STOCK PURCHASE AGREEMENT
by and among
iBEAM BROADCASTING CORPORATION,
XXXXXXXX COMMUNICATIONS, LLC,
XXXXX & COMPANY INCORPORATED,
and
XXXX iBEAM, LLC
______________________________
Dated as of June 24, 2001
______________________________
iii
517664.04-New York S7A
TABLE OF CONTENTS
ARTICLE I DEFINITIONS..................................................1
Definitions....................................................................1
ARTICLE II PURCHASE AND SALE OF PREFERRED STOCK.....................10
Purchase and Sale of Preferred Stock..........................................10
Payment In-Kind Adjustments...................................................10
Series A Certificate of Designations..........................................11
Closing Date..................................................................11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY............11
Corporate Existence and Power.................................................11
Authorization; No Contravention...............................................12
Governmental Authorization; Third Party Consents..............................12
Binding Effect................................................................12
Capitalization................................................................13
SEC Reports; Financial Condition..............................................14
Absence of Change.............................................................15
Litigation....................................................................16
Compliance with Laws..........................................................16
No Default or Breach; Contractual Obligations.................................17
Title to Real Property and Assets.............................................17
Taxes.........................................................................17
Employees; Employee Compensation..............................................18
Labor Relations...............................................................19
Employee Benefit Plans........................................................19
Intellectual Property.........................................................21
Trade Relations...............................................................24
Insurance.....................................................................25
Environmental Matters.........................................................25
Potential Conflicts of Interest...............................................25
Anti-takeover.................................................................25
Broker's, Finder's or Similar Fees............................................26
Private Offering..............................................................26
Full Disclosure...............................................................26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER..............26
Corporate Existence and Power.................................................27
Authorization; No Contravention...............................................27
Governmental Authorization; Third Party Consents..............................27
Binding Effect................................................................27
Purchase for Own Account......................................................28
Legends.......................................................................28
Reliance Upon Purchaser Representations.......................................28
Broker's, Finder's or Similar Fees............................................29
ARTICLE V AFFIRMATIVE COVENANTS OF THE COMPANY.....................29
Ordinary Course of Business...................................................29
Delivery of SEC Reports and Press Releases; Listing; Nasdaq...................32
Reservation of Common Stock...................................................33
Books and Records.............................................................33
Inspection....................................................................33
Board of Directors............................................................33
No Solicitation...............................................................33
Filing of Series A Certificate of Designations................................34
Use of Proceeds...............................................................34
ARTICLE VI AFFIRMATIVE COVENANTS OF THE PURCHASERS AND THE COMPANY.........34
Reasonable Best Efforts.......................................................35
ARTICLE VII CONDITIONS TO CLOSING...........................................35
Conditions to the Obligation of the Primary Purchaser and the Company.........35
Conditions to Obligation of the Primary Purchaser.............................36
Conditions to the Obligation of the Company With Respect To the Primary
Purchaser Purchased Sh........................................................39
Conditions to the Obligation of the Company with Respect to the Xxxxx
Purchased Shares..............................................................40
Conditions to the Obligation of the Company with Respect to the Xxxx
Purchased Shares..............................................................40
Conditions to the Obligation of the Additional Purchasers.....................41
ARTICLE VIII TERMINATION....................................................41
Termination of Agreement......................................................41
Effect of Termination.........................................................42
ARTICLE IX SURVIVAL AND INDEMNIFICATION...................................43
Survival......................................................................43
Indemnification...............................................................43
Notification and Procedure....................................................44
Exclusive Remedy..............................................................45
ARTICLE X MISCELLANEOUS.................................................45
Notices.......................................................................45
Successors and Assigns; No Third Party Beneficiaries..........................47
Amendment and Waiver..........................................................47
Counterparts..................................................................48
Headings......................................................................48
Governing Law.................................................................48
Severability..................................................................48
Entire Agreement..............................................................48
Expenses......................................................................49
Publicity; Confidentiality....................................................49
Further Assurances............................................................49
EXHIBITS
A Form of Consent and Standstill Agreement
B Form of Registration Rights Agreement
C Form of Series A Certificate of Designations
D Form of Service Agreements
E Form of Stockholders Agreement
F Form of Confidentiality, Invention Assignment and Noncompetition Agreement
G Form of Confidentiality, Invention Assignment and Nonsolicitation Agreement
H Form of Retention Incentive Agreement
I Form of Retention Plan
J Form of Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP Opinion
K Form of Company's General Counsel Opinion
L Form of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of June 24, 2001 (this "Agreement"), by
and among iBeam Broadcasting Corporation, a Delaware corporation (the
"Company"), Xxxxxxxx Communications, LLC, a Delaware limited liability company
(the "Primary Purchaser"), Xxxxx & Company Incorporated, a New York corporation
("Xxxxx") and Xxxx iBeam, LLC, an Illinois limited liability company ("Xxxx",
and together with Xxxxx, the "Additional Purchasers").
WHEREAS, upon the terms and conditions set forth in this Agreement, the
Company proposes to issue and sell an aggregate of 2,400,939 shares, par value
$.0001 per share, of Series A Convertible Preferred Stock of the Company (the
"Series A Preferred Stock"); and
WHEREAS, each share of Series A Preferred Stock is convertible (subject to
adjustment) into shares of common stock, par value $.0001 per share, of the
Company (the "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 otherwise, the
following terms have the meanings indicated:
"Additional Purchasers" has the meaning set forth in the preamble to this
Agreement.
"Affiliate" shall mean any Person who is an "affiliate" as defined in Rule
12b-2 of the General Rules and Regulations of the Exchange Act.
"Agreement" means this Agreement, as the same may be amended, supplemented
or modified in accordance with the terms hereof.
"Xxxxx" has the meaning set forth in the preamble to this Agreement.
"Xxxxx Purchase Price" has the meaning set forth in Section 2.1 of this
Agreement.
"Xxxxx Purchased Shares" has the meaning set forth in Section 2.1 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 New York are authorized or required by
law or executive order to close.
"Bylaws" means the bylaws of the Company in effect on the Closing Date, as
the same may be amended from time to time.
"Certificate of Incorporation" means the Certificate of Incorporation of
the Company as the same may be amended from time to time.
"Claims" has the meaning set forth in Section 3.8 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.
"Commission" means the U. S. Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act.
"Common Stock" has the meaning set forth in the recitals to this Agreement.
"Company" has the meaning set forth in the preamble to this Agreement.
"Company Privacy Policy" means the privacy policy posted on the Company
Website.
"Company Website" means the Internet Website located at the URL address
xxx.xxxxx.xxx and all other Internet Websites owned and/or controlled by the
Company.
"Condition of the Company" means the assets, business, prospects, results
of operations or condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole.
"Consent and Standstill Agreement" shall mean the Consent and Standstill
Agreement in the form set forth in Exhibit A.
"Contractual Obligations" means, as to any Person, any provisions 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 nonregistered copyrights.
"Cure Period" has the meaning set forth in Section 2.2 of this Agreement.
"Customer Information" means any and all of the personally identifiable and
non-personally identifiable customer information the Company receives through
the Company Website or otherwise.
"Disclosure Letter" the disclosure letter delivered by the Company to the
Purchasers pursuant to this Agreement.
"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.
"ERISA Affiliate" has the meaning set forth in Section 3.15(a) of this
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission thereunder.
"Existing Investors' Rights Agreement" has the meaning set forth in Section
6.1 of this Agreement.
"Failure Notice" has the meaning set forth in Section 2.2 of this
Agreement.
"Financial Statements" has the meaning set forth in Section 3.6(b) 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 or Person 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.
"including" means including but not limited to the items following such
term, unless the context clearly requires otherwise.
"Indebtedness" of any Person at any date shall include (i) all indebtedness
of such Person for borrowed money or for the deferred purchase price of property
or services, including earn-out or similar contingent purchase amounts, (ii) any
other indebtedness of such Person which is evidenced by a note, mortgage, bond,
debenture or similar instrument, (iii) all obligations of such Person under
capitalized leases, (iv) all payments made or to be made pursuant to
sale-leaseback transactions, (v) all payments made or to be made pursuant to a
non-compete payment obligation, change of control payment obligation, and
severance and retention obligations, and (vi) all guarantees by such Person of
obligations of others whether or not such Person has assumed or otherwise become
directly liable for the payment thereof.
"Indemnified Party" has the meaning set forth in Section 9.2 of this
Agreement.
"Intellectual Property" has the meaning set forth in Section 3.16 of this
Agreement.
"Internet Assets" means any Internet domain names and other computer user
identifiers and any rights in and to sites on the World Wide Web, including
rights in and to any text, graphics, audio and video files and html or other
code incorporated in such sites.
"License Agreements" has the meaning set forth in Section 3.16 of this
Agreement.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien or preference, priority, right or other security
interest or preferential arrangement of any kind or nature whatsoever.
"Losses" has the meaning set forth in Section 9.2 of this Agreement.
"Xxxx" has the meaning set forth in the preamble to this Agreement.
"Xxxx Purchase Price" has the meaning set forth in Section 2.1 of this
Agreement.
"Xxxx Purchased Shares" has the meaning set forth in Section 2.1 of this
Agreement.
"NASDAQ" shall mean the National Association of Securities Dealers, Inc.
Automated Quotation System.
"Orders" has the meaning set forth in Section 3.2 of this Agreement.
"Outside Date" has the meaning set forth in Section 8.1 of this Agreement.
"Payment In-Kind Adjustment" shall mean an amount equal to (x) Ten Million
Dollars ($10,000,000), minus (y) the value of the services which the Primary
Purchaser or its Affiliates performed pursuant to the Service Agreements from
the date of the Service Agreements until the Payment In-Kind Adjustment Date.
"Payment In-Kind Adjustment Date" shall mean the date on which the payment
of the Payment In-Kind Adjustment occurs.
"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 3.9(b) of this Agreement.
"Permitted Liens" means (i) Liens disclosed in Section 1.1(a) of the
Disclosure Letter; (ii) Liens disclosed on the Financial Statements; (iii) Liens
for taxes, assessments, duties and similar charges that are not yet due or are
being contested in good faith; (iv) mechanic's, materialman's, carrier's,
repairer's and other similar Liens arising or incurred in the ordinary course of
business consistent with past practices, the existence of which does not, and
would not reasonably be expected to materially impair the value or use and
enjoyment of the asset subject to such Lien, (v) Liens incurred in the ordinary
course of business consistent with past practices since the March 31, 2001, the
existence of which does not, and would not reasonably be expected to materially
impair the value or use and enjoyment of the asset subject to such Lien, or (vi)
other Liens that do not secure payment of Indebtedness for borrowed money, the
existence of which does not, and would not reasonably be expected to, materially
impair the value or use and enjoyment of the asset subject to such Lien.
"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 3.15 of this Agreement.
"Pre-Closing Period" has the meaning set forth in Section 5.1 of this
Agreement.
"Preferred Stock" shall mean the Series A Preferred Stock.
"Primary Purchaser" has the meaning set forth in the preamble to this
Agreement.
"Primary Purchaser Purchased Shares" has the meaning set forth in Section
2.1 of this Agreement.
"Primary Purchaser Cash Payment" has the meaning set forth in Section 2.1
of this Agreement.
"Proprietary Software" has the meaning set forth in Section 3.16(b) of this
Agreement.
"Purchased Shares"shall mean the Primary Purchaser Purchased Shares, the
Xxxxx Purchased Shares and the Xxxx Purchased Shares.
"Purchasers" shall mean the Primary Purchaser together with the Additional
Purchasers.
"Registration Rights Agreement" means the Registration Rights Agreement in
the form attached hereto as Exhibit B.
"Requirements of Law" means, as to any Person, any law, statute, treaty,
rule, regulation, right, 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.
"SEC Reports" with respect to any Person means all forms, reports,
statements and other documents (including exhibits, annexes, supplements and
amendments to such documents) required to be filed by it, or sent or made
available by it to its security holders, under the Exchange Act, the Securities
Act, any national securities exchange or quotation system or comparable
Governmental Authority since the date of such Person's initial public offering.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"Series A Certificate of Designations" means the Certificate of
Designations with respect to the Series A 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 Payment Date substantially in the form attached hereto as
Exhibit C.
"Series A Preferred Stock" has the meaning set forth in the recitals to
this Agreement.
"Service Agreements" means the Service Agreements between the Company and
the Primary Purchaser in the forms attached hereto as Exhibit D.
"Software" means any computer software programs, including, without
limitation, any computer software programs that incorporate and run the
Company's pricing models, formulas and algorithms, source code, object code,
data, databases, compilations and documentation, including user manuals and
training materials.
"Stock Equivalents" means any security or obligation that 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.
"Stockholders Agreement" means the Stockholders Agreement among the Primary
Purchaser, the Additional Purchasers and the Company in the form attached hereto
as Exhibit E.
"Stock Option Plan" means the Company's 1998 Stock Plan, the Company's 2000
Stock Option Plan, the Company's 2000 Director Plan, the Company's 2000 B Stock
Option Plan, the Company's 2000 Employee Stock Purchase Plan, the NextVenue,
Inc. Amended and Restated 1999 Stock Option Plan and the xxxxxxxx.xxx Inc. 1999
Stock Option Plan, pursuant to which up to 33,195,990 shares of restricted stock
and options to purchase shares of Common Stock may be issued to officers,
directors, employees and consultants of the Company.
"Subsidiaries" means, as of the relevant date of determination, with
respect to any Person, a corporation or other Person of which 50% or more of the
voting power of the outstanding voting equity securities or 50% or more of the
outstanding economic equity interest is held, directly or indirectly, by such
Person. Unless otherwise qualified, or the context otherwise requires, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Company.
"Tax" or "Taxes" have the meaning set forth in Section 3.12 of this
Agreement.
"Threshold" has the meaning set forth in Section 9.2(b) of this Agreement.
"Trade Secrets" means any confidential information trade secrets, research
records, processes, procedures, manufacturing formulas, technical know-how,
technology, blue prints, designs, plans, models and methodologies (whether
patentable and whether reduced to practice), invention disclosures and
improvements thereto.
"Trademarks" means any foreign or U.S. trademarks, service marks, trade
dress, trade names, brand names, designs and logos, corporate names, product or
service identifiers, and general intangibles of like nature whether registered
or unregistered, together with all of the goodwill relating thereto and all
registrations and applications for registration thereof.
"Transaction Documents" means, collectively, this Agreement, the
Registration Rights Agreement, the Stockholders Agreement, the Service
Agreements, the Consent and Standstill Agreements, the Series A Certificate of
Designations and the other ancillary agreements entered into in connection with
the foregoing.
ARTICLE II
PURCHASE AND SALE OF PREFERRED STOCK
1.2 Purchase and Sale of Preferred Stock.
(1) Subject to the terms and conditions herein, the Company agrees to issue
and sell to the Primary Purchaser, and the Primary Purchaser agrees to purchase
from the Company, at the Closing Date, 1,800,704 shares of Series A Preferred
Stock (the "Primary Purchaser Purchased Shares") for the aggregate purchase
price of Thirty Million Dollars ($30,000,000) comprised of (i)- Twenty Million
Dollars ($20,000,000) in cash (the "Primary Purchaser Cash Payment"), and (ii)-
services valued at Ten Million Dollars ($10,000,000) pursuant to the Service
Agreements.
(2) Subject to the terms and conditions herein, the Company agrees to issue
and sell to Xxxxx, and Xxxxx agrees to purchase from the Company, at the Closing
Date, 480,188 shares of Series A Preferred Stock (the "Xxxxx Purchased Shares")
for the aggregate purchase price of Eight Million Dollars ($8,000,000) in cash
(the "Xxxxx Purchase Price").
(3) Subject to the terms and conditions herein, the Company agrees to issue
and sell to Xxxx, and Xxxx agrees, to purchase from the Company, at the Closing
Date, 120,047 shares of Series A Preferred Stock (the "Xxxx Purchased Shares")
for the aggregate purchase price of Two Million Dollars ($2,000,000) in cash
(the "Xxxx Purchase Price").
1.3 Payment In-Kind Adjustments. In the event that the Primary Purchaser
materially fails to perform its obligations under the Service Agreements, except
in the event that such failure is principally the result of the Company's
inability or unwillingness to accept the services, and the Primary Purchaser has
not cured such failure within the cure period provided under the applicable
Service Agreement (the "Cure Period") after receiving written notice thereof
from the Company (the "Failure Notice"), the Primary Purchaser will pay the
Company in cash an amount equal to the Payment In-Kind Adjustment, such payment
to be made within 10 Business Days of the end of the Cure Period by wire
transfer of immediately available funds to a bank account designated by the
Company in writing in the Failure Notice.
1.4 Series A Certificate of Designations. The Series A Preferred Stock
shall have the preferences and rights set forth in the Series A Certificate of
Designations.
1.5 Closing Date.
(1) Upon the terms and subject to the conditions set forth herein, the
closing of the purchase and sale of the Purchased Shares (the "Closing") will
take place on the first Business Day after satisfaction or waiver (subject to
applicable law) of the conditions herein (excluding those conditions that by
their nature cannot be satisfied until the Closing Date) unless another time or
date is agreed to in writing by the parties hereto (the actual time and date of
the Closing being referred to as the "Closing Date"). The Closing shall be held
at the offices of Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP, 000 Xxxxxxx Xxxxxx, Xxx
Xxxxxxxxx, XX 00000, unless another place is agreed to in writing by the parties
hereto.
(2) On the Closing Date, the Company shall deliver to (i) the Primary
Purchaser certificates in definitive form and registered in the name of the
Primary Purchaser, representing the Primary Purchaser Purchased Shares against
delivery by the Primary Purchaser to the Company of (A)- the Primary Purchaser
Cash Payment therefor by wire transfer of immediately available funds, and (B)
execution of the Service Agreements by the Primary Purchaser, (ii) Xxxxx
certificates in definitive form and registered in the name of Xxxxx,
representing the Xxxxx Purchased Shares against delivery by Xxxxx to the Company
of the Xxxxx Purchase Price by wire transfer of immediately available funds, and
(iii) Xxxx certificates in definitive form and registered in the name of Xxxx,
representing the Xxxx Purchased Shares against delivery by Xxxx to the Company
of the Xxxx Purchase Price by wire transfer of immediately available funds.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchasers as follows:
1.6 Corporate Existence and Power. Except as set forth in Section 3.1 of
the Disclosure Letter, the Company and each of its Subsidiaries: (a) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware; (b) has all requisite power and authority to own,
lease, license and operate its properties and assets and to carry on its
business as now conducted and as presently proposed to be conducted; and (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 in which the
failure to so qualify would have a material adverse effect on the Condition of
the Company. The Company has all corporate power and authority to execute,
deliver and perform its obligations under this Agreement and each of the other
Transaction Documents to which it is party.
1.7 Authorization; No Contravention. The execution, delivery and
performance by the Company of this Agreement and each of the other Transaction
Documents to which it is party and the transactions contemplated hereby and
thereby (i) have been duly authorized by all necessary corporate actions of the
Company; (ii) do not contravene the terms of the Certificate of Incorporation or
the Bylaws; (iii) 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 (iv) 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, except in the cases of clauses
(iii) and (iv) for such violations, conflicts, breaches or defaults which would
not have a material adverse effect on the Condition of the Company.
1.8 Governmental Authorization; Third Party Consents. Except as set forth
in Section 3.3 of the Disclosure Letter, no material 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 the sale, issuance and
delivery of the Purchased Shares) by, or enforcement against, the Company of
this Agreement, each of the other Transaction Documents to which it is a party
or the transactions contemplated hereby and thereby.
1.9 Binding Effect. This Agreement has been, and as of the Closing Date
each of the other Transaction Documents to which the Company is party will have
been, duly executed and delivered by the Company, and this Agreement
constitutes, and as of the Closing Date each of the other Transaction Documents
will 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 or by equitable
principles relating to enforceability (regardless of whether considered in a
proceeding at law or in equity).
1.10 Capitalization.
(1) As of June 19, 2001, the authorized capital stock of the Company
consists of (i) 413,000,000 shares of Common Stock, of which 127,396,741 are
issued and outstanding and (ii)- 10,000,000 shares of undesignated "blank check"
preferred stock. As of the date hereof, the aggregate number of shares of stock
and options to purchase shares of Common Stock that may be issued under the
Stock Option Plan is 33,195,990, of which 18,534,467 are issued and outstanding.
Except as set forth in Section 3.5(a) of the Disclosure Letter and except for
the securities to be issued under this Agreement, 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) any 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 applicable
federal and state securities laws or pursuant to valid exemptions therefrom and
will be free and clear of all other Liens. The shares of Series A Preferred
Stock when issued in compliance with the provisions of the Series A Certificate
of Designations, will be validly issued, fully 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. All of the issued and outstanding
shares of Common Stock are duly authorized, validly issued, fully paid and
nonassessable, and were issued in compliance with the registration and
qualification requirements of applicable federal and state securities laws.
(2) Section 3.5(b) of the Disclosure Letter sets forth, as of the Closing
Date, a true and complete list of each of the Subsidiaries of the Company.
Except as set forth in Section 3.5(b) of the Disclosure Letter, the Company owns
all of the issued and outstanding capital stock of the Subsidiaries, free and
clear of all Liens. All of such shares of capital stock are duly authorized,
validly issued, fully paid and non-assessable, and were issued in compliance
with the registration and qualification requirements of applicable federal and
state securities laws. Except as set forth in Section 3.5(b) of the Disclosure
Letter, there are no options, warrants, conversion privileges, subscription or
purchase rights or other rights presently outstanding, to purchase or otherwise
acquire any authorized but unissued shares, unauthorized or treasury shares of
capital stock or other securities of, or any proprietary interest in, any of the
Subsidiaries, and there is no outstanding security of any kind convertible into
or exchangeable for such shares or proprietary interest.
1.11 SEC Reports; Financial Condition.
(1) The Company has filed all SEC Reports and has made available to the
Purchasers each SEC Report. The SEC Reports of the Company, including any
financial statements or schedules included or incorporated therein by reference,
(i) comply in all material respects with the requirements of the Exchange Act or
the Securities Act or both, as the case may be, applicable to those SEC Reports
and (ii) did not at the time they were filed contain any untrue statement of a
material fact or omit to state a material fact required to be stated or
necessary in order to make the statements made in those SEC Reports, in light of
the circumstances under which they were made, not misleading.
(2) Each of the consolidated balance sheets of the Company and the related
statements of income, stockholders' equity and cash flow, together with the
notes thereto, which are included in or incorporated by reference into the SEC
Reports of the Company (the "Financial Statements") fairly present, in all
material respects, the consolidated financial position of the Company as of the
respective dates thereof, and the consolidated results of operations and cash
flows of the Company as of the respective dates or for the respective periods
set forth therein, all in conformity with GAAP consistently applied during the
periods involved, except as otherwise set forth in the notes thereto and
subject, in the case of unaudited quarterly financial statements, to normal
year-end audit adjustments.
(3) Except as disclosed in the Financial Statements or in Section 3.6 of
the Disclosure Letter, neither the Company nor any of its Subsidiaries has any
material liability or obligation of any nature, (including, without limitation,
any direct or indirect Indebtedness, guaranty, endorsement, claim, loss, damage,
deficiency, cost, expense, obligation or responsibility, fixed or unfixed, known
or unknown, asserted or unasserted, liquidated or unliquidated, secured or
unsecured). Section 3.6 of the Disclosure Letter sets forth a list of all
liabilities and obligations (including Indebtedness) of the Company and its
Subsidiaries to any Person or group of related Persons, whether or not disclosed
in Financial Statements, for amounts in excess of $100,000.
1.12 Absence of Change. Since March 31, 2001, except as fully disclosed in
SEC Reports filed on or before the date hereof or as set forth in Section 3.7 of
the Disclosure Letter, there has not been:
(1) any material adverse change in the Condition of the Company;
(2) any satisfaction, discharge or payment of any liability or obligation
(including Indebtedness) by the Company, except in the ordinary course of
business and that is not material to the Condition of the Company;
(3) any change to a material Contractual Obligation by which the Company or
any of its assets is bound or subject;
(4) any amendment or modification to any Plan or adoption of any
compensation or benefit agreement, plan or arrangement for the benefit of any
employee, director, consultant or stockholder of the Company and its
Subsidiaries or any increase in the compensation payable to any such individual;
(5) any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets and Intellectual Property;
(6) any resignation or termination of employment of any officer or key
employee of the Company;
(7) any loans or guarantees made by the Company to or for the benefit of
its officers or directors, or any members of their immediate families, other
than advances made in the ordinary course of its business;
(8) any material transaction in which the Company participated that is
outside the ordinary course of business, including any declaration, setting
aside or payment or other distribution with respect to any of the Company's
capital stock, or any direct or indirect redemption, purchase, or other
acquisition of any such stock by the Company;
(9) any material change in the Company's accounting principles or practice
except as required by reason of a change in GAAP; or
(10) any arrangement or commitment by the Company to do any of the things
described in this Section 3.7.
1.13 Litigation. Except as set forth in SEC Reports filed on or before the
date hereof or in Section 3.8 of the Disclosure Letter, there are no material
actions, suits, proceedings, claims, complaints, disputes, controversies,
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 or any of its
Subsidiaries.
1.14 Compliance with Laws. Except as set forth in SEC Reports filed on or
before the date hereof or as set forth in Section 3.9 of the Disclosure Letter:
(1) The Company and each of its Subsidiaries is, and since May 18, 2000 has
been, in compliance in all material respects with all Requirements of Law and
all Orders issued by any court or Governmental Authority against the Company or
its Subsidiaries, as applicable. There is no existing or, to the Company's
knowledge, proposed Requirement of Law that would reasonably be expected to
prohibit or restrict the Company from conducting its business, or otherwise
materially adversely affect the Condition of the Company.
(a) (i) The Company and each of its Subsidiaries have all material
licenses, permits and approvals of any Governmental Authority (collectively,
"Permits") that are necessary for the conduct of their respective businesses as
presently conducted, (ii)-such Permits are in full force and effect, and (iii)
no violations are or have been recorded in respect of any Permit.
(2) No material expenditure is presently required by the Company to comply
with any existing Requirement of Law or Order.
1.15 No Default or Breach; Contractual Obligations. Except as disclosed in
SEC Reports filed on or before the date hereof or in Section 3.10 of the
Disclosure Letter, the Company and its Subsidiaries do not have any Contractual
Obligation (whether written or oral) that is material to the Condition of the
Company. All of the Contractual Obligations to which the Company or one of its
Subsidiaries is a party (whether written or oral) that are material to the
Condition of the Company, are valid, subsisting, in full force and effect and
binding upon the Company or its Subsidiary, as the case may be, and the other
parties thereto. Except as set forth in Section 3.10 of the Disclosure Letter,
the Company has not received notice of default and is not in default under, or
with respect to, any such Contractual Obligation nor does any condition exist
that with notice or lapse of time or both would constitute a default by the
Company or its Subsidiaries thereunder. To the knowledge of the Company, no
other party to any such Contractual Obligation is in default thereunder.
1.16 Title to Real Property and Assets.
(1) The Company and each of its Subsidiaries 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.
(2) The Company and each of its Subsidiaries owns and has good, valid, and
marketable title to all of its properties (excluding real property, addressed in
Section 3.11(a)) and assets used in its business and reflected as owned on the
Financial Statements or so described in the Disclosure Letter, in each case free
and clear of all Liens, except for Permitted Liens.
1.17 Taxes. The Company has paid (i) all federal taxes, (ii) all state,
local and foreign income taxes, and (iii) all material state, local and foreign
other taxes, including, without limitation, estimated taxes, excise and value
added taxes, sales taxes, use taxes, gross receipts taxes, franchise taxes,
employment and payroll related taxes, property (real or personal) taxes, import
duties, windfall or excess profits taxes, withholding taxes, and any other tax,
charge, or levy imposed by any Governmental Authority (hereinafter the taxes
collectively referred to in clauses (i), (ii), and (iii), "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, other than
Taxes being disputed by the Company in good faith for which adequate reserves
have been made in accordance with GAAP. The Company has timely filed or caused
to be filed all returns and other reports 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. 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. 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.
1.18 Employees; Employee Compensation.
(1) The Company has complied in all material respects with all applicable
state and federal equal employment opportunity and other laws related to
employment and employment practices, terms and conditions of employment, wages,
hours of work, and occupational safety and health. To the Company's knowledge,
no charges or investigations with respect to the Company or its Subsidiaries are
pending or threatened before the Equal Employment Opportunity Commission, or any
other state or federal agency responsible for the prevention of unlawful
employment practices. Except as set forth in Section 3.13(a) of the Disclosure
Letter, to the Company's knowledge, there are no Claims pending or threatened
regarding the breach of any express or implied contract of employment, any law
or regulation governing employment or the termination thereof, or any other
discriminatory, wrongful or tortious conduct by the Company or its Subsidiaries
in connection with the employment relationship. To the Company's knowledge, no
employee of the Company or any of its Subsidiaries is or will be in violation of
any judgment, decree or order, or any term of any employment contract, patent
disclosure agreement, or other contract or agreement relating to the
relationship of any such employee with the Company or any of its Subsidiaries or
any other party because of the nature of the business conducted by the Company
or any of its Subsidiaries or to the use by the employee of his or her best
efforts with respect to such business. The Company and its Subsidiaries are and
have been in compliance with the requirements of the Worker Adjustment and
Retraining Notification Act of 1988 and any similar state or local law governing
layoffs and/or employment termination.
(2) The SEC Reports filed on or before the date hereof, accurately disclose
information required to be disclosed therein (including compensation data)
concerning all current directors, officers, material employees and consultants
of the Company.
1.19 Labor Relations. Except as set forth in Section 3.14 of the Disclosure
Letter, (i) the Company is not engaged in any unfair labor practice as defined
in the National Labor Relations Act, (ii) there is (A) no unfair labor practice
charge or complaint against the Company or its Subsidiaries pending or
threatened before the National Labor Relations Board or any similar agency, (B)
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 or its Subsidiaries, and (C) no strike, labor dispute,
slowdown, stoppage or lockout pending or, to the knowledge of the Company,
threatened against the Company or its Subsidiaries, (iii) the Company is not a
party to any collective bargaining agreement or similar contract, (iv) there is
no union representation question existing with respect to the employees of the
Company, and (v) none of the Company employees are represented by any labor
organization and no union organizing activities are taking place. Except as set
forth in Section 3.14 of the Disclosure Letter, to the knowledge of the Company,
no officer or key employee, or any group of key employees, intends to terminate
his, her or their employment with the Company. Except as set forth in Section
3.14 of the Disclosure Letter, the Company has not taken any steps to terminate
the employment of any officer, key employee or group of key employees, nor does
it have any plans to do so.
1.20 Employee Benefit Plans. (a) Section 3.15(a) of the Disclosure Letter
contains a true and complete list of each "welfare" plan, fund or program
(within the meaning of Section 3(1) of ERISA), each "pension" plan, fund or
program (within the meaning of Section 3(2) of ERISA), and each other material
employee benefit plan, fund, program, agreement or arrangement, in each case,
that is sponsored, maintained, contributed to or required to be contributed to
by the Company or by any trade or business, whether or not incorporated (an
"ERISA Affiliate"), that together with the Company would be deemed a "single
employer" within the meaning of Section 4001(b) of ERISA, or to which the
Company or an ERISA Affiliate is party, for the benefit of any current or former
employee, consultant or director of the Company and its Subsidiaries (the
"Plans"). No Plan is subject to Title IV or Section 302 of ERISA.
(1) With respect to each Plan, the Company has heretofore made available to
the Purchasers true and complete copies of each of the following documents, as
applicable: (A) a copy of the Plan and any amendments thereto; (B) a copy of the
most recent annual report and actuarial report; (C) a copy of the most recent
summary Plan description; (D) a copy of the trust or other funding agreement and
the latest financial statements thereof; and (E) the most recent determination
letter received from the Internal Revenue Service with respect to each Plan
intended to qualify under Section 401 of the Code.
(2) No liability under Title IV or Section 302 of ERISA has been incurred
by the Company or any ERISA Affiliate that has not been satisfied in full, and
no condition exists that presents a material risk to the Company or any ERISA
Affiliate of incurring any such liability, other than liability for premiums due
the Pension Benefit Guaranty Corporation (which premiums have been paid when
due).
(3) Neither the Company, its Subsidiaries, any Plan, any trust created
thereunder, nor any trustee or administrator thereof has engaged in a
transaction in connection with which the Company, its Subsidiaries, any Plan,
any such trust, or any trustee or administrator thereof, or any party dealing
with any Plan or any such trust could be subject to either a material civil
penalty assessed pursuant to Section 409 or 502(i) of ERISA or a material tax
imposed pursuant to Section 4975 or 4976 of the Code.
(4) Each Plan has been operated and administered in all material respects
in compliance with its terms and applicable law, including but not limited to
ERISA and the Code. All contributions required to be made with respect to any
Plan on or prior to the Closing Date have been timely made. There are no
pending, threatened or anticipated Claims by or on behalf of any Plan, by any
employee or beneficiary covered under any such Plan, or otherwise involving any
such Plan (other than routine claims for benefits).
(5) Each Plan intended to be "qualified" within the meaning of Section
401(a) of the Code has received a determination letter from the Internal Revenue
Service stating that it is so qualified, and no event has occurred since the
date of such letter that would adversely affect such qualification.
(6) No Plan provides medical, surgical, hospitalization, death or similar
benefits (whether or not insured) for employees or former employees of the
Companies or their Subsidiaries for periods extending beyond their retirement or
other termination of service, other than coverage mandated by applicable law.
(7) The shareholder approval or consummation of the transactions
contemplated by this Agreement will not, either alone or in combination with
another event (i) entitle any current or former employee, officer or director of
the Company or any ERISA Affiliate to severance pay, unemployment compensation
or any other payment, except as expressly provided in this Agreement, or (ii)
accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee, officer or director. No amounts payable
under the Plans will constitute an "excess parachute payment" (as defined in
Section 280G of the Code) with respect to the transactions contemplated by this
Agreement.
1.21 Intellectual Property.
(1) Section 3.16(a) of the Disclosure Letter sets forth, for all
Intellectual Property owned by the Company, a complete and accurate list of all
U.S. and foreign: (i) Patents; (ii) registered Trademarks and material
unregistered Trademarks; and (iii) registered Copyrights and material
unregistered Copyrights.
(2) Section 3.16(b) of the Disclosure Letter lists all contracts for
Software that is licensed, leased or otherwise used by the Company (other than
off-the-shelf Software), and all Software that is owned by the Company
('Proprietary Software'), and identifies which Software is owned, licensed,
leased, or otherwise used, as the case may be.
(3) Section 3.16(c) of the Disclosure Letter sets forth a complete and
accurate list of all agreements (whether verbal or written) granting or
obtaining any right to use or practice any rights under any Intellectual
Property, to which the Company is a party or otherwise bound, as licensee or
licensor thereunder, including, without limitation, license agreements,
settlement agreements and covenants not to xxx (collectively, the 'License
Agreements').
(b) (i) The Company is the owner of all, or has a license or right to use,
sell and license all Copyrights, Patents, Trade Secrets, Trademarks, Internet
Assets, Software and other proprietary rights that are used in connection with
its business as presently conducted or contemplated in its business plan, free
and clear of all Liens (collectively, "Intellectual Property").
(1) Except as set forth in Section 3.16(d)(ii) of the Disclosure Letter, no
litigation is pending, or to the knowledge of the Company threatened, against
the Company relating to Intellectual Property.
(2) To the knowledge of the Company, any Intellectual Property owned or
used by the Company has been duly maintained, is valid and subsisting, in full
force and effect and has not been cancelled, expired or abandoned, nor does it
infringe upon or otherwise violate any intellectual property rights of others.
(3) Except as set forth in Section 3.16(d)(iv) of the Disclosure Letter,
the Company has not received notice from any third party regarding any actual or
potential infringement or misappropriation by the Company of any intellectual
property of such third party, and the Company has no knowledge of any basis for
such a claim against the Company.
(4) Except as set forth in Section 3.16(d)(v) of the Disclosure Letter, the
Company has not received notice from any third party regarding any assertion or
claim challenging the validity of any Intellectual Property owned or used by the
Company and the Company has no knowledge of any basis for such a claim.
(5) None of the Trademarks the Company currently uses and none of the
Trademarks listed in Section 3.16(a) of the Disclosure Letter for which the
Company has obtained or applied for a registration have been abandoned. To the
knowledge of the Company, there has been no prior use of such Trademarks by any
third party that would confer upon said third party superior rights in such
Trademarks. The Company has taken reasonable steps to maintain the validity of
such Trademarks.
(6) Except as set forth in Section 3.16(d)(vii) of the Disclosure Letter,
to the knowledge of the Company, no Person is misappropriating, diluting,
infringing upon or otherwise violating the Intellectual Property rights of the
Company.
(4) 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.
(c) (i) Except as set forth in Section 3.16(f)(i) of the Disclosure Letter,
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.
(1) The Company has not licensed or sublicensed its rights in any
Intellectual Property, or received or been granted any such rights, other than
pursuant to the License Agreements.
(2) The Company has substantially performed all obligations imposed upon it
under the License Agreements and the License Agreements are valid and binding
obligations of the Company, enforceable in accordance with their terms, and
there exists no event or condition that will result in a violation or breach of,
or constitute a default by the Company or, to the best knowledge of the Company,
the other party thereto, under any such License Agreement.
(5) The Company takes reasonable measures to protect the confidentiality of
Trade Secrets. No Trade Secret of the Company has been disclosed or authorized
to be disclosed to any third party other than pursuant to a written
nondisclosure agreement that reasonably protects the Company's proprietary
interests in and to such Trade Secrets, or pursuant to the filing of patent
applications related to such Trade Secrets;
(d) (i) It is the policy of the Company that all employees of the Company
with access to technical information execute and deliver 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.
(1) All Proprietary Software set forth in Section 3.16(b) of the Disclosure
Letter, was either developed (A) by employees of the Company within the scope of
their employment; or (B) by independent contractors or other third parties who
have assigned all of their rights to the Company pursuant to written agreement.
(6) Except as set forth in Section 3.16(i) of the Disclosure Letter, the
consummation of the transactions contemplated hereby will not result in the loss
or impairment of the Company's rights to own, use, or to bring any action for
the infringement of, any of the Intellectual Property, nor will such
consummation require the consent of any third party in respect of any
Intellectual Property. (1)
(7) The Company has not used or authorized the use of the Customer
Information, whether obtained through the Company Website or otherwise, in an
unlawful manner, or in a manner violative of the Company Privacy Policy or the
privacy rights of its customers; the Company has not collected any Customer
Information through the Company Website in an unlawful manner or in violation of
the Company Privacy Policy, and the transactions contemplated by this Agreement
will not violate the Company Privacy Policy or the privacy rights of its
customers. The Company has reasonable security measures in place to protect the
Customer Information it receives through the Company 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 on the Company Website that it assures
reasonable security as to the protection of Customer Information.
1.22 Trade Relations. Except as set forth in Section 3.17 of the Disclosure
Letter or in the SEC Reports filed prior to the date hereof, 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 any of its Subsidiaries, or the business of the
Company or any of its Subsidiaries, 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 circumstance that would adversely affect the Condition of the Company or
prevent the Company or any of its Subsidiaries 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
or each Subsidiary.
1.23 Insurance. The insurance policies held by or on behalf of the Company
are valid and enforceable in accordance with their terms and are in full force
and effect and cover the 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.
1.24 Environmental Matters. The Company and each of its Subsidiaries is in
compliance with all applicable Environmental Laws, except to the extent that a
failure to be in compliance would not have a material adverse effect on the
Condition of the Company. There is no civil, criminal or administrative
judgment, 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 or any of its Subsidiaries
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 that would reasonably be expected to
prevent material compliance with, or which have given rise to or will give rise
to material liability under, Environmental Laws.
1.25 Potential Conflicts of Interest. No officer or director of the
Company, no spouse of any such officer or director, and, to the knowledge of the
Company, no relative of such spouse or of any such officer or director 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 that 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) to the Company's knowledge, 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.
1.26 Anti-takeover. The Company and its Board of Directors has taken all
actions required to be taken (x) in order to approve the execution of the
Agreement and the consummation of the transactions contemplated thereby for
purposes of Section 203 of Delaware General Corporation Law, and (y) so that the
restrictions on "business combinations" contained in Section 203 of Delaware
General Corporation Law do not apply to the Purchasers or their respective
Affiliates. As of the date hereof and as of the Closing Date, the Company shall
not have adopted a stockholder rights plan or any other similar anti-takeover
plan.
1.27 Broker's, Finder's or Similar Fees. Except for the fee payable to
Xxxxxx Xxxxxxx & Co. Incorporated and Dresdner Kleinwort Xxxxxxxxxxx, the amount
of which has been previously disclosed to the Purchasers and which in the
aggregate does not exceed $4,000,000, there are no brokerage commissions,
finder's fees or similar fees or commissions payable by the Company in
connection with the transactions contemplated hereby. 1.1
1.28 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" 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.
1.29 Full Disclosure. The Company has not failed to disclose to the
Purchasers any facts material to the Condition of the Company. No representation
or warranty by the Company contained in this Agreement (including the Disclosure
Letter) or in any certificate or other writing delivered pursuant hereto or in
connection herewith, contains or will contain any untrue statement of material
fact or omits or will omit to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statements herein or
therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each of the Purchasers individually, and not jointly or severally, hereby
represents and warrants to the Company as follows:
1.30 Corporate Existence and Power. Such Purchaser (a) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
formation, (b) has all requisite 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 (c) has the financial resources to perform
its obligations hereunder.
1.31 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, (i) have been duly authorized by all necessary corporate,
partnership or limited liability company, as the case may be, action, (ii) do
not contravene the terms of the such Purchaser's organizational documents, (iii)
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 (iv) do not violate any
Orders of any Governmental Authority against, or binding upon, such Purchaser,
except in the cases of clauses (iii) and (iv) for such violations, conflicts,
breaches or defaults which would not materially delay consummation of the
transactions contemplated by this Agreement.
1.32 Governmental Authorization; Third Party Consents. No material
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
the purchase of such Purchaser's 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.
1.33 Binding Effect. This Agreement has been, and as of the Closing Date
each of the other Transaction Documents to which such Purchaser is a party will
have been, duly executed and delivered by such Purchaser, and this Agreement
constitutes, and as of the Closing Date each of the other Transaction Documents
will constitute, the legal, valid and binding obligations of such Purchaser,
enforceable against such Purchaser 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 or by equitable
principles relating to enforceability (regardless of whether considered in a
proceeding at law or in equity).
1.34 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. If such Purchaser
should in the future 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.
1.35 Legends. Such Purchaser agrees to the imprinting, so long as required
by law, of a legend on certificates representing such Purchaser's Purchased
Shares and shares of Common Stock issuable upon conversion of such Purchaser's
Purchased Shares to the following effect:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS, AND
MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED OR AN EXEMPTION FROM REGISTRATION
IS AVAILABLE. THE SHARES REPRESENTED BY THIS CERTIFICATE ALSO ARE SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE STOCKHOLDERS AGREEMENT,
DATED AS OF ______________, ___, 2001, A COPY OF WHICH MAY BE OBTAINED FROM THE
COMPANY. NO TRANSFER OF SUCH SHARES WILL BE MADE ON THE BOOKS OF THE COMPANY
UNLESS ACCOMPANIED BY EVIDENCE OF COMPLIANCE WITH THE TERMS OF SUCH AGREEMENT
AND BY AN AGREEMENT OF THE TRANSFEREE TO BE BOUND BY THE RESTRICTIONS SET FORTH
IN THE STOCKHOLDERS AGREEMENT.
1.36 Reliance Upon Purchaser Representations. Such Purchaser understands
that at Closing such Purchaser's Purchased Shares will not be registered under
the Securities Act on the ground that the sale provided for in this Agreement
and the issuance of securities hereunder is exempt from registration under the
Securities Act pursuant to Section 4(2) thereof, and that the Company's reliance
on such exemption is based in part on such Purchaser's representations set forth
herein.
1.37 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, except for
the fee payable by the Primary Purchaser to Xxxxx & Co., the Primary Purchaser's
financial advisor.
ARTICLE V
AFFIRMATIVE COVENANTS OF THE COMPANY
The Company hereby covenants and agrees with each of the Purchasers as follows:
1.38 Ordinary Course of Business. (a) Except as otherwise expressly
contemplated by the terms of this Agreement or as set forth in Section 5.1 of
the Disclosure Letter, during the period from the date of this Agreement to the
Closing (the "Pre-Closing Period"), the Company shall (unless otherwise
consented to in writing by the Primary Purchaser) (i) conduct its business in
the ordinary course consistent with past practice, (ii) use reasonable best
efforts to preserve intact its and its Subsidiaries' current business
organizations, keep available the services of their current officers, licensors,
licensees, advertisers, distributors, governmental authorities and others having
business dealings with them to the end that their goodwill and ongoing
businesses shall be unimpaired, and (iii) not take any action that could cause
any representation or warranty contained in Article III to be untrue in any
material respect or cause a covenant to fail to be satisfied in any material
respect.
(1) Without limiting the generality of the foregoing, during the
Pre-Closing Period, other than as expressly provided in this Agreement or as set
forth in Section 5.1 of the Disclosure Letter, each of the Company and its
Subsidiaries shall not, without the prior written consent of the Primary
Purchaser:
(1) (A) declare, set aside or pay any dividends on, or make any other
distributions in respect of capital stock of the Company or any of its
Subsidiaries, (B) split, combine or reclassify capital stock of the Company or
any of its Subsidiaries or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of capital
stock of the Company or any of its Subsidiaries, (C) purchase, redeem or
otherwise acquire any shares of capital stock or any other securities of the
Company or any of its Subsidiaries, (D) pay or set aside a "sinking fund" for
the payment of any principal amount of outstanding debt securities of the
Company or any of its Subsidiaries, or (E) consummate or enter into an agreement
to recapitalize the Company or any of its Subsidiaries;
(2) issue, deliver, sell, transfer, pledge or otherwise encumber or subject
to any Lien any shares of capital stock of the Company or any of its
Subsidiaries, any other voting securities or any securities convertible into, or
any rights, warrants, options or calls to acquire, any capital stock of the
Company or any of its Subsidiaries;
(3) amend the Certificate of Incorporation, the Bylaws or any similar
governing documents of any Subsidiary of the Company;
(4) merge, consolidate or reorganize the Company or any of its Subsidiaries
with any other Person;
(5) form, join, participate or agree to form, join or participate in the
business, operations, sales, distribution, or development of any other Person or
contribute assets, employees, cash or customers or other resources to any such
arrangement, other than in the ordinary course of business consistent with past
practices;
(6) acquire or agree to acquire by merging or consolidating with, or by
purchasing assets of, or by any other manner, any business or any Person, other
than purchases supplies in the ordinary course of business consistent with past
practice;
(7) sell, lease, license, mortgage or otherwise encumber or subject to any
Lien or otherwise dispose of any of significant amount of its properties or
assets, otherwise than in the ordinary course of business;
(8) (A) incur any significant amount of Indebtedness or (B) make any loans,
advances or capital contributions to, or investments in, any other Person,
otherwise than in the ordinary course of business;
(9) make, commit or otherwise agree to make any capital expenditure, or
enter into any agreement or agreements providing for capital expenditures which,
individually, are in excess of $100,000 or, in the aggregate, are in excess of
$300,000;
(10) pay, discharge, settle or satisfy any material claims, liabilities,
obligations or litigation (absolute, accrued, asserted or unasserted, contingent
or otherwise), other than the payment, discharge, settlement or satisfaction, in
the ordinary course of business consistent with past practices;
(11) transfer or license to any person or entity or otherwise extend, amend
or modify any rights to the Intellectual Property of the Company or its
Subsidiaries other than in the ordinary course of business;
(12) modify, amend, alter or change terms, provisions or rights and
obligations of any agreement which is material to the Company and its
Subsidiaries taken as a whole;
(13) take any action or omit to take any action which, individually or in
the aggregate, would have a material adverse effect on the Condition of the
Company;
(14) take any action or omit to take any action which would reasonably be
expected to materially delay or materially adversely affect the ability of any
of the parties to obtain any consent, waiver or other approval of any
Governmental Authority or other Person required to consummate the transactions
contemplated hereby;
(15) amend or modify any Plan or adopt any compensation or benefit
agreement, plan or arrangement for the benefit of any employee, director,
consultant or stockholder of the Company and its Subsidiaries or increase the
compensation payable to any such individual;
(16) adopt a shareholder rights plan or similar plan or agreement;
(17) (A) effect a voluntary liquidation, dissolution or winding up of the
Company or any of its Subsidiaries, or (B) voluntarily file for bankruptcy, or
otherwise seek protection under any federal or state bankruptcy or similar law;
or
(18) authorize, or commit or agree to take, any of the foregoing actions.
1.39 Delivery of SEC Reports and Press Releases; Listing; Nasdaq.
(a) During the Pre-Closing Period, the Company shall deliver to the
Purchasers, promptly upon their becoming available, copies of (i) all SEC
Reports of the Company, (ii) all financial statements, reports, notices and
proxy statements sent or made available by the Company to its security holders,
(iii) all regular and periodic reports and all registration statements and
prospectuses filed by the Company with any securities exchange or with the
Commission, and (iv) all press releases and other statements made available by
the Company to the public concerning material developments in the business of
the Company or any of its Subsidiaries.
(b) Prior to the Closing, the Company shall secure the listing of all
shares of Common Stock that may be issued upon conversion of the Series A
Preferred Stock upon each national securities exchange or automated quotation
system, if any, upon which shares of Common Stock are then listed and, shall use
its reasonable best efforts to maintain such listing for so long as the
Purchasers or any of their respective Affiliates own any shares of Common Stock
or Series A Preferred Stock.
(c) The Company has previously delivered to Nasdaq the notice of issuance
of the Series A Preferred Stock in accordance with the Nasdaq Marketplace Rule
4310(c)(17) ("Rule 4310(c)(17)"). The Company has applied to Nasdaq for the
exception under Nasdaq Marketplace Rule 4350(i)(2) ("Rule 4350(i)(2)") to the
requirement to obtain shareholder approval for the transactions contemplated by
this Agreement and the other Transaction Documents. The Company agrees to mail
the letter to its shareholders contemplated by Rule 4350(i)(2) immediately upon
receipt from Nasdaq that the exception contemplated by such rule has been
granted.
1.40 Reservation of Common Stock. The Company shall at all times reserve
and keep available out of its authorized shares of Common Stock, solely for the
purpose of issue or delivery upon conversion of the Series A Preferred Stock, as
provided in the Series A Certificate of Designations, the maximum number of
shares of Common Stock that may be issuable or deliverable upon such conversion.
Such shares of Common Stock shall be duly authorized and, when issued or
delivered in accordance with the Series A Certificate of Designations, shall be
validly issued, fully paid and non-assessable. The Company shall issue such
shares of Common Stock in accordance with the terms of the Series A Certificate
of Designations and otherwise comply with the terms hereof and thereof.
1.41 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.
1.42 Inspection. During the Pre-Closing Period, the Company shall permit
representatives of the Primary Purchaser 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 no such inspection, examination or inquiry, the
failure to conduct same, nor any knowledge of the Primary Purchaser, including
any knowledge obtained by the Primary Purchaser in connection with any such
inspection, investigation or inquiry, shall constitute a waiver of any rights
the Primary Purchaser may have under any representation, warranty, covenant,
term or agreement under any of the Transaction Documents.
1.43 Board of Directors. The Company shall cause the Board of Directors,
effective as of the Closing, to be comprised as set forth in the Stockholders
Agreement.
1.44 No Solicitation. Except as set forth in Section 5.7 of the Disclosure
Letter, during the Pre-Closing Period, neither the Company nor any of its
Affiliates or representatives shall (a) solicit any inquiries or proposals or
enter into or continue any discussions, negotiations or agreements with any
Person other than the Primary Purchaser relating to (i) the issuance, sale or
exchange (whether by merger or otherwise) of the Company's or any of its
Subsidiaries' capital stock or Indebtedness, (ii) the sale of any significant
amount of property and other assets of the Company or its Subsidiaries, or (b)
provide any assistance or information to or otherwise cooperate with any Person
in connection with any such inquiry, proposal, or transaction.
1.45 Filing of Series A Certificate of Designations. Prior to the Closing,
the Company shall cause the Series A Certificate of Designations to be duly
filed by the Company with the Secretary of State of the State of Delaware in
accordance with the Delaware General Corporation Law, and shall deliver to the
Primary Purchaser evidence of such filings in form and substance reasonably
satisfactory to the Primary Purchaser.
1.46 Use of Proceeds. The proceeds of the sale of Series A Preferred Stock
contemplated hereby shall be used by the Company for general corporate purposes.
1.47 Consent and Standstill Agreement. The Company agrees to promptly take
all action necessary to enforce its rights under the Consent and Standstill
Agreements for any breaches of such agreements by a Stockholder (as defined in
the Consent and Standstill Agreements).
1.48 Restructuring. In the event that the transactions contemplated by this
Agreement and the other Transaction Documents shall have been modified as
contemplated in Section 7.2(r), then the Company shall use its reasonable best
efforts to raise, and cooperate with the Primary Purchaser in raising,
additional equity financing for the Company in an amount equal to the amount
which would have been raised had the Company issued the Xxxxx Purchased Shares
or the Xxxx Purchased Shares, as the case may be, at Closing. As a condition to
such financing, the Primary Purchaser shall own the same percentage of voting
securities of the Company immediately following such financing as it owned
immediately prior to such financing.
ARTICLE VI
AFFIRMATIVE COVENANTS OF
THE PURCHASERS AND THE COMPANY
1.49 Reasonable Best Efforts. Subject to the terms and conditions of this
Agreement, each of the parties will use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under this Agreement and applicable laws and
regulations to consummate the transactions contemplated by this Agreement as
soon as practicable after the date hereof, including (i)- preparing and filing
as promptly as practicable all documentation to effect all necessary
applications, notices, petitions, filings, and other documents and to obtain as
promptly as practicable all consents, waivers, licenses, orders, registrations,
approvals, permits, and authorizations necessary or advisable to be obtained
from any third party and/or any Governmental Authority in order to consummate
the transactions contemplated by this Agreement and (ii)- taking all reasonable
steps as may be necessary to obtain all such consents, waivers, licenses,
registrations, permits, authorizations, orders and approvals. The parties agree
that any costs and expenses of obtaining such consents, waivers, licenses,
registrations, permits, authorizations, orders and approvals shall be borne by
the Company, including any costs and expenses related obtaining a consent,
waiver or other approval of the parties to the Company's Third Amended and
Restated Investor Rights Agreement, dated April 28, 2000, as may be amended (the
"Existing Investors' Rights Agreement"). Nothing in this Agreement (including
this Section 6.1) shall require Purchasers to amend any of Transaction Documents
or enter into any additional agreements in order to obtain any consents,
waivers, licenses, registrations, permits, authorizations, orders and approvals
contemplated above.
ARTICLE VII
CONDITIONS TO CLOSING
1.50 Conditions to the Obligation of the Primary Purchaser and the Company.
The obligations of the Primary Purchaser and the Company to consummate the
Closing are subject to the satisfaction (or waiver by the Primary Purchaser and
the Company) of each of the following conditions:
(1) There shall not be (i) in force any statute, rule, regulation, order or
decree restraining, enjoining or prohibiting the consummation of the
transactions contemplated by this Agreement and the other Transaction Documents
or (ii) any material suit or proceeding by a Governmental Authority to restrain
or enjoin the transactions contemplated by this Agreement and the other
Transaction Documents.
(2) All consents, approvals, exemptions, authorizations, waivers or other
actions by, or notice to, or filings with, any Governmental Authorities in
respect of any Requirement of Law necessary to consummate the transactions
contemplated hereby, shall have been obtained, provided, however, that the
provisions of this Section 7.1(b) shall not be available to any party whose
failure to fulfill its obligations pursuant to Section 6.1 shall have been the
cause of, or shall have resulted in, the failure to obtain such consents,
approvals, exemptions, authorizations, waivers or other actions.
(3) (i) The Company shall have received (and delivered to the Purchasers)
written confirmation from Nasdaq that the transactions contemplated by this
Agreement and the other Transaction Documents shall not require shareholder
approval pursuant to Rule 4350(i)(2) and the Company shall have complied with
the conditions of such rule, (ii) the Company shall have delivered to the
Nasdaq, in accordance with Rule 4310(c)(17), a notice of the proposed issuance
of the Preferred Stock pursuant to this Agreement, at least fifteen calendar
days prior to the Closing Date or received from Nasdaq, prior to the Closing
Date, a waiver of the requirement to give such notice, and (iii) the shares of
Common Stock reserved for issuance upon conversion of the Series A Preferred
Stock shall have been authorized for listing on the Nasdaq Stock Market.
1.51 Conditions to Obligation of the Primary Purchaser. The obligation of
the Primary Purchaser to consummate the Closing is subject to the satisfaction
(or waiver by the Primary Purchaser) of each of the following additional
conditions:
(1) Each of the representations and warranties of the Company set forth in
this Agreement that is qualified as to materiality or material adverse effect
shall be true and correct, and each of the representations and warranties of the
Company set forth in this Agreement that is not so qualified shall be true and
correct in all material respects, in each case as of the date of this Agreement
and as of the Closing Date as though made on and as of the Closing Date (except
to the extent in either case that such representations and warranties speak as
of another date).
(2) The Company shall have performed or complied in all material respects
with all agreements and covenants required to be performed by it under this
Agreement at or prior to the Closing Date.
(3) All material consents, waivers and approvals of any Person (other than
a Governmental Authority) that are necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Company of
this Agreement and each of the other Transaction Documents shall have been
obtained and shall be in full force and effect (including, without limitation,
the consent, approval and waiver of a majority of the holders of "Registrable
Securities" (as defined in the Existing Investors' Rights Agreement) under the
Existing Investors' Rights Agreement), and the Primary Purchaser shall have been
furnished with appropriate evidence thereof.
(4) Since the date hereof, there shall not have been any material adverse
change in the Condition of the Company.
(5) The Series A Certificate of Designations shall have been duly and
properly filed with the Secretary of State of Delaware in accordance with the
Delaware General Corporation Law.
(6) A majority of the holders of "Registrable Securities" (as defined in
the Existing Investors' Rights Agreement) under the Existing Investors' Rights
Agreement shall have waived their rights pursuant to Section 1.12 of the
Existing Investors' Rights Agreement and consented to the Registration Rights
Agreement, including, the grant of "demand" and "piggyback" registration rights
pursuant to the Registration Rights Agreement.
(7) The Company and the Persons listed in Section 7.2(g) of the Disclosure
Letter shall have entered into the Consent and Standstill Agreement and
delivered copies thereto to the Primary Purchaser.
(8) The employees of the Company listed in Section 7.2(h) of the Disclosure
Letter shall have entered into a Confidentiality, Invention Assignment and
Noncompetition Agreement, substantially in the form attached hereto as Exhibit
F.
(9) The employees of the Company listed in Section 7.2(i) of the Disclosure
Letter shall have entered into a Confidentiality, Invention Assignment and
Nonsolicitation Agreement, substantially in the form attached hereto as Exhibit
G.
(10) The Company shall have delivered to the Primary Purchaser the Service
Agreements duly executed by the Company.
(11) The Company shall have delivered to the Primary Purchaser the
Stockholders Agreement duly executed by the Company and the Additional
Purchasers shall have delivered to the Primary Purchaser the Stockholders
Agreement duly executed by the Additional Purchasers.
(12) The Company shall have delivered to the Primary Purchaser the
Registration Rights Agreement duly executed by the Company.
(13) The Company shall have delivered to the Primary Purchaser the
Retention Incentive Agreement in substantially the form set forth in Exhibit H,
duly executed by the Company and the Chief Executive Officer of the Company.
(14) The Company shall have established the Retention Plan in substantially
the form set forth in Exhibit I.
(b The Board of Directors of the Company shall be comprised as set forth in
the Stockholders Agreement.
(15) The Company shall have delivered to the Primary Purchaser an opinion
of Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP, counsel for the Company, dated the
Closing Date, substantially in the form attached hereto as Exhibit J.
(16) The Company shall have delivered to the Primary Purchaser an opinion
of the Company's General Counsel, dated the Closing Date, substantially in the
form attached hereto as Exhibit K.
(17) The conditions to the obligations of the Company under Section 7.4 and
Section 7.5 with respect to the Xxxxx Purchased Shares and the Xxxx Purchased
Shares shall have been satisfied (or waived) or if not so satisfied or waived,
the transactions contemplated by this Agreement and the other Transaction
Documents shall have been modified to the reasonable satisfaction of the Primary
Purchaser such that upon issuance of the Primary Purchaser Purchased Shares, the
Primary Purchaser will own the same percentage of the Company's voting
securities as if such Xxxxx Purchased Shares and the Xxxx Purchased Shares, as
the case may be, had been issued at Closing.
(18) The Company shall have delivered to the Primary Purchaser a
certificate, dated the Closing Date, signed by the Chief Executive Officer of
the Company, certifying as to the fulfillment of the conditions set forth in
clauses (a), (b), (c), and (d) of this Section 7.2.
1.52 Conditions to the Obligation of the Company With Respect To the
Primary Purchaser Purchased Shares. The obligation of the Company to consummate
the Closing with respect to the Primary Purchaser Purchased Shares is subject to
the satisfaction (or waiver by the Company) of the following further conditions:
(1) Each of the representations and warranties of the Primary Purchaser set
forth in this Agreement that is qualified as to materiality or material adverse
effect shall be true and correct, and each of the representations and warranties
of the Primary Purchaser set forth in this Agreement that is not so qualified
shall be true and correct in all material respects, in each case as of the date
of this Agreement and as of the Closing Date as though made on and as of the
Closing Date (except to the extent in either case that such representations and
warranties speak as of another date).
(2) The Primary Purchaser shall have performed or complied in all material
respects with all agreements and covenants required to be performed by it under
this Agreement at or prior to the Closing Date.
(3) The Primary Purchaser shall have delivered to the Company the Service
Agreements duly executed by the Primary Purchaser.
(4) The Primary Purchaser shall have delivered to the Company the
Stockholders Agreement duly executed by the Primary Purchaser.
(5) The Primary Purchaser shall have delivered to the Company the
Registration Rights Agreement duly executed by the Primary Purchaser.
(6) The Primary Purchaser shall have delivered to the Company an opinion of
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, special counsel for the Primary
Purchaser, dated the Closing Date, substantially in the form attached hereto as
Exhibit L.
(7) The Primary Purchaser shall have delivered to the Company a
certificate, dated the Closing Date, signed by an executive officer of the
Primary Purchaser, certifying as to the fulfillment of the conditions set forth
in clauses (a) and (b) of this Section 7.3.
1.53 Conditions to the Obligation of the Company with Respect to the Xxxxx
Purchased Shares. The obligations of the Company to consummate the Closing with,
and only with, respect to the Xxxxx Purchased Shares is subject to the
satisfaction (or waiver by the Company) of the following further conditions:
(1) Each of the representations and warranties of Xxxxx set forth in this
Agreement shall be true and correct in all material respects, in each case as of
the date of this Agreement and as of the Closing Date as though made on and as
of the Closing Date (except to the extent in either case that such
representations and warranties speak as of another date).
(2) Xxxxx shall have performed or complied in all material respects with
all agreements and covenants required to be performed by it under this Agreement
at or prior to the Closing Date.
(3) Xxxxx shall have delivered to the Company the Stockholders Agreement
duly executed by Xxxxx.
(4) Xxxxx shall have delivered to the Company a certificate, dated the
Closing Date, signed by an executive officer of Xxxxx, certifying as to the
fulfillment of the conditions set forth in clauses (a) and (b) of this Section
7.4.
1.54 Conditions to the Obligation of the Company with Respect to the Xxxx
Purchased Shares. The obligations of the Company to consummate the Closing with,
and only with, respect to the Xxxx Purchased Shares is subject to the
satisfaction (or waiver by the Company) of the following further conditions:
(1) Each of the representations and warranties of Xxxx set forth in this
Agreement shall be true and correct in all material respects, in each case as of
the date of this Agreement and as of the Closing Date as though made on and as
of the Closing Date (except to the extent in either case that such
representations and warranties speak as of another date).
(2) Xxxx shall have performed or complied in all material respects with all
agreements and covenants required to be performed by it under this Agreement at
or prior to the Closing Date.
(3) Xxxx shall have delivered to the Company the Stockholders Agreement
duly executed by Xxxx. (1)
(4) Xxxx shall have delivered to the Company a certificate, dated the
Closing Date, signed by an executive officer of Xxxx, certifying as to the
fulfillment of the conditions set forth in clauses (a) and (b) of this Section
7.5.
1.55 Conditions to the Obligation of the Additional Purchasers. The
obligation of each Additional Purchaser to consummate the Closing is subject to
the satisfaction (or waiver by such Additional Purchaser) of the following
condition:
(1) The conditions to the obligations of the Primary Purchaser set forth in
this Article VII shall have been satisfied (or waived by the Primary Purchaser).
ARTICLE VIII
TERMINATION
1.56 Termination of Agreement. This Agreement may be terminated prior to
the Closing as follows:
(1) by mutual written consent of the Primary Purchaser and the Company;
(2) by either the Primary Purchaser or the Company upon written notice to
the other party if the Closing shall not have been consummated on or before July
13, 2001 (the "Outside Date"), unless the failure to consummate the Closing by
such date shall be due to the action or failure to act of the party seeking to
terminate this Agreement;
(3) by either the Primary Purchaser or the Company upon written notice to
the other party if any Governmental Authority shall have issued an order, decree
or injunction or taken any other action permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement and such
order, decree or injunction or other action shall have become final and
nonappealable; or
(4) by either the Primary Purchaser or the Company upon written notice to
the other party, if there shall have been a breach by the other of any of its
representations, warranties, covenants or obligations contained in this
Agreement, which breach would result in the failure to satisfy the conditions
set forth in Section 7.2(a) or Section 7.2(b) (in the case of a breach by the
Company) or Section 7.3(a) or Section 7.3(b) (in the case of a breach by the
Primary Purchaser), and in any such case such breach shall be incapable of being
cured or, if capable of being cured, shall not have been cured by the Outside
Date after written notice thereof shall have been received by the party alleged
to be in breach.
1.57 Effect of Termination. In the event of termination by the Company or
the Primary Purchaser pursuant to Section 8.1, written notice thereof shall
promptly be given to the other party and, except as otherwise provided herein,
the transactions contemplated by this Agreement shall be terminated without
further action by either party. Notwithstanding the foregoing, nothing in this
Section 8.2 shall be deemed to release any party from any liability for any
breach by such party of the terms and provisions of this Agreement or to impair
the right of the Company, on the one hand, and the Purchasers, on the other
hand, to compel specific performance of the other party of its obligations under
this Agreement. After termination pursuant to Section 8.1, no party shall have
any liability to the other, except for any willful breach of any representation,
warranty, covenant or obligation contained in this Agreement. This Section 8.2
and Section 10.9 (Expenses) shall survive any termination of this Agreement.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
P
1.58 Survival. Each of the representations and warranties of the Company
contained in this Agreement or in any certificate or other writing delivered
pursuant hereto or in connection herewith shall survive the Closing until March
31, 2003 except for (i) those contained in Sections 3.1, 3.2, 3.4, 3.5, , which
shall survive indefinitely and (ii) the representations and warranties contained
in Sections 3.12, 3.13 and 3.15, which shall survive until expiration of the
statute of limitations applicable to the matters covered thereby (giving effect
to any waiver or extension thereof). In the event notice of any claim for
indemnification under this Agreement shall have been given within the applicable
survival period, the representations and warranties that are the subject of such
indemnification claim shall survive until such time as such claim is finally
resolved. The covenants and agreements of the Company set forth in this
Agreement, including, without limitation, the indemnification obligations of the
Company hereunder shall survive indefinitely except as expressly provided
herein.
1.59 Indemnification. (a) The Company agrees to indemnify, defend and hold
harmless each of the Purchasers and their respective Affiliates and their
respective officers, directors, agents, employees, subsidiaries, partners,
members, attorneys, accountants, and controlling persons (each, an "Indemnified
Party") to the fullest extent permitted by law from and against any and all
losses, Claims, damages, costs, expenses (including reasonable fees,
disbursements and other charges of counsel) or other liabilities (collectively,
"Losses") resulting from, arising out of or relating to (i) any breach of any
representation or warranty by the Company or its Affiliates in this Agreement or
the other Transaction Documents, and (ii) any breach of any covenant or
agreement of the Company in this Agreement or the other Transaction Documents.
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 securities purchased hereunder below the purchase
price paid by such Indemnified Party hereof.
(b) The indemnification obligations of the Company pursuant to Section
9.2(a)(i) shall not be effective until the aggregate dollar amount of all Losses
that would otherwise be indemnifiable pursuant to Section 9.2(a)(i) exceeds
$400,000 (the "Threshold"), at which point such obligations shall be effective
for all Losses in excess of 50% of the Threshold, provided that the foregoing
limitation shall not apply with respect to any breach of the representations and
warranties set forth in Sections 3.1, 3.2, 3.4, 3.5 and 3.12.
(c) Notwithstanding anything in this Agreement to the contrary, it is
hereby understood that for purposes of this Article IX, all materiality and
material adverse effect exceptions and qualifications set forth in any
representation or warranty contained in this Agreement or the other Transaction
Documents shall be disregarded.
(d) If and to the extent that the indemnification provided for in this
Article IX is unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of such Losses which shall be
permissible under applicable law.
1.60 Notification and Procedure. Each Indemnified Party under this Article
IX 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 Company under this Article IX, notify the Company in writing of the
commencement thereof. The omission of any Indemnified Party to so notify the
Company of any such action shall not relieve the Company from any liability
which it may have to such Indemnified Party other than to the extent, and only
to the extent, that such omission materially prejudices the Company by resulting
in the Company's forfeiture of substantive rights or defenses. In case any such
claim shall be brought against any Indemnified Party, and it shall notify the
Company of the commencement thereof, the Company 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. Notwithstanding the foregoing, in any claim in
which both the Company, 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 Company or (y) a conflict or potential conflict
exists between the Company, on the one hand, and such Indemnified Party, on the
other hand, that would make such separate representation advisable; provided,
however, that the Company (i) shall not be liable for the fees and expenses of
more than one counsel to all Indemnified Parties in any one legal action or
group of related legal actions, and (ii) shall reimburse the Indemnified Parties
for all of such fees and expenses of such counsel incurred in any action between
the Company and the Indemnified Parties or between the Indemnified Parties and
any third party, as such expenses are incurred. The Company agrees that it will
not, without the prior written consent of the Indemnified Party, 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.
1.61 Exclusive Remedy. The rights accorded to an Indemnified Party
hereunder shall be the sole and exclusive remedy for breach of any
representation, warranty or covenant of the Company contained in this Agreement
except for claims based on fraud or willful misconduct by the Company; provided,
however, that notwithstanding the foregoing or anything to the contrary
contained in this Agreement, nothing in this Article IX shall restrict or limit
any rights that any Indemnified Party may have to seek equitable relief.
ARTICLE X
MISCELLANEOUS
1.62 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:
iBeam Broadcasting Corporation
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
If to the Primary Purchaser:
Xxxxxxxx Communications, LLC
Xxx Xxxxxxxx Xxxxxx 00-0
Xxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
If to Xxxxx:
Xxxxx & Company Incorporated
000 0xx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxx
If to Xxxx:
Xxxx iBeam, LLC
Xxx Xxxxx Xxxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Telcopy: (000) 000-0000
Attention: Xxxxxx Xxxx
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.
1.63 Successors and Assigns; No Third Party Beneficiaries.
(1) 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, upon prior
written notice to the Company, 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 the Primary Purchaser. No Person other than the
parties hereto and their successors and permitted assigns is intended to be a
beneficiary of this Agreement. (1)
(2) Notwithstanding Section 10.2 of this Agreement, during the Pre-Closing
period, Xxxxx shall be entitled to assign its right to purchase all or any part
of the Xxxxx Purchased Shares to any Person, provided that (i) such assignment
shall (A) be made in compliance with applicable law (including the federal and
state securities laws), and (B) not cause the exemption from registration of the
Purchased Shares to be issued pursuant to this Agreement to be not available,
(ii) such assignee agrees in writing to be bound by the terms of this Agreement
as an Additional Purchaser, (iii) such assignee has the financial resources to
perform its obligations hereunder, and (iv) such assignee agrees to be bound by
the terms of the Stockholders Agreement to the same extent Xxxxx would have been
bound by such agreement, including Section 2.4 thereof.
1.64 Amendment and Waiver.
(1) No failure or delay on the part of the Company or any of 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 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
any of the Purchasers at law, in equity or otherwise.
(2) Any amendment, supplement or modification of or to any provision of
this Agreement, any waiver 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
Primary Purchaser and (ii) only in the specific instance and for the specific
purpose for which made or given, provided that any amendment, supplement,
modification, or waiver that would materially and adversely affect the rights of
an Additional Purchaser hereunder shall require the prior written consent of
such Additional Purchaser. 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.
1.65 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.
1.66 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
1.67 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.
1.68 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.
1.69 Entire Agreement. This Agreement, together with the exhibits and
Disclosure Letter hereto, and the other Transaction Documents are intended by
the parties hereto 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 Disclosure Letter hereto, and the
other Transaction Documents supersede all prior agreements and understandings
between the parties with respect to such subject matter.
1.70 Expenses. Except as otherwise contemplated in the Transaction
Documents, including Section 6.1 hereof and the last sentence of this Section
10.9, each party shall pay its own expenses incurred in connection with the
Transaction Documents and the transactions contemplated thereby. Notwithstanding
the foregoing, the Company agrees to promptly reimburse the Primary Purchaser an
amount equal to (i) the reasonable fees, disbursements and other charges of
Primary Purchaser's legal counsel in connection with the preparation,
negotiation, execution, delivery and performance of this Agreement and the other
Transaction Documents, less (ii) the amount by which the fees, disbursements and
other charges paid by the Company to Xxxxxx Xxxxxxx & Co. Incorporated and
Dresdner Kleinwort Xxxxxxxxxxx, in the aggregate, are less than $4,000,000.
1.71 Publicity; Confidentiality. (a) All press releases or other public
communications of any nature relating to this Agreement, the other Transactions
Documents and the transactions contemplated hereby or thereby, and the method of
the release for publication thereof, shall be subject to the prior mutual
approval of the Primary Purchaser and the Company which approval shall not be
unreasonably withheld by such parties; provided however, that nothing herein
shall prevent any party from publishing such press release or other public
communications as may be required by applicable law or stock exchange rule after
consultation with the other parties hereto as is reasonable under the
circumstances.
(b) The Primary Purchaser and the Company agree that they shall remain
bound by the terms of the Non Disclosure Agreement dated May 2, 2001, between
the Primary Purchaser and the Company.
1.72 Further Assurances. Each party shall execute such documents and
perform such further acts (including 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 Agreement on the date first written above.
iBEAM BROADCASTING CORPORATION
By:_________________________
Name:
Title:
XXXXXXXX COMMUNICATIONS, LLC
By:_________________________
Name:
Title:
XXXXX & COMPANY INCORPORATED
By:_________________________
Name:
Title:
XXXX iBEAM, LLC
By:_________________________
Name:
Title:
