EXHIBIT 10.6
UNIT PURCHASE AGREEMENT
THIS AGREEMENT is made as of April 22, 1999, among INTERNET FASHION MALL
LLC, a Delaware limited liability company (the "Company"), XXXXXXXXXXX.XXX., a
Delaware corporation ("FMI") and TRG Net Investors LLC, a Delaware limited
liability company (the "Purchaser").
The parties hereto agree as follows:
SECTION 1.--CLOSING.
1A. PURCHASE AND SALE OF THE SERIES B LLC INTEREST AND WARRANTS. At the
Closing, the Company shall sell to the Purchaser and, subject to the terms and
conditions set forth herein, the Purchaser shall purchase from the Company for
$5,768,588 ($7.00 per Unit), subject to adjustment as provided in Section 7A, a
9.9% Series B membership interest (the "Interest") in the LLC which is intended
to be transferred in an exchange under Section 351 of the Internal Revenue Code
for 824,084 shares of convertible preferred stock (the "Preferred Stock") of
FMI, which as set forth in the Certificate of Designations, Preferences and
Rights of the Series A Preferred Stock (a copy of which is attached as Exhibit A
hereto) is convertible into an aggregate of 824,084 shares, par value $0.01 per
share of common stock (the "Common Stock") and (b) warrants (the "Warrants") to
purchase an additional 10% membership interest in the LLC or, under certain
circumstances, 924,898 shares of Common Stock of FMI (the "LLC Interest" and the
"Warrants" collectively referred to as "Units").
1B. THE CLOSING. The closing of the purchase and sale of the Units
pursuant to paragraph 1A (the "Closing") shall take place at the offices of
Squadron, Ellenoff, Plesent & Xxxxxxxxx, LLP, in New York, New York no later
than 11:59 p.m. on Thursday, April 22, 1999 or at such other place or on such
other date as may be mutually agreeable to the Company and the Purchaser. At the
Closing, the Purchaser, the Company and its members shall execute and deliver an
Amended and Restated Limited Liability Agreement in the form of Exhibit B hereto
(the "LLC Agreement") and the executed Warrants, registered in such Purchaser's
or its nominee's name, upon payment of the purchase price therefor by a
cashier's or certified check, or by wire transfer of immediately available funds
to the Company's account at Xxxxxxx Xxxxx (Account No. 885-07357).
SECTION 2.--CONDITIONS OF THE PURCHASER'S OBLIGATION AT THE CLOSING. The
obligation of the Purchaser to purchase and pay for the Units at the Closing is
subject to the representations and warranties contained in Section 5 hereof
being true and correct at and as of the Closing, except to the extent of changes
caused by the transactions expressly contemplated herein, and the performance by
the Company in all material respect of all of the covenants required to be
performed by it hereunder prior to the Closing.
SECTION 3.--BOARD SEAT
3A. If FMI completes the IPO (as defined in Section 7), so long as the
Purchaser owns at least 750,000 shares of the outstanding Common Stock of the
Company or Preferred Stock
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convertible into, or warrants exercisable for, at least 750,000 shares of such
outstanding Common Stock, the Company shall use its best efforts to cause one
person designated by Purchaser to be nominated to FMI's Board of Directors
provided that such person shall be Xxxxxx X. Xxxxxxx unless he is dead or
disabled and provided further that such obligation shall cease if such person's
membership on the Board of Directors would require any disclosure under Item
401(f) of Regulation S-K (other than set forth on Annex I hereto with respect to
Xx. Xxxxxxx) or comparable successor provisions of or under securities laws or
if such Person or his affiliates compete with the Company over the Internet.
SECTION 4.--TRANSFER OF RESTRICTED SECURITIES; LOCK-UP
4A. GENERAL PROVISIONS. The Purchaser agrees that the LLC Interest, the
Preferred Stock, the Warrants and the underlying Common Stock (collectively, the
"Securities") constitute restricted securities transferable only pursuant to (i)
registration under the Securities Act, (ii) Rule 144 or Rule 144A of the
Securities and Exchange Commission (or any similar rule or rules then in force)
if such rule is available and (iii) subject to the conditions specified in
paragraph 4B below, any other legally available means of transfer. Purchaser
also acknowledges and agrees that if FMI completes the IPO, Purchaser shall be
obligated to enter into a one-year lock-up with the underwriter of the IPO
subject to limited rights of resale to protect its status as a real estate
investment trust.
4B. OPINION DELIVERY. In connection with the transfer of any Securities
(other than a transfer described in Section 4A(i) or (ii) above), the holder
thereof shall deliver written notice to the Company or FMI, as the case may be,
describing in reasonable detail the transfer or proposed transfer, together with
an opinion of Xxxx Xxxxxx & Xxxxxx or other counsel which (to the Company's or
FMI's reasonable satisfaction) is knowledgeable in securities law matters to the
effect that such transfer of Securities may be effected without registration of
such Securities under the Securities Act. In addition, if the holder of the
Securities delivers to the Company or FMI, as the case may be, an opinion of
Xxxx Xxxxxx & Xxxxxx or such other counsel that no subsequent transfer of such
Securities shall require registration under the Securities Act and has delivered
the original certificate or certificates representing such Securities to the
Company or FMI, as the case may be, the Company or FMI, as the case may be,
shall promptly upon such contemplated transfer deliver new certificates for such
Securities which do not bear the Securities Act legend set forth in Section 6.
If the Company or FMI, as the case may be, is not required to deliver new
certificates for such Securities not bearing such legend, the holder thereof
shall not transfer the same until the prospective transferee has confirmed to
the Company or FMI, as the case may be, in writing its agreement to be bound by
the conditions contained in this Section paragraph and Section 6. After such
confirmation and any required opinion has been given, the Company or FMI, as the
case may be, shall permit the transfer to occur.
4C. RULE 144A. Upon the request of the Purchaser, the Company or FMI, as
the case may be, shall promptly supply to such Purchaser or its prospective
transferees, at such Purchaser's cost, all information regarding the Company or
FMI, as the case may be, required to be delivered in connection with a transfer
pursuant to Rule 144A of the Securities and Exchange Commission.
4D. LEGEND REMOVAL. If any Securities become eligible for sale pursuant to
Rule 144(k), the Company or FMI, as the case may be, shall, upon the request of
the holder of such Securities and receipt of evidence sufficient in the
reasonable judgment of the Company's or FMI, as the case may
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be, counsel that the Securities are so eligible, remove the legend set forth in
Section 6 from the certificates for such Securities.
SECTION 5.--REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
and FMI hereby represent and warrant to the Purchaser that:
5A. ORGANIZATION, CORPORATE POWER AND LICENSES. FMI is a corporation and
the Company is a limited liability company, in each case duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, as the case may be, and is qualified to do
business in every jurisdiction in which the failure to so qualify has had or
would reasonably be expected to have a material adverse effect on the financial
condition, operating results, assets, operations or business prospects of the
Company or FMI and its Subsidiaries taken as a whole. FMI possesses all
requisite corporate power and authority and FMI (if the IPO occurs) and the
Company each possess all material licenses, permits and authorizations necessary
to own and operate their properties, to carry on their businesses as now
conducted and presently proposed to be conducted and to carry out the
transactions contemplated by this Agreement.
5B. CAPITAL STOCK AND RELATED MATTERS. Immediately prior to the closing of
the IPO, the authorized capital stock of FMI shall consist of (a) 3,000,000
shares of preferred stock, of which no shares shall be outstanding and (b)
35,000,000 shares of Common Stock, of which no shares are issued and
outstanding. At the closing of the IPO, it is currently contemplated that there
will be 7,500,000 shares of Common Stock outstanding.
5C. AUTHORIZATION: NO BREACH. The execution, delivery and performance of
this Agreement, the Warrants, the LLC Agreement and all other agreements
contemplated hereby to which the Company or FMI is a party, have been duly
authorized by the Company and FMI. Assuming the due and valid execution by the
other parties thereto, this Agreement, the Warrants, the LLC Agreement and all
other agreements contemplated hereby to which the Company and FMI is a party
each constitutes a valid and binding obligation of the Company or FMI, as the
case may be, enforceable in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, fraudulent conveyance or other similar
laws, and to general principles of equity (whether considered in proceedings at
law or in equity). The execution and delivery by the Company and FMI of this
Agreement, the Warrants, the LLC Agreement and all other agreements contemplated
hereby to which the Company or FMI is a party, the offering, sale and issuance
of the LLC Interest, the Preferred Stock and the Warrants and the fulfillment of
and compliance with the respective terms hereof and thereof by the Company or
FMI, as the case may be, do not and shall not (i) conflict with or result in a
breach of the terms, conditions or provisions of, (ii) constitute a default
under, (iii) result in the creation of any lien, security interest, charge or
encumbrance upon the Company's or FMI's equity securities or assets pursuant to,
(iv) give any third party the right to modify, terminate or accelerate any
obligation under, (v) result in a violation of, or (vi), require any
authorization, consent, approval, exemption or other action by or notice or
declaration to, or filing with, any court or administrative or governmental body
or agency pursuant to, the charter or bylaws of FMI, the membership agreement of
the Company or any law, statute, rule or regulation to which the Company or FMI
is subject, or any agreement, instrument, order, judgment or decree to which the
Company or FMI is subject.
5D. GOVERNMENTAL CONSENT, ETC. No permit, consent, approval or
authorization of, or declaration to or filing with, any governmental authority
is required in connection with the
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execution, delivery and performance by the Company or FMI of this Agreement, the
Warrants, the LLC Agreement or the other agreements contemplated hereby, or the
consummation by the Company or FMI of any other transactions contemplated hereby
or thereby, except as expressly contemplated herein or therein.
SECTION 6.--REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The
Purchaser represents and warrants to the Company or FMI the following:
(i) The Purchaser hereby represents and warrants that it is
acquiring the Units purchased hereunder or acquired pursuant hereto for
its own account with the present intention of holding such securities for
purposes of investment, and that it has no intention of selling such
securities in a public distribution in violation of the federal securities
laws or any applicable state securities laws; provided that nothing
contained herein shall prevent the Purchaser and subsequent holders of the
LLC Interest, Preferred Stock and Warrants from transferring such
securities in compliance with the provisions of Section 4 hereof. Each
certificate or instrument representing the LLC Interest, Preferred Stock
or Warrants shall be imprinted with a legend in substantially the
following form:
"The securities represented by this certificate were
originally issued on ________ __, 1999, and have not been
registered under the Securities Act . The transfer of the
securities represented by this certificate is subject to the
conditions specified in the Unit Purchase Agreement, dated as
of ______ __, 1999 and as amended and modified from time to
time, between the issuer (the "Company") and the Purchaser,
and the Company reserves the right to refuse the transfer of
such securities until such conditions have been fulfilled with
respect to such transfer. A copy of such conditions shall be
furnished by the Company to the holder hereof upon written
request and without charge."
Certificates representing the Common Stock underlying the Preferred Stock or
Warrants shall be imprinted with a substantially similar legend.
(ii) The Purchaser represents and warrants that it is an "accredited
investor" as that term is defined in Regulation D promulgated under the
Securities Act. The Purchaser acknowledges that it has been given the
opportunity to ask questions and receive satisfactory answers concerning
the Company and FMI, and the terms and conditions of the LLC Interest,
Preferred Stock or Warrants and obtain additional information in order to
evaluate the merits and risks of an investment in the LLC Interest, the
Preferred Stock and Warrants and to verify the accuracy of the information
contained in this Agreement. The Purchaser represents and warrants that it
is a sophisticated investor with such knowledge and experience in business
and financial matters as will enable the Purchaser to evaluate the merits
and risks of investment in the LLC Interest, the Preferred Stock and
Warrants and is able to bear the economic risks and lack of liquidity of
an investment in the LLC Interest, the Preferred Stock and Warrants.
SECTION 7.--ADJUSTMENT OF PRICE, RECONFIRMATION AND NOTICE.
7A. ADJUSTMENT. If FMI consummates an initial public offering of its
Common Stock prior to July 22, 1999 (such offering consummated prior to such
date (the "IPO") at a price (the "IPO Price") per share in excess of $7.00, the
price of the Units shall be adjusted to the lesser of (i) $9.00
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per Unit and (ii) the IPO Price. If the IPO price is less than $7.00, the price
of the Units shall be adjusted to the IPO price. In either case, the adjustment
shall take place as provided in Section 3.1 and 3.4 of the LLC Agreement.
Purchaser and the Company, as the case may be, each agree to pay any amounts
payable pursuant to the two preceding sentences immediately prior to the closing
of the IPO. Purchaser also agrees to execute and deliver to FMI, on or prior to
such closing date, a letter acknowledging that Purchaser has carefully reviewed
the Final Prospectus relating to the IPO and reconfirms its investment in the
Company and FMI.
7B. NOTICE OF REPURCHASES. If, at any time after the IPO, FMI proposes to
repurchase any of its Common Stock and if it reasonably believes, based on
information provided by Purchaser as to its ownership of FMI Common Stock that
such repurchase would cause Purchaser's ownership to exceed 10% of the
outstanding Common Stock of FMI, FMI will give Purchaser at least 10 business
days written notice of such repurchase.
SECTION 8.--MISCELLANEOUS.
8A. CONSENT TO AMENDMENTS. Except as otherwise expressly provided herein,
the provisions of this Agreement may be amended only if the Company, FMI and the
Purchaser have amended this Agreement in writing. No other course of dealing
between the Company, FMI and the Purchaser or any delay in exercising any rights
hereunder shall operate as a waiver of any rights of the Company, FMI or the
Purchaser.
8B. SUCCESSORS AND ASSIGNS. This Agreement may not be assigned by either
party without the other's written consent except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not.
8C. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
8D. COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts taken together shall constitute one and the
same Agreement.
8E. DESCRIPTIVE HEADINGS: INTERPRETATION. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a substantive
part of this Agreement. The use of the word "including" in this Agreement shall
be by way of example rather than by limitation.
8F. GOVERNING LAW. The limited liability company law and the corporate law
of the State of Delaware shall govern all issues and questions concerning the
relative rights and obligations of the Company and its members and FMI and its
stockholders. All other issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the exhibits and
schedules hereto shall be governed by, and construed in accordance with, the
laws of the State of New York, without giving effect to any choice of law or
conflict of law rules or provisions (whether of the State of New York or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York. In furtherance of the
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foregoing, the internal law of the State of New York shall control the
interpretation and construction of this Agreement (and all schedules and
exhibits hereto), even though under that jurisdiction's choice of law or
conflict of law analysis, the substantive law of some other jurisdiction would
ordinarily apply.
8G. NOTICES. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable overnight courier service (charges
prepaid), mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid or sent to the recipient by facsimile.
Such notices, demands and other communications shall be sent to the offices of
the Company or FMI at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxx Xxxxxxx, with a copy to Squadron, Ellenoff, Plesent & Xxxxxxxxx, LLP,
Attention: Xxxxxxx X. Xxxx, Esq., at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
and to the Purchaser at the address indicated below:
TRG Net Investors LLC
000 Xxxx Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxx
WITH A COPY TO:
Xxxx Xxxxxx & Xxxxxx
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000
X.X. Xxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxxx X. Gold, Esq.
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
8H. NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the parties hereto and their
respective successors and permitted assigns.
8I. BROKERAGE. Each party represents and warrants to the other that there
are no claims for brokerage commissions, finders' fees or similar compensation
in connection with the transactions contemplated by this Agreement based on any
arrangement or agreement binding upon such party and each indemnifies the other
against any breach of the foregoing.
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IN WITNESS WHEREOF, the parties hereto have executed this Unit Purchase
Agreement on the date first written above.
INTERNET FASHION MALL LLC
By: /s/ Xxx Xxxxxxx
----------------------------------
Name: Xxx Xxxxxxx
Title: President and Managing
Member
XXXXXXXXXXX.XXX, INC.
By: /s/ Xxx Xxxxxxx
----------------------------------
Name: Xxx Xxxxxxx
Title: President and CEO
TRG NET INVESTORS LLC
By: /s/ Xxxx X. Xxxxx
----------------------------------
Name: Xxxx X. Xxxxx
Title: Executive Vice President
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