COMMON STOCK PURCHASE AGREEMENT
between
THE KNOT, INC.
and
MAY BRIDAL CORPORATION
Dated as of
February 19, 2002
COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (this Agreement) is made as of
February 19, 2002 between THE KNOT, INC., a Delaware corporation (the Company),
and MAY BRIDAL CORPORATION, a Missouri corporation (the Purchaser).
RECITALS
WHEREAS, the Company desires to sell to the Purchaser, and the
Purchaser desires to purchase from the Company, 3,575,747 shares of the
Company's common stock, par value $0.01 per share (the Common Stock), on the
terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1
Agreement to Purchase and Sell Common Stock
Upon the terms and subject to the conditions set forth in this
Agreement, the Company hereby agrees to sell to the Purchaser, and the Purchaser
agrees to purchase from the Company, 3,575,747 shares of the Common Stock (the
Shares) for an aggregate purchase price of $5,000,000.
SECTION 2
Closing Date; Deliveries; Legend
2.1 Closing Date. The closing of the transactions contemplated hereby
shall take place at the offices of Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.,
000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New York time, on
February 19, 2002, or at such other location, date and time, as may be agreed
upon between the Purchasers and the Company, or by facsimile or other electronic
means (such closing being called the Closing and such date and time being called
the Closing Date).
2.2 Delivery. At the Closing, the Company shall deliver to the
Purchaser or its designee a certificate or certificates representing the Shares
against payment of the aggregate purchase price of $5,000,000 by wire transfer
of immediately available funds to an account designated by the Company in
writing.
2
2.3 Legend. (a) The certificate or certificates representing the Shares
shall bear a legend restricting transfer under the Securities Act of 1933, as
amended (the Securities Act) and acknowledging the restrictions on transfer set
forth herein, such legend shall be substantially in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW. NO TRANSFER OF THE SHARES REPRESENTED BY
THIS CERTIFICATE SHALL BE VALID OR EFFECTIVE UNLESS (A) SUCH TRANSFER
IS MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, OR (B) THE HOLDER SHALL DELIVER TO THE COMPANY AN
OPINION OF ITS COUNSEL, IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO
THE COMPANY AND REASONABLY CONCURRED IN BY THE COMPANY'S COUNSEL, THAT
SUCH PROPOSED TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT.
(b) The Company agrees (a) to remove the legend set forth in the
Section 2.3(a) upon receipt of an opinion of the Purchaser's counsel, reasonably
concurred in by the Company's counsel within ten (10) business days of the
Company's receipt of such opinion, that the Shares are eligible for transfer
without registration under the Securities Act and (b) to remove such legend at
such time as the Shares are subject to an effective registration statement
registering the Shares under the Securities Act.
SECTION 3
Representations and Warranties of the Company
The Company hereby represents and warrants to the Purchaser as follows:
3.1 Organization. The Company is a corporation duly organized and
validly existing under the laws of the State of Delaware and is in good standing
under such laws. The Company has the requisite corporate power to own and
operate its properties and assets, and to carry on its business as presently
conducted. The Company is qualified to do business as a foreign corporation in
each jurisdiction in which the ownership of its property or the nature of its
business requires such qualification, except where the failure to be so
qualified would not reasonably be expected to have a material adverse effect on
the business, assets, liabilities, operations or conditions (financial or
otherwise) of the Company and its subsidiaries, taken as a whole (a Material
Adverse Effect).
3.2 Authorization. The Company has taken all corporate action necessary
for the authorization, execution, delivery and performance of this Agreement and
the authorization, sale, issuance and delivery of the Shares. This Agreement
constitutes the legal, valid, and binding
3
obligation of the Company enforceable in accordance with its terms, except to
the extent limited by (a) applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws of general application related to the enforcement of
creditors' rights generally and (b) general principles of equity.
3.3 No Conflict. The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default under (with or without notice or
lapse of time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or to a loss of a material benefit under any
provision of, the Company's Amended and Restated Certificate of Incorporation or
Amended and Restated Bylaws or any mortgage, indenture, lease or other agreement
or instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company or its
properties or assets, which would have a Material Adverse Effect or would
materially impair or restrict the Company's power to perform its obligations as
contemplated under such agreements.
3.4 Capitalization. (a) The authorized capital stock of the Company
consists solely of (i) 100,000,000 shares Common Stock, of which 14,761,417
shares are issued and outstanding, and (ii) 5,000,000 shares of preferred stock,
par value $0.001 per share, none of which are issued and outstanding. All of the
issued and outstanding shares of Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable and are not subject to any
preemptive rights.
(b) Except as reflected in the Company's most recent proxy statement
filed on April 12, 2001 or as set forth on Schedule 3.4(b) hereof, the Company
has not issued or granted any outstanding options, warrants, rights or other
securities convertible into or exchangeable or exercisable for shares of the
Company's capital stock, any other commitments or agreements providing for the
issuance of additional shares of the Company's capital stock, the sale of
treasury shares or for the repurchase or redemption of shares of the Company's
capital stock or any obligations arising from canceled stock of the Company.
There are no agreements of any kind which may obligate the Company to issue,
purchase, register for sale, redeem or otherwise acquire any of its securities
or interests. The issuance and sale of the Shares will not give rise to any
preemptive rights or rights of first refusal on behalf of any person in
existence on the date hereof. There are no outstanding or authorized stock
appreciation, phantom stock or similar rights with respect to the Company.
Except as set forth on Schedule 3.4(b) hereof, there are no outstanding
securities of the Company, or contracts binding on the Company relating to such
securities, that give to their holders anti-dilution protections or similar
rights. Except as set forth on Schedule 3.4(b) hereof, the issuance of the
Shares will not give any other holder of the Company's securities the right to
receive as a result of such issuance any additional securities or property or
change any material rights enjoyed with respect to such securities.
(c) Except as set forth on Schedule 3.4(c) hereof, there are no voting
trusts, stockholder agreements, proxies or other agreements in effect with
respect to the voting or transfer of the Shares.
4
3.5 Compliance With Securities Laws. Subject to and in reliance on the
truth and accuracy of the Purchasers representations and warranties set forth in
this Agreement, the offer, sale and issuance of the Shares is exempt from the
registration requirements of the Securities Act and any applicable state
securities laws and neither the Company nor any authorized agent acting on its
behalf will take any action hereafter that would cause the loss of such
exemption.
3.6 SEC Documents. The Company has timely filed all required reports,
schedules, forms, statements and other documents with the Securities and
Exchange Commission (the SEC) since December 31, 2000 (the SEC Documents). As of
their respective dates, the SEC Documents complied in all material respects with
the requirements of the Securities Act or the Securities Exchange Act of 1934,
as amended (the Exchange Act), as the case may be, and the rules and regulations
of the SEC promulgated thereunder, and, except to the extent that information
contained in any SEC Document has been revised or superseded by a later document
filed with the SEC and made publicly available prior to the date of this
Agreement, none of the SEC Documents contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of the Company
included in the SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with U.S.
generally accepted accounting principles (GAAP) applied on a consistent basis
during the periods involved and fairly present the consolidated financial
position of the Company and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operation and cashflows for the
periods then ending in accordance with GAAP (subject, in the case of the
unaudited statements, to normal year-end audit adjustments and the absence of
footnotes). Except as disclosed in financial statements included in the SEC
Documents, neither the Company nor any of its subsidiaries has any liabilities
or obligations of any nature (whether accrued, absolute, contingent or
otherwise) required by GAAP to be set forth on a consolidated balance sheet of
the Company and its consolidated subsidiaries or in the notes thereto and which
would reasonably be expected to have a Material Adverse Effect.
3.7 Absence of Certain Changes or Events. Since the date of the
Company's Quarterly Report on Form 10-Q filed on November 14, 2001, which
contains unaudited financial statements of the Company prepared in accordance
with the requirements of Form 10-Q, (a) the Company has conducted its business
in the ordinary course and (b) there has not been any action taken and there has
not been any event which would require the Company to amend or supplement any of
the SEC Documents or to file a Current Report on Form 8-K.
3.8 Governmental and Like Consents. No consent, approval or
authorization of or designation, declaration or filing with any governmental
authority on the part of the Company is required in connection with the valid
execution and delivery of this Agreement, the offer, sale or issuance of the
Shares or the consummation of any other transaction contemplated hereby, except
such filings as may be required to be made with the SEC, the Over-the-Counter
Bulletin Board or under applicable state securities laws.
5
3.9 Litigation. Except as disclosed in the SEC Documents, there is no
suit, action, or proceeding pending or affecting the Company or any of its
subsidiaries that, individually or in the aggregate, would reasonably be
expected to (a) have a Material Adverse Effect, (b) impair the Company's ability
to perform its obligations under this Agreement or (c) prevent the consummation
of any of the transactions contemplated by such agreements, nor is there any
judgment, decree, injunction, rule or order of any governmental entity or
arbitrator outstanding against the Company or any of its subsidiaries having, or
which, insofar as reasonably can be foreseen in the future have, any such
effect.
SECTION 4
Representations and Warranties of the Purchaser
The Purchaser hereby represents and warrants to the Company as follows:
4.1 Organization. The Purchaser is a corporation duly organized and
validly existing under the laws of the State of Missouri, with all requisite
corporate power and authority to own, lease and operate its properties and to
conduct its business as presently conducted. The Purchaser is a subsidiary of
The May Department Stores Company, a Delaware corporation.
4.2 Authority. All corporate action on the part of the Purchaser
necessary for the authorization, execution, delivery and performance of this
Agreement by the Purchaser has been taken. This Agreement has been duly executed
and delivered by the Purchaser and constitutes the legal, valid and binding
obligations of the Purchaser, enforceable in accordance with its terms, except
to the extent limited by (a) applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws of general application related to the enforcement of
creditors' rights generally and (b) general principles of equity, and except
that enforcement of rights to indemnification and contribution contained herein
may be limited by applicable federal or state laws or the public policy
underlying such laws, regardless of whether enforcement is considered in a
proceeding in equity or at law.
4.3 Investment. The Purchaser is acquiring the Shares for investment
for its own account, not as a nominee or agent, and not with a view to, or for
resale in connection with, any distribution thereof. The Purchaser understands
that the Shares have not been registered under the Securities Act and are issued
pursuant to an exemption from the registration requirements of the Securities
Act.
4.4 Accredited Investor Status. The Purchaser is an "accredited
investor" within the meaning of Regulation D promulgated under the Securities
Act.
4.5 Restricted Securities. The Purchaser understands that the Shares
are restricted securities under the Securities Act inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under the Securities Act and applicable regulations thereunder such
securities may be resold without registration under the Securities Act
6
only in certain limited circumstances. The Purchaser is familiar with Rule 144
promulgated by the SEC, as presently in effect, and understands the resale
limitations imposed thereby and by the Securities Act.
SECTION 5
Conditions to Obligation of the Purchaser
The Purchaser's obligation to purchase and pay for the Shares is
subject to the satisfaction, on or before the Closing Date, of the following
conditions, any of which may be waived in whole or in part by the Purchaser:
5.1 Representations and Warranties. The representations and warranties
of the Company under Section 3 of this Agreement shall be true, complete and
correct on and as of the Closing Date, with the same effect as though such
representations and warranties had been made on and as of such date, subject to
changes herein in its course of business, and the Company's Chief Executive
Officer shall have certified to such effect to the Purchaser in writing.
5.2 No Order Pending. There shall not then be in effect any order
enjoining or restraining the transactions contemplated by this Agreement.
5.3 Delivery of Stock Certificates. At the Closing, the Company shall
have delivered a stock certificate or stock certificates representing the
Shares.
SECTION 6
Conditions to Obligation of the Company
The Company's obligation to issue and sell the Shares to the Purchaser
is subject to the satisfaction, on or before the Closing Date, of the following
conditions, any of which may be waived in whole or in part by the Company:
6.1 Representations and Warranties. The representations and warranties
of the Purchaser under Section 4 of this Agreement shall be true, complete and
correct on and as of the Closing Date, with the same effect as though such
representations and warranties had been made on and as of such date.
6.2 No Order Pending. There shall not then be in effect any order
enjoining or restraining the transactions contemplated by this Agreement.
7
SECTION 7
Covenants
7.1 Rights to Acquire Additional Shares or Voting Power. Except for the
Common Stock reserved for future issuance in the amounts set forth on Schedule
7.1 or which shall be reserved for future issuance pursuant to Stock Incentive
Plans for officers and directors which may be adopted from time to time by
appropriate corporate resolution, if the Company proposes to sell, transfer or
otherwise issue any Common Stock or preferred stock or other interest
convertible into Common Stock, to any third party, which transaction would
result in Purchaser's interest in the Common Stock or in the voting power of the
Company being more than 1 percentage point lower after the transaction than
before the transaction, then the Company shall offer to the Purchaser the right
to acquire shares of Common Stock or preferred stock or other interest on the
same terms and conditions as offered to the third party (if such terms and
conditions involve consideration other than cash, then the Company will offer
terms and conditions that involve cash consideration substantially equivalent to
those offered to the third party) in such amount as to preserve its percentage
interest in the Common Stock and voting power of the Company. If the Company
engages in several such transactions or proposed transactions, which individual
transactions would not result in Purchaser's interest in the Common Stock or in
the voting power of the Company being reduced by 1 percentage point, the Company
need not make such offer to the Purchaser unless and until the aggregate of the
transactions would result in such a change.
7.2 Rights to Dispose of Shares or Voting Power. If the Company
proposes to acquire any Common Stock or preferred stock or other interest
convertible into Common Stock, from any third party, which transaction would
result in Purchaser's interest in the Common Stock or in the voting power of the
Company being more than 20% after the transaction, then the Company shall offer
to acquire shares of Common Stock or preferred stock or other interest from
Purchaser on the same terms and conditions as offered to the third party (if
such terms and conditions involve consideration other than cash, then the
Company will offer terms and conditions that involve cash consideration
substantially equivalent to those offered to the third party) in such amount as
to permit Purchaser to own less than 20% of the Common Stock or voting power of
the Company after the transaction.
7.3 Notice. In the case of a transaction under either Section 7.1 or
7.2, the Company shall give Purchaser at least 20 days notice of such
transaction and shall reasonably cooperate with the Purchaser to answer
questions and provide all information requested by Purchaser.
7.4 Board Designee. So long as Purchaser owns more than 15% of the
Common Stock or of the voting power of the Company, the Company shall take all
steps necessary to elect such person as Purchaser shall from time to time
designate to serve as a member of the board of directors of the Company, and to
nominate and submit such person for election by the shareholders of the Company.
8
SECTION 8
Miscellaneous
8.1 Governing Law. This Agreement shall be governed by, and construed,
interpreted and enforced in accordance with, the laws of the State of New York,
without giving effect to the principles of conflicts of laws thereunder which
would specify the application of the law of another jurisdiction.
8.2 Survival. The representations and warranties in Sections 3 and 4 of
this Agreement shall not survive the execution and delivery of this Agreement
and the Closing.
8.3 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns.
8.4 Entire Agreement; Amendment. This Agreement and the other documents
delivered or referred to in this Agreement constitute the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof and thereof and supersede all prior agreements and understandings
among the parties relating to the subject matter hereof. This Agreement may not
be amended, waived, discharged or terminated other than by a written instrument
signed by the party against whom enforcement of any such amendment, waiver,
discharge or termination is sought.
8.5 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
Party to be notified, (b) when sent by confirmed facsimile if sent during normal
business hours of the Party, if not, then on the next business day, (c) five (5)
days after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (d) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All notices not delivered personally or by facsimile
will be sent with postage and other charges prepaid and properly addressed to
the party to be notified at the address set forth for such party:
(a) if to the Company, to:
The Knot, Inc.
000 Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
9
with a copy to (which copy does not constitute notice):
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
10
(b) if to the Purchaser, to:
May Bridal Corporation
000 Xxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000-0000
Attention: Vice President of Internet Marketing
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
with a copy to (which copy does not constitute notice):
The May Department Store Company
000 Xxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
Any party hereto (and such party's permitted assigns) may change such party's
address for receipt of future notices hereunder by giving written notice to the
Company and the other parties hereto.
8.6 Brokers.
(a) The Company has not engaged, consented to, or authorized any
broker, finder or intermediary to act on its behalf, directly or indirectly, as
a broker, finder or intermediary in connection with the transactions
contemplated by this Agreement. The Company hereby agrees to indemnify and hold
harmless the Purchaser from and against all fees, commissions or other payments
owing to any such party acting on behalf of the Company.
(b) The Purchaser has not engaged, consented to or authorized any
broker, finder or intermediary to act on its behalf, directly or indirectly, as
a broker, finder or intermediary in connection with the transactions
contemplated by this Agreement. The Purchaser hereby agrees to indemnify and
hold the Company harmless from and against all fees, commissions or other
payments owing to any such party acting on behalf of the Purchaser.
8.7 Fees, Costs and Expenses. All fees, costs and expenses (including
attorneys' fees and expenses) incurred by either party hereto in connection with
the preparation, negotiation and execution of this Agreement, and the
consummation of the transactions contemplated hereby shall be the sole and
exclusive responsibility of such party.
8.8 Severability. If any term, provision, covenant or restriction of
this Agreement (or this Agreement in its entirety) is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restriction of this
11
Agreement (or such other agreements) shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.
8.9 Further Assurances. The parties will from time to time subsequent
to the Closing, at the respective parties' request and without further
consideration, execute and deliver such other documents and instruments as such
requesting party may reasonably request in order to more fully carry out the
intentions of the parties under this Agreement.
8.10 Initial Public Announcement. The Company and the Purchaser shall
agree on the form and content of the initial public announcement which shall be
made concerning this Agreement and the transactions contemplated hereby, and
neither the Company nor the Purchaser shall make such public announcement
without the consent of the other, except as required by law.
8.11 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.12 Business Day. All references to the term A business day shall
mean any day on which Citibank in New York is not closed.
[the remainder of this page has been intentionally omitted]
12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized officers as of the date set forth above.
THE KNOT, INC.
By:
-------------------------------
Name:
Title:
MAY BRIDAL CORPORATION
By:
------------------------------
Name:
Title:
Schedule 3.4(b)
(1) (a) Stock Incentive Plans
In November 2001, the Company issued 197,759 options under the Company's
1999 Stock Incentive Plan.
In December 2001, the Company issued 3,000 options under the Company's 1999
Stock Incentive Plan.
In January 2002, the Company issued 24,000 options under the Company's 1999
Stock Incentive Plan.
In February 2002, the Company issued 7,750 options under the Company's 1999
Stock Incentive Plan.
On the Closing Date, there were 2,892,116 options issued and outstanding
under the Company's 1999 Stock Incentive Plan, and 215,874 options issued
and outstanding under the Company's 2000 Non-Officer Stock Incentive Plan.
(b) Employee Stock Purchase Plan
On January 31, 2002, the Company issued 25,364 shares under the Company's
1999 Employee Stock Purchase Plan.
(2) On July 23, 1999, the Company entered into a Warrant Agreement with America
Online, Inc. ("AOL") which granted AOL the right to purchase up to 366,667
shares of Common Stock (collectively, the "Warrant Shares") at a per share
exercise price of $7.20. The exercise price is subject to adjustment, on a
weighted average basis, upon the occurrence of certain stock issuances.
Immediately prior to the transactions contemplated hereby, the per share
exercise price of the Warrant Shares was $7.087. After giving effect to the
transactions contemplated hereby, the per share exercise price of the
Warrant Shares shall be reduced to $5.991.
ii
Schedule 3.4(c)
Pursuant to the terms of that certain Third Amended and Restated Investors'
Rights Agreement (the "Investors' Rights Agreement"), dated November 8, 1999, by
and among the Company and certain of its stockholders listed on the signature
pages attached thereto, each Significant Stockholder (as such term is defined in
the Investors' Rights Agreement) agreed that neither it nor any of its
Affiliates (as such term is defined in the Investors' Rights Agreement) will
enter into any voting trust or any other voting agreement with any other
Significant Stockholder, other than certain voting agreements permitted
thereunder.
iii
Schedule 7.1(b)
Stock options reserved pursuant to the Company's 1999 Stock Incentive Plan 5,192,439
Stock options reserved pursuant to the Company's 2000 Stock Incentive Plan 435,000
Shares of Common Stock reserved pursuant to the Warrant Agreement with AOL 366,667
Shares reserved pursuant to the Company's 1999 Employee Stock Purchase Plan 274,636
Stock options reserved in connection with the Company's acquisition of Xxxxxxxxx.xxx 10,000
---------
Total number of shares of Common Stock reserved for future issuance 6,278,742
iv
