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EXHIBIT 2.2
EXECUTION COPY
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SECURITIES PURCHASE AGREEMENT
among
THE INVESTORS NAMED ON SCHEDULE I HERETO,
BIZWATCH, INC.
and
THE MANAGING FOUNDERS (as defined herein).
DECEMBER 11, 1997
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TABLE OF CONTENTS
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SECTION 1. PURCHASE AND SALE OF SECURITIES .............................................1
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE MANAGING
FOUNDERS AND THE COMPANY ............................................2
2.1. Corporate Organization ......................................................2
2.2. Subsidiaries ................................................................3
2.3. Capitalization ..............................................................3
2.4. Corporate Proceedings, etc. .................................................3
2.5. Consents and Approvals ......................................................4
2.6. Absence of Defaults, Conflicts, etc..........................................4
2.7. Financial Statements ........................................................4
2.8. Absence of Certain Developments .............................................4
2.9. Financial Projections .......................................................5
2.10. Compliance with Law .........................................................5
2.11. Litigation ..................................................................5
2.12. Material Contracts ..........................................................6
2.13. Absence of Undisclosed Liabilities ..........................................6
2.14. Employees ...................................................................7
2.15. Tax Matters .................................................................7
2.16. Employee Benefit Plans ......................................................8
2.17. Intellectual Property .......................................................8
2.18. Title to Tangible Assets ...................................................10
2.19. Sufficiency of Assets and Employees ........................................10
2.20. Condition of Properties ....................................................10
2.21. Insurance ..................................................................10
2.22. Transactions with Related Parties ..........................................11
2.23. Interest in Competitors ....................................................11
2.24. Registration Rights ........................................................11
2.25. Exchange Act Registration ..................................................11
2.26. Environmental Matters ......................................................11
2.27. Private Offering ...........................................................13
2.28. Brokerage ..................................................................13
2.29. Illegal or Unauthorized Payments; Political Contributions ..................13
2.30. Material Facts .............................................................14
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS ............................14
SECTION 4. ADDITIONAL COVENANTS OF THE PARTIES ........................................15
4.1. Resale of Securities .......................................................15
4.2. Covenants Pending Closing ..................................................16
4.3. Further Assurance ..........................................................16
4.4. Guarantees of Distribution Agreements ......................................16
SECTION 5. INVESTORS' CLOSING CONDITIONS ..............................................17
5.1. Representations and Warranties .............................................17
5.2. Compliance with Agreement ..................................................17
5.3. Officer's Certificate ......................................................17
(i)
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5.4. Netscape Agreement ...........................................................17
5.5. Infoseek Agreements ..........................................................17
5.6. Chief Financial Officer ......................................................18
5.7. Counsel's Opinion ............................................................18
5.8. Approval of Proceedings ......................................................18
5.9. Injunction ...................................................................18
5.10. Adverse Development ..........................................................18
5.11. Shareholders Agreement .......................................................18
5.12. Election of Directors ........................................................18
5.13. Employment Agreements ........................................................19
5.14. Management Stock Subscription Agreements .....................................19
SECTION 6. COMPANY CLOSING CONDITIONS ..................................................19
6.1. Representations and Warranties ...............................................19
6.2. Compliance with Agreement ....................................................19
6.3. Investors' Certificates ......................................................19
6.4. Infoseek Agreements ..........................................................19
6.5. Shareholders Agreement .......................................................20
6.6. Injunction ...................................................................20
SECTION 7. DISPOSITION OF INVESTOR SHARES ..............................................20
SECTION 8. COVENANTS ...................................................................21
8.1. Financial and Business Information ...........................................21
8.2. Inspection ...................................................................23
8.3. Confidentiality ..............................................................23
8.4. Conduct of Business and Maintenance of Existence .............................24
8.5. Compliance with Laws .........................................................24
8.6. Insurance ....................................................................24
8.7. Keeping of Books .............................................................24
8.8. Lost, etc. Certificates Evidencing Shares; Exchange ..........................25
8.9. Subrogation ..................................................................25
SECTION 9. INTERPRETATION OF THIS AGREEMENT ............................................25
9.1. Terms Defined ..................................................................25
9.2. Accounting Principles ..........................................................27
9.3. Directly or Indirectly .........................................................27
9.4. Governing Law ..................................................................27
9.5. Paragraph and Section Headings .................................................27
SECTION 10. MISCELLANEOUS ..............................................................28
10.1. Notices .......................................................................28
10.2. Press Releases ................................................................28
10.3. Expenses and Taxes ............................................................29
10.4. Reproduction of Documents .....................................................29
10.5. Termination and Survival ......................................................29
10.6. Successors and Assigns ........................................................30
10.7. Entire Agreement; Amendment and Waiver ........................................30
10.8. Counterparts ..................................................................30
(ii)
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EXHIBIT A Certificate of Incorporation of the Company
EXHIBIT B Bylaws of the Company
EXHIBIT C Acquisition Agreement
EXHIBIT D License Agreement
EXHIBIT E Opinion of Company's Counsel
EXHIBIT F Shareholders Agreement
EXHIBIT G Management Stock Subscription Agreement
Schedule 2.1 Investors' Equity Investment
Schedule 2.3 Company's Capitalization
Schedule 2.5 Consents
Schedule 2.7 Pro Forma Balance Sheet
Schedule 2.9 Financial Projections
Schedule 2.12 Material Contracts
Schedule 2.13 Undisclosed Liabilities
Schedule 2.14 For Cause Employees
Schedule 2.16 Employee Benefit Arrangements
Schedule 2.17 Intellectual Property
Schedule 2.21 Insurance Policies
Schedule 2.22 Transactions with Related Parties
Schedule 2.28 Brokerage Commissions
Schedule 2.30 Additional Material Facts
(iii)
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BIZWATCH, INC.
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, dated as of December 11, 1997, by
and among each of the Investors set forth on Schedule 2.1 hereto (the
"Investors"); Xxxxx X. Xxxxxxxx, Xxxx Xxxxx, Xxxxx XxXxx and Xxxxxxxxx Xxxxxxx
(collectively, the "Managing Founders"); and BizWatch, Inc., a Delaware
corporation (after giving effect to the transactions contemplated hereby, the
"Company").
W I T N E S S E T H:
WHEREAS, Infoseek Corporation ("Infoseek") and the Managing
Founders have acquired, or simultaneously with the transactions contemplated
hereby will acquire, certain outstanding shares of common stock, par value $.001
per share, of the Company ("Common Stock") set forth opposite their names on
Schedule 2.1 hereto; and
WHEREAS, the Investors shall purchase from the Company the
number of shares of Common Stock set forth opposite their names on Schedule 2.1
hereto, upon the terms and subject to the conditions of this Agreement;
WHEREAS, the assets and business of the Company were owned and
operated by Infoseek prior to the Company's incorporation;
NOW, THEREFORE, in consideration of the foregoing premises, and
for other good and valuable consideration, the parties hereby agree as follows:
SECTION 1. PURCHASE AND SALE OF SECURITIES
(a) Subject to the terms and conditions set forth in this
Agreement and in reliance upon the Company's, the Managing Founders' and the
Investors' respective representations set forth below, on the Closing Date (as
defined below) the Company shall sell to the Investors, and the Investors shall
purchase from the Company, the number of shares of Common Stock at the aggregate
cash purchase prices (each a "Purchase Price"), set forth opposite their
respective names on Schedule 2.1 (such shares, collectively, the "Shares"). Such
sales and purchases shall be effected on the Closing Date by the Company
executing and delivering to each of the Investors, duly registered in its name,
a duly executed stock certificate evidencing Shares being purchased by it,
against delivery by the Investors to the Company of one half of the Purchase
Price by wire transfer of immediately available funds to such account as the
Company shall designate, not less than three Business Days prior to the Closing
Date. The Investors shall deliver the balance of the Purchase Price on January
1, 1998 (or the next succeeding Business Day) by wire
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transfer of immediately available funds to such account as the Company shall
designate, not less than three Business Days prior to such date.
(b) The closing of such sale and purchase (the "Closing") shall
take place at 10:00 A.M., New York City time, on December 11, 1997, or such
other date as the Investors and the Company agree in writing (the "Closing
Date"), at the offices of Xxxxxxx Xxxx & Xxxxxxxxx, One Citicorp Center, 153
East 53rd Street, New York, New York, or such other location as the Investors
and the Company shall mutually select.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE MANAGING FOUNDERS AND THE
COMPANY
Each of the Managing Founders and the Company, jointly and
severally, represents and warrants to the Investors the following and that as of
the Closing, after giving effect to the transactions contemplated by the
Transaction Documents and the License Agreement, the following will be true and
correct:
2.1. Corporate Organization
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Attached
hereto as Exhibits A and B, respectively, are true and complete copies of the
Certificate of Incorporation and Bylaws of the Company, as amended through the
date hereof (collectively, the "Organizational Documents").
(b) The Company has all requisite power and authority and has
all necessary approvals, licenses, permits and authorization to own its
properties and to carry on its business as now conducted or as currently
proposed to be conducted in the Proposal for Equity Partnership - - Corporate
Information Division (the "Plan") previously made available to the Investors.
The Company has all requisite power and authority to execute and deliver the
Transaction Documents and to perform its obligations hereunder and thereunder.
(c) The Company has filed all necessary documents to qualify to
do business as a foreign corporation in, and the Company is in good standing
under the laws of, each jurisdiction in which the conduct of the Company's
business as now conducted or as currently proposed to be conducted in the Plan
previously made available to the Investors or the nature of the property owned
requires such qualification, except where the failure to so qualify would not
have a material adverse effect on the business, properties, prospects, profits
or condition (financial or otherwise) of the Company (a "Material Adverse
Effect").
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2.2. Subsidiaries
The Company has no subsidiaries and no interests or investments
in any partnership, trust or other entity or organization.
2.3. Capitalization
(a) As of the Closing Date, and after giving effect to the
transactions contemplated hereby and by the other Transaction Documents, (i) the
authorized capital stock of the Company will consist of 200,000 shares of Common
Stock and 50,000 shares of preferred stock, par value $.001 per share and (ii)
the issued and outstanding shares of capital stock of the Company will consist
of 50,000 shares of Common Stock which will be held beneficially and of record
by the persons and in the amounts set forth on Schedule 2.3.
(b) All shares of capital stock of the Company outstanding
immediately prior to the Closing have been duly and validly issued and are fully
paid and non-assessable. Upon issuance, sale and delivery as contemplated by
this Agreement, the Shares will be duly authorized, validly issued, fully paid
and non-assessable shares of the Company, free of all preemptive or similar
rights, and entitled to the rights therein described.
(c) Except for the conversion rights which attach to the
warrants, options and convertible securities which are listed on Schedule 2.3
hereto, on the Closing Date there will be no shares of Common Stock or any other
equity security of the Company issuable upon conversion or exchange of any
security of the Company nor will there be any rights, options or warrants
outstanding or other agreements to acquire shares of Common Stock nor will the
Company be contractually obligated to purchase, redeem or otherwise acquire any
of its outstanding shares. No stockholder of the Company is entitled to any
preemptive or similar rights to subscribe for shares of capital stock of the
Company.
2.4. Corporate Proceedings, etc.
The Company has authorized the execution, delivery, and
performance of the Transaction Documents and each of the transactions and
agreements contemplated hereby and thereby. No other corporate action (including
stockholder approval) is necessary to authorize such execution, delivery and
performance of the Transaction Documents, and upon such execution and delivery
each of the Transaction Documents by each of the parties thereto, shall
constitute the valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except that such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights and general
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principles of equity. The Company has authorized the issuance and delivery of
the Shares in accordance with this Agreement.
2.5. Consents and Approvals
Except as set forth on Schedule 2.5, the execution and delivery
by the Company of the Transaction Documents, the performance by the Company of
its obligations hereunder and thereunder and the consummation by the Company of
the transactions contemplated hereby and thereby do not require the Company to
obtain any consent, approval or action of, or make any filing with or give any
notice to, any corporation, person or firm or any public, governmental or
judicial authority.
2.6. Absence of Defaults, Conflicts, etc.
The execution and delivery of the Transaction Documents do not,
and the consummation of the transactions contemplated hereby and thereby by the
Company, and the issuance of the Shares will not, result in a breach of any of
the terms, conditions or provisions of, or constitute a default under, or permit
the acceleration of rights under or termination of, any indenture, mortgage,
deed of trust, credit agreement, note or other evidence of indebtedness, or
other material agreement of the Company (collectively the "Key Agreements and
Instruments"), or the Organizational Documents, or any rule or regulation of any
court or federal, state or foreign regulatory board or body or administrative
agency having jurisdiction over the Company or over its properties or
businesses. No event has occurred and no condition exists which, upon notice or
the passage of time (or both), would constitute a default under any such Key
Agreements and Instruments or in any license, permit or authorization to which
the Company is a party or by which it may be bound.
2.7. Financial Statements
The pro forma balance sheet of the Company as at December 10,
1997 (the "Balance Sheet Date") attached hereto as Schedule 2.7, fairly presents
the financial position of the Company, as at the date thereof after giving
effect to the transactions contemplated hereby on the pro forma basis set forth
in the Notes thereto.
2.8. Absence of Certain Developments
Since the Balance Sheet Date there has been no (i) material
adverse change in the condition, financial or otherwise, of the Company or in
its assets, liabilities, properties, or business or prospects, (ii) declaration,
setting aside or payment of any dividend or other distribution with respect to
the capital stock of the Company, (iii) issuance of capital stock or options,
warrants or rights to acquire capital stock (other than the rights granted to
the Investors hereunder or those that are set forth on Schedule 2.3 hereto),
(iv) material loss, destruction or
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damage to any property of the Company, whether or not insured, (v) acceleration
or prepayment of any indebtedness for borrowed money or the refunding of any
such indebtedness, (vi) labor trouble involving the Company or any material
change in its personnel or the terms and conditions of employment, (vii) waiver
of any valuable right, (viii) loan or extension of credit to any officer or
employee of the Company or (ix) acquisition or disposition of any material
assets (or any contract or arrangement therefor), or any other material
transaction by the Company otherwise than for fair value in the ordinary course
of business.
2.9. Financial Projections
The financial projections for the years ending December 31, 1997
through 1999 (the "Projections") attached hereto as Schedule 2.9, (i) reflect a
good faith estimate of the Company and the Managing Founders as to the Company's
expected financial results, which as set forth therein are reasonable, (ii) are
based on reasonable assumptions and (iii) contain or are premised on all
material facts of which the Company and Managing Founders are, or reasonably
should be, aware.
2.10. Compliance with Law
(a) The Company is not in material violation of any laws,
ordinances, governmental rules or regulations to which it is subject, including
without limitation laws or regulations relating to the environment or to
occupational health and safety, and no material expenditures are or will be
required in order to cause its current operations or properties to comply with
any such law, ordinances, governmental rules or regulations.
(b) The Company has not received notice of any violation of any
such law, ordinance, rule, regulation, order or other legal requirement, nor is
it in default with respect to any order, writ, judgment, award, injunction or
decree of any federal, state or local court or governmental or regulatory
authority or arbitrator, domestic or foreign, applicable to the Company or any
of its assets, properties or operations.
(c) The Company has all licenses, permits, franchises or other
governmental authorizations necessary to the ownership of its property or to the
conduct of its business, which if violated or not obtained might have a Material
Adverse Effect. The Company has not been denied any application for any such
licenses, permits, franchises or other governmental authorizations necessary to
its business.
2.11. Litigation
(a) There is no legal action, suit, arbitration or other legal,
administrative or other governmental investigation, inquiry or proceeding
(whether federal, state, local or foreign)
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pending or, to the best of the Company's knowledge, threatened against or
affecting the Company or the Company's properties, assets or business. After
reasonable inquiry of its employees, the Company is not aware of any fact which
might result in or form the basis for any such action, suit, arbitration,
investigation, inquiry or other proceeding. The Company is not subject to any
order, writ, judgment, injunction, decree, determination or award of any court
or of any governmental agency or instrumentality (whether federal, state, local
or foreign).
(b) There is no legal action, suit, arbitration or other legal,
administrative or other governmental investigation, inquiry or proceeding
(whether federal, state, local or foreign) pending or, to the best of the
Company's knowledge, threatened against or affecting the properties, assets or
business being transferred to the Company pursuant to the Acquisition Agreement.
After reasonable inquiry, the Company is not aware of any fact which might
result in or form the basis for any such action, suit, arbitration,
investigation, inquiry or other proceeding against Infoseek affecting its
ability to perform its obligations under the Acquisition Agreement or which
could reasonably be expected to result in a Material Adverse Effect.
2.12. Material Contracts
Schedule 2.12 sets forth a true and complete list of each
contract, agreement, instrument, commitment and other arrangement to which the
Company is a party or otherwise relating to or affecting any of its assets,
including without limitation, employment, severance or consulting agreements;
loan, credit or security agreements; joint venture agreements and distribution
agreements (each, a "Contract"). Each Contract is valid, binding and enforceable
against the Company and, to the Company's best knowledge, the other parties
thereto, in accordance with its terms, and in full force and effect on the date
hereof.
2.13. Absence of Undisclosed Liabilities
Except as disclosed on Schedule 2.13, neither the Company nor
the Managing Founders has any debt, obligation or liability (whether accrued,
absolute, contingent, liquidated or otherwise, whether due or to become due,
whether or not known to the Company) arising out of any transaction entered into
at or prior to the Closing, or any act or omission at or prior to the Closing,
or any state of facts existing at or prior to the Closing, including Taxes with
respect to or based upon the transactions or events occurring at or prior to the
Closing, and including, without limitation, unfunded past service liabilities
under any pension, profit sharing or similar plan, which have resulted, or could
result, in liability to the Company, except current liabilities incurred, and
obligations under agreements entered into, in the usual and ordinary course of
business, none of which (individually or in the aggregate) could have a Material
Adverse Effect.
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2.14. Employees
(a) The Company is in full compliance with all laws regarding
employment, wages, hours, equal opportunity, collective bargaining and payment
of social security and other taxes except to the extent that noncompliance would
not, in the aggregate, have a Material Adverse Effect. The Company is not
engaged in any unfair labor practice or discriminatory employment practice and
no complaint of any such practice against the Company is filed or, to the best
of the Company's knowledge, threatened to be filed with or by the National Labor
Relations Board, the Equal Employment Opportunity Commission or any other
administrative agency, federal or state, that regulates labor or employment
practices, nor is any grievance filed or, to the best of the Company's
knowledge, threatened to be filed against the Company by any employee pursuant
to any collective bargaining or other employment agreement to which the Company
is a party or is bound which, individually or in the aggregate, could have a
Material Adverse Effect. The Company is in compliance with all applicable
foreign, federal, state and local laws and regulations regarding occupational
safety and health standards except to the extent that noncompliance will not
have a Material Adverse Effect, and the Company has not received any complaints
from any foreign, federal, state or local agency or regulatory body alleging
violations of any such laws and regulations which; individually or in the
aggregate, could have a Material Adverse Effect.
(b) Except as set forth on Schedule 2.14, the employment of all
Persons and officers employed by the Company is terminable at will without any
penalty or severance obligation of any kind on the part of the employer. All
sums due for employee compensation and benefits and all vacation time owing to
any employees of the Company have been duly and adequately accrued on the
accounting records of the Company.
2.15. Tax Matters
There are no Taxes due and payable by the Company which have not
been paid. The provisions, if any, for Taxes on the balance sheet described in
Section 2.7 are sufficient for the payment of all accrued and unpaid Taxes of
the Company whether or not assessed or disputed as of the respective dates of
such balance sheets. The Company has duly filed all Tax Returns required to have
been filed by it and there are in effect no waivers of applicable statutes of
limitations with respect to taxes for any year. The Company has not been subject
to a federal or state Tax audit of any kind. All Taxes relating to periods
ending on or before the Closing Date for which the Company may be liable under
Treasury Regulations Section 1.1502-6 (or analogous state or foreign provisions)
by virtue of having been a member of any "affiliated group" (or other group
filing on a combined or unitary basis) at any time on or prior to the Closing
Date, if required to have been paid, have been paid (except for Taxes which are
being contested in good faith). Any liability of
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the Company for Taxes not yet due and payable, or which are being contested in
good faith, has been provided for on the financial statements of the Company in
accordance with generally accepted accounting principles. The Company has no
deferred gain or loss arising from any intercompany transactions, within the
meaning of Treasury Regulations Section 1.1502-13. The Company is not a party to
any agreement, whether written or unwritten, providing for the payment of Taxes,
payment for Tax losses, entitlements to refunds or similar Tax matters. The
Company has withheld and paid all material Taxes required to be withheld in
connection with any amounts paid or owing to any employee, creditor, independent
contractor or other third party.
2.16. Employee Benefit Plans
The Company has no employee benefit plans (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974) covering former and
current employees of the Company, and there are not any employee benefit plans
under which the Company has any obligation or liability. Schedule 2.16 lists all
material plans, contracts, bonuses, commissions, profit-sharing, savings, stock
options, insurance, deferred compensation, or other similar fringe or employee
benefits covering former or current employees of the Company or under which the
Company has any obligation or liability (each, a "Benefit Arrangement"). True
and complete copies of all Benefit Arrangements have been provided or made
available to the Investors prior to the date hereof. The Benefit Arrangements
are and have been administered in substantial compliance with their terms and
with the requirements of applicable law. The Company's payments to current or
former employees pursuant to the Benefit Arrangements are and have been fully
deductible under the Code.
2.17. Intellectual Property
Except as provided on Schedule 2.17, the Company owns, free and
clear of all encumbrances, restrictions, liens, security interests and charges,
and has good and marketable title to, or holds adequate licenses or otherwise
possesses all such rights as are necessary to use, all patents (and applications
therefor), patent disclosures, trademarks, service marks, trade names,
copyrights (and applications therefor), inventions, discoveries, processes,
know-how, scientific, technical, engineering and marketing data, formulae and
techniques used or proposed to be used (as contemplated by the Plan and the
Projections and subject to the assumptions set forth therein), in or necessary
for the conduct of its business as now conducted or as proposed to be conducted
(as contemplated by the Plan and the Projections and subject to the assumptions
set forth therein) (collectively, "Intellectual Property").
The CID Software (as defined in the Acquisition Agreement but
including the complete source code listing on Exhibit A to Schedule 2.1(c) of
the Acquisition Agreement) was
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(i) authored solely by any one or more of the Managing Founders and/or other
employees of Infoseek's Corporate Information Division while employed by
Infoseek's Corporate Information Division in a capacity such that ownership of
all intellectual property in the software has vested in Infoseek and/or (ii)
acquired from contractors engaged by Infoseek under the control of Infoseek's
Corporation Information Division under terms and conditions such that ownership
of all intellectual property in the software acquired from such contractors has
vested in Infoseek. The CID Software is not a derivative work (as defined in
Xxxxx 00, Xxxxxx Xxxxxx Code) of any search engine software or other software
that supports the Infoseek service or other products and services of Infoseek
that remain with Infoseek after the Closing Date.
Except as provided on Schedule 2.17, the Company has not
received notice nor otherwise has reason to know of any conflict or alleged
conflict with the rights of others pertaining to the Intellectual Property
described in this Section 2.17. To the Company's best knowledge, the Company's
business, as presently conducted and as proposed to be conducted, does not
infringe upon or violate any patent rights or trade secrets of others. To the
Company's best knowledge, the Company has the unrestricted right to use, free
and clear of any rights or claims of others, all trade secrets, processes,
customer lists and other rights incident to its business as now conducted or as
proposed to be conducted.
To the best of the Company's knowledge, Infoseek has not leased,
licensed, mortgaged, pledged, created any security interests in or encumbrances
on, or otherwise transferred any rights to own or use any of the Intellectual
Property (as defined in the Acquisition Agreement) (each, an "Encumbrance")
other than (i) to the Company, (ii) to the Managing Founders, and (iii) to
Wayfarer Communications, Inc. No actions creating an Encumbrance have been taken
by (i) the Company, (ii) the Managing Founders or (iii) to the best of the
Company's knowledge, any other employees or contractors of Infoseek's
Corporation Information Division, or (iv) to the knowledge of the Company,
Wayfarer Communications, Inc., or any third party who gained access to the
Intellectual Property at Wayfarer Communications, Inc. To the knowledge of the
Company there are no Encumbrances in existence as of the date hereof.
Except as provided for on Schedule 2.17, the Company is not
currently obligated or under any existing liability to make royalty or other
payments to any owner of, licensor of, or other claimant to, any patent,
trademark, service names, trade names, copyrights, or other intangible asset,
with respect to the use thereof or in connection with the conduct of its
business as now conducted or as proposed to be conducted (as contemplated by the
Plan and the Projections and subject to the assumptions set forth therein), or
otherwise. To the Company's best knowledge, no employee of the Company has
violated any employment agreement or
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proprietary information agreement which he had with a previous employer or any
patent policy of such employer, or is a party to or threatened by any litigation
concerning any patents, trademarks, trade secrets, service names, trade names,
copyrights, licenses and the like.
2.18. Title to Tangible Assets
The Company has good title to its properties and assets and good
title to all its leasehold estates, in each case subject to no mortgage, pledge,
lien, lease, encumbrance or charge, other than or resulting from taxes which
have not yet become delinquent and minor liens and encumbrances which do not in
any case materially detract from the value of the property subject thereto or
materially impair the operations of the Company and which have arisen in the
ordinary course of business.
2.19. Sufficiency of Assets and Employees
Upon the consummation of the transactions contemplated hereby,
the Company will have (i) acquired good and marketable title or rights to use
all assets, properties and facilities, (ii) retained such management and
non-management employees, as are necessary to conduct the Company's business as
now conducted or as proposed to be conducted (as contemplated by the Plan and
the Projections and subject to the assumptions set forth therein).
2.20. Condition of Properties
All facilities, machinery, equipment, fixtures, vehicles and
other properties owned, leased or used by the Company are in good operating
condition and repair, are reasonably fit and usable for the purposes for which
they are being used, are adequate and sufficient for the Company's business as
now conducted or proposed to be conducted (as contemplated by the Plan and the
Projections and subject to the assumptions set forth therein) and conform in all
material respects with all applicable ordinances, regulations and laws.
2.21. Insurance
Schedule 2.21 sets forth a true and complete listing of the
insurance policies the Company proposes to have in effect as of the Closing
Date, including in each case the applicable coverage limits, deductibles and the
policy expiration dates. No notice of any refusal of coverage or threatened
refusal of coverage of any of such policies has been received and such policies
shall be in full force and effect as of the Closing Date. Except as set forth on
Schedule 2.21, the Company is not aware of any fact which would impair the
ability of the Company to obtain such insurance on the coverage dates indicated.
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2.22. Transactions with Related Parties
Except as disclosed on Schedule 2.22, the Company is not a party
to any agreement with any of the Company's directors, officers or stockholders
or any Affiliate or family member of any of the foregoing under which it: (i)
leases any real or personal property (either to or from such Person), (ii)
licenses technology (either to or from such Person), (iii) is obligated to
purchase any tangible or intangible asset from or sell such asset to such
Person, or (iv) purchases products or services from such Person. Except as set
forth in Schedule 2.22, the Company does not employ as an employee or engage as
a consultant any family member of any of the Company's directors, officers or
stockholders. Other than the Shareholders Agreement and the Management Stock
Subscription Agreements, to the best knowledge of the Company, there exist no
agreements among stockholders of the Company to act in concert with respect to
their voting or holding of Company securities.
2.23. Interest in Competitors
Neither the Company nor any of its officers or, to the best of
its knowledge, directors, has any interest, either by way of contract or by way
of investment (other than as holder of not more than 2% of the outstanding
capital stock of a publicly traded Person) or otherwise, directly or indirectly,
in any Person other than the Company that (i) provides any services or designs,
produces or sells any product or product lines or engages in any activity
similar to or competitive with any activity currently proposed to be conducted
by the Company or (ii) has any direct or indirect interest in any asset or
property, real or personal, tangible or intangible, of the Company.
2.24. Registration Rights
Except as provided in the Shareholders Agreement, the Company
will not, as of the Closing Date, be under any obligation to register any of its
securities under the Securities Act.
2.25. Exchange Act Registration
None of the Company's securities are registered, or required to
be registered, under Section 12 of the Exchange Act.
2.26. Environmental Matters
Notwithstanding anything to the contrary contained in this
Agreement and in addition to the other representations and warranties contained
herein:
(a) The Company and its operations are in material compliance
with all applicable laws, regulations and other requirements of governmental or
regulatory authorities or duties
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under the common law relating to toxic or hazardous substances, wastes,
pollution or to the protection of health, safety or the environment
(collectively, "Environmental Laws") and each have obtained and maintained in
effect all licenses, permits and other authorizations or registrations
(collectively, "Environmental Permits") required under all Environmental Laws
and are in material compliance with all such Environmental Permits.
(b) The Company has not performed or suffered any act which
could give rise to, or has otherwise incurred, liability to any person
(governmental or not) under the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601 et seq. ("CERCLA"), or
any other Environmental Laws, nor has the Company received notice of any such
liability or any claim therefor or submitted notice pursuant to Section 103 of
CERCLA to any governmental agency with respect to any of its assets.
(c) To the best knowledge of the Company, no hazardous
substance, hazardous waste, contaminant, pollutant or toxic substance (as such
terms are defined in any applicable Environmental Law and collectively referred
to herein as "Hazardous Materials") has been released, placed, dumped or
otherwise come to be located on, at, beneath or near any of the assets or
properties owned or leased by the Company or any surface waters or groundwaters
thereon or thereunder in violation of any Environmental Laws or that could
subject the Company to liability under any Environmental Laws.
(d) The Company does not own or operate, and has never owned or
operated, aboveground or underground storage tanks.
(e) With respect to any or all of the real properties leased by
the Company, (1) there are no asbestos-containing materials, urea formaldehyde
insulation, polychlorinated biphenyls or lead-based paints present at any such
properties, and (2) there are no wetlands, as defined under any Environmental
Law, located on any such properties.
(f) None of the real properties leased by the Company (1) has
been used or is now used by the Company for the generation, transportation,
storage, handling, treatment or disposal of any Hazardous Materials (other than
de minimis quantities of Hazardous Materials used in the normal course of the
Company's business and in compliance with all applicable Environmental Laws), or
(2) is identified on a federal, state or local listing of sites which require or
might require environmental cleanup.
(g) To the best of the Company's knowledge, no condition exists
on any of the real properties leased by the Company that upon the failure to
act, the passage of time or the giving of notice would give rise to liability
under any Environmental Law.
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(h) To the best of the Company's knowledge, there are no ongoing
investigations or negotiations, pending or threatened administrative, judicial
or regulatory proceedings, or consent decrees or other agreements in effect that
relate to environmental conditions in, on, under, about or related to the
Company, its operations or the real properties leased by the Company.
(i) Neither the Company nor its operations is subject to
reporting requirements under the federal Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. Section 11001 et seq., or analogous state
statutes and related regulations.
2.27. Private Offering
Neither the Company nor anyone acting on its behalf has sold or
has offered any of the Shares for sale to, or solicited offers to buy from, or
otherwise approached or negotiated with respect thereto with, any prospective
purchaser, other than the Investors. Neither the Company nor anyone acting on
its behalf shall offer the Shares for issue or sale to, or solicit any offer to
acquire any of the same from, anyone so as to bring the issuance and sale of
such Shares, or any part thereof, within the provisions of Section 5 of the
Securities Act. Based upon the representations of the Investors set forth in
Section 3, the offer, issuance and sale of the Shares are and will be exempt
from the registration and prospectus delivery requirements of the Securities
Act, and have been registered or qualified (or are exempt from registration and
qualification) under the registration, permit or qualification requirements of
all applicable state securities laws.
2.28. Brokerage
Except as set forth on Schedule 2.28, there are no claims for
brokerage commissions or finder's fees or similar compensation in connection
with the transactions contemplated by this Agreement based on any arrangement
made by or on behalf of the Company or the Managing Founders and the Company and
the Managing Founders, jointly and severally, agree to indemnify and hold the
Investors harmless against any costs or damages incurred by the Company, the
Investors or otherwise as a result of any such claim, including any claim set
forth on Schedule 2.28. None of the proceeds of the sale of the Shares will be
used to pay any such commissions or fees.
2.29. Illegal or Unauthorized Payments; Political
Contributions
Neither the Company nor, to the best of its knowledge (after
reasonable inquiry of its officers and directors), any of its officers,
directors, employees, agents, other representatives of the Company or any other
business entity or enterprise with which the Company is or has been affiliated
or associated, has,
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directly or indirectly, made or authorized any payment, contribution or gift of
money, property, or services, whether or not in contravention of applicable law,
(a) as a kickback or bribe to any Person or (b) to any political organization,
or the holder of or any aspirant to any elective or appointive public office
except for personal political contributions not involving the direct or indirect
use of funds of the Company.
2.30. Material Facts
This Agreement, the schedules furnished contemporaneously
herewith, the documents set forth on Schedule 2.30 and the other agreements,
documents or certificates furnished to the Investors on the Closing Date by or
on behalf of the Company and/or the Managing Founders in connection with the
transactions contemplated hereby do not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
contained therein or herein, in light of the circumstances in which they were
made, not misleading. There is no fact which is known to the Company and which
has not been disclosed herein or otherwise by the Company to the Investors which
may materially adversely affect the business, properties, prospects, assets or
condition, financial or otherwise, of the Company.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each of the Investors severally represents and warrants to the
Company as to itself as follows:
(a) It is acquiring the Shares for its own account for
investment and not with a view towards the resale, transfer or distribution
thereof, nor with any present intention of distributing the Shares, but subject,
nevertheless, to any requirement of law that the disposition of the Investors'
property shall at all times be within the Investors' control, and without
prejudice to the Investors' right at all times to sell or otherwise dispose of
all or any part of such securities under a registration under the Securities Act
or under an exemption from said registration available under the Securities Act.
(b) It has full power and legal right to execute and deliver
this Agreement and to perform its obligations hereunder.
(c) It has taken all action necessary for the authorization,
execution, delivery, and performance of this Agreement and its obligations
hereunder, and, upon execution and delivery by the Company, this Agreement shall
constitute the valid and binding obligation of such Investor, enforceable
against such Investor in accordance with its terms, except that such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and
general principles of equity.
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(d) There are no claims for brokerage commissions or finder's
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement made by or on behalf of such Investor
and such Investor agrees to indemnify and hold the Company harmless against any
costs or damages incurred as a result of any such claim.
(e) It has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of its
investment in the Company as contemplated by this Agreement, and is able to
bear the economic risk of such investment for an indefinite period of time. It
has been furnished access to such information and documents as it has requested
and has been afforded an opportunity to ask questions of and receive answers
from representatives of the Company concerning the terms and conditions of this
Agreement and the purchase of the Shares contemplated hereby.
(f) It is an "accredited investor" within the meaning of Rule
501 of Regulation D promulgated under the Securities Act.
SECTION 4. ADDITIONAL COVENANTS OF THE PARTIES
4.1. Resale of Securities
(a) Each of the Investors severally covenants that it will not
sell or otherwise transfer the Shares except pursuant to an effective
registration under the Securities Act or in a transaction which, in the opinion
of counsel reasonably satisfactory to the Company and its counsel, qualifies as
an exempt transaction under the Securities Act and the rules and regulations
promulgated thereunder.
(b) The certificates evidencing the Shares will bear the
following legend reflecting the foregoing restrictions on the transfer of such
securities:
"The securities evidenced hereby have not been registered under
the Securities Act of 1933, as amended (the "Act"), and may not
be transferred except pursuant to an effective registration
under the Act or in a transaction which, in the opinion of
counsel reasonably satisfactory to the Company and its counsel,
qualifies as an exempt transaction under the Act and the rules
and regulations promulgated thereunder."
"The securities evidenced hereby are subject to the terms of
that certain Shareholders Agreement, dated as of December 11,
1997, by and among the Company and certain investors
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identified therein, including certain restrictions on transfer.
A copy of this Agreement has been filed with the Secretary of
the Company and is available upon request."
4.2. Covenants Pending Closing
Pending the Closing the Company will not, without the
Investors' prior written consent, take any action which would result in any of
the representations or warranties contained in this Agreement not being true at
and as of the time immediately after such action, or in any of the covenants
contained in this Agreement becoming incapable of performance. The Company will
promptly advise the Investors of any action or event of which it becomes aware
which has the effect of making incorrect any of such representations or
warranties or which has the effect of rendering any of such covenants incapable
of performance.
4.3. Further Assurance
Each of the parties shall execute such documents and other
papers and take such further actions as may be reasonably required or desirable
to carry out the provisions hereof and the transactions contemplated hereby.
Each such party shall use its reasonable efforts to fulfill or obtain the
fulfillment of the conditions to the Closing as promptly as practicable.
4.4. Guarantees of Distribution Agreements
Solely to the extent and in the manner set forth in this Section
4.4, Quantum Industrial Partners LDC ("QIP") hereby agrees to guarantee the
payment obligations of the Company under (a) any internet or intranet
distribution agreements entered into by the Company with a third party provider
("Distribution Agreements") or (b) any credit facility or other loan arrangement
the proceeds of which will be used solely to make payments under a Distribution
Agreement; provided, however, that (i) the aggregate amount for which QIP may be
liable under any circumstances and under all of such guarantees taken together
shall not exceed $3,000,000 whether or not such guarantees remain in force; (ii)
the agreement of QIP to guarantee payments by the Company set forth in this
Section 4.4 is not made on a revolving basis; (iii) no such guarantee will (A)
require performance of any kind by QIP at any time after November 30, 1999 or
(B) guarantee any payment obligation of the Company which is required to be made
after November 30, 1999 and (iv) QIP shall not be required to execute or
deliver, and shall have the absolute right to refuse to execute and deliver, any
guarantee (x) which in the reasonable opinion of counsel to QIP (A) could have
tax consequences which would be adverse to QIP or its Affiliates or (B) is
unsatisfactory in form or substance, including, without limitation, the duration
of the guarantee or the timing of the
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payments which are proposed to be guaranteed or (y) after November 30, 1999. The
Company agrees to use its best efforts to structure any guarantees in the most
favorable manner to QIP and to allow QIP to participate in any negotiations of
such agreements.
SECTION 5. INVESTORS' CLOSING CONDITIONS
The obligation of the Investors to purchase and pay for the
Shares on the Closing Date and on January 1, 1998, as provided in Section 1
hereof, shall be subject to the performance by the Company of its agreements to
be performed hereunder prior to the Closing Date and to the satisfaction, prior
to the Closing Date or concurrently with the Closing, of the following further
conditions:
5.1. Representations and Warranties
The representations and warranties the Managing Founders and the
Company contained in this Agreement shall be true on and as of the Closing Date
as though such warranties and representations were made at and as of such date,
except as otherwise affected by the transactions contemplated hereby.
5.2. Compliance with Agreement
The Company shall have performed and complied with all
agreements, covenants and conditions contained in this Agreement which are
required to be performed or complied with by the Company prior to or on the
Closing Date.
5.3. Officer's Certificate
The Investors shall have received a certificate, dated the
Closing Date, signed by each of the President and the Chief Operating Officer of
the Company, certifying that the conditions specified in the foregoing Sections
5.1 and 5.2 hereof have been fulfilled.
5.4. Netscape Agreement
The Company shall have entered into an agreement with Netscape
Communications Corporation satisfactory in form and substance to the Investors
in their sole discretion.
5.5. Infoseek Agreements
The Company and Infoseek shall have executed and delivered the
Acquisition Agreement, the form of which is attached as Exhibit C hereto (the
"Acquisition Agreement"), and the Ultraseek License Agreement, the Trademark
License Agreement and the Distribution Agreement, the forms of which are
attached as Exhibit D hereto (collectively, the "License Agreement"), and such
agreements shall be in full force and effect.
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5.6. Chief Financial Officer
The Company shall have hired a Chief Financial Officer
satisfactory to the Investors in their sole discretion or shall have taken such
steps short of hiring a Chief Financial Officer as are acceptable to the
Investors in their sole discretion.
5.7. Counsel's Opinion
The Investors shall have received from the Company's counsel
Fulbright & Xxxxxxxx L.L.P., an opinion, dated the Closing Date, substantially
in the form of Exhibit E hereto.
5.8. Approval of Proceedings
All proceedings to be taken in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
satisfactory in form and substance to the Investors and their special counsel,
Xxxxxx Xxxx & Xxxxxxxxx; and the Investors shall have received copies of all
documents or other evidence which they and Xxxxxx Xxxx & Xxxxxxxxx may request
in connection with such transactions and of all records of corporate proceedings
in connection therewith in form and substance satisfactory to the Investors and
Xxxxxx Xxxx & Xxxxxxxxx.
5.9. Injunction
There shall be no effective injunction, writ, preliminary
restraining order or any order of any nature issued by a court of competent
jurisdiction directing that the transactions provided for herein or any of them
not be consummated as herein provided.
5.10. Adverse Development
There shall have been no developments in the business of the
Company which in the opinion of the Investors would have a Material Adverse
Effect.
5.11. Shareholders Agreement
The Company and each of the other parties thereto shall have
executed the Shareholders Agreement, the form of which is attached as Exhibit F
hereto (the "Shareholders Agreement").
5.12. Election of Directors
Two directors designated by the Investors shall have been
elected to the Board of Directors of the Company, effective upon the Closing.
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5.13. Employment Agreements
The Company shall have entered into employment agreements (the
"Employment Agreements") with each of the Managing Founders satisfactory in form
and substance to the Investors in their sole discretion, and each of such
Agreement shall be in full force and effect.
5.14. Management Stock Subscription Agreements
The Company shall have entered into a Management Stock
Subscription Agreement with each of the Managing Founders (each, a "Management
Stock Subscription Agreement"), the forms of which are attached as Exhibit G
hereto, and each of such Agreements shall be in full force and effect.
SECTION 6. COMPANY CLOSING CONDITIONS
The obligation of the Company to issue and deliver the Shares on
the Closing Date, as provided in Section 2 hereof, shall be subject to the
performance by the Investors of their agreements theretofore to be performed
hereunder and to the satisfaction, prior thereto or concurrently therewith, of
the following further conditions:
6.1. Representations and Warranties
The representations and warranties of the Investors contained in
this Agreement shall be true on and as of the Closing Date as though such
warranties and representations were made at and as of such date, except as
otherwise affected by the transactions contemplated hereby.
6.2. Compliance with Agreement
The Investors shall have performed and complied with all
agreements, covenants and conditions contained in this Agreement which are
required to be performed or complied with it prior to or on the Closing Date.
6.3. Investors' Certificates
The Company shall have received a certificate from each of the
Investors, dated the Closing Date, signed by a duly authorized representative of
such Investor, certifying that the conditions specified in the foregoing
Sections 6.1 and 6.2 hereof have been fulfilled.
6.4. Infoseek Agreements
The Company and Infoseek shall have executed and delivered the
Acquisition Agreement and the License Agreement, and such agreements shall be in
full force and effect.
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6.5. Shareholders Agreement
The Company and each of the other parties thereto shall have
executed the Shareholders Agreement.
6.6. Injunction
There shall be no effective injunction, writ, preliminary
restraining order or any order of any nature issued by a court of competent
jurisdiction directing that the transactions provided for herein or any of them
not be consummated as herein provided.
SECTION 7. DISPOSITION OF INVESTOR SHARES
Promptly upon request by the Investors set forth in a notice
delivered in accordance with Section 10.1 (the "Sale Notice"), which notice may
be given at any time following the third anniversary of the Closing Date and
prior to the completion of the initial public offering (an "IPO") of the Common
Stock, or any security issued in exchange for or as replacement of the Common
Stock, pursuant to a registration under the Securities Act, the Company shall
use its best efforts to arrange for the sale of such number of Shares set forth
in the Sale Notice (subject to the ability of the Company to elect the method
set forth in clause (b) below, in which case all of the Shares then held by the
Investors may be sold) upon one of the following methods, as determined at the
sole option of the Company:
(a) The Company will use its best efforts to cause the
registration of the Shares under the Securities Act pursuant to an underwritten
registration conducted in the manner set forth in Section 3 of the Shareholders
Agreement (notwithstanding that the Company may not have received a demand for
registration from any holder or that the IPO shall not have occurred); or
(b) The Company will use its best efforts to arrange the private
sale of the Company at a price not less than the Company's then current fair
market value (as determined by a mutually acceptable top 10 investment bank of
national reputation, or, if the parties are unable to agree on a single
investment bank, then by an investment bank chosen by two such investment banks,
one chosen by the Investors and the other by the Company); or
(c) The Company will use its best efforts to arrange the private
sale of the Shares at a price not less than the then current fair market value
of the Shares (as determined by an investment bank selected as described in
clause (b) above); or
(d) The Company will repurchase the Shares from the Investors at
their then current fair market value (as determined by an investment bank
selected as described in clause (b) above).
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The Company shall bear all of the expenses incurred by the
Company in compliance with this Section 7, including, without limitation, all
fees and expenses of any investment bankers, all fees and expenses of counsel
for the Company, fees and expenses of one counsel for all of the Investors, the
expense of any audits or accounting services incident to, or in connection with,
the sale of the Shares contemplated by this Section 7, and, in the case of a
sale of Shares effected pursuant to clause (a) above, and without duplication,
all Registration Expenses (as defined in the Shareholders Agreement). The
Company shall use its best efforts to cause a sale of the Shares via one of the
methods set forth in clauses (a) through (d) above (the "Methods") to be
consummated within 180 days of the date (the "Notice Date") of the Sale Notice.
If a sale of the Shares via one of the methods set forth in clauses (a) through
(d) above is not consummated within six months of the Notice Date, the Company
shall use its best efforts to cause a sale to be consummated via one of the
Methods (such Method to be determined by the Investors in their sole discretion)
provided in clause (a), (b) or (c) within 12 months of the Notice Date and shall
continue to use such best efforts until such a sale has been consummated. The
Investors agree to cooperate in good faith with the Company in effecting any
sale contemplated by this Section 7.
SECTION 8. COVENANTS
8.1. Financial and Business Information
From and after the date hereof, the Company shall deliver to
each of the Investors so long as the Investors beneficially own, in the
aggregate, securities representing at least 5% of the outstanding voting
securities of the Company:
(a) Monthly and Quarterly Statements - as soon as practicable,
and in any event within 10 days after the close of each month of each fiscal
year of the Company in the case of monthly statements and 30 days after the
close of each of the first three fiscal quarters of each fiscal year of the
Company in the case of quarterly statements, a consolidated balance sheet,
statement of income and statement of cash flows of the Company and any
subsidiaries as at the close of such month or quarter and covering operations
for such month or quarter, as the case may be, and the portion of the Company's
fiscal year ending on the last day of such month or quarter, all in reasonable
detail and prepared in accordance with GAAP, subject to audit and year-end
adjustments, setting forth in each case in comparative form the figures for the
comparable period of the previous fiscal year. The Company shall also provide
comparisons of each pertinent item to the budget referred to in subsection (c)
below.
(b) Annual Statements - as soon as practicable after the end of
each fiscal year of the Company, and in any event within 90 days thereafter,
duplicate copies of:
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(i) consolidated and consolidating balance sheets of the Company
and any subsidiaries at the end of such year; and
(ii) consolidated and consolidating statements of income,
stockholders' equity and cash flows of the Company and any
subsidiaries for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, all
in reasonable detail and accompanied by an opinion thereon of
independent certified public accountants of recognized national
standing selected by the Company, which opinion shall state that
such financial statements fairly present the financial position
of the Company and any subsidiaries on a consolidated basis and
have been prepared in accordance with GAAP (except for changes
in application in which such accountants concur) and that the
examination of such accountants in connection with such
financial statements has been made in accordance with generally
accepted auditing standards, and accordingly included such tests
of the accounting records and such other auditing procedures as
were considered necessary in the circumstances, and the Company
shall also provide comparisons of each pertinent item to the
budget referred to in subsection (c) below.
(c) Business Plan; Projections - no later than 10 days prior to
the commencement of each fiscal year of the Company, an annual business plan of
the Company and projections of operating results, prepared on a monthly basis,
and a three-year business plan of the Company and projections of operating
results. Within 45 days of the close of each semi-annual fiscal period of the
Company, the Company shall provide the Investors with an update of such monthly
projections. Such business plans, projections and updates shall contain such
substance and detail and shall be in such form as will be reasonably acceptable
to the Investors.
(d) Audit Reports - promptly upon receipt thereof, one copy of
each other financial report and internal control letter submitted to the Company
by independent accountants in connection with any annual, interim or special
audit made by them of the books of the Company.
(e) Other Reports - promptly upon their becoming available, one
copy of each financial statement, report, notice or proxy statement sent by the
Company to stockholders generally, of each financial statement, report, notice
or proxy statement sent by the Company or any of its subsidiaries to the SEC or
any successor agency, if applicable, of each regular or periodic report and any
registration statement, prospectus or written communication (other than
transmittal letters) in respect thereof filed by the Company or any subsidiary
with, or received by such Person in connection therewith from, any domestic or
foreign securities exchange, the SEC or any successor agency or any
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foreign regulatory authority performing functions similar to the SEC, of any
press release issued by the Company or any subsidiary, and of any material of
any nature whatsoever prepared by the SEC or any successor agency thereto or any
state blue sky or securities law commission which relates to or affects in any
way the Company or any subsidiary.
(f) Progress Report - prior to each regularly scheduled meeting
of the Board of Directors of the Company, a narrative report shall be delivered
to each of the Investors describing the Company's activities since the date
of the last such report, including a description of business development,
operating results and marketing efforts.
(g) Requested Information - with reasonable promptness, the
Company shall furnish each of the Investors with such other data and information
as from time to time may be reasonably requested.
8.2. Inspection
As long as an Investor holds beneficially (within the meaning of
Rule 13d-3 under the Exchange Act) at least five percent (5%) of the outstanding
Common Stock, the Company shall permit such Investor, its nominee, assignee, and
its representative to visit and inspect any of the properties of the Company, to
examine all its books of account, records, reports and other papers not
contractually required of, or reasonably determined by, the Company to be
confidential or secret, to make copies and extracts therefrom, and to discuss
its affairs, finances and accounts with its officers, directors, key employees
and independent public accountants or any of them (and by this provision the
Company authorizes said accountants to discuss with such Investor, its nominees,
assignees and representatives the finances and affairs of the Company and any
subsidiaries), all at such reasonable times and as often as may be reasonably
requested.
8.3. Confidentiality
As to so much of the information and other material furnished
under or in connection with this Agreement (whether furnished before, on or
after the date hereof, including without limitation information furnished
pursuant to Sections 8.1 and 8.2 hereof) as constitutes or contains confidential
business, financial or other information of the Company, each of the Investors
covenants for itself and its directors, officers and partners that it will use
due care to prevent its officers, directors, partners, employees, counsel,
accountants and other representatives from disclosing such information to
Persons other than their respective authorized employees, counsel, accountants,
stockholders, members, partners, limited partners and other authorized
representatives; provided, however, that each Investor may disclose or deliver
any information or other material
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disclosed to or received by it should such Investor be advised by its counsel
that such disclosure or delivery is required by law, regulation or judicial or
administrative order. In the event of any termination of this Agreement prior to
the Closing Date, each Investor shall return to the Company all confidential
material previously furnished to such Investor or its officers, directors,
partners, employees, counsel, accountants and other representatives in
connection with this transaction. For purposes of this Section 8.3, "due care"
means at least the same level of care that such Investor would use to protect
the confidentiality of its own sensitive or proprietary information, and this
obligation shall survive termination of this Agreement.
8.4. Conduct of Business and Maintenance of Existence
The Company will continue to engage in business of the same
general type as now conducted by it, and preserve, renew and keep in full force
and effect its corporate existence and take all reasonable action to maintain
all rights, privileges and franchises necessary or desirable in the normal
conduct of its business. The Company shall require all of its employees or
consultants to enter into appropriate confidentiality agreements to protect
confidential information relating to the Company and its business, including
trade secrets, in a form satisfactory to the Investors.
8.5. Compliance with Laws
The Company will comply in all material respects with all
applicable laws, rules, regulations and orders except where the failure to
comply would not have a material adverse effect on the business, properties,
operations, prospects or financial condition of the Company.
8.6. Insurance
The Company will maintain insurance with responsible and
reputable insurance companies or associations in such amounts and covering such
risks as is usually carried by companies of similar size and credit standing
engaged in similar business and owning similar properties, provided that such
insurance is and remains available to the Company at commercially reasonable
rates.
8.7. Keeping of Books
The Company will keep proper books of record and account, in
which full and correct entries shall be made of all financial transactions and
the assets and business of the Company in accordance with GAAP.
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8.8. Lost, etc. Certificates Evidencing Shares; Exchange
Upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of any certificate
evidencing any Shares (or shares of Common Stock) owned by one of the Investors,
and (in the case of loss, theft or destruction) of an unsecured indemnity
satisfactory to it, and upon reimbursement to the Company of all reasonable
expenses incidental thereto, and upon surrender and cancellation of such
certificate, if mutilated, the Company will make and deliver in lieu of such
certificate a new certificate of like tenor and for the number of shares
evidenced by such certificate which remain outstanding. Such Investor's
agreement of indemnity shall constitute indemnity satisfactory to the Company
for purposes of this Section 8.8. Upon surrender of any certificate representing
any Shares (or shares of Common Stock) for exchange at the office of the
Company, the Company at its expense will cause to be issued in exchange
therefor new certificates in such denomination or denominations as may be
requested for the same aggregate number of Shares or shares of Common Stock,
as the case may be, represented by the certificate so surrendered and
registered as such holder may request. The Company will also pay the cost of
all deliveries of certificates for such shares to the office of such Investor
upon any exchange provided for in this Section 8.8.
8.9. Subrogation
Without limiting any rights the Investors may have by operation
of law or equity, the Company agrees, to the extent that any of the Investors
guaranty the obligation of the Company under (i) that certain Term Loan
Agreement (the "Loan Agreement"), dated as of the date hereof, between the
Company and Bayerische Vereinsbank AG (the "Lender") or (ii) any other
agreements of the Company, including, without limitation, the Netscape
Agreement, and any Investor is obligated to perform on such a guaranty, such
Investors shall be subrogated to the rights (x) in the case of a guaranty in
respect of the Loan Agreement, of the Lender to receive payments or
distributions of assets of the Company and (y) in all other cases, of the party
for whose benefit the Investor guaranteed the obligations of the Company to
receive payments or distribution of assets of the Company.
SECTION 9. INTERPRETATION OF THIS AGREEMENT
9.1. Terms Defined
As used in this Agreement, the following terms have the
respective meanings set forth below or set forth in the Section hereof following
such term:
Affiliate: means any Person or entity directly or indirectly
controlling, controlled by or under common control
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with such Person or entity. In addition, a Person shall be deemed to be an
Affiliate of an Investor if Xxxxx Fund Management, L.L.C. or an Affiliate
thereof has or exercises investment discretion on behalf of such Person.
Business Day: shall mean a day other than a Saturday, Sunday or
other day on which banks in the State of New York are not required or authorized
to close.
Closing: shall have the meaning set forth in Section l.l(a).
Closing Date: shall have the meaning set forth in Section
1.1(a).
Code: shall mean the Internal Revenue Code of 1986, as amended.
Exchange Act: shall mean the Securities Exchange Act of 1934, as
amended.
GAAP: shall have the meaning set forth in Section 2.7.
Intellectual Property: shall have the meaning set forth in
Section 2.17.
Knowledge of the Company: or words of similar import, shall mean
the knowledge of the Company or any of the Managing Founders.
Material Adverse Effect: shall have the meaning set forth in
Section 2.1.
Person: shall mean an individual, partnership, joint-stock
company, corporation, trust or unincorporated organization, and a government or
agency or political subdivision thereof.
SEC: shall mean the Securities and Exchange Commission.
Securities Act: shall mean the Securities Act of 1933, as
amended.
Shareholders Agreement: shall have the meaning set forth in
Section 5.11.
subsidiary: shall mean a corporation of which a Person owns,
directly or indirectly, more than 50% of the securities of any class or classes
of a corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors (or
Persons performing similar functions).
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Taxes: shall mean any and all federal, state, local, foreign and
other taxes, levies, fees, imposts, duties and charges of whatever kind
(including any interest, penalties or additions to the tax imposed in connection
therewith or with respect thereto), whether or not imposed on the Company,
including, without limitation, taxes imposed on, or measured by, income,
franchise, profits or gross receipts, and also ad valorem, value added, sales,
use, service, real or personal property, capital stock, license, payroll,
withholding, employment, social security, workers' compensation, unemployment
compensation, utility, severance, production, excise, stamp, occupation,
premium, windfall profits, transfer and gains taxes and custom duties.
Tax Returns: shall mean returns, reports, information statements
and other documentation (including any additional or supporting material) filed
or maintained, or required to be filed or maintained, in connection with the
calculation, determination, assessment or collection of any Tax.
Transaction Documents: shall mean this Agreement and the
Shareholders Agreement.
9.2. Accounting Principles
Where the character or amount of any asset or amount of any
asset or liability or item of income or expense is required to be determined or
any consolidation or other accounting computation is required to be made for the
purposes of this Agreement, this shall be done in accordance with GAAP at the
time in effect, to the extent applicable, except where such principles are
inconsistent with the requirements of this Agreement.
9.3. Directly or Indirectly
Where any provision in this Agreement refers to action to be
taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.
9.4. Governing Law
This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed entirely within such State.
9.5. Paragraph and Section Headings
The headings of the sections and subsections of this Agreement
are inserted for convenience only and shall not be deemed to constitute a part
thereof.
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SECTION 10. MISCELLANEOUS
10.1. Notices
(a) All communications under this Agreement shall be in writing
and shall be delivered by hand or mailed by overnight courier or by registered
mail or certified mail, postage prepaid:
(i) if to the Investors, to c/o Soros Fund Management, 000
Xxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, marked for
attention of Xxxxxxx X. Xxxx, Esq., or at such other address as
the Investors may have furnished the Company in writing,
with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
One Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxxxxx X. Xxxxx, Esq.
Facsimile: 000-000-0000
(ii) if to the Company or the Managing Founders, at 0000 Xxxxx
Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000, marked for
the attention of Xxxxx X. Xxxxxxxx, or at such other address as
it may have furnished in writing to the Investors,
with a copy to:
Fulbright & Xxxxxxxx L.L.P.
Market Square
000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxx Xxxxxxxx, Esq.
Facsimile: 000-000-0000
(b) Any notice so addressed shall be deemed to be given: if
delivered by hand, on the date of such delivery; if mailed by courier, on the
first business day following the date of such mailing; and if mailed by
registered or certified mail, on the third business day after the date of such
mailing.
10.2. Press Releases
Except as required by law, neither the Investors, the Managing
Founders nor the Company shall issue any press release or other information to
the press or any other third party relating to this Agreement or the Investors'
proposed investment in the Company without the prior written consent of each
party hereto.
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10.3. Expenses and Taxes.
(a) The Company agrees to pay the fees and disbursements of
Xxxxxxx Xxxx & Xxxxxxxxx, special counsel for the Investors, incurred in
connection with the negotiation, preparation, execution and delivery of this
Agreement and the other instruments and agreements entered into pursuant to this
Agreement, and any amendments to the same, said payment to be made no later
than 5 days after a xxxx for such fees and/or disbursements has been sent to the
Company.
(b) The Company will pay, and save and hold the Investors
harmless from any and all liabilities (including interest and penalties) with
respect to, or resulting from any delay or failure in paying, stamp and other
taxes (other than income taxes), if any, which may be payable or determined to
be payable on the execution and delivery or acquisition of the Shares or the
shares of Common Stock issuable upon conversion of the Shares.
10.4. Reproduction of Documents
This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications which may hereafter
be executed, (b) documents received by the parties hereto on the Closing Date
(except for certificates evidencing the Shares themselves), and (c) financial
statements, certificates and other information previously or hereafter furnished
to the Investors, may be reproduced by the parties hereto by any photographic,
photostatic, microfilm, micro-card, miniature photographic or other similar
process and any party may destroy any original document so reproduced. All
parties hereto agree and stipulate that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made by such party in the regular course of business) and that
any enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
10.5. Termination and Survival
Unless the Closing has occurred prior thereto, this Agreement
and, except as herein provided, all the rights of the parties hereto, shall
terminate on January 7, 1998 (unless such date is extended by mutual written
consent). Notwithstanding the foregoing, Section 8.3 hereof shall survive the
termination of this Agreement. All warranties, representations, and covenants
made by the Investors, the Managing Founders and the Company herein or in any
certificate or other instrument delivered by one of the Investors or the Company
under this Agreement shall be considered to have been relied upon by the Company
or the Investors, as the case may be, and shall survive all deliveries to the
Investors of the Shares, or payment to the Company for
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such Shares, regardless of any investigation made by the Company or an Investor,
as the case may be, or on the Company's or an Investor's behalf. All statements
in any such certificate or other instrument shall constitute warranties and
representations by the Company or the Managing Founders, as the case may be,
hereunder.
10.6. Successors and Assigns
This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of each of the parties.
10.7. Entire Agreement; Amendment and Waiver
This Agreement and the agreements attached as Exhibits hereto
constitute the entire understandings of the parties hereto and supersede all
prior agreements or understandings with respect to the subject matter hereof
among such parties. This Agreement may be amended, and the observance of any
term of this Agreement may be waived, with (and only with) the written consent
of the parties hereto.
10.8. Counterparts
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original and all of which together shall be
considered one and the same agreement.
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IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement as of the date first above written.
BIZWATCH, INC.
BY: /s/ XXXXX X. XXXXXXXX
--------------------------------
Name: XXXXX X. XXXXXXXX
Title: PRESIDENT
THE MANAGING FOUNDERS
/s/ XXXXX X. XXXXXXXX
--------------------------------
Xxxxx X. Xxxxxxxx
/s/ XXXX XXXXX
--------------------------------
Xxxx Xxxxx
/s/ XXXXX XxXXX
--------------------------------
Xxxxx XxXxx
/s/ XXXXXXXXX XXXXXXX
--------------------------------
Xxxxxxxxx Xxxxxxx
INVESTORS
Quantum Industrial Partners LDC
By: /s/ XXXX XXXXXXXXX
-----------------------------
Name:
Title:
/s/ XXXXX XXXXXXXXXXXX
--------------------------------
Xxxxx Xxxxxxxxxxxx
/s/ XXXX XXXXXXXXX
--------------------------------
Xxxx Xxxxxxxxx
/s/ XXXXXXX XXXXXXX
--------------------------------
Xxxxxxx Xxxxxxx
/s/ XXXX XXXX
--------------------------------
Xxxx Xxxx
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Geosor Corporation
By: /s/ XXXX XXXXXXXXX
----------------------------------
Name: Xxxx Xxxxxxxxx
Title President
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