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STOCK SWAP AGREEMENT
THIS STOCK SWAP AGREEMENT (the "Agreement") is made as of the 20th day
of January, 2000 by and between XXXXXXX COMMUNICATIONS, INC., a Delaware
corporation, having an address at One Xxxx Xxxx Xxxxx, Xxxxx Xxxxx, Xxx Xxxx
00000 ("Xxxxxxx") and XXXXXXX.XXX, INC., a California corporation, having an
address at 0000 Xxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000 ("Itarget").
W I T N E S S E T H :
WHEREAS, the parties hereto have agreed to exchange and transfer the
securities referred to in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises of the parties
hereto, it is agreed as follows:
1. Definitions
1.1 "Act" shall mean the Securities Act of 1933, as amended.
1.2 "Aggregate Sales Proceeds" shall mean the sum of (i) the gross
proceeds received in the aggregate by Itarget upon its sale of
any Xxxxxxx Shares during the period between the Effective Date
and the Final Measuring Date, plus (ii) the product of (A) the
maximum number of Xxxxxxx Shares which Itarget could have sold
pursuant to the provisions of Section 6 hereof at a sales price
equal to or greater than 125% of the Closing Date Price (as
reported for Qualified Trades by the Nasdaq National Market or
the market upon which the Xxxxxxx Common Stock is then traded),
but did not sell, during the period between the Effective Date
and the Final Measuring Date (solely for purposes of this
Section 1.2, the "Section 1.2 Protected Shares"), multiplied by
(B) a fraction, the numerator of which shall be the sum of the
following products:
(x) the number of Section 1.2 Protected Shares Itarget could
have sold on a trading day during the period between the
Effective Date and the Final Measurement Date, multiplied by (y)
the high sales price of the Xxxxxxx Common Stock on such trading
day (as reported for Qualified Trades by the Nasdaq National
Market or the market upon which the Xxxxxxx Common Stock is then
traded),
and the denominator of which shall be the total number of Section 1.2 Protected
Shares; provided, however, that the total number of Section 1.2 Protected Shares
shall not exceed the difference between (xx) the total number of Xxxxxxx Shares
less (yy) the number of Xxxxxxx
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Shares actually sold by Itarget during the period between the Effective Date and
the Final Measuring Date; and, provided further, however, that for purposes of
the calculation in subpart (ii)(B) of this Section 1.2, for each particular
Section 1.2 Protected Share, the high sales price of the Xxxxxxx Common Stock to
be used for each such Section 1.2 Protected Share shall be the high sales price
on the first trading day such Section 1.2 Protected Share could have been sold,
but was not.
1.3 "Change of Control" shall mean any consolidation or merger of
Itarget with or into any other corporation or entity or person,
or any other corporate reorganization, in which the stockholders
of Itarget immediately prior to such consolidation, merger or
reorganization, own securities constituting less than 50% of
Itarget's voting power immediately after such consolidation,
merger or reorganization, or any transaction or series of
related transactions to which Itarget is a party in which
securities constituting in excess of 50% of Itarget's voting
power is transferred, or any transaction in which Itarget is not
the surviving entity.
1.4 "Closing Date" shall mean January 20, 2000.
1.5 "Closing Date Price" shall mean the quotient of (a) the sum of
the following products calculated for each of the twenty (20)
trading days prior to the Closing Date:
(i) the total number of shares of Xxxxxxx Common Stock traded on
a trading day, multiplied by (ii) the closing sales price of the
Xxxxxxx Common Stock for such trading day, all as reported by
the Nasdaq National Market or the market upon which the Xxxxxxx
Common Stock is then traded,
divided by (b) the total number of shares of Xxxxxxx Common Stock traded during
the twenty (20) trading days prior to the Closing Date, as reported by the
Nasdaq National Market or the market upon which the Xxxxxxx Common Stock is then
traded.
1.6 "Commission" shall mean the Securities and Exchange Commission.
1.7 "Disinterested Directors" shall mean all of the members of the
Board of Directors of Xxxxxxx and Itarget excluding Xxxxxx
Xxxxxxxx and Xxxxxxxx Xxxxx.
1.8 "Effective Date" shall mean the date the Registration Statement
has been declared effective by the Commission.
1.9 "Escrow Agent" shall mean the law firm of Feder, Kaszovitz,
Isaacson, Weber, Xxxxx & Bass LLP.
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1.10 "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
1.11 "Final Measuring Date" shall mean the first business day
following the date that is sixty (60) calendar days after the
Effective Date.
1.12 "Holders" shall mean the holders of the Xxxxxxx Shares
subsequent to the Closing Date, provided such holders are either
Itarget or its permitted assigns or any successor to Itarget
resulting from a Change of Control.
1.13 "Itarget Common Stock" shall mean the common stock, $.01 par
value per share, of Itarget.
1.14 "Itarget Preferred Shares" shall mean shares of Itarget's Series
B Preferred Stock, par value $.01 per share, such Series B
Preferred Stock having the same rights and preferences as the
form of Series B Preferred Stock annexed hereto as Schedule
1.14.
1.15 "Protected Xxxxxxx Shares" shall mean the maximum number of
Xxxxxxx Shares which Itarget could have sold pursuant to the
provisions of Section 6 hereof on any Protected Xxxxxxx Share
Trading Day, but did not sell during the period between the
Effective Date and the Final Measuring Date; provided, however,
the total number of Protected Xxxxxxx Shares shall not exceed
the difference between (i) the total number of Xxxxxxx Shares
issued to Itarget on the Closing Date, less (ii) the number of
Xxxxxxx Shares actually sold by Itarget during the period
between the Effective Date and the Final Measuring Date.
1.16 "Protected Xxxxxxx Share Trading Day" shall mean any day upon
which the Xxxxxxx Common Stock trades during the period between
the Effective Date and the Final Measuring Date for which a
sales price for the Xxxxxxx Common Stock is equal to or greater
than 75% of the Closing Date Price (as reported for Qualified
Trades by the Nasdaq National Market or the market upon which
the Xxxxxxx Common Stock is then traded).
1.17 "Qualified Trades" shall mean trades of an aggregate of at least
500 shares of Xxxxxxx Common Stock on a trading day during
regular trading hours (as reported by the Nasdaq National Market
or the market upon which the Xxxxxxx Common Stock is then
traded).
1.18 "Xxxxxxx Common Stock" shall mean the common stock, $.001 par
value per share, of Xxxxxxx.
1.19 "Xxxxxxx Shares" shall mean that number of shares of the Xxxxxxx
Common
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Stock equal to the quotient of (i) 1,999,980 divided by (ii) the
Closing Date Price.
1.20 "Registration Statement" shall mean the registration statement
filed with the Commission by Xxxxxxx that includes the Xxxxxxx
Shares.
1.21 "Remaining Eligible Protected Xxxxxxx Shares" shall mean the
difference of (i) the total number of Xxxxxxx Shares issued to
Itarget on the Closing Date but not yet sold by Itarget, less
(ii) the sum of all Protected Xxxxxxx Shares which Itarget could
have sold on all prior Protected Xxxxxxx Share Trading Dates,
but did not sell.
1.22 "Sold Xxxxxxx Shares' Gross Proceeds" shall mean the sum of all
of the following products:
(i) the number of Xxxxxxx Shares sold by Itarget on any trading
day during the period between the Effective Date and the Final
Measuring Date, multiplied by (ii) the greater of (x) the sales
price reported for such sale (as reported by the Nasdaq National
Market or the market upon which the Xxxxxxx Common Stock is then
traded) or (y) 75% of the Closing Date Price.
2. Purchase and Delivery of Shares. Upon the Closing Date:
2.1 Xxxxxxx shall deliver to Itarget, a stock certificate
representing the ownership interest of the Xxxxxxx Shares
registered in the name of Itarget.
2.2 Itarget shall deliver to (i) Xxxxxxx, a certificate representing
the ownership interest of 42,372 Itarget Preferred Shares, and
(ii) the Escrow Agent, a certificate representing the ownership
interest of 10,593 Itarget Preferred Shares, both of such
certificates registered in the name of Xxxxxxx;
3. Adjustment to Consideration
3.1 Xxxxxxx shall pay to Itarget the difference (to the extent such
difference is greater than zero) between $1,499,985.00 less (x)
the sum of (i) the Sold Xxxxxxx Shares' Gross Proceeds, plus
(ii) the sum of the following products calculated for each
Protected Xxxxxxx Share Trading Day:
(A) the lesser of (xx) the number of the Remaining Eligible
Protected Xxxxxxx Shares that are Protected Xxxxxxx Shares or
(yy) the number of the Protected Xxxxxxx Shares for a Protected
Xxxxxxx Share Trading Day, multiplied by (B) the high sales
price of the Xxxxxxx Common Stock on such Protected Xxxxxxx
Share Trading Day (as reported for Qualified Trades by the
Nasdaq National Market
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or the market upon which the Xxxxxxx Common Stock is then
traded).
Upon Xxxxxxx'x delivery of such payment, Itarget shall return to Xxxxxxx within
five (5) business days any of its Xxxxxxx Shares that were not sold and were not
Protected Xxxxxxx Shares. Such payment shall be paid by Xxxxxxx to Itarget by
wire transfer no later than five (5) business days after the Final Measuring
Date in accordance with the wiring instructions annexed hereto as Schedule 3.1.
3.2 a. In the event the Aggregate Sales Proceeds exceed
$2,499,975.00, the Escrow Agent shall deliver to Xxxxxxx, from
those securities deposited therewith by Itarget pursuant to
Section 2.2(ii) hereof, certificates representing the ownership
interest of that number of Itarget Preferred Shares equal to the
quotient of:
(x) the difference of (i) the lesser of the Aggregate Sales Proceeds or
$2,999,970.00, less (ii) $2,499,975.00, divided by (y) $47.20. Any
remaining shares (or, in the event Xxxxxxx is not entitled to any
distributions from the Escrow Agent pursuant to the provisions of this
Section 3.2(a), all of such shares) held by the Escrow Agent shall be
returned by the Escrow Agent to Itarget.
(b) Upon the Aggregate Sales Proceeds equaling
$2,999,970.00, Itarget shall cease selling any Xxxxxxx Shares and shall deliver
to Xxxxxxx, within two business days after the Aggregate Sales Proceeds equal
$2,999,970.00, a stock certificate evidencing the ownership interest of that
number of shares of Xxxxxxx Common Stock equal to the difference of (i) the
total number of Xxxxxxx Shares issued to Itarget on the Closing Date, less (ii)
the sum of (x) the total number of Xxxxxxx Shares sold by Itarget during the
period between the Effective Date and the Final Measuring Date, plus (y) the
maximum number of Xxxxxxx Shares which Itarget could have sold pursuant to the
provisions of Section 6 hereof at a sales price equal to or greater than 125% of
the Closing Date Price (as reported for Qualified Trades by the Nasdaq National
Market or the market upon which the Xxxxxxx Common Stock is then traded), but
did not sell, during the period between the Effective Date and the Final
Measuring Date.
(c) Notwithstanding the provisions of Section 3.2(b) hereof,
in the event the Aggregate Sales Proceeds exceed $2,999,970.00, Itarget shall be
required to pay to Xxxxxxx an amount equal to the difference of (i) the
Aggregate Sales Proceeds less (ii) the sum of (x) $2,999,970.00 plus (y) the
product of (A) the total number of shares of Xxxxxxx Common Stock delivered to
Xxxxxxx pursuant to the provisions of Section 3.2(b), multiplied by (B) the
closing price of the Xxxxxxx Common Stock on the date the Aggregate Sales
Proceeds first exceed $2,999,970.00 (as reported by the Nasdaq National Market
or the market upon which the Xxxxxxx Common Stock is then traded).
In the event any fractional amounts of Itarget Preferred Shares result from the
calculations
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stated in Section 3.2(a), Itarget shall pay to Xxxxxxx the proportionate dollar
value thereof in lieu of issuing a fractional amount of such security. Such
payment and any other payments required to be paid pursuant to this Section 3.2
shall be paid by Itarget to Xxxxxxx by wire transfer no later than five (5)
business days after the Final Measuring Date in accordance with the wiring
instructions annexed hereto as Schedule 3.2.
3.3 If at any time after the Closing Date and prior to Final
Measuring Date there is a Change of Control and, subsequent to
such Change of Control, Itarget is required by Section 3.2 above
to deliver to Xxxxxxx (via the Escrow Agent) additional Itarget
Preferred Shares, provision shall be made so that Xxxxxxx shall
receive, and Xxxxxxx shall accept, the number of shares of stock
or other securities or property to which a holder of the same
number of Itarget Preferred Shares deliverable pursuant to
Section 3.2 would have been entitled in such transaction
constituting the Change of Control. The parties agree to execute
and deliver such certificates or other documents as are
reasonably necessary to carry out the purposes of this Section
3.3. and to deliver promptly to the Escrow Agent such joint
instructions, certificates or documents as are reasonably
necessary for the Escrow Agent to carry out the purposes of this
Section 3.3.
3.4 In order to effectuate the provisions of this Section 3, upon
the sale of any Xxxxxxx Shares during the period between the
Effective Date and the Final Measuring Date, Itarget shall
notify Xxxxxxx and the Escrow Agent within two (2) business days
after such sale of the number of Xxxxxxx Shares sold and the
sales price thereof.
4. Itarget Registration Rights.
4.1 Registration Requirements. Xxxxxxx shall use its best efforts to
effect the registration of the Xxxxxxx Shares as would permit or
facilitate the public sale or distribution of all the Xxxxxxx
Shares by the Holders. Such best efforts by Xxxxxxx shall
include the following:
a. The filing by Xxxxxxx no later than 52 days after the
Closing Date of the Registration Statement with the
Commission pursuant to Rule 415 under the Act on Form
S-3 (or successor form) or such other appropriate
registration form if Xxxxxxx is ineligible to use Form
S-3.
b. Thereafter, using its best efforts to cause such
Registration Statement to be declared effective by the
Commission within 187 days following the Closing Date.
c. Thereafter, abstaining from taking any affirmative
action for a period of three months after the Effective
Date that would cause the Commission
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to declare such Registration Statement to be no longer
effective, unless required to do so by any statute, rule
or regulation of the Act, the Exchange Act or any state
securities law, or any other federal or state statute,
rule or regulation.
d. In the event the Registration Statement becomes
ineffective within the three month period after the
Effective Date, to use its best efforts to cause such
Registration Statement to again be declared effective by
the Commission and maintained effective for a cumulative
period of three months after the Effective Date.
e. Prepare and file with the Commission such amendments and
supplements to the Registration Statement and the
prospectus used in connection with such Registration
Statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of
all securities covered by such Registration Statement.
f. Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in
conformity with the requirements of the Act, and such
other documents as they may reasonably request in order
to facilitate the disposition of the Xxxxxxx Shares
owned by them.
g. Use its best efforts to register and qualify the
securities covered by such Registration Statement under
such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the
Holders; provided that Xxxxxxx shall not be required in
connection therewith or as a condition thereto to
qualify to do business in any such states or
jurisdictions.
h. Notify each Holder of the happening of any event as a
result of which the prospectus included in the
Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary
to make the statements therein not misleading in the
light of the circumstances then existing.
i. Cause all Xxxxxxx Shares registered pursuant to such
Registration Statement to be listed on each securities
exchange on which similar securities issued by Xxxxxxx
are then listed not later than the Effective Date.
j. Provide a transfer agent and registrar for all Xxxxxxx
Shares registered pursuant to such Registration
Statement and a CUSIP number for all such Xxxxxxx
Shares, in each case not later than the Effective Date.
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4.2 Failure to Timely File or Register. If for any reason other than
the fault of any of the Holders or force majeure, either (i) the
filing date of the Registration Statement has not occurred by
the end of the 52-day period following the Closing Date or (ii)
the Effective Date has not occurred by the end of the 187-day
period following the Closing Date, the Holders shall have the
one-time right, exercisable only within five (5) business days
following the end of either such period, to rescind the
transactions contemplated by this Agreement. Such rescission
shall only be effectuated upon (i) the notification to Xxxxxxx
and the Escrow Agent that all of the Holders wish to rescind the
transactions contemplated by this Agreement and (ii) the
delivery of the certificates representing the Xxxxxxx Shares to
the Escrow Agent. If such notice is not timely given or such
certificates are not timely delivered, this Agreement shall
continue in full force and effect. If such notice is timely
given and such certificates are timely delivered, unless Xxxxxxx
gives notice to all the Holders and the Escrow Agent within the
next succeeding five (5) business days that Xxxxxxx elects, at
its sole option, to pay the aggregate sum of $1,999,980 (the
"Total Cash Payment") to Itarget (or the Holders pro rata to
their ownership interests in the Xxxxxxx Shares) and Xxxxxxx
pays the Total Cash Payment by wire transfer pursuant to the
wiring instructions annexed hereto as Schedule 3.1 to Itarget
(or pursuant to other wiring instructions delivered by the
Holders subsequent to the Closing Date) within such five (5)
business days, the transactions contemplated by this Agreement
will be rescinded; the issuance of the Itarget Preferred Shares
and the Xxxxxxx Shares will be deemed cancelled; the
certificates representing the Itarget Preferred Shares shall be
immediately returned by Xxxxxxx to Itarget; the certificates
representing the Xxxxxxx Shares issued to Itarget shall be
immediately returned by the Escrow Agent to Xxxxxxx; and the
certificates deposited with the Escrow Agent pursuant to the
provisions of Section 2.2(ii) shall be immediately returned by
the Escrow Agent to Itarget. If Xxxxxxx gives the requisite
notice to all the Holders and the Escrow Agent that it elects to
pay the Total Cash Payment and pays the Total Cash Payment
(receipt by the Escrow Agent of written confirmation from the
transmitting bank that the Total Cash Payment was delivered
pursuant to the wiring instructions annexed hereto as Schedule
3.1 being sufficient verification by the Escrow Agent that the
Total Cash Payment was paid), the issuance of the Xxxxxxx Shares
shall be deemed cancelled, the certificates representing the
Xxxxxxx Shares shall be returned by the Escrow Agent to Xxxxxxx
and the certificates deposited with the Escrow Agent pursuant to
the provisions of Section 2.2(ii) hereof shall be returned by
the Escrow Agent to Itarget.
4.3 Furnish Information. It shall be a condition precedent to the
obligations of Xxxxxxx to take any action pursuant to this
Section 4 with respect to the Xxxxxxx Shares of any selling
Holder that such Holder shall furnish to Xxxxxxx such
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information regarding itself, the Xxxxxxx Shares held by it, and
the intended method of disposition of such securities as shall
be reasonably required to effect the registration of such
Xxxxxx'x Xxxxxxx Shares.
4.4 Expenses of Registration. Xxxxxxx shall bear and pay all
expenses incurred in connection with any registration, filing or
qualification of the Xxxxxxx Shares pursuant to this Section 4
for each Holder, including, without limitation, all
registration, filing and qualification fees, printers' and
accounting fees relating or apportionable thereto and the
reasonable fees and disbursements of one counsel for the
Holders, but excluding underwriting discounts and commissions,
if any, relating to the disposition of such Xxxxxxx Shares.
4.5 Indemnification. In the event that any Xxxxxxx Shares are
included in a Registration Statement:
a. To the extent permitted by law, Xxxxxxx will indemnify
and hold harmless each Holder, any underwriter (as
defined in the Act) for such Holder and each officer,
director and person, if any, who controls such Holder or
underwriter within the meaning of the Act or the
Exchange Act against any losses, claims, damages or
liabilities (joint or several) to which they may become
subject under the Act or the Exchange Act, insofar as
such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations
(collectively, a "Violation") of Xxxxxxx: (i) any untrue
statement or alleged untrue statement of a material fact
contained in such Registration Statement, including any
preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto; (ii)
the omission or alleged omission to state therein a
material fact required to be stated therein or necessary
to make the statements therein not misleading; or (iii)
any violation or alleged violation of the Act, the
Exchange Act, any state securities law or any rule or
regulation promulgated under the Act or the Exchange Act
or any state securities law; and Xxxxxxx will pay to
each such Holder, underwriter, officer, director or
controlling person any legal or other expenses
reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the
indemnity agreement contained in this subsection 4.5(a)
shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such
settlement is effected without the consent of Xxxxxxx
(which consent shall not be unreasonably withheld), nor
shall Xxxxxxx be liable in any such case for any such
loss, claim, damage, liability or action to the extent
that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity
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with information furnished expressly for use in
connection with such registration by any such Holder,
underwriter, officer, director or controlling person.
b. To the extent permitted by law, each Holder will
indemnify and hold harmless Xxxxxxx, each of its
directors, each of its officers who has signed the
Registration Statement, each person, if any, who
controls Xxxxxxx within the meaning of the Act, any
underwriter, any other Holder selling securities in such
Registration Statement and any controlling person of any
such underwriter or other Holder, against any losses,
claims, damages or liabilities (joint or several) to
which any of the foregoing persons may become subject,
under the Act, the Exchange Act or applicable state
securities law, insofar as such losses, claims, damages
or liabilities (or actions in respect thereto) arise out
of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation
occurs in reliance upon and in conformity with written
information furnished by such Holder under an instrument
duly executed by such Holder expressly for use in
connection with such registration; and each such Holder
will pay any legal or other expenses reasonably incurred
by any person intended to be indemnified pursuant to
this subsection 4.5(b) in connection with investigating
or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement
contained in this subsection 4.5(b) shall not apply to
amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is
effected without the consent of the Holder, which
consent shall not be unreasonably withheld; provided,
further, however, that in no event shall any indemnity
under this Section 4.5 exceed the net proceeds from the
offering received by such Holder.
c. Promptly after receipt by an indemnified party under
this Section 4 of notice of the commencement of any
action (including any governmental action), such
indemnified party will, if a claim in respect thereof is
to be made against any indemnifying party under this
Section 4, deliver to the indemnifying party a written
notice of the commencement thereof and the indemnifying
party shall have the right to participate in, and, to
the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to
assume the defense thereof with counsel mutually
satisfactory to the indemnified and indemnifying
parties; provided, however, that an indemnified party
(together with all other indemnified parties which may
be represented without conflict by one counsel) shall
have the right to retain one separate counsel, with the
fees and expenses to be paid by the indemnifying party,
if representation of such indemnified party by the
counsel retained by the indemnifying
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party would be inappropriate due to actual or potential
differing interests between such indemnified party and
any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the
commencement of any such action, if materially
prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the
indemnified party under this Section 4, but the omission
so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to
any indemnified party otherwise than under this Section
4. Nothing contained herein shall prevent Xxxxxxx from
being represented by the Escrow Agent in connection with
any matter whatsoever, whether or not related to the
subject matter hereof.
d. If the indemnification provided for in this Section 4 is
held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any
loss, liability, claim, damage or expense referred to
therein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall
contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability,
claim, damage or expense in such proportion as is
appropriate to reflect the relative fault of the
indemnifying party on the one hand, and of the
indemnified party on the other, in connection with the
Violations that resulted in such loss, liability, claim,
damage or expense, as well as any other relevant
equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material
fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to
correct or prevent such statement or omission; provided,
that in no event shall any contribution by a Holder
hereunder exceed the net proceeds from the offering
received by such Holder.
e. The obligations of Xxxxxxx and the Holders under this
Section 4 shall survive the completion of any offering
of Xxxxxxx Shares in a Registration Statement under this
Section 4 and the termination of this Agreement. No
indemnifying Party in the defense of any such claim or
litigation, shall, except with the consent of each
Indemnified Party, consent to entry of a judgment or
enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation.
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4.6 Reports Under The Exchange Act. With a view to making available
to the Holders the benefits of Rule 144 promulgated under the
Act and any other rule or regulation of the Commission that may
at any time permit a Holder to sell the Xxxxxxx Shares to the
public without registration or pursuant to a registration on
Form S-3, Xxxxxxx agrees to:
a. timely make and keep public information available, as
those terms are understood and defined in Rule 144 under
the Act at all times after the Effective Date;
b. file with the Commission in a timely manner all reports
and other documents required of Xxxxxxx under the Act
and the Exchange Act; and
c. furnish to any Holder, so long as the Holder owns any
Xxxxxxx Shares, forthwith upon request (i) a written
statement by Xxxxxxx that it has complied with the
requirements of Rule 144 under the Act (at any time
after 90 days after the Effective Date), the Act and the
Exchange Act, or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3, and (ii)
a copy of the most recent annual or quarterly report of
Xxxxxxx and such other reports and documents as a Holder
may reasonably request in availing itself of any rule or
regulation of the Commission allowing such Holder to
sell such securities without registration.
5. Xxxxxxx Registration Rights. Xxxxxxx is hereby granted the registration
rights granted it pursuant to Section 1 of the Amended and Restated
Investors' Rights Agreement, dated November 8, 1999, by and between
Xxxxxxx, Itarget (previously known as "LJ Com, Inc.") and Xxxxxx London,
a copy of which is annexed hereto as Schedule 5, subject to the
following terms, as defined in the Amended and Restated Investors'
Rights Agreement, being defined for purposes of this Agreement (while
maintaining their meaning for purposes of the Amended and Restated
Investors' Rights Agreement) as follows:
5.1 The "Company" shall mean Itarget.
5.2 "Holder" shall mean Xxxxxxx.
5.3 "Registrable Securities" shall mean (i) all of the shares of
Itarget Common Stock (or other capital stock of Itarget) into
which the Itarget Preferred Shares are convertible and, to the
extent the rights to ownership thereto vest in Xxxxxxx pursuant
to Section 3.2 hereof, the shares of Itarget Common Stock (or
other capital stock of Itarget) into which the Itarget Preferred
Shares deliverable to Xxxxxxx pursuant to Section 3.2 hereof are
convertible; and (ii) any shares of
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Itarget Common Stock (or other capital stock of Itarget) issued
as (or issuable upon the conversion or exercise of any warrant,
right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in
replacement of any of the securities listed in subsection (i) of
this Section 5.3.
From the date the registration statement covering any Registrable Securities is
declared effective by the Commission, and for a period of three months
thereafter, Itarget shall abstain from taking any affirmative action that would
cause the Commission to declare such registration statement to be no longer
effective, unless required to do so by any statute, rule or regulation of the
Act, the Exchange Act or any state securities law, or any other federal or state
statute, rule or regulation. In the event such registration statement becomes
ineffective within the three month period after its effective date, Itarget
shall use its best efforts to cause such registration statement to again be
declared effective by the Commission and maintained effective for a cumulative
period of three months after it first became effective.
6. Limitation on Resale of Xxxxxxx Shares. Itarget agrees that it will not
sell on any one trading day that number of Xxxxxxx Shares that exceeds
one-third (1/3) of the average daily trading volume of the Xxxxxxx
Shares for the preceding five (5) trading days, as reported by the
Nasdaq National Market or the market upon which the Xxxxxxx Shares are
then traded.
7. Representations and Warranties of Itarget. Itarget hereby makes the
following representations and warranties to Xxxxxxx from and as of the
date hereof through the Closing Date:
7.1 Organization and Qualification. Itarget does not have any
subsidiaries. Itarget is a corporation duly incorporated,
validly existing and in good standing under the laws of the
State of California and has the requisite corporate power to own
its properties and to carry on its business as now being
conducted. Itarget is duly qualified as a foreign corporation to
do business and is in good standing in every jurisdiction in
which the nature of the business conducted or property owned by
it makes such qualification necessary.
7.2 Authorization; Enforcement. (i) Itarget has the requisite
corporate power and authority to enter into and perform this
Agreement, to issue and sell the Itarget Preferred Shares and to
acquire the Xxxxxxx Shares in accordance with the terms hereof
and the terms of the Itarget Preferred Shares; (ii) the
execution and delivery of this Agreement by Itarget and the
consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary corporate action,
including authorization by a majority of the Disinterested
Directors of the Board of Directors of Itarget, and no further
consent or authorization of Itarget or its Board of Directors or
stockholders is required; and (iii) this Agreement constitutes
the valid and binding obligation of Itarget
14
enforceable against it in accordance with its terms.
7.3 Capitalization. The authorized capital stock of Itarget consists
of 1,000,000 shares of common stock and 191,391 shares of
preferred stock; without giving effect to the securities to be
issued pursuant to this Agreement, Itarget has 235,389 shares of
Common Stock, 41,391 shares of Series A Preferred Stock and
25,190 shares of Series B Preferred Stock issued and
outstanding. All of these outstanding shares have been validly
issued and are fully paid and non-assessable. No shares of
Itarget Common Stock are entitled to preemptive rights. There
are outstanding options and warrants to purchase 12,630.20
shares of Itarget Common Stock. Except as disclosed in the prior
sentence and on Schedule 7.3 to this Agreement and as
contemplated by this Agreement, there are no other scrip, rights
to subscribe for, calls or commitments of any character
whatsoever relating to, or securities or rights exchangeable or
convertible into, any shares of capital stock of Itarget, or
contracts, commitments, understandings or arrangements by which
Itarget is or may become bound to issue additional shares of
capital stock of Itarget or options, warrants, scrip, rights to
subscribe for or commitments to purchase or acquire, any shares
or securities or rights convertible into shares, of capital
stock of Itarget. Itarget represents and warrants that it has no
current plan or intention to sell or otherwise issue any shares
of capital stock or securities convertible into or exercisable
for shares of capital stock.
7.4 No Conflicts. The execution, delivery and performance of this
Agreement by Itarget and the consummation by Itarget of the
transactions contemplated hereby do not and will not (i) result
in a violation of the charter or Bylaws of Itarget, or (ii)
conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture,
patent, patent license or instrument to which Itarget is a
party, or result in a violation of any federal, state, local or
foreign law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations)
applicable to Itarget or by which any property or asset of
Itarget is bound or affected. Itarget is not required under
federal, state, local or foreign law, rule or regulation to
obtain any consent, authorization or order of, or to make any
filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its
obligations under this Agreement or issue and sell the Itarget
Preferred Shares in accordance with the terms hereof, provided
that, for purposes of the representation made in this sentence,
Itarget is assuming and relying upon the accuracy of the
relevant representations and agreements of Xxxxxxx herein.
7.5 No General Solicitation. None of Itarget, or to Itarget's
knowledge, any of its
15
affiliates, or any person acting on its behalf, has engaged in
any form of general solicitation or general advertising (within
the meaning of Regulation D under the Act) in connection with
the offer or sale of the Itarget Preferred Shares.
7.6 No Integrated Offering. None of Itarget or, to Itarget's
knowledge, any of its affiliates, or any person acting on its
behalf, has, directly or indirectly, made any offers or sales of
any security or solicited any offers to buy any security, under
circumstances that would require registration of any of the
Itarget Preferred Shares.
7.7 Brokers. Itarget has taken no action which would give rise to
any claim by any person for brokerage commissions, finders' fees
or similar payments relating to this Agreement or the
transactions contemplated hereby.
7.8 Investment Representation. Itarget is purchasing the Xxxxxxx
Shares for its own account and not with a view to resale or
distribution in violation of any securities laws. Itarget has no
present intention to sell the Xxxxxxx Shares purchased hereunder
and has no present arrangement (whether or not legally binding)
to sell the Xxxxxxx Shares to or through any person or entity;
provided, however, that by the representations herein, Itarget
does not agree to hold any of the Xxxxxxx Shares for any minimum
or other specific term and reserves the right to pledge or
dispose of any of the Xxxxxxx Shares at any time in accordance
with federal and state securities laws applicable to such pledge
or disposition.
7.9 Accredited Investor. Itarget is an "accredited investor" as
defined in Rule 501 promulgated under the Act. Itarget has such
knowledge and experience in financial and business matters in
general, and investments in particular, so that Itarget is able
to evaluate the merits and risks of an investment in the Xxxxxxx
Shares purchased hereunder and to protect its own interests in
connection with such investment. In addition, Itarget has
received such information as it considers necessary or
appropriate for deciding whether to purchase the Xxxxxxx Shares.
7.10 Reliance by Xxxxxxx. Itarget understands that the Xxxxxxx Shares
are being offered and sold in reliance on a transactional
exemption from the registration requirements of federal and
state securities laws and that Xxxxxxx is relying upon the truth
and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of Itarget set forth herein
in order to determine the applicability of such exemptions and
the suitability of Itarget to acquire the Xxxxxxx Shares.
8. Representations and Warranties of Xxxxxxx. Xxxxxxx hereby makes the
following representations and warranties to Itarget:
16
8.1 Organization and Qualification. Xxxxxxx is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate
power to own its properties and to carry on its business as now
being conducted. Xxxxxxx is duly qualified as a foreign
corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary.
8.2 Authorization; Enforcement. (i) Xxxxxxx has the requisite
corporate power and authority to enter into and perform this
Agreement and to issue and sell the Xxxxxxx Shares and acquire
the Itarget Preferred Shares in accordance with the terms
hereof; (ii) the execution and delivery of this Agreement by
Xxxxxxx and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action, including authorization by a majority of the
Disinterested Directors of the Board of Directors of Xxxxxxx,
and no further consent or authorization of Xxxxxxx or its Board
of Directors or stockholders is required; and (iii) this
Agreement constitutes the valid and binding obligation of
Xxxxxxx enforceable against it in accordance with its terms.
8.3 No Conflicts. The execution, delivery and performance of this
Agreement by Xxxxxxx and the consummation of the transactions
contemplated hereby do not and will not (i) result in a
violation of the charter or Bylaws of Xxxxxxx, or (ii) conflict
with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture, patent, patent
license or instrument to which Xxxxxxx is a party, or result in
a violation of any federal, state, local or foreign law, rule,
regulation, order, judgment or decree (including federal and
state securities laws and regulations) applicable to Xxxxxxx or
by which any property or asset of Xxxxxxx is bound or affected.
Xxxxxxx is not required under federal, state, local or foreign
law, rule or regulation to obtain any consent, authorization or
order of, or to make any filing or registration with, any court
or governmental agency in order for it to execute, deliver or
perform any of its obligations under this Agreement or issue and
sell the Xxxxxxx Shares in accordance with the terms hereof,
except for the registration provisions provided for herein,
provided that, for purposes of the representation made in this
sentence, Xxxxxxx is assuming and relying upon the accuracy of
the relevant representations and agreements of Itarget.
8.4 No General Solicitation. None of Xxxxxxx, or to Xxxxxxx'x
knowledge, any of its affiliates, or any person acting on its
behalf has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D under
the Act) in connection with the offer or sale of the Xxxxxxx
Shares.
17
8.5 No Integrated Offering. Neither Xxxxxxx, or to Xxxxxxx'x
knowledge, any of its respective affiliates, or any person
acting on its behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy
any security, under circumstances that would require
registration of any of the Xxxxxxx Shares.
8.6 Brokers. Xxxxxxx has taken no action which would give rise to
any claim by any person for brokerage commissions, finders' fees
or similar payments relating to this Agreement or the
transactions contemplated hereby.
8.7 Investment Representation. Xxxxxxx is purchasing the securities
purchased by it hereunder for its own account and not with a
view to resale or distribution in violation of any securities
laws. Xxxxxxx has no present intention to sell the securities
purchased by it hereunder and has no present arrangement
(whether or not legally binding) to sell the securities
purchased by it hereunder to or through any person or entity;
provided, however, that by the representations herein, Xxxxxxx
does not agree to hold any of the Itarget Preferred Shares for
any minimum or other specific term and reserves the right to
dispose of any of the Itarget Preferred Shares at any time in
accordance with federal and state securities laws applicable to
such disposition.
8.8 Accredited Investor. Xxxxxxx is an "accredited investor" as
defined in Rule 501 promulgated under the Act. Xxxxxxx has such
knowledge and experience in financial and business matters in
general, and investments in particular, so that Xxxxxxx is able
to evaluate the merits and risks of an investment in the
securities purchased by it hereunder and to protect its own
interests in connection with such investment. In addition,
Xxxxxxx has received such information as it considers necessary
or appropriate for deciding whether to purchase the securities
purchased hereunder.
8.9 Reliance by Itarget. Xxxxxxx understands that the Itarget
Preferred Shares are being offered and sold in reliance on a
transactional exemption from the registration requirements of
federal and state securities laws and that Itarget is relying
upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of Xxxxxxx set
forth herein in order to determine the applicability of such
exemptions and the suitability of Xxxxxxx to acquire the Itarget
Preferred Shares.
9. Legend. Each certificate representing the Xxxxxxx Shares and the Itarget
Preferred Shares shall be stamped or otherwise imprinted with a legend
substantially in the following form:
18
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THEY MAY NOT BE
OFFERED, SOLD, PLEDGED, HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT (I)
PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT WHICH HAS
BECOME EFFECTIVE AND IS CURRENT WITH RESPECT TO THESE SECURITIES, OR
(II) PURSUANT TO A SPECIFIC EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT, BUT ONLY UPON A HOLDER HEREOF FIRST HAVING OBTAINED THE
WRITTEN OPINION OF COUNSEL OF THE ISSUER, OR OTHER COUNSEL REASONABLY
ACCEPTABLE TO THE ISSUER, THAT THE PROPOSED DISPOSITION IS CONSISTENT
WITH ALL APPLICABLE PROVISIONS OF THE SECURITIES ACT AS WELL AS ANY
APPLICABLE "BLUE SKY" OR SIMILAR SECURITIES LAW.
10. Escrow Agent
10.1 The parties hereto acknowledge that if any dispute arises with
respect to the securities deposited hereunder with the Escrow
Agent, or if the Escrow Agent receives contradictory
instructions from the parties hereto or any third party, or if
the Escrow Agent is uncertain as to its obligations under this
Agreement, the Escrow Agent shall refrain from taking any action
other than to continue to hold the securities deposited
hereunder in escrow or to institute proceedings described in
subsection 10.3 below, until otherwise directed by a final
judgment of a court of competent jurisdiction.
10.2 The Escrow Agent may assume the genuineness of any document or
signature which appears to it to be genuine (whether or not
original or photocopy) if such document or signature is
presented to it. The Escrow Agent shall have no obligations
other than those specifically set forth herein.
10.3 The Escrow Agent shall not be obligated to, but may, institute
legal proceedings (which, if instituted, shall be in a court in
the City and State of New York) to determine its obligations
hereunder or to seek permission to deposit the securities
deposited hereunder or any portion thereof in court, upon which
act the Escrow Agent shall be relieved of any further
obligations hereunder with respect to such securities.
10.4 The parties hereto agree to reimburse the Escrow Agent for any
expenses it incurs in connection with the performance of its
obligations under this Agreement, and agrees to jointly and
severally indemnify and hold the Escrow Agent harmless from all
suits, claims, actions, judgments, losses, liability, fees,
costs, expenses, damages, or other charges that may be imposed
upon, or
19
incurred by, the Escrow Agent, in connection with the
performance of its duties hereunder.
10.5 Upon disbursing and disposing of the securities deposited
hereunder and held by the Escrow Agent in the manner provided in
this Agreement, the Escrow Agent shall be released, discharged,
and acquitted of all obligations and liabilities hereunder and
any claims or surcharges made by or on behalf of any party to
this Agreement.
10.6 The Escrow Agent may resign at any time upon written notice to
the parties hereto.
10.7 Nothing contained herein shall prevent the Escrow Agent from
acting as counsel to Xxxxxxx in any future proceedings or
transactions, including, without limitation, those arising from
this Agreement or the transactions contemplated hereby.
11. Miscellaneous.
11.1 Notices. Any notice or demand required or permitted to be given
or made hereunder to or upon any party hereto shall be deemed to
have been duly given or made for all purposes if (a) in writing
and sent by (i) messenger or an overnight courier service
against receipt, or (ii) certified or registered mail, postage
paid, return receipt requested, or (b) sent by telegram,
facsimile, telex or similar electronic means, provided that a
written copy thereof is sent on the same day by postage-paid
first-class mail, to such party at the addresses set forth
above, with a copy to:
Feder, Kaszovitz, Isaacson,
Weber, Xxxxx & Bass LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxxxx, Esq.
Fax: (000) 000-0000
and to: Xxxx, Forward, Xxxxxxxx & Scripps, LLP
000 Xxxx Xxxxxxxx
Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
or such other address as any party hereto may at any time, or from time to time,
direct by
20
notice given to the other parties in accordance with this Section. Except as
otherwise expressly provided herein, the date of giving or making of any such
notice or demand shall be, in the case of clause (a) (i), the date of the
receipt; in the case of clause (a) (ii), five business days after such notice or
demand is sent; and, in the case of clause (b), the date such notice or demand
is sent.
11.2 Amendment. Except as otherwise provided herein, no amendment of
this Agreement shall be valid or effective, unless in writing
and signed by or on behalf of the parties hereto.
11.3 Waiver. No course of dealing or omission or delay on the part of
any party hereto in asserting or exercising any right hereunder
shall constitute or operate as a waiver of any such right. No
waiver of any provision hereof shall be effective, unless in
writing and signed by or on behalf of the party to be charged
therewith. No waiver shall be deemed a continuing waiver or
waiver in respect of any other or subsequent breach or default,
unless expressly so stated in writing.
11.4 Governing Law. This Agreement shall be governed by, and
interpreted and enforced in accordance with, the laws of the
State of New York without regard to principles of choice of law
or conflict of laws.
11.5 Jurisdiction. Each of the parties hereto hereby irrevocably
consents and submits to the jurisdiction of the Superior Court
of the State of New York and the United States District Court
for the Southern District of New York in connection with any
proceeding arising out of or relating to this Agreement, waives
any objection to venue in the County of New York, State of New
York, or such District, and agrees that service of any summons,
complaint, notice or other process relating to such proceeding
may be effected in the manner provided by Section 11.1 hereof.
11.6 Severability. The provisions hereof are severable and in the
event that any provision of this Agreement shall be determined
to be invalid or unenforceable in any respect by a court of
competent jurisdiction, the remaining provisions hereof shall
not be affected, but shall, subject to the discretion of such
court, remain in full force and effect, and any invalid or
unenforceable provision shall be deemed, without further action
on the part of the parties hereto, amended and limited to the
extent necessary to render the same valid and enforceable.
11.7 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and which together
shall constitute one and the same Agreement.
21
11.8 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective
successors and permitted assigns. This Agreement is not
intended, and shall not be deemed, to create or confer any right
or interest for the benefit of any person not a party hereto.
11.9 Assignment. Except as otherwise permitted herein, this
Agreement, and each right, interest and obligation hereunder,
may not be assigned by any party hereto without the prior
written consent of the other parties hereto, and any purported
assignment without such consent shall be void and without
effect.
11.10 Titles and Captions. The titles and captions of the Sections of
this Agreement are for convenience of reference only and do not
in any way define or interpret the intent of the parties or
modify or otherwise affect any of the provisions hereof.
11.11 Grammatical Conventions. Whenever the context so requires, each
pronoun or verb used herein shall be construed in the singular
or the plural sense and each capitalized term defined herein and
each pronoun used herein shall be construed in the masculine,
feminine or neuter sense.
11.12 References. The terms "herein," "hereto," "hereof," "hereby" and
"hereunder," and other terms of similar import, refer to this
Agreement as a whole, and not to any Section or other part
hereof.
11.13 No Presumptions. Each party hereto acknowledges that it has
participated, with the advice of counsel, in the preparation of
this Agreement. No party hereto is entitled to any presumption
with respect to the interpretation of any provision hereof or
the resolution of any alleged ambiguity herein based on any
claim that any other party hereto drafted or controlled the
drafting of this Agreement.
11.14 Incorporation by Reference. The Schedules hereto are an integral
part of this Agreement and are incorporated in their entirety
herein by this reference.
11.15 Entire Agreement. This Agreement embodies the entire Agreement
of the parties hereto with respect to the subject matter hereof
and supersedes any prior Agreement, commitment or arrangement
relating thereto.
11.16 Survival. The representations and warranties made herein shall
survive any investigation made by any party hereto and the
closing of the transactions contemplated hereby for a period of
up to two (2) years from the Effective Date.
11.17 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and
be binding upon, the
22
respective successors and permitted assigns of the parties
hereto. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto
or their respective successors and permitted assigns any rights,
remedies, obligations, or liabilities, under or by reason of
this Agreement, except as expressly provided in this Agreement.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
23
IN WITNESS WHEREOF, the parties hereto have hereunto duly executed this
Agreement as of the day and year first above written.
XXXXXXX COMMUNICATIONS, INC.
By:
---------------------------
Name:
Title:
XXXXXXX.XXX, INC.
By:
---------------------------
Name:
Title:
24
SCHEDULE 1.14
FORM OF ITARGET SERIES B PREFERRED STOCK
25
SCHEDULE 3.1
WIRING INSTRUCTIONS FOR ITARGET
26
SCHEDULE 3.2
WIRING INSTRUCTIONS FOR XXXXXXX
27
SCHEDULE 5
COPY OF AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT, DATED
NOVEMBER 8, 1999, BY AND BETWEEN XXXXXXX, ITARGET (PREVIOUSLY
KNOWN AS "LJ COM, INC.") AND XXXXXX LONDON
28
SCHEDULE 7.3
ADDITIONAL CAPITALIZATION DISCLOSURE OF ITARGET
Xxxxx Xxxxxxxx holds an option to purchase 5,972.2 shares of Common Stock of
Itarget exercisable at $0.10 per share.
Cruttenden Xxxx holds warrants to purchase 4,139 shares of Common Stock of
Itarget at an exercise price of $28.99 per share and warrants to purchase 2,519
shares of the Common Stock of Itarget at an exercise price of $52.40 per share.
The existing holders of Itarget's Series A Preferred Stock and Series B
Preferred Stock have entered into an Investors' Rights Agreement with Itarget,
pursuant to which such holders have a right of first offer with respect to
future sales by Itarget of its shares of stock (subject to certain exceptions).
The Investors' Rights Agreement also grants such holders other rights, including
demand, piggy-back and S-3 registration rights.
Cruttenden Xxxx holds a right of first refusal to participate as a co-managing
underwriter with respect to any public offering conducted by Itarget in the 12
month period ending January 14, 2001.
Itarget intends to approve a Stock Option Plan in the near future. The number of
shares of Common Stock that will be reserved for issuance under such Plan will
not exceed 10% of Itarget's outstanding shares of Common Stock at the time the
Stock Option Plan is approved.
On October 5, 1999, Itarget, Xxxxxx London and the then existing holders of
Itarget's Common Stock entered into a Voting Agreement with respect to the
nomination and election of members of Itarget's Board of directors.
