Exhibit 2.1
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EXECUTION COPY
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STOCK PURCHASE AGREEMENT
dated as of December 22, 2000
among
CentrPort, Inc.,
Modem Media, Inc.
and
the Investors named herein
Confidential treatment has been requested for portions of this Exhibit 2.1. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as [XXXXX]. A complete version of this Exhibit
has been filed with Securities and Exchange Commission.
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TABLE OF CONTENTS
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ARTICLE I SALE OF SERIES A PREFERRED STOCK; CLOSING............................................... 1
1.1 Authorization........................................................................... 1
1.2 Purchase and Sale....................................................................... 1
1.3 Closing ................................................................................ 2
1.4 Deferred Payments....................................................................... 2
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................... 3
2.1 Organization and Qualification.......................................................... 3
2.2 Authority............................................................................... 3
2.3 Capital Stock........................................................................... 4
2.4 Subsidiaries............................................................................ 4
2.5 No Conflicts............................................................................ 4
2.6 Financial Statements; Books and Records................................................. 5
2.7 Absence of Changes...................................................................... 5
2.8 No Undisclosed Liabilities.............................................................. 6
2.9 Taxes .................................................................................. 7
2.10 Legal Proceedings....................................................................... 7
2.11 Compliance with Laws and Orders......................................................... 7
2.12 Benefit Plans........................................................................... 8
2.13 Real Property........................................................................... 9
2.14 Tangible Personal Property.............................................................. 9
2.15 Intellectual Property Rights............................................................ 9
2.16 Contracts............................................................................... 10
2.17 Licenses ............................................................................... 11
2.18 Insurance............................................................................... 11
2.19 Affiliate Transactions.................................................................. 11
2.20 Proprietary Information and Inventions Agreements....................................... 12
2.21 Registration Rights..................................................................... 12
2.22 Employees; Labor Relations.............................................................. 12
2.23 Environmental Matters................................................................... 12
2.24 Brokers ................................................................................ 13
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2.25 Accounts Receivable..................................................................... 13
2.26 Bank Accounts; Powers of Attorney; Proxies.............................................. 13
2.27 Exemption from Registration; Restrictions on Offer and Sale of Same or
Similar Securities...................................................................... 13
2.28 Disclosure.............................................................................. 14
2.29 Conversion of LLC....................................................................... 14
2.30 Authority............................................................................... 14
2.31 Ownership............................................................................... 14
2.32 No Preemptive Rights.................................................................... 15
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE INVESTORS........................................ 15
3.1 Organization; Power and Authority....................................................... 15
3.2 Purchase for Investment................................................................. 15
3.3 Brokers ................................................................................ 16
ARTICLE IV COVENANTS OF THE COMPANY............................................................... 16
4.1 Financial Statements and Reports........................................................ 16
(a) Books and Records; Projections................................................. 16
(b) Quarterly Statements........................................................... 16
(c) Annual Statements.............................................................. 17
(d) Annual Budget.................................................................. 17
(e) Additional Information......................................................... 17
4.2 Reservation of Shares................................................................... 17
4.3 Notice and Cure......................................................................... 17
4.4 Proprietary Information and Inventions Agreements....................................... 18
4.5 Stock Options........................................................................... 18
ARTICLE V DELIVERIES AT CLOSING................................................................... 19
5.1 Officers' Certificates.................................................................. 19
5.2 Opinion of Counsel...................................................................... 19
5.3 Good Standing Certificates.............................................................. 19
5.4 Other Agreements........................................................................ 19
5.5 Delivery of Certificates................................................................ 19
5.6 Employment Agreements................................................................... 19
5.7 Director's and Officer's Insurance...................................................... 19
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5.8 Agreements with Modem Media............................................................. 19
5.9 Stock Option Plan and Option Grants..................................................... 20
5.10 Consents and Approvals.................................................................. 20
ARTICLE VI INDEMNIFICATION........................................................................ 20
6.1 Indemnification......................................................................... 20
6.2 Third Party Claims...................................................................... 20
6.3 Limitations on Indemnification.......................................................... 22
ARTICLE VII DEFINITIONS........................................................................... 22
7.1 Definitions............................................................................. 22
ARTICLE VIII MISCELLANEOUS........................................................................ 28
8.1 Notices................................................................................. 28
8.2 Entire Agreement........................................................................ 29
8.3 Expenses................................................................................ 29
8.4 Survival................................................................................ 29
8.5 Further Assurances; Post-Closing Cooperation............................................ 30
8.6 Waiver.................................................................................. 30
8.7 Amendment............................................................................... 30
8.8 Right to Rely........................................................................... 30
8.9 Third Party Beneficiaries............................................................... 30
8.10 No Assignment; Binding Effect........................................................... 30
8.11 Headings................................................................................ 30
8.12 Invalid Provisions...................................................................... 30
8.13 Governing Law........................................................................... 31
8.14 Construction............................................................................ 31
8.15 Counterparts............................................................................ 31
8.16 Limited Recourse........................................................................ 31
8.17 Xxxxxx Xxxxxx Capital Partners Acting on Own Behalf, Etc................................ 31
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STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of December 22,
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2000, among CentrPort, Inc., a Delaware corporation (together with its
predecessor in interest CentrPort, LLC, the "Company"), Modem Media, Inc., a
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Delaware corporation ("Modem Media), and the investors listed on Exhibit A (the
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"Schedule of Investors") attached hereto (each an "Investor" and collectively,
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the "Investors").
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WHEREAS, each Investor desires to purchase from the Company, and the
Company desires to sell to each Investor, the number of shares of Series A
Preferred Stock, par value $0.01 per share, of the Company (the "Series A
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Preferred Stock") specified opposite such Investor's name on the Schedule of
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Investors;
WHEREAS, each Investor's contribution of capital to the Company is
part of a series of related transactions, including contributions of capital by
Modem Media, Inc., CLLC Investments I, Inc. and Xxxxxx Xxxxxxxx (together with
CLLC Investments II, Inc. the "Transferors"), and the merger of CLLC Investments
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II, Inc. into the Company, all of which together are intended to qualify under
Section 351 of the Internal Revenue Code of 1986, as amended, as transfers to a
corporation controlled by the Transferors;
WHEREAS, each Investor desires to purchase from Modem Media, and Modem
Media desires to sell to each Investor, the number of shares of Series A
Preferred Stock, par value $0.01 per share, of the Company specified opposite
such Investor's name on the Schedule of Investors; and
WHEREAS, capitalized terms used and not otherwise defined herein have
the meanings set forth in Section 7.1.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
SALE OF SERIES A PREFERRED STOCK; CLOSING
1.1 Authorization. The Company shall adopt and file with the
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Secretary of State of the State of Delaware on or before the Closing a
Certificate of Designation of the Company in the form attached to this Agreement
as Exhibit B setting forth the rights, privileges and preferences of the Series
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A Preferred Stock.
1.2 Purchase and Sale. On the terms and subject to the conditions of
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this Agreement, at the Closing, (a) the Company shall issue and sell to each
Investor, and each Investor will purchase from the Company, the number of shares
of Series A Preferred Stock specified opposite such Investor's name on the
Schedule of Investors, and (b) Modem Media will sell to each Investor, and each
Investor will purchase from Modem Media, the number of shares of Series A
Preferred Stock specified opposite such Investor's name on the Schedule of
Investors, in each case at a purchase price of $0.600096 per share (the
"Purchase Price").
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Notwithstanding the foregoing, the number of Shares sold to the Investors is
based on a valuation of the Company that assumes 78,712,404 shares of Common
Stock issued and outstanding, as of the Closing, on a fully-diluted basis,
giving effect to issuances of up to 11,410,000 options, 1,841,604 warrants and
49,687,828 shares of Preferred Stock. If it is later determined that there are
more shares outstanding as of the Closing (the "Excess Shares"), the Company
shall issue to each Investor, for no additional consideration, an additional
number of shares of Series A Preferred Stock so that such Investor has the same
percentage ownership of the Company that such Investor would have had if the
Excess Shares were not outstanding. The shares of Series A Preferred Stock to be
purchased by the Investors pursuant to this Agreement are hereinafter referred
to, collectively, as the "Shares."
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1.3 Closing. The Closing will take place at the offices of Xxxxxx,
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Xxxxx & Bockius LLP, 101 Park Avenue, New York, New York, or at such other place
as the Investors, Modem Media and the Company shall mutually agree, at 10:00
A.M. local time, on the Closing Date. At the Closing, each Investor * Other than
Trident Capital, which will purchase its shares by January 3, 2001. shall pay
75% (50% in the case of payment to Modem Media) of the aggregate Purchase Price
by wire transfer of funds to such accounts as the Company and Modem Media, as
the case may be, may reasonably direct by written notice delivered to each
Investor by the Company and Modem Media at least three (3) Business Days before
the Closing Date in the aggregate amount for the Shares specified opposite such
Investor's name on the Schedule of Investors. Simultaneously, (a) the Company
will issue to each Investor * the number of Shares designated in the Schedule of
Investors to be purchased by each Investor from the Company, free and clear of
all Liens, by delivering to each Investor certificates, registered in the name
of the Investor or any designee thereof, evidencing the Shares to be purchased
by such Investor from the Company as designated in the Schedule of Investors;
and (b) Modem Media will sell to each Investor * the number of Shares designated
in the Schedule of Investors to be purchased by each Investor from Modem Media,
free and clear of all Liens, by delivering to each Investor certificates,
registered in the name of such Investor or any designee thereof, evidencing the
Shares to be purchased by such Investor from Modem Media as designated in the
Schedule of Investors. At the Closing, there shall also be delivered to the
Company, each Investor and Modem Media the opinions, certificates and other
documents and instruments to be delivered under Article V.
1.4 Deferred Payments. The Investors shall pay, by wire transfer,
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the remaining 25% of the aggregate Purchase Price payable to the Company and the
remaining 50% of the aggregate Purchase Price payable to Modem Media on the
first anniversary of the Closing, unless there has been a Change of Control of
Modem Media on or prior to the first anniversary of the Closing, in which case
the Investors will remain obligated to make such payments only if (1) the VAR
Agreement continues to be in full force and effect (unless it has been validly
terminated by Modem Media or the acquiring entity pursuant to the terms of the
VAR Agreement), (2) the Company maintains its preferred status under the VAR
Agreement and (3) the acquiring entity has no competing technology performing
functions similar to those provided by the Company. Notwithstanding the
foregoing, in no event shall the Investors have to pay the remaining 25% of the
aggregate Purchase Price payable to the Company if the Company has not executed
an
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* Other than Trident Capital, which will purchase its shares by January 3, 2001.
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agreement with [XXXXXXX] in a form reasonably acceptable to the Investors by
[XXXXX]. Without limiting the generality of the foregoing, the Investors agree
that such agreement with [XXXXXX] will be in a form reasonably acceptable to the
Investors if (i) it provides that the Company will realize Revenue of at least $
[XXXX] over the initial [XXXXX] term of the agreement and provides the Company
with the ability to earn $[XXXX] upon the achievement of certain targets over
the [XXXXXXX] term of the agreement based on the sale of additional products and
services identified in the agreement, (ii) [XXXXXXXXXX] (iii) it contains other
customary terms reasonably acceptable to the Investors. The Investors also shall
pay Modem Media, by wire transfer, as additional purchase price, an additional
$700,000 by March 31, 2002 if the Company has Revenue of at least $7.5 million
from Modem Media clients under the VAR Agreement for the year ended December 31,
2001.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
(A) Except as set forth in the Disclosure Schedule (in which each
disclosure is made specifically with respect to only the corresponding section
of this Article II(A)), the Company and Modem Media hereby jointly and severally
represent and warrant to the Investors as follows:
2.1 Organization and Qualification. The Company is a corporation
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duly organized, validly existing and in good standing under the Laws of its
state of incorporation. The Company is duly qualified, licensed or admitted to
do business in each jurisdiction in which the ownership, use or leasing of its
Assets and Properties, or the conduct or nature of its business, makes such
qualification, licensing or admission necessary.
2.2 Authority. The Company has full power and authority to execute and
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deliver this Agreement and the Operative Agreements, to perform its obligations
hereunder and thereunder, to consummate the transactions contemplated hereby and
thereby, to conduct its business as now conducted and to own, use and lease its
Assets and Properties. The execution, delivery and performance by the Company
of this Agreement and the Operative Agreements by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary action by the Board of
Directors of the Company, and no other action on the part of the Company or its
stockholders is necessary to authorize the execution, delivery and performance
of this Agreement and the Operative Agreements and the consummation by the
Company of the transactions contemplated hereby and thereby. This Agreement and
the Operative Agreements have been duly and validly executed and delivered by
the Company and, assuming the due authorization, execution and
[XXXXX]= Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect to
the omitted portions.
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delivery of this Agreement and the Operative Agreements by the other parties
thereto, constitute legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws relating
to the enforcement of creditors' rights generally and by general principles of
equity.
2.3 Capital Stock. The authorized capital stock of the Company
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consists only of 100,000,000 shares of Common Stock and 50,000,000 shares of
Series A Preferred Stock, of which 15,812,972 shares of Common Stock and
13,027,028 shares of Series A Preferred Stock are issued and outstanding as of
the date of this Agreement. The issued and outstanding shares of capital stock
of the Company have been, and upon issuance, the Shares will have been, issued
in compliance with all applicable federal, state and foreign securities Laws.
Except for the shares of Common Stock issuable upon exercise of the Warrants and
the shares of Common Stock issuable upon conversion of the Series A Preferred
Stock and Options for up to 11,410,000 shares of Common Stock issuable pursuant
to the Stock Option Plan, no shares of Common Stock, Series A Preferred Stock or
other capital stock are reserved for issuance. No shares of capital stock are
held in treasury. All of the outstanding shares of capital stock of the
Company are owned of record as set forth in Section 2.3 of the Disclosure
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Schedule. There are no outstanding Options or agreements, arrangements or
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understandings to issue Options with respect to the Company and (ii) there are
no preemptive rights or agreements, arrangements or understandings to issue
preemptive rights, rights of first refusal or similar rights with respect to the
issuance or sale of the Company's capital stock. On the Closing Date, the
delivery of the certificate or certificates evidencing the Shares to the
Investors will transfer to each Investor good and valid title to the Shares, in
each case free and clear of all Liens, and the Shares will have been duly
authorized, validly issued, fully paid and nonassessable. The Company has taken
all necessary corporate action to reserve the full number of shares of Common
Stock issuable upon conversion of the Series A Preferred Stock. The shares of
Common Stock issuable upon conversion of the Series A Preferred Stock, when
issued upon conversion, will be duly authorized, validly issued, fully paid and
nonassessable. Except for the Stockholders Agreement, the Company is not a
party or subject to any agreement or understanding, and, to the Company's
knowledge, there is no agreement or understanding between or among any Persons
that affects or relates to the voting, giving of written consents or nominating
of directors, with respect to the Company or any of its securities.
2.4 Subsidiaries. The Company does not have any Subsidiaries. The
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Company does not presently own, of record or beneficially, or control, directly
or indirectly, any capital stock, securities convertible into or exercisable or
exchangeable for any capital stock or any other equity interest in any
corporation, association or business entity nor is the Company, directly or
indirectly, a participant in any joint venture, partnership or other non-
corporate entity.
2.5 No Conflicts. The execution and delivery by the Company of this
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Agreement and the Operative Agreements do not and the performance by the Company
of its obligations under this Agreement and the Operative Agreements and the
consummation of the transactions contemplated hereby and thereby (including the
issuance of the Series A Preferred
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Stock and the shares of Common Stock issuable upon conversion of the Series A
Preferred Stock) do not and will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the certificate of incorporation or by-laws
of the Company; or
(b) (i) conflict with or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a default under,
(iii) require the Company to obtain any consent, approval or action of, make any
filing with or give any notice to any Person as a result or under the terms of,
(iv) result in or give to any Person any right of termination, cancellation,
acceleration or modification in or with respect to, (v) result in or give to any
Person any additional right or entitlement to increased, additional, accelerated
or guaranteed payments under or (vi) result in the creation or imposition of any
Lien upon the Company or any of its respective Assets and Properties, under any
Law or Order applicable to the Company or any Contract or License to which the
Company is a party or by which any of its respective Assets and Properties is
bound that would have a material adverse effect on the Company.
2.6 Financial Statements; Books and Records. (a) The Company has
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delivered to the Investors unaudited financial statements for the year ended
December 31, 1999 and unaudited financial statements for the nine months ended
September 30, 2000, copies of which are included in Section 2.6 of the
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Disclosure Schedule (the "Financial Statements"). The Financial Statements,
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together with the related notes, have been prepared (i) in accordance with GAAP,
(ii) from Books and Records of the Company that have been maintained in a manner
consistent with the Company's past practices, and (iii) fairly present, in all
material respects, the financial position of the Company at the respective dates
thereof and the results of its operations for the periods indicated therein.
(b) Copies of the minute books, stock record books and other similar
records of the Company have been provided to the Investors prior to the
execution of this Agreement, are complete and correct and have been maintained
in accordance with sound business practices. Such minute books contain a true
and complete record of all actions taken at all meetings and by all written
consents in lieu of meetings of the directors, stockholders, members and
committees of the board of directors, stockholders and members of the Company.
2.7 Absence of Changes. Since September 30, 2000, there has not
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been:
(a) any material adverse change in the financial condition, assets,
liabilities (contingent or otherwise) or Business or Condition of the
Company;
(b) any damage, destruction or casualty loss (whether or not covered
by insurance) materially adversely affecting the properties or business of
the Company;
(c) any change in the authorized capital of the Company or its
outstanding securities or any change in its ownership interests or any
grant by the Company of any options, warrants, calls, conversion rights or
commitments;
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(d) any declaration or payment of any dividend or distribution in
respect of the capital stock or other ownership interests, or any direct or
indirect redemption, purchase or other acquisition of any of the capital
stock or other ownership interests, of the Company;
(e) any increase in the compensation, bonus, sales commissions or fee
arrangements payable or to become payable by the Company to any of its
officers, directors, stockholders, members, employees, consultants or
agents other than in the ordinary course of business;
(f) any sale or transfer, or any agreement to sell or transfer, any
material assets, property or rights of the Company outside of the ordinary
course of business to any Person;
(g) any cancellation, or agreement to cancel, any material
Indebtedness or other material obligation owing to the Company;
(h) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property
or rights of the Company or requiring consent of any party to the transfer
and assignment of any such assets, property or rights;
(i) any purchase or acquisition of, or agreement, plan or arrangement
to purchase or acquire, any property, rights or assets outside of the
ordinary course of the Company's business;
(j) any waiver of any material rights or claims of the Company;
(k) any amendment, cancellation or termination of any material
Contract or document;
(l) any change in the Company's certificate of incorporation, by-laws
or other organizational documents;
(m) any Contract entered into or commitment incurred involving any
Liability or commitment to make any capital expenditures, except in the
normal course of business (consistent with past practice) or involving an
amount not in excess of $25,000;
(n) any Lien or encumbrance upon any asset or property of the Company
created or as sumed, except (1) purchase money Liens incurred in connection
with the acquisition of equipment with an aggregate cost not in excess of
$25,000 necessary or desirable for the conduct of the business of the
Company, (2)(A) Liens for taxes either not yet due or being contested in
good faith and by appropriate proceedings (and for which contested taxes
adequate reserves have been established and are being maintained) or (B)
materialmen's, mechanics', workers', repairmen's, employees' or other like
Liens arising in the ordinary course of business, or (3) liens or
encumbrances set forth in Section 2.8 of the Disclosure Schedule; or
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(o) any transaction by the Company outside the ordinary course of its
business.
2.8 No Undisclosed Liabilities. Except as set forth in the Financial
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Statements, the Company has no Liabilities of a nature that are required in
accordance with GAAP to be reflected on its balance sheet. Since September 30,
2000, the Company has not incurred any Liabilities of any kind, character or
description, whether accrued, absolute, secured or unsecured, contingent or
otherwise other than in the ordinary course of business. If any of the
Liabilities of the Company are contingent or otherwise not fixed, Section 2.8 of
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the Disclosure Schedule includes a good faith and reasonable estimate (to the
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extent the Company can reasonably make such an estimate) of the maximum amount
that the Company reasonably expects will be payable. Section 2.8 of the
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Disclosure Schedule also sets forth an accurate list of all Indebtedness,
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indemnity agreements, mortgages, pledges and material security agreements to
which the Company is a party or by which its Assets and Properties may be bound.
The Company maintains a standard system of accounting established and
administered in accordance with GAAP.
2.9 Taxes. The Company has timely filed all requisite federal, state
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and other tax returns or extension requests for all fiscal periods in which such
filings were required to be made, and such Tax returns are complete and accurate
in all material respects. There are no examinations in progress or claims
pending against the Company for federal, state and other taxes (including
penalties and interest) for any period or periods prior to and including
December 31, 1999 and no notice of any claim for taxes, whether pending or
threatened, has been received. All taxes of the Company for any period ended
before the date hereof, including interest and penalties (whether or not shown
on any tax return) have been paid. The amounts shown as accruals for taxes on
the Financial Statements (as opposed to any reserve for deferred taxes
established to reflect timing differences between book and tax income) are
sufficient for the payment of all taxes (including penalties and interest) for
all periods up to and including the Closing Date, as adjusted for the passage of
time through the Closing Date. Copies of (i) any tax examinations, (ii)
extensions of statutory limitations and (iii) the federal and local income tax
returns and franchise tax returns of the Company for their last three (3) fiscal
years, or such shorter period of time as any of them shall have existed, are
attached hereto as Section 2.9 of the Disclosure Schedule. Section 2.9 of the
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Disclosure Schedule sets forth the last day of the taxable year of the Company.
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The Company uses the accrual method of accounting for income tax purposes, and
the Company's methods of accounting have not changed. The Company is not an
investment company as defined in Section 351(e)(1) of the Code. The Company is
not and has not been a party to any tax sharing agreement or agreement of
similar effect. The Company is not and has not been a member of any consolidated
group. The Company has not received, been denied, or applied for any private
letter ruling. CentrPort, LLC constituted a partnership within the meaning of
Section 761(a) of the Code from the date of its organization until December 20,
2000, at which time it merged with and into CentrPort, Inc., a corporation
within the meaning of Section 7701(a)(3) of the Code, which will retain such
status up through the Closing Date. CLLC Investments II, Inc. has no assets
other than its membership interest in Centrport, LLC and has no liabilities,
including any liabilities accruable with respect to taxes.
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2.10 Legal Proceedings. There are no Actions or Proceedings pending
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or, to the knowledge of the Company, threatened against the Company or any of
its Assets or Properties. The Company has not received any notice, and the
Company does not have any knowledge, of any Orders outstanding against the
Company.
2.11 Compliance with Laws and Orders. The Company is not, nor has it
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at any time received any notice that it is or has at any time been, in violation
of or default under any Law or Order applicable to the Company or any of its
Assets and Properties, except to the extent that any such violation or default
would not have a material adverse effect on the Business or Condition of the
Company.
2.12 Benefit Plans. All Benefit Plans of the Company are listed in
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Section 2.12 of the Disclosure Schedule, and copies of all documentation
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relating to such Benefit Plans (including all plan documents, written
descriptions of plans, actuarial reports and governmental filings and
determinations with respect to such Benefit Plans) have been delivered or made
available to the Investors. None of the Benefit Plans are Defined Benefit Plans:
(a) each Benefit Plan has at all times been maintained and
administered in all material respects in accordance with its terms and with the
requirements of all applicable law, including, without limitation, ERISA and the
Code, and each Benefit Plan intended to qualify under Section 401(a) of the Code
has at all times since its adoption been so qualified, and each trust which
forms a part of any such plan has at all times since its adoption been tax-
exempt under Section 501(a) of the Code;
(b) neither the Company nor any ERISA Affiliate has incurred any
liability for any tax imposed under Chapter 43 of the Code or civil liability
under Section 502(i) or (l) of ERISA;
(c) no benefit under any Benefit Plan, including, without limitation,
any severance or parachute payment plan or agreement, will be established or
become accelerated, vested or payable by reason of any transaction contemplated
under this Agreement;
(d) no tax has been incurred under Section 511 of the Code with
respect to any Benefit Plan (or trust or other funding vehicle pursuant
thereto);
(e) no Benefit Plan provides health or death benefit coverage beyond
the termination of an employee's employment, except as required by Part 6 of
Subtitle B of Title I of ERISA or Section 4980B of the Code or the laws of any
other jurisdiction requiring continuation of benefits coverage following
termination of employment;
(f) no suit, actions or other litigation (excluding claims for
benefits incurred in the ordinary course) have been brought or, to the knowledge
of the Company, threatened against or with respect to any Benefit Plan and there
are no facts or circumstances known to the
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Company that could reasonably be expected to give rise to any such suit, action
or other litigation; and
(g) all contributions to Benefit Plans that were required to be made
under such Benefit Plans have been made, and all benefits accrued under any
unfunded Benefit Plan have been paid, accrued or otherwise adequately reserved
in accordance with GAAP, all of which accruals under unfunded Benefit Plans are
as disclosed in Section 2.12(g) of the Disclosure Schedule, and the Company has
performed all material obligations required to be performed under all Benefit
Plans.
2.13 Real Property. Section 2.13 of the Disclosure Schedule contains
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a true and correct list of (i) each parcel of real property leased by the
Company (the "Leased Real Property") and (ii) all Liens relating to or affecting
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the Leased Real Property. The Company does not own any real estate.
(a) The Company has a valid and subsisting leasehold estate in and
the right to quiet enjoyment of the Leased Real Properties for the full term of
the lease thereof. Each lease referred to in clause (i) of Section 2.13 is a
legal, valid and binding agreement of the Company and, to the Company's
knowledge, of each other Person that is a party thereto, enforceable in
accordance with its terms, and (ii) there is no, and the Company has not
received notice of any, default (or any condition or event which, after notice
or lapse of time or both, would constitute a default) thereunder by the Company.
(b) The Company does not have any knowledge, nor has the Company
received any notice, of any claim, action or proceeding, actual or threatened,
against the Company or the Leased Real Property by any Person which would or may
adversely affect the future use, occupancy or value of the Leased Real Property
or any part thereof.
2.14 Tangible Personal Property. Section 2.14 of the Disclosure
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Schedule contains a true and correct list of the tangible personal property
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owned or leased by the Company. The Company is in possession of and has good and
marketable title to, or has valid leasehold interests in or valid rights under
contract to use, all material tangible personal property used in the conduct of
its business as currently conducted. All such tangible personal property is free
and clear of all Liens and is adequate and suitable to enable the Company to
provide the services they are obligated to provide under their current customer
Contracts and otherwise to conduct their business, and is in good working order
and condition, ordinary wear and tear excepted, and its use complies in all
material respects with all applicable Laws.
2.15 Intellectual Property Rights. Section 2.15 of the Disclosure
---------------------------- ------------------------------
Schedule contains a true and correct list of the material Intellectual Property
--------
(including, without limitation, all Intellectual Property that is the subject of
any registration or application for registration by the Company) owned or
licensed by the Company and such Intellectual Property is the only Intellectual
Property necessary for the Company to provide the services it is obligated to
provide under its current customer Contracts and otherwise to conduct its
business. The Company has all right, title and interest in each item of
Intellectual Property disclosed in Section 2.15 of the
-------------------
9
Disclosure Schedule, and except as disclosed in Section 2.15 of the Disclosure
------------------- ------------------------------
Schedule, such Intellectual Property is free and clear of all Liens. Except as
--------
disclosed in Section 2.15 of the Disclosure Schedule, (a) the Company has all
---------------------------------------
necessary rights to use the Intellectual Property disclosed therein, (b) all
registrations owned by or on behalf of the Company, and applications to
Governmental or Regulatory Authorities in respect of such Intellectual Property
are valid and in full force and effect, (c) there are no restrictions on the
direct or indirect transfer of any such Intellectual Property, (d) the Company
has taken reasonable security measures to protect the secrecy, confidentiality
and value of its trade secrets, (e) the Company has not granted any license,
agreement or other permission to use such Intellectual Property except as
provided in the Contracts listed in Section 2.16 of the Disclosure Schedule and
(f) the Company does not have knowledge that such Intellectual Property is being
infringed by any other Person. To the Company's knowledge, the Intellectual
Property listed in Section 2.15 of the Disclosure Schedule is not infringing any
---------------------------------------
Intellectual Property of any other Person. No claim is pending or, to the
knowledge of the Company, has been threatened alleging any such infringement or
with respect to the ownership, validity, license or use of, or any infringement
resulting from, the Company's Intellectual Property or the sale of any products
or services by the Company. The Intellectual Property and information systems
(including all computer hardware and software) owned, licensed or otherwise used
by the Company are free in all material respects of any "Year 2000 Problem."
2.16 Contracts. (a) Section 2.16 of the Disclosure Schedule contains a
--------- ---------------------------------------
true and complete list of each of the following Contracts to which the Company
is a party:
(i) all Contracts (excluding Benefit Plans) providing for a
commitment of employment or consulting services for a specified or
unspecified term;
(ii) all Contracts with any Person containing any provision or
covenant prohibiting the Company from engaging in any business activity or
competing with any Person or limiting the ability of the Company to engage
in any business activity or compete with any Person;
(iii) all partnership, joint venture, stockholders' or other
similar Contracts with any Person;
(iv) all Contracts relating to Indebtedness in excess of $25,000
of the Company;
(v) all Contracts relating to the future disposition or
acquisition of any material assets and properties, other than dispositions
or acquisitions in the ordinary course of business consistent with past
practice and the provisions of this Agreement and the Operative Agreements;
(vi) all Contracts that limit or contain restrictions on the
ability of the Company to declare or pay dividends on, to make any other
distribution in respect of or to issue or purchase, redeem or otherwise
acquire its capital stock or other ownership
10
interests, to incur Indebtedness, to incur or suffer to exist any Lien, to
purchase or sell any assets and properties or to change the lines of
business in which it participates or engages;
(vii) all Contracts requiring payments or which might require
payments to or by the Company in excess of $25,000 in cash or property;
(viii) all Contracts requiring indemnification by the Company
with respect to infringements of proprietary rights;
(ix) all other existing and proposed customer Contracts; and
(x) all other Contracts material to the operation of the
business of the Company.
(b) Each Contract required to be disclosed in Section 2.16 of the
-------------------
Disclosure Schedule is in full force and effect and constitutes a legal, valid
-------------------
and binding agreement, enforceable in accordance with its terms, of the Company
and, to the Company's knowledge, of each party thereto, and the Company and, to
the Company's knowledge, any other party to such Contract, is, or has received
notice that it is, in violation or breach of or default under any such Contract
or with notice, lapse of time or both would be in violation or breach of or
default under any such Contract.
2.17 Licenses. Section 2.17 of the Disclosure Schedule contains a
-------- ---------------------------------------
true and complete list of all Licenses used in and material to the business or
operations of the Company or necessary to provide the services the Company is
obligated to provide under its current customer Contracts and otherwise to
conduct its business. Each License required to be disclosed in Section 2.17 of
---------------
the Disclosure Schedule is valid, binding and in full force and effect. The
-----------------------
Company is not, nor has it received any notice that it is, in default (or with
the giving of notice or lapse of time or both, would be in default) under any
such License.
2.18 Insurance. Section 2.18 of the Disclosure Schedule contains (i) a
--------- ---------------------------------------
true and complete list of all liability, property, workers' compensation,
directors' and officers' liability and other insurance policies currently in
effect or that were in effect since April 2000 that insure the business,
operations or employees of the Company or affect or relate to the ownership, use
or operation of any of the Assets and Properties of the Company and (ii) a true
and complete list of all liability, property, workers' compensation, directors'
and officers' liability and other insurance policies to be in effect as of the
Closing that are to insure the business, operations or employees of the Company
or affect or relate to the ownership, use or operation of any of the Assets and
Properties of the Company as of the Closing. The insurance coverage provided by
the policies set forth in clauses (i) and (ii) above is in such amounts and
covers such liabilities as the Company believes is reasonable for Persons
employed in businesses similar to the Company and such coverage set forth in
clause (ii) will not terminate or lapse by reason of any of the transactions
contemplated by this Agreement or the Operative Agreements. Each policy listed
in clause (i) above is valid and binding and in full force and effect, all
premiums due thereunder
11
have been paid when due and neither the Company nor the Person to whom such
policy has been issued has received any notice of cancellation, termination,
nonrenewal, reduction or elimination in coverage or material premium increase in
respect of any such policy or is in default thereunder.
2.19 Affiliate Transactions. There are no transactions or Liabilities
----------------------
between the Company, on the one hand, and any current or former officer,
director, stockholder, other equity holder, Affiliate or Associate of the
Company or any direct or indirect Affiliate or Associate of any such officer,
director, stockholder, other equity holder or Affiliate or Associate, on the
other hand. To the Company's knowledge, each transaction and obligation
disclosed in Section 2.19 of the Disclosure Schedule is on terms substantially
---------------------------------------
equivalent to those obtainable by the Company from unaffiliated parties.
2.20 Proprietary Information and Inventions Agreements. Each key
-------------------------------------------------
employee, officer and consultant of the Company has executed a non-competition,
non-solicitation and non-disclosure and developments agreement substantially in
the form previously provided to the Investors. The Company is not aware that any
of the Company's key employees, officers or consultants is in violation of the
terms thereof.
2.21 Registration Rights. Except as provided in the Registration
-------------------
Rights Agreement, the Company has not granted or agreed to grant any
registration rights, including piggyback rights, to any Person.
2.22 Employees; Labor Relations. (a) Section 2.22(a) of the
-------------------------- ----------------------
Disclosure Schedule contains a list of the names of each officer, employee and
-------------------
consultant of the Company, together with such person's position or function,
annual base salary or wages and any incentive or bonus arrangement with respect
to such person. The Company has not received any notice that any such person
will or may cease to be engaged by the Company, or will refuse offers of
engagement by the Company.
(b) Except as disclosed in Section 2.22(b) of the Disclosure
---------------------------------
Schedule, (i) to the Company's knowledge, there are no material controversies
--------
between the Company, on the one hand, and any officer, employee or consultant of
the Company, on the other hand, (ii) no officer or employee of the Company is
presently a member of a collective bargaining unit and, to the knowledge of the
Company, there are no threatened or contemplated attempts to organize for
collective bargaining purposes any of the employees of the Company, (iii) no
unfair labor practice complaint or sex or age discrimination claim is pending
against the Company before the National Labor Relations Board or any other
Governmental or Regulatory Authority and the Company has no knowledge of any
such threatened complaint or claim, (iv) there has been no work stoppage, strike
or other concerted action by employees of the Company and (v) the employment of
each officer and employee of the Company is terminable at the will of the
Company. The Company has complied in all material respects with all applicable
Laws relating to the employment of labor, including those relating to wages,
hours and collective bargaining.
12
2.23 Environmental Matters. To the Company's knowledge: (a) the
---------------------
Company is in compliance in all material respects with all applicable Laws and
Orders relating to human health and the protection of the environment
(collectively, "Environmental Laws") and possesses all Licenses relating
------------------
thereto; (b) the Company has not caused any releases of Hazardous Substances (as
defined by the Comprehensive Environmental Response Compensation and Liability
Act) at, in, or under, any property (currently or formerly) operated by the
Company in violation of any Environmental Law; and (c) there are no past,
pending or, to the Company's knowledge, threatened administrative or legal
proceedings, claims or actions against the Company pursuant to Environmental
Laws.
2.24 Brokers. No agent, broker, finder, investment banker, financial
-------
advisor or other similar Person will be entitled to any fee, commission or other
compensation in connection with the transactions contemplated by this Agreement
or the Operative Agreements on the basis of any act or statement made or alleged
to have been made by the Company, any of its Affiliates, or any investment
banker, financial advisor, attorney, accountant or other Person retained by or
acting for or on behalf of the Company or any such Affiliate.
2.25 Accounts Receivable. The accounts and notes receivable of the
-------------------
Company, whether billed or unbilled, reflected on the Financial Statements and
all accounts and notes receivable arising subsequent to the date of the
Financial Statements, (i) arose from bona fide transactions in the ordinary
---- ----
course of business consistent with past practice and are payable on ordinary
trade terms, (ii) are legal, valid and binding obligations of the respective
debtors enforceable in accordance with their respective terms, (iii) are not
subject to any valid set-off or counterclaim, (iv) do not represent obligations
for goods sold on consignment, on approval or on a sale-or-return basis or
subject to any other repurchase or return arrangement, (v) are collectible in
the ordinary course of business within sixty (60) days in the aggregate recorded
amounts thereof, net of any applicable reserve reflected in the Financial
Statements, as such reserve has been adjusted on the books of the Company since
the Financial Statements in the ordinary course of business consistent with past
practices, (vi) are not the subject of any Actions or Proceedings brought by or
on behalf of the Company and its Subsidiaries or by the account debtor, and
(vii) have not been pledged as collateral by the Company or subject to any
Liens.
2.26 Bank Accounts; Powers of Attorney; Proxies. Section 2.26 of the
------------------------------------------ -------------------
Disclosure Schedule sets forth (i) the name of each bank in which the Company
-------------------
maintains an account or safe deposit box, and all the names of all Persons
authorized to draw thereon or have access thereto, (ii) the names of all
Persons, if any, holding powers of attorney with respect to the Company and
(iii) the names of all Persons, if any, holding proxies with respect to the
capital structure of the Company.
2.27 Exemption from Registration; Restrictions on Offer and Sale of
--------------------------------------------------------------
Same or Similar Securities. Subject to the truth and accuracy of the Investors'
--------------------------
representations in Article III hereof, the offer and sale of the Series A
Preferred Shares, the Warrants and the shares of Series A Preferred Stock
issuable upon exercise or conversion thereof are exempt from the registration
requirements of the Securities Act. None of the Company, Modem Media or any
13
Person authorized to act on the behalf of the Company or Modem Media has, in
connection with the offering of the Shares, engaged in (i) any form of general
solicitation or general advertising (as those terms are used within the meaning
of Rule 502(c) under the Securities Act), (ii) any action involving a public
offering within the meaning of Section 4(2) of the Securities Act and the
judicial interpretations of such section, or (iii) any action that would require
the registration under the Securities Act of the offering and sale of the Shares
pursuant to this Agreement. As used herein, the terms "offer" and "sale" have
the meanings specified in Section 2(3) of the Securities Act.
2.28 Disclosure. All material facts regarding the Business or
----------
Condition of the Company have been disclosed to the Investors in or in
connection with this Agreement. No representation or warranty contained in this
Agreement, and no statement contained in the Disclosure Schedule or in any
certificate, list or other writing furnished to the Investors pursuant to any
provision of this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements herein
or therein, in the light of the circumstances under which they were made, not
misleading. As used in this Agreement, the term "knowledge," when used with
reference to the Company, refers to the actual knowledge of the Company's
officers.
2.29 Conversion of LLC. The conversion of the Company from a Delaware
-----------------
limited liability company to a Delaware corporation through the merger of
CentrPort, LLC with and into CentrPort, Inc. has been duly and validly completed
in accordance with the laws of the State of Delaware and evidence of such
conversion has been delivered to the Investors.
(B) Modem Media hereby represents and warrants to the Investors as
follows:
2.30 Authority. Modem Media has full power and authority to execute
---------
and deliver this Agreement and the Operative Agreements to which it is a party
(the "Modem Media Operative Agreements"), to perform its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance by Modem Media of this
Agreement and the Modem Media Operative Agreements by Modem Media and the
consummation by Modem Media of the transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary action by the Board of
Directors of Modem Media, and no other action on the part of Modem Media or its
stockholders is necessary to authorize the execution, delivery and performance
of this Agreement and the Modem Media Operative Agreements and the consummation
by Modem Media of the transactions contemplated hereby and thereby. This
Agreement and the Modem Media Operative Agreements have been duly and validly
executed and delivered by Modem Media, and, assuming the due authorization,
execution and delivery of this Agreement and the Modem Media Operative
Agreements by the other parties thereto, constitute legal, valid and binding
obligations of Modem Media enforceable against Modem Media in accordance with
their respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws relating to the enforcement of creditors' rights generally
and by general principles of equity.
14
2.31 Ownership. Modem Media owns beneficially and of record all of the
---------
Shares to be sold by it to the Investors hereunder. Such Shares are owned by
Modem Media free and clear of all liens, security interests, pledges, charges,
voting trusts, restrictions, encumbrances and claims of every kind.
2.32 No Preemptive Rights. There are no preemptive rights or
--------------------
agreements, arrangements or understandings to issue preemptive rights, rights of
first refusal or similar rights with respect to the sale of the Shares to be
sold by Modem Media to the Investors hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each Investor hereby represents and warrants to the Company and Modem
Media as follows:
3.1 Organization; Power and Authority. Such Investor has full power
---------------------------------
and authority to execute and deliver this Agreement and the Operative Agreements
to which it is a party and to perform its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery by such Investor of this Agreement and the Operative
Agreements to which it is a party and the performance by such Investor of its
obligations hereunder and thereunder have been duly and validly authorized by
such Investor. This Agreement has been duly and validly executed and delivered
by such Investor and, assuming the due authorization, execution and delivery by
the other parties hereto and thereto, constitutes, and upon the execution and
delivery by such Investor of the Operative Agreements to which it is a party,
assuming the due authorization, execution and delivery thereof by the other
parties hereto and thereto, will constitute, legal, valid and binding
obligations of such Investor enforceable against such Investor in accordance
with their respective terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to the enforcement of creditors' rights generally and by general
principles of equity.
3.2 Purchase for Investment. The Shares and the shares of Common
-----------------------
Stock issuable upon the conversion of the Series A Preferred Shares will be
acquired by such Investor for its own account for the purpose of investment and
not with a view to the resale or distribution of all or any part of the Shares
or the shares of Common Stock issuable upon the conversion of the Series A
Preferred Shares in violation of the Securities Act, it being understood that
the right to dispose of such Shares and the shares of Common Stock issuable
upon conversion of the Series A Preferred Shares shall be entirely within the
discretion of such Investor. Such Investor represents and warrants that it is
an "accredited investor" as such term is defined in Rule 501 of Regulation D of
the Securities Act and has had an opportunity to discuss the Business or
Condition of the Company with the Company's management. Such Investor
understands that the Shares and the shares of Common Stock issuable upon the
conversion of the Series A Preferred Shares have not been registered under the
Securities Act in reliance on an applicable exemption
15
or exemptions therefrom and that the certificates for such securities shall
bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS,
AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED EXCEPT PURSUANT TO (I) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR (II) AN
APPLICABLE EXEMPTION FROM REGISTRATION THEREUNDER OR UNDER APPLICABLE STATE
SECURITIES LAWS."
The Company shall remove such legend upon receipt of an opinion from
counsel to such Investor, reasonably satisfactory in form and substance to
counsel to the Company, that the requirements for such legend have terminated.
3.3 Brokers. No agent, broker, finder, investment banker, financial
-------
advisor or other similar Person will be entitled to any fee, commission or other
compensation in connection with any of the transactions contemplated by this
Agreement or the Operative Agreements on the basis of any act or statement made
or alleged to have been made by such Investor or any of its Affiliates, or any
investment banker, financial advisor, attorney, accountant or other Person
retained by or acting for or on behalf of such Investor or any such Affiliates.
ARTICLE IV
COVENANTS OF THE COMPANY
The Company covenants and agrees with each of the Investors that,
except to the extent the Investors may otherwise consent in writing:
4.1 Financial Statements and Reports. Until the consummation of a
--------------------------------
public offering of Common Stock registered under the Securities Act, so long as
an Investor continues to hold 300,000 Shares (or an equivalent number of shares
of Common Stock), the Company shall comply with the provisions of Sections
4.1(a), (d) and (e) and, shall provide copies of the statements referred to in
Sections 4.1(b) and (c) with respect to such Investor:
(a) Books and Records; Projections. The Company shall at all times
------------------------------
maintain correct and complete Books and Records in which full and correct
entries shall be made of all its business transactions pursuant to a system of
accounting established and administered in accordance with GAAP to the extent
applicable, and set aside on its books all such proper accruals and reserves as
shall be required under GAAP. The Company shall provide access to the Investors
to inspect such Books and Records during normal business hours upon reasonable
advance notice by the Investors to the Company without interference in any
material respect with the conduct of the Company's business. The Company shall
retain a "big 5" accounting firm for the purpose of auditing its financial
statements and reports for each fiscal year.
16
(b) Quarterly Statements. As soon as available, and in any event
--------------------
within ten (10) business days after the end of each respective monthly fiscal
period of each fiscal year of the Company, copies of the balance sheet of the
Company as of the end of such monthly fiscal period, and the related statements
of income and cash flows of the Company for such monthly fiscal period and for
the portion of the fiscal year ending with such period, and beginning in July
2001, in each case setting forth in comparative form the figures for the
corresponding period of the preceding fiscal year, all in reasonable detail, and
certified by the Chief Financial Officer or Chief Executive Officer of the
Company, as being true and correct in all material respects and, except for the
lack of notes, as having been prepared in accordance with GAAP, subject to year-
end audit adjustments. Notwithstanding the foregoing, the Company shall also
provide copies of the balance sheet of the Company as of the end of each
quarterly fiscal period, and the related statements of income and cash flows of
the Company for such quarterly fiscal period and for the portion of the fiscal
year ending with such period, in each case setting forth in the comparative form
the figures for the corresponding period of the preceding fiscal year, all in
reasonable detail, and certified by the Chief Financial Officer or Chief
Executive Officer of the Company, being true and correct in all material
respects and, except for the lack of notes, as having been prepared in
accordance with GAAP, subject to year-end audit adjustments.
(c) Annual Statements. As soon as available and in any event within
-----------------
thirty (30) business days so long as Modem Media reflects the Company on an
equity, a cost, or a consolidated basis on its financial statements and
thereafter within ninety (90) days after the close of each respective fiscal
year of the Company, copies of the balance sheet of the Company as of the close
of such fiscal year and the related statements of income and cash flows of the
Company for such fiscal year, in each case, setting forth in comparative form
the figures for the preceding fiscal year, all in reasonable detail and
accompanied by an opinion thereon of independent public accountants of the
Company to the effect that such financial statements have been prepared in
accordance with GAAP and fairly present the financial condition and results of
operations of the Company.
(d) Annual Budget. As soon as available and in any event within
-------------
thirty (30) days prior to the end of each fiscal year, an annual budget prepared
on a monthly basis for the Company for the following fiscal year (displaying
anticipated statements of income and cash flows and balance sheets), and
following preparation thereof quarterly revisions of such budget and any other
significant budgets prepared by the Company and within thirty (30) days after
any monthly period in which there is a material adverse deviation from the
annual budget, a certificate of the Chief Financial Officer of the Company
explaining the deviation and what actions the Company has taken and proposes to
take with respect thereto.
(e) Additional Information. With reasonable promptness, such other
----------------------
information and financial data concerning the Company as such Investor may
reasonably request.
4.2 Reservation of Shares. The Company shall at all times any shares
---------------------
of Series A Preferred Stock are outstanding keep reserved the full number of
shares of Common Stock issuable upon the conversion of all outstanding shares of
Series A Preferred Stock.
17
4.3 Notice and Cure. The Company shall notify each Investor promptly
---------------
in writing of, and contemporaneously shall provide each Investor with true and
complete copies of any and all information or documents relating to any event,
transaction or circumstance occurring after the date of this Agreement that
causes or will cause any covenant or agreement of the Company under this
Agreement to be breached or that prior to the Closing Date renders untrue any
representation or warranty of the Company contained in this Agreement. The
Company also shall notify each Investor promptly in writing of, and will use its
commercially reasonable efforts to cure any violation or breach of any
representation, warranty, covenant or agreement made by the Company in this
Agreement, whether occurring or arising before, on or after the date of this
Agreement. No notice given pursuant to this Section shall have any effect on
the representations, warranties, covenants or agreements contained in this
Agreement or shall in any way limit each Investor's right to seek
indemnification under Article VI.
4.4 Proprietary Information and Inventions Agreements. The Company
-------------------------------------------------
shall ensure that, for so long as the Series A Preferred Stock is outstanding,
each key employee, officer and consultant of the Company executes a non-
competition, non-solicitation and non-disclosure and developments agreement
substantially in the form previously provided to the Investors.
4.5 Stock Options. Following the Closing, for so long as the Series A
-------------
Preferred Stock is outstanding, any Option issued by the Company to any of its
employees, directors, consultants or other service providers shall vest (a) as
to 25% of the shares, at the end of the first year following such issuance and
(b) as to the remaining 75% of the shares, quarterly over the next three years,
except as the Board of Directors may approve. The Company shall ensure that the
Company or, to the extent permitted by applicable law, any assignee of the
Company, shall have the right to repurchase, in connection with the termination
of an employee's employment with the Company, any shares issued to such
employee, except as otherwise approved by the Board of Directors. The purchase
price shall be at cost with respect to any employee terminated with cause and at
fair market value with respect to any employee whose employment terminates for
any other reason, except as otherwise approved by the Board of Directors. For
purposes of this Section 4.5, in no case shall approval by the Board of
Directors mean approval by a Compensation Committee or any other committee of
the Board of Directors.
4.6 Insurance. The Company shall at all times from and after the
---------
Closing maintain liability, property, workers' compensation, directors' and
officers' liability and other insurance coverage that is in such amounts and
covers such liabilities as the Company believes is reasonable for businesses
similar to the Company.
4.7 Modem Media Arrangements. Except for the VAR Agreement and
------------------------
statements of work entered into in the ordinary course under the VAR Agreement,
the Company will not enter into any material contract or other material
transaction or arrangement with Modem Media without the consent of a majority of
the Company's disinterested directors other than.
18
ARTICLE V
DELIVERIES AT CLOSING
At or before the Closing, each of the following shall be (or shall
have been) delivered to the Investors or, in the case of Section 5.8(b), to
Modem Media:
5.1 Officers' Certificates. A certificate, dated the Closing Date
----------------------
and executed by the President of the Company, substantially in the form and to
the effect of Exhibit B hereto, and a certificate, dated the Closing Date and
---------
executed by the Secretary or any Assistant Secretary of the Company,
substantially in the form and to the effect of Exhibit C hereto.
---------
5.2 Opinion of Counsel. An opinion of Day, Xxxxx & Xxxxxx LLP,
------------------
counsel to the Company, and an opinion of Xxxxxx Xxxx, counsel to Modem Media,
each opinion dated the Closing Date, addressed to the Investors and in form and
substance reasonably satisfactory to the Investors.
5.3 Good Standing Certificates. (a) Copies of the certificate of
--------------------------
incorporation, including all amendments thereto, of the Company certified by the
Secretary of State or other appropriate official of the jurisdiction of
organization, (b) certificates from the applicable Secretary of State or other
appropriate official to the effect that the Company is in good standing or
subsisting in such jurisdiction, listing all charter documents of the Company on
file and attesting to its payment of all franchise or similar taxes, and (c) a
certificate from the Secretary of State or other appropriate official in each
jurisdiction in which the Company is qualified, licensed or admitted to do
business to the effect that the Company is duly qualified or admitted and in
good standing in such jurisdiction.
5.4 Other Agreements. Copies of the Operative Agreements executed by
----------------
each of the parties thereto other than the Investors, each of which shall be in
full force and effect.
5.5 Delivery of Certificates. Duly executed certificates
------------------------
representing the Shares being purchased by the Investors.
5.6 Employment Agreements. Evidence that the Company has entered
----------------------
into the Employment Agreements with the Founders in form and substance
satisfactory to the Investors.
5.7 Director's and Officer's Insurance. Evidence that the Company
----------------------------------
has obtained director's and officer's insurance coverage in form and substance
satisfactory to the Investors.
5.8 Agreements with Modem Media. (a) Evidence that the Company has
----------------------------
entered into the VAR Agreement and the Administrative Services Agreement between
the Company and Modem Media and executed the Modem Media Warrant, each in form
and substance satisfactory to the Investors.
19
(b) The Modem Media Warrant duly executed by the Company.
5.9 Stock Option Plan and Option Grants. Evidence that the Company
------------------------------------
has adopted the Stock Option Plan, in form and substance reasonably satisfactory
to the Investors, and granted options to purchase shares of Common Stock of the
Company pursuant thereto, the terms and grantees of which shall be reasonably
satisfactory to the Investors.
5.10 Consents and Approvals. Evidence that the Company and Modem
-----------------------
Media have obtained all consents and approvals and completed all filings under
all statutes, laws, ordinances, regulations, rules, judgments, decrees and
orders of any court or governmental agency, board, bureau, body, department or
authority or of any other person required to be obtained by either of them in
connection with the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby, including, without
limitation, evidence of the termination of any applicable waiting period under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification. Modem Media and the Company hereby jointly and
---------------
severally indemnify the Investors and the officers, directors, stockholders,
members, partners, employees, agents and Affiliates of each of the Investors
(each, an "Indemnified Party"), in respect of, and holds each of them harmless
-----------------
from and against any and all Losses (whether or not involving any Person not a
party to this Agreement) suffered, incurred or sustained by any of them or to
which any of them becomes subject, resulting from, arising out of or relating to
(i) any misrepresentation or breach of warranty or nonfulfillment of or failure
to perform any covenant or agreement on the part of the Company or Modem Media
contained in this Agreement or any of the Operative Agreements (including any
certificates delivered in connection herewith or therewith) or (ii) the status
of each Investor as a holder of securities of the Company. Modem Media and the
Company hereby agree to reimburse each Indemnified Party (whether or not such
Indemnified Party is a party to this Agreement) for all expenses (including
reasonable counsel fees and disbursements) as they are incurred by such
Indemnified Party in connection with investigating and preparing or defending
any Action or Proceeding (whether or not such Indemnified Party is a formal
party to any such Action or Proceeding). If and to the extent that the
indemnification hereunder is finally determined by a court of competent
jurisdiction to be unenforceable, Modem Media and the Company hereby agree to
make the maximum contribution to the payment and satisfaction of the indemnified
Losses as shall be permissible under applicable laws.
6.2 Third Party Claims. Promptly after the Indemnified Party has
------------------
received notice of or has knowledge of any claim by a person or entity not a
party to this Agreement ("Third Person"), or the commencement of any action or
------------
proceeding by a Third Person, the Indemnified Party shall, as a condition
precedent to a claim with respect thereto being made against any party obligated
to provide indemnification pursuant to Section 6.1 hereof (hereinafter
20
the "Indemnifying Party"), give the Indemnifying Party written notice of such
claim or the commencement of such action or proceeding. Such notice shall state
the nature and the basis of such claim and a reasonable estimate of the amount
thereof. The Indemnifying Party shall have the right to defend and settle, at
its own expense and by its own counsel, any such matter so long as the
Indemnifying Party pursues the same in good faith and diligently, provided that
the Indemnifying Party shall not settle any action or proceeding without the
written consent of the Indemnified Party unless the Indemnified Party is fully
released and exonerated from all matters related to the claim. If the
Indemnifying Party undertakes to defend or settle, it shall promptly notify the
Indemnified Party of its intention to do so, and the Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in the defense thereof and
in any settlement thereof. Such cooperation shall include, but shall not be
limited to, furnishing the Indemnifying Party with any books, records or
information reasonably requested by the Indemnifying Party that are in the
Indemnified Party's possession or control. All Indemnified Parties shall
endeavor to use the same counsel, which shall be the counsel selected by
Indemnifying Party, provided that if counsel to the Indemnifying Party shall
have a conflict of interest in the opinion of such counsel that prevents counsel
for the Indemnifying Party from representing the Indemnified Party, the
Indemnified Party shall have the right to participate in such matter through
counsel of its own choosing and the Indemnifying Party will reimburse the
Indemnified Party for the reasonable expenses of its counsel and experts. After
the Indemnifying Party has notified the Indemnified Party of its intention to
undertake to defend or settle any such asserted liability, and for so long as
the Indemnifying Party diligently pursues such defense, the Indemnifying Party
shall not be liable for any additional legal expenses or out-of-pocket expenses
incurred by the Indemnified Party in connection with any defense or settlement
of such asserted liability, except (i) as set forth in the preceding sentence
and (ii) to the extent such participation is requested by the Indemnifying
Party, in which event the Indemnified Party shall be reimbursed by the
Indemnifying Party for reasonable additional legal expenses and out-of-pocket
expenses. If the Indemnifying Party desires to accept a final and complete
settlement of any such Third Person claim, which settlement provides solely for
the payment of monetary damages and effects a full release of the Indemnified
Party from all matters related to the claim, and the Indemnified Party refuses
to consent to such settlement, then the Indemnifying Party's liability under
this Section with respect to such Third Person claim shall be limited to the
amount so offered in settlement to said Third Person, and the Indemnifying
Party, upon payment of such settlement amount to such Third Person, shall be
deemed released from any and all obligation or liability with respect thereto
and the Indemnified Party shall reimburse the Indemnifying Party for any
additional costs of defense that the Indemnifying Party subsequently incurs with
respect to such claims and all additional costs of settlement or judgment. If
the Indemnifying Party does not undertake to defend such matter to which the
Indemnified Party is entitled to indemnification hereunder, or fails diligently
to pursue such defense, the Indemnified Party may undertake such defense through
counsel of its choice, at the cost and expense of the Indemnifying Party, and
the Indemnified Party may settle such matter, and the Indemnifying Party shall
reimburse the Indemnified Party for the amount paid in such settlement and any
other liabilities or expenses incurred by the Indemnified Party in connection
therewith; provided, however, that under no circumstances shall the Indemnified
-------- -------
Party settle any Third Person claim without the written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
21
All settlements hereunder shall effect a complete release of the Indemnified
Party, unless the Indemnified Party otherwise agrees in writing. The parties
hereto will make appropriate adjustments for any tax benefits or detriments and
any insurance proceeds in determining the amount of any indemnification
obligation under this Section.
6.3 Limitations on Indemnification. Notwithstanding the foregoing,
------------------------------
the Indemnified Party shall not assert any claim for indemnification hereunder
against Modem Media or the Company until the aggregate of all claims under
Section 6.1 exceeds 1.0% of the amount of proceeds received by Modem Media and
the Company (including, for these purposes, any funds received by Modem Media or
the Company pursuant to Section 1.4) in connection with the sale by it of the
Shares pursuant to this Agreement (the "Indemnification Threshhold"); provided,
-------------------------- --------
however, that the Indemnified Party may assert and shall be indemnified for any
-------
claim of a misrepresentation or breach of warranty of Section 2.9 at any time,
regardless of whether the aggregate of all claims which the Indemnified Party
shall have against Modem Media and the Company exceeds the Indemnification
Threshold, it being understood that the amount of any such claim shall not be
counted toward the Indemnification Threshold. The Indemnified Party is entitled
to indemnification for the full amount of any such claim asserted pursuant to
Section 6.1 once the Indemnification Threshold is reached. Notwithstanding the
foregoing, neither Modem Media nor the Company shall be liable for any amount
which exceeds the amount of proceeds received by it (including for these
purposes any funds received by Modem Media or the Company pursuant to Section
1.4) in connection with the sale by it of the Shares pursuant to this Agreement;
provided, however, that Modem Media's and the Company's indemnification
-------- -------
obligations for a misrepresentation or breach of warranty of Section 2.9 shall
not be limited.
6.4 Exclusive Remedies. In the absence of a fraudulent or intentional
------------------
misrepresentation, omission or breach of this Agreement, following the Closing,
the remedies set forth in this Article VI shall be the sole and exclusive
remedies of the parties hereto, their Affliates, successors and assigns with
respect to any and all claims for money damages covered by Section 6.1 hereof.
ARTICLE VII
DEFINITIONS
7.1 Definitions. As used in this Agreement, the following defined
-----------
terms shall have the meanings indicated below:
"Action or Proceeding" means any legal action, suit, proceeding,
--------------------
arbitration or Governmental or Regulatory Authority investigation or audit.
"Administrative Services Agreement" means the Administrative Services
---------------------------------
Agreement, dated as of the date hereof, between the Company and Modem Media.
"Affiliate" means, with respect to any Person, any other Person that
---------
controls, is controlled by or is under common control with such Person. For the
purposes of this definition,
22
"control" (including, with its correlative meanings, the terms "controlled by"
-------
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of securities, by contract or otherwise.
"Agreement" has the meaning ascribed to it in the forepart of this
---------
Agreement.
"Assets and Properties" of any Person means all assets and properties
---------------------
of every kind, nature, character and description (whether real, personal or
mixed, whether ta ngible or intangible, whether absolute, accrued, contingent,
fixed or otherwise and wherever situated), including the goodwill related
thereto, operated, owned or leased by such Person, including cash, cash
equivalents, Investment Assets, accounts and notes receivable, chattel paper,
documents, instruments, general intangibles, real estate, equipment, inventory,
goods and Intellectual Property.
"Associate" means, with respect to any Person, (i) any corporation or
---------
organization of which such Person is an officer or partner or is, directly or
indirectly, the beneficial owner of 10 percent or more of any class of equity
securities, (ii) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as trustee or
in a similar fiduciary capacity and (iii) any relative or spouse of such Person,
or any relative of such spouse, who has the same home as such Person or who is a
director or officer of such Person or any of its parents or subsidiaries.
"Benefit Plan" means any Plan maintained, established or to which the
------------
Company, or any Subsidiary or Affiliate of any of the same contribute or to
which contributions have at any time been made, by the Company or any
Subsidiaries or Affiliate of any of the foregoing existing at the Closing Date
or prior thereto, or under which any employee, former employee or director of
the Company or any beneficiary thereof is covered, is eligible for coverage or
has benefit rights.
"Books and Records" means all files, documents, instruments, papers,
-----------------
books and records relating to the Business or Condition of the Company,
including financial statements, tax returns and related work papers and letters
from accountants, budgets, pricing guidelines, ledgers, journals, deeds, title
policies, minute books, stock certificates and books, stock transfer ledgers,
Contracts, Licenses, customer lists, computer files and programs, retrieval
programs, operating data and plans and environmental studies and plans.
"Business Day" means a day other than Saturday, Sunday or any day on
------------
which banks located in the State of New York are authorized or obligated to
close.
"Business or Condition of the Company" means the business, condition
------------------------------------
(financial or otherwise), results of operations, prospects, Assets and
Properties of the Company and the Subsidiaries.
"Change of Control of Modem Media" means the occurrence of any of the
--------------------------------
following events: (i) the consummation of a merger or consolidation of Modem
Media with any
23
other entity, other than a merger or consolidation which would result in the
voting securities of Modem Media outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least fifty percent (50%) of
the total voting power represented by the voting securities of Modem Media or
such surviving entity outstanding immediately after such merger or
consolidation; (ii) the consummation of the sale or disposition by Modem Media
of all or substantially all of Modem Media's assets; or (iii) any person (as
such term is used in Section 13(d) of the Securities Exchange Act of 1934, as
amended) becomes the beneficial owner (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of Modem Media representing fifty percent
(50%) or more of the total voting power represented by Modem Media's then
outstanding voting securities. "Closing" means the closing of the transactions
-------
contemplated by Section 1.3.
"Closing Date" means December 22, 2000 or such other date on which the
------------
Closing actually occurs.
"Code" means the Internal Revenue Code of 1986, as amended, and the
----
rules and regulations promulgated thereunder.
"Common Stock" means common stock of the Company, par value $.01 per
------------
share.
"Company" has the meaning ascribed to it in the forepart of this
-------
Agreement.
"Contract" means any agreement (including licenses with non-
--------
governmental Persons), lease, evidence of Indebtedness, mortgage, indenture,
security agreement or other contract, whether written or oral.
"Defined Benefit Plan" means each Plan which is subject to Part 3 of
--------------------
Title 1 of ERISA, Section 412 of the Code or Title IV of ERISA.
"Disclosure Schedule" means the disclosure schedule delivered to the
-------------------
Investors by or on behalf of the Company, containing all lists, descriptions,
exceptions and other information and materials as are required to be included
therein by the Company pursuant to this Agreement.
"Employment Agreements" means the Employment Agreements, dated as of
---------------------
the date hereof, between the Company and each of the Founders.
"Environmental Laws" has the meaning ascribed to it in Section 2.23.
------------------
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and the rules and regulations promulgated thereunder.
"Financial Statements" has the meaning ascribed to it in Section 2.6.
--------------------
24
"Founder" or "Founders" means Xxxxxxx Xxxxxxx, Xxx XxXxxxxxx, Xxxx
------- --------
Xxxxxx, Xxxx Xxxxxx and Xxxx Xxxxxxx.
"GAAP" means generally accepted accounting principles, consistently
----
applied.
"Governmental or Regulatory Authority" means any court, tribunal,
------------------------------------
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.
"Indebtedness" of any Person means all obligations of such Person (a)
------------
for borrowed money, (b) evidenced by notes, bonds, debentures or similar
instruments, (c) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(d) under capital leases and (e) in the nature of guarantees of the obligations
described in clauses (a) through (d) above of any other Person.
"Indemnified Party" has the meaning ascribed to it in Article VI.
-----------------
"Intellectual Property" means all trademarks and trademark rights,
---------------------
trade names and trade name rights, service marks and service xxxx rights,
service names and service name rights, patents and patent rights, brand names,
trade dress, product designs, product packaging, business and product names,
logos, slogans, rights of publicity, trade secrets, inventions, processes,
formulae, industrial models, processes, designs, specifications, data,
technology, methodologies, computer programs (including all source codes), any
other confidential and proprietary right or information, whether or not subject
to statutory registration, and all related technical information, manufacturing,
engineering and technical drawings, know-how and all pending applications for
and registrations of patents, trademarks, service marks and copyrights, and the
right to xxx for past infringement, if any, in connection with any of the
foregoing, and all documents, disks and other media on which any of the
foregoing is stored.
"Investment Assets" means all debentures, notes and other evidences of
-----------------
Indebtedness, stocks, securities (including rights to purchase and securities
convertible into or exchangeable for other securities), interests in joint
ventures and general and limited partnerships, mortgage loans and other
investment or portfolio assets owned of record or beneficially by the Company or
the Subsidiaries.
"Investor" or "Investors" has the meaning ascribed to it in the
-------- ---------
forepart of this Agreement.
"Law" or "Laws" means all laws, statutes, rules, regulations,
--- ----
ordinances and other pronouncements having the effect of law of the United
States, any foreign country or any domestic or foreign state, county, city or
other political subdivision or of any Governmental or Regulatory Authority.
"Leased Real Property" has the meaning ascribed to it in Section
--------------------
2.13(a).
25
"Liabilities" means all Indebtedness, obligations and other
-----------
liabilities (or contingencies that have not yet become liabilities) of a Person,
whether absolute, accrued, contingent (or based upon any contingency), known or
unknown, fixed or otherwise, or whether due or to become due.
"Licenses" means all licenses, permits, certificates of authority,
--------
authorizations, approvals, registrations, franchises and similar consents
granted or issued to the Company or the Subsidiaries or by any Governmental or
Regulatory Authority.
"Liens" means any mortgage, pledge, assessment, security interest,
-----
lease, lien, adverse claim, levy, charge or other encumbrance of any kind.
"Loss" means any and all damages, fines, fees, taxes, penalties,
----
deficiencies, diminutions in value of investment, losses and expenses, including
interest, reasonable expenses of investigation, court costs, reasonable fees and
expenses of attorneys, accountants and other experts or other expenses of
litigation or other proceedings or of any claim, default or assessment
(including, without limitation, fees and expenses of attorneys, incurred in
connection with (i) the investigation or defense of any claim made by a Person
not a party hereto and (ii) asserting or disputing any rights under this
Agreement against any party hereto or otherwise).
"Modem Media Operative Agreements" has the meaning ascribed to it in
--------------------------------
Section 2.30.
"Modem Media Warrant" means a Warrant to purchase 391,604 shares of
-------------------
Common Stock issued to Modem Media.
"Operative Agreements" means the Registration Rights Agreement, the
--------------------
Stockholders Agreement, the Employment Agreements, the VAR Agreement, the
Administrative Services Agreement, the Warrants and any other agreements to be
entered into in connection with the transactions contemplated by this Agreement.
"Option" with respect to any Person means any security, right,
------
subscription, warrant, option, or convertible or exchangeable instrument that
gives the right to purchase or otherwise receive or be issued any shares of
capital stock or other equity interests of such Person or any security of any
kind convertible into or exchangeable or exercisable for any shares of capital
stock or other equity interests of such Person and shall also include any
"phantom" stock right or other right to participate in the equity, income or
election of directors or officers.
"Order" means any writ, judgment, decree, injunction or similar order
-----
of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
"Person" means any natural person, corporation, general partnership,
------
limited partnership, limited liability company or partnership, proprietorship,
other business organization, trust, union, association or Governmental or
Regulatory Authority.
26
"Plan" means any bonus, incentive compensation, deferred compensation,
----
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, workmen's compensation or other insurance, severance,
separation or other employee benefit plan, practice, policy or arrangement of
any kind, whether written or oral, including any "employee benefit plan" within
the meaning of Section 3(3) of ERISA.
"Purchase Price" has the meaning ascribed to it in Section 1.2.
--------------
"Revenue" means Revenue as defined in the VAR Agreement.
-------
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations thereunder.
"Series A Preferred Stock" has the meaning ascribed thereto in the forepart
------------------------
of this Agreement.
"Shares" has the meaning ascribed thereto in the forepart of this
------
Agreement.
"Stockholders Agreement" means the Stockholders Agreement, dated as of the
----------------------
date hereof, by and among the Company, the Investors and the other Persons who
are signatories thereto.
"Stock Option Plan" means the Company's 2000 Stock Incentive Plan.
-----------------
"Subsidiary" means any Person in which the Company, directly or indirectly,
----------
through Subsidiaries or otherwise, beneficially owns more than fifty percent
(50%) of either the equity interest in, or the voting control of, such Person,
whether or not existing on the date hereof.
"Transferors" has the meaning ascribed thereto in the forepart of this
-----------
Agreement.
"VAR Agreement" means the Reseller Agreement dated as of the date hereof,
-------------
between the Company and Modem Media, setting forth the terms and conditions of
the business relationship between the Company and Modem Media.
"Warrants" means warrants to purchase up to 2,741,228 shares of Common
--------
Stock issued to Modem Media and warrants issued to Delta Air Lines, Inc. to
purchase up to 250,000 shares of Common Stock.
Unless the context of this Agreement otherwise requires, (i) words of
any gender include each other gender, (ii) words using the singular or plural
number also include the plural or singular number, respectively, (iii) the terms
"hereof," "herein," "hereby" and derivative or similar words refer to this
entire Agreement, (iv) the terms "Article" or "Section" refer to the specified
Article or Section of this Agreement, (v) the phrases "ordinary course of
business" and
27
"ordinary course of business consistent with past practice" refer to the
business and practice of the Company and the Subsidiaries and (vi) the words
"include," "includes" and "including" shall be deemed to be followed by the
phrase "without limitation." All accounting terms used herein and not expressly
defined herein shall have the meanings given to them under GAAP.
ARTICLE VIII
MISCELLANEOUS
8.1 Notices. All notices, requests and other communications
-------
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally against written receipt or by facsimile transmission
against facsimile confirmation or mailed by prepaid first class certified mail,
return receipt requested, or mailed by overnight courier prepaid, to the parties
at the following addresses or facsimile numbers:
(i) If to any Investor: Such Investor's address set forth on
the Schedule of Investors.
with a copy to:
Xxxxxx, Xxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxxxxxx X. Xxxxxx, Esq.
(ii) If to the Company, to:
CentrPort, Inc.
000 Xxxx Xxxx Xxxx
Xxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn.: Chief Executive Officer
with a copy to:
Day, Xxxxx & Xxxxxx LLP
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn.: Xxxxxx Xxxxxxxxx III
(iii) If to Modem Media, to:
28
Modem Media, Inc.
000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Chief Executive Officer
with a copy to:
Modem Media, Inc.
000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: General Counsel
All such notices, requests and other communications will (i) if
delivered personally to the address as provided in this Section, be deemed given
upon delivery, (ii) if delivered by facsimile transmission to the facsimile
number as provided for in this Section, be deemed given upon facsimile
confirmation, (iii) if delivered by mail in the manner described above to the
address as provided for in this Section, be deemed given on the earlier of the
third Business Day following mailing or upon receipt and (iv) if delivered by
overnight courier to the address as provided in this Section, be deemed given on
the earlier of the first Business Day following the date sent by such overnight
courier or upon receipt (in each case regardless of whether such notice, request
or other communication is received by any other Person to whom a copy of such
notice is to be delivered pursuant to this Section). Any party from time to
time may change its address, facsimile number or other information for the
purpose of notices to that party by giving notice specifying such change to the
other parties hereto.
8.2 Entire Agreement. This Agreement and the Operative Agreements
----------------
supersede all prior discussions and agreements between the parties with respect
to the subject matter hereof and thereof and contain the sole and entire
agreement between the parties hereto with respect to the subject matter hereof
and thereof.
8.3 Expenses. Whether or not the transactions contemplated by this
--------
Agreement close, the Company will reimburse the Investors for all reasonable
costs and expenses (including legal fees and expenses) incurred by the Investors
in connection with the negotiation, execution and delivery of this Agreement and
the Operative Agreements; provided, however, that the costs and expenses that
-------- -------
are non-legal shall be capped at $75,000 and legal fees and expenses will be
capped at an amount agreed upon between the Investors and the Company.
8.4 Survival. The representations, warranties, covenants and
--------
agreements of the Company, Modem Media and the Investors contained in this
Agreement will survive the Closing for a period of 18 months following the
Closing, except that representations and warranties relating to tax matters
shall survive until thirty (30) days following the expiration of
29
the last applicable statute of limitations and the representations and
warranties contained in Sections 2.29, 2.31 and 2.32 shall survive without
expiration.
8.5 Further Assurances; Post-Closing Cooperation. At any time or
--------------------------------------------
from time to time after the Closing, the Company shall execute and deliver to
each Investor such other documents and instruments, provide such materials and
information and take such other actions as each Investor may reasonably request
to consummate the transactions contemplated by this Agreement and the Operative
Agreements and otherwise to cause the Company to fulfill its obligations under
this Agreement and the Operative Agreements.
8.6 Waiver. Any term or condition of this Agreement may be waived at
------
any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by any
party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under
this Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
8.7 Amendment. This Agreement may be amended, supplemented or
---------
modified only by a written instrument duly executed by the Company and the
Investors.
8.8 Right to Rely. Notwithstanding any right of the Investors
-------------
(whether or not exercised) to investigate the affairs of the Company or any
right of any party (whether or not exercised) to investigate the accuracy of
the representations and warranties of the other party contained in this
Agreement, the Company and Modem Media, on the one hand, and the Investors, on
the other hand, have the right to rely fully upon the representations,
warranties, covenants and agreements of the other contained in this Agreement.
8.9 Third Party Beneficiaries. The terms and provisions of this
-------------------------
Agreement are intended solely for the benefit of each party hereto and their
respective successors and assigns, and it is not the intention of the parties to
confer third-party beneficiary rights, and this Agreement does not confer any
such rights, upon any other Person other than any Person entitled to
indemnification under Article VI.
8.10 No Assignment; Binding Effect. Neither this Agreement nor any
-----------------------------
right, interest or obligation hereunder may be assigned (by operation of law or
otherwise) by any party hereto without the prior written consent of the other
parties hereto and any attempt to do so will be void. Subject to the preceding
sentence, this Agreement is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective successors and permitted
assigns.
8.11 Headings. The headings used in this Agreement have been
--------
inserted for convenience of reference only and do not define or limit the
provisions hereof.
8.12 Invalid Provisions. If any provision of this Agreement is held
------------------
to be illegal, invalid or unenforceable under any present or future Law, and if
the rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a)
30
such provision will be fully severable, (b) this Agreement will be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, (c) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the illegal, invalid
or unenforceable provision or by its severance therefrom and (d) in lieu of such
illegal, invalid or unenforceable provision, there will be added automatically
as a part of this Agreement a legal, valid and enforceable provision as similar
in terms to such illegal, invalid or unenforceable provision as may be possible.
8.13 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the domestic laws of the State of New York; provided,
--------
however, that any matters herein within the purview of the General Corporation
-------
Law of the State of Delaware shall be governed by such General Corporation Law.
8.14 Construction. The parties hereto agree that this Agreement is
------------
the product of negotiation between sophisticated parties and individuals, each
of which was represented by counsel, and each of which had an opportunity to
participate in and did participate in, the drafting of each provision hereof.
Accordingly, ambiguities in this Agreement, if any, shall not be construed
strictly or in favor of or against any party hereto but rather shall be given a
fair and reasonable construction.
8.15 Counterparts. This Agreement may be executed in any number of
------------
counter parts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
8.16 Limited Recourse. Notwithstanding anything in this Agreement,
----------------
any Operative Agreement or any other document, agreement or instrument
contemplated hereby or thereby to the contrary, the obligations of the Investors
hereunder and under any Operative Agreement shall be without recourse to any
partner, Associate or Affiliate of the Investors or their respective partners,
or any of their respective officers, directors, employees or agents and shall be
limited to the assets of the Investors.
8.17 Xxxxxx Xxxxxx Capital Partners Acting on Own Behalf, Etc. EACH
---------------------------------------------------------
OF THE COMPANY, MODEM MEDIA AND THE INVESTORS AGREES THAT (1) XXXXXX XXXXXX
CAPITAL PARTNERS AND ITS AFFILIATES EXECUTING THIS AGREEMENT ARE ACTING SOLELY
ON THEIR OWN BEHALF AND NOT ON BEHALF OF, AS AGENT OR REPRESENTATIVE, OR IN ANY
OTHER FIDUCIARY CAPACITY WITH RESPECT TO, ANY OTHER INVESTOR, AND (2) XXXXXX,
XXXXX & BOCKIUS LLP IS ACTING SOLELY AS COUNSEL TO XXXXXX XXXXXX CAPITAL
PARTNERS AND NOT AS COUNSEL TO, OR IN ANY OTHER FIDUCIARY CAPACITY WITH RESPECT
TO, ANY OTHER INVESTOR.
31
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party hereto as of the date
first above written.
CENTRPORT, INC.
By: /s/ Xxxxxxx Xxxxxxx
Name: Xxxxxxx Xxxxxxx
Title: President
XXXXXX XXXXXX CAPITAL PARTNERS, L.P.
By: Xxxxxx Xxxxxx Capital Partners LLC, its general
partner
By: /s/ Xxxx Xxxxxxxxx
Name: Xxxx Xxxxxxxxx
Title: Partner
TWP CEO FOUNDERS' CIRCLE (AI), L.P.
By: Xxxxxx Xxxxxx Capital Partners LLC, its general
partner
By: /s/ Xxxx Xxxxxxxxx
Name: Xxxx Xxxxxxxxx
Title: Partner
TWP CEO FOUNDERS' CIRCLE (QP), L.P.
By: Xxxxxx Xxxxxx Capital Partners LLC, its general
partner
By: /s/ Xxxx Xxxxxxxxx
Name: Xxxx Xxxxxxxxx
Title: Partner
XXXXXX XXXXXX CAPITAL PARTNERS (DUTCH), L.P.
By: Xxxxxx Xxxxxx Capital Partners (Dutch) LLC, its
general partner
By: Xxxxxx Xxxxxx Capital Partners LLC, its managing
member
By: /s/ Xxxx Xxxxxxxxx
Name: Xxxx Xxxxxxxxx
Title: Partner
XXXXXX XXXXXX CAPITAL PARTNERS (DUTCH II), L.P.
By: Xxxxxx Xxxxxx Capital Partners (Dutch) LLC, its
general partner
By: Xxxxxx Xxxxxx Capital Partners LLC, its managing
member
By: /s/ Xxxx Xxxxxxxxx
Name: Xxxx Xxxxxxxxx
Title: Partner
TWP CENTRPORT INVESTORS
By: Xxxxxx Xxxxxxx, its general partner
By: /s/ Xxxxxx Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: Chief Financial Officer
TWP 2000 CO-INVESTMENT FUND, L.P.
By: Xxxxxx Xxxxxx Capital Partners LLC, its general
partner
By: /s/ Xxxx Xxxxxxxxx
Name: Xxxx Xxxxxxxxx
Title: Partner
XXXXXX XXXXXX CAPITAL PARTNERS PARTNER FUND LLC
By: Xxxxxx Xxxxxx Capital Partners LLC, its manager
By: /s/ Xxxx Xxxxxxxxx
Name: Xxxx Xxxxxxxxx
Title: Partner
XXXXXX XXXXXX CAPITAL PARTNERS EMPLOYEE FUND LP
By: Xxxxxx Xxxxxx Capital Partners LLC, its manager
By: /s/ Xxxx Xxxxxxxxx
Name: Xxxx Xxxxxxxxx
Title: Partner
VENTURE STRATEGY PARTNERS II, LP
By: /s/ Xxxxxx Xxxx Gallanter
Name: Xxxxxx Xxxx Xxxxxxxxx
Title: Managing Partner
VENTURE STRATEGY AFFILIATE FUND, L.P.
By: /s/ Xxxxxx Xxxx Gallanter
Name: Xxxxxx Xxxx Xxxxxxxxx
Title: Managing Partner
MODEM MEDIA, INC.
By: /s/ Xxxxxx Xxxx
Name: Xxxxxx Xxxx
Title: Vice President and General Counsel
TRIDENT CAPITAL FUND-V, L.P.
By: Trident Capital Management - V, L.L.C.,
Its General Partner
By: /s/ Xxxxxxx Xxxxxxxxxxx
Name: Xxxxxxx Xxxxxxxxxxx
Title: Managing Director
XXXXXXXX ASSOCIATES III, L.P.
By: Xxxxxxxx Partners III, LLC, General Partner
By: /s/ Xxxxxxxx Xxxxxx
Name: Xxxxxxxx Xxxxxx
Title: Vice President
XXXXXXXX PARTNERS III, L.P.
By: Xxxxxxxx Partners III, LLC, General Partner
By: /s/ Xxxxxxxx Xxxxxx
Name: Xxxxxxxx Xxxxxx
Title: Vice President
XXXXXXXX FOREIGN PARTNERS III, L.P.
By: Xxxxxxxx Partners III, LLC, General Partner
By: /s/ Xxxxxxxx Xxxxxx
Name: Xxxxxxxx Xxxxxx
Title: Vice President
XXXXXX XXXXXXXX XX
By: Xxxxxx Xxxxxxxx Management Company
By: /s/ Xxxxxxx X. Xxxxxx, III
Name: Xxxxxxx X. Xxxxxx, III
Its: President
Exhibit A
---------
Number of Shares of Number of Shares of
Preferred Stock Preferred Stock
Name of Investor From CentrPort, Inc. from Modem Media, Inc
---------------- -------------------- ----------------------
Xxxxxx Xxxxxx Capital Partners, L.P.
Xxx Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000 16,481,108 3,745,707
TWP CEO Founders' Circle (AI), L.P.
(see address above) 397,761 90,400
TWP CEO Founders' Circle (QP), L.P.
(see address above) 1,453,240 330,282
Xxxxxx Xxxxxx Capital Partners (Dutch I), L.P.
(see address above) 385,577 87,631
Xxxxxx Xxxxxx Capital Partners (Dutch II), L.P.
(see address above) 385,577 87,631
TWP Centrport Investors (see address above) 77,181 17,541
TWP 2000 Co-Investment Fund, L.P.
(see address above) 260,383 59,178
Xxxxxx Xxxxxx Capital Partners Partner Fund
LLC (see address above) 769,612 174,912
Xxxxxx Xxxxxx Capital Partners Employee
Fund LP (see address above) 156,671 35,607
Venture Strategy Partners II, L.P.
000 Xxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000 6,555,741 1,667,943
Venture Strategy Affiliate Fund, L.P.
(see above address) 690,013 168,183
Staenberg Capital
0000 Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000 67,890 15,430
Trident Capital
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxx Xxxx, XX 00000 6,789,037 1,542,963
Xxxxxxxx Partners III, L.P.
00 Xxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxx Xxxx, XX 00000
With a copy to:
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000 947,718 215,391
Xxxxxxxx Associates III, L.P.
(see above address) 207,396 47,135
Xxxxxxxx Foreign Partners III, L.P.
(see above address) 202,693 46,067
Xxxxxx Xxxxxxxx XX
00 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000 833,200 0
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