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EXHIBIT 10.40
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of June 12, 2000, by and between Xxxx.xxx, Inc., a Delaware corporation
(the "Company"), and Xxxxxxxxx.xxx, Inc., a Delaware corporation ("Purchaser").
RECITALS:
WHEREAS, the Company, P-Sub Corporation, the Company's wholly owned
subsidiary (the "Subsidiary") and XxxXxxxx.xxx, Inc., a Delaware corporation
("PetStore") have entered into a certain asset purchase agreement dated June 12,
2000 (the "Asset Purchase Agreement") providing for the sale to the Subsidiary
of certain of the assets of PetStore (the "Transaction"); and
WHEREAS, in addition, the Purchaser has agreed to invest $3,000,000 in
the Company.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein, the parties hereto, intending to be legally bound,
hereby agree as follows.
1. Authorization and Sale of Shares.
1.1 Authorization of the Shares. On or before the Closing Date (as
defined in Section 2.2 below), the Company will have authorized the issuance and
sale of, pursuant to the terms and conditions of this Agreement, 1,430,700
Shares. "SHARES" means the total number of shares of Common Stock of the Company
("Common Stock") and, if applicable as provided below, non-voting Series A
Redeemable Preferred Stock, that are sold to Purchaser under this Agreement. To
the extent that the number of shares of Common Stock issued to PetStore and
reserved for issuance to PetStore warrantholders pursuant to the Asset Purchase
Agreement plus the number of Shares to be issued to Purchaser under this
Agreement represent less than 19.90% of the total voting stock of the Company
outstanding immediately prior to the Closing under the Asset Purchase Agreement,
the Shares issued under this Agreement shall be entirely Common Stock. To the
extent, however, that the sum of the number of shares of Common Stock issued to
PetStore and reserved for issuance to PetStore warrantholders pursuant to the
Asset Purchase Agreement and the number of Shares that would be issued to
Purchaser under this Agreement exceeds 19.90% of the total voting stock of the
Company outstanding immediately prior to the Closing under the Asset Purchase
Agreement, then the number of Shares to be issued under this Agreement which
exceed this percentage shall be non-voting Series A Redeemable Preferred Stock
of the Company have the rights, preferences and privileges set forth in the
Certificate of Designation attached to this Agreement as Exhibit A (the
"Certificate of Designation"). No fractional shares will be issued or sold
pursuant to this Agreement.
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1.2 Sale of the Shares. Subject to the terms and conditions of this
Agreement, the Purchaser agrees to purchase at the Closing, and the Company
agrees to sell and issue to the Purchaser at Closing, the Shares for
consideration consisting solely of the number of Shares multiplied by the Price
(the "Shares Consideration"). The Company will not take any position on any tax
return inconsistent with this position.
2. Closing; Closing Date; Deliveries at Closing.
2.1 Closing. The completion of the purchase and sale of the Shares (the
"Closing") shall be held at the offices of Venture Law Group, 0000 Xxxx Xxxx
Xxxx, Xxxxx Xxxx, XX 00000 at 10:00 a.m. Pacific time, or at such other time as
may be mutually agreed orally or in writing by the parties hereto, on the
Closing Date. The parties agree that the Closing may be effected by facsimile.
2.2 Closing Date. Subject to the terms and conditions of this Agreement,
the Closing (the "Closing Date") shall occur on the day on which the Closing as
defined and set forth in the Asset Purchase Agreement occurs unless otherwise
agreed orally or in writing by the Company and the Purchaser.
2.3 Delivery of the Shares at the Closing. At the Closing, the Company
shall deliver to the Purchaser one or more stock certificates registered in the
name of the Purchaser, or in such nominee name(s) as designated by the Purchaser
in writing, representing the Shares bearing an appropriate legend referring to
the fact that the Shares were sold in reliance upon the exemption from
registration under the Securities Act of 1933, as amended (the "Securities
Act"), provided by Section 4(2) thereof and Rule 505 thereunder.
2.4 Registration Rights. The Company hereby covenants and agrees to
grant to a single transferee of Purchaser piggyback registration rights with
respect to a total of 1,430,700 shares of the Company's Common Stock (including
with respect to shares of Common Stock into which shares of Series A Preferred
Stock issued may subsequently be converted, and as such number may be increased,
decreased or otherwise adjusted in the event of a recapitalization or similar
event with respect to the Company's capital structure, the "Registrable
Shares"). Such piggyback registration rights shall be granted to such transferee
pursuant to an amendment, in the form of Exhibit C attached hereto ("Amendment
No. 1"), to that certain Amended and Restated Investors' Rights Agreement, dated
as of January 18, 2000, between the Company and the signatories thereto
("Investors' Rights Agreement"); which Amendment No. 1, as executed by the Prior
Rights Holders (as defined in Amendment No. 1), shall be delivered to the
Purchaser at the Closing and, upon acquisition by any such transferee, an
executed original thereof shall be delivered to the Company.
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3. Representations and Warranties of the Company.
In order to induce the Purchaser to enter into this Agreement and to
perform its obligations hereunder, the Company hereby represents and warrants to
the Purchaser, at and as of the date of this Agreement and as of the Closing
date, as follows:
3.1 Organization. The Company and Subsidiary are each
corporations duly formed, validly existing and in good standing under the laws
of the State of Delaware.
3.2 Company's and Subsidiary's Capital Stock.
(a) The authorized capital stock of the Company consists
of: (i) 150,000,000 shares of Common Stock, par value $0.00125 per share, of
which 29,224,237 shares are issued and outstanding as of June 7, 2000 and are
fully paid and non-assessable; (ii) 5,000,000 shares of Preferred Stock, par
value $0.00125 per share, of which no shares are issued and outstanding as of
June 7, 2000. The Company has reserved (i) an aggregate of 5,815,328 shares of
Common Stock issuable to employees and consultants pursuant to the Company's
1999 Stock Plan (the "Plan"), of which, as of June 7, 2000, 929,618 shares have
been issued pursuant to restricted stock purchase grants, 2,089,108 shares have
been issued pursuant to the exercise of options granted under the Plan,
2,782,290 shares are issuable upon exercise of outstanding options, and 14,312
shares are eligible for future grant under such Plan, and (ii) an aggregate of
400,000 shares of Common Stock issuable to employees and consultants pursuant to
the Company's 2000 Employee Stock Purchase Plan, of which no shares are issuable
upon exercise of outstanding options as of June 7, 2000 under such plans, and
there are no other options or warrants to purchase shares of Common Stock
outside of such plans. Except as described in this Section 3.2 or as set forth
on Schedule 3.2, there are no outstanding subscriptions, options, rights,
warrants, convertible securities, preemptive rights or other agreements (other
than the Asset Purchase Agreement and this Agreement) or calls, demands or
commitments of any kind relating to the issuance, sale or transfer of any
capital stock or other equity securities of the Company, whether directly or
upon the exercise or conversion of other securities. There are no outstanding
contractual obligations of the Company to repurchase, redeem or otherwise
acquire any shares of the Company's capital stock or to provide funds to, or
make any investment (in the form of a loan, capital contribution or otherwise)
in, any other. For the purposes of this Agreement, "Person" means any
individual, corporation, partnership, limited liability company, joint venture,
association, joint stock company, trust, unincorporated organization or other
entity or organization, including any government or political subdivision or any
agency or instrumentality thereof. Upon issuance, the Shares will be duly and
validly issued, fully paid, non-assessable and free and clear of all liens
(except liens for Taxes not yet due and payable), mortgages, pledges,
imperfections of title, security interests, restrictions, prior assignments,
easements, leases, licenses or sublicenses, options, rights of first refusal or
first offer, and encumbrances (collectively, "Liens") and preemptive rights.
(b) The authorized capital stock of the Subsidiary
consists of 1000 shares of Common Stock, par value $0.001 per share, of which
1000 shares are issued and
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outstanding as of the date of this Agreement and are fully paid and
non-assessable. The Subsidiary is a wholly-owned subsidiary of the Company.
3.3 Authorization, Validity and Enforceability. The Company and
Subsidiary each have full corporate power and authority to execute, deliver and
perform its obligations under this Agreement and each of the other documents in
connection with the Transaction to which it is a party (collectively, the
"Transaction Documents"). The execution, delivery and performance by the Company
and Subsidiary of the Transaction Documents to which it is a party and the
consummation by the Company and Subsidiary of the transactions contemplated by
the Transaction Documents to which it is a party have been duly authorized by
all necessary corporate action on the part of the Company and Subsidiary, and no
other corporate proceedings on the part of the Company and Subsidiary are
necessary to authorize the Transaction Documents to which it is a party or the
transactions contemplated thereby. This Agreement has been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company and each of the other Transaction Documents to which each of the
Company and Subsidiary are a party will, upon due execution and delivery
thereof, constitute the legal, valid and binding obligation of the Company and
Subsidiary respectively, in each case enforceable against the Company or
Subsidiary respectively, in accordance with the terms hereof or thereof, subject
to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditor's rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or equity).
3.4 No Violation or Breach. The execution, delivery and
performance by the Company and Subsidiary of the Transaction Documents to which
it is a party, and the consummation of the transactions contemplated thereby, do
not and will not conflict with, result in a violation or breach of, constitute a
default (or an event which with the giving of notice or the lapse of time or
both would constitute a default) or give rise to any right of termination or
acceleration of any right or obligation of the Company or Subsidiary under, or
result in the creation or imposition of any Lien upon any assets or properties
of the Company or Subsidiary by reason of the terms of, (a) the certificate of
incorporation, bylaws and other charter or organizational documents of the
Company or Subsidiary, (b) any contract, agreement, lease, license, mortgage,
note, bond, debenture, indenture or other instrument or obligation to which the
Company or Subsidiary is a party or by or to which it or its assets or
properties may be bound or subject, (c) any order, writ, judgment, injunction,
award, decree, law, statute, rule or regulation applicable to it or (d) any any
license, permit, order, consent, approval, registration, authorization or
qualification with or under any foreign, federal, state or local law or
governmental or regulatory body (any of the foregoing, a "Permit") of the
Company or Subsidiary.
3.5 Consent and Approvals. No consent, approval, authorization,
license or order of, registration or filing with, or notice to, any federal,
state, local, foreign or other court, administrative agency or commission, other
governmental authority or regulatory body (each, a "Governmental Authority") or
any other Person (such consents, approvals, authorizations, licenses, orders,
registrations, filings or notices referred to collectively herein as "Consents")
is
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necessary to be obtained, made or given by the Company or Subsidiary in
connection with the execution, delivery and performance by the Company and
Subsidiary of this Agreement or any other Transaction Document to which it is a
party or the consummation by the Company and Subsidiary of the transactions
contemplated hereby or thereby. There are no contracts, agreements or other
arrangements by which the Company or Subsidiary or any of its assets or
properties maybe bound that contain (i) any change in control provisions that
will become applicable or inapplicable as a result of the consummation of the
transactions contemplated by this Agreement or any other Transaction Document,
or (ii) any other provisions which will result in a material change of the terms
of such contract, agreement or other arrangement to the Company or Subsidiary
relative to the benefit or terms to the Purchaser as a result of the
consummation of the transactions contemplated by this Agreement or any other
Transaction Document.
3.6 Legal Proceedings. There is no pending or, to the knowledge
of the Company or Subsidiary, threatened action, suit, claim, proceeding or
investigation before any Governmental Authority against or involving the Company
or Subsidiary that has not been disclosed in the Company's public filings with
the Securities and Exchange Commission ("SEC"). Each of the Company and
Subsidiary are not bound by or subject to any order, judgment, injunction, award
or decree of any Governmental Authority or arbitration tribunal.
3.7 Brokers. Except for Xxxxxxx Xxxxx Xxxxxx, Xxxxxx & Xxxxx
Incorporated, no broker, finder or investment banker has been retained or
authorized to act on behalf of the Company or Subsidiary who is or might be
entitled to any brokerage, finder's or other fee, commission or compensation in
connection with the transactions contemplated by this Agreement or any of the
other Transaction Documents.
3.8 SEC Documents; Financial Statements. As of their respective
filing dates (i) each quarterly and other report and registration statement
(without exhibits) filed by the Company with the SEC since January 1, 2000 (the
"Company SEC Documents"), complied in all material respects with the applicable
requirements of the Securities Act of 1933 and the Securities Exchange Act of
1934, as the case may be, and (ii) none of the Company SEC Documents contained
as of the date when made any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading, except to the extent corrected by a Company SEC Document
subsequently which has been filed with the SEC prior to the date of this
Agreement. The financial statements of the Company included in the Company SEC
Documents (the "Company Financial Statements") comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, have been prepared in
conformity with GAAP consistently applied (except as may be indicated in the
notes thereto or, in the case of unaudited financial statements, as permitted by
the rules and regulations of the SEC) and present fairly, in all material
respects, the financial position of the Company at the dates thereof and the
results of its operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal, recurring and certain non-recurring
audit adjustments and the unaudited statements may not include all footnotes
required to comply with GAAP).
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3.9 Absence of Certain Changes or Events. Except as set forth in
Schedule 4.9, since March 31, 2000, the Company has not: (a) declared or paid
any dividend or made any other payment or distribution in respect of its capital
stock; (b) purchased or redeemed, directly or indirectly, any of its capital
stock except for purchases of shares held by employees or consultants in
connection with their termination of employment with the Company; (c) paid,
discharged or satisfied any Lien (other than a Lien then required to be paid,
discharged or satisfied), claim, liability or obligation (whether fixed,
accrued, contingent or otherwise, whether due or to become due), other than a
claim, liability or obligation that is a current liability shown on the balance
sheet of the Company dated as of March 31, 2000 (the "Company Recent Balance
Sheet") or incurred since the date of the Company Recent Balance Sheet in the
ordinary course of business; (d) canceled or compromised any debt or claim, or
waived or released any material right, other than adjustments in the ordinary
course of business which, in the aggregate, are not material; (e) sold,
assigned, transferred, conveyed, leased, pledged, encumbered or otherwise
disposed of any of its assets (real or personal, tangible or intangible) except
in the ordinary course of business; (f) changed accounting methods other than in
accordance with GAAP; (g) made any capital expenditures or additions to
property, plant or equipment or acquired of any other property or assets (other
than raw materials and supplies) at a cost in excess of $15 million in the
aggregate; (h) incurred or assumed any indebtedness for money borrowed or
guaranteed any indebtedness or other obligation of another Person in excess of
$15 million in the aggregate; (i) incurred any liability or obligation other
than certain general and administrative expenses not involving expenditures in
excess of $15 million in the aggregate; (j) agreed or otherwise committed,
whether in writing or otherwise, to do, or taken any action or omitted to take
any action that would result in, any of the foregoing; or (k) the Company has
not suffered a material adverse change in its operations or financial condition
since March 31, 2000 to the date of this Agreement.
3.10 Tax Matters. All Tax Returns (including Tax Returns relating
to Estimated Tax and Information Returns and Reports ) required to be filed by
the Copany in any jurisdiction have been properly prepared and timely filed and
all Taxes upon the Company or upon any of the Company's properties, income or
franchises, which are shown to be due and payable in such Tax returns have been
paid except for such Taxes the payment of which is being contested by the
Company in good faith by appropriate proceedings and with respect to which the
Company has set aside on its books reserves deemed by it to be adequate and has
reflected such reserves in the Company Recent Balance Sheet or except where such
failure would not have a material adverse effect. There are no pending tax
examinations of or tax claims asserted against the Company or any assets or
properties of the Company which could adversely affect the Purchaser.
"Tax" or "Taxes" means any tax, charge, fees, levy, duty, and
other similar governmental assessment, including, without limitation, net
income, alternative or add-on minimum tax, gross income, gross receipts, sales,
use, ad valorem, value added, transfer, franchise, profits, license,
withholding, payroll, employment (including, without limitation, unemployment
insurance assessment), excise, goods and services tax, capital tax, business
tax, severance, stamp, occupation, premium, property, environmental or windfall
profit tax, custom, duty or other tax, whether federal, state, local or foreign,
any governmental fee or other like
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assessment or charge of any kind whatsoever, together with any interest, fine,
penalty, addition to tax or additional amount imposed by any Taxing Authority.
"Tax Returns" mean reports, returns, and statements required to
be supplied to a Taxing Authority in connection with Taxes.
"Taxing Authority" means a Governmental Authority responsible for
the imposition or collection of any Tax.
3.11 Assets and Revenues. The Company is its own "ultimate parent
entity" as such term is defined in 16 C.F.R. Section 801.1(a)(3). The Company,
on a consolidated basis, does not (i) have assets having an aggregate book value
of $100 million or more based on its most recent regularly prepared balance
sheet or (ii) sales of $100 million or more in its most recent fiscal year. The
representation and warranty is made solely for the purpose of determining the
applicability to the transactions contemplated by this Agreement of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended.
3.12 Full Disclosure. Neither this Agreement, nor any
representation or warranty contained in this Agreement, nor any other agreement
(including the Transaction Documents), exhibit, schedule, or certificate being
entered into or delivered pursuant hereto, when read as a whole, contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements contained herein or therein not
misleading.
4. Representations and Warranties of the Purchaser.
In order to induce the Company to enter into this Agreement and to
perform its obligations hereunder, the Purchaser hereby represents and warrants
to the Company, at and as of the date of this Agreement and at and as of the
Closing Date, as follows:
4.1 Organization. The Purchaser is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware.
4.2 Authority. The Purchaser has all requisite corporate power and
authority to enter into this Agreement, to purchase and hold the Shares and to
consummate the other transactions to be consummated by the Purchaser
contemplated by this Agreement. The execution and delivery of this Agreement,
the purchase of the Shares and the consummation of the other transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of the Purchaser. This Agreement has been duly
executed and delivered by the Purchaser, and constitutes the valid and binding
obligation of the Purchaser, enforceable in accordance with its terms, except to
the extent limited by (i) the effect of bankruptcy, insolvency, reorganization,
receivership, conservatorship, arrangement, moratorium, fraudulent transfer or
other laws affecting or relating to the rights of creditors generally, (ii) the
rules governing the availability of specific performance, injunctive relief or
other equitable remedies and general principles of equity, regardless of whether
arising prior to, or after, the date hereof or considered
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in a proceeding in equity or at law, or (iii) the effect of federal and state
securities laws and principles of public policy on rights of indemnity and
contribution.
4.3 No Conflict. The execution and delivery by the Purchaser of this
Agreement does not, and consummation of the transactions contemplated by this
Agreement will not conflict with, or result in any violation or breach of any
provision of, the charter documents of the Purchaser.
4.4 Required Filings and Consents. No Consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to the Purchaser in connection with the
execution and delivery of this Agreement, the purchase of the Shares to be
purchased by the Purchaser or the consummation of the other transactions to be
consummated by the Purchaser contemplated hereby, except for such filings as may
be required under applicable federal, state and foreign securities and antitrust
laws, and such Consents, authorizations, filings, approvals and registrations
which, if not obtained or made, could not be expected to have a material adverse
effect on the Purchaser's ability to consummate the transactions contemplated
pursuant to this Agreement.
4.5 Accredited Investor; Access to Company Information. The Purchaser is
an "accredited investor" as defined in Rule 501(a) under the Securities Act. The
Purchaser believes that it has received all the information it considers
necessary or appropriate for deciding whether to purchase the Shares. The
Purchaser further represents that it has had an opportunity to ask questions and
receive answers from the Company regarding the terms and conditions of the
Shares and the business, properties, prospects and financial condition of the
Company; provided, however, that the foregoing shall not diminish or detract
from the Purchaser's ability to rely upon any of the Company's representations
or warranties. The Purchaser acknowledges that it can bear the economic risk of
its investment, and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of the investment
in the Shares. The Purchaser is not acquiring the Shares with a view towards
distribution in violation of the Securities Act, provided that, the Purchaser
may decide to sell some or all of the shares to a single transferee, as
discussed in Section 4.6.
4.6 Restricted Stock. Purchaser understands that the Shares being
purchased hereunder are "restricted securities" under applicable U.S. federal
and state securities laws and that, pursuant to these laws, Purchaser must hold
the Shares unless and until they are registered with the Securities and Exchange
Commission and qualified by state authorities, or an exemption from such
registration and qualification requirements is available. Purchaser acknowledges
that except as provided pursuant to the terms of the Amendment No. 1 to the
Amended and Restated Investors' Rights Agreement the Company has no obligation
to register or qualify the Shares for resale. Purchaser further acknowledges
that if an exemption from registration or qualification is available, including
without limitation any exemption that may be available pursuant to Rule 144 of
the Securities Act, it may be conditioned on various requirements including, but
not limited to, the time and manner of sale, the holding period for the Shares,
and requirements relating to the Company which are outside of Purchaser's
control, and which the Company is under no obligation and may not be able to
satisfy. Notwithstanding the foregoing, Purchaser has apprised
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the Company, and by execution and delivery of this Agreement, the Company hereby
acknowledges and consents that the Purchaser may decide to sell and assign some
or all the Shares to a single transferee immediately upon receipt by Purchaser
thereof. The Company further covenants to cause the Shares to be reregistered on
its books and records in the name of the transferee upon such sale by Purchaser
thereto. The Company further covenants and agrees that an opinion of counsel, as
required by the legend set forth in Section 4.7 below, shall not be required in
connection with such sale.
4.7 Legends. Purchaser understands that the Shares, and any securities
issued in respect of or exchange for the Shares, may bear one or all of the
following legends:
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A
FORM SATISFACTORY TO THE PURCHASER THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT OF 1933."
(b) Any legend required by the Blue Sky laws of any state to the
extent such laws are applicable to the shares represented by the certificate so
legended.
4.8 Corporate Securities Law. THE SALE OF THE SHARES THAT IS THE
SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA. THE ISSUANCE OF SUCH SECURITIES OR THE
RECEIPT OF ANY PART OF THE ASSETS FOR SUCH SECURITIES PRIOR TO SUCH
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON
SUCH QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.
4.9 No Hedging or Short Sales. Except as otherwise provided for in this
Agreement, Purchaser hereby agrees that from the date of this Agreement and
continuing through the first year anniversary of the date hereof, or such longer
period as required by any U.S. federal or state securities laws, Purchaser shall
not directly or indirectly engage in short sales, derivative transactions or any
similar hedging techniques or strategies involving any of the Shares.
4.10 Brokers or Finders. The Purchaser has not employed any broker,
finder, consultant or other intermediary that would have a valid claim against
the Company for a fee or commission in connection with the transactions
contemplated hereby.
5. Conditions to the Obligations of the Purchaser. The obligations of the
Purchaser pursuant to Sections 1 and 2 of this Agreement are subject to the
fulfillment on or prior to the Closing
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Date of the following conditions, each of which may be waived in whole or part
by the Purchaser:
5.1 Representations and Warranties. The representations and warranties
made by the Company pursuant to this Agreement shall have been true and correct
when made, and shall be true and correct on the Closing Date.
5.2 Covenants. The Company shall have performed all obligations and
conditions herein required to be performed or observed by it on or prior to the
Closing Date.
5.3 Closing Certificate. The President or Chief Financial Officer of the
Company shall deliver to the Purchaser at the Closing a certificate certifying
that the conditions specified in Sections 5.1 and 5.2 have been fulfilled, that
there shall have been no material adverse change in the business, operations,
properties, assets or financial condition of the Company since the date of this
Agreement and that the representations and warranties are true and correct as of
the Closing Date.
5.4 No Injunction or Litigation. As of the Closing Date, there shall not
be any claim or judgment of any nature or type threatened, pending or made by or
before any Governmental Entity that questions or challenges the lawfulness of
the transactions contemplated by this Agreement under any law or regulation or
seeks to delay, restrain or prevent such transactions.
5.5 Government Approvals. All Consents, approvals or authorizations of,
and declarations, filings or registrations with, all Governmental Entities
required for the consummation of the transactions contemplated in Sections 1 and
2 of this Agreement shall have been obtained or made on terms reasonably
satisfactory to the Purchaser and shall be in full force and effect.
5.6 Legal Opinion. The Company shall have delivered to the Purchaser an
opinion of counsel, dated the Closing Date, substantially in the form of Exhibit
B hereto, except for the addition of standard qualifications of counsel.
5.7 Nasdaq Listing. The Company shall have filed a Notification For
Listing of Additional Shares with Nasdaq covering the Shares.
5.8 Asset Purchase Agreement. The Company, the Subsidiary and PetStore
shall have closed the transactions contemplated by the Asset Purchase Agreement.
5.9 Xxxx-Xxxxx Xxxxxx Act. All applicable waiting periods under the HSR
Act shall have expired or early termination shall have been granted by both the
Federal Trade Commission and the Department of Justice.
5.10 Certificate of Designation. If applicable in accordance with
Section 1.1, the Certificate of Designation shall have been filed with the
Secretary of State of the State of Delaware.
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5.11 Amendment to Investors' Rights Agreement. The Company and the
requisite holders of the Company's Common Stock shall have executed Amendment
No. 1, and an executed original of the same shall have been delivered to the
Purchaser.
6. Conditions to the Company's Obligations. The obligation of the Company
pursuant to Sections 1 and 2 of this Agreement are subject to the fulfillment on
or prior to the Closing Date of each of the following conditions, each of which
may be waived in whole or part by the Company:
6.1 Representations and Warranties. The representations and warranties
of the Purchaser pursuant to this Agreement shall have been true and correct
when made, and shall be true and correct on the Closing Date.
6.2 Covenants. The Purchaser shall have performed all obligations and
conditions herein required to be performed or observed by the Purchaser on or
prior to the Closing Date.
6.3 No Injunction or Litigation. As of the Closing Date, there shall not
be any claim or judgment of any nature or type threatened, pending or made by or
before any Governmental Entity that questions or challenges the lawfulness of
the transactions contemplated by this Agreement under any law or regulation or
seeks to delay, restrain or prevent such transactions.
6.4 Government Approvals. All Consents, approvals or authorizations of,
and declarations, filings or registrations with, all Governmental Entities
required for the consummation of the transactions contemplated in Sections 1 and
2 of this Agreement shall have been obtained or made on terms reasonably
satisfactory to the Company and shall be in full force and effect.
6.5 Asset Purchase Agreement. The Company, Subsidiary and PetStore shall
have closed the transactions contemplated by the Asset Purchase Agreement.
6.6 Xxxx Xxxxx Xxxxxx Act. All applicable waiting periods under the HSR
Act shall have expired or early termination shall have been granted by both the
Federal Trade Commission and the Department of Justice.
6.7 Certificate of Designation. If applicable in accordance with Section
1.1, the Certificate of Designation shall have been filed with the Secretary of
State of the State of Delaware.
6.8 Amendment to Investors' Rights Agreement. The Company and the
requisite holders of the Company's Common Stock shall have executed Amendment
No. 1, and an executed original of the same shall have been delivered to
Purchaser.
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7. Certain Covenants.
7.1 [*] In the event the Company [*] to [*] under this Agreement, the
Company shall include a [*] in its [*] and [*] to send to [*] in connection with
its next [*] of [*] of its [*] to [*] of [*] of the [*] of the [*] the Company's
[*]. The Company shall [*] such [*] to its [*] and shall [*] held by it [*] of
such [*].
7.2 Nondisclosure. The Company and the Purchaser agree to protect the
Confidential Information (as defined below) of the other party from
misappropriation and unauthorized use or disclosure, and at a minimum, will take
precautions at least as great as those taken to protect its own confidential
information of a similar nature. Without limiting the foregoing, the Receiving
Party (as defined below) will: (a) use such Confidential Information solely for
the purposes for which it has been disclosed; and (b) disclose such Confidential
Information only to those of its employees, agents, consultants, and others who
have a need to know the same for the purpose of performing this Agreement and
who are informed of and agree to a duty of nondisclosure. The Receiving Party
may also disclose Confidential Information of the Disclosing Party (as defined
below) to the extent necessary to comply with applicable law or legal process,
provided that the Receiving Party uses reasonable efforts to give the Disclosing
Party prompt advance notice thereof. Upon request of the other party, each party
shall return to the other all materials, in any medium, which contain, embody,
reflect or reference all or any part of any Confidential Information of the
other party.
For the purposes of this Section 7.2, the following terms have the
following meanings:
"CONFIDENTIAL INFORMATION" means non-public information and know-how of the
Disclosing Party which, by the nature of the circumstances surrounding
disclosure, ought in good faith to be treated as proprietary and/or
confidential, or which has been or is designated as proprietary and/or
confidential. Confidential Information does not include information that the
Receiving Party can show: (a) was known by the Receiving Party prior to
disclosure thereof by the Disclosing Party; (b) was in or entered the public
domain through no fault of the Receiving Party; (c) is independently developed
by the Receiving Party without reference to any Confidential Information of the
Disclosing Party; or (d) came into the possession of the Receiving Party in the
ordinary course of business from sources not owing a duty of confidentiality to
the Disclosing Party with respect to that information.
"DISCLOSING PARTY" means a party that discloses Confidential Information to the
other party in connection with this Agreement.
"RECEIVING PARTY" means a party that receives Confidential Information from the
other party in connection with this Agreement.
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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7.3 Board Representation. In connection with the Asset Purchase
Agreement and the agreement of Purchaser to the transfer of certain material
agreements to the Company from PetStore, the Company hereby acknowledges that as
of the date of this Agreement (i) the authorized size of the Board of Directors
of the Company is five members, (ii) the members of the Board of Directors are
Xxxxx X. Xxxxxxxxxx, Xxxx X. Xxxxxxxx, Xxxx X. Xxxxxx and Xxxx X. Xxxxxx, (iii)
there is one vacancy on the Company's Board of Directors, and (iv) the Company's
By-laws authorize Board members to fill vacancies on the Board of Directors
without shareholder approval. The Company hereby agrees that on the Closing
Date, the Company's Board of Directors will fill the vacancy on the Board with
the Purchaser's designee who shall be Michela English or such other reasonable
candidate (who shall be at the level of senior vice president of Purchaser or
higher) designated by the Purchaser ("Purchaser Designee") and that the
Purchaser Designee shall have all the rights associated with being a Board
member, including but not limited to, the right to vote at meetings of the
Board; and that at the Company's next annual meeting of shareholders, the
Purchaser Designee shall be included in the Company's slate of nominees for
election to the Board at the meeting of shareholders. The Company will also
obtain prior to Closing a voting agreement reasonably satisfactory to Purchaser
and effective as of the Closing from a majority of the holders of its voting
stock (determined based on the number of shares of voting stock outstanding
after Closing) under which such holders will agree to vote all shares of the
Company's voting stock held by them at each annual and special meeting at which
directors of the Company are to be elected to appoint the Purchaser Designee to
the Company's Board of Directors. The voting agreement will terminate on the
earlier of (i) the date on which the Tenancy and Promotion Agreement entered
into between the Company and Purchaser as of the same date as this Agreement is
terminated, (ii) the date on which Purchaser has transferred, sold or otherwise
disposed of more than twenty-five percent (25%) of the shares of Xxxx.xxx Common
Stock originally acquired by it from Xxxxxxxx.xxx, Inc. upon distribution, if
any, of those shares of Xxxx.xxx Common Stock received by Xxxxxxxx.xxx under the
Asset Purchase Agreement, excluding for the purposes of this calculation any
shares Purchaser has pledged to Imperial Creditcorp, Inc.under a guarantee
agreement, or (iii) the consummation of the sale of all or substantially all of
the Company's assets or a merger, reorganization or other recapitalization or
transaction or series of related transactions in which the Company's
stockholders prior to such transaction hold less than 50% of the voting power.
7.4 Confidentiality; Publicity. Neither the Company nor the
Purchaser shall issue any press release or other public announcement regarding,
or otherwise disclose, this Agreement or the transactions contemplated herein,
or make any filing of this Agreement or other agreements relating to the
transactions contemplated herein, without the written consent of the other,
which consent will not be unreasonably withheld; provided, however, that if a
party is required by applicable law to provide public disclosure of this
Agreement or the transactions contemplated herein, such party shall use all
reasonable efforts to coordinate the disclosure with the other party before
issuance, including, but not limited to the submission to the Securities
Exchange Commission (and any other applicable regulatory or judicial authority)
of an application for confidential treatment of certain terms (which terms shall
be agreed upon by the Purchaser and the Company) of this Agreement. Each party
shall provide to the other for review a copy of any proposed disclosure of this
Agreement or its terms and any application for confidential treatment at least
five (5) business days before any such disclosure or application is made and to
comply
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with all reasonable requests from the other party to minimize the extent and
scope of any such disclosure.
7.5 Covenants to Satisfy Conditions. Each of the Company and the
Purchaser shall use commercially reasonable efforts to satisfy or cause to be
satisfied all of the conditions precedent to the other party's obligations that
are set forth in Section 5 or 6, as the case may be.
7.6 Further Assurances. Each party agrees from time to time to do and
perform such other and future acts and execute and deliver any and all such
other instruments as may be required by law or reasonably requested by the other
party to establish, maintain or protect the rights and remedies of the
requesting party or to carry out and effect the intent and purpose of this
Agreement.
8. Miscellaneous.
8.1 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California applicable to contracts
executed in and to be performed in that state.
8.2 Survival. The representations and warranties made herein shall
survive until the first anniversary of the Closing. The covenants and agreements
made herein shall survive the Closing in accordance with their terms.
8.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto. It is expressly acknowledged that the Purchaser may assign its
rights hereunder to any affiliate (as such term is defined in Rule 144 of the
Securities Act) thereof provided such affiliates agrees in writing to be bound
by the terms and conditions of this Agreement.
8.4 Entire Agreement. This Agreement and the other documents referred to
herein constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof.
8.5 Amendment; Waiver. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Purchaser.
8.6 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any holder of any of the Shares, upon any breach or
default of the Company under this Agreement, shall impair any such right, power
or remedy of such holder nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any holder of any
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breach or default under this Agreement, or any waiver on the part of any holder
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies either under this Agreement, or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.
8.7 Notices and Other Communications. Every notice or other
communication required or contemplated by this Agreement by either party shall
be delivered either by (i) personal delivery, (ii) postage prepaid return
receipt requested registered or certified mail or the equivalent of registered
or certified mail under the laws of the country where mailed, (iii) nationally
recognized overnight courier, such as Federal Express or UPS, or (iv) facsimile
with confirmation of successful transmission and with a confirmation copy sent
simultaneously by postage prepaid, return receipt requested, registered or
certified mail, in each case addressed to the Company or the Purchaser as the
case may be at the following address:
To the Company: Xxxx.xxx, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Chief Executive Officer
Facsimile: (000) 000-0000
With copies to: Venture Law Group
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx
Facsimile: 000-000-0000
To the Purchaser: Xxxxxxxxx.xxx, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Michela English
Facsimile: 000-000-0000
With a copy to: Xxxxxxxxx Xxxxxxx, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxx, Esq.
Facsimile: 212-801-6400
or at such other address as the intended recipient previously shall have
designated by written notice to the other party (with copies to counsel as may
be indicated on the signature page). Notice by registered or certified mail
shall be effective on the date it is officially recorded as delivered to the
intended recipient by return receipt or equivalent, and in the absence of such
record of delivery, the effective date shall be the fifth business day after it
was deposited in the mail. All notices delivered in person or sent by courier
shall be effective on the date of personal
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delivery; notices delivered by facsimile with confirmation of successful
transmission and with simultaneous confirmation copy by registered or certified
mail shall be effective on the date sent. Notice not given in writing shall be
effective only if acknowledged in writing by a duly authorized representative of
the party to whom it was given.
8.8 Specific Performance. Each of the parties hereto acknowledges and
agrees that the other party hereto would be damaged irreparably in the event any
of the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the parties
hereto agrees the other party hereto will be entitled to an injunction to
prevent breaches of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions of this Agreement in any competent
court having jurisdiction over the parties, in addition to any other remedy to
which they might be entitled at law or in equity. In any such action
specifically to enforce any such term or provision of this Agreement, the
parties hereby waive any claim or defense therein that an adequate remedy at law
or in damages exists.
8.9 Severability of this Agreement. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby. Furthermore the court shall have the power to replace the
invalid or unenforceable part or provision with a provision that accomplishes,
to the extent possible, the original business purpose of such part or provision
in a valid and enforceable manner. Such replacement shall apply only with
respect to the particular jurisdiction in which the adjudication is made.
8.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument. Execution and delivery of this Agreement by
exchange of facsimile copies bearing the facsimile signature of a party hereto
shall constitute a valid and binding execution and delivery of this Agreement by
such party. Such facsimile copies shall constitute enforceable original
documents.
8.11 No Third-Party Rights. Nothing in this Agreement is intended, nor
shall be construed, to confer upon any Person or entity other than the parties
and their respective successors and assigns any right or remedy under or by
reason of this Agreement, except as expressly provided in this Agreement;
provided, that the Company hereby confirms and agrees that the representations
and warranties made by the Company herein are made as well for the benefit of,
and may be relied on by, the single transferee to whom Purchaser may decide to
sell and assign some or all of the Shares, as discussed in Section 4.6.
8.12 No Agency, Etc. None of the provisions of this Agreement shall be
construed to mean that any party is appointed or is in any way authorized to act
as an agent of any other party. This Agreement does not constitute, create, give
effect to, or otherwise recognize a joint venture, partnership, or formal
business organization of any kind.
8.13 Construction of Agreement. This Agreement has been negotiated by
the parties and their attorneys, and the language hereof shall not be construed
for or against any party. The
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titles and headings herein are for reference purposes only and shall not in any
manner limit the construction of this Agreement, which shall be considered as a
whole.
8.14 Termination. This Agreement may be terminated as follows:
(a) The Purchaser may terminate this Agreement in the event that
the conditions set forth in Section 5 have not been satisfied or waived on or
before July 31, 2000 through no fault of the Purchaser;
(b) The Company may terminate this Agreement in the event that
the conditions set forth in Section 6 have not been satisfied or waived on or
before July 31, 2000 through no fault of the Company;
No termination pursuant to this Section 8.14 shall relieve any party of
liability for breach of this Agreement prior to such termination.
Either the Company or the Purchaser may terminate this Agreement if the
other (a) has a receiver or administrative receiver appointed for it or over its
undertakings or assets, (b) passes a resolution for winding up or a court of
competent jurisdiction makes an order to that effect and such order is not
discharged within ninety (90) days, (c) enters into any voluntary arrangement
with its creditors for the benefit of its creditors, (d) becomes subject to an
administration order, or (e) ceases to carry on its business.
8.15 Attorneys' Fees. If any action or proceeding shall be commenced to
enforce this Agreement or any right arising in connection with this Agreement,
the prevailing party in such action or proceeding shall be entitled to recover
from the other party, the reasonable attorneys' fees, costs and expenses
incurred by such prevailing party in connection with such action or proceeding
or negotiation to avoid such action or proceeding.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have executed this Securities Purchase Agreement
as of the date first set forth above.
XXXX.XXX, INC.
By: /s/ Xxxx Xxxxx
-------------------------------------
Name: Xxxx Xxxxx
-----------------------------------
Title: Chief Financial Officer
----------------------------------
XXXXXXXXX.XXX, INC.
By: /s/ Michela English
-------------------------------------
Name: Michela English
-----------------------------------
Title: President and COO
----------------------------------
