertible into common stock, par value
$0.01 per share, of the Company (such class of stock being called the "Common
Stock").
C. In order to induce each of the Purchasers to purchase the
Preferred Stock from the Company, the Company has agreed to grant certain rights
to each of the Purchasers with respect to the registration of the Common Stock
acquired upon conversion of the Preferred Stock.
Therefore, in consideration of the premises and the covenants
contained herein, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged and confessed, the parties hereby
agree as follows:
AGREEMENTS:
1. Definitions. As used in this Agreement, the following capitalized terms shall
have the following meanings:
"Common Securities" means the Common Stock into which the Preferred
Securities are converted and any other securities of the Company into which the
Preferred Securities are converted or convertible pursuant to the terms thereof
and any other securities into which such Common Stock or other securities are
changed, reclassified, split, combined, or converted or for which they are
exchanged by amendment to the Company's Certificate of Incorporation or by
consolidation, merger, conversion, or otherwise.
"Common Stock" has the meaning given it under the caption
"Background."
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Holders" means each of the Purchasers, for so long as it is the
registered owner of any of the Registrable Securities, and each successor and
assign of a Purchaser, for so long as such successor and assign is a registered
owner of any of the Registrable Securities. The plural term is applicable
whether there is one or more Persons who meet the definition.
"Majority" means, with respect to the Holders (or any subgroup of
Holders), the Holders (or Holders within such subgroup) who are the registered
owners of a majority of the outstanding Registrable Securities owned by all
Holders (or Holders within such subgroup); provided however, that, if there is
more than one class of Common Securities outstanding at any time, each class
shall be assigned a fair value relative to each other class by the Board of
Directors of the Company, acting reasonably and in good faith, and the term
"Majority" will be the Holders (or the Holders within such subgroup) of
outstanding Registrable Securities having a majority of the value of the
outstanding Registrable Securities owned by all Holders (or Holders within such
subgroup). For purposes of this definition, each Preferred Security will be
deemed to be the number and type of Common Securities into which it is
convertible by its terms (or would be so convertible at the date on which it
first becomes exercisable if the passage of time or the occurrence of some event
is required before such Preferred Security becomes convertible).
"NASD" means the National Association of Securities Dealers, Inc.
"Person" means an individual, partnership, corporation, limited
liability company, trust, unincorporated organization or government or agency or
political subdivision thereof.
"Preferred Securities" means the shares of Preferred Stock and any
other securities into which such shares are changed, reclassified, split,
combined, or converted or for which they are exchanged by amendment to the
Company's Certificate of Incorporation or by consolidation, merger, conversion,
or otherwise other than as a result of the conversion thereof pursuant to the
conversion feature thereof.
"Preferred Stock" has the meaning given it under the caption
"Background."
"Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement.
"Registrable Securities" means the Preferred Securities and the
Common Securities but only so long as they remain Restricted Securities.
"Registration Expenses" means any and all expenses incident to the
Company's performance of or compliance with this Agreement, including (i) all
registration and filing fees required by the SEC, stock exchanges, and the NASD;
(ii) fees and expenses of compliance with securities or blue sky laws (including
fees and disbursements of counsel for the underwriters or Holders of Registrable
Securities to be registered in connection with blue sky qualifications of the
Registrable Securities and determination of their eligibility for investment
under the laws of such jurisdictions as a managing underwriter or a Majority of
Holders of the Registrable Securities to be registered may designate); (iii)
fees and expenses of any "qualified independent underwriter" required in
accordance with the rules of the NASD; (iv) printing, messenger, telephone, and
delivery expenses; (v) fees and disbursements of counsel for the Company and of
the Company's independent public accountants (including the expenses of any
special audit and "cold comfort" letters required by or incident to such
performance), (vi) fees and expenses of the underwriters customarily required to
be paid by issuers or sellers of securities (excluding (A) discounts,
commissions, and fees of underwriters, selling brokers, dealer managers, or
similar securities industry professionals relating to the distribution of the
Registrable Securities, (B) transfer taxes relating to the distribution of the
Registrable Securities, and (C) legal expenses of any Person other than the
Company and the Holders of Registrable Securities to be registered as
contemplated by clause (viii)); (vii) the costs of
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securities acts liability insurance, if the Company chooses to obtain such
insurance; (viii) fees and expenses of counsel to the Holders of the Registrable
Securities to be registered (who shall be selected by a Majority of such
Holders); and (ix) and fees and expenses of other Persons related to the
preparation, printing, and distribution of any Registration Statement, any
Prospectus, any amendment or supplement to any Registration Statement or
Prospectus, any underwriting agreement, any securities sales agreement, or any
other document.
"Registration Statement" means a Registration Statement, including
the Prospectus included therein, registering, under the Securities Act,
securities of the Company and all amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits
thereto, and all material incorporated by reference in such Registration
Statement. The Company agrees that each Registration Statement in which
Registrable Securities may be included under the Agreement will be on Form S-3
(or any form substituting therefor or the equivalent thereof) to the extent the
Company is eligible to use such form.
"Restricted Securities" means each of the Common Securities and the
Preferred Securities from the date of its original issuance until (i) it has
been effectively registered under the Securities Act and disposed of in
accordance with the Registration Statement covering it, (ii) it is distributed
to the public pursuant to Rule 144 under the Securities Act (or any similar
provisions then in force), or (iii) it has otherwise been transferred and a new
certificate, or other evidence of ownership, for it has been delivered by or on
behalf of the Company and such certificate or other evidence of ownership does
not bear a legend restricting the transfer thereof under federal securities laws
and is not subject to any stop transfer order given by the Company to its
transfer agent.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Underwritten Offering" means an offering in which securities are
sold to an underwriter (either on a firm commitment or best efforts basis) for
reoffering to the public.
2. Registration Rights.
(a) At any time the Company has equity securities outstanding that
requires it to be subject to the reporting requirements of Sections 13 or 15(d)
of the Exchange Act, the Company shall, upon the written request of any
Holder(s) of at least 25% of the outstanding Registrable Securities, use its
best efforts to effect, as promptly as practical but in any event within 60 days
after such request, the registration or qualification of Registrable Securities
under the Securities Act and/or any other applicable federal and/or state
securities laws in order to permit the sale or other disposition of some or all
of the Registrable Securities of the requesting Holder(s) in the manner and in
the jurisdictions described in such request. The Company shall not be required
to effect more than three registrations pursuant to the provisions of this
Subparagraph 2(a) if (and only if) the Registration Statement relating to each
such registration remains effective for the period of time required by
Subparagraph 3(a) and the Company otherwise complies with the provisions of
Paragraph 3 with respect to each such registration. Notwithstanding anything to
the contrary in this Agreement, no Holder has a right to have securities
registered pursuant to this Subparagraph 2(a) during the first 180 days
following the initial public offering of Common Stock by the Company. In
addition, if the offering to which a registration is demanded under this
Subparagraph 2(a) is not an underwritten offering, the Registrable Securities to
be included in such registration may not exceed the greater of (i) 15%
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of the total outstanding shares of Common Stock (on a fully-diluted basis) or
(ii) such higher percentage that an investment bank of national reputation
selected by mutual agreement of the Holder(s) demanding registration under this
Subparagraph 2(a) and the Company (the fees and expenses of which investment
bank will be paid by the Company) determines may be so registered without a
material adverse effect on the market for the Company's securities. The
limitations described in the preceding sentence do not apply to an underwritten
offering (although such offering may be subject to customary underwriter
cutbacks due to market conditions).
(b) Each time the Company proposes to file a Registration Statement
(other than in connection with the initial public offering of Common Stock or a
Registration Statement on Form S-4 or S-8 or any form substituting therefor or
the equivalent thereof) on which equity securities of the Company are to be
registered for sale by the Company or any other Person (including a Registration
Statement to be filed pursuant to Subparagraph 2(a))(a "Triggering Registration
Statement"), the Company shall give written notice of such proposed filing to
all Holders of Registrable Securities at least 30 days before the anticipated
filing date of the Triggering Registration Statement and such notice shall offer
each Holder of Registrable Securities the opportunity to have any or all of the
Registrable Securities so held included in the Triggering Registration Statement
or, at the option of the Company, in a separate Registration Statement to be
filed concurrently with the Triggering Registration Statement. Each Holder of
Registrable Securities desiring to have Registrable Securities registered under
this Subparagraph 2(b) shall so advise the Company in writing within 30 days
after the date such notice is given by the Company (which request shall set
forth the amount of Registrable Securities for which registration is requested).
The Company shall include in the Triggering Registration Statement or separate
Registration Statement all such Registrable Securities so requested to be
included therein. Notwithstanding the foregoing, if the Company has proposed to
file the Triggering Registration Statement in connection with an Underwritten
Offering by the Company and a managing underwriter of such offering delivers a
written opinion to the Company that the total amount or kind of securities that
the Company and any other Persons intend to include in such proposed offering is
so large that it is likely to affect in a materially adverse way the success of
such proposed offering, then the amount of securities to be offered for the
accounts of Holders of Registrable Securities and such other Persons (other than
the Company) shall be reduced pro rata to the extent necessary to reduce the
total amount of securities to be included in such proposed offering to the
amount recommended by such managing underwriter; provided, however, that the
percentage reduction of such Registrable Securities shall not be greater than
the percentage reduction of the securities of any such other Person.
Furthermore, if a managing underwriter of an Underwritten Offering by the
Company (but not any other Person) delivers an opinion to the Company that the
inclusion in such proposed offering of any Registrable Securities would
materially adversely affect the success of such proposed offering by the
Company, the Registrable Securities need not be included and the notice of the
proposed filing need not be given so long as the securities of any other Person
(other than the Company) are not included therein. The Company agrees that it
will not grant to any Person registration rights that are equal to or more
favorable than those granted under this Agreement.
3. Registration Procedures. In connection with the Company's registration
obligations pursuant to Paragraph 2 hereof, the Company will or, to the extent
such matters are dependent on third parties, use its best efforts to:
(a) after a Registration Statement relating to any or all
Registrable Securities becomes effective, prepare and file with the SEC such
post-effective amendments to such
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Registration Statement as may be necessary to keep such Registration Statement
effective for the lesser of (i) the period of time necessary to effect the
complete distribution of the Registrable Securities thereunder and (ii) 180
days; cause the Prospectus to be supplemented by any required supplement and
cause the Prospectus as so supplemented to be filed pursuant to Rule 424 under
the Securities Act (it being understood that the Company shall not be deemed to
have used its best efforts to keep a Registration Statement effective during the
applicable period if it voluntarily takes any action that would result in
Holders of the Registrable Securities covered thereby not being able to sell
such Registrable Securities during that period);
(b) notify the selling Holders of Registrable Securities and, if the
sale of Registrable Securities is to be made in an Underwritten Offering, each
managing underwriter, if any, promptly, and (if requested by any such Person)
confirm such advice in writing, (i) when a Registration Statement covering such
Registrable Securities, or any amendment or post-effective amendment thereto,
has been filed, when the same has become effective, and when any supplement to
the Prospectus has been filed, (ii) of any request by the SEC for amendments or
supplements to the Registration Statement or the Prospectus or for additional
information, (iii) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any Proceedings
for that purpose, (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable Securities for
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose, and (v) of the happening of any event that makes any statement
made in the Registration Statement, the Prospectus, or any document incorporated
therein by reference untrue in any material respect or that requires the making
of any changes in the Registration Statement, the Prospectus, or any document
incorporated therein by reference in order to make the statements therein not
misleading in any material respect;
(c) obtain the withdrawal of any order suspending the effectiveness
of the Registration Statement at the earliest possible moment;
(d) if reasonably requested by a managing underwriter of an
Underwritten Offering or a Holder of Registrable Securities to be registered in
connection with an Underwritten Offering, promptly incorporate in a Prospectus
(by filing the Registration Statement or an amendment or post-effective
amendment thereto or a supplement to the Prospectus, as appropriate) such
information as the managing underwriter and the Majority of the Holders of the
Registrable Securities being registered agree should be included therein
relating to the sale of the Registrable Securities, including, without
limitation, information with respect to the number of Registrable Securities
being sold to such underwriters, the purchase price being paid therefor by such
underwriters, and any other terms of the Underwritten Offering of the
Registrable Securities to be sold in such offering;
(e) furnish to each selling Holder of Registrable Securities and
each managing underwriter involved in an Underwritten Offering of such
Registrable Securities, without charge, at least one signed copy of the
Registration Statement covering such Registrable Securities and each amendment
and post-effective amendment thereto (including exhibits) and a copy of all
documents incorporated therein by reference;
(f) deliver to each selling Holder of Registrable Securities and the
underwriters, if any, involved in an Underwritten Offering of such Registrable
Securities, without charge, as many copies of the Prospectus relating to such
Registrable Securities (including each Preliminary prospectus) and any amendment
or supplement thereto as such Persons may reasonably request;
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(g) prior to any public offering of Registrable Securities, register
or qualify or cooperate with the selling Holders of Registrable Securities, the
underwriters, if any, involved in an Underwritten Offering of such Registrable
Securities, and their respective counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions as any seller or underwriter
reasonably requests in writing and do any and all other acts or things necessary
or advisable to enable the disposition in such jurisdictions of such Registrable
Securities;
(h) cooperate with the selling Holders of Registrable Securities and
the managing underwriters, if any, involved in an Underwritten Offering of such
Registrable Securities to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Registrable
Securities to be sold; and enable such Registrable Securities to be in such
denominations and registered in such names as a managing underwriter may request
at least two business days prior to any sale of Registrable Securities to the
underwriters;
(i) cause the Registrable Securities covered by the applicable
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the seller or
sellers thereof or the underwriters, if any, to consummate the disposition of
such Registrable Securities;
(j) upon the occurrence of any event contemplated by Subparagraph
3(b)(v), prepare, file and use its best efforts to cause a supplement,
amendment, or post-effective amendment to the Registration Statement or the
related Prospectus or any document incorporated therein by reference to be
declared effective by the SEC or other requisite regulatory authority or file
any other required document, within 30 days of such occurrence so that, as
thereafter delivered to the purchasers of the Registrable Securities, the
Prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading;
(k) cause all Registrable Securities covered by the Registration
Statement to be listed on each securities exchange on which similar securities
issued by the Company are then listed;
(l) enter into such agreements (including an underwriting agreement
and agreements relating to indemnification) and take all such other actions in
connection therewith in order to expedite or facilitate the disposition of such
Registrable Securities; provided the Company need not enter into any such
agreement or take any such other action if it exposes the Company to liability
greater than the liability to which issuers are customarily exposed in
connection with offerings for the benefit of stockholders;
(m) comply with all applicable rules and regulations of the SEC and
make generally available to its security holders earnings statements satisfying
the provisions of Section 11(a) of the Securities Act; and
(n) cooperate with each seller of Registrable Securities and each
underwriter participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be made with
the NASD.
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The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Company in writing
such information regarding the distribution of such securities as the Company
may from time to time reasonably request in writing.
Each Holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Subparagraph 3(b)(v), such
Holder will forthwith discontinue disposition of Registrable Securities until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Subparagraph 3(j) or until it is advised in writing by the
Company that the use of the Prospectus may be resumed, which, in any event,
shall be within 30 days of such notice of discontinuance. If so directed by the
Company, such Holder will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies then in such Holder's possession, of
the Prospectus covering such Registrable Securities current at the time of
receipt of such notice. Any suspension or discontinuance of the effectiveness of
the Registration Statement shall toll the 180 day period of effectiveness of the
Registration Statement set forth in Paragraph 3(a) such that the number of days
of any such suspension or discontinuance shall not be counted toward the 180 day
period of effectiveness required by Paragraph 3(a).
4. Registration Expenses.
(a) All Registration Expenses will be borne by the Company
regardless of whether a Registration Statement relating to the Registrable
Securities becomes effective. The Company will, in any event, pay its internal
expenses (including all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the securities to
be registered on each securities exchange on which similar securities issued by
the Company are then listed, and the fees and expenses of any Person, including
special experts, retained by the Company.
(b) In connection with each Registration Statement registering the
sale of Registrable Securities as required hereby, the Company will reimburse
the Holders of Registrable Securities for Registration Expenses incurred by
them.
5. Exchange Act Compliance; Rule 144. The Company covenants that, so long as it
is required to do so during the term of this Agreement, it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder. In addition, the Company
will take such further action as any Holder may reasonably request to enable
such Holder to sell such Holder's Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided by (a)
Rule 144 under the Securities Act, as such rule may be amended from time to
time, or (b) any similar rule or regulation hereafter adopted by the SEC. Upon
the request of any Holder, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements.
6. Participation in Underwritten Offerings. No Holder may participate in any
Underwritten Offering arranged for by the Company or any other Person unless
such Holder (a) agrees to sell such Holder's securities on the basis provided in
any underwriting arrangements approved by the Company or the other Persons who
arranged for such Underwritten Offering and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements, and
other documents required under the terms of such underwriting
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arrangements. Nothing in this Paragraph shall be construed to create any
additional rights regarding the registration of Registrable Securities in any
Person other than as set forth herein.
7. Indemnification. In the event any Registrable Securities are included in a
Registration Statement pursuant to this Agreement:
(a) Company Indemnity. Without limitation of any other
indemnity provided to any Holder, either in connection with the Preferred Stock
offering or otherwise, to the extent permitted by law, the Company shall
indemnify and hold harmless each Holder, the affiliates, representatives,
officers, directors and partners of each Holder, any underwriter (as defined in
the Securities Act) for such Holder, and each Person, if any, who controls such
Holder or underwriter (within the meaning of the Securities Act or the Exchange
Act, against any losses, claims, damages or liabilities (joint or several) to
which they may become subject under the Securities Act, the Exchange Act or
other federal or state securities law, insofar as such losses, claims, damages
or liabilities (or actions in respect thereto) arise out of or are based upon
any of the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement of a material
fact contained in such Registration Statements including any preliminary
Prospectus or final Prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, (iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, or (iv) any state securities law or any rule
or regulation promulgated under the Securities Act, the Exchange Act or any
state securities law, and the Company shall reimburse each Holder, affiliate,
officer or director or partner, underwriter or controlling Person for reasonable
legal or other expenses incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, action or expense; provided,
however, that the Company shall not be liable to any Holder in any such case for
any such loss, claim, damage, liability or action to the extent that it arises
out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information by such Holder furnished expressly for use
in connection with such registration by such Holder.
(b) Holder Indemnity. Each Holder shall indemnify and hold
harmless the Company and any underwriter (as defined in the Securities Act) and
each Person, if any, who controls the Company or the underwriter (within the
meaning of the Securities Act or the Exchange Act), against any losses, claims,
damages or liabilities (joint or several) to which they may become subject under
the Securities Act, the Exchange Act or any state securities law, and the Holder
shall reimburse the Company and each such underwriter or controlling person of
any of the foregoing for reasonable legal or other expenses incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; insofar as such losses, claims, damages or liabilities (or
actions with respect thereof) arise out of or are based upon any statements or
information provided in writing by such Holder to the Company specifically for
use in connection with the registration statement. The amount any Holder shall
be obligated to pay pursuant to this provision shall be limited to the net
proceeds to such Holder of the Registrable Securities sold pursuant to the
Registration Statement which gives rise to such obligation.
(c) Notice; Right to Defend. Promptly after receipt by an
indemnified party under this Paragraph 7 of notice of the commencement of any
action (including any governmental action), such indemnified party shall, if a
claim in respect thereof is to be made against any indemnifying party under this
Paragraph 7, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
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participate in and if the indemnifying party agrees in writing that it will be
responsible for any costs, expenses, judgments, damages and losses incurred by
the indemnified party with respect to such claim, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an indemnified
party shall have the right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying party, if the indemnified party reasonably
believes that representation of such indemnified party by the counsel retained
by the indemnifying party would be inappropriate due to actual or potential
differing interests between such counsel in such proceeding. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall relieve such indemnifying party of any
liability to the indemnified party under this Agreement only if and to the
extent that such failure is prejudicial to its ability to defend such action,
and the omission so to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified party otherwise
than under this Agreement.
(d) Contribution. If the indemnification provided for in this
Agreement is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
hand in connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relevant fault of the indemnifying party and the indemnified
party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
Notwithstanding the foregoing, the amount any Holder shall be obligated to
contribute pursuant to this Agreement shall be limited to an amount equal to the
net proceeds to such Holder of the Registrable Securities sold pursuant to the
Registration Statement which gives rise to such obligation to contribute (less
the aggregate amount of any damages which the Holder has otherwise been required
to pay in respect of such loss, claim, damage, liability or action arising from
the sale of such Registrable Securities).
(e) Survival of Indemnity. The indemnification provided by
this Agreement shall be a continuing right to indemnification and shall survive
the registration and sale of any Registrable Securities by any person entitled
to indemnification hereunder and the expiration or termination of this
Agreement.
8. Limitations on Other Registration Rights. Except as otherwise set forth in
this Agreement, the Company shall not, without the prior written consent of the
Holders of Registrable Securities representing a majority thereof held by all
the Holders, allow any Registration Statement filed on behalf of any Person
(including the Company) other than a Holder to become effective during any
period when the Company is not in compliance with this Agreement.
9. Remedies.
(a) Time is of Essence. The Company agrees that time is of the
essence of each of the covenants contained herein and that, in the event of a
dispute
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hereunder, this Agreement is to be interpreted and construed in a manner that
will enable the Holders to sell their Registrable Securities as quickly as
possible after such Holders have indicated to the Company that they desire their
Registrable Securities to be registered. Any delay on the part of the Company
not expressly permitted under this Agreement, whether material or not, shall be
deemed a material breach of this Agreement.
(b) Remedies Upon Default or Delay. The Company acknowledges
the breach of any part of this Agreement may cause irreparable harm to a Holder
and that monetary damages alone may be inadequate. The Company therefore agrees
that the Holder shall be entitled to injunctive relief or such other applicable
remedy as a court of competent jurisdiction may provide. Nothing contained
herein will be construed to limit a Holder's right to any remedies at law,
including recovery of damages for breach of any part of this Agreement.
10. Further Assurances. From time to time after the date of this Agreement, each
party to this Agreement will, at the expense of the requesting party, execute
and deliver such further instruments and documents and take such other action as
any other party to this Agreement may reasonably request in order more
effectively to carry out or confirm the intent of this Agreement.
11. Notices. All notices, requests, demands, and other communications hereunder
shall be in writing and shall be personally delivered, delivered by facsimile or
courier service, or mailed, certified with first class postage prepaid, to the
address set forth below:
If to a Holder: At the most current address given by such Holder to the
Company, in accordance with the provisions of this
Paragraph, which address initially is, with respect to
each Holder, the address set forth below such Holder's
name on the signature page of this Agreement
If to the Company: Initially at its address set forth below its name on the
signature page of this Agreement and thereafter at such
other address as may be designated from time to time by
notice given in accordance with the provisions of this
Paragraph
Each such notice, request, demand, or other communication shall be deemed to
have been given (whether actually received or not) on the date of actual
delivery thereof, if personally delivered or delivered by facsimile transmission
(if receipt is confirmed at the time of such transmission by telephone or
facsimile-machine-generated confirmation), or on the third day following the
date of mailing, if mailed in accordance with this Paragraph, or on the day
specified for delivery to the courier service (if such day is one on which the
courier service will give normal assurances that such specified delivery will be
made). Any notice, request, demand, or other communication given otherwise than
in accordance with this Paragraph shall be deemed to have been given on the date
actually received. Any party may change its address for purposes of this
Paragraph by giving written notice of such change to all other parties in the
manner hereinabove provided. Whenever any notice is required to be given by law
or by this Agreement, a written waiver thereof, signed by the Person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of that notice.
12. Severability. If any provision of this Agreement is held to be illegal,
invalid, or unenforceable under present or future laws effective during the term
hereof, such provision shall be fully severable and this Agreement shall be
construed and enforced as if such
-10-
illegal, invalid, or unenforceable provision had never comprised a part of this
Agreement; the remaining provisions of this Agreement shall remain in full force
and effect and shall not be affected by the illegal, invalid, or unenforceable
provision or by its severance from this Agreement. Furthermore, in lieu of each
such illegal, invalid, or unenforceable provision, there shall be added
automatically as a part of this Agreement a provision as similar in terms to
such illegal, invalid, or unenforceable provision as may be possible and be
legal, valid, and enforceable.
13. Parties Bound; Assignment. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns,
including, without limitation and without the need for an express assignment,
subsequent Holders of Registrable Securities.
14. Entirety; Amendments and Waivers. This Agreement (including any Exhibits
hereto and the documents delivered pursuant hereto) constitutes the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior agreements or understandings relating to the subject matter
hereof and may be modified or amended only by an instrument in writing executed
by the Company and each Holder of the Registrable Securities. Any party may
waive any of the conditions contained herein or any of the obligations of any
other party hereunder, but any such waiver shall be effective only if in writing
and signed by the party waiving such conditions or obligations.
15. Paragraph Headings. The Paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
16. Specific Performance. The Company hereby agrees and acknowledges that the
remedy at law for any breach by the Company of the provisions of this Agreement
will be inadequate and that the Holders shall be entitled to equitable remedies,
including specific performance and injunctive relief, therefor.
17. Governing Law and Venue. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO
ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF
DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS
OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE. EACH PARTY HEREBY
IRREVOCABLY SUBMITS TO THE PERSONAL JURISDICTION OF THE COURTS LOCATED IN
DELAWARE AND AGREES THAT ANY LITIGATION BETWEEN THE PARTIES WILL BE FILED IN
COURTS LOCATED IN DELAWARE.
18. Expenses. Except as otherwise expressly set forth herein, each party hereto
will bear its own legal and other expenses incurred in connection with the
preparation, execution, and performance of this Agreement.
19. Attorney's Fees. If any action is brought to enforce or interpret the terms
of this Agreement (including through arbitration), the prevailing party shall be
entitled to reasonable legal fees, costs, and necessary disbursements in
addition to any other relief to which such party may be entitled.
-11-
20. Counterparts. This Agreement may be executed in any number of counterparts
and shall be effective when each party hereto has executed at least one
counterpart, with the same effect as if all signing parties had signed the same
document. All counterparts will be construed together and evidence only one
agreement, which, notwithstanding the actual date of execution of any
counterpart, shall be deemed to be dated day and year first written above. In
making proof of this Agreement, it shall not be necessary to account for a
counterpart executed by any party other than the party against whom enforcement
is sought or to account for more than one counterpart executed by the party
against whom enforcement is sought.
21. Execution by Facsimile. The manual signature of any party hereto that is
transmitted to any other party by facsimile shall be deemed for all purposes to
be an original signature.
22. Non-Waiver; Rights are Cumulative. Neither a failure of a party to this
Agreement to exercise any power reserved to it in this Agreement or any
ancillary agreement or to insist upon compliance by any other party hereto with
any obligation or condition in this Agreement or any ancillary agreement nor any
custom or practice of the parties at variance with the terms hereof or any
ancillary agreement shall constitute a waiver of such first party's rights to
demand exact compliance with the terms of this Agreement or such ancillary
agreement. Waiver by a party to this Agreement of any particular default shall
not affect or impair such party's right with respect to any subsequent default
of the same or of a different nature; nor shall any delay, forbearance, or
omission of such party to exercise any power or right arising out of any breach
or default by any other party hereto of any of the terms, provisions, or
covenants of this Agreement or under any ancillary agreement affect or impair
such first party's rights; nor shall such constitute a waiver by such first
party of any rights hereunder or under any ancillary agreement or rights to
declare any subsequent breach or default. Subsequent acceptance by a party to
this Agreement of any performance or payments due to it hereunder or any
ancillary agreement will not be deemed to be a waiver by such first party of any
preceding breach by any other party of any terms, provisions, covenants, or
conditions of this Agreement or any ancillary agreement. Each party's rights
under this Agreement and the ancillary agreements are cumulative and neither the
existence of, nor the exercise or enforcement by a party of, any right or remedy
under this Agreement or the ancillary agreements shall preclude the exercise or
enforcement by such party of any other right or remedy under this Agreement, any
ancillary agreement, or law.
23. No Strict Construction. This Agreement is the result of substantial
negotiations among the parties and their counsel and has been prepared by their
joint efforts. Accordingly, the fact that counsel to one party or another may
have drafted this Agreement or any portion hereof is immaterial and this
Agreement will not be strictly construed against any party.
24. Construction. Whenever the context requires, the gender of all words used in
this Agreement includes the masculine, feminine, and neuter. Unless otherwise
stated, all references to Paragraphs or Subparagraphs are to paragraphs or
subparagraphs of this Agreement. All references in this Agreement to "dollars"
or "$" means United States of America dollars. The term "including" and
variations of the term mean including without limitation.
[THE REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY.]
-12-
Executed on the date or dates indicated below, to be effective as of
the date first written above.
XXXXXXXXX.XXX, INC
By: /s/ [ILLEGIBLE]
---------------------------
Title: CEO
------------------------
Date: June 14, 1999
-------------------------
Address:
00 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile Number: 000-000-0000
XL VENTURES, LLC
By: XL Ventures (Delaware), Inc.
Its Managing Member
--------------------------------
By: Xxxx X. Xxxxxxxx
Deputy Chairman
Date:________________, 1999
AT HOME CORPORATION, a Delaware
corporation
By: /s/ Xxxx X. Xxxxxxx
-----------------------------
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President, Business Affairs
Date: June 10, 1999
CHANCELLOR PRIVATE CAPITAL
PARTNERS III, L.P.
BY: CPCP Associates, L.P., its General Partner
BY: INVESCO Private Capital, Inc., its General
Partner
By: /s/ Xxxxxx Xxxxxxxxx
-------------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Managing Director
Date: June 10, 1999
CHANCELLOR PRIVATE CAPITAL OFFSHORE
PARTNERS II, L.P.
By: CPCO Associates, L.P., its Investment
General Partner
By: INVESCO Private Capital, Inc., its General
Partner
By: /s/ Xxxxxx Xxxxxxxxx
-------------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Managing Director
CHANCELLOR PRIVATE CAPITAL OFFSHORE
PARTNERS I, C.V.
By: Chancellor KME IV Partner, L.P., its
Investment General Partner
By: INVESCO Private Capital, Inc., its General
Partner
By: /s/ Xxxxxx Xxxxxxxxx
-------------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Managing Director
CITIVENTURE 96 PARTNERSHIP, L.P.
By: INVESCO Private Capital, Inc., its investment
Advisor
By: /s/ Xxxxxx Xxxxxxxxx
-------------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Managing Director
MS CUBED, LLC
By: /s/ Xxxxxxx [ILLEGIBLE]
----------------------------
Name: Xxxxxxx [ILLEGIBLE]
--------------------------
Title: Managing Member
-------------------------
Date: [ILLEGIBLE], 1999
--------------------------
MAMARONECK CAPITAL LLC
BY: /s/ Xxxx Xxxxxxxx
----------------------------
Name: Xxxx Xxxxxxxx
--------------------------
Title: Manager
-------------------------
Date: June 10, 1999
-------------------------
DRAKE & CO. FOR THE ACCOUNT OF
CITIVENTURE III
By: /s/ Xxxxxxx Going
----------------------------
Name: Xxxxxxx Going
-------------------------
Title: DRAKE & CO. NOMINEE
-------------------------
DATE: 6/10/99
-------------------------
PROSPECT STREET NYC DISCOVERY
FUND, L.P.
By: PROSPECT STREET DISCOVERY
FUND, INC., its general partner
By: /s/ Xxxxxxx X. Xxxx
---------------------------------------
Name: XXXXXXX X. XXXX
-------------------------------------
Title: Principal
------------------------------------
Date:________________, 0000
XXXXXXXXX-XXXXX PARTNERS III, L.P.
By: Xxxxxxxxx-Xxxxx Managing Partner III,
L.L.C., its general partner
By: /s/ Xxxxx X. Xxxxx
---------------------------------------
Name: Xxxxx X. Xxxxx
Title: Authorized Person
Date: 6/11/99
-------------------------------------
CHANNEL-WEBSTAKES, LLC
By: Xxxxxxxxx Partners Management Company
LLC, its Managing Member
By: /s/ Xxxxx X. Xxxxx
---------------------------------------
Name: Xxxxx X. Xxxxx
Title: Authorized Person
Date: 6/11/99
-------------------------------------
WINSTON PARTNERS, L.P. XXX XXXXXX
By: Chatterjee Fund Management, L.P., its
general partner ------------------------------------
By: /s/ Xxxxx X. Xxxxxxx Date:
--------------------------------- ------------------------------
Date: Address for notices:
-------------------------------
Xxxxx X. Xxxxxxx 000 X. 00xx Xxxxxx Xxx. #00X
Address for notices: Attorney in Fact Xxx Xxxx, XX 00000
c/o The Chatterjee Group
000 Xxxxxxx Xxxxxx Xxxxx 0000 XXXXX XXXXXXX
Xxx Xxxx, XX 00000
/s/ Xxxxx X. Xxxxxxx
------------------------------------
WINSTON PARTNERS II LLC
Date:
By: Chatterjee Advisors LLC, its Manager ------------------------------
Address for notices:
By: /s/ Xxxxx X. Xxxxxxx Manager
--------------------------------- 00 Xxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
Date:
-------------------------------
XXXX XXXXX
Address for notices:
/s/ Xxxx Xxxxx
c/o The Chatterjee Group ------------------------------------
000 Xxxxxxx Xxxxxx Xxxxx 0000
Xxx Xxxx, XX 00000 Date:
------------------------------
Address for notices:
WINSTON PARTNERS II LDC
000 Xxxx 00xx Xxxxxx Xxx. #0X
By: /s/ Xxxxx X. Xxxxxxx Xxx Xxxx, XX 00000
---------------------------------
Date: XXXXX XXXXXX
-------------------------------
Xxxxx X. Xxxxxxx /s/ Xxxxx Xxxxxx
Address for notices: Attorney in Fact ------------------------------------
c/o Citco Date:
Xxxx Xxxxxxxxx 0 ------------------------------
Xxxxxxxxxx, Xxxxxxx
Xxxxxxxxxxx Antilles Address for notices:
000 Xxxx 00xx Xxxxxx
Xxx. 00X
Xxx Xxxx, XX 00000
WINSTON PARTNERS, L.P. XXX XXXXXX
By: Chatterjee Fund Management, L.P., its /s/ Xxx Xxxxxx
general partner ------------------------------------
By: /s/ Xxxxx X. Xxxxxxx Date:
--------------------------------- ------------------------------
Attorney-in-Fact
Date: Address for notices:
-------------------------------
000 X. 00xx Xxxxxx Xxx. #00X
Address for notices: Xxx Xxxx, XX 00000
c/o The Chatterjee Group
000 Xxxxxxx Xxxxxx Xxxxx 0000 XXXXX XXXXXXX
Xxx Xxxx, XX 00000
/s/ Xxxxx X. Xxxxxxx
------------------------------------
WINSTON PARTNERS II LLC
Date:
By: Chatterjee Advisors LLC, its Manager ------------------------------
Address for notices:
By: /s/ Xxxxx X. Xxxxxxx Manager
--------------------------------- 00 Xxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
Date:
-------------------------------
XXXX XXXXX
Address for notices:
/s/ Xxxx Xxxxx
c/o The Chatterjee Group ------------------------------------
000 Xxxxxxx Xxxxxx Xxxxx 0000
Xxx Xxxx, XX 00000 Date:
------------------------------
Address for notices:
WINSTON PARTNERS II LDC
000 Xxxx 00xx Xxxxxx Xxx. #0X
By: /s/ Xxxxx X. Xxxxxxx Xxx Xxxx, XX 00000
---------------------------------
Attorney-in-Fact
Date: XXXXX XXXXXX
-------------------------------
/s/ Xxxxx Xxxxxx
Address for notices: ------------------------------------
c/o Citco Date:
Xxxx Xxxxxxxxx 0 ------------------------------
Xxxxxxxxxx, Xxxxxxx
Xxxxxxxxxxx Antilles Address for notices:
000 Xxxx 00xx Xxxxxx
Xxx. 00X
Xxx Xxxx, XX 00000
THE TRAVELERS INSURANCE COMPANY
By: /s/ Jordan X. Xxxxxxx
Name: JORDAN X. XXXXXXX
Vice President
Title:
Date: , 1999
PRIMUS CAPITAL FUND IV LIMITED
PARTNERSHIP
By: Primus Venture Partners IV Limited
Partnership, its General Partner
By: Primus Venture Partners IV, Inc., its
General Partner
By: /s/ Xxxxx X. XxXxxxx
---------------------------------------
Name: Xxxxx X. XxXxxxx
-------------------------------------
Title: Managing Director
------------------------------------
PRIMUS EXECUTIVE FUND LIMITED
PARTNERSHIP
By: Primus Venture Partners IV Limited
Partnership, its General Partner
By: Primus Venture Partners IV, Inc., its
General Partner
By: /s/ Xxxxx X. XxXxxxx
---------------------------------------
Name: Xxxxx X. XxXxxxx
-------------------------------------
Title: Managing Director
------------------------------------
XXXXX CAPITAL ARCHON PARTNERS L.P.
By: Xxxxx Capital Inc.
By: /s/ Xxxx Xxxxxxx
---------------------------------------
Xxxx Xxxxxxx, President
-13-
I WIN INVESTORS, LLC
By: /s/ Xxxxxx Xxxxxxx
---------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Manager
ALPINE SPECTRUM INVESTORS LLC
By: G(2) Investment Partners Mgr
---------------------------------------
By: [ILLGIBLE]
---------------------------------------
XXXXXXXXX FAMILY FUND LLC
/s/ Xxxxxx Xxxxxxxxx
-------------------------------------------
Name: Xxxxxx Xxxxxxxxx, Manager
Date: June , 1999
NATIONAL BROADCASTING COMPANY, INC.
By: /s/ [ILLEGIBLE]
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Date: ________________, 1999
[Registration Rights Agreement]
WPG SOFTWARE FUND, L.P.
By: Xxxxx Xxxx & Xxxxx, LLC, Its General
Partner
By: /s/ XxXxxxx Xxxxxx
---------------------------------------
Name: XxXxxxx Xxxxxx
Title Managing Director
WPG INSTITUTIONAL SOFTWARE FUND, L.P.
By: Xxxxx Xxxx & Xxxxx, LLC, Its General
Partner
By: /s/ XxXxxxx Xxxxxx
---------------------------------------
Name: XxXxxxx Xxxxxx
Title Managing Director
WPG NETWORKING FUND, L.P.
By: Xxxxx Xxxx & Xxxxx, LLC, Its General
Partner
By: /s/ XxXxxxx Xxxxxx
---------------------------------------
Name: XxXxxxx Xxxxxx
Title Managing Director
CA CAPITAL MANAGEMENT LTD.
By: /s/ XxXxxxx Xxxxxx
---------------------------------------
Name: XxXxxxx Xxxxxx
Title: Managing Director
EXHIBIT A
Investor List
Dollar Investment Number of Shares
----------------- ----------------
XL Ventures, LLC $ 7,000,000 1,166,667
At Home Corporation 7,000,000 1,166,667
Chancellor Private Capital Partners III, L.P. 496,962 82,827
Chancellor Private Capital Offshore Partners II, L.P. 818,586 136,431
Chancellor Private Capital Offshore Partners I, C.V. 75,738 12,623
Citiventure 96 Partnership, L.P. 1,945,314 324,219
MS Cubed LLC 750,000 125,000
Mamaroneck Capital LLC 99,996 16,666
Drake & Co. for the Account of Citiventure III 813,402 135,567
Prospect Street NYC Discovery Fund L.P. 5,000,000 833,333
Xxxxxxxxx-Xxxxx Partners III, L.P. 1,000,000 333,333
Channel-Webstakes, LLC 1,200,000
Winston Partners, L.P. 700,000 116,667
Winston Partners II LLC 700,000 116,667
Winston Partners II LDC 500,000 83,333
Xxx Xxxxxx 58,000 9,667
Xxxxx Xxxxxxx 15,000 2,500
Xxxx Xxxxx 12,000 2,000
Xxxxx Xxxxxx 15,000 2,500
The Travelers Insurance Company 5,000,000 833,333
Primus Capital Fund IV Limited Partnership 2,880,000 480,000
Primus Executive Fund Limited Partnership 120,000 20,000
Xxxxx Capital Archon Partners L.P. 1,000,000 166,667
I Win Investors, LLC 500,000 83,333
Alpine Spectrum Investors LLC 500,000 83,333
Xxxxxx Xxxxxxxxx 1,000,000 166,667
National Broadcasting Company, Inc. 1,000,000 166,667
WPG Software Fund, L.P. 114,000
WPG Institutional Software Fund L.P. 248,800
WPG Networking Fund L.P. 27,200
CA Capital Management Ltd. 10,000
TOTAL 39,999,998 6,666,667
=========== =========
EXHIBIT H
ESCROW AGREEMENT AMONG XXXXXXXXX.XXX, INC.,
THE PURCHASERS AND THE ESCROW AGENT
Exhibit H
ESCROW AGREEMENT
This AGREEMENT made this 10th day of June, 1999 between Xxxxxxxxx.xxx,
Inc., a Delaware corporation (the "Issuer"), Xxxx Xxxxx Xxxx & XxXxxx LLP, a
limited liability partnership organized under the laws of the Commonwealth of
Pennsylvania (the "Escrow Agent"), and the parties listed on Exhibit A (each a
"Purchaser" and collectively the "Purchasers").
W I T N E S S E T H:
WHEREAS, the Issuer and the Purchasers intend to execute a certain Stock
Purchase Agreement dated June 11, 1999 (the "Purchase Agreement") relating to
the sale of 6,666,667 shares of the Issuer's Class B Convertible Redeemable
Preferred Stock (the "Shares") to be conducted pursuant to Rule 506 of
Regulation D under the Securities Act of 1933, as amended (the "Act"); and
WHEREAS, the Issuer proposes to establish the Escrow Account (as defined
below) with the Escrow Agent in connection with the Purchase Agreement and the
Escrow Agent is willing to establish such Escrow Account (as defined below) on
the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto hereby agree as follows:
1. Escrow Funds.
1.1 Each Purchaser shall deposit with the Escrow Agent the
respective sum applicable to such Purchaser as set forth on Exhibit A (the
"Escrowed Funds"), into a federally insured non-interest-bearing escrow account
established by the Escrow Agent (the "Escrow Account"). Each Purchaser agrees
that the Escrow Agent shall not be obligated to accept deposits not made in the
form of a wire transfer. Amounts deposited in the Escrow Account which have
cleared the federal funds wire system are herein referred to as the "Escrowed
Funds".
1.2 The Escrowed Funds shall be wired to the Escrow Account as
follows:
Bank Name: Summit Bank, Princeton, New Jersey
ABA No.: 021-202162
Account Name: Xxxx Xxxxx Xxxx & XxXxxx LLP Attorney Trust Account
Account No.: 901707619
2. Disbursement from the Escrow Account.
2.1 In the event that at any time up to the close of banking hours
on June 16, 1999 (the "Termination Date"), the Escrow Agent receives a joint
instruction letter ("Instruction Letter") executed by (i) Stone Investments,
Inc., (ii) the Issuer and (iii) Xxxx X. Xxxxxxx, Esq. (or such other designee as
determined by the Purchasers) on behalf of the Purchasers, stating that the
conditions to close the transactions contemplated by the Purchase Agreement, as
set forth in Sections 5 through 7 inclusive, thereof, have been satisfied, the
Escrow Agent shall thereafter (i) disburse the sum of twenty-four million
dollars to Stone Investments, Inc.; and (ii) disburse the amount of the Escrowed
Funds less twenty-four million dollars to the Issuer.
2.2 In the event the Escrow Agent does not receive the Instruction
Letter before the Termination Date, the Escrow Agent shall promptly refund to
each Purchaser the amount of Escrowed Funds received from such Purchaser which
is then held in the Escrow Account, without interest thereon or deduction
therefrom, and the Escrow Agent shall notify the Issuer thereof.
2.3 Upon disbursement of the Escrowed Funds pursuant to the terms of
this Section 2, the Escrow Agent shall be relieved of all further obligations
and released from all liability under this Agreement. It is expressly agreed and
understood that in no event shall the aggregate amount of payments made by the
Escrow Agent exceed the amount of the Escrowed Funds.
3. Rights, Duties and Responsibilities of Escrow Agent. The parties hereto
acknowledge and recognize that the Escrow Agent has acted as counsel for the
Issuer. The parties hereto covenant and agree that in performing any of its
duties under this Agreement, the Escrow Agent shall not be liable for any loss,
costs or damage which it may incur as a result of serving as Escrow Agent
hereunder, except for any loss, costs or damage arising out of its willful
default or gross negligence. Specifically, Escrow Agent shall not incur any
liability with respect to (i) any action taken or omitted to be taken in good
faith with respect to any questions relating to the duties and responsibilities
hereunder, or (ii) any action taken or omitted to be taken in reliance upon any
document, including any written notice of instruction provided for in this
Escrow Agreement, not only as to its due execution and the validity and
effectiveness of its provisions, but also to the truth and accuracy of any
information contained therein, which Escrow Agent shall in good faith believe to
be genuine, to have been signed or presented by a proper person or persons and
to conform with the provisions of this Escrow Agreement. Purchasers and Issuer
hereby agree to indemnify and hold harmless the Escrow Agent against any and all
losses, claims, damages, liabilities and expenses, including without limitation,
reasonable attorneys' fees and disbursements which may be imposed upon or
incurred by the Escrow Agent in connection with its serving as Escrow Agent
hereunder.
4. Resignation of Escrow Agent. The Escrow Agent may, at any time prior to
the receipt by the Escrow Agent of a written notice of dispute from either of
the parties, resign as Escrow Agent. Such resignation shall be permissible and
effective upon the delivery of the Escrowed Funds by the Escrow Agent to a bank
or attorney as shall be chosen by the Escrow Agent or mutually selected by
Issuer and Purchaser.
5. Indemnification and Contribution.
5.1 The Issuer agrees to indemnify the Escrow Agent and its
officers, directors, employees, agents and shareholders (jointly and severally
the "Indemnitees") against, and hold them harmless of and from, any and all
loss, liability, cost, damage and expense,
-2-
including, without limitation, reasonable counsel fees, which the Indemnitees
may suffer or incur by reason of any action, claim or proceeding brought against
the Indemnitees arising out of or relating in any way to this Agreement or any
transaction to which this Agreement relates, unless such action, claim or
proceeding is the result of the willful misconduct of the Indemnitees.
5.2 If the indemnification provided for in this Section 5 is
applicable, but for any reason is held to be unavailable, the Issuer shall
contribute such amounts as are just and equitable to pay, or to reimburse the
Indemnitees for, the aggregate of any and all losses, liabilities, costs,
damages and expenses, including counsel fees, actually incurred by the
Indemnitees as a result of or in connection with, and any amount paid in
settlement of any action, claim or proceeding arising out of or relating in any
way to any actions or omissions of the Indemnitors.
5.3 Any Indemnitee which proposes to assert the right to be
indemnified under this Section 5, promptly after receipt of notice of
commencement of any action, suit or proceeding against such Indemnitee in
respect of which a claim is to be made against the Issuer under this Section 5,
will notify the Issuer of the commencement of such action, suit or proceeding,
enclosing a copy of all papers served, but the omission so to notify the Issuer
of any such action, suit or proceeding shall not relieve the Issuer from any
liability which it may have to any Indemnitee otherwise than under this Section
5. In case any such action, suit or shall be brought against any Indemnitee and
it shall notify the Issuer of the commencement thereof, the Issuer shall be
entitled to participate in and, to the extent that they shall wish, to assume
the defense thereof, with counsel satisfactory to such Indemnitee. The
Indemnitee shall have the right to employ its counsel in any such action, but
the fees and expenses of such counsel shall be at the expense of such Indemnitee
unless (i) the employment of counsel by such Indemnitee has been authorized b
the Issuer, (ii) the Indemnitee shall have concluded reasonably that there may
be a conflict of interest among the Issuer and the Indemnitee in the conduct of
the defense of such action (in which case the Issuer shall not have the right to
direct the defense of such action on behalf of the Indemnitee) or (iii) the
Issuer in fact shall not have employed counsel to assume the defense of such
action, in each of which case the fees and expenses of counsel shall be borne by
the Issuer.
5.4 The provisions of this Section 5 shall survive any termination
of this Agreement, whether by disbursement of the Escrowed Funds, resignation of
the Escrow Agent or otherwise.
6. Governing Law and Assignment. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York and shall be
binding upon the parties hereto and their respective successors and assigns;
provided, however, that any assignment or transfer by any party of its rights
under this Agreement or with respect to the Escrowed Funds shall be void as
against the Escrow Agent unless: (a) written notice thereof shall be given to
the Escrow Agent; and (b) the Escrow Agent shall have consented in writing to
such assignment or transfer.
7. Severability. If any provision of this Agreement or the application
thereof to any person or circumstance shall be determined to be invalid or
unenforceable, the remaining
-3-
provisions of this Agreement or the application of such provision to persons or
circumstances other than those to which it is held invalid or unenforceable
shall not be affected thereby and shall be valid and enforceable to the fullest
extent permitted by law.
8. Captions. All captions are for convenience only and shall not limit or
define the text hereof.
9. Execution in Several Counterparts. This Agreement may be executed in
several counterparts or by separate instruments and all of such counterparts and
instruments shall constitute one agreement, binding on all of the parties
hereto.
10. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings (written or oral) of the
parties in connection herewith.
IN WITNESS OF, the undersigned have executed this Agreement as of the day
and year first above written.
XXXXXXXXX.XXX, INC.
(the Issuer)
By: ________________________________________
Xxxxxx X. Xxxxx, Chief Executive Officer
XXXX XXXXX XXXX & XxXXXX LLP
(the Escrow Agent)
By: ________________________________________
Xxxx X. Xxxxx, Partner
-4-
XL VENTURES, LLC
By: XL Ventures (Delaware), Inc.
Its Managing Member
_____________________________
By: Xxxx X. Xxxxxxxx
Deputy Chairman
Date: _________________, 1999
AT HOME CORPORATION, a Delaware
corporation
By: _____________________________
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President,
Business Affairs
Date: June , 0000
XXXXXXXX XXXXXX NYC DISCOVERY
FUND, L.P.
By: PROSPECT STREET DISCOVERY
FUND, INC., its general partner
By: _______________________________
Name: _____________________________
Title: ____________________________
Date: _______________________, 1999
CHANCELLOR PRIVATE CAPITAL
PARTNERS III, L.P.
BY: CPCP Associates, L.P., its General
Partner
BY: INVESCO Private Capital, Inc., its
General Partner
By: _______________________________
Name: _____________________________
Title: ____________________________
Date: _______________________, 1999
CHANCELLOR PRIVATE CAPITAL OFFSHORE
PARTNERS II, L.P.
By: CPCO Associates, L.P., its
Investment General Partner
By: INVESCO Private Capital, Inc., its
General Partner
By: _______________________________
Name: _____________________________
Title: ____________________________
CHANCELLOR PRIVATE CAPITAL OFFSHORE
PARTNERS I, C.V.
By: Chancellor KME IV Partner, L.P., its
Investment General Partner
By: INVESCO Private Capital, Inc., its
General Partner
By: _______________________________
Name: _____________________________
Title: ____________________________
CITIVENTURE 96 PARTNERSHIP, L..P.
By: INVESCO Private Capital, Inc., its
Investment Advisor
By: _______________________________
Name: _____________________________
Title: ____________________________
XXXXXXXXX FAMILY FUND, LLC
__________________________________
Name: Xxxxxx Xxxxxxxxx, Manager
Date: June , 1999
XXXXX CAPITAL ARCHON PARTNERS L.P.
By: Xxxxx Capital Inc.
By:_____________________________________
Xxxx Xxxxxxx, President
ALPINE SPECTRUM INVESTORS, LLC
By:_____________________________________
By:_____________________________________
PRIMUS CAPITAL FUND IV LIMITED
PARTNERSHIP
By: Primus Venture Partners IV Limited
Partnership, its General Partner
By: Primus Venture Partners IV, Inc.,
its General Partner
By: _______________________________
Name: _____________________________
Title: ____________________________
PRIMUS EXECUTIVE FUND LIMITED
PARTNERSHIP
By: Primus Venture Partners IV Limited
Partnership, its General Partner
By: Primus Venture Partners IV, Inc.,
its General Partner
By: _______________________________
Name: _____________________________
Title: ____________________________
THE TRAVELERS INSURANCE COMPANY
By: _______________________________
Name: _____________________________
Title: ____________________________
Date: _______________________, 1999
NATIONAL BROADICASTING COMPANY, INC.
By: _______________________________
Name: _____________________________
Title: ____________________________
Date: _______________________, 1999
MS CUBED, LLC
By: _______________________________
Name: _____________________________
Title: ____________________________
Date: _______________________, 1999
DRAKE & CO. FOR THE ACCOUNT OF
CITIVENTURE III
By: _______________________________
Name: _____________________________
MAMARONECK CAPITAL LLC
By: _______________________________
Name: _____________________________
Title: ____________________________
Date: _____________________________
WINSTON PARTNERS, L.P.
By: Chatterjee Fund Management, L.P.,
its general partner
By:_______________________________
Date:_____________________________
Address for notices:
c/o The Chatterjee Group
000 Xxxxxxx Xxxxxx Xxxxx 0000
Xxx Xxxx, XX 00000
WINSTON PARTNERS II LLC
By: Chatterjee Advisors LLC, its Manager
By:_______________________________
Date:_____________________________
Address for notices:
c/o The Chatterjee Group
000 Xxxxxxx Xxxxxx Xxxxx 0000
Xxx Xxxx, XX 00000
WINSTON PARTNERS II LDC
By:_______________________________
Date:_____________________________
Address for notices:
x/x Xxxxx
Xxxx Xxxxxxxxx 0
Xxxxxxxxxx, Xxxxxxx
Xxxxxxxxxxx Antilles
XXX XXXXXX
__________________________________
Date:_____________________________
Address for notices:
000 X. 00xx Xxxxxx Xxx. #00X
Xxx Xxxx, XX 00000
XXXXX XXXXXXX
__________________________________
Date:_____________________________
Address for notices:
00 Xxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
XXXX XXXXX
__________________________________
Date:_____________________________
Address for notices:
000 Xxxx 00xx Xxxxxx Xxx. #0X
Xxx Xxxx, XX 00000
XXXXX XXXXXX
__________________________________
Date:_____________________________
Address for notices:
000 Xxxx 00xx Xxxxxx
Xxx. 00X
Xxx Xxxx, XX 00000
XXXXXXXXX-XXXXX PARTNERS III, L.P.
By: Xxxxxxxxx-Xxxxx Managing Partner
III, L.L.C., Its general partner
By:_________________________________
Name: Xxxxx X. Xxxxx
Title: Authorized Person
Date:_______________________________
CHANNEL-WEBSTAKES, LLC
By: Xxxxxxxxx Partners Management Company
LLC, Its Managing Member
By:_________________________________
Name: Xxxxx X. Xxxxx
Title: Authorized Person
Date:_______________________________
I WIN INVESTORS, LLC
By:_____________________________
Name: Xxxxxx Xxxxxxx
Title:
WPG SOFTWARE FUND, L.P.
By: Xxxxx Xxxx & Xxxxx, LLC, Its
General Partner
By:_____________________________
Name:
Title
WPG INSTITUTIONAL SOFTWARE FUND, L.P.
By: Xxxxx Xxxx & Xxxxx, LLC, Its
General Partner
By:_____________________________
Name:
Title
WPG NETWORKING FUND, L.P.
By: Xxxxx Xxxx & Xxxxx, LLC, Its
General Partner
By:_____________________________
Name:
Title
CA CAPITAL MANAGEMENT LTD.
By:_____________________________
Name:
Title: Its Attorney in Fact
SCHEDULE 3.3
Share Ownership Table
64,000 options to be issued to outside directors upon consummation of IPO
Xxxxxxxxx.xxx
Current Common Stock Ownership table
June 11, 1999
0/S Common Stock Options Warrants Preferred TOTAL
# Shares 0/S Vested 3/31/99 Convertible to Common Common Percent
-------- --- -------------- --------------------- ------ -------
Common Stock Holders
Xxxxxx Xxxxx 1,470,000 1,470,000 17.90%
Xxxxxx Xxxxxxx 1,470,000 1,470,000 17.90%
Xxxxxx Xxxxxxx 588,000 588,000 7.16%
Xxxx Xxxxxx 392,784 392,784 4.78%
Xxxxx Xxxxx 78,792 78,792 0.96%
Stone Investments, Inc.-Loan 1** 999,600 999,600 12.17%
Stone Investments, Inc.-Loan 2** 715,008 715,008 8.70%
Preferred Stock Holders
Stone Preferred** 50,000 2,284,968 27.82%
0.00%
-- 0.00%
-- 0.00%
Stock Option Information
2,450,000 available
Option Sub 493,385 46,725 46,725 0.57%
Xxxxx & Co Warrants
Initial
* 168,350 168,350 2.05%
-- 0.00%
---------------------------------------------------------------------------------------------------------------------
TOTAL 5,714,184 493,385 46,725 168,350 50,000 8,214,227 100.00%
=====================================================================================================================
* Additional 53,333 options will be issued subsequent to consummation of the
private equity.
** Subsequent to consummation of the private equity, shares will be
repurchased by the Company.
SCHEDULE 3.4
The Company owns a 6.25% interest in The Net's Best LLC and has the right
to acquire an additional 5%.
SCHEDULE 3.6
CLASS A PREFERRED STOCKHOLDER AND WAIVER AND CONSENT
CLASS A PREFERRED STOCKHOLDER WAIVER AND CONSENT
In connection with this waiver and consent made by Stone
Investments, Inc., ("Stone"), a Delaware corporation, reference is made to that
certain stock purchase agreement (the "Stock Purchase Agreement") by and among
Xxxxxxxxx.xxx, Inc. ("Webstakes"), a Delaware corporation and the purchasers
(the "Purchasers") listed on Exhibit A to the Stock purchase Agreement dated
June 11, 1999 pursuant to which the Purchasers have agreed to purchase shares of
newly issued Webstakes Class B Preferred Stock. Webstakes has amended its
Certificate of Incorporation pursuant to a Certificate of Amendment
("Certificate of Amendment") which amendment created a new class of preferred
stock, Class B Convertible Redeemable Preferred Stock (the "Class B Preferred
Stock").
As an inducement for the parties to enter into the Stock Purchase
Agreement and to consummate the transactions contemplated thereby, Stone hereby
represents and certifies as follows:
Stone consents to Webstakes' issuance of the Class B Preferred Stock
to the Purchasers pursuant to the terms of the Stock Purchase Agreement;
Stone waives those rights contained in Section D.6(c) of the
Certificate of Amendment.
Stone waives those preemptive rights granted to it pursuant to the
terms of Section D.7 of the Certificate of Amendment;
Stone waives the occurrence of any and all events which would
constitute an Events of Default as defined in Section D.9 of the Certificate of
Amendment; and
Stone understands, agrees with and acknowledges the reasonableness
of the aforesaid waivers and consents, and agrees to take all reasonable actions
necessary to effectuate the intents and purposes thereof.
STONE INVESTMENTS, INC.
By: /s/ Xxxx X. Xxxxx
---------------------------------
Xxxx X. Xxxxx, Vice President
-2-
SCHEDULE 3.9
In May 1999, the Company ordered $680,000 of computer equipment which will
be subject to a lease with Leasing Technologies International, Inc.
SCHEDULE 3.10(d)
The Company hired Xxxxxx Xxxxxx at an annual salary of $175,000.
SCHEDULE 3.10(f)
The Company loaned $35,000 to its President, Xxx Xxxxxxx pursuant to a
five-year promissory note.
SCHEDULE 3.10(h)
See Schedule 3.9
SCHEDULE 3.10(I)
See Schedule 3.9.
SCHEDULE 3.13
In April 1999, the Company sold certain equipment to Leasing Technologies,
International, Inc. ("LTI") for approximately $160,000 and simultaneously leased
the equipment back from LTI.
SCHEDULE 3.30
1. The Company is party to a written loan agreement with Stone dated
December 24, 1997 pursuant to which Stone loaned the Company the principal
amount of $200,000.
2. Stone Analytics, an affiliate of Stone, provides the Company with
statistical analysis, modeling services and software development. With the
exception of a one page letter between the parties dated January 5, 1999 (the
"Letter"), there is no written agreement between the parties, and to date the
Company has not made any payments for such services. Pursuant to an invoice
dated June 11, 1999, Stone Analytics, Inc. billed the Company in the amount of
$54,986 for consulting services and related expenses rendered pursuant to the
Letter. The Company is in discussions with this entity regarding continuing
their business relationship.
3. Business Transaction Express, Inc., an affiliate of Stone Capital,
Inc., provides the Company with data verification services. There is no written
agreement between the parties, and to date the Company has not made any payments
for such services. The Company is in discussions with this entity regarding
continuing their business relationship.
4. The Company is a shareholder of The Net's Best, a newspaper circular
marketing company. Stone Investments, Inc. is a fifty percent shareholder of
that entity. The Company and The Net's Best are parties to an agreement dated
September 1998 which runs for a term of 15 months for which there is no
termination provision other than the natural expiration of the agreement or a
breach thereof.