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EXHIBIT 10.17
ONElist, Inc.
SERIES A PREFERRED
STOCK PURCHASE AGREEMENT
First Closing: December 28, 1998
Second Closing: April 29, 1999
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ONElist, Inc.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of December 28,1998, by and between ONElist,
Inc., a California corporation, with headquarters at 000 Xxx Xxxxxx Xxxx #000,
Xxxxxxx, XX 00000, and its predecessor (the "Company"), and each of the
investors listed on Schedule 1.2 hereto (as such Schedule may be updated from
time to time) (collectively, the "Purchasers"). In consideration of mutual
promises, covenants and conditions hereinafter set forth, the parties hereby
agree as follows:
1. Authorization and Sale of the Shares.
1.1 Authorization, Filing of Restated Articles of Incorporation.
On or prior to the Closing (as defined below), the Company shall have authorized
the issuance and sale at the Closing (as defined below) pursuant to the terms
and conditions hereof of up to 2,316,289 shares of its Series A Preferred Stock
(the "Preferred Shares"), having the rights, restrictions, privileges and
preferences as set forth in the form of the Amended and Restated Articles of
Incorporation of the Company (the "Restated Articles") attached hereto as
Exhibit A. The Company shall adopt and file the Restated Articles with the
Secretary of State of California on or before the Closing.
1.2 Sale and Issuance of the Preferred Shares. Subject to the
terms and conditions hereof, at the Closing the Company will issue and sell to
each Purchaser and each Purchaser will purchase from the Company the number of
Preferred Shares set forth opposite such Purchaser's name on Schedule 1.2
attached hereto for a consideration of $1.7377 per share (the "Purchase Price").
2. Closing, Delivery.
2.1 Closing Date.
(a) Closing. The closing (the "Closing") of the purchase
and sale of the Preferred Shares to the Purchasers shall take place at the
offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx,
Xxxxxxxxxx 00000 at 10:00 a.m., on December 28, 1998, or at such other time and
place as the Company and the Purchasers may agree. The date of the Closing shall
be referred to as the "Closing Date."
2.2 Delivery. Subject to the terms of this Agreement, at the
Closing, the Company shall deliver to each of the Purchasers a certificate (or
certificates) registered in such Purchaser's name representing the number of
Preferred Shares purchased against payment of the Purchase Price therefor by
check payable to the Company, wire transfer per the Company's instructions, or
any combination of the foregoing payable to the Company.
2.3 Use of Proceeds. The Company shall use the proceeds upon the
sale of the Preferred Shares for general working capital purposes.
3. Representations and Warranties of the Company. In order to induce the
Purchasers to purchase the Preferred Shares, the Company makes the following
representations and warranties which are true, correct and complete in all
respects on the date hereof and shall be true, correct and complete in all
respects as of the
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Closing, subject to the exceptions set forth on the Disclosure Schedule attached
hereto as Exhibit B (the "Disclosure Schedule").
3.1 Organization, Good Standing and Power. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California and has all requisite corporate power and authority
to own its properties and to carry on its business as currently conducted. The
Company is duly licensed or qualified to do business as a foreign corporation in
each jurisdiction where the failure to do so would constitute a Material Adverse
Change (as defined in Section 3.6 below).
3.2 Authorization. The Company has all necessary corporate power
and has taken or will take prior to the Closing all necessary corporate action
required for the due authorization, execution, delivery and performance by the
Company of this Agreement, the Rights Agreement (the "Rights Agreement")
referred to in Section 5.1 and the Right of First Refusal and Co-Sale Agreement
(the "Co-Sale Agreement") referred to in Section 5.1 (collectively, the "Related
Agreements") and any other agreements or instruments to be executed by the
Company in connection herewith or therewith and the consummation of the
transactions contemplated herein or therein, and for the due authorization,
issuance and delivery of the Preferred Shares. The issuance of the Preferred
Shares does not require any further corporate action and is not and will not,
except as provided in the Related Agreements, be subject to any preemptive
right, right of first refusal or the like. This Agreement, the Related
Agreements and the other agreements and instruments to be executed by the
Company in connection herewith or therewith will each, when executed by the
Company, be a valid and binding obligation of the Company enforceable in
accordance with its respective terms, except as such enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or
other similar federal or state laws affecting the rights of creditors, (ii)
rules of law governing specific performance, injunctive relief or other
equitable remedies (whether considered in a proceeding at law or in equity) or
(iii) indemnification provisions to the extent limited by statutes, judicial
decisions or public policy considerations.
3.3 Government Approvals. No consent, approval, license or
authorization of, or designation, declaration or filing with, any court or
governmental authority is or will be required on the part of the Company in
connection with the execution, delivery and performance by the Company of this
Agreement, any of the Related Agreements and any other agreements or instruments
executed by the Company in connection herewith or therewith, or in connection
with the issuance of the Preferred Shares the failure of which would cause a
Material Adverse Change except for (i) those which have already been made or
granted, (ii) those required to be made pursuant to (A) Section 25102(f) of the
California Corporate Securities Law of 1968, as amended, and the rules
thereunder (the "Law"), or (b) the securities laws of any other state in which
the Preferred Shares will be issued or sold hereunder and (iii) any applicable
state securities commissions as specifically provided for in the Rights
Agreement described in Section 5. 1 (f).
3.4 Capitalization. The authorized capital stock of the
Company as of the Closing Date and immediately prior to the Closing Date is
10,000,000 shares of Common Stock and 2,400,000 shares of Preferred Stock, all
of which have been designated Series A Preferred Stock (the "Series A Shares").
There are issued and outstanding 2,000,000 shares of the Company's Common Stock.
There are no issued and outstanding shares of Series A Preferred Stock
immediately prior to the Closing. The holders of record of the currently issued
and outstanding shares of Common Stock immediately prior to the Closing are as
set forth in Section 3.4 of the Disclosure Schedule. All such issued and
outstanding shares have been duly authorized and validly issued, are fully paid
and nonassessable, and were issued in compliance with all applicable state and
federal laws concerning the issuance of securities. Except as set forth in the
Related Agreements and in Section 3.4 of the Disclosure Schedule, there are no
other outstanding rights, options, warrants, conversion rights or agreements
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for the purchase or acquisition from the Company of any shares of its capital
stock (and a list of holders of such outstanding rights, options, warrants,
conversion rights and agreements for the purchase or acquisition from the
Company of any shares of its capital stock is set forth in Section 3.4 of the
Disclosure Schedule), except that the Company has (i) reserved 1,165,000 shares
of its Common Stock for issuance under the Company's 1998 Stock Option Plan to
its employees, consultants, directors or officers and (ii) reserved 2,316,279
shares of its Common Stock for issuance upon conversion of the Series A Shares
of the Company to Common Stock of the Company. Except as set forth in Section
3.4 of the Disclosure Schedule, the Company is not a party or subject to any
agreement or understanding between any persons or entities which affects or
relates to the voting or giving of written consents with respect to any
securities or by any director of the Company, except as provided for in the
Related Agreements.
3.5 Subsidiaries. The Company has neither any subsidiaries nor
any joint venture relationships nor any investment or other equity or
equity-like interest in, or any outstanding loan or advance to or from, any
person, including, without limitation, any officer, director or shareholder of
the Company except travel, meal and similar reimbursement obligations created in
the ordinary course of business.
3.6 Financial Information. The Company has attached hereto as
Schedule 3.6 to the Disclosure Schedule the unaudited financial statements of
the Company for the period ended December 15, 1998 (the "Unaudited Financial
Statements"). The Unaudited Financial Statements are in accordance with the
books and records of the Company and present fairly in accordance with generally
accepted accounting principles applied on a basis consistent with prior periods
the financial condition and results of operations of the Company as of the dates
and for the periods shown, subject to year end adjustments which will not be
material, and subject to the absence of footnotes otherwise required. The
Company has no liability, contingent or otherwise, that is not adequately
reflected in or reserved against in the Unaudited Financial Statements that
could materially and adversely affect the financial condition of the Company.
Since the date of the Unaudited Financial Statements, (i) there has been no
Material Adverse Change (as defined below) in the business, assets, liabilities,
condition (financial or otherwise) or operations of the Company or its
predecessor except for changes in the ordinary course of business which,
individually or in the aggregate, have not been materially adverse and (ii)
none of the business, financial condition, operations, property or affairs of
the Company has been materially adversely affected by any occurrence or
development, individually or in the aggregate, whether or not insured against.
"Material Adverse Change" means any change in, or effect on, the business,
conditions, affairs or operations of the Company (including all subsidiaries, if
any) or in any of its properties or assets, or any material impairment of the
right or ability of the Company (including all subsidiaries, if any) to carry on
its business as now conducted or as proposed to be conducted in the future (the
"Business") (x) that is, or is reasonably likely to be, materially adverse to
the results of the operations or the financial condition of the Company (or any
subsidiary) or the Business or (y) that requires or is reasonably likely to
require the expenditure of Ten Thousand Dollars ($10,000) or more, individually
or in the aggregate.
3.7 Events Subsequent to the Date of the Financial Statements.
Since November 30, 1998, the Company has not (i) issued any capital interest,
stock, bond or other security, (ii) borrowed any amount or incurred or become
subject to any liability (absolute, accrued or contingent), except liabilities
under contracts entered into in the ordinary course of business except travel,
meal and similar reimbursement obligations created in the ordinary course of
business, (iii) discharged or satisfied any lien or encumbrance or incurred or
paid any obligation or liability (absolute, accrued or contingent) other than
current liabilities shown on the Unaudited Financial Statements and current
liabilities incurred since November 30, 1998, in the ordinary course of
business, (iv) declared or made any payment or distribution to shareholders or
purchased or redeemed any shares of its capital stock, capital interest or other
securities, (v) mortgaged, pledged or subjected to lien any of
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its assets, tangible or intangible, other than liens of current real property
taxes not yet due and payable or mechanics' or materialmen's or similar inchoate
liens relating to amounts not yet due and payable, (vi) sold, assigned or
transferred any of its tangible assets except in the ordinary course of
business, or canceled any debt or claim, except in the ordinary course of
business, (vii) sold, assigned, transferred or granted any license with respect
to any patent, trademark, trade name, service xxxx, copyright, trade secret or
other intangible asset, except pursuant to license or other agreements entered
into in the ordinary course of business, (viii) suffered any loss of property or
waived any right of substantial value whether or not in the ordinary course of
business, (ix) made any change in officer compensation other than in the
ordinary course of business, (x) made any material change in the manner of
business or operations of the Company, its predecessor or any of their
respective subsidiaries, (xi) entered into any transaction except in the
ordinary course of business or as otherwise contemplated hereby or (xii) entered
into any commitment (contingent or otherwise) to do any of the foregoing.
3.8 Litigation . There is no litigation or governmental
proceeding pending or, to the knowledge of the Company, threatened against the
Company or its predecessor or affecting any of the Company's properties or
assets, or against any officer, key employee or shareholder of the Company or
its predecessor in his capacity as such, nor, to the knowledge of the Company,
has there occurred any event which questions the validity of this Agreement and
the Related Agreements or any action taken or to be taken in connection
herewith, including in each case, without limitation, actions pending or, to the
knowledge of the Company, threatened, involving the prior employment of any of
the Company's employees, the use in connection with the Business of any
information or techniques allegedly proprietary to any of its former employees,
or their obligations under any agreements with prior employers. There is no
governmental investigation pending or, to the best knowledge of the Company,
threatened against the Company or its predecessor or affecting any of the
Company's properties or assets, or against any officer, key employee or
shareholder of the Company or its predecessor in his capacity as such. Neither
the Company, nor, to the best of its knowledge, any officer, key employee or
shareholder of the Company or its predecessor, in his capacity as such, is in
default with respect to any order, writ, injunction, decree, ruling or decision
of any court, commission, board or other government agency which may materially
and adversely affect the Business or assets of the Company. There is no action,
suit, proceeding or investigation by the Company currently pending or which the
Company currently intends to initiate.
3.9 Compliance with Laws and Other Instruments. The Company is as
of the Closing Date in compliance with all of the provisions of this Agreement
and of its Restated Articles and in all material respects with the provisions of
(i) each judgment, decree and judicial order by which it is bound or to which it
or any of its properties are subject and to its knowledge, each statute, rule or
regulation applicable to the Company and (ii) each mortgage, indenture, lease,
license, other agreement or instrument by which it is bound or to which it or
any of its properties are subject. Neither the execution, delivery or
performance of this Agreement and the Related Agreements, nor the offer,
issuance, sale or delivery of the Preferred Shares in accordance with the
provisions of this Agreement and the Restated Articles, with or without the
giving of notice or passage of time, or both, will violate, or result in any
breach of, or constitute a default under, or result in the imposition of any
encumbrance in any material respect upon any asset of the Company pursuant to
any provision of the Company's Restated Articles, or, to the best knowledge of
the Company, any statute, rule or regulation applicable to the Company, or any
judgment, decree, judicial order, mortgage, indenture, lease, license or other
agreement or instrument by which the Company is bound or to which the Company or
any of its properties are subject, or, to the best knowledge of the Company,
will cause the Company to lose the benefit of any material right or privilege it
currently enjoys or cause any person who is expected to normally do business
with the Company to discontinue to do so on substantially the same basis.
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3.10 Taxes. The Company has filed all tax returns (including
statements of estimated taxes owed) required to be filed within the applicable
periods for such filings and has paid all taxes required to be paid (other than
those contested in good faith for which adequate reserves have been
established), and has established adequate reserves (net of estimated tax
payments already made) for the payment of all taxes payable in respect of the
period subsequent to the last periods covered by such returns. There is no
pending dispute with any taxing authority relating to any of such returns and
the Company has not received notice of any proposed liability for any tax to be
imposed upon the properties or assets of the Company. No deficiencies for any
tax are currently assessed against the Company, and no tax returns of the
Company have ever been audited, and, to the actual knowledge of the Company,
there is no such audit pending or threatened. There is no tax lien, whether
imposed by any federal, state or local taxing authority, outstanding against the
assets, properties or business of the Company or its predecessor, except such
liens for taxes not yet due and payable as may accrue in the ordinary course of
business and for which the Company has established reasonable reserves and as
would not, in any case, constitute a Material Adverse Change. For the purposes
of this Agreement, the term "tax" shall include all federal, state and local
taxes, including income, franchise, property, sales, withholding, payroll and
employment taxes.
3.11 Real Property.
(a) Schedule 3.11 to the Disclosure Schedule sets forth
the addresses and uses of all real property that the Company owns, leases or
subleases, and any material lien or encumbrance on any such owned real property
or the Company's leasehold interest therein, specifying in the case of each such
lease or sublease, the name of the lessor or sublessor, as the case may be, and
the lease term. Copies of all leases have been provided to special counsel to
the Purchasers.
(b) The Company has good and marketable title to, and owns
free and clear of all liens and encumbrances, all property listed as owned by
the Company on Schedule 3.11, and, to the knowledge of the Company, there is no
material violation of any law, regulation or ordinance (including without
limitation laws, regulations or ordinances relating to zoning, environmental,
city planning or similar matters) relating to any real property owned, leased or
subleased by the Company.
(c) There are no defaults by the Company or, to the
knowledge of the Company, by any other party thereto, which might curtail in any
material respect the current use of the Company's property listed on Schedule
3.11. The performance by the Company of this Agreement and the Related
Agreements will not result in the termination of, or in any increase of any
amounts payable under, any lease listed on Schedule 3.11.
3.12 Personal Property. Except for property sold or otherwise
disposed of in the ordinary course of business since September 30, 1998, the
Company owns free and clear of any liens or encumbrances, all of the personal
property reflected as owned by the Company in the balance sheet contained in the
Unaudited Financial Statements, and all other material items of personal
property acquired by the Company through the date hereof. All material items of
such personal property are in good operating condition, normal wear and tear
excepted.
3.13 Patents, Trademarks, etc.
(a) Set forth on Schedule 3.13 is a list of all patents,
patent rights, patent applications, trademarks, trademark applications, service
marks, service xxxx applications, trade names and registered copyrights, and all
applications for such that are in the process of being prepared, owned by or
registered in the
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name of the Company, or of which the Company is a licensor or licensee or in
which the Company has any right, except licenses to commercially available
software legally in the possession of the Company and having a purchase price of
less than $2,000 per copy. The Company owns and possesses sufficient right,
title and interest in and to, or has obtained licenses to use, all software,
software tools, works of authorship, copyrights, know-how, trade secrets and
registered trade names (and to its best knowledge owns and possesses sufficient
right, title and interest in and to, or has obtained licenses to use, all
patentable inventions and common law tradenames) used in or necessary for the
conduct of its Business, free and clear of all liabilities, charges, liens,
pledges, mortgages, restrictions, adverse claims, security interests, rights of
others and encumbrances (including, without limitation, distribution rights)
(all of which are referred to as "Proprietary Rights"), except, in each case,
where such failure would not constitute a Material Adverse Change. The foregoing
representation as it relates to Third Party Technology (as defined herein) is
limited to the Company's interest pursuant to the Third Party Licenses (as
defined herein), all of which are, to the best knowledge of the Company, valid
and enforceable and in full force and effect and which grant the Company such
rights to Third Party Technology as are employed in or necessary to the
Business. Schedule 3.13 contains (i) an accurate and complete description of all
registered and unregistered trademarks and trade names owned or licensed to the
Business, and a list of all licenses and other agreements relating thereto and
(ii) a list of all licenses and other agreements with third parties (the "Third
Party Licenses") relating to any software, copyrights, works of authorship,
technology, know-how or processes that the Company is licensed or otherwise
authorized by such third parties to use, market, distribute or incorporate into
products distributed by the Company, except licenses to commercially available
software legally in the possession of the Company and having a purchase price of
less than $2,000 per copy (such software, technology, know-how and processes are
collectively referred to as the "Third Party Technology"). All of the copyrights
in any of the Company Products (including but not limited to any works of
authorship incorporated in or distributed with such products) used by the
Company in connection with the Business are owned by the Company, or licensed to
the Company, and are in full force and effect, and the consummation of the
transactions contemplated hereby will not alter or impair any such rights. No
claims have been asserted against the Company, and to the best knowledge of the
Company (actual knowledge in the case of common law trademarks and tradenames
and patents) there are no claims which are reasonably likely to be asserted
against the Company or which have been asserted against others by any person
challenging the Company's use or distribution of any trademarks, tradenames,
copyrights, works of authorship, trade secrets, software, technology, know-how
or processes utilized by the Company (including, without limitation, the Third
Party Technology) or challenging or questioning the validity or effectiveness of
any license or agreement relating thereto (including, without limitation, the
Third Party Licenses). The use of any trademarks, tradenames, copyrights, works
of authorship, software, technology, know-how or processes by the Company in its
Business does not infringe on the rights of, constitute misappropriation of, or
in any way involve unfair competition with respect to, any proprietary
information or intangible property right of any third person or entity,
including, without limitation, any patent, trade secret, copyright, trademark or
tradename; provided, however, that such representation is made only to the
Company's actual knowledge with respect to common law trademarks and tradenames,
technology, patent or similar intangible property right where infringement is
possible without wrongful taking and where no readily accessible and exhaustive
search process would serve to have warned the Company.
(b) To the best knowledge of the Company, all designs,
drawings, specifications, source code, object code, documentation, flow charts
and diagrams incorporated in any of the Company's Proprietary Rights (the
"Company Components") constitute original creations of and were written,
developed and created solely and exclusively by employees of the Company
without the assistance of any third party or entity or were created by, or with
the assistance of, third parties who assigned ownership of or licensed their
rights to the Company in valid and enforceable agreements. The Company has at
all times used commercially
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reasonable efforts to treat its trade secrets as confidential and has not
disclosed or otherwise dealt with such items in such a manner as to cause the
loss of such trade secrets by release into the public domain.
(c) To the best knowledge of the Company, no employee of
the Company is in violation of any term of any employment contract, patent
disclosure agreement, confidentiality agreement or any other contract or
agreement relating to the relationship of any such employee with the Company or,
to the best knowledge of the Company, any other party because of the nature of
the Business.
3.14 Agreements of Directors, Officers and Employees. To the best
knowledge of the Company, no director, officer or employee of or consultant to
the Company is in violation of any restrictive covenants contained in any
employment contract, non-competition agreement, non-disclosure agreement, patent
disclosure or assignment agreement or other contract or agreement relating to
the right of any such director, officer, employee or consultant to be employed
or engaged by the Company because of the nature of the Business, or relating to
the use of trade secrets or proprietary information of others.
3.15 Governmental Approvals. The Company has all the permits,
licenses, orders, franchises and other rights and privileges of all federal,
state, local or foreign governmental or regulatory bodies necessary for the
Company to conduct its business as presently conducted, except, in each case,
where such failure would not constitute a Material Adverse Change. All such
permits, licenses, orders, franchises and other rights and privileges are in
full force and effect except, in each case, where such failure would not
constitute a Material Adverse Change and, to the best knowledge of the Company,
no suspension or cancellation of any of them is threatened, and none of such
permits, licenses, orders, franchises or other rights and privileges will be
adversely affected by the Closing.
3.16 Contracts and Commitments. All contracts, obligations or
commitments to which the Company is a party or by which it is bound (including
purchase orders to the Company or placed by the Company) which involve
obligations of, or payments to, the Company in excess of Five Thousand Dollars
($5,000) and all agreements between the Company and its officers, directors,
consultants and employees are set forth on the list attached hereto as Schedule
3.17 (the "Contracts"), copies of which have been delivered to special counsel
to the Purchasers. All of the Contracts are valid and binding obligations of the
Company and in full force and effect in all material respects and enforceable by
the Company in accordance with their respective terms in all material respects,
except as such enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar federal or state laws
affecting the rights of creditors, (ii) rules of law governing specific
performance, injunctive relief or other equitable remedies (whether considered
in a proceeding at law or in equity) or (iii) indemnification provisions to the
extent limited by statutes, judicial decisions or public policy considerations.
The Company is not in material default under any of such Contracts. To the best
knowledge of the Company, no other party to any of the Contracts is in material
default thereunder.
3.17 Securities Act. The Company has complied and will comply
with all applicable federal or state securities laws in connection with the
issuance and sale of the Preferred Shares, and, in reliance on the
representations and warranties of the Purchasers in Section 4 hereof, the
Company hereby asserts that (i) the offer, sale and issuance of the Preferred
Shares in conformity with the terms of this Agreement will not result in a
violation of the requirements of Section 5 of the Securities Act of 1933, as
amended (the "Act"), or the qualification or registration requirements of the
Law or other applicable blue sky laws and (ii) neither the Company nor, to the
best knowledge of the Company, anyone acting on its behalf has offered any of
the Preferred Shares, or similar securities, or solicited any offers to purchase
any of such securities, in such a manner as to bring the issuance and sale of
the Preferred Shares under the registration provisions of the Act.
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3.18 Registration Rights. The Company has not granted or agreed
to grant any rights relating to registration of its capital stock under the Act
or state securities laws other than those contained in this Agreement or the
Related Agreements.
3.19 Insurance Coverage. Schedule 3.20 to the Disclosure Schedule
contains an accurate summary of the insurance policies currently maintained by
the Company. There are currently no claims in excess of Ten Thousand Dollars
($10,000) in the aggregate pending against the Company under any insurance
policies currently in effect and covering the property, business or employees of
the Company, and all premiums due and payable with respect to the policies
maintained by the Company have been paid to date.
3.20 Employee Matters. Except as set forth in Schedule 3.21
hereof, the Company does not have in effect, and its assets are not subject to,
any employment agreements, consulting agreements, deferred compensation, pension
or retirement agreements or arrangements, bonus, incentive or profit-sharing
plans or arrangements, or labor or collective bargaining agreements, written or
oral. The Company is in compliance, and its predecessor was in compliance, in
all material respects, with all applicable laws and regulations relating to
labor, employment, fair employment practices, terms and conditions of
employment, and wages and hours. Each officer, director, employee and consultant
of the Company has executed an agreement regarding confidentiality and
proprietary information, the form of which is attached hereto as Exhibit C.
Except as set forth in Schedule 3.21 hereof, the Company is not aware that any
officer, director or employee is obligated under any contract (including
licenses, covenants or commitments of any nature) or other agreement, or subject
to any judgment, decree or order of any court or administrative agency, that
would interfere in any material way with the use of his or her best efforts to
promote the interests of the Company, conflict with the Company's Business or
prevent any such employee from assigning inventions to the Company. Neither the
execution nor delivery of this Agreement or the Related Agreements, nor the
carrying on of the Company's business as proposed, will, to the Company's
knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any of such employees is now obligated. Furthermore, the
Company does not believe that it will be necessary for the Company to utilize
any inventions of any of its employees made prior to their employment by the
Company except in cases where obtaining a license to do such is expected to be
routine and license fees are not material to the Business.
3.21 Labor Agreements and Actions. The Company is not bound by or
subject to (and none of its assets or properties are bound by or subject to) any
contract, commitment or arrangement with any labor union, and no labor union has
requested or, to the knowledge of the Company, has sought to represent any of
the employees, representatives or agents of the Company. There is no strike or
other labor dispute involving the Company pending, or to the knowledge of the
Company threatened, which could constitute a Material Adverse Change, nor is the
Company aware of any labor organization activity involving its employees. The
Company is not aware that any officer or key employee, or that any group of key
employees, intends to terminate his, her or its employment with the Company, nor
does the Company have a current intention to terminate the employment of any of
the foregoing. Subject to general principles related to wrongful termination of
employees, the employment of each officer and employee of the Company is
terminable at the will of the Company.
3.22 No Brokers or Finders. No person has or will have, as a
result of the transactions contemplated by this Agreement, any right, interest
or claim against or upon the Company for any commission, fee or other
compensation as a finder or broker because of any act or omission by the
Company. -
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3.23 Transactions with Affiliates. There are no loans, leases or
other continuing transactions involving more than $10,000 (in the aggregate)
annually between the Company, any officer or director of the Company or any
person owning five percent (5%) or more of the voting power of the Company on
the one hand and any respective family member or affiliate of such officer,
director or shareholder on the other hand.
3.24 Assumptions, Guarantees, etc. of Indebtedness of Other
Persons. The Company has not assumed, guaranteed, endorsed or otherwise become
directly or contingently liable on or for any indebtedness of any other person,
except guarantees by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business.
3.25 Disclosures. Neither this Agreement, any Schedule or Exhibit
to this Agreement, the Related Agreements, the Unaudited Financial Statements,
nor any other agreement, document or written statement made by the Company and
furnished by the Company to the Purchasers or the Purchasers' special counsel in
connection with the transactions contemplated hereby, contains any untrue
statement of material fact or, when taken as a whole, omits to state any
material fact necessary to make the statements contained herein or therein not
misleading. There is no fact known to the Company that has not been disclosed
herein or in any other agreement, document or written statement furnished by the
Company to the Purchasers or their special counsel in connection with the
transactions contemplated hereby which is specific to the Company, as opposed to
the industry in which the Company operates, and which materially adversely
affects or is reasonably likely to materially and adversely affect the business,
properties, assets or financial condition of the Company.
4. Representations and Warranties of Purchasers and Restrictions on
Transfer Imposed by the Securities Act.
4.1 Representations and Warranties by the Purchasers. Each of the
Purchasers, severally and not jointly, represents and warrants to the Company as
follows:
(a) Investment Intent. This Agreement is made with each
Purchaser in reliance upon such Purchaser's representations to the Company,
evidenced by such Purchaser's execution of this Agreement, that such Purchaser
is acquiring the Preferred Shares and the Common Stock issuable upon conversion
of the Preferred Shares (collectively the "Securities") for investment for such
Purchaser's own account and not with a view to, or for resale in connection
with, any distribution or public offering thereof within the meaning of the Act
and the Law (or other applicable blue sky laws). Each Purchaser has the full
right, power and authority to enter into and perform this Agreement and the
Related Agreements, and this Agreement and the Related Agreements constitute
valid and binding obligations upon it enforceable in accordance with their
terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar federal or
state laws affecting the rights of creditors, (ii) rules of law governing
specific performance, injunctive relief or other equitable remedies (whether
considered in a proceeding at law or in equity) or (iii) indemnification
provisions to the extent limited by statutes, judicial decisions or public
policy considerations.
(b) Shares Not Registered . Each Purchaser understands and
acknowledges that the offering of the Preferred Shares pursuant to this
Agreement will not be registered under the Act or qualified under the Law (or
other applicable blue sky laws) on the grounds that the offering and sale of
securities contemplated by this Agreement are exempt from registration under the
Securities Act and exempt from qualification pursuant to the applicable
provisions of the Law (and the relevant provisions of other applicable blue sky
laws), and that the Company's reliance upon such exemptions is predicated upon
such Purchaser's
11
representations set forth in this Agreement. Each Purchaser acknowledges and
understands that the Securities must be held indefinitely unless the Securities
are subsequently registered under the Act and qualified under the Law (or other
applicable blue sky laws) or an exemption from such registration and such
qualification is available.
(c) No Transfer . Each Purchaser covenants that in no
event will it dispose of any of the Securities (other than in conjunction with
an effective registration statement for the Securities under the Act) unless and
until (i) such Purchaser shall have notified the Company of the proposed
disposition and shall have furnished the Company with a statement of the
circumstances surrounding the proposed disposition and (ii) if reasonably
requested by the Company, such Purchaser shall have furnished the Company with
an opinion of counsel reasonably satisfactory in form and substance to the
Company to the effect that (X) such disposition will not require registration
under the Act and (y) appropriate action necessary for compliance with the Act,
the Law and any other applicable state, local or foreign law has been taken. It
is agreed that the Company will not require opinions of counsel for transactions
by a Purchaser made pursuant to Rule 144.
(d) Permitted Transfers. Notwithstanding the provisions of
subsection (b) above, no registration statement or opinion of counsel shall be
necessary for a transfer by such Purchaser, if it is a partnership, to a partner
of such partnership or a former partner of such partnership who leaves such
partnership after the date hereof, or to the estate of any such partner or
former partner or the transfer by gift, will or intestate succession of any
partner to his spouse or lineal descendants or ancestors, if the transferee
agrees in writing to be bound by the terms of this Agreement and the Related
Agreements to the same extent as if he were an original Purchaser hereunder
provided that the Company shall receive written notice of such transfer within
thirty (30) days of its completion.
(e) Knowledge and Experience. Each Purchaser (i) has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of such Purchaser's prospective investment in
the Securities, (ii) has the ability to bear the economic risks of such
Purchaser's prospective investment, (iii) has been furnished with and has had
access to such information as such Purchaser has considered necessary to make a
determination as to the purchase of the Securities together with such additional
information as is necessary to verify the accuracy of the information supplied,
(iv) has had all questions which have been asked by such Purchaser
satisfactorily answered by the Company and (v) has not been offered the
Securities by any form of advertisement, article, notice or other communication
published in any newspaper, magazine, or similar media or broadcast over
television or radio, or any seminar or meeting whose attendees have been invited
by any such media.
(f) Accredited Investor . Each Purchaser is an "accredited
investor" within the meaning of Rule 501 promulgated by the Securities and
Exchange Commission ("SEC") under the Act.
(g) Authorization. All action on the part of each of the
Purchaser's partners, board of directors, and shareholders, as applicable,
necessary for the authorization, execution, delivery and performance of this
Agreement and the Related Agreements by each Purchaser, the purchase of and
payment for the Preferred Shares and the performance of all of each Purchaser's
obligations hereunder and under the Related Agreements has been taken or will be
taken prior to the Closing. This Agreement and the Related Agreements, when
executed and delivered by each Purchaser, shall constitute valid and binding
obligations of the Purchasers, enforceable in accordance with their terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance,
injunctive relief or other
12
equitable remedies; provided, however, that the Purchaser makes no
representation as to the enforceability of the indemnification provisions
contained in the Rights Agreement.
(h) Holding Requirements. Each Purchaser understands that
if the Company does not (i) register its Common Stock with the SEC pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended ("Exchange Act"),
(ii) become subject to Section 15(d) of the Exchange Act, (iii) supply
information pursuant to Rule 15c2-11 thereunder or (iv) have a registration
statement covering the Securities (or a filing pursuant to the exemption from
registration under Regulation A of the Act covering the Securities) under the
Securities Act in effect when it desires to sell the Securities, such Purchaser
may be required to hold the Securities for an indeterminate period. Each
Purchaser also understands that any sale of the Securities that might be made by
such Purchaser in reliance upon Rule 144 under the Act may be made only in
limited amounts in accordance with the terms and conditions of that rule.
4.2 Legends. Each certificate representing the Securities shall
be endorsed with the following legends:
(a) Federal Legend. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND ARE "RESTRICTED SECURITIES" AS DEFINED IN RULE 144
PROMULGATED UNDER THE ACT. THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR
OTHERWISE DISTRIBUTED EXCEPT (i) IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SHARES UNDER THE ACT OR (ii) IN COMPLIANCE WITH RULE 144, OR
(iii) PURSUANT TO AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION OR COMPLIANCE IS NOT REQUIRED AS TO SAID SALE, OFFER OR
DISTRIBUTION.
(b) Other Legends. Any other legends required by the Law
or other applicable state blue sky laws. The Company need not register a
transfer of legended Securities, and may also instruct its transfer agent not to
register the transfer of the Securities, unless the conditions specified in each
of the foregoing legends are satisfied.
Removal of Legend and Transfer Restrictions. Any legend
endorsed on a certificate pursuant to subsection 4.2(a) and the stop transfer
instructions with respect to such legend Securities shall be removed, and the
Company shall issue a certificate without such legend to the holder of such
Securities if such Securities are registered under the Act and a prospectus
meeting the requirements of Section 10 of the Act is available or if such holder
satisfies the requirements of Rule 144(k) and, where reasonably deemed necessary
by the Company, the holder of the Securities provides the Company with an
opinion of counsel for such holder, reasonably satisfactory to the Company, to
the effect that (i) such holder meets the requirements of Rule 144(k) or (ii) a
public sale, transfer or assignment of such Securities may be made without
registration.
4.4 Rule 144. Each Purchaser is aware of the adoption of Rule 144
by the SEC promulgated under the Act, which permits limited public resales of
securities acquired in a nonpublic offering, subject to the satisfaction of
certain conditions. Each Purchaser understands that under Rule 144, the
conditions include, among other things, the availability of certain current
public information about the issuer and the resale occurring not less than one
(1) year after the party has purchased and paid for the securities to be sold.
5. Conditions to Closing
13
5.1 Conditions to Each Purchaser's Obligations at the Closing.
The obligation of each Purchaser to purchase the Preferred Shares at the Closing
is subject to the fulfillment to each Purchaser's satisfaction, on or prior to
the Closing Date, of the following conditions, any of which may be waived in
accordance with the provisions of Section 7.3 hereof.
(a) Representations and Warranties, Correct Performance of
Obligations. The representations and warranties made by the Company in Section 3
hereof, when read together with Exhibit B, shall be true and correct when made,
and shall be true and correct in all respects on the Closing Date with the same
force and effect as if they had been made on and as of said date. The Company's
Business and assets shall not have been subject to any Material Adverse Change
prior to the Closing Date. The Company shall have performed in all respects all
obligations and conditions herein required to be performed or observed by it on
or prior to the Closing Date.
(b) Consents and Waivers. The Company shall have obtained
in a timely fashion any and all consents, permits and waivers necessary or
appropriate for consummation of the transactions contemplated by this Agreement.
(c) Board of Directors; Board Committees. Effective on the
Closing (i) the Board of Directors of the Company shall initially be set at five
(5). The holders of Common Stock, voting together as a single class, shall be
entitled to elect two (2) directors. The holders of Series A Preferred Stock,
voting together as a single class, shall be entitled to elect two (2) directors,
which shall include one CMG@Ventures director and one Bertlesmann Ventures
director. The holders of Common Stock and the holders of Preferred Stock voting
together shall elect the remaining director. The members of the Compensation
Committee of the Board of Directors of the Company shall include a CMG@Ventures
director, an outside director and the Chief Executive Officer, and the members
of the Audit Committee of the Board of Directors of the Company shall include a
CMG@Ventures director and two outside directors.
(d) No Material Adverse Change. The business, properties,
assets or condition (financial or otherwise) of the Company and its respective
subsidiaries, if any, shall not have been materially adversely affected since
the date of this Agreement, whether by fire, casualty, act of God or otherwise,
and there shall have been no other changes in the Business, properties, assets,
condition (financial or otherwise), management or prospects of the Company or
any of its respective subsidiaries, if any, that would have a Material Adverse
Change.
(e) Filing of the Restated Articles. The Restated Articles
shall have been filed with the Secretary of State of the State of California.
(f) Rights Agreement. The Company and each Purchaser shall
have executed the Rights Agreement attached hereto as Exhibit D.
(g) Co-Sale Agreement. The Company, each Purchaser and
each Founder (as defined in the Co-Sale Agreement) shall have executed the
Co-Sale Agreement attached hereto as Exhibit E.
(h) Compliance Certificate. The Company shall have
delivered a Certificate, executed by the President of the Company and dated the
Closing Date, certifying to the fulfillment of the conditions specified in
subsections (a) and (b) of this Section 5.1.
14
(i) Opinion of Counsel. The Purchasers shall have received
an opinion from Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, the
Company's counsel, in substantially the form attached hereto as Exhibit F.
5.2 Conditions to Obligations of the Company at the Closing. The
Company's obligation to sell and issue the Preferred Shares at the Closing is
subject to the fulfillment to the satisfaction of the Company on or prior to the
Closing Date of the following conditions, any of which may be waived in
accordance with the provisions of Section 7.3 hereof.
(a) Representations and Warranties Correct. The
representations and warranties made by the Purchasers in Section 4 hereof shall
be true and correct when made, and shall be true and correct on the Closing Date
with the same force and effect as if they had been made on and as of said date.
(b) Conditions Fulfilled. The conditions set forth in
subsections (b), (d), (e), (f) and (g) of Section 5.1 shall have been fulfilled.
(c) Consents, Permits, and Waivers. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement and the Related
Agreements (except for such as may be properly obtained subsequent to the
Closing).
6. Termination.
6.1 Termination by Mutual Written Consent. This Agreement may be
terminated, and the transactions contemplated hereby abandoned, at any time
prior to the Closing by the written agreement of the Company and the Purchasers.
6.2 Termination for Breach. This Agreement may be terminated and
the transactions contemplated hereby may be abandoned at any time before the
Closing (or any date to which the Closing may have been extended by the written
agreement of the parties obligated to perform on such Closing) by any party
obligated to perform on the Closing if the conditions for its benefit set forth
in Sections 5.1 and 5.2, as the case may be, have not been satisfied on or prior
to the Closing and if the conditions for the benefit of the other parties have
been satisfied or waived, and if such performing party shall have given written
notice of termination to the non-performing party.
6.3 Termination for Delay. Unless earlier terminated in
accordance with Section 6.1 or 6.2, this Agreement may be terminated and the
transactions contemplated hereby may be abandoned by the Company or the
Purchasers if the Closing does not occur by January 15, 1999; provided, however,
that the right to terminate this Agreement under this Section 6.3 shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Closing to
occur on or before such date.
6.4 Rights After Termination. Upon termination of this Agreement
under this Section 6, the parties shall be released from all obligations arising
hereunder, except as to any liability for misrepresentations, breach or default
in connection with any warranty, representation, covenant, duty or obligation
given, occurring or arising prior to the date of termination if the
non-breaching party has detrimentally relied thereon.
15
7. Miscellaneous.
7.1 Survival of Representations. The representations, warranties,
covenants and agreements made herein or in any certificates or documents
executed in connection herewith shall survive the execution and delivery hereof
and the closing of the transaction contemplated hereby.
7.2 Parties in Interest. Except as otherwise set forth herein,
all covenants, agreements, representations, warranties and undertakings
contained in this Agreement shall be binding on and shall inure to the benefit
of the respective successors and assigns of the parties hereto (including
transferees of any of the Preferred Shares).
7.3 Amendments and Waivers. Amendments or additions to this
Agreement may be made, agreements with any decision of the Company may be made,
and compliance with any term, covenant, agreement, condition or provision set
forth herein may be omitted or waived (either generally or in a particular
instance and either retroactively or prospectively) upon the written consent of
the Company and the holders of a majority of the Preferred Shares (or Common
Stock issued upon conversion of the Preferred Shares). Prompt notice of any such
amendment or waiver shall be given to any person who did not consent thereto.
This Agreement (including the Schedules and Exhibits annexed hereto, which are
an integral part of this Agreement) constitutes the full and complete agreement
of the parties with respect to the subject matter hereof.
7.4 Notices. All notices, requests, consents, reports and demands
shall be in writing and shall be hand delivered, sent by facsimile or other
electronic medium, or mailed, postage prepaid, to the Company or to the
Purchasers at the address set forth below each party's signature to this
Agreement or to such other address as may be furnished in writing to the other
parties hereto.
7.5 Expenses. Each party hereto will pay its own expenses in
connection with the transactions contemplated hereby; provided, however, that if
and only if the acquisition of the Preferred Shares is consummated, the Company
shall pay all reasonable costs and expenses of the Purchasers in connection with
the investigation, preparation, execution and delivery of this Agreement (and
due diligence related thereto) and the other instruments and documents to be
delivered hereunder and the transactions contemplated hereby and thereby,
including the reasonable fees and disbursements of special counsel to the
Purchasers, not to exceed $10,000 in the aggregate for all such costs and
expenses.
7.6 Counterparts. This Agreement and any Exhibit hereto may be
executed in multiple counterparts, each of which shall constitute an original
but all of which shall constitute but one and the same instrument. One or more
counterparts of this Agreement or any Exhibit hereto may be delivered via
telecopier, with the intention that they shall have the same effect as an
original counterpart hereof.
7.7 Effect of Headings. The article and section headings herein
are for convenience only and shall not affect the construction hereof.
7.8 Adjustments. All provisions of this Agreement shall be
automatically adjusted to reflect any split of capital interests (in the nature
of a stock split), distribution of additional capital interests to the existing
holders of capital interests (in the nature of a stock dividend) or other such
form of recapitalization.
16
7.9 Governing Law. This Agreement shall be deemed a contract made
under the laws of California and together with the rights and obligations of the
parties hereunder, shall be construed under and governed by the laws of
California.
7.10 Entire Agreement. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof and
they supersede, merge and render void every other prior written and/or oral
understanding or agreement among or between the parties hereto.
7.11 Severability. In case any provision of this Agreement shall
be found by a court of law to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Series A
Preferred Stock Purchase Agreement as of the date first written above.
ONELIST, INC.
a California Corporation
Name: Xxxx Xxxxxxxx
Title: Chief Executive Officer and
President
Address: 000 Xxx Xxxxxx Xxxx # 000
Xxxxxxx, XX 00000
Signature Page to Series A Preferred Stock Purchase Agreement
