Exhibit 10.1
Execution Copy
--------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
among
XXXXXXXXXXX.XXX, INC.,
ARINCO COMPUTER SYSTEMS, INC.
and
THE OTHER PARTIES NAMED HEREIN
------------------------------
Dated: June 29, 2000
------------------------------
--------------------------------------------------------------------------------
Table of Contents
Page
----
ARTICLE I DEFINITIONS.............................................1
1.1 Definitions.............................................1
ARTICLE II PURCHASE AND SALE OF PREFERRED STOCK....................6
2.1 Purchase and Sale of Preferred Stock....................6
2.2 Amended and Restated Certificate of
Incorporation...........................................7
2.3 Use of Proceeds.........................................7
2.4 Closing.................................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF
THE COMPANY.............................................7
3.1 Corporate Existence and Power...........................7
3.2 Authorization; No Contravention.........................7
3.3 Governmental Authorization; Third Party
Consents..............................................8
3.4 Binding Effect..........................................8
3.5 Litigation..............................................8
3.6 Compliance with Laws....................................8
3.7 Capitalization..........................................9
3.8 No Default or Breach; Contractual Obligations..........10
3.9 Title to Properties....................................10
3.10 FIRPTA.................................................10
3.11 Financial Statements...................................10
3.12 Taxes..................................................11
3.13 No Material Adverse Change; Ordinary
Course of Business...................................11
3.14 Investment Company.....................................11
3.15 Private Offering.......................................11
3.16 Labor Relations........................................12
3.17 Employee Benefit Plans.................................12
3.18 Title to Assets........................................12
3.19 Liabilities............................................12
3.20 Intellectual Property..................................13
3.21 Network Redundancy and Computer Back-up................15
3.22 Privacy of Customer Information........................15
3.23 Potential Conflicts of Interest........................15
3.24 Trade Relations........................................16
3.25 Outstanding Borrowing..................................16
3.26 Insurance..............................................16
3.27 Environmental Matters..................................16
3.28 Broker's, Finder's or Similar Fees.....................16
3.29 Disclosure.............................................17
3.30 Year 2000 Compliance...................................17
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
THE PURCHASERS.........................................17
4.1 Existence and Power....................................17
4.2 Authorization; No Contravention........................18
i
Page
----
4.3 Governmental Authorization; Third
Party Consents.......................................18
4.4 Binding Effect.........................................18
4.5 Purchase for Own Account...............................18
4.6 Restricted Securities..................................19
4.7 Broker's, Finder's or Similar Fees.....................19
4.8 Accredited Investor....................................19
4.9 Investment Representation..............................20
ARTICLE V CONDITIONS TO THE OBLIGATION OF
THE PURCHASERS TO CLOSE................................20
5.1 Secretary's Certificate................................20
5.2 Filing of Amended and Restated Certificate of Incorpora21
5.3 Purchased Shares.......................................21
5.4 Stockholders Agreement.................................21
5.5 Registration Rights Agreement..........................21
5.6 Opinion of Counsel.....................................21
5.7 Stock Option Plan......................................21
5.8 Exchange Agreement.....................................21
5.9 Employment Agreements..................................21
5.10 Restricted Stock Agreements............................22
5.11 Proprietary Invention and Nondisclosure Agreements.....22
5.12 Settlement of Litigation...............................22
5.13 Key-Man Life Insurance.................................22
5.14 Amendment to Bylaws....................................22
5.15 Repayment of Outstanding Convertible Notes.............22
5.16 Assignment of Domain Name..............................22
5.17 Young Kwon Promissory Note.............................22
5.18 Reimbursement for Settlement Agreement.................22
ARTICLE VI CONDITIONS TO THE OBLIGATION OF
THE COMPANY TO CLOSE...................................23
6.1 Payment of Purchase Price..............................23
6.2 Stockholders Agreement.................................23
6.3 Registration Rights Agreement..........................23
ARTICLE VII INDEMNIFICATION........................................23
7.1 Indemnification........................................23
7.2 Notification...........................................24
7.3 Contribution...........................................25
ARTICLE VIII AFFIRMATIVE COVENANTS..................................25
8.1 Preservation of Existence..............................25
8.2 Financial Statements and Other Information.............26
8.3 Reservation of Common Stock............................27
8.4 Insurance..............................................27
8.5 Books and Records......................................27
8.6 Back-ups of Computer Software..........................27
ii
Page
----
8.7 Inspection.............................................27
8.8 Key-Man Life Insurance.................................27
8.9 Share Certificates.....................................27
8.10 Principal Place of Business............................28
8.11 Outstanding Licenses, Permits and Taxes................28
ARTICLE IX MISCELLANEOUS..........................................28
9.1 Survival of Representations and Warranties.............28
9.2 Notices................................................28
9.3 Successors and Assigns; Third Party Beneficiaries......29
9.4 Amendment and Waiver...................................29
9.5 Counterparts...........................................30
9.6 Headings...............................................30
9.7 GOVERNING LAW..........................................30
9.8 Severability...........................................30
9.9 Rules of Construction..................................30
9.10 Entire Agreement.......................................30
9.11 Fees...................................................31
9.12 Publicity; Confidentiality.............................31
9.13 Further Assurances.....................................31
iii
EXHIBITS
A Form of By-laws
B Form of Amended and Restated Certificate of
Incorporation
C Form of Restated Registration Rights Agreement
D Form of Stockholders Agreement
E Form of Woollacott Jannol Fields Opinion
F-1 Form of Employment Agreement for Xxxxxx and Xxxxxxx
F-2 Form of Employment Agreement for Xxxxx, Kwon and Xxxxx
G Form of Restricted Stock Agreement
SCHEDULES
2.1 Purchased Shares and Purchase Price
3.3 Authorizations and Consents
3.5 Litigation
3.6(b) Outstanding Licenses and Permits
3.7(a) List of Equity Holders
3.8 Contractual Obligations
3.11 Estimated Balance Sheet
3.12(a) Outstanding Taxes
3.17 Employee Benefit Plans
3.20(a)(ii) Intellectual Property Owned by the Company and Filings
and Applications Therefor
3.20(a)(iii) Intellectual Property Licenses, Sublicenses,
Distributor Agreements
and Other Agreements
3.20(a)(iv) Infringements by the Company of Intellectual Property
of Others
3.20(a)(v) Intellectual Property Litigation
3.20(b) Infringements of Intellectual Property of the Company
3.20(d) Licenses or Other Agreements Requiring Material Royalty
Payments
3.21 Network Redundancy and Computer Back-up
3.23 Potential Conflicts of Interest
3.25 Outstanding Borrowing
3.26 Insurance
5.13 Employees Delivering Proprietary Invention
and Nondisclosure Agreement
iv
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated June 29, 2000 (this "Agreement"), among
Xxxxxxxxxxx.xxx, Inc., a Delaware corporation (the "Company"), Arinco Computer
Systems, Inc., a New Mexico corporation ("Arinco") and the purchasers listed on
Schedule I hereto (the "Coinvestors" and, together with Arinco, the
"Purchasers").
WHEREAS, upon the terms and conditions set forth in this Agreement, the
Company proposes to issue and sell to each Purchaser the number of shares, par
value $.001 per share, of Series A Convertible Redeemable Participating
Preferred Stock of the Company (the "Preferred Stock") set forth opposite such
Purchaser's name on Schedule 2.1 hereto, for the purchase price set forth
opposite such Purchaser's name on Schedule 2.1 hereto and
WHEREAS, each share of Preferred Stock is convertible (subject to
adjustment) into one share, par value $.001 per share, of voting common stock of
the Company (the "Voting Common Stock").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Affiliate" shall mean any Person who is an "affiliate" as defined in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act. In
addition, the partners or members of a partnership or limited liability company,
as the case may be, shall be deemed to be Affiliates of such partnership or
limited liability company.
"Agreement" means this Agreement as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"Amended and Restated Certificate of Incorporation" means the Amended
and Restated Certificate of Incorporation with respect to the Preferred Stock
adopted by the Board of Directors and duly filed with the Secretary of State of
the State of Delaware on or before the Closing Date substantially in the form
attached hereto as Exhibit B in accordance with the terms of the Stockholders
Agreement.
2
"Arinco" has the meaning set forth in the preamble to this Agreement.
"Assets" has the meaning set forth in Section 3.18 of this Agreement.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in the State of California are authorized or required
by law or executive order to close.
"By-laws" means the by-laws of the Company in effect on the Closing
Date substantially in the form attached hereto as Exhibit A, as the same may be
amended from time to time in accordance with the terms of the Stockholders
Agreement.
"Claims" has the meaning set forth in Section 3.5 of this Agreement.
"Closing" has the meaning set forth in Section 2.4 of this Agreement.
"Closing Date" has the meaning set forth in Section 2.4 of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
"Coinvestors" has the meaning set forth in the preamble to this
Agreement.
"Commission" means the United States Securities and Exchange Commission
or any similar agency then having jurisdiction to enforce the Securities Act.
"Common Stock" means the Voting Common Stock and the Nonvoting Common
Stock.
"Company" has the meaning set forth in the preamble to this Agreement.
"Condition of the Company" means the assets, business, properties,
prospects, operations or condition (financial or otherwise) of the Company.
"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability of that Person with respect to any Indebtedness, lease,
dividend, guaranty, letter of credit or other obligation, contractual or
otherwise (the "primary obligation") of another Person (the "primary obligor"),
whether or not contingent, (a) to purchase, repurchase or otherwise acquire such
primary obligations or any property constituting direct or indirect security
therefor, (b) to advance or provide
3
funds (i) for the payment or discharge of any such primary obligation, or (ii)
to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet item, level
of income or financial condition of the primary obligor, (c) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation, or (d) otherwise to assure or hold harmless
the owner of any such primary obligation against loss or failure or inability to
perform in respect thereof. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reason ably anticipated liability in respect
thereof.
"Contractual Obligations" means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument to which such Person is a
party or by which it or any of its property is bound.
"Copyrights" means any foreign or United States copyright registrations
and applications for registration thereof, and any non-registered copyrights.
"Environmental Laws" means federal, state, local and foreign laws,
principles of common laws, civil laws, regulations, and codes, as well as
orders, decrees, judgments or injunctions, issued, promulgated, approved or
entered thereunder relating to pollution, protection of the environment or
public health and safety.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.
"Financial Statements" has the meaning set forth in Section 3.11 of
this Agreement.
"GAAP" means United States generally accepted accounting principles in
effect from time to time.
"Governmental Authority" means the government of any nation, state,
city, locality or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
4
"Indebtedness" means, as to any Person, (a) all obligations of such
Person for borrowed money (including, without limitation, reimbursement and all
other obligations with respect to surety bonds, letters of credit and bankers'
acceptances, whether or not matured), (b) all obligations of such Person to pay
the deferred purchase price of property or services, except trade accounts
payable and accrued commercial or trade liabilities arising in the ordinary
course of business, (c) all interest rate and currency swaps, caps, collars and
similar agreements or hedging devices under which payments are obligated to be
made by such Person, whether periodically or upon the happening of a
contingency, (d) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all obligations of such Person under leases which have been or
should be, in accordance with GAAP, recorded as capital leases, (f) all
indebtedness secured by any Lien (other than Liens in favor of lessors under
leases other than leases included in clause (e)) on any property or asset owned
or held by that Person regardless of whether the indebtedness secured thereby
shall have been assumed by that Person or is non-recourse to the credit of that
Person, and (g) any Contingent Obligation of such Person.
"Indemnified Party" has the meaning set forth in Section 7.1 of this
Agreement.
"Indemnifying Party" has the meaning set forth in Section 7.1 of this
Agreement.
"Intellectual Property" has the meaning set forth in Section 3.20 of
this Agreement.
"Internet Assets" means any Internet domain names and other computer
user identifiers and any rights in and to sites on the worldwide web, including
rights in and to any text, graphics, audio and video files and html or other
code incorporated in such sites.
"Knowledge" means the knowledge of its officers after due inquiry.
"Liabilities" has the meaning set forth in Section 3.19 of this
Agreement.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or preference, priority,
right or other security interest or preferential arrangement of any kind or
nature whatsoever (excluding preferred stock and equity related preferences).
"Losses" has the meaning set forth in Section 7.1 of this Agreement.
5
"Nonvoting Common Stock" means the nonvoting common stock, par value
$.001 per share, of the Company.
"Orders" has the meaning set forth in Section 3.2 of this Agreement.
"Patents" means any foreign or United States patents and patent
applications, including any divisions, continuations, continuations-in-part,
substitutions or reissues thereof, whether or not patents are issued on such
applications and whether or not such applications are modified, withdrawn or
resubmitted.
"Permits" has the meaning set forth in Section 3.6 of this Agreement.
"Person" means any individual, firm, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
limited liability company, Governmental Authority or other entity of any kind,
and shall include any successor (by merger or otherwise) of such entity.
"Plans" has the meaning set forth in Section 3.17 of this Agreement.
"Preferred Stock" has the meaning set forth in the recitals to this
Agreement.
"Purchased Shares" has the meaning set forth in Section 2.1 of this
Agreement.
"Purchasers" has the meaning set forth in the preamble to this
Agreement.
"Registration Rights Agreement" means the Registration Rights Agreement
substantially in the form attached hereto as Exhibit C.
"Requirements of Law" means, as to any Person, any law, statute,
treaty, rule, regulation, right, privilege, qualification, license or franchise
or determination of an arbitrator or a court or other Governmental Authority or
stock exchange, in each case applicable or binding upon such Person or any of
its property or to which such Person or any of its property is subject or
pertaining to any or all of the transactions contemplated or referred to herein.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"Software" means any computer software programs, source code, object
code, data and documentation, including, without limitation, any computer
software programs that incorporate and run the Company's pricing models,
formulae and algorithms.
6
"Stock Equivalents" means any security or obligation which is by its
terms convertible into or exchangeable for shares of Common Stock or other
capital stock or securities of the Company, and any option, warrant or other
subscription or purchase right with respect to Common Stock or such other
capital stock or securities.
"Stock Option Plan" means the 2000 Stock Option Plan of the Company
pursuant to which up to 3,150,000 shares of restricted stock and options to
purchase shares of Nonvoting Common Stock are reserved and available for grant
to officers, directors, employees and consultants of the Company.
"Stockholders Agreement" means the Stockholders Agreement substantially
in the form attached hereto as Exhibit D.
"Taxes" has the meaning set forth in Section 3.12 of this Agreement.
"Trade Secrets" means any trade secrets, research records, processes,
procedures, manufacturing formulae, technical know-how, technology, blue prints,
designs, plans, inventions (whether patentable and whether reduced to practice),
invention disclosures and improvements thereto.
"Trademarks" means any foreign or United States trademarks, service
marks, trade dress, trade names, brand names, designs and logos, corporate
names, product or service identifiers, whether registered or unregistered, and
all registrations and applications for registration thereof.
"Transaction Documents" means, collectively, this Agreement, the
Stockholders Agreement and the Registration Rights Agreement.
"Voting Common Stock" has the meaning set forth in the recitals to this
Agreement.
ARTICLE II
PURCHASE AND SALE OF PREFERRED STOCK
2.1 Purchase and Sale of Preferred Stock. Subject to the terms and
conditions herein set forth, the Company agrees to issue and sell to each
Purchaser, and each Purchaser severally agrees to purchase from the Company, on
the Closing Date the number of shares of Preferred Stock set forth opposite such
Purchaser's name on Schedule 2.1 hereto, for the purchase price set forth
opposite such Purchaser's name on Schedule 2.1 hereto (all of the shares of
Preferred Stock being purchased pursuant hereto being referred to herein as the
"Purchased Shares").
7
2.2 Amended and Restated Certificate of Incorporation. The Purchased
Shares shall have the preferences and rights set forth in the Amended and
Restated Certificate of Incorporation.
2.3 Use of Proceeds. The Company shall use the proceeds from the sale
of the Purchased Shares to the Purchasers to fund the Company's working capital.
2.4 Closing. The closing of the sale and purchase of the Purchased
Shares (the "Closing") shall take place at the offices of Xxxx, Weiss, Rifkind,
Xxxxxxx & Xxxxxxxx, at 10:00 a.m., local time, on the date hereof, or at such
other time, place and date that the Company and Arinco may agree in writing (the
"Closing Date"). On the Closing Date, or as soon as such certificates are
available, the Company shall deliver to each of the Purchasers a certificate or
certificates in definitive form and registered in the name of each such
Purchaser, representing its Purchased Shares against delivery by each of the
Purchasers to the Company of the aggregate purchase price therefor by (a) wire
transfer of immediately available funds or (b) cancellation of indebtedness.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of the Purchasers
as follows:
3.1 Corporate Existence and Power. The Company (a) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; (b) has all requisite power and authority to
own and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently, or is proposed to be, engaged;
(c) is duly qualified as a foreign corporation, licensed and in good standing
under the laws of each jurisdiction in which its ownership, lease or operation
of property or the conduct of its business requires such qualification and (d)
has the corporate power and authority to execute, deliver and perform its
obligations under this Agreement and each of the other Transaction Documents. No
jurisdiction, other than those referred to in clause (c) above, has claimed, in
writing or otherwise, that the Company is required to qualify as a foreign
corporation or other entity therein, and the Company does not file any
franchise, income or other tax returns in any other jurisdiction based upon the
ownership or use of property therein or the derivation of income therefrom. The
Company does not own or lease property in any jurisdiction other than its
jurisdiction of incorporation and the jurisdictions referred to in clause (c)
above.
3.2 Authorization; No Contravention. The execution, delivery and
performance by the Company of this Agreement and each of the other Transaction
Documents and the transactions contemplated hereby and thereby (a) have been
duly authorized by all necessary corporate action of the Company; (b) do not
contravene
8
the terms of the Restated Certificate of Incorporation or the By-laws; (c) do
not violate, conflict with or result in any breach, default or contravention of
(or with due notice or lapse of time or both would result in any breach, default
or contravention of), or the creation of any Lien under, any Contractual
Obligation of the Company or any Requirement of Law applicable to the Company;
and (d) do not violate any judgment, injunction, writ, award, decree or order of
any nature (collectively, "Orders") of any Governmental Authority against, or
binding upon, the Company.
3.3 Governmental Authorization; Third Party Consents. Except as set
forth in Schedule 3.3 and assuming the accuracy of the Purchasers'
representations and warranties in Section 4.3, no approval, consent, compliance,
exemption, authorization or other action by, or notice to, or filing with, any
Governmental Authority or any other Person, and no lapse of a waiting period
under a Requirement of Law, is necessary or required in connection with the
execution, delivery or performance (including, without limitation, the sale,
issuance and delivery of the Purchased Shares) by, or enforcement against, the
Company of this Agreement and the other Transaction Documents or the
transactions contemplated hereby and thereby.
3.4 Binding Effect. This Agreement and each of the other Transaction
Documents have been duly executed and delivered by the Company, and constitute
the legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity relating to enforceability
(regardless of whether considered in a proceeding at law or in equity).
3.5 Litigation. Except as set forth on Schedule 3.5, there are no
actions, suits, proceedings, claims, complaints, disputes, arbitrations or
investigations (collectively, "Claims") pending or, to the Knowledge of the
Company, threatened, at law, in equity, in arbitration or before any
Governmental Authority against the Company nor is the Company aware that there
is any basis for any of the foregoing. The foregoing includes, without
limitation, Claims pending or, to the Knowledge of the Company, threatened or
any basis therefor Known by the Company involving the prior employment of any of
the Company's employees, their use in connection with the Company's business of
any information or techniques allegedly proprietary to any of their former
employers or their obligations under any agreements with prior employers. No
Order has been issued by any court or other Governmental Authority against the
Company purporting to enjoin or restrain the execution, delivery or performance
of this Agreement or any of the other Transaction Documents.
3.6 Compliance with Laws.
(a) The Company is in compliance with all Requirements of Law and
all Orders issued by any court or Governmental Authority against the Company in
all respects. To the Company's Knowledge, there is no existing or proposed
Requirement of Law which could reasonably be expected to prohibit or
9
restrict the Company from, or otherwise materially adversely effect the Company
in, conducting its business in any jurisdiction in which it now conducts or
proposes, to conduct its business.
(b) (i) Except as set forth on Schedule 3.6(b), the Company has all
licenses, permits and approvals of any Governmental Authority (collectively,
"Permits") that are necessary for the conduct of the business of the Company;
(ii) such Permits are in full force and effect; and (iii) no violations are or
have been recorded in respect of any Permit.
(c) No material expenditure is presently required by the Company to
comply with any existing Requirement of Law or Order.
3.7 Capitalization.
(a) On the Closing Date, after giving effect to the transactions
contemplated by this Agreement, the authorized capital stock of the Company
shall consist of (i) 30,000,000 shares of Voting Common Stock, of which
5,000,000 shares are issued and outstanding, (ii) 20,000,000 shares of Nonvoting
Common Stock, of which 5,835,214 shares are issued and outstanding and (iii)
12,000,000 shares of Preferred Stock, 11,207,136 of which shares are issued and
outstanding. Schedule 3.7(a) sets forth, as of the Closing Date, a true and
complete list of (x) the stockholders of the Company (including any trust or
escrow agent arrangement created in connection with any employee stock option
plan) and, opposite the name of each stockholder, the amount of all outstanding
capital stock and Stock Equivalents owned by such stockholder and (y) the
holders of Stock Equivalents and, opposite the name of each such holder, the
amount of all Stock Equivalents owned by such holder. As of the date of this
Agreement, the aggregate number of shares of restricted stock and options to
purchase shares of Nonvoting Common Stock which may be issued under the Stock
Option Plan is 3,150,000 of which zero (0) have been granted. The Company has
reserved an aggregate of 3,150,000 shares of Voting Common Stock for issuance
upon conversion of the Purchased Shares. Except as set forth on Schedule 3.7(a),
there are no options, warrants, conversion privileges, subscription or purchase
rights or other rights presently outstanding to purchase or otherwise acquire
(i) any authorized but unissued, unauthorized or treasury shares of the
Company's capital stock, (ii) any Stock Equivalents or (iii) other securities of
the Company and there are no commitments, contracts, agreements, arrangements or
understandings by the Company to issue any shares of the Company's capital stock
or any Stock Equivalents or other securities of the Company. The Purchased
Shares are duly authorized, and when issued and sold to the Purchasers after
payment therefor, will be validly issued, fully paid and non-assessable, will be
issued in compliance with the registration and qualification requirements of all
applicable federal, state and foreign securities laws and will be free and clear
of all other Liens (other than those imposed by the Stockholders Agreement. The
shares of Voting Common Stock issuable upon conversion of the Purchased Shares
have been duly reserved for issuance upon conversion of the Preferred Shares
and, when issued in compliance with the provisions of the Restated Certificate
of Incorporation, will be validly issued, fully
10
paid and non-assessable and not subject to any preemptive rights or similar
rights that have not been satisfied and will be free and clear of all other
Liens (other than those imposed by the Stockholders Agreement). All of the
issued and outstanding shares of Common Stock and Preferred Stock are all duly
authorized, validly issued, fully paid and non-assessable, and were issued in
compliance with the registration and qualifi cation requirements of all
applicable federal, state and foreign securities laws.
(b) The Company does not directly or indirectly own or have any
investment in any of the capital stock of, or any other proprietary interest in,
any Person.
(c) The Purchased Shares to be purchased by the Purchasers
hereunder represent, in the aggregate, on the Closing Date, not less than 44.32%
of the outstanding shares of Common Stock on a fully diluted basis assuming the
grant of all options that may be granted under the Stock Option Plan and the
exercise thereof and the conversion, exercise or exchange of any outstanding
securities into shares of Common Stock, including, without limitation, all of
the Purchased Shares.
3.8 No Default or Breach; Contractual Obligations. The Company has not
received notice of a default and is not in default under, or with respect to,
any Contractual Obligation nor does any condition exist that with notice or
lapse of time or both would constitute a default thereunder. Schedule 3.8 lists
all of the Contractual Obligations to which the Company is a party, whether
written or oral, (i) which involve an amount in excess of $25,000 or (ii) which
are otherwise material to the Condition of the Company. All of such Contractual
Obligations are valid, subsisting, in full force and effect and binding upon the
Company and the other parties thereto, and the Company has paid in full or
accrued all amounts due thereunder and has satisfied in full or provided for all
of its liabilities and obligations thereunder. To the Knowledge of the Company,
no other party to any such Contractual Obligation is in default thereunder, nor
does any condition exist that with notice or lapse of time or both would
constitute a default by such other party thereunder.
3.9 Title to Properties. The Company has good, record and marketable
title in fee simple to, or holds interests as lessee under leases in full force
and effect in, all real property used in connection with its business or
otherwise owned or leased by it.
3.10 FIRPTA. The Company is not a "foreign person" within the meaning
of Section 1445 of the Code.
3.11 Financial Statements. The Company has delivered to the Purchasers
the unaudited financial statements of the Company (balance sheet and statements
of operations) for the period ended June 22, 2000 and an estimated balance sheet
as at the date hereof which is attached hereto as Schedule 3.11 (the "Financial
Statements"). The Financial Statements are complete and correct in all respects
and
11
fairly present the financial condition, operating results and cash flows of the
Company as of their respective dates.
3.12 Taxes. (a) Except as set forth on Schedule 3.12(a), the Company
has paid all federal, state, county, local, foreign and other taxes, including,
without limitation, income taxes, estimated taxes, excise taxes, sales taxes,
use taxes, gross receipts taxes, franchise taxes, employment and payroll related
taxes, property taxes and import duties, whether or not measured in whole or in
part by net income (hereinafter, "Taxes" or, individually, a "Tax") which have
come due and are required to be paid by it through the date hereof, and all
deficiencies or other additions to Tax, interest and penalties owed by it in
connection with any such Taxes; (b) the Company has timely filed or caused to be
filed all returns for Taxes that it is required to file on and through the date
hereof (including all applicable extensions), and all such Tax returns are
accurate and complete; (c) with respect to all Tax returns of the Company, (i)
there is no unassessed Tax deficiency proposed or, to the Knowledge of the
Company, threatened against the Company and (ii) no audit is in progress with
respect to any return for Taxes, no extension of time is in force with respect
to any date on which any return for Taxes was or is to be filed and no waiver or
agreement is in force for the extension of time for the assessment or payment of
any Tax; (d) all provisions for Tax liabilities of the Company with respect to
the Financial Statements have been made in accordance with GAAP consistently
applied, and all liabilities for Taxes of the Company attributable to periods
prior to or ending on the Closing Date have been adequately provided for on the
Financial Statements; and (e) there are no Liens for Taxes on the assets of the
Company.
3.13 No Material Adverse Change; Ordinary Course of Business. Since its
date of incorporation, (a) there has not been any material adverse change, nor
is any such change reasonably expected, in the Condition of the Company, (b) the
Company has not participated in any transaction material to the Condition of the
Company or otherwise acted outside the ordinary course of business, including,
without limitation, declaring or paying any dividend or declaring or making any
distribution to its stockholders except out of the earnings of the Company, (c)
the Company has not increased the compensation of any of its officers or the
rate of pay of any of its employees, except as part of regular compensation
increases in the ordinary course of business, (d) the Company has not created or
assumed any Lien on a material asset of the Company; (e) the Company has not
entered into any Contractual Obligation, other than in the ordinary course of
business and (f) there has not occurred a material change in the Company's
accounting principles or practice.
3.14 Investment Company. The Company is not controlled by or affiliated
with an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
3.15 Private Offering. No form of general solicitation or general
advertising was used by the Company or its representatives in connection with
the offer or sale of the Purchased Shares. No registration of the Purchased
Shares, pursuant to the provisions of the Securities Act or any state securities
or "blue sky"
12
laws, will be required by the offer, sale or issuance of the Purchased Shares.
The Company agrees that neither it, nor anyone acting on its behalf, shall offer
to sell the Purchased Shares or any other securities of the Company so as to
require the registration of the Purchased Shares pursuant to the provisions of
the Securities Act or any state securities or "blue sky" laws, unless such
Purchased Shares or other securities are so registered.
3.16 Labor Relations. (a) The Company is not engaged in any unfair
labor practice; (b) there is (i) no grievance or arbitration proceeding arising
out of or under collective bargaining agreements pending or, to the Knowledge of
the Company, threatened against the Company, and (ii) no strike, labor dispute,
slow down or stoppage pending or, to the Knowledge of the Company, threatened
against the Company; (c) the Company is not a party to any collective bargaining
agreement or contract; (d) there is no union representation question existing
with respect to the employees of the Company; and (e) no union organizing
activities are taking place. To the Knowledge of the Company, no officer or key
employee, or any group of key employees, intends to terminate their employment
with the Company. The Company has not discussed or taken any steps to terminate
the employment of any officer, key employee or group of key employees.
3.17 Employee Benefit Plans. The Company does not have any actual or
contingent, direct or indirect, liability in respect of any employee plan or
arrangement, including any plan subject to ERISA, other than to make
contributions under or pay benefits pursuant to the plans listed on Schedule
3.17 (collectively, the "Plans"). All of the Plans are in compliance with all
applicable Requirements of Law. No Plan is subject to Title IV of ERISA, or is
otherwise a defined benefit plan, or is a multiple employer plan (within the
meaning of Section 413(c) of the Code), or provides for post-retirement welfare
benefits or a "parachute payment" (within the meaning of Section 280G(b) of the
Code). The execution and delivery of this Agreement and each of the other
Transaction Documents, the purchase and sale of the Purchased Shares and the
consummation of the transactions contemplated hereby and thereby will not result
in any prohibited transaction within the meaning of Section 406 of ERISA or
Section 4975 of the Code.
3.18 Title to Assets. The Company owns and has good, valid, and
marketable title to all of its properties and assets used in its business and
reflected as owned on the Financial Statements or so described in any Schedule
hereto (collectively, the "Assets"), in each case free and clear of all Liens,
except for Liens specifically described on the notes to the Financial
Statements.
3.19 Liabilities. The Company does not have any direct or indirect
obligation or liability (the "Liabilities") other than Liabilities incurred
since June 20, 2000 in the ordinary course of business. The Company has no
Knowledge of any circumstance, condition, event or arrangement that could
reasonably be expected to give rise hereafter to any Liabilities of the Company
except in the ordinary course of business.
13
3.20 Intellectual Property.
(a) (i) The Company is the owner of all, or has the license or
right to use, sell and license all of, the Copyrights, Patents, Trade Secrets,
Trademarks, Internet Assets, Software and other proprietary rights
(collectively, "Intellectual Property") that are used in connection with its
business as presently conducted or contemplated in its business plan, free and
clear of all Liens, except to the extent such rights are limited by Broadstream
Communications Corporation's use of the term "Broadstream," including but not
limited to U.S. trademark application number 75872815 for the xxxx
"Xxxxxxxxxxx.xxx," U.S. trademark application number 75-876917 for the xxxx
"Broadstream," U.S. trademark application number 75-872813 for the xxxx
"Xxxxxxxxxxx.xxx," U.S. trademark application number 75-872823 for the xxxx
"Broadstream," U.S. trademark application number 75-872814 for the xxxx
"Broadstream Communications" and use of such term in its corporate name, and
Broadstream Communications and Xxxxxx Xxxxxxxx'x use of the term "Broadstream,"
including but not limited to such company and party's use of the Internet domain
name "Xxxxxxxxxxx.xxx" and use of such term in such company's corporate name,
with respect to The Company's rights in the term "Broadstream.".
(ii) Schedule 3.20(a)(ii) sets forth all of the Intellectual
Property owned by, and filings and applications for any Intellectual Property
filed by, the Company. None of the Intellectual Property listed on Schedule
3.20(a)(ii) is subject to any outstanding Order, and no action, suit,
proceeding, hearing, investiga tion, charge, complaint, claim or demand is
pending or, to the Knowledge of the Company, threatened, which challenges the
validity, enforceability, use or ownership of the item.
(iii) Schedule 3.20(a)(iii) sets forth all Intellectual
Property licenses, sublicenses, distributor agreements and other agreements
under which the Company is either a licensor, licensee or distributor, except
such licenses, sublicenses and other agreements relating to off-the-shelf
software, which is commercially available on a retail basis and used solely on
the computers of the Company. The Company has substantially performed all
obligations imposed upon it thereunder, and is not, nor to the Knowledge of the
Company is any other party thereto, in breach of or default thereunder in any
respect, nor is there any event which with notice or lapse of time or both would
constitute a default thereunder. All of the Intellectual Property licenses
listed on Schedule 3.20(a)(iii) are valid, enforceable and in full force and
effect, and will continue to be so on identical terms immediately following the
Closing except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity relating to enforceability (regardless of whether
considered in a proceeding at law or in equity).
(iv) Other than as set forth on Schedule 3.20(a)(iv), none of
the Intellectual Property currently sold or licensed by the Company to any
Person
14
or used by or licensed to the Company by any Person infringes upon or otherwise
violates any Intellectual Property rights of others.
(v) Except as set forth on Schedule 3.20(a)(v), no
litigation is pending and no Claim has been made against the Company or, to the
Knowledge of the Company, is threatened, contesting the right of the Company to
sell or license to any Person or use the Intellectual Property presently sold or
licensed to such Person or used by the Company.
(b) Except as set forth on Schedule 3.20(b), to the Knowledge
of the Company, no Person is infringing upon or otherwise violating the
Intellectual Property rights of the Company.
(c) No former employer of any employee of the Company, and
no current or former client of any consultant of the Company, has made a claim
against the Company or, to the Knowledge of the Company, against any other
Person, that such employee or such consultant is utilizing Intellectual Property
of such former employer or client.
(d) Except as set forth on Schedule 3.20(d), the Company is
not a party to or bound by any license or other agreement requiring the payment
by the Company of any royalty payment, excluding such agreements relating to
software licensed for use solely on the computers of the Company.
(e) To the Knowledge of the Company, no employee of the Company
is in violation of any Requirement of Law applicable to such employee,
or any term of any employment agreement, patent or invention disclosure
agreement or other contract or agreement relating to the relationship of such
employee with the Company or any prior employer.
(f) To the Knowledge of the Company, none of the Trade Secrets,
wherever located, the value of which is contingent upon maintenance of
confidentiality thereof, has been disclosed to any Person other than employees,
representatives and agents of the Company, except as required pursuant to the
filing of a patent application by the Company.
(g) It is not necessary for the Company's business to use any
Intellectual Property owned by any director, officer, employee or consultant of
the Company (or persons the Company presently intends to hire). To the Company's
Knowledge, at no time during the conception or reduction to practice of any of
the Company's Intellectual Property was any developer, inventor or other
contributor to such Intellectual Property operating under any grants from any
Governmental Authority or subject to any employment agreement, invention
assignment, nondisclosure agreement or other Contractual Obligation with any
Person that could adversely affect the Company's rights to its Intellectual
Property.
15
(h) All present employees of the Company have executed and
delivered proprietary invention agreements with the Company, and are obligated
under the terms thereof to assign all inventions made by them during the course
of employment to the Company. No such employee or present consultant of the
Company has excluded works or inventions made prior to his employment with or
work for the Company from his assignment of inventions pursuant to such
proprietary invention agreements.
3.21 Network Redundancy and Computer Back-up. Except as set forth on
Schedule 3.21,
(a) the server hardware and supporting equipment (including
communications equipment, terminals and hook-ups that interface with third party
computer systems) used in the Company's services network provide redundancy and
meet industry standards relating to high availability; and
(b) the Company has made back-ups of all material computer Software
and databases utilized by it and maintain such Software and databases at a
secure off-site location.
3.22 Privacy of Customer Information. The Company does not use any of
the customer information it receives through its website or otherwise in an
unlawful manner, or in a manner violative of the Company's privacy policy or the
privacy rights of its customers. The Company has not collected any customer
information through its website in an unlawful manner or in violation of its
privacy policy. The Company has adequate security measures in place to protect
the customer information it receives through its website and which it stores in
its computer systems from illegal use by third parties or use by third parties
in a manner violative of the rights of privacy of its customers. The Company
represents to its customers that it assures complete security as to the customer
information it receives through its website.
3.23 Potential Conflicts of Interest. Except as set forth on Schedule
3.23, no officer, director or stockholder of the Company, no spouse of any such
officer, director or stockholder, and, to the Knowledge of the Company, no
relative of such spouse or of any such officer, director or stockholder and no
Affiliate of any of the foregoing (a) owns, directly or indirectly, any interest
in (excepting less than one percent (1%) stock holdings for investment purposes
in securities of publicly held and traded companies), or is an officer,
director, employee or consultant of, any Person which is, or is engaged in
business as, a competitor, lessor, lessee, supplier, distributor, sales agent or
customer of, or lender to or borrower from, the Company; (b) owns, directly or
indirectly, in whole or in part, any tangible or intangible property that the
Company has used, or that the Company will use, in the conduct of business; or
(c) has any cause of action or other claim whatsoever against, or owes or has
advanced any amount to, the Company, except for claims in the ordinary course of
business such as for accrued vacation pay, accrued benefits under employee
benefit plans, and similar matters and agreements existing on the date hereof.
16
3.24 Trade Relations. There exists no actual or, to the Knowledge of
the Company, threatened termination, cancellation or limitation of, or any
adverse modification or change in, the business relationship of the Company, or
the business of the Company, with any customer or supplier or any group of
customers or suppliers whose purchases or inventories provided to the Company's
business are individually or in the aggregate material to the Condition of the
Company, and there exists no present condition or state of fact or circumstances
that would adversely affect the Condition of the Company or prevent the Company
from conducting such business relationships or such business with any such
customer, supplier or group of customers or suppliers in the same manner as
heretofore conducted by the Company.
3.25 Outstanding Borrowing. Schedule 3.25 sets forth the amount of all
Indebtedness of the Company as of the date hereof, the Liens that relate to such
Indebtedness and that encumber the Assets and the name of each lender thereof.
No Indebtedness is entitled to any voting rights in any matters voted upon the
holders of the Voting Common Stock.
3.26 Insurance. Schedule 3.26 lists all of the insurance policies held
by or on behalf of the Company, with the effective date and coverage amounts
indicated thereon. Such policies and binders are valid and enforceable in
accordance with their terms and are in full force and effect and cover all risks
associated with the Company's business that are customarily insured against in
the industry in such amounts as are customary in the industry. None of such
policies will be affected by, or terminate or lapse by reason of, any
transaction contemplated by this Agreement or any of the other Transaction
Documents.
3.27 Environmental Matters. The Company is in compliance with all
applicable Environmental Laws. There is no civil, criminal or administrative
judg ment, action, suit, demand, claim, hearing, notice of violation,
investigation, proceeding, notice or demand letter pending or, to the Knowledge
of the Company, threatened against the Company pursuant to Environmental Laws;
and, to the Knowledge of the Company, there are no past or present events,
conditions, circumstances, activities, practices, incidents, agreements, actions
or plans which could reasonably be expected to prevent compliance with, or which
have given rise to or will give rise to liability under, Environmental Laws.
3.28 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by the Company
in connection with the transactions contemplated hereby based on any agreement,
arrangement or understanding with the Company or any action taken by any such
Person.
17
3.29 Disclosure.
(a) Agreement and Other Documents. This Agreement and the documents
and certificates furnished to the Purchasers by the Company do not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained herein or therein, in the light of the
circum stances under which they were made, not misleading.
(b) Material Adverse Effects. There is no fact that the Company has
not disclosed to the Purchasers in writing which materially adversely affects,
or insofar as the Company can reasonably foresee could materially adversely
affect, the Condition of the Company or the ability of the Company to perform
its obligations under this Agreement, any of the other Transaction Documents or
any document contemplated hereby or thereby.
3.30 Year 2000 Compliance. The Company has conducted and continues to
conduct "year 2000" audits with respect to the Software which constitutes part
of the products and services manufactured, marketed or sold by the Company or
licensed by the Company to third parties, and the Company is not aware of any
failure of such Software to be Year 2000 Compliant, which failure is reasonably
likely to have a material adverse effect on the Company. The Company has used
commercially reasonable efforts to obtain "year 2000" certifications with
respect to all third-party Software used in connection with the business or
operations of the Company, including without limitation systems belonging to the
Company's suppliers, service providers and customers. As used herein, "Year 2000
Compliant" means Software which can (a) accurately process date information
before, during and after January 1, 2000, including, but not limited to,
accepting date input, providing date output and performing calculations on date
or portions of dates; (b) function accurately and without interruption before,
during and after January 1, 2000 without any change in operations associated
with the advent of the new century; (c) respond to two (2) digit year input in a
way that resolves the ambiguity as to century in a disclosed and predetermined
manner; and (d) store and provide output of date information in ways that are
unambiguous as to century, in each case assuming that such Software receives
properly formatted data from all other software or hardware with which it
interacts.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each of the Purchasers hereby represents and warrants, severally and
not jointly, to the Company as follows:
4.1 Existence and Power. Such Purchaser (a) in the case of an entity,
(i) is a limited partnership, corporation, partnership or limited liability
company duly organized and validly existing under the laws of the jurisdiction
of its
18
formation and (ii) has the requisite partnership, corporate or limited liability
company, as the case may be, power and authority to execute, deliver and perform
its obligations under this Agreement and each of the other Transaction Documents
to which it is a party and (b) in the case of an individual, has the legal
capacity to execute, deliver and perform its obligations under this Agreement
and each of the other Transaction Documents to which it is a party.
4.2 Authorization; No Contravention. The execution, delivery and
performance by such Purchaser of this Agreement and each of the other
Transaction Documents to which it is a party and the transactions contemplated
hereby and thereby, (a) in the case of an entity, (i) have been duly authorized
by all necessary partnership, corporate or limited liability company, as the
case may be, action, and (ii) do not contravene the terms of such Purchaser's
organizational documents, or any amendment thereof, and (b) (i) do not violate,
conflict with or result in any breach or contravention of, or the creation of
any Lien under, any Contractual Obligation of such Purchaser or any Requirement
of Law applicable to such Purchaser and (ii) do not violate any Orders of any
Governmental Authority against, or binding upon, such Purchaser.
4.3 Governmental Authorization; Third Party Consents. No approval,
consent, compliance, exemption, authorization or other action by, or notice to,
or filing with, any Governmental Authority or any other Person, and no lapse of
a waiting period under any Requirement of Law, is necessary or required in
connection with the execution, delivery or performance (including, without
limitation, the purchase of the Purchased Shares) by, or enforcement against,
such Purchaser of this Agreement and each of the other Transaction Documents to
which it is a party or the transactions contemplated hereby and thereby.
4.4 Binding Effect. This Agreement and each of the other Transaction
Documents to which it is a party have been duly executed and delivered by such
Purchaser and constitutes the legal, valid and binding obligations of such
Purchaser, enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws
affecting the enforcement of creditors' rights generally or by equitable
principles relating to enforceability (regardless of whether considered in a
proceeding at law or in equity).
4.5 Purchase for Own Account. The Purchased Shares to be acquired by
such Purchaser pursuant to this Agreement are being or will be acquired for its
own account and with no intention of distributing or reselling such Purchased
Shares or any part thereof in any transaction that would be in violation of the
securities laws of the United States of America, or any state, without
prejudice, however, to the rights of such Purchaser at all times to sell or
otherwise dispose of all or any part of such Purchased Shares under an effective
registration statement under the Securities Act, or under an exemption from such
registration available under the Securities Act, and subject, nevertheless, to
the disposition of such Purchaser's property being at all times within its
control. If such Purchaser should in the future
19
decide to dispose of any of such Purchased Shares, such Purchaser understands
and agrees that it may do so only in compliance with the Securities Act and
applicable state securities laws, as then in effect. Such Purchaser agrees to
the imprinting, so long as required by law, of a legend on certificates
representing all of its Purchased Shares and shares of Voting Common Stock
issuable upon conversion of its Purchased Shares to the following effect:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY
STATE. THE SECURITIES MAY NOT BE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
THE SALE, ASSIGNMENT, HYPOTHECATION, PLEDGE,
ENCUMBRANCE OR OTHER DISPOSITION (EACH A "TRANSFER")
AND VOTING OF ANY OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE RESTRICTED BY THE TERMS OF THE
STOCKHOLDERS AGREEMENT, DATED JUNE 29, 2000, AMONG
THE COMPANY AND THE STOCKHOLDERS NAMED THEREIN, A
COPY OF WHICH MAY BE INSPECTED AT THE COMPANY'S
PRINCIPAL OFFICE. THE COMPANY WILL NOT REGISTER THE
TRANSFER OF SUCH SECURITIES ON THE BOOKS OF THE
COMPANY UNLESS AND UNTIL THE TRANSFER HAS BEEN MADE
IN COMPLIANCE WITH THE TERMS OF THE STOCKHOLDERS
AGREEMENT.
4.6 Restricted Securities. Such Purchaser understands that the
Purchased Shares will not be registered at the time of their issuance under the
Securities Act for the reason that the sale provided for in this Agreement is
exempt pursuant to Section 4(2) of the Securities Act and that the reliance of
the Company on such exemption is predicated in part on such Purchaser's
representations set forth herein.
4.7 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by such
Purchaser in connection with the transactions contemplated hereby based on any
agreement, arrangement or understanding with such Purchaser or any action taken
by such Purchaser.
4.8 Accredited Investor. Such Purchaser is an "Accredited Investor"
within the meaning of Rule 501 of Regulation D under the Securities Act, as
presently in effect.
20
4.9 Investment Representation. Solely for establishing that the sale of
Purchased Shares to such Purchaser is exempt from the registration requirements
of Section 5 of the Securities Act and comparable provisions of state blue-sky
laws and not in any way to mitigate the responsibility or liability of the
Company for any breach of the representations and warranties made by it in this
Agreement, on which such Purchaser is relying in full in connection with its
decision to invest in the Company:
(a) No regulator has made any finding or determination relating to
the fairness of the investment in the Purchased Shares, and no regulator has or
will recommend or endorse the Purchased Shares.
(b) By reason of his business or financial experience, such
Purchaser is capable of evaluating the merits and risks of this investment and
of protecting his own interests in connection with this investment.
(c) During the course of this transaction and before acquiring the
Purchased Shares, such Purchaser has been provided with such financial and other
written information about Company that such Purchaser deemed was necessary.
(d) Such Purchaser has been given the opportunity by Company to
obtain any information and to ask any questions concerning Company, the
Purchased Shares and the investment that was felt necessary; and to the extent
necessary, such Purchaser availed himself of that opportunity and received
satisfactory information and answers.
(e) In reaching the decision to invest in the Purchased Shares,
such Purchaser have carefully evaluated its financial resources and investment
position and the risks associated with this investment; and such Purchaser
acknowledges that it is able to bear the economic risks of this investment.
ARTICLE V
CONDITIONS TO THE OBLIGATION
OF THE PURCHASERS TO CLOSE
The obligation of the Purchasers to purchase the Purchased Shares to
pay the purchase price therefor at the Closing and to perform any obligations
hereunder shall be subject to the satisfaction as determined by, or waiver by,
Arinco of the following conditions on or before the Closing Date.
5.1 Secretary's Certificate. The Purchasers shall have received a
certificate from the Company, in form and substance satisfactory to Arinco,
dated the Closing Date and signed by the Secretary or an Assistant Secretary of
the Company, certifying (a) that the Company is in good standing with the
Secretary of State of the State of Delaware, (b) that the attached copies of the
Amended and Restated
21
Certificate of Incorporation, the By-laws, and resolutions of the Board of
Directors of the Company approving this Agreement and each of the other
Transaction Documents and the transactions contemplated hereby and thereby, are
all true, complete and correct and remain unamended and in full force and effect
and (c) as to the incumbency and specimen signature of each officer of the
Company executing this Agreement, each other Transaction Document and any other
document delivered in connection herewith on behalf of the Company.
5.2 Filing of Amended and Restated Certificate of Incorporation. The
Amended and Restated Certificate of Incorporation shall have been duly filed by
the Company with the Secretary of State of the State of Delaware in accordance
with the General Corporation Law of the State of Delaware, and the Purchasers
shall have received evidence of such filing in form and substance reasonably
satisfactory to Arinco.
5.3 Purchased Shares. If such certificates are available, the Company
shall have delivered to each of the Purchasers certificates in definitive form
representing the number of Purchased Shares set forth opposite such Purchaser's
name on Schedule 2.1 hereto, registered in the name of such Purchaser.
5.4 Stockholders Agreement. The Company and each of the Persons listed
on Schedule 3.7(a) shall have duly executed and delivered the Stockholders
Agreement.
5.5 Registration Rights Agreement. The Company and each of the Persons
listed on Schedule 3.7(a) shall have duly executed and delivered the
Registration Rights Agreement.
5.6 Opinion of Counsel. The Purchasers shall have received an opinion
of Woollacott Jannol Fields LLP, dated the Closing Date, relating to the
transactions contemplated by or referred to herein, substantially in the form
attached hereto as Exhibit E.
5.7 Stock Option Plan. The Company shall have established the Stock
Option Plan in form and substance reasonably satisfactory to Arinco.
5.8 Exchange Agreement. 2,719,531 and 1,341,875 of the outstanding
shares of Common Stock held by each of Xxxxxxx Xxxxxx and Xxxx Xxxxxxx,
respectively, and all of the outstanding shares of Voting Common Stock held by
eViva Ventures, LLC, Xxxxxxx Xxxxx, Young Kwon and Xxxxxx Xxxxx shall have been
exchanged for shares of Nonvoting Common Stock in a manner reasonably
satisfactory to Arinco.
5.9 Employment Agreements. Each of Xxxxxxx Xxxxxx and Xxxx Xxxxxxx and
the Company shall have duly executed and delivered an Employment Agreement,
substantially in the form attached hereto as Exhibit F-1 and each of Xxxxxxx
Xxxxx, Young Kwon and Xxxxxx Xxxxx and the Company shall have duly
22
executed and delivered on Employment Agreement, substantially in the form
attached hereto as Exhibit F-2.
5.10 Restricted Stock Agreements. Each of Xxxxxxx Xxxxxx, Xxxx Xxxxxxx,
Xxxxxxx Xxxxx, Xxxxx Xxxx and Xxxxxx Xxxxx and the Company shall have duly
executed and delivered a Restricted Stock Agreement, substantially in the form
attached hereto as Exhibit G.
5.11 Proprietary Invention and Nondisclosure Agreements. Each of the
Persons set forth on Schedule 5.13 shall have duly executed and delivered a
Proprietary Invention and Nondisclosure Agreement, in form and substance
reasonably satisfactory to Arinco.
5.12 Settlement of Litigation. The Xxxxxxxxx.xxx, Inc. litigation shall
have been settled in a manner reasonably satisfactory to Arinco.
5.13 Key-Man Life Insurance. The Company shall have obtained a term
life insurance policy on the life on Xxxxxxx Xxxxxx in an amount of at least
$9,500,000 naming the Company as beneficiary.
5.14 Amendment to Bylaws. The Company's Bylaws shall have been amended
to (a) remove cumulative voting for directors and (b) give the Board of
Directors authority to act upon a majority of the directors voting, such
amendment to be in form and substance reasonably satisfactory to Arinco.
5.15 Repayment of Outstanding Convertible Notes. The Company shall be
prepared to repay any Indebtedness owed to any of the Purchasers that is not
being canceled pursuant to this Agreement.
5.16 Assignment of Domain Name. Xxxxxxx Xxxxxx shall have assigned all
rights, title and interest in the website address "xxxxxxxxxxx.xxx" to the
Company pursuant to an assignment agreement reasonably satisfactory to Arinco.
5.17 Young Kwon Promissory Note. Young Kwon shall have executed a
promissory note in favor of the Company reasonably satisfactory to Arinco
evidencing his Indebtedness to the Company.
5.18 Reimbursement for Settlement Agreement. Xxxxxxx Xxxxxx and Xxxx
Xxxxxxx shall have reimbursed the Company, either by forfeiture of shares of
Common Stock or payment of cash, for the expenses incurred by the settlement
referred to in Section 5.12, or shall have entered into an agreement with the
Company with regard to the foregoing.
23
ARTICLE VI
CONDITIONS TO THE OBLIGATION
OF THE COMPANY TO CLOSE
The obligation of the Company to issue and sell the Purchased Shares
and the obligation of the Company to perform its other obligations hereunder
shall be subject to the satisfaction as determined by, or waiver by, the Company
of the following conditions on or before the Closing Date:
6.1 Payment of Purchase Price. Each Purchaser shall be prepared to pay
the aggregate purchase price for the Purchased Shares to be purchased by such
Purchaser.
6.2 Stockholders Agreement. Each Purchaser shall have duly executed and
delivered the Stockholders Agreement.
6.3 Registration Rights Agreement. Each Purchaser shall have duly
executed and delivered the Registration Rights Agreement.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification. Except as otherwise provided in this Article VII,
the Company (the "Indemnifying Party") agrees to indemnify, defend and hold
harmless each of the Purchasers and its Affiliates and their respective
officers, directors, agents, employees, subsidiaries, partners, members and
controlling persons (each, an "Indemnified Party") to the fullest extent
permitted by law from and against any and all losses, Claims, or written threats
thereof (including, without limitation, any Claim by a third party), damages,
expenses (including reasonable fees, disbursements and other charges of counsel
incurred by the Indemnified Party in any action between the Indemnifying Party
and the Indemnified Party or between the Indemnified Party and any third party
or otherwise) or other liabilities (collectively, "Losses") resulting from or
arising out of any breach of any representation or warranty, covenant or
agreement by the Company in this Agreement or the other Transaction Documents;
provided however, that if and to the extent that such indemnification is
unenforceable for any reason, the Indemnifying Party shall make the maximum
contribution to the payment and satisfaction of such Losses which shall be
permissible under applicable laws. The amount of any payment to any Indemnified
Party herewith in respect of any Loss shall be of sufficient amount to make such
Indemnified Party whole for any diminution in value of the Purchased Shares. In
connection with the obligation of the Indemnifying Party to indemnify for
expenses as set forth above, the Indemnifying Party shall, upon presentation of
appropriate invoices containing reasonable detail, reimburse each Indemnified
Party for all such expenses (including reasonable fees, disbursements and other
charges of counsel
24
incurred by the Indemnified Party in any action between the Indemnifying Party
and the Indemnified Party or between the Indemnified Party and any third party)
as they are incurred by such Indemnified Party; provided, however, that if an
Indemnified Party is reimbursed under this Article VII for any expenses, such
reimbursement of expenses shall be refunded to the extent it is finally
judicially determined that the Losses in question resulted primarily from the
willful misconduct or gross negligence of such Indemnified Party.
7.2 Notification. Each Indemnified Party under this Article VII shall,
promptly after the receipt of notice of the commencement of any Claim against
such Indemnified Party in respect of which indemnity may be sought from the
Indemnifying Party under this Article VII, notify the Indemnifying Party in
writing of the commencement thereof. The omission of any Indemnified Party to so
notify the Indemnifying Party of any such action shall not relieve the
Indemnifying Party from any liability which it may have to such Indemnified
Party (a) other than pursuant to this Article VII or (b) under this Article VII
unless, and only to the extent that, such omission results in the Indemnifying
Party's forfeiture of substantive rights or defenses. In case any such Claim
shall be brought against any Indemnified Party, and it shall notify the
Indemnifying Party of the commencement thereof, the Indemnifying Party shall be
entitled to assume the defense thereof at its own expense, with counsel
satisfactory to such Indemnified Party in its reasonable judgment; provided,
however, that any Indemnified Party may, at its own expense, retain separate
counsel to participate in such defense at its own expense. Notwithstanding the
foregoing, in any Claim in which both the Indemnifying Party, on the one hand,
and an Indemnified Party, on the other hand, are, or are reasonably likely to
become, a party, such Indemnified Party shall have the right to employ separate
counsel and to control its own defense of such Claim if, in the reasonable
opinion of counsel to such Indemnified Party, either (x) one or more defenses
are available to the Indemnified Party that are not available to the
Indemnifying Party or (y) a conflict or potential conflict exists between the
Indemnifying Party, on the one hand, and such Indemnified Party, on the other
hand, that would make such separate representation advisable; provided, however,
that the Indemnifying Party (i) shall not be liable for the fees and expenses of
more than one counsel to all Indemnified Parties and (ii) shall reimburse the
Indemnified Parties for all of such fees and expenses of such counsel incurred
in any action between the Indemnifying Party and the Indemnified Parties or
between the Indemnified Parties and any third party, as such expenses are
incurred. The Indemnifying Party agrees that it will not, without the prior
written consent of the Purchasers, settle, compromise or consent to the entry of
any judgment in any pending or threatened Claim relating to the matters
contemplated hereby (if any Indemnified Party is a party thereto or has been
actually threatened to be made a party thereto) unless such settlement,
compromise or consent includes an unconditional release of each Indemnified
Party from all liability arising or that may arise out of such Claim. The
Indemnifying Party shall not be liable for any settlement of any Claim effected
against an Indemnified Party without its written consent, which consent shall
not be unreasonably withheld. The rights accorded to an Indemnified Party
hereunder shall be in addition to any rights that any Indemnified Party may have
at common law, by separate agreement or otherwise; provided,
25
however, that notwithstanding the foregoing or anything to the contrary
contained in this Agreement, nothing in this Article VII shall restrict or limit
any rights that any Indemnified Party may have to seek equitable relief.
7.3 Contribution. If the indemnification provided for in this Article
VII from the Indemnifying Party is unavailable to an Indemnified Party hereunder
in respect of any Losses referred to herein, then the Indemnifying Party, in
lieu of indemnifying such Indemnified Party, shall contribute to the amount paid
or payable by such Indemnified Party as a result of such Losses in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party and Indemnified Party in connection with the actions which resulted in
such Losses, as well as any other relevant equitable considerations. The
relative faults of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties| relative intent, knowledge, access to information and opportunity to
correct or prevent such action. The amount paid or payable by a party as a
result of the Losses referred to above shall be deemed to include, subject to
the limitations set forth in Sections 7.1 and 7.2, any legal or other fees,
charges or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
ARTICLE VIII
AFFIRMATIVE COVENANTS
The Company hereby covenants and agrees with the Purchasers as follows:
8.1 Preservation of Existence. The Company shall:
(a) preserve and maintain in full force and effect its existence
and good standing under the laws of its jurisdiction of formation or
organization;
(b) preserve and maintain in full force and effect all material
rights, privileges, qualifications, applications, licenses and franchises
necessary in the normal conduct of its business;
(c) use its reasonable best efforts to preserve its business
organization;
(d) conduct its business in the ordinary course in accordance with
sound business practices, keep its properties in good working order and
condition (normal wear and tear excepted), and from time to time make all needed
repairs to, renewals of or replacements of its properties so that the efficiency
of its business operation shall be reasonably maintained and preserved;
26
(e) comply with all Requirements of Law and with the directions of
any Governmental Authority having jurisdiction over the Company or its business
or property; and
(f) file or cause to be filed in a timely manner all reports,
applications, estimates and licenses that shall be required by a Governmental
Authority.
8.2 Financial Statements and Other Information. The Company shall
deliver to each Purchaser, in form and substance satisfactory to Arinco:
(a) as soon as available, but not later than thirty (30) days
after the Closing Date, an unaudited financial statement of the Company (balance
sheet and statement of operations) as of the Closing Date, taking into account
the transactions contemplated by this Agreement.
(b) as soon as available, but not later than ninety (90) days
after the end of each fiscal year of the Company, a copy of the audited balance
sheet of the Company as of the end of such fiscal year and the related
statements of operations and cash flows for such fiscal year, setting forth in
each case in compara tive form the figures for the previous year, all in
reasonable detail and accompanied by a management summary and analysis of the
operations of the Company for such fiscal year and by the opinion of a
nationally recognized independent certified public accounting firm which report
shall state without qualification that such financial statements present fairly
the financial condition as of such date and results of opera tions and cash
flows for the periods indicated in conformity with GAAP applied on a consistent
basis;
(c) commencing with the six months ended June 30, 2000 as soon as
available, but in any event not later than forty-five (45) days after the end of
each of the first three fiscal quarters of each fiscal year, the unaudited
balance sheet of the Company, and the related statements of operations and cash
flows for such quarter and for the period commencing on the first day of the
fiscal year and ending on the last day of such quarter, all certified by an
appropriate officer of the Company as presenting fairly the financial condition
as of such date and results of operations and cash flows for the periods
indicated in conformity with GAAP applied on a consistent basis, subject to
normal year-end adjustments and the absence of footnotes required by GAAP;
(d) if requested by any of the Purchasers, as promptly as
practicable, but not later than five (5) days after the end of each fiscal year
of the Company, a certificate signed by the Chief Executive Officer of the
Company in customary form certifying that the Company is not a "foreign person"
within the meaning of Section 1445 of the Code; and
(e) such other information as Arinco reasonably may request.
27
8.3 Reservation of Common Stock. The Company shall at all times reserve
and keep available out of its authorized shares of Voting Common Stock, solely
for the purpose of issue or delivery upon conversion of the Purchased Shares, as
provided in the Restated Certificate of Incorporation, the maximum number of
shares of Voting Common Stock that may be issuable or deliverable upon such
conversion. Such shares of Voting Common Stock are duly authorized and, when
issued or delivered in accordance with the Restated Certificate of
Incorporation, shall be validly issued, fully paid and non-assessable. The
Company shall issue such shares of Voting Common Stock, in accordance with the
terms of the Restated Certificate of Incorporation, and otherwise comply with
the terms hereof and thereof.
8.4 Insurance. The Company shall maintain insurance with insurance
companies or associations with a rating of "A" or better as established by
Best's Rating Guide (or an equivalent rating with such other publication of a
similar nature as shall be in current use) in such amounts and covering such
risks as are usually and customarily carried with respect to similar businesses
according to its locations.
8.5 Books and Records. The Company shall keep proper books of record
and account, in which full and correct entries shall be made of all financial
transactions and the assets and business of the Company in accordance with GAAP
consistently applied.
8.6 Back-ups of Computer Software. The Company shall make back-ups of
all material computer software programs and databases and shall maintain such
software programs and databases at a secure off-site location.
8.7 Inspection. The Company shall permit representatives of the
Purchasers to visit and inspect any of its properties, to examine its corporate,
financial and operating records and make copies thereof or abstracts therefrom,
and to discuss its affairs, finances and accounts with their respective
directors, officers and independent public accountants, all at such reasonable
times during normal business hours and as often as may be reasonably requested
upon reasonable advance notice to the Company; provided, however, that the
Company shall not be obligated under this Section 8.7 with respect to
information which the Board of Directors determines in good faith is
confidential and should not, therefore, be disclosed.
8.8 Key-Man Life Insurance. The Company shall use commercially
reasonable efforts to maintain a term life insurance policy on the life of
Xxxxxxx Xxxxxx in the amount of at least $9,500,000 naming the Company as the
beneficiary.
8.9 Share Certificates. To the extent the certificates referred to in
Section 5.3 hereof were not delivered on the Closing Date, the Company shall,
promptly upon the availability of such certificates but in any event not later
than five (5) Business Days after the Closing Date, deliver such certificates to
the Purchasers.
28
8.10 Principal Place of Business. Within thirty (30) days of the
Closing Date, the Company shall have established its principal place of
business, and delivered to Arinco the lease, in form and substance reasonably
satisfactory to Arinco, therefor.
8.11 Outstanding Licenses, Permits and Taxes. Within thirty (30) days
of the Closing Date, the Company shall have (a) obtained such permits and
licenses as are listed on Schedule 3.6(b) and (b) paid such taxes as are listed
on Schedule 3.12(a).
ARTICLE IX
MISCELLANEOUS
9.1 Survival of Representations and Warranties. All of the
representations and warranties made herein shall survive the execution and
delivery of this Agreement until the date that is ninety (90) days after the
receipt by the Purchasers of audited financial statements of the Company for the
fiscal year ending December 31, 2001 (or, if such fiscal year changes and no
such audited consolidated financial statements are available, then the successor
fiscal year), except for (a) Sections 3.1, 3.2, 3.4, 3.7, 3.15, 3.28 and 3.30,
which representations and warranties shall survive until the third anniversary
of the Closing Date, and (b) Section 3.12, which shall survive until the later
to occur of (i) the lapse of the statute of limitations with respect to the
assessment of any Tax to which such representation and warranty relates
(including any extensions or waivers thereof) and (ii) sixty (60) days after the
final administrative or judicial determination of the Taxes to which such
representation and warranty relates, and no claim with respect to Section 3.12
may be asserted thereafter with the exception of claims arising out of any fact,
circumstance, action or proceeding to which the party asserting such claim shall
have given notice to the other parties to this Agreement prior to the
termination of such period of reasonable belief that a tax liability will
subsequently arise therefrom.
9.2 Notices. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, telecopier,
courier service or personal delivery:
if to the Company:
Xxxxxxxxxxx.xxx, Inc.
000 Xxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
Telecopy: 0-000-000-0000
Attention: Chief Executive Officer
29
with a copy to:
Woollacott Jannol Fields LLP
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Telecopy: 310-552-7552
Attention: Xxxxxx Xxxxxx, Esq.
if to Arinco:
Arinco Computer Systems, Inc.
00 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Chief Executive Officer
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
All such notices, demands and other communications shall be deemed to
have been duly given when delivered by hand, if personally delivered; when
delivered by courier, if delivered by commercial courier service; five (5)
Business Days after being deposited in the mail, postage prepaid, if mailed; and
when receipt is mechanically acknowledged, if telecopied.
9.3 Successors and Assigns; Third Party Beneficiaries. This Agreement
shall inure to the benefit of and be binding upon the successors and permitted
assigns of the parties hereto. Subject to applicable securities laws and the
terms and conditions thereof, the Purchasers may assign any of their rights
under this Agreement or the other Transaction Documents to any of their
respective Affiliates. The Company may not assign any of its rights under this
Agreement without the written consent of Arinco. Except as provided in Article
VII, no Person other than the parties hereto and their successors and permitted
assigns is intended to be a beneficiary of this Agreement.
9.4 Amendment and Waiver.
(a) No failure or delay on the part of the Company or the Purchasers in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other
30
right, power or remedy. The remedies provided for herein are cumulative and are
not exclusive of any remedies that may be available to the Company or the
Purchasers at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by the Company or the Purchasers from the terms of
any provision of this Agreement, shall be effective (i) only if it is made or
given in writing and signed by the Company and the Purchasers purchasing a
majority of the Purchased Shares, and (ii) only in the specific instance and for
the specific purpose for which made or given. Except where notice is
specifically required by this Agreement, no notice to or demand on the Company
in any case shall entitle the Company to any other or further notice or demand
in similar or other circumstances.
9.5 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
9.6 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
9.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW THEREOF.
9.8 Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
9.9 Rules of Construction. Unless the context otherwise requires,
references to sections or subsections refer to sections or subsections of this
Agreement.
9.10 Entire Agreement. This Agreement, together with the exhibits and
schedules hereto, and the other Transaction Documents are intended by the par
ties as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein. There are no
restrictions, promises, representations, warranties or undertakings, other than
those set forth or referred to herein or therein. This Agreement, together with
the exhibits and
31
schedules hereto, and the other Transaction Documents supersede all prior
agreements and understandings between the parties with respect to such subject
matter.
9.11 Fees. Upon the Closing, the Company shall reimburse each of the
Purchasers for their transaction related expenses, including fees, disbursements
and other charges of counsel and consultants and expenses incurred in connection
with their due diligence inquiry, provided that the amount of such reimbursement
shall not exceed $50,000.
9.12 Publicity; Confidentiality. Except as may be required by
applicable Requirements of Law, none of the parties hereto shall issue a
publicity release or public announcement or otherwise make any disclosure
concerning this Agreement, the transactions contemplated hereby, the Purchasers
or the business, technology and financial affairs of the Company, without prior
approval by the other parties hereto; provided, however, that nothing in this
Agreement shall restrict any of the Purchasers from disclosing information (a)
that is already publicly available, (b) that was known to such Purchaser on a
non-confidential basis prior to its disclosure by the Company, (c) that may be
required or appropriate in response to any summons or subpoena or in connection
with any litigation, provided that such Purchaser will use reasonable efforts to
notify the Company in advance of such disclosure so as to permit the Company to
seek a protective order or otherwise contest such disclosure, and such Purchaser
will use reasonable efforts to cooperate, at the expense of the Company, with
the Company in pursuing any such protective order, (d) to the extent that such
Purchaser reasonably believes it appropriate in order to protect its investment
in the Purchased Shares in order to comply with any Requirement of Law, (e) to
such Purchaser's or the Company's officers, directors, shareholders, advisors,
employees, members, partners, controlling persons, auditors or counsel or (f) to
Persons from whom releases, consents or approvals are required, or to whom
notice is required to be provided, pursuant to the transactions contemplated by
the Transaction Document. If any announcement is required by law or the rules of
any securities exchange or market on which shares of Common Stock are traded to
be made by any party hereto, prior to making such announcement such party will
deliver a draft of such announcement to the other parties and shall give the
other parties reasonable opportunity to comment thereon.
9.13 Further Assurances. Each of the parties shall execute such
documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations or other actions by, or
giving any notices to, or making any filings with, any Governmental Authority or
any other Person) as may be reasonably required or desirable to carry out or to
perform the provisions of this Agreement.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the undersigned have executed, or have caused to be
executed, this Stock Purchase Agreement on the date first written above.
XXXXXXXXXXX.XXX, INC.
By: /s/ Xxxx Xxxxxx
---------------------------------
Name: Xxxx Xxxxxx
Title: CEO/President
ARINCO COMPUTER SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxx
Title: CEO
XX XX SEED FUND, LLC
By: /s/ Xxxxx Xxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxx
Title: Managing Director
ADLESON INVESTORS, LLC
By: /s/ Xxxx Xxxxx
---------------------------------
Name: Xxxx Xxxxx
Title: President
STERLING PAYOT CAPITAL, L.P.
By: /s/ Xxxxxx Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title:
LAZARUS FAMILY INVESTMENTS, LLC
By: /s/ Xxxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: Manager
LA BAY INVESTMENTS, LLC
By: /s/ Xxxxxxx Xxx
---------------------------------
Name: Xxxxxxx Xxx
Title:
Schedule I
Coinvestors
-----------
1. XX XX Seed Fund, LLC, a Delaware limited liability company.
2. Xxxxxxx Investors, LLC, a Delaware limited liability company.
3. Sterling Payot Capital, LP, Delaware limited partnership.
4. Lazarus Family Investments, LLC, a Washington limited liability company.
5. LA Bay Investments, LLC, a Washington limited liability company.
Schedule 2.1
Purchased Shares and Purchase Price
-----------------------------------
Purchaser Purchased Shares Purchase Price
--------- ---------------- --------------
Arinco Computer Systems, Inc. 7,626,165 $ 6,500,000
XX XX Seed Fund, LLC 413,179 $ 352,164
Xxxxxxx Investors, LLC 2,346,512 $ 2,000,000
Sterling Payot Capital, LP 586,628 $ 500,000
Lazarus Family Investments, LLC 117,326 $ 100,000
LA Bay Investments, LLC. 117,326 $ 100,000
Total: 11,207,136 $ 9,552,164
