EXHIBIT 10.11
XXXXXXXXX.XXX, INC.
SERIES D PREFERRED STOCK AND CONVERTIBLE NOTE PURCHASE AGREEMENT
This Series D Preferred Stock and Convertible Note Purchase Agreement (the
"Agreement") is made as of May 19, 1999 by and between xxxxxxxxx.xxx, inc., a
Delaware corporation (the "Company"), and the investors listed on Exhibit A
attached hereto (each a "Purchaser" and together the "Purchasers").
The parties hereby agree as follows:
1. Purchase and Sale of Preferred Stock and Convertible Promissory Notes.
1.1 Sale and Issuance of Series D Preferred Stock.
(a) The Company shall adopt and file with the Secretary of State of
the State of Delaware on or before the Closing (as defined below) the Fifth
Amended and Restated Certificate of Incorporation in the form attached hereto as
Exhibit B (the "Restated Certificate").
(b) Subject to the terms and conditions of this Agreement and the
Notes (defined below), each Purchaser severally and not jointly agrees to
purchase and the Company agrees to sell and issue to each such Purchaser that
number of shares of Series D Preferred Stock listed opposite such Purchaser's
name on Exhibit A attached hereto at a purchase price of $17.65 per share upon
conversion of the Notes. The shares of Series D Preferred Stock issued to each
such Purchaser pursuant to this Agreement are hereinafter referred to as the
"Stock."
(c) The Stock and the Common Stock issuable upon conversion of the
Stock shall have the rights, privileges, preferences and restrictions as set
forth in the Restated Certificate.
1.2 Sale and Issuance of Convertible Promissory Notes.
(a) Subject to the terms and conditions of this Agreement, each
Purchaser severally and not jointly agrees to purchase at the Closing and the
Company agrees to sell and issue to each Purchaser a convertible promissory note
in substantially the form attached hereto as Exhibit F (a "Note" and
collectively, the "Notes") in the principal amount specified with respect to
such Purchaser on Exhibit A to this Agreement. The purchase price of each Note
shall be equal to 100% of the principal amount of such Note. The Company's
agreement with each Purchaser is a separate agreement, and the sales of the
Notes to the Purchasers are separate sales.
(b) The Stock, the Common Stock issuable upon conversion of the Stock,
and the Notes are hereinafter referred to as the "Securities."
1.3 Closing; Delivery.
(a) The purchase and sale of the Notes shall take place at the offices
of Venture Law Group, 0000 Xxxx Xxxx Xxxx, Xxxxx Xxxx, Xxxxxxxxxx, at 8:00 a.m.,
on May 19, 1999 or at such other time and place as the Company, the Purchasers
purchasing a majority of the principal amount of the Notes, mutually agree upon,
orally or in writing (which time and place are designated as the "Closing").
(b) At the Closing, the Company shall deliver to each Purchaser the
Note to be purchased by such Purchaser against payment of the purchase price
therefor by check payable to the Company, wire transfer to the Company's bank
account or cancellation of indebtedness (or any combination of the foregoing).
2. Representations and Warranties of the Company. The Company
hereby represents and warrants to each Purchaser that, except as set forth on
the Schedule of Exceptions delivered on the date hereof, which exceptions shall
be deemed to be representations and warranties as if made hereunder:
2.1 Organization, Good Standing and Qualification. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to carry on its business as now conducted. The Company is qualified to
transact business in the state of Washington and is in good standing under the
laws of the state of Washington. The Company is not required to qualify to
transact business in any other jurisdiction, except where the failure so to
qualify would not have a material adverse effect on its business or properties.
2.2 Capitalization. Upon the filing of the Restated Certificate, the
authorized capital of the Company consists, or will consist, immediately prior
to the Closing, of:
(a) 22,800,000 shares of Preferred Stock, (i) 10,000,000 of which
shares have been designated Series A Preferred Stock, all of which are issued
and outstanding immediately prior to the Closing, (ii) 5,500,000 of which shares
have been designated Series B Preferred Stock, 5,446,268 of which are issued and
outstanding immediately prior to the Closing, 5,000,000 of which shares have
been designated Series C Preferred Stock of which 4,472,844 are issued and
outstanding immediately prior to the Closing, and 2,300,000 of which shares have
been designated Series D Preferred Stock none of which are issued and
outstanding immediately prior to the Closing. All of the outstanding shares of
Preferred Stock have been duly authorized, fully paid and are nonassessable,
issued in compliance with all applicable federal and state securities laws, and
are convertible into Common Stock on a one-for-one basis.
(b) 30,200,000 shares of Common Stock, 2,323,000 shares of which are
issued and outstanding and 4,235,000 shares of which are reserved for future
issuance under the Company's 1998 Stock Plan (of which 3,068,684 shares are
currently subject to issuance under outstanding options and 1,158,316 shares
remain available for future grants) immediately prior to the Closing. All of
the outstanding shares of Common Stock have been duly authorized,
-2-
fully paid and are nonassessable and issued in compliance with all applicable
federal and state securities laws.
(c) Except for the conversion privileges of the Preferred Stock and
the Notes, and except as set forth in the Investors' Rights Agreement (as
defined below), there are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal or similar rights)
or agreements, orally or in writing, for the purchase or acquisition from the
Company of any shares of its capital stock.
2.3 Subsidiaries. The Company does not currently own or control,
directly or indirectly, any interest in any other corporation, association, or
other business entity.
2.4 Authorization. All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement, the Third Amended and Restated
Investors' Rights Agreement in the form attached hereto as Exhibit D (the
"Investors' Rights Agreement") and the Second Amended and Restated Voting
Agreement (the "Voting Agreement", and collectively with the Investors' Rights
Agreement and this Agreement, the "Agreements"), the performance of all
obligations of the Company hereunder and thereunder and the authorization,
issuance and delivery of the Securities has been taken or will be taken prior to
the Closing, and the Agreements, when executed and delivered by the Company,
will constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, and other laws of general application affecting
enforcement of creditors' rights generally, as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies, or (ii) to the extent the indemnification provisions contained in the
Investors' Rights Agreement may be limited by applicable federal or state
securities laws.
2.5 Valid Issuance of Securities. The Notes that are being issued
to the Purchasers hereunder, when issued, sold and delivered in accordance with
the terms hereof for the consideration expressed herein, will be duly and
validly issued and free of restrictions on transfer other than restrictions on
transfer under this Agreement, the Notes, the Investors' Rights Agreement and
applicable state and federal securities laws. The Stock that may be issued to
the Purchasers upon conversion of the Notes has been duly and validly reserved
for issuance and, when issued and delivered in accordance with the terms
thereof, will be duly and validly issued and free of restrictions on transfer
other than restrictions on transfer under this Agreement, the Investors' Rights
Agreement and applicable state and federal securities laws. Based in part upon
the representations of the Purchasers in this Agreement and subject to the
provisions of Section 2.6 below, the Securities will be issued in compliance
with all applicable federal and state securities laws. Neither the Company nor
any agent on its behalf has solicited or will solicit any offers to sell or has
offered to sell or will offer to sell all or any part of the Stock or the Notes
to any person or persons so as to bring the sale of such Stock or Notes by the
Company within the registration provisions of the Securities Act or any state
securities laws. Except as set forth in Section 2.6, no governmental orders,
permissions, consents, approvals or authorizations are required to be obtained
and no registrations or declarations are required to be filed in connection
-3-
with the execution and delivery of this Agreement and the issuance of the Stock,
the Notes or Securities, except such as has been duly and validly obtained or
filed, or with respect to any filings that must be made after the Closing, as
will be filed in a timely manner. The Common Stock issuable upon conversion of
the Stock has been duly and validly reserved for issuance, and upon issuance in
accordance with the terms of the Restated Certificate, will be duly and validly
issued, fully paid and nonassessable and free of restrictions on transfer other
than restrictions on transfer under this Agreement, the Investors' Rights
Agreement and applicable federal and state securities laws and will be issued in
compliance with all applicable federal and state securities laws.
2.6 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except for filings pursuant to Section 25102(f)
of the California Corporate Securities Law of 1968, as amended, and the rules
thereunder, other applicable state securities laws, the Securities Act of 1933,
as amended (the "Securities Act") and the rules thereunder, and filings under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act") as required for any conversion of the Notes into Stock.
2.7 Financial Statements. The Company has delivered to each
Purchaser (a) its audited balance sheet as at December 31, 1998 and audited
statement of income and cash flows for the twelve months ending December 31,
1998 and (b) its unaudited balance sheet as at April 31, 1998 (the "Statement
Date") and unaudited consolidated statement of income and cash flows for the
four month period ending on the Statement Date (collectively, the "Financial
Statements"). The Financial Statements, together with the notes thereto, are
complete and correct in all material respects, have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods indicated, except as disclosed therein, and present
fairly the financial condition and position of the Company as of December 31,
1998 and the Statement Date; provided, however, that the unaudited financial
statements are subject to normal recurring year-end audit adjustments (which are
not expected to be material), and do not contain all footnotes required under
generally accepted accounting principles.
2.8 Liabilities. The Company has no material liabilities and, to
the best of its knowledge, knows of no material contingent liabilities not
disclosed in the Financial Statements, except current liabilities incurred in
the ordinary course of business subsequent to the Statement Date which have not
been, either in any individual case or in the aggregate, materially adverse.
2.9 Litigation. There is no action, suit, proceeding or
investigation pending or, to the Company's knowledge, currently threatened
against the Company that questions the validity of the Agreements or the right
of the Company to enter into them, or to consummate the transactions
contemplated hereby or thereby, or that might result, either individually or in
the aggregate, in any material adverse changes in the assets, condition or
affairs of the Company, financially or otherwise, nor is the Company aware that
there is any basis for the foregoing. The
-4-
Company is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or that the Company intends to initiate.
2.10 Intellectual Property. To its knowledge, the Company owns or
possesses sufficient legal rights to all patents, trademarks, service marks,
tradenames, copyrights, trade secrets, licenses, information and proprietary
rights necessary for its business as now conducted without any conflict with, or
infringement of, the rights of others. The Company has not received any
communications alleging that the Company has violated or, by conducting its
business, would violate any of the patents, trademarks, service marks,
tradenames, copyrights, trade secrets or other proprietary rights of any other
person or entity. The Company is not aware that any of its employees is
obligated under any contract 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 interest of the Company
or that would conflict with the Company's business. Neither the execution or
delivery of this Agreement, nor the carrying on of the Company's business as now
conducted by the employees of the Company, 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. The Company does not believe it is or will
be necessary to use any inventions of any of its employees (or persons it
currently intends to hire) made prior to their employment by the Company.
2.11 Compliance with Other Instruments. The Company is not in
violation or default of any provisions of its Restated Certificate or Bylaws or
in violation or default of any instrument, judgment, order, writ, decree or
contract to which it is a party or by which it is bound or, to its knowledge, of
any provision of any federal or state statute, rule or regulation applicable to
the Company, the effect of which would have a material adverse effect on the
Company. The execution, delivery and performance of the Agreements and the
consummation of the transactions contemplated hereby or thereby will not result
in any such violation or be in conflict with or constitute, with or without the
passage of time and giving of notice, either a default under any such provision,
instrument, judgment, order, writ, decree or contract or an event which results
in the creation of any lien, charge or encumbrance upon any assets of the
Company.
2.12 Agreements; Action.
(a) Except for agreements explicitly contemplated hereby and
agreements between the Company and its employees with respect to the sale of the
Company's Common Stock, there are no agreements, understandings or proposed
transactions between the Company and any of its officers, directors, affiliates
or any affiliate thereof that would be required to be disclosed pursuant to
Regulation S-K, as promulgated by the Securities and Exchange Commission, and
that are not disclosed in the Schedule of Exceptions.
(b) Except for agreements explicitly contemplated by the Agreements,
there are no agreements, understandings, instruments, contracts or proposed
transactions to
-5-
which the Company is a party or by which it is bound that involve (i)
obligations (contingent or otherwise) of, or payments to, the Company in excess
of, $100,000, (ii) the license of any patent, copyright, trade secret or other
proprietary right to or from the Company (other than standard "off the shelf"
product licenses), or (iii) the grant of rights to manufacture, produce,
assemble, license, market, or sell its products to any other person or affect
the Company's exclusive right to develop, manufacture, assemble, distribute,
market or sell its products.
(c) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or
incurred any other liabilities individually in excess of $100,000 or in excess
of $500,000 in the aggregate, (iii) made any loans or advances to any person,
other than ordinary advances for business expenses, or (iv) sold, exchanged or
otherwise disposed of any of its assets or rights, other than in the ordinary
course of business.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
2.13 No Conflict of Interest. The Company is not indebted, directly
or indirectly, to any of its officers or directors or to their respective
spouses or children, in any amount whatsoever other than in connection with
expenses or advances of expenses incurred in the ordinary course of business or
relocation expenses of employees. None of the Company's officers or directors,
or any members of their immediate families, are, directly or indirectly,
indebted to the Company (other than in connection with purchases of the
Company's stock) or, to the Company's knowledge, have any direct or indirect
ownership interest in any firm or corporation with which the Company is
affiliated or with which the Company has a business relationship, or any firm or
corporation that competes with the Company except that officers, directors
and/or existing stockholders of the Company may own stock in (but not exceeding
two percent of the outstanding capital stock of) any publicly traded company
that may compete with the Company. To the Company's knowledge, none of the
Company's officers or directors or any members of their immediate families are,
directly or indirectly, interested in any material contract with the Company.
The Company is not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation.
2.14 Rights of Registration and Voting Rights. Except as
contemplated in the Investors' Rights Agreement, the Company has not granted or
agreed to grant any registration rights, including piggyback rights, to any
person or entity. To the Company's knowledge, except as provided in the
Company's Second Amended and Restated Voting Agreement dated May 19, 1999 with
certain stockholders, no stockholder of the Company has entered into any
agreements with respect to the voting of capital shares of the Company.
2.15 Title to Property and Assets. The Company owns its property and
assets free and clear of all mortgages, liens, loans and encumbrances, except
such encumbrances and
-6-
liens which arise in the ordinary course of business and do not materially
impair the Company's ownership or use of such property or assets. With respect
to the property and assets it leases, the Company is in compliance with such
leases and, to its knowledge, holds a valid leasehold interest free of any
liens, claims or encumbrances.
2.16 Changes. Since the Company's inception, there has not been:
(a) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the business, properties,
prospects, or financial condition of the Company;
(b) any waiver or compromise by the Company of a valuable right or of
a material debt owed to it;
(c) any satisfaction or discharge of any lien, claim, or encumbrance
or payment of any obligation by the Company, except in the ordinary course of
business and that is not material to the business, properties, prospects or
financial condition of the Company;
(d) any material change to a material contract or agreement by which
the Company or any of its assets is bound or subject;
(e) any sale or assignment of any patents, trademarks, copyrights,
trade secrets or other intangible assets;
(f) any mortgage, pledge, transfer of a security interest in, or lien,
created by the Company, with respect to any of its material properties or
assets, except liens for taxes not yet due or payable;
(g) any loans or guarantees made by the Company to or for the benefit
of its employees, officers or directors, or any members of their immediate
families, other than travel advances and other advances made in the ordinary
course of its business;
(h) any declaration, setting aside or payment or other distribution in
respect to any of the Company's capital stock, or any direct or indirect
redemption, purchase, or other acquisition of any of such stock by the Company;
(i) to the Company's knowledge, any other event or condition of any
character that might materially and adversely affect the business, properties,
prospects or financial condition of the Company; or
(j) any arrangement or commitment by the Company to do any of the
things described in this Section 2.14.
2.17 Tax Returns and Payments. The Company has filed all tax returns
and reports as required by law. These returns and reports are true and correct
in all material respects. The Company has paid all taxes and other assessments
due.
-7-
2.18 Labor Agreements and Actions. The Company is not bound by or
subject to (and none of its assets or properties is bound by or subject to) any
written or oral, express or implied, contract, commitment or arrangement with
any labor union, and no labor union has requested or, to the knowledge of the
Company, has sought to represent any of the employees, representatives or agents
of the Company. There is no strike or other labor dispute involving the Company
pending, or to the knowledge of the Company threatened, which could have a
material adverse effect on the assets, properties, financial condition,
operating results, or business of the Company, nor is the Company aware of any
labor organization activity involving its employees. The employment of each
officer and employee of the Company is terminable at the will of the Company.
To its knowledge, the Company has complied in all material respects with all
applicable state and federal equal employment opportunity laws and with other
laws related to employment. To the Company's knowledge, no employee of the
Company, nor any consultant with whom the Company has contracted, is in
violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such individual to
be employed by, or to contract with, the Company because of the nature of the
business to be conducted by the Company that would have a material adverse
effect on the Company; and to the Company's knowledge the continued employment
by the Company of its present employees, and the performance of the Company's
contracts with its independent contractors, will not result in any such
violation that would have a material adverse effect on the Company. To its
knowledge, the Company has not received any notice alleging that any such
violation has occurred.
2.19 Confidential Information and Invention Assignment Agreements.
Each employee, consultant and officer of the Company has executed an agreement
with the Company regarding confidentiality and proprietary information in the
form provided to the Purchasers. The Company is not aware that any of its
employees or consultants is in violation thereof, and the Company will use its
best efforts to prevent any such violation.
2.20 Compliance with Laws; Permits. To its knowledge, the Company is
not in violation of any applicable statute, rule, regulation, order or
restriction of any domestic or foreign government or any instrumentality or
agency thereof in respect of the conduct of its business or the ownership of its
properties which violation would materially and adversely affect the business,
assets, liabilities, financial condition, operations or prospects of the
Company. The Company has all franchises, permits, licenses and any similar
authority necessary for the conduct of its business, the lack of which could
materially and adversely affect the business, properties, prospects, or
financial condition of the Company. The Company is not in default in any
material respect under any of such franchises, permits, licenses or other
similar authority.
2.21 Corporate Documents. The Restated Certificate and Bylaws of the
Company are in the form made available to counsel for the Purchasers. The copy
of the minute books of the Company made available to the Purchasers contains
minutes of all meetings of directors and stockholders and all actions by written
consent without a meeting by the directors and stockholders since the date of
incorporation and reflects all actions by the directors and stockholders with
respect to all transactions referred to in such minutes accurately in all
material respects.
-8-
2.22 Full Disclosure. This Agreement, the Exhibits hereto, the
Agreements and all other documents delivered by the Company to Purchasers or
their attorneys or agents in connection herewith or therewith or with the
transactions contemplated hereby or thereby, do not contain any untrue statement
of a material fact nor, to the Company's knowledge, omit to state a material
fact necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made. To the
Company's knowledge, there are no facts which (individually or in the aggregate)
materially adversely affect the business, assets, liabilities, financial
condition, prospects or operations of the Company that have not been set forth
in the Agreements, the Exhibits hereto, or in other documents delivered to
Purchasers or their attorneys or agents in connection herewith.
3. Representations and Warranties of the Purchasers. Each Purchaser
hereby represents and warrants to the Company that:
3.1 Authorization. Such Purchaser has full power and authority to
enter into this Agreement. The Agreements, when executed and delivered by the
Purchaser, will constitute valid and legally binding obligations of the
Purchaser, enforceable in accordance with their terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and any other laws of general application affecting enforcement of
creditors' rights generally, and as limited by laws relating to the availability
of a specific performance, injunctive relief, or other equitable remedies, or
(b) to the extent the indemnification provisions contained in the Investors'
Rights Agreement may be limited by applicable federal or state securities laws.
3.2 Purchase Entirely for Own Account. This Agreement is made with
the Purchaser in reliance upon the Purchaser's representation to the Company,
which by the Purchaser's execution of this Agreement, the Purchaser hereby
confirms, that the Securities to be acquired by the Purchaser will be acquired
for investment for the Purchaser's own account, not as a nominee or agent, and
not with a view to the resale or distribution of any part thereof, and that the
Purchaser has no present intention of selling, granting any participation in, or
otherwise distributing the same. By executing this Agreement, the Purchaser
further represents that the Purchaser does not presently have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with respect to any of the
Securities. The Purchaser has not been formed for the specific purpose of
acquiring the Securities.
3.3 Disclosure of Information. The Purchaser has had an opportunity
to discuss the Company's business, management, financial affairs and the terms
and conditions of the offering of the Stock with the Company's management and
has had an opportunity to review the Company's facilities. The Purchaser
understands that such discussions, as well as any written information delivered
by the Company to the Purchaser, were intended to describe the aspects of the
Company's business that it believes to be material.
3.4 Restricted Securities. The Purchaser understands that the
Securities have not been, and will not be, registered under the Securities Act,
by reason of a specific exemption
-9-
from the registration provisions of the Securities Act which depends upon, among
other things, the bona fide nature of the investment intent and the accuracy of
the Purchaser's representations as expressed herein. The Purchaser understands
that the Securities are "restricted securities" under applicable U.S. federal
and state securities laws and that, pursuant to these laws, the Purchaser must
hold the Securities indefinitely unless they are registered with the Securities
and Exchange Commission and qualified by state authorities, or an exemption from
such registration and qualification requirements is available. The Purchaser
acknowledges that the Company has no obligation to register or qualify the
Securities for resale except as set forth in the Investors' Rights Agreement.
The Purchaser further acknowledges that if an exemption from registration or
qualification is available, it may be conditioned on various requirements
including, but not limited to, the time and manner of sale, the holding period
for the Securities, and on requirements relating to the Company that are outside
of the Purchaser's control, and which the Company is under no obligation and may
not be able to satisfy.
3.5 No Public Market. The Purchaser understands that no public
market now exists for any of the securities issued by the Company, and that the
Company has made no assurances that a public market will ever exist for the
Securities.
3.6 Legends. The Purchaser understands that the Securities, and any
securities issued in respect thereof or exchange therefor, may bear one or all
of the following legends:
(a) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A
FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT OF 1933."
(b) Any legend set forth in the other Agreements.
(c) Any legend required by the Blue Sky laws of any state to the
extent such laws are applicable to the shares represented by the certificate so
legended.
3.7 Accredited Investor. The Purchaser is an accredited investor as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
4. Conditions of the Purchasers' Obligations at Closing. The
obligations of each Purchaser to the Company under this Agreement are subject to
the fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
4.1 Representations and Warranties. The representations and
warranties of the Company contained in Section 2 shall be true and correct in
all material respects on and as of
-10-
the Closing with the same effect as though such representations and warranties
had been made on and as of the date of the Closing.
4.2 Performance. The Company shall have performed and complied with
all covenants, agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing and, except as set forth in Section 2.6, the Company shall have
obtained any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement and the
Agreements.
4.3 Reservation of Conversion Shares. The Stock issuable upon
conversion of the Notes and the Securities issuable upon conversion of the Stock
shall have been duly authorized and reserved for issuance upon such conversions.
4.4 Compliance Certificate. The President of the Company shall
deliver to the Purchasers at the Closing a certificate certifying that the
conditions specified in Sections 4.1, 4.2 and 4.3 have been fulfilled.
4.5 Qualifications. Except as described in Section 6, all
authorizations, approvals or permits, if any, of any governmental authority or
regulatory body of the United States or of any state that are required in
connection with the lawful issuance and sale of the Notes pursuant to this
Agreement shall be obtained and effective as of the Closing.
4.6 Opinion of Company Counsel. The Purchasers at the Closing shall
have received from Venture Law Group, counsel for the Company, an opinion dated
as of the Closing in substantially the form of Exhibit E.
4.7 Investors' Rights Agreement. The Company, each Purchaser and
the parties thereto shall have executed and delivered the Investors' Rights
Agreement in substantially the form attached as Exhibit D.
4.8 Voting Rights Agreement. The Company and certain stockholders
of the Company shall have executed and delivered the Second Amended and Restated
Voting Agreement in substantially the form as Exhibit C attached hereto.
4.9 Restated Certificate. The Company shall have filed the
Restated Certificate with the Secretary of State of Delaware on or prior to the
Closing, which shall continue to be in full force and effect as of the Closing.
5. Conditions of the Company's Obligations at Closing. The
obligations of the Company to each Purchaser under this Agreement are subject to
the fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
5.1 Representations and Warranties. The representations and
warranties of each Purchaser contained in Section 3 shall be true and correct in
all material respects on and as
-11-
of the Closing with the same effect as though such representations and
warranties had been made on and as of the Closing.
5.2 Performance. All covenants, agreements and conditions contained
in this Agreement to be performed by the Purchasers on or prior to the Closing
shall have been performed or complied with in all material respects.
5.3 Qualifications. Except as described in Section 6, all
authorizations, approvals or permits, if any, of any governmental authority or
regulatory body of the United States or of any state that are required in
connection with the lawful issuance and sale of the Stock pursuant to this
Agreement shall be obtained and effective as of the Closing.
5.4 Investors' Rights Agreement. The Company and each Purchaser
shall have executed and delivered the Investors' Rights Agreement in
substantially the form attached as Exhibit D.
5.5 Restated Certificate. The Company shall have filed the Restated
Certificate with the Secretary of State of Delaware on or prior to the Closing,
which shall continue to be in full force and effect as of the Closing.
6. HSR Act Filings. As soon as practicable after the Closing, the
Company and each of the Purchasers will separately file with the United States
Federal Trade Commission and the Antitrust Division of the Justice Department
pursuant to the HSR Act all requisite documents and notifications in order to
provide for the conversion of the Notes into shares of the Company's Series D
Preferred Stock. The parties will cooperate and coordinate with one another in
exchanging information and providing reasonable assistance as the other parties
may request in connection with the foregoing. So long as the Notes remain
outstanding, the Company agrees not to take any action that would (A) cause the
representations and warranties of the Company contained in Section 2.1 (the
first sentence only), Section 2.4, Section 2.5 and Section 2.6 not to be true in
any material respects on and as of the date of the conversion of the Notes into
the Stock or (B) require, under Delaware law, the consent of the holders of
Series D Preferred Stock, voting as a separate class, if shares of Series D
Preferred Stock were outstanding, unless approved by Vulcan Ventures
Incorporated.
7. Miscellaneous.
7.1 Survival of Warranties. The warranties, representations and
covenants of the Company and the Purchasers contained in or made pursuant to
this Agreement shall survive any investigation made by any Purchaser and the
closing of the transactions contemplated hereby.
7.2 Transfer; Successors and Assigns. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies,
-12-
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
7.3 Governing Law. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.
7.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
7.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.6 Notices. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed sufficient upon delivery, when delivered
personally or by overnight courier or sent by telegram or fax, or forty-eight
(48) hours after being deposited in the U.S. mail, as certified or registered
mail, with postage prepaid, addressed to the party to be notified at such
party's address as set forth on the signature page or Exhibit A hereto, or as
subsequently modified by written notice, and if to the Company, with a copy to
Venture Law Group, 0000 Xxxx Xxxx Xxxx, Xxxxx Xxxx, XX 00000 attn: Xxxxxx Xxxxx.
7.7 Finder's Fee. Each party represents that it neither is nor will
be obligated for any finder's fee or commission in connection with this
transaction. Each Purchaser agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending against such liability or
asserted liability) for which each Purchaser or any of its officers, employees,
or representatives is responsible. The Company agrees to indemnify and hold
harmless each Purchaser from any liability for any commission or compensation in
the nature of a finder's fee (and the costs and expenses of defending against
such liability or asserted liability) for which the Company or any of its
officers, employees or representatives is responsible.
7.8 Fees and Expenses. If the Closing is consummated, the Company
shall pay the reasonable fees and expenses of one special counsel for the
Purchasers, incurred with respect to this Agreement, the documents referred to
herein and the transactions contemplated hereby and thereby, provided such fees
and expenses do not exceed $15,000. Except as provided above, the Company and
each Purchaser shall pay their respective filing fees and other expense in
connection with all filings they are required to made under the HSR Act.
7.9 Attorney's Fees. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of any of the
Agreements, the prevailing party shall be entitled to reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.
-13-
7.10 Amendments and Waivers. Any term of this Agreement may be
amended or waived only with the written consent of the Company and the
Purchasers of at least a majority of the principal amount of the Notes purchased
hereunder. Any amendment or waiver effected in accordance with this Section 7.10
shall be binding upon the Purchasers and each transferee of the Securities, each
future holder of all such Securities, and the Company.
7.11 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.
7.12 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any party under this Agreement, upon any
breach or default of any other party under this Agreement, shall impair any such
right, power or remedy of such non-breaching or non-defaulting party nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.
7.13 Entire Agreement. This Agreement, and the documents referred to
herein constitute the entire agreement between the parties hereto pertaining to
the subject matter hereof, and any and all other written or oral agreements
relating to the subject matter hereof existing between the parties hereto are
expressly canceled.
7.14 Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON
THE QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.
7.15 Confidentiality. Except as provided below, each party hereto
agrees that, except with the prior written permission of the other party, it
shall at all times keep confidential and not divulge, furnish or make accessible
to anyone any confidential information, knowledge or data concerning or relating
to the business or financial affairs of the other parties to which
-14-
such party has been or shall become privy by reason of this Agreement,
discussions or negotiations relating to this Agreement, the performance of its
obligations hereunder or the ownership of Stock purchased hereunder. The
provisions of this Section 7.15 shall be in addition to, and not in substitution
for, the provisions of any separate nondisclosure agreement executed by the
parties hereto with respect to the transactions contemplated hereby.
Notwithstanding the foregoing, nothing herein shall prevent any party from
disclosing (i) such information which has been publicly disclosed, (ii) such
information which becomes available to the party on a non-confidential basis
from a source other than a party hereto, provided that such source is not bound
by a confidentiality agreement with such party, (iii) information required to be
disclosed pursuant to subpoena or other court process or otherwise required by
law and (iv) such information was known to such party prior to its first receipt
from the other party. Notwithstanding the foregoing provisions of this Section
7.15, with regard to the obligations of Xxxxxx.xxx, Inc. ("Xxxxxx.xxx"), the
existing Nondisclosure Agreement between the Company and Xxxxxx.xxx dated August
10, 1998 shall remain in full force and effect and shall supersede in all
respects the obligations contained in this Section 7.15 that would otherwise be
binding upon Xxxxxx.xxx.
7.16 Publicity. Within thirty (30) days of the Closing, the Company
may issue a press release disclosing that Vulcan Ventures Incorporated
("Vulcan") has invested in the Company in a form approved by Vulcan, which
approval will not be unreasonably withheld, conditioned or delayed. No other
announcement regarding Vulcan or its investment in the Company in a press
release, advertisement, professional or trade publication, mass marketing
materials or otherwise to the general public may be made by any party without
Vulcan's prior written consent. Notwithstanding the foregoing, any party may
disclose solely the fact that Vulcan is an investor in the Company and disclose
information as required by law.
7.17 Exculpation Among Purchasers. Each Purchaser acknowledges that
it is not relying upon any person, firm or corporation, other than the Company
.and its officers and directors, in making its investment or decision to invest
in the Company. Each Purchaser agrees that no Purchaser nor the respective
controlling persons, officers, directors, partners, agents, or employees of any
Purchaser shall be liable to any other Purchaser for any action heretofore or
hereafter taken or omitted to be taken by any of them in connection with the
purchase of the Securities.
7.18 Waiver of Conflicts. Each party to this Agreement acknowledges
that Venture Law Group, counsel for the Company, has in the past performed and
may continue to perform legal services for certain of the Purchasers in matters
unrelated to the transactions described in this Agreement, including the
representation of such Purchasers in venture capital financings. Accordingly,
each party to this Agreement hereby (a) acknowledges that they have had an
opportunity to ask for information relevant to this disclosure; and (b) gives
its informed consent to Venture Law Group's representation of certain of the
Purchasers in such unrelated matters and to Venture Law Group's representation
of the Company in connection with this Agreement and the transactions
contemplated hereby.
-15-
[Signature Pages Follow]
-16-
The parties have executed this Series D Preferred Stock Purchase Agreement
as of the date first written above.
COMPANY:
XXXXXXXXX.XXX, INC.
By: /s/ Xxxxx Xxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxx
Title: President and CEO
Address: 00000 XX 00xx Xxxxx
Xxxxxxx, XX 00000
PURCHASERS:
Vulcan Ventures, Incorporated
By: /s/ Vulcan Ventures
-------------------------------------
Address: 000 000xx Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Signature Page to the Series D Preferred Stock and
Convertible Note Purchase Agreement
EXHIBITS
Exhibit A - Schedule of Purchasers
Exhibit B - Form of Fifth Amended and Restated Certificate of
Incorporation
Exhibit C- Second Amended and Restated Voting Agreement
Exhibit D - Form of Fourth Amended and Restated Investors' Rights
Agreement
Exhibit E - Form of Legal Opinion of Venture Law Group
Exhibit F - Form of Convertible Promissory Note
EXHIBIT A
SCHEDULE OF PURCHASERS
Purchaser Name Total Purchase Price Shares
Vulcan Ventures Incorporated $40,000,000.85 2,266,289
* Pursuant to Section 1.2 of this Agreement, such Purchaser is acquiring a Note
and is not purchasing Stock under this Agreement. The number of shares
reflected opposite such Purchaser's name reflect the number of shares of Stock
into which the Note may be converted upon the occurrence of certain events as
specified in the Note.
EXHIBIT B
FORM OF FIFTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
EXHIBIT C
SECOND AMENDED AND RESTATED
VOTING AGREEMENT
EXHIBIT D
FORM OF FOURTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
EXHIBIT E
FORM OF LEGAL OPINION
OF
VENTURE LAW GROUP
EXHIBIT F
FORM OF CONVERTIBLE PROMISSORY NOTE
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933.
CONVERTIBLE PROMISSORY NOTE
$40,000,000.85 May 19, 0000
Xxxxxxxx, Xxxxxxxxxx
For value received, xxxxxxxxx.xxx, inc., a Delaware corporation (the
"Company"), promises to pay to Vulcan Ventures Incorporated (the "Holder"), the
principal sum of Forty Million Dollars Eighty-Five Cents ($40,000,000.85). No
interest shall accrue or be paid on this Note; provided, that if this Note shall
not have converted in accordance with Section 2 below on or before November 19,
1999, this Note shall bear interest accruing from the date hereof on the unpaid
principal amount at a rate equal to the lower of (i) 7.75% per annum, compounded
annually or (ii) the highest rate permitted by law. This Note is one of a
series of Convertible Promissory Notes containing substantially identical terms
and conditions issued pursuant to that certain Series D Preferred Stock and
Convertible Note Purchase Agreement dated May 19, 1999 (the "Purchase
Agreement"). Such Notes are referred to herein as the "Notes," and the holders
thereof are referred to herein as the "Holders." This Note is subject to the
following terms and conditions.
1. Maturity. Unless converted as provided in Section 2, this Note will
automatically mature and be due and payable on November 19, 1999 (the "Maturity
Date"). Subject to Section 2 below, any interest shall accrue on this Note but
shall not be due and payable until the Maturity Date.
2. Conversion.
(a) HSR Clearance. Under Section 6 of the Purchase Agreement, the
Company and the Holder have agreed to file with the United States Federal Trade
Commission (the "FTC") and the Antitrust Division of the United States
Department of Justice (the "DOJ") pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act") all requisite documents and
notifications in order to provide for the conversion of this Note into shares of
the Company's Series D Preferred Stock. Upon the earlier of one business day
after (i) the date all required clearances or pre-termination notices under the
HSR Act have been received from the FTC and the DOJ (or all applicable waiting
periods have expired) or (ii) the date the Holder and the Company are no longer
required by law to make filings under the HSR to convert this Note into capital
stock, the entire principal amount of this Note shall automatically
convert into fully-paid and non-assessable shares of the Company's Series D
Preferred Stock (the "Stock"); provided, however, the automatic conversion of
such principal amount into shares of the Company's Series D Preferred Stock
shall be conditioned upon (A) the Company having provided to the Holder a
compliance certificate in the form attached hereto as Exhibit A or (B) the
Holder having waived such applicable terms, conditions or certifications
included in such certificate, either individually or in the aggregate. The
number of shares of Stock to be issued upon such conversion shall be equal to
the quotient obtained by dividing (i) the entire outstanding principal amount of
this Note by (ii) $17.65 (as adjusted for any future stock splits, stock
dividends, recapitalizations or the like after May 19, 1999), provided that no
fractional shares shall be issued. In the event that the required clearances
from the FTC and the DOJ are not obtained, this Note shall not be convertible
into the Stock.
(b) Conversion of Series B Preferred Stock. Should all of the
Company's Series D Preferred Stock be, or if outstanding would be, at any time
prior to full payment of this Note, converted into shares of the Company's
Common Stock in accordance with the Company's Certificate of Incorporation, then
subject to Section 2(a), this Note shall become convertible into that number of
shares of the Company's Common Stock equal to the number of shares of the Common
Stock that would have been received if this Note had been converted in full and
the Series D Preferred Stock received thereupon had been simultaneously
converted immediately prior to such event.
(c) Mechanics and Effect of Conversion. No fractional shares of the
Company's capital stock will be issued upon conversion of this Note. In lieu of
any fractional share to which the Holder would otherwise be entitled, the
Company will pay to the Holder in cash the amount of the unconverted principal
and interest balance of this Note that would otherwise be converted into such
fractional share. Upon conversion of this Note pursuant to this Section 2, the
Holder shall surrender this Note, duly endorsed, at the principal offices of the
Company or any transfer agent of the Company. At its expense, the Company will,
as soon as practicable thereafter, issue and deliver to such Holder, at such
principal office, a certificate or certificates for the number of shares to
which such Holder is entitled upon such conversion, together with any other
securities and property to which the Holder is entitled upon such conversion
under the terms of this Note, including a check payable to the Holder for any
cash amounts payable as described herein. Upon conversion of this Note, the
Company will be forever released from all of its obligations and liabilities
under this Note with regard to that portion of the principal amount and accrued
interest being converted including without limitation the obligation to pay such
portion of the principal amount and accrued interest.
3. Payment. All payments shall be made in lawful money of the United
States of America at such place as the Holder hereof may from time to time
designate in writing to the Company. Payment shall be credited first to the
accrued interest then due and payable and the remainder applied to principal.
Prepayment of this Note may be made without penalty, if the Company's Board of
Directors has unanimously determined, in consultation with legal counsel, and
with the consent of the Holders of a majority of the outstanding principal
amount of the Notes, that the required clearances or pre-termination notices
under the HSR Act specified in Section 2(a) are not likely to be obtained,
otherwise this note made not prepaid without the
consent of the Holders of a majority of the outstanding principal amount of the
Notes; provided, however, that the Company may repay the Note on November 19,
1999 in the event the conditions to conversion set forth in Section 2 hereof
have not occurred.
4. Default.
4.1 Events of Default. Each of the following shall constitute an
"Event of Default."
(a) Default in the payment of any part of the principal or interest of
this Note when due and payable pursuant to the provisions, or a default by the
Company under any other term or condition of this Note; or
(b) The institution by the Company of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it or the filing by it of a petition or answer or
consent seeking reorganization or relief under the Federal Bankruptcy Code, or
any other applicable federal or state law, or the consent by it to the filing of
any such petition or the appointment of a receiver, liquidator, assignee,
trustee, or other similar official, of the Company, or of any substantial part
of its property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its debts
generally as they become due or the taking of corporate action by the Company in
furtherance of any such action; or
(c) If, within sixty (60) days after the commencement of an action
against the Company seeking any bankruptcy, insolvency, reorganization,
liquidation, dissolution or similar relief under any present or future statute,
law or regulation, such action shall not have been dismissed or all orders or
proceedings thereunder affecting the operations or the business of the Company
stayed, or if the stay of any such order or proceeding shall thereafter be set
aside, or if, within sixty (60) days after the appointment without the consent
or acquiescence of the Company of any trustee, receiver or liquidator of the
Company or of all or any substantial part of the properties of the Company, such
appointment shall not have been vacated; or
(d) Any material misrepresentation by the Company contained in the
Purchase Agreement is false or misleading in any material respect when made; or
(e) Any material breach under the Purchase Agreement by the Company,
including with respect to any covenant set forth in Section 6 thereof and such
default continues unremedied for a period of ten days after notice thereof shall
have been given to the Company by the Holder; or
(f) the Company shall (i)(A) fail to make any payment when due under
the terms of any bond, debenture, note or other evidence of indebtedness, and
such failure shall continue beyond any period of grace provided with respect
thereto, or (B) default in the observance or performance of any other agreement,
term or condition contained in any such bond, debenture, note or other evidence
of indebtedness, and (ii) the effect of such failure or default is to cause, or
permit the holder or holders thereof to cause, upon the expiration of any
applicable grace periods, indebtedness in an aggregate amount of Five Million
Dollars ($5,000,000) or more to become due prior to its stated date of maturity.
4.2 Remedies upon Default.
(a) Upon an Event of Default, Holder may at any time (unless all
defaults shall theretofore have been remedied) at its option, by written notice
to the Company, declare this Note to be due and payable, whereupon the entire
principal balance under this Note shall forthwith mature and become due and
payable, together with interest accrued thereon, without presentment, demand,
protest, or notice, all of which are hereby waived, provided, however, that upon
the occurrence of an Event of Default under Section 4.1(b) and (c) above, this
Note (including all principal and all accrued interest) shall automatically be
accelerated and become due and payable immediately without any written notice to
the Company.
(b) In case any one or more Events of Default shall occur and be
continuing, Holder may proceed to protect and enforce its rights by an action at
law, suit in equity, or other appropriate proceeding, whether for the specific
performance of any agreement contained in the Purchase Agreement or in this Note
or for an injunction against a violation of any of the terms of the Purchase
Agreement or of this Note, or in the aid of the exercise of any power granted by
the Purchase Agreement, this Note, or by law. In case of a default in the
payment of any principal of or interest on this Note, the Company shall pay to
Holder such further amount as shall be sufficient to cover the cost and expenses
of collection, including, without limitation, reasonable attorney's fees,
expenses, and disbursements. No course of dealing and no delay on the part of
Holder in exercising any right shall operate as a waiver thereof or otherwise
prejudice Holder's rights, powers, or remedies. No right, power, or remedy
conferred by the Purchase Agreement or by this Note upon Holder shall be
exclusive of any rights, power, or remedy referred to in the Purchase Agreement
or in this Note, or now or hereafter available at law, in equity, by statute, or
otherwise.
5. Default Interest Rate. Any amount which is not paid as of the
expiration of five (5) calendar days after its due date shall thereafter bear
interest at the alternative rate (rather than the rate otherwise applicable
hereunder and in addition to any other amounts payable hereunder by reason
thereof) equal to the lesser of two percent (2%) per annum in excess of the then
applicable interest rate as set forth above or the maximum rate of interest
permitted under applicable law (the "Default Rate) until the Event of Default is
fully cured, provided that the imposition of interest at the Default Rate shall
not affect or reduce the obligation to pay any final payment (for whatever
reason) of all outstanding indebtedness hereunder.
6. Transfer; Successors and Assigns. The terms and conditions of this
Note shall inure to the benefit of and be binding upon the respective successors
and assigns of the parties. Notwithstanding the foregoing, the Company may not
assign, pledge or otherwise transfer this Note without the prior written consent
of the Holder, which shall not be unreasonably withheld, and the Holder may not
assign, pledge, or otherwise transfer this Note without the prior written
consent of the Company, which shall not be unreasonably withheld, except for
transfers to affiliates. Subject to the preceding sentence, this Note may be
transferred only upon surrender of
the original Note for registration of transfer, duly endorsed, or accompanied by
a duly executed written instrument of transfer in form satisfactory to the
Holder. Thereupon, a new note for the same principal amount and interest will be
issued to, and registered in the name of, the transferee. Interest and principal
are payable only to the registered holder of this Note.
7. Governing Law. This Note and all acts and transactions pursuant
hereto and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the State of
Washington, without giving effect to principles of conflicts of law.
8. Notices. Any notice required or permitted by this Note shall be in
writing and shall be deemed sufficient upon delivery, when delivered personally
or one business day after being sent by a nationally-recognized overnight
delivery service (such as Federal Express or UPS), or forty-eight (48) hours
after being deposited in the U.S. mail, as certified or registered mail, with
postage prepaid, addressed to the party to be notified at such party's address
as set forth below or as subsequently modified by written notice.
9. Amendments and Waivers. Any term of this Note may be amended only
with the written consent of the Company and at least a majority in interest of
the Holders. Any amendment or waiver effected in accordance with this Section 7
shall be binding upon the Company, the Holders and each transferee of the Notes.
10. Waiver. Borrower waives presentment and demand for payment, notice of
dishonor, protest and notice of protest of this Note, and shall pay all costs of
collection when incurred, including, without limitation, reasonable attorneys'
fees, costs and other expenses.
The right to plead any and all statutes of limitations as a defense to any
demands hereunder is hereby waived to the full extent permitted by law.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON
LAW.
COMPANY:
XXXXXXXXX.XXX, INC.
By:
-----------------------------------------
Name:
---------------------------------------
(print)
Title:
--------------------------------------
Address: 00000 XX Xxxxxxxx Xxx, Xxxxx 000
Xxxxxxxx, XX 00000
AGREED TO AND ACCEPTED:
Vulcan Ventures Incorporated
By:
------------------------------
Name:
----------------------------
(print)
Title:
---------------------------
Address: 000 000xx Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
EXHIBIT A
COMPLIANCE CERTIFICATE
The undersigned, Xxxxx Xxxxxxx, the President and Chief Executive Officer
of xxxxxxxxx.xxx, inc., a Delaware corporation (the "Company"), certifies that
he is authorized to execute this Compliance Certificate for and on behalf of the
Company, and further certifies that:
1. The representations and warranties of the Company contained in Section
2.1 (the first sentence only), Section 2.4, Section 2.5 and Section 2.6 of the
Series D Preferred Stock and Convertible Note Purchase Agreement, dated May 19,
1999 (the "Purchase Agreement"), are true and correct as though made on and as
of the date hereof.
2. Exhibit A to that certain Certificate of the Secretary of
xxxxxxxxx.xxx, inc., dated May 19, 1999 (the "Secretary's Certificate"), is a
true and correct copy of the Company's Fifth Amended and Restated Certificate of
Incorporation (the "Restated Certificate"), and since May 19, 1999 no steps have
been taken by the Board of Directors or stockholders of the Company to effect or
authorize any amendment or other modification to such Restated Certificate that
would require, under Delaware law, consent of the holders of the Series D
Preferred Stock, voting as a separate class, if shares of Series D Preferred
Stock were outstanding, unless approved by Vulcan.
3. The Company has performed or fulfilled all covenants, agreements and
conditions contained in the Purchase Agreement and that certain Convertible
Promissory Note, dated May 19, 1999, in the amount of $40,000,000.85 of the
Company in favor of Vulcan Ventures Incorporated to be performed or fulfilled by
the Company on or prior to the date hereof.
In Witness Whereof, the undersigned has hereunto set his hand this ____ day
of _________, 1999.
-------------------------------------
Xxxxx Xxxxxxx
President and Chief Executive Officer
