LIVEWORLD, INC. PURCHASE AGREEMENT
Exhibit 4.5
LIVEWORLD, INC.
PURCHASE AGREEMENT
PURCHASE AGREEMENT
This Purchase Agreement (this “Agreement”) is made and entered into as of September
11, 2006, by and between LiveWorld, Inc., a Delaware corporation (the “Company”), and each
of the purchasers listed on Exhibit A attached hereto (collectively, the
“Purchasers” and individually, a “Purchaser”).
RECITALS
WHEREAS, the Company desires to sell to the Purchasers, and the Purchasers desire to purchase
from the Company, shares of Company Common Stock (“Common Stock”) on the terms and
conditions set forth in this Agreement; and
NOW, THEREFORE, in consideration of the foregoing, the mutual promises hereinafter set forth,
and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. AGREEMENT TO PURCHASE AND SELL STOCK.
(a) Authorization. The Company’s Board of Directors has authorized the issuance,
pursuant to the terms and conditions of this Agreement of Common Stock (the “Shares”) to
the Purchasers in the amounts and on the terms and conditions specified herein.
(b) Agreement to Purchase and Sell shares of Common Stock. Subject to the terms and
conditions of this Agreement, each Purchaser severally agrees to purchase, and the Company agrees
to sell and issue to each Purchaser, at the Closing (as defined below), that number of shares of
Common Stock set forth opposite the appropriate Purchaser’s name on Exhibit A attached
hereto. The purchase price of each Share shall be $0.544.
2. CLOSING. Subject to the satisfaction of closing conditions, the purchase and sale
of the Common Stock shall take place remotely via the exchange of documents and signatures, at such
time or times as the Company and the Purchasers mutually agree upon (which time and place are
referred to in this Agreement as the “Closing”). At each Closing, the Company shall
authorize its transfer agent to issue to each Purchaser participating in such Closing, against
delivery of payment for the Shares, one or more stock certificates registered in the name of each
Purchaser, representing the number of Shares set forth opposite such Purchaser’s name on
Exhibit A hereto, and bearing the legend set forth in Section 4(i) below. Closing
documents may be delivered by facsimile with original signature pages sent by overnight courier.
The date of a Closing is referred to herein as the “Closing Date”. The final Closing shall occur
no later than fourteen (14) days after the initial Closing. At the final Closing, J. Xxxxxx
Xxxxxxxx U.S.A., Inc. shall have the right, but shall not be obligated, to purchase Shares having
an aggregate purchase price equal to $2,000,000 less the aggregate purchase price of all of the
Shares sold pursuant to this Agreement in prior Closings and to
other Purchasers at the final Closing. Each Purchaser whose name appears on Exhibit A
may become a party to this Agreement and the Investors’ Rights Agreement (as defined below) by
affixing such Purchaser’s signature page hereto and thereto without further action, and Exhibit
A may be accordingly revised to indicate the date upon which the sale to such Purchaser or
Purchaser(s) occurred.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and
warrants to each Purchaser that the statements in this Section 3 are true and correct as of the
date hereof and as of the Closing Date, except as set forth in the disclosure letter delivered to
the Purchasers concurrently herewith (the “Disclosure Letter”):
(a) Organization and Authority. The Company is a corporation duly organized and
validly existing under, and by virtue of, the laws of Delaware and is in good standing under such
laws. The Company has all requisite legal right, power and authority (corporate or other) to own
or hold under lease and operate its properties and assets, to carry on its business as presently
conducted and as proposed to be conducted, to execute and deliver this Agreement and the Investors’
Rights Agreement to be entered into between the Company and the Purchasers at the Closing in the
form attached hereto as Exhibit B (the “Investors’ Rights Agreement”), to issue the
Shares hereunder and to carry out and perform its obligations under the terms of this Agreement and
the Investors’ Rights Agreement. The Company is duly qualified or licensed and in good standing as
a corporation duly authorized to do business in each state or jurisdiction in which the nature of
its activities or the character of the properties it owns or leases makes such qualification or
licensing necessary. The Company does not presently own or control, directly or indirectly, any
interest in any other corporation, association, partnership, joint venture, limited liability
company, trust or estate, or organization.
(b) Due Authorization. All corporate actions on the part of the Company, its
directors and stockholders necessary for the authorization, execution, and delivery of this
Agreement and the Investors’ Rights Agreement, and the performance of all obligations of the
Company under this Agreement and the Investors’ Rights’ Agreement and the authorization, sale,
issuance, and delivery of all of the Shares being sold under this Agreement have been taken. This
Agreement and the Investors’ Rights Agreement have been duly executed by the Company and this
Agreement and the Investors’ Rights Agreement constitute the legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with their respective terms, except
(a) as may be limited by (i) applicable bankruptcy, insolvency, reorganization or others laws of
general application relating to or affecting the enforcement of creditors’ rights generally and
(ii) the effect of rules of law governing the availability of equitable remedies and (b) as rights
to indemnity or contribution may be limited under federal or state securities laws or by principles
of public policy thereunder.
(c) Capitalization. The authorized, issued and outstanding capital stock of the
Company is as set forth in the “Capitalization” section of the Disclosure Letter. All of the
issued and outstanding shares of capital stock have been duly authorized and validly issued, are
fully paid and nonassessable and have been issued in compliance with applicable federal and state
securities laws. Except as described in the “Capitalization” section of the Disclosure Letter,
there are no options, warrants, conversion privileges or other rights (including preemptive rights)
or agreements presently outstanding to purchase or otherwise acquire any authorized but unissued
shares of capital stock or
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other securities of the Company. There are presently a sufficient number of shares of Common
Stock authorized and reserved for issuance upon the exercise or conversion of all of the
outstanding options, warrants, convertible securities and other rights to purchase shares of Common
Stock.
(d) Valid Issuance of Stock.
(i) Valid Issuance. The Shares to be issued pursuant to this Agreement will be, upon
payment therefor by the Purchasers in accordance with this Agreement, duly authorized, validly
issued, fully paid and non-assessable, with no personal liability attaching to the ownership
thereof, and free of any liens or encumbrances. The issuance of the Shares is not subject to any
preemptive rights or rights of first refusal, except such rights as have been satisfied or waived.
(ii) Compliance with Securities Laws. Subject to the accuracy of the representations
made by the Purchasers in Section 4 hereof, the Shares will be issued to the Purchasers in
compliance with applicable exemptions from (i) the registration and prospectus delivery
requirements of the Securities Act of 1933, as amended (the “Securities Act”) and (ii) the
registration and qualification requirements of all applicable securities laws of the states of the
United States.
(e) Financial Statements. The historical financial statements referred to under the
“Financial Statements” section of the Disclosure Letter (the “Financial Statements”),
including the latest balance sheet contained in the Financial Statements (the “Balance
Sheet”; the date of such Balance Sheet being the “Balance Sheet Date”), are complete
and correct and present fairly in all material respects the financial condition and results of
operations of the Company, as at the dates and for the periods indicated, and have been prepared in
accordance with U.S. generally accepted accounting principles consistently applied
(“GAAP”).
(f) Absence of Undisclosed Liabilities. The Company does not have any liability
(contingent or otherwise), except for (a) liabilities shown on the Balance Sheet, (b) liabilities
that have arisen since the Balance Sheet Date in the ordinary course of business and that are
similar in nature and amount to the liabilities that arose during the comparable period of time in
the immediately preceding fiscal period and (c) contractual and other liabilities incurred in the
ordinary course of business that are not required by GAAP to be reflected on a balance sheet.
(g) Tax Returns, Payments and Elections. The Company has filed or obtained timely
extensions for all tax returns and reports required by law to have been filed by the Company in any
jurisdiction and has never been audited by any state or federal taxing authority. These returns
and reports are, and when so filed were, true and correct in all material respects. The Company
has timely paid all taxes and other assessments due, except those being contested by it in good
faith and with respect to which adequate reserves have been established, all of which are listed in
the Disclosure Letter. The Company does not know of any additional assessment or proposed
assessment for any fiscal year, and no material controversy in respect of additional Federal or
state income taxes is pending or to the knowledge of the Company is threatened. In the opinion of
the Company, all tax liabilities (including taxes for all open years and for its current fiscal
period) are adequately provided for on the books of the Company. The Company has properly withheld
or collected from each payment made to each of its employees the amount of all taxes, including,
but
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not limited to, Federal income taxes, Federal Insurance Contribution Act taxes and Federal
Unemployment Tax Act taxes required to be withheld or collected therefrom and has paid the same to
the proper tax receiving officers or authorized depositories. To the Company’s knowledge, there is
no tax lien imposed by any governmental body outstanding against the assets, properties or business
of the Company. Neither the Company nor any of its stockholders have filed an election pursuant to
Section 1362 of the Internal Revenue Code of 1986, as amended (the “Code”), that the
Company be taxed as an S corporation or consent pursuant to Section 341(f) of the Code relating to
collapsible corporations.
(h) Title. The Company owns no real property. The Company has good and marketable
title to its tangible personal properties and assets, and has good title to, and enjoys peaceful
and undisturbed possession of, all its leasehold interests, in each case subject to no mortgage,
pledge, lien, lease, encumbrance or charge, other than (i) the lien of current taxes not yet due
and payable and (ii) possible minor liens and encumbrances which do not in any case materially
detract from the value of the property subject thereto or materially impair the operations of the
Company, when taken as a whole. All leases pertaining to leasehold interests of the Company are
valid and subsisting and in full force and effect and the Company is not in default in any material
respect in the performance or observance of its obligations under any provisions thereof. The
Company’s possession of such leased property has not been disturbed nor has any claim been asserted
against the Company adverse to its rights in such leasehold interests.
(i) Intellectual Property. The Company owns and possesses or is licensed under all
patents, patent applications, licenses, trademarks, service marks, trade names, brand names,
inventions, processes, formulae, and copyrights (“Intellectual Property”) necessary for the
operation of its business as now conducted and as proposed to be conducted with no known
infringement of or conflict with the rights of others, and the Disclosure Letter includes a true
and complete list of all Intellectual Property registered by the Company and all service marks,
trade names, and brand names currently used by the Company. The Company has not received any
communications alleging that the Company has violated or, by conducting its business as presently
conducted, would violate any of the Intellectual Property or other proprietary rights of any other
person or entity. To the Company’s knowledge, no third party has infringed or violated any of the
Intellectual Property owned by the Company. The Company is not party to any outstanding material
options, licenses, or other agreements granting rights in or to any of the Intellectual Property
owned by the Company except for options, licenses, or other agreements entered into in the ordinary
course of business on commercially reasonable terms. The Company is not bound by or a party to any
material options, licenses, or other material agreements of any kind with respect to the
Intellectual Property owned by any other person or entity except for licenses to “shrink wrap”
software products of third parties that are generally and readily commercially available
(“Shrink Wrap Software”) and as set forth in the Disclosure Letter. Except for licenses to
Shrink Wrap Software or as otherwise set forth in the Disclosure Letter, the Company is not
obligated to make any material payments by way of royalties, fees or otherwise to any other person
or entity in respect of its use of Intellectual Property in connection with the conduct of its
business or otherwise. No claim is pending or, to the Company’s knowledge, threatened to the
effect that any Intellectual Property owned by the Company is invalid or unenforceable by the
Company, and, to the Company’s knowledge, there is no basis for any such claim.
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The Company has used its best efforts to insure that all confidential information of the
Company has at all times been maintained in confidence and that such confidential information has
not been disclosed by the Company other than to those employees, consultants and third parties
having a reasonable need to know of the contents thereof and pursuant to written agreements
obligating such persons and entities to maintain the confidentiality thereof. All of the Company’s
present and former directors, officers, employees, consultants and independent contractors, who
have either contributed to the development of or utilized any of the Company’s confidential
information or Intellectual Property have executed a nondisclosure, noncompetition and developments
agreement with the Company in the form of Exhibit C hereto and all of such agreements are
presently in full force and effect. All Intellectual Property owned by the Company has been (i)
acquired pursuant to a written assignment agreement from a person or entity having, to the
Company’s knowledge, full, effective and exclusive ownership thereof, (ii) developed or created
internally by employees of the Company within the scope of their employment, or (iii) developed or
created by independent contractors that have been party to a written, effective “work-for-hire”
arrangement in favor of the Company conveying to the Company full, effective and exclusive
ownership of all tangible and intangible rights therein.
The Company is not aware that any of its employees 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 with the use of his or
her best efforts to promote the interests of the Company or that would conflict with the Company’s
business as proposed to be conducted. Neither the execution nor delivery of this Agreement, nor
the carrying on of the Company’s business as proposed, does or 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 or, to the knowledge of the Company, has any such breach or default occurred.
(j) Contracts. All material contracts, agreements, and instruments to which the
Company is a party are valid, binding, and in full force and effect in all material respects,
without any material breach by the Company or, to the Company’s knowledge, any other party thereto.
(k) Compliance with Other Instruments. The Company is not in violation or breach of
any term of its certificate of incorporation or by-laws and is not in material default, violation
or breach, individually or in the aggregate, of any term or provision of any mortgage, indenture,
contract, agreement, instrument, judgment or decree to which it is a party or by which any of its
properties or leasehold interests may be bound or affected, the effect of which would be to have,
individually or in the aggregate, a material adverse effect on the Company’s business. The Company
is not in violation of any order, statute, rule or regulation applicable to the Company, the
violation of which would have a material adverse effect on the Company’s business. None of the
execution, delivery and performance of and compliance with this Agreement and the Investors’ Rights
Agreement, the issuance and sale of the Shares, or the consummation of the transactions
contemplated hereto or by the Investors’ Rights Agreement has resulted or will result in any such
default, violation or breach, or be in conflict with, or constitute a default under, or result in
the creation of, any mortgage, pledge, lien, encumbrance or charge upon any of the properties,
leasehold
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interests or assets of the Company, the effect of which would be to have, individually or in
the aggregate, a material adverse effect on the Company’s business, properties or leasehold
interests.
(l) Governmental and Other Consents. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, or notice to, any federal,
state or local governmental authority or other person or entity (including any trustee or holder of
any indebtedness, securities or other obligations of the Company) on the part of the Company is
required for or in connection with the valid execution and delivery by the Company of this
Agreement or the Investors’ Rights Agreement or the offer, sale or issuance of the Shares to the
Purchasers, or the consummation of the other transactions contemplated by this Agreement or the
Investors’ Rights Agreement, or the performance by the Company of its obligations under this
Agreement or the Investors’ Rights Agreement, except (i) such filings as have been made prior to
the date hereof, (ii) the filing of any notice required by Section 25102(f) or 25102.1 of the
California Corporations Code, and (iii) the filing of a notice on Form D with Securities and
Exchange Commission, which filings will be accomplished in a timely manner, as required by such
laws.
(m) Litigation. There is no action, suit, proceeding, claim, arbitration or
investigation pending or, to the Company’s knowledge, currently threatened against the Company or
any of its properties or leasehold interests in any court or before any arbitrator of any kind or
before or by any governmental body and no basis therefore is known to the Company. To the
Company’s knowledge, there is no action, suit, proceeding, claim, arbitration or investigation
pending or threatened against any officer, director or employee of the Company in any court or
before any arbitrator of any kind or before or by any governmental body in connection with such
officer’s, director’s or employee’s relationship with, or actions taken on behalf of, the Company.
The Company has not admitted in writing its inability to pay its debts generally as they become
due, filed or consented to the filing against it of a petition in bankruptcy or a petition to take
advantage of any insolvency act, made any assignment for the benefit of creditors, consented to the
appointment of a receiver for itself or for any part of its property, or had a petition in
bankruptcy filed against it, been adjudicated a bankrupt, or filed a petition or answer seeking
reorganization or arrangement under the federal bankruptcy laws or any other law or statute of the
United States of America or any other jurisdiction. To the Company’s knowledge, no person employed
or to be employed by the Company worked on projects, ideas or inventions for the benefit of the
Company while employed by a third party. To the Company’s knowledge, no person employed by or
affiliated, or currently anticipated to be employed or affiliated, with the Company has employed or
proposes to employ any trade secret or any information or documentation proprietary to any former
employer and no person employed by or affiliated with the Company has violated any confidential
relationship which such person may have had with any third party, in connection with the
development, manufacture or sale of any product or proposed product or the development or sale of
any service or proposed service of the Company, and the Company has no reason to believe there will
be any such employment, affiliation or violation.
(n) Labor Agreements and Actions. The Company is not bound by or subject to any
contract, commitment or arrangement with any labor union, and to the Company’s best knowledge, no
labor union has requested, sought or attempted to represent any employees, representatives or
agents of the Company. There is no strike or other labor dispute involving the
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Company pending nor, to the Company’s best knowledge, threatened, nor is the Company aware of
any labor organization activity involving its employees.
(o) Licenses. The Company owns, possesses or has the right to use all governmental
permits, franchises, licenses or other authorizations (collectively, “Licenses”) that are
necessary to conduct its business as now conducted and as proposed to be conducted. Each such
License is in full force and effect, and the Company has fulfilled and performed its obligations
with respect thereto in all material respects. No default in the performance or observance by the
Company of its obligations hereunder has occurred (and, so far as is known to the Company no other
event has occurred) that permits, or after notice or lapse of time or both would permit, the
revocation or termination of any such License.
(p) Transactions with Affiliates. Except as indicated in the Disclosure Letter, no
Affiliate or employee of the Company is a party to any material contract, agreement or other
arrangement providing for the employment of, furnishing of services by, loaning of money to, rental
of real or personal property from or otherwise requiring payments to any such person or firm. None
of the officers, directors or key employees of the Company or their Affiliates owns, directly or
indirectly, individually or collectively, a material interest in any entity that is a competitor,
customer or supplier of the Company. For purposes of this Agreement, the term “Affiliate” shall
mean, with respect to a specified person or entity, (i) a person or entity that, directly or
indirectly through one or more intermediaries, controls, is controlled by or is under common
control with, the specified person or entity, (ii) any person or entity that is an officer,
director, partner, manager, employee, or trustee of, or serves in a similar capacity with respect
to, the specified person or entity or of which the specified person or entity is an officer,
partner, manager or trustee, or with respect to which the specified person or entity serves in a
similar capacity, (iii) any person or entity that, directly or indirectly, has an ownership
interest in the specified person or entity, (iv) any person or entity in which the specified person
or entity has an ownership interest, (v) the spouse, issue, or parent of the specified person or
entity, and (vi) any person or entity that would constitute an Affiliate of any such person or
entity described in clauses (i) through (v) above.
(q) Absence of Certain Developments. Since the Balance Sheet Date, there has been no
(i) event, occurrence, development or state of circumstances or facts that, individually or in the
aggregate, has had or could reasonably be expected to have, a material adverse effect on the
business, operations, assets, properties, earnings, condition (financial or other) or reasonably
foreseeable prospects of the Company, (ii) declaration, setting aside or payment of any dividend or
other distribution with respect to the capital stock of the Company, (iii) material loss,
destruction or damage to any property of the Company, whether or not insured, (iv) acceleration or
prepayment of any indebtedness for borrowed money or the refunding of any such indebtedness, (v)
material change in the Company’s personnel or the terms and conditions of their employment, (vi)
waiver of any valuable right, (vii) loan or extension of credit to any officer or employee of the
Company, (viii) acquisition or disposition of any assets (or any contract or arrangement therefor),
(ix) change in any material tax election, or (x) change in any method of accounting or accounting
practice by the Company.
(r) Health of Key Executives. To the knowledge of the Company and/or Xxxxx Xxxxxxxx,
Xxxxx Xxxxxxxx is in good health and to the knowledge of the Company and/or Xxxxx
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Xxxxxxxx there exists no fact or circumstance that could reasonably be expected to cause a
commercial life insurer to fail to issue a key-person life and disability insurance policy with
respect to him at commercially reasonable rates.
(s) Disclosure. Neither this Agreement nor the Investors’ Rights Agreement (including
the Disclosure Letter and all exhibits and schedules to this Agreement and the Investors’ Rights
Agreement) nor any other certificate or document delivered by the Company or any officer, director
or agent thereof to any Purchaser in connection with this Agreement or the Investors’ Rights
Agreement contains any untrue statement of a material fact or omits to state a material fact
necessary, in light of the statements made therein, not misleading.
4. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF THE PURCHASER. Each
Purchaser hereby represents and warrants to the Company severally and not jointly, and agrees that:
(a) Organization Good Standing and Qualification. The Purchaser has all corporate,
membership or partnership power and authority required to enter into this Agreement and to
consummate the transactions contemplated hereby and thereby.
(b) Authorization. The execution of this Agreement has been duly authorized by all
necessary corporate, membership or partnership action on the part of the Purchaser. This Agreement
constitutes the Purchaser’s legal, valid and binding obligation, enforceable in accordance with its
terms, except (a) as may be limited by (i) applicable bankruptcy, insolvency, reorganization or
other laws of general application relating to or affecting the enforcement of creditors’ rights
generally and (ii) the effect of rules of law governing the availability of equitable remedies and
(b) as rights to indemnity or contribution may be limited under federal or state securities laws or
by principles of public policy thereunder.
(c) Purchase for Own Account. The Shares are being acquired for investment for the
Purchaser’s own account, not as a nominee or agent, and not with a view to the public resale or
distribution thereof within the meaning of the Securities Act. The Purchaser also represents that
it has not been formed for the specific purpose of acquiring the Shares.
(d) Investment Experience. The Purchaser understands that the purchase of the Shares
involves substantial risk. The Purchaser has experience as an investor in securities of companies
and acknowledges that it is able to fend for itself, can bear the economic risk of its investment
in the shares of Common Stock and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of this investment in the shares of
Common Stock and protecting its own interests in connection with this investment.
(e) Accredited Purchaser Status. The Purchaser is an “accredited investor” within the
meaning of Regulation D promulgated under the Securities Act.
(f) Reliance Upon Purchaser’s Representations. The Purchaser understands that the
issuance and sale of the shares of Common Stock to it will not be registered under the Securities
Act on the ground that such issuance and sale will be exempt from registration under the Securities
Act
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pursuant to Section 4(2) thereof, and that the Company’s reliance on such exemption is based
on each Purchaser’s representations set forth herein.
(g) Receipt of Information. The Purchaser has had an opportunity to ask questions and
receive answers from the Company regarding the terms and conditions of the issuance and sale of the
shares of Common Stock and the business, properties, prospects and financial condition of the
Company and to obtain any additional information requested and has received and considered all
information it deems relevant to make an informed decision to purchase the shares of Common Stock.
(h) Restricted Shares. The Purchaser will not sell, offer to sell, assign, pledge,
hypothecate or otherwise transfer any of the Shares unless (i) pursuant to an effective
registration statement under the Securities Act, (ii) such holder provides the Company with an
opinion of counsel, in a generally acceptable form, to the effect that a public sale, assignment or
transfer of the Shares may be made without registration under the Securities Act, or (iii) such
holder provides the Company with reasonable assurances that the Shares can be sold pursuant to Rule
144 under the Securities Act without any restriction as to the number of securities acquired as of
a particular date that can be immediately sold. Notwithstanding anything to the contrary contained
in the Agreement, the Purchaser may transfer (without restriction and without the need for an
opinion of counsel) Shares to any of its Affiliates provided that such Affiliate is an “accredited
investor” under Regulation D and such Affiliate agrees to be bound by the terms and conditions of
the Agreement.
(i) Legends. The Purchaser agrees that the certificates for the Common Stock shall
bear the following legend:
“The securities represented by this certificate have not been registered
under the Securities Act of 1933 or with any state securities commission, and
may not be transferred or disposed of by the holder in the absence of a
registration statement which is effective under the Securities Act of 1933
and applicable state laws and rules, or, unless, immediately prior to the
time set for transfer, such transfer may be effected without violation of the
Securities Act of 1933 and other applicable state laws and rules.”
In addition, the Purchaser agrees that the Company may place stop transfer orders with its
transfer agents with respect to such certificates. The legend set forth above shall be removed
from the certificates for the Common Stock, (i) following any sale of such Common Stock or Common
Stock pursuant to Rule 144 or any effective registration statement, or (ii) if such Common Stock is
eligible for sale under Rule 144(k) (and the holder of such Common Stock has submitted a written
request for removal of the legend indicating that the holder has complied with the applicable
provisions of Rule 144), or (iii) if such legend is not required under applicable requirements of
the Securities Act (including judicial interpretations and pronouncements issued by the Staff of
the Securities and Exchange Commission) (and the holder of such Common Stock has submitted a
written request for removal of the legend indicating that the holder has complied with such
judicial interpretation or pronouncement).
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5. CONDITIONS TO THE PURCHASERS’ OBLIGATIONS AT CLOSING. The obligations of the
Purchasers under Section 2(a) of this Agreement are subject to the fulfillment, on or before the
Closing, of each of the following conditions, any of which may be waived in whole or in part by a
Purchaser with respect to its own purchase of securities:
(a) Representations and Warranties True. Each of the representations and warranties
of the Company contained in this Agreement, the Investors’ Rights Agreement and in any other
agreement, instrument or certification delivered in connection with the transactions contemplated
hereby shall be true and correct on and as of the date hereof and on and as of the date of the
Closing, with the same effect as though such representations and warranties had been made as of the
Closing.
(b) Performance. The Company shall have performed and complied with all agreements,
obligations and conditions contained in this Agreement that are required to be performed or
complied with by it on or before the Closing and shall have obtained all approvals, consents and
qualifications necessary or appropriate for consummation of the transactions contemplated by this
Agreement that need to be obtained prior to the Closing and all such consents, permits and waivers
shall be final, subsisting and in full force and effect on the Closing Date, and shall not be
subject to any further proceedings or appeals or any conditions subsequent not approved by the
Purchasers. The terms, provisions and conditions of all such consents, permits and waivers shall
be reasonably satisfactory to the Purchasers. Certified copies or other appropriate evidence of
all such consents, permits and waivers, in form, scope and substance satisfactory to the Purchasers
and their counsel, shall have been delivered to the Purchasers and their counsel.
(c) Compliance Certificate. The Company will have delivered to the Purchasers at the
Closing a certificate signed on its behalf by its Chief Executive Officer or Chief Financial
Officer certifying that the conditions specified in Sections 5(a) and 5(b) hereof have been
fulfilled.
(d) Good Standing Certificates. The Company shall have delivered to the Purchasers a
certificate of the Secretary of State of the State of Delaware, dated as of a date within five days
of the date of the Closing, with respect to the good standing of the Company.
(e) Secretary’s Certificate. The Company shall have delivered to the Purchasers a
certificate of the Company executed by the Company’s Secretary attaching and certifying to the
truth and correctness of (1) the Certificate of Incorporation, (2) the Bylaws and (3) the
resolutions adopted by the Company’s Board of Directors in connection with the transactions
contemplated by this Agreement.
(f) Legal Purchase. At the Closing, the purchase of the Shares by the Purchasers
hereunder shall be legally permitted by all laws and regulations to which the Purchasers or the
Company are subject.
(g) Investors’ Rights Agreement. Each of the Purchasers and the Company shall have
executed the Investors’ Rights Agreement in the form attached hereto as Exhibit B.
(h) Proceedings Satisfactory. All corporate and other proceedings taken in connection
with the authorization, issuance and sale of the Shares and the consummation of the transactions
contemplated by this Agreement and the Investors’ Rights Agreement and all
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documents and papers relating thereto shall be reasonably satisfactory in form, scope and
substance to the Purchasers and their counsel, and the Purchasers and their counsel shall have
received copies (executed or certified as may be appropriate) of all such documents and papers as
they may reasonably request in connection therewith.
(i) Legal Opinion. The Purchasers shall have received an opinion, dated the Closing
Date, addressed to the Purchasers, from Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, PC, counsel to
the Company, substantially in the form attached hereto as Exhibit D.
6. CONDITIONS TO THE COMPANY’S OBLIGATIONS AT CLOSING. The obligations of the Company
to the Purchasers under this Agreement are subject to the fulfillment or waiver, on or before the
Closing, of each of the following conditions:
(a) Representations and Warranties True. The representations and warranties of the
Purchasers contained in Section 4 shall be true and correct in all material respects on and as of
the date hereof and on and as of the date of the Closing with the same effect as though such
representations and warranties had been made as of the Closing.
(b) Performance. The Purchasers shall have performed and complied in all material
respects with all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing and shall have obtained
all approvals, consents and qualifications necessary or appropriate for consummation of the
transaction contemplated by the Agreement that need to be obtained prior to the Closing.
(c) Securities Exemptions. The offer and sale of the shares of Common Stock to the
Purchasers pursuant to this Agreement shall be exempt from the registration requirements of the
Securities Act and the registration and/or qualification requirements of all applicable state
securities laws.
(d) Payment of Purchase Price. The Purchasers shall have delivered to the Company by
wire transfer funds in full payment of the purchase price as specified in Section 1(b).
(e) Legal Purchase. At the Closing, the purchase of the Shares by the Purchasers
hereunder shall be legally permitted by all laws and regulations to which the Purchasers or the
Company are subject.
(f) Investors’ Rights Agreement. Each of the Purchasers and the Company shall have
executed the Investors’ Rights Agreement in the form attached hereto as Exhibit B.
7. COVENANTS.
The Company hereby agrees to perform and comply with the following covenants:
(a) Books and Records; Fiscal Year. The Company shall (a) keep proper books of record
and account in which full, true and correct entries will be made of all its business dealings and
transactions in accordance with GAAP applied on a consistent basis and (b) maintain a system of
accounting established and administered in accordance with GAAP, and properly set aside on its
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books from its earnings for each fiscal year all proper reserves, accruals and provisions
that, in accordance with GAAP, should be set aside from such earnings in connection with its
business, including, without limitation, if applicable, provisions for depreciation, obsolescence
and/or amortization and accruals for taxes for such period.
(b) Private Offering. Neither the Company nor any other person acting on its behalf
will take any action (including, without limitation, any offer or sale of securities of the Company
under circumstances that might require the integration of such offer and/or sale with the offer and
sale of the Shares under the Securities Act) that would subject the sale and/or issuance of the
Shares to Section 5 of the Securities Act or to the registration or qualification requirements of
any securities or blue sky law of any applicable jurisdiction.
8. MISCELLANEOUS.
(a) Successors and Assigns. The terms and conditions of this Agreement will inure to
the benefit of and be binding upon the respective successors, assigns, heirs, executors and
administrators of the parties hereto. The provisions of this Agreement are intended to be for the
benefit of all holders from time to time of the Shares and shall be enforceable by any such holder,
whether or not an express assignment to such holder of rights under this Agreement has been made.
The Company may not assign its rights or obligations under this Agreement.
(b) Governing Law. This Agreement will be governed by and construed under the
internal laws of the State of Delaware, without reference to principles of conflict of laws or
choice of laws.
(c) Counterparts. This Agreement may be executed in two or more counterparts, each of
which will be deemed an original, but all of which together will constitute one and the same
instrument.
(d) Headings. The headings and captions used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this Agreement. All
references in this Agreement to sections, paragraphs, exhibits and schedules will, unless otherwise
provided, refer to sections and paragraphs hereof and exhibits and schedules attached hereto, all
of which exhibits and schedules are incorporated herein by this reference.
(e) Notices. Any notice required or permitted under this Agreement shall be given in
writing, shall be effective when received, and shall in any event be deemed received and
effectively given upon the earlier of (i) when delivered personally, (ii) three (3) business days
after deposit with the United States Post Office, by registered or certified mail, postage prepaid,
(iii) one (1) business day after deposit with a nationally recognized courier service such as
Federal Express for next business day delivery under circumstances in which such service guarantees
next business day delivery, or (iv) one (1) business day after facsimile with copy delivered by
registered or certified mail, in any case, postage prepaid and addressed to the party to be
notified at the address indicated for such party on the signature page hereof or at such other
address as the Purchaser or the Company may designate by giving at least ten (10) days advance
written notice pursuant to this
Section 8(e).
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(f) Amendments and Waivers. 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 holders of
Shares representing at least a majority of the total Shares issued under this Agreement; provided,
however, that no such waiver or amendment shall reduce the above percentage of Shares, the holders
of which are required to consent to any waiver or amendment, without the consent of the holders of
all of the Shares. Any amendment or waiver effected in accordance with this Section 8(f) will be
binding upon the Purchasers, the Company and their respective successors and assigns.
(g) Severability. Any provision of this Agreement that shall be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or enforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(h) Entire Agreement. This Agreement and the Investors’ Rights Agreement, together
with all exhibits and schedules hereto and thereto, constitutes the entire agreement and
understanding of the parties with respect to the subject matter hereof and supersedes any and all
prior negotiations, correspondence, agreements, understandings, duties or obligations between the
parties with respect to the subject matter hereof.
(i) Further Assurances. From and after the date of this Agreement upon the request of
the Company or the Purchasers, the Company and the Purchasers will execute and deliver such
instruments, documents or other writings, and take such other actions, as may be reasonably
necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of
this Agreement.
(j) Meaning of Include and Including. Whenever in this Agreement the word “include”
or “including” is used, it shall be deemed to mean “include, without limitation” or “including,
without limitation,” as the case may be, and the language following “include” or “including” shall
not be deemed to set forth an exhaustive list.
(k) Fees, Costs and Expenses. The Company and each Purchaser shall bear its own
expenses in connection with this Agreement and the transactions contemplated by this Agreement.
(l) Survival. The representations, warranties and covenants of the Company and the
Purchasers in this Agreement and the Investors’ Rights Agreement and in any other agreement,
instrument or certification delivered in connection with the transactions contemplated hereby shall
be deemed to be material and to have been relied upon by the Purchasers, shall not be limited or
otherwise affected by any investigation made by the Purchasers and shall survive the Closing of the
transactions contemplated hereby.
(m) No Third Party Rights. This Agreement is intended solely for the benefit of the
parties hereto and their respective successors and assigns and is not intended to confer any
benefits upon, or create any rights in favor of, any person (including, without limitation, any
stockholder or debt holder of the Company) other than the parties hereto.
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(n) Finder’s Fees.
(i) The Company (A) represents and warrants that, except as may set forth in the
Disclosure
Letter, it has retained no finder or broker in connection with the transactions contemplated by
this Agreement and (B) hereby agrees to indemnify and to hold the Purchasers harmless of and from
any liability for commission or compensation in the nature of a finder’s fee to any broker or other
person or firm (and the costs and expenses of defending against such liability or asserted
liability) for which the Company, or any of its employees or representatives, are responsible.
(ii) Each Purchaser severally represents and warrants that such Purchaser has retained no
finder or broker in connection with the transactions contemplated by this Agreement. Each
Purchaser hereby agrees, severally and not jointly with the other Purchasers, to indemnify and to
hold the Company harmless of and from any liability for any commission or compensation in the
nature of a finder’s fee to any broker or other person or firm (and the costs and expenses of
defending against such liability or asserted liability) for which such Purchaser, or any of its
employees or representatives, is responsible.
(o) Delays or Omissions. It is agreed that no delay or omission to exercise any
right, power or remedy accruing to the Purchasers upon any breach or default of the Company under
this Agreement shall impair any such right, power or remedy, nor shall it be construed to be a
waiver of any such breach or default, or any 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. It is further agreed
that any waiver, permit, consent or approval of any kind or character by the Purchasers of any
breach or default under this Agreement, or any waiver by the Purchasers of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to the extent
specifically set forth in writing and that all remedies, either under this Agreement, or by law or
otherwise afforded to the Purchasers, shall be cumulative and not alternative.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year
first above written.
| LIVEWORLD, INC. | ||||||
| By: Name: |
/s/ Xxxxx X. Xxxxxxxx
|
|||||
| Title: | President and Chief Executive Officer | |||||
[PURCHASER SIGNATURE PAGES TO FOLLOW]
[SIGNATURE PAGE TO PURCHASE AGREEMENT]
SIGNATURE PAGE TO
DATED AS
OF SEPTEMBER 11, 2006
BY AND AMONG
LIVEWORLD, INC.
AND EACH PURCHASER NAMED THEREIN
The undersigned hereby executes and delivers to LiveWorld, Inc. the Purchase Agreement (the
“Agreement”) to which this Signature Page is attached effective as of the date of the
Agreement, which Agreement and Signature Page, together with all counterparts of such Agreement and
signature pages of the other Purchasers named in such Agreement, shall constitute one and the same
document in accordance with the terms of such Agreement.
| For Individuals: | ||||||||||
| Name (please print): | ||||||||||
| Signature: | ||||||||||
| For Entities: | ||||||||||
| Entity name: | ||||||||||
| By: | ||||||||||
| Title: | ||||||||||
[SIGNATURE PAGE TO PURCHASE AGREEMENT]
Exhibit A
Schedule of Purchasers
| Aggregate Purchase | Shares of | |||||||
| Name of Purchaser | Price | Common Stock | ||||||
J. Xxxxxx Xxxxxxxx U.S.A., Inc. |
$ | 1,325,002.31 | 2,435,666 | |||||
The Xxxxxxx Family Trust Dated
September 25, 1998 |
$ | 199,999.97 | 367,647 | |||||
Presidio Group LLC |
$ | 99,999.72 | 183,823 | |||||
South Fork Ventures, LLC |
$ | 99,999.72 | 183,823 | |||||
Abundance Partners LP |
$ | 74,999.65 | 137,867 | |||||
Xxxx Xxxxx Xxxxxx |
$ | 49,999.59 | 91,911 | |||||
Xxxx X. Xxxxxx |
$ | 49,999.59 | 91,911 | |||||
Xxxx C. K. Wuh |
$ | 49,999.59 | 91,911 | |||||
Xxxxxx Xxx |
$ | 49,999.59 | 91,911 | |||||
TOTAL |
$ | 1,999,999.73 | 3,676,470 | |||||
Exhibit B
Form of Investors’ Rights Agreement
Exhibit C
Form of Confidential Information and Invention Assignment Agreement
Exhibit D
Form of Legal Opinion
