EXHIBIT 10.4
PREFERRED STOCK PURCHASE AGREEMENT
XXXXX ADVISORS, INC.
Series C Convertible Preferred Stock
Dated as of November 2, 1999 and
Amended as of December 30, 1999
EXHIBITS
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EXHIBIT A Purchasers
EXHIBIT B Certificate of Designation of Series C Convertible Preferred Stock
EXHIBIT C Form of Employee Confidentiality Agreement
EXHIBIT D Form of Opinion of Company Counsel
EXHIBIT E Form of Investor Rights Agreement
EXHIBIT F Form of Certificate of Amendment to Restated Certificate of Incorporation
SCHEDULES
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SCHEDULE 2.1 Foreign Qualifications
SCHEDULE 2.7 Material Agreements
SCHEDULE 2.12 Title to Assets
SCHEDULE 2.13 Intellectual Property Rights
SCHEDULE 2.14 Financial Information
SCHEDULE 2.15 Capitalization
SCHEDULE 2.18 Registration Rights
SCHEDULE 2.20 Transactions with Affiliates
SCHEDULE 2.21 Employees
PREFERRED STOCK PURCHASE AGREEMENT
THIS PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement") is made as
of November 2, 1999 and amended as of December 30, 1999 by and among Xxxxx
Advisors, Inc., a corporation organized under the laws of Delaware (the
"Company"), and the Persons listed on EXHIBIT A hereto (individually, a
"Purchaser" and collectively, the "Purchasers").
WHEREAS the Company desires to issue and sell to the Purchasers and the
Purchasers desire to acquire on the terms and subject to the conditions set
forth in this Agreement up to an aggregate amount of Five Million Eight Hundred
Eighty-Two Thousand Three Hundred Fifty-Three (5,882,353) shares of the
Company's Series C Convertible Preferred Stock, par value $.01 per share (the
"Series C Preferred Stock");
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement the parties hereto agree as follows:
ARTICLE 1 PURCHASE AND SALE OF SERIES C PREFERRED STOCK
1.1 AUTHORIZATION OF SERIES C PREFERRED STOCK. The Company has, or
before the Initial Closing (as hereinafter defined) will have, authorized the
issuance and sale of up to Five Million Eight Hundred Eighty-Two Thousand Three
Hundred Fifty-Three (5,882,353) shares (the "Shares") of its Series C Preferred
Stock, having the rights, restrictions, privileges and preferences as set forth
in the Certificate of Designation attached to this Agreement as EXHIBIT B, as
amended pursuant to a Certificate of Amendment to Restated Certificate of
Incorporation in substantially the form of EXHIBIT F attached hereto.
1.2 INITIAL CLOSING. Subject to the terms and conditions set forth in
this Agreement, and in reliance on the representations and warranties set forth
in this Agreement, the Company agrees to issue and sell to the Purchasers at the
Initial Closing (as hereinafter defined) and the Purchasers, severally but not
jointly, agree to purchase from the Company, that number of Shares set forth
opposite their respective names on EXHIBIT A under the caption "Number of Series
C Preferred Shares" at a purchase price per Share of Five Dollars and Ten Cents
($5.10). The purchase price of the Shares being acquired by each Purchaser is
set forth opposite such Purchaser's name on EXHIBIT A. The closing of the
purchase and sale of the Shares (the "Initial Closing") shall take place at the
offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. at 10:00 a.m. on
November 2, 1999 (the "Initial Closing Date") or at such time and date
thereafter as the Purchasers and the Company may agree. At the Initial Closing,
the Company will deliver to each Purchaser certificates for the number of Shares
being purchased by such Purchaser registered in such Purchaser's name (or its
nominee), against delivery of a certified or bank check or checks payable to the
order of the Company, or a transfer of funds to the account of the Company by
wire transfer, representing the purchase price set forth opposite each such
Purchaser's name on EXHIBIT A.
1.3 SUBSEQUENT CLOSINGS. At any time and from time to time, on or prior
to January 7, 2000, the Company may sell up to Four Million Eight Hundred
Thirty-Four Thousand One Hundred Seventy Five (4,834,175) Shares ("such Shares
being referred to as the "Additional Shares") to such
Persons as may be approved by the Company's Board of Directors (the "Additional
Purchasers"), at a purchase price per Additional Share of Five Dollars and Ten
Cents ($5.10). All such sales shall be made subject to the terms and conditions
set forth in this Agreement and in reliance on the representations and
warranties set forth in this Agreement. The closing or closings of the purchase
and sale of Additional Shares (a "Subsequent Closing"), if any, shall take place
at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. at such
time and date (a "Subsequent Closing Date") as such Additional Purchasers and
the Company may agree. At each Subsequent Closing, the Company shall issue and
sell to each such Additional Purchaser, and each such Additional Purchaser,
severally but not jointly, shall purchase from the Company, that number of
Additional Shares being purchased by such Additional Purchaser. At each
Subsequent Closing, the Company will deliver to each Additional Purchaser
certificates for the number of Additional Shares being purchased by such
Additional Purchaser registered in such Additional Purchaser's name (or its
nominee), against delivery of a certified or bank check or checks payable to the
order of the Company, or a transfer of funds to the account of the Company by
wire transfer, representing the purchase price for such Additional Shares. The
Initial Closing and the Subsequent Closings, if any, shall hereinafter be
referred to individually as a "Closing" and collectively as the "Closings". The
date of each Closing is hereinafter referred to as the Closing Date.
In connection with the sale of Additional Shares to Additional
Purchasers, each such Additional Purchaser shall execute and deliver a
counterpart signature page hereto. In addition, each such Additional Purchaser
shall, if requested by the Company, execute a counterpart signature to the
Investor Rights Agreement to which the Purchasers are party, pursuant to which
such Additional Purchaser agrees to become a party to and be bound by the
provisions of this Agreement and the Investor Rights Agreement. Thereupon,
EXHIBIT A hereto shall be automatically amended without further action on the
part of any of the parties hereto to reflect the sale of Additional Shares to
each such Additional Purchaser. Upon each such Subsequent Closing, the Company
shall provide to each Purchaser a copy of EXHIBIT A as so amended. Upon the sale
of any Additional Shares to Additional Purchasers in accordance with this
Agreement, each such Additional Purchaser shall be deemed a Purchaser for all
purposes hereunder and under the Investor Rights Agreement.
In connection with the sale of Additional Shares to any Additional
Purchaser, in the event that the Company agrees with any such Additional
Purchaser to terms or conditions that are more favorable than the terms and
conditions then contained herein or in the Investor Rights Agreement, the terms
and conditions herein and in the Investor Rights Agreement shall be amended or
modified to make such more favorable terms and conditions applicable to all
Purchasers.
1.4 USE OF PROCEEDS. The Company agrees to use the net proceeds from
the sale of the Shares (i) to upgrade and market its products and services, (ii)
to develop and market new products and services, (iii) to add personnel, (iv) to
expand its facilities, and (v) for working capital and general corporate
purposes, including possible acquisitions of or investments in complementary
businesses, products or technologies.
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ARTICLE 2. THE COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce the Purchasers to enter into this Agreement and to
consummate the transactions contemplated hereby, the Company hereby represents
and warrants to the Purchasers, as of the date hereof and as of the date of each
Closing, as follows (and, for purposes of this Article 2 the "Company" shall
refer to the Company and its Subsidiary and, where applicable, to the Company
and its Subsidiary on a consolidated basis):
2.1 INCORPORATION, STANDING AND QUALIFICATION OF THE COMPANY. The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of organization. The Company has
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted and as proposed to be conducted.
The Company is qualified as a foreign corporation and in good standing in the
states listed on SCHEDULE 2.1. Except as set forth on SCHEDULE 2.1, the nature
of the Company's business and the ownership or lease of its property do not
require it to become qualified as a foreign corporation in any other state or
jurisdiction.
2.2 SUBSIDIARIES. Other than Concord Bowling, Inc., a Delaware
corporation ("Concord"), the Company does not (i) own of record or beneficially,
directly or indirectly, (A) any shares of capital stock of any other corporation
or (B) any participating interest in any partnership, joint venture or other
non-corporate business enterprise, or (ii) control, directly or indirectly, any
other entity. All the outstanding shares of capital stock of Concord have been
duly authorized, are validly issued and are fully paid and non-assessable and
are owned of record by the Company, free and clear of any Lien.
2.3 CORPORATE POWER AND AUTHORITY. The Company has the requisite power
and authority to execute and deliver this Agreement, the Shares, and the other
agreements and certificates contemplated hereby to which it is a party
(collectively, the "Related Agreements"), to perform its obligations hereunder
and thereunder and to engage in the transactions contemplated hereby and
thereby. The Company has taken all requisite corporate action to make all the
provisions of this Agreement, the Shares and the Related Agreements the valid
and enforceable obligations they purport to be. This Agreement is and, upon the
execution and delivery thereof, each of the Related Agreements will be, legal,
valid and binding obligations of the Company, enforceable in accordance with
their terms, subject to laws of general application from time to time in effect
affecting creditors' rights and the exercise of judicial discretion in
accordance with general equitable principles.
2.4 CHARTER AND BY-LAWS; ASHTON STOCKHOLDERS AGREEMENT. The Company has
made available to each of the Purchasers true, correct and complete copies of
its Certificate of Incorporation and By-Laws, and all amendments to and
restatements of each as of the date hereof. Prior to the Closing, the Company
shall have properly filed amendments to the Certificate of Incorporation to
permit the Company to fulfill its obligations under this Agreement. The Company
has made available to each of the Purchasers a true, correct and complete copy
of the Stockholders Agreement (the "Original Ashton Stockholders Agreement")
dated as of January 22, 1999 by and among the Company, The Ashton Technology
Group, Inc. ("Ashton"), the Xxxxx Principals (as defined therein) and the Ashton
Executives (as defined therein), and the form of amended Ashton Stockholders
Agreement to be entered into by the parties thereto contemporaneously with the
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amendment of this Agreement (the Original Ashton Stockholders Agreement, as so
amended, being the "Ashton Stockholders Agreement").
2.5 LITIGATION; COMPLIANCE WITH LAWS; BANKRUPTCY.
(a) LITIGATION. There is no action, suit, claim, litigation,
proceeding, investigation, arbitration or governmental inquiry, at law
or in equity, or before or by any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or arbitration involving private
parties (collectively, a "Proceeding") pending or, to the knowledge of
the Company, threatened against the Company or affecting any of its
properties or assets. There are no Proceedings pending or, or to the
Company's knowledge, threatened which might call into question the
validity of this Agreement, any of the Shares, any of the Related
Agreements or any action taken or to be taken pursuant hereto or
thereto. There is no Proceeding by the Company pending or threatened
against others.
(b) COMPLIANCE WITH LAWS. The Company has complied in all
material respects with, and is not in violation of or in default (with
due notice or lapse of time or both) with respect to, all laws,
governmental rules, governmental regulations, governmental orders,
judgments, decrees, writs, injunctions and awards of any arbitration,
court or governmental authority applicable to it and its business,
which violation or default would have a material adverse impact on the
Company, and the Company has all material permits, licenses and other
authorizations required to conduct its business. There is no existing
law, governmental rule, governmental regulation or governmental order
applicable to or binding upon the Company, and the Company is not aware
of any proposed law, governmental rule, governmental regulation or
governmental order, whether Federal or state, which would prohibit or
materially restrict the Company from, or otherwise materially adversely
affect the Company in, conducting its business in any jurisdiction in
which it is now conducting business.
(c) BANKRUPTCY. The Company has not admitted in writing its
inability to pay its debts generally as they become due, filed or
consented to the filing against it of a petition in bankruptcy or a
petition to take advantage of any insolvency act, made an assignment
for the benefit of creditors, consented to the appointment of a
receiver for itself or for the whole or any substantial part of its
property, or had a petition in bankruptcy filed against it, been
adjudicated a bankrupt, or filed a petition or answer seeking
reorganization or arrangement under the Federal bankruptcy laws or any
other law or statute of the United States of America or any other
jurisdiction.
2.6 CONFLICTING AGREEMENTS; VIOLATIONS OF CHARTER PROVISIONS. The
Company is not bound by any agreement or instrument or subject to any charter or
other corporate restriction which materially and adversely affects the business,
properties, operations, condition, prospects or affairs, financial or otherwise,
of the Company. The Company is not in violation or default (with due notice or
lapse of time or both) of its charter, By-laws or other corporate restriction,
or of any agreement or instrument to which it is a party or by which it or any
of its assets is bound, except for violations or defaults of any agreement or
instrument other than the charter or By-laws which, individually or in the
aggregate, would not materially adversely affect the business, properties,
operations or
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condition, financial or otherwise, of the Company. Neither the authorization,
execution, delivery and performance of this Agreement or the Related Agreements,
nor the sale, issuance and delivery of the Shares, nor the consummation of the
transactions herein and therein contemplated, nor the fulfillment of or
compliance with the terms hereof and thereof, will conflict with or result in a
breach or default (with due notice or lapse of time or both) of any of the terms
of the charter or By-laws or any other corporate restriction, or of any statute,
law, rule or regulation, or of any judgment, decree, writ, injunction, order or
award of any arbitrator, court or governmental authority, or of any agreement or
instrument, which is applicable to the Company or by which the Company or any of
its assets is bound, or constitute a default (with due notice or lapse of time
or both) thereunder, or result in the creation or imposition of any Lien upon
any of the assets of the Company.
2.7 MATERIAL AGREEMENTS. Except as set forth in SCHEDULE 2.7, the
Company is not a party to any written or oral contract, instrument, agreement,
commitment, obligation, plan or arrangement (x) between the Company and any
Affiliate of the Company, (y) requiring the Company to pay, or entitling the
Company to receive, more than $250,000 in any consecutive twelve (12) month
period or (z) not entered into in the ordinary course of business, consistent
with past practice (collectively, the "Material Agreements"). Each of the
Material Agreements is in full force and effect with no default (without regard
to notice or lapse of time or both) by the Company or, to the knowledge of the
Company, by any other party thereto. There is no anticipated or threatened
default or material failure of performance or observance of any obligations or
conditions contained in the Material Agreements by the Company or, to the
knowledge of the Company, by any other party thereto, and none of the foregoing
parties nor the Company has provided any notice of default or of its intention
to terminate these agreements.
2.8 GOVERNMENTAL APPROVALS. Subject to the accuracy of the
representations and warranties of the Purchasers set forth in Article 3, no
registration or filing with, or consent or approval of or other action by, any
Federal, state or other governmental agency or instrumentality, domestic or
foreign, under laws and regulations thereof as now in effect is or will be
necessary for the valid execution, delivery and performance by the Company of
this Agreement, or any of the Related Agreements, the issuance, sale and
delivery of the Shares and the Conversion Shares, other than (i) filings
pursuant to state securities laws (all of which filings have been made by the
Company or will be made within the period of time required by such state
securities laws) in connection with the sale of the Shares and (ii) with respect
to the Investor Rights Agreement, the registration of the shares covered thereby
with the Commission and filings pursuant to state securities laws, and any other
registration or filing, or consent or approval or other action as a result of or
associated with any purchase or sale of securities in accordance therewith.
2.9 TAX RETURNS AND PAYMENTS. The Company has accurately prepared and
timely filed all required tax returns and reports (other than those not required
to be filed by applicable law or regulation) and has paid, or adequately
provided for the payment of, all taxes, assessments and other governmental
charges imposed upon it or upon any of its assets, income or franchises, other
than any such charges that are currently payable without penalty or interest,
including, without limitation, all taxes which the Company is obligated to
withhold from amounts owing to employees, creditors and third parties. Adequate
reserves have been established for all taxes accrued but not yet payable. The
Federal income tax returns of the Company have never been audited by the
Internal Revenue Service or other taxing authority, domestic or foreign. No
deficiency assessment with
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respect to, or proposed adjustment of, the Company's Federal, state, county or
local taxes, domestic or foreign, is pending or threatened. There is no tax
lien, whether imposed by any Federal, state, county or local taxing authority,
outstanding against the assets, properties or business of the Company.
2.10 ISSUANCE TAXES. All taxes imposed by law in connection with the
issuance, sale and delivery of the Shares have been fully paid, and all laws
imposing such taxes have been fully complied with.
2.11 ERISA. The Company does not make nor has it any present intention
of making any contributions to any employee pension benefit plans for its
employees which are or would be subject to the Employee Retirement Income
Security Act of 1974, as amended.
2.12 TITLE TO ASSETS. The Company has good and marketable title in fee
to its real property and good and merchantable title to all of its assets free
of any Liens except (i) Liens not material to the Company or any property to
which such Liens relate or Liens for current taxes not yet due and payable, and
(ii) those encumbrances listed on SCHEDULE 2.12 hereto. The Company enjoys
peaceful and undisturbed possession under all leases (both capital and operating
leases) under which it is operating, and all said leases are valid and
subsisting and in full force and effect.
2.13 INTELLECTUAL PROPERTY RIGHTS. The Company owns or has a valid
right to use the Intellectual Property Rights being used and proposed to be used
to conduct its business as now conducted and as now proposed to be conducted. To
the Company's knowledge, the conduct of the Company's business as now operated
and as now proposed to be operated does not and is not expected to conflict with
or infringe upon the Intellectual Property Rights of others. Except as specified
on SCHEDULE 2.13, the Company has no obligation to compensate any Person for the
use of any such Intellectual Property Rights, and the Company has not granted to
or assigned to any Person any license or other right to use any of the
Intellectual Property Rights of the Company or otherwise licensed from others
the Intellectual Property Rights of third parties, whether requiring the payment
of royalties or not.
The Company has taken all reasonable measures to protect and preserve
the security, confidentiality and value of its Intellectual Property Rights,
including its trade secrets and other confidential information. All employees of
the Company have executed the Company's standard form of Confidentiality
Agreement in the form attached hereto as EXHIBIT C. To the Company's knowledge,
all trade secrets and other confidential information of the Company are
presently valid and protectable and are not part of the public domain or
knowledge, nor have they been used, divulged or appropriated for the benefit of
any Person other than the Company or otherwise to the detriment of the Company.
The Company is the exclusive owner of all right, title and interest in the
Intellectual Property Rights purported to be owned by the Company, and such
Intellectual Property Rights are valid and in full force and effect. There is no
litigation pending or, to the Company's knowledge, threatened that the
Intellectual Property Rights owned or licensed by the Company or the use or
ownership thereof by the Company infringes, violates or conflicts with any such
right of any third party or are invalid or unenforceable.
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2.14 FINANCIAL INFORMATION. The Company has furnished the Purchasers
with the Company's audited financial statements as of and for the year ended
March 31, 1999 and Company's unaudited financial statements for the quarters
ended June 30, 1999 and September 30, 1999 (collectively, the "Financial
Statements"). The Financial Statements have been prepared in accordance with
generally accepted accounting principles consistently applied, except for the
absence of footnotes and any year-end adjustments, and fairly present the
financial position of the Company as of such dates and the results of its
operations for the periods stated. Except as set forth in SCHEDULE 2.14 or as
reflected in the Financial Statements, the Company has not incurred any
indebtedness for money borrowed or any other liabilities except in the ordinary
course of business.
2.15 CAPITALIZATION; STATUS OF CAPITAL STOCK. The Company has a total
authorized capitalization consisting of Fifty Million (50,000,000) shares of
Common Stock, of which 3,684,000 shares were issued and outstanding on November
2, 1999 and 3,695,666 shares were issued and outstanding on December 30, 1999,
and Ten Million (10,000,000) shares of preferred stock, $.01 par value per
share, of which (a) 10,000 shares are designated as Series A Convertible Voting
Preferred Stock, of which 4,905 shares are issued and outstanding, (b) 1,300,000
shares are designated as Series B Convertible Preferred Stock, of which
1,100,000 shares are issued and outstanding and (c) 6,000,000 shares are
designated as Series C Convertible Preferred Stock, of which 1,067,782 shares
were issued and outstanding as of December [30], 1999. Set forth on SCHEDULE
2.15 is a list of all such shares owned by Ashton, the Ashton Executives, the
Xxxxx Founders as of December 30, 1999, as well as the number of stock options
reserved and outstanding under the stock plans referred to below. All the
outstanding shares of capital stock of the Company have been duly authorized,
are validly issued and are fully paid and non-assessable. As of immediately
prior to the Closing, the designations, powers, preferences, rights,
qualifications, limitations and restrictions in respect of the authorized
capital stock of the Company will be as set forth in the Company's charter, and
all such designations, powers, preferences, rights, qualifications, limitations
and restrictions will be valid, binding and enforceable and in accordance with
all applicable laws. The Shares, when issued and delivered in accordance with
the terms hereof, and the shares of Common Stock when issued and delivered upon
the conversion of the Shares (as adjusted from time to time in accordance the
Certificate of Incorporation, as amended, the "Conversion Shares"), will be duly
authorized, validly issued, fully paid and non-assessable and will be free and
clear of all Liens or restrictions imposed by or through the Company except as
set forth in this Agreement and the Investor Rights Agreement. The Conversion
Shares have been duly reserved for issuance.
Except for the Shares and as set forth on SCHEDULE 2.15, there are no
subscriptions, options, warrants or other rights (contingent or otherwise) to
purchase or otherwise acquire shares of capital stock or other securities of the
Company authorized, issued or outstanding, nor is the Company obligated in any
other manner to issue shares of its capital stock, subscriptions, warrants,
options, convertible securities, or other such rights or to distribute to
holders of any of its equity securities any evidence of Indebtedness or asset.
As of the date hereof, 600, 000 shares of Common Stock remain reserved for
issuance pursuant to the Company's 1998 Stock Plan (the "1998 Stock Plan"),
567,000 of which are subject to stock options outstanding as of December 30,
1999. As of the date hereof, 3,003,000 shares of Common Stock are reserved for
issuance pursuant to the Company's 1999 Long Term Incentive Stock Plan (the
"1999 LTI Plan"), all of which are subject to stock options outstanding as of
December 30,1999. As of the date hereof, 3,000,000 shares of Common
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Stock are reserved for issuance pursuant to the Company's 1999 Stock Plan (the
"1999 Stock Plan"), 855,000 of which are subject to stock options outstanding as
of December 30, 1999. Except as set forth in SCHEDULE 2.15 or contemplated by
this Agreement or the Ashton Stockholders Agreement, (i) there are no
restrictions on the transfer of shares of capital stock of the Company other
than those imposed by relevant state and Federal securities laws and (ii) there
are no agreements, understandings, proxies, trusts or other collaborative
arrangements concerning the voting, pledge or purchase and sale of the capital
stock of the Company. Except as set forth in SCHEDULE 2.15 or the Investor
Rights Agreement, no holder of any security of the Company is entitled to
preemptive, first refusal or similar statutory or contractual rights, either
arising pursuant to any agreement or instrument to which the Company is a party,
or which are otherwise binding upon the Company, or to the best of the Company's
knowledge, to which any other Person is a party. Except as provided for in the
Certificate of Incorporation, as amended, or as contemplated by the Ashton
Stockholders Agreement, or as set forth in the attached SCHEDULE 2.15, the
Company has no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any of its equity securities or any interest therein or to pay
any dividend or make any other distribution in respect thereof. Assuming the
representations and warranties of the purchasers thereof were true when made,
the offer and sale of all capital stock and other securities of the Company
issued before the Closing complied with or were exempt from all applicable
Federal and state securities laws and no stockholder has a right of rescission
or damages with respect thereto. Assuming the representations and warranties of
the Purchasers contained in Article 3 of this Agreement are true when made, the
offer and sale of the Shares will comply with or be exempt from all applicable
Federal and state securities laws and no Purchaser will have a right of
rescission or damages with respect thereto.
2.16 SECURITIES LAWS. The Company has complied and will comply with all
applicable Federal and state securities laws in connection with the offer,
issuance and sale of the Shares and Conversion Shares hereunder. Neither the
Company nor anyone authorized to act on its behalf has or will sell, offer to
sell or solicit offers to buy the Shares or Conversion Shares or similar
securities thereto, or solicit offers with respect thereto from, or enter into
any preliminary conversations or negotiations relating thereto with, any Person,
so as to bring the issuance and sale of the Shares or Conversion Shares under
the registration provisions of the Securities Act and applicable state
securities laws (including, without limitation, any offer, other issuance or
sale of any security of the Company under circumstances that might require the
integration of the offering of such security with the offering of the Shares or
Conversion Shares under the Securities Act or the rules and regulations
thereunder).
2.17 INSURANCE. The Company carries insurance with financially sound
and reputable insurance companies or associations in such amounts and covering
such risks as are adequate and customary for the type and scope of its property
and business, but in any event in amounts sufficient to prevent the Company from
becoming a co-insurer.
2.18 REGISTRATION RIGHTS. Other than pursuant to the terms of the
Investor Rights Agreement and the Ashton Stockholders Agreement, and other than
as set forth on SCHEDULE 2.18 attached hereto, no Person has demand or similar
rights to cause the Company to file any registration statement under the
Securities Act relating to any securities of the Company or any right to
participate in any such registration.
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2.19 NO BROKER. Except with respect to BancBoston Xxxxxxxxx Xxxxxxxx,
the Company has no contract, arrangement or understanding with any broker,
finder, agent, financial advisor or other intermediary with respect to the
transactions contemplated by this Agreement.
2.20 TRANSACTIONS WITH AFFILIATES. Except as set forth in SCHEDULE
2.20, neither the Company nor, to the Company's knowledge, any of the customers
and suppliers of the Company, is a party to or bound by any agreement with any
Affiliate of the Company. All of the agreements identified on SCHEDULE 2.20
hereto were entered into by the Company in good faith and are on terms no less
favorable to the Company than those which the Company could have obtained from
non-Affiliates.
2.21 EMPLOYEES. Except as set forth in SCHEDULE 2.21, no employee of
the Company has an employment agreement or understanding, whether oral or
written, with the Company which is not terminable on notice by the Company
without cost or other liability to the Company. Except as set forth in SCHEDULE
2.21, no employee of the Company has advised the Company (orally or in writing)
that he or she intends to terminate employment with the Company. The Company has
complied in all material respects with all applicable laws, domestic and
foreign, relating to the employment of labor, including provisions relating to
wages, hours, equal opportunity, collective bargaining and the payment of Social
Security and other taxes, and with ERISA.
2.22 LABOR RELATIONS. No labor union or any representative thereof has
made any attempt to organize or represent employees of the Company. There are no
unfair labor practice charges, pending trials with respect to unfair labor
practice charges, pending grievance proceedings or adverse decisions of any
labor relations board against the Company or relating to the Company's employees
or consultants. The Company is not in violation in any material respect of any
applicable statute, law or regulation relating to occupational safety and
health. Furthermore, to the knowledge of the Company, relations with employees
and consultants of the Company are good and there is no reason to believe that
any labor difficulties will arise in the foreseeable future.
2.23 ASSUMPTIONS OR GUARANTIES OF INDEBTEDNESS OF OTHER PERSONS. The
Company has not assumed, guaranteed, endorsed or otherwise become directly or
contingently liable on (including, without limitation, liability by way of
agreement, contingent or otherwise, to purchase, to provide funds for payment,
to supply funds to or otherwise invest in any debtor or otherwise to assure any
creditor against loss) any Indebtedness of any other Person.
2.24 LOANS AND ADVANCES. The Company has not made any loan or advance
to any Person nor is the Company obligated or committed to make any such loan or
advance.
2.25 BOOKS AND RECORDS. The books of account, ledgers, order books,
records and documents of the Company accurately and completely reflect all
material information relating to the business of the Company, the nature,
acquisition, maintenance, location and collection of the assets of the Company,
and all transactions giving rise to the obligations or accounts receivable of
the Company.
2.26 FOREIGN CORRUPT PRACTICES ACT. The Company is not engaged, nor has
any officer, director, employee or agent of the Company engaged, in any act or
practice which would constitute a violation of the Foreign Corrupt Practices Act
of 1977, or any rules or regulations promulgated
9
thereunder. There is not now, and there never has been, any employment by the
Company of, or any beneficial ownership in the Company by, any governmental or
political official in any country in the world.
2.27 U.S. REAL PROPERTY HOLDING CORPORATION. The Company is not now nor
has it ever been a "United States real property holding corporation", as defined
in Section 897(c)(2) of the Internal Revenue Code of 1986, as amended and
Section 1.897-2(b) of the Regulations promulgated by the Internal Revenue
Service.
2.28 ENVIRONMENTAL MATTERS. The Company is not in violation of any
applicable statute, law or regulation relating to the environment or
occupational safety and health, which violation would have a material adverse
effect on the Company and, to the knowledge of the Company, no material
expenditures will be required in order to comply with any such statute, law or
regulation.
2.29 YEAR 2000 COMPLIANCE. The hardware, software and software products
(the "Systems") used by the Company are, and will be, able to accurately (i)
process any date rollover, (ii) process calculations or computations regardless
of the dates used in such calculations whether before, on or after January 1,
2000, (iii) accept and respond to two digit year date input in a manner which
resolves any ambiguities as to the century in an appropriate manner and (iv)
store and display date data in a manner which is unambiguous as to the century,
provided in all such cases, (1) third party hardware and software used in
conjunction with the Systems (a) can accurately perform in accordance with
clauses (i) through (iv) above and (b) do not affect the performance of the
Systems and (2) the Systems have not been modified without the active
involvement of the Company. This representation is subject to the Year 2000
Information and Readiness Disclosure Act (Public Law 105-271).
2.30 SMALL BUSINESS CONCERN. The Company together with its "affiliates"
(as that term is defined in Section 121.103 of Title 13 of the Code of Federal
Regulations) is a "small business concern" within the meaning of the Small
Business Act of 1958, as amended ("SBIA"), and the regulations thereunder (the
"SBIC Regulations"), including Title 13, C.F.R. ss. 121.301(c). The information
pertaining to the Company set forth in Small Business Administration Forms 480,
652 and 1031 delivered to each Purchaser that is a Small Business Investment
Company ("SBIC") licensed by the United States Small Business Administration
(each an "SBIC Purchaser") is accurate and complete. Neither the Company nor any
subsidiary of the Company presently engages in, or shall hereafter engage in,
any activities, nor shall the Company or any subsidiary of the Company use the
proceeds of the sale of the Shares directly or indirectly for any purpose for
which an SBIC is prohibited from providing funds by the regulations under the
SBIC Regulations (including, without limitation, 13 C.F.R. ss. 107.720). To the
best knowledge of the Company, each SBIC that owns any securities issued by the
Company, together with a description of the kinds and amounts of securities
held, are listed on SCHEDULE 2.30 hereto.
2.31 ASHTON EXECUTIVES AND ASHTON SHARES. SCHEDULE 2.15 sets forth all shares of
Common Stock owned by the Ashton Executives as of December 30, 1999. Each of
such Ashton Executives is a party to, and bound by the provisions of, the Ashton
Stockholders Agreement, and each of such shares of Common Stock constitute
"Ashton Executive Shares" as defined in and for purposes of
10
the Ashton Stockholders Agreement. The Ashton Stockholders Agreement constitutes
the legal, valid and binding obligations of each Ashton Executive, enforceable
in accordance with its terms, subject to laws of general application from time
to time in effect affecting creditors' rights and the exercise of judicial
discretion in accordance with general equitable principles.
ARTICLE 3. THE PURCHASERS' REPRESENTATIONS AND WARRANTIES
Each Purchaser severally, but not jointly, represents and warrants to
the Company solely as to itself as follows:
3.1 INVESTMENT REPRESENTATIONS. The Purchaser's present intention is to
acquire the Shares to be acquired by it for its own account and the Shares are
being and will be acquired by it for the purpose of investment and not with a
view to distribution or resale thereof. The acquisition by the Purchaser of the
Shares acquired by it shall constitute a confirmation of this representation by
such Purchaser. The Purchaser further represents that it understands and agrees
that, except as otherwise provided in the Investor Rights Agreement, all
certificates evidencing any of the Shares or Conversion Shares, whether upon
initial issuance or upon any transfer thereof, shall bear a legend, prominently
stamped or printed thereon, reading substantially as follows:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 or any other securities
laws. These securities have been acquired for investment and not with a
view to distribution or resale. Such securities may not be offered for
sale, sold, delivered after sale, transferred, pledged or hypothecated
in the absence of an effective registration statement covering such
securities under the Securities Act of 1933 and any other applicable
securities laws, unless the holder shall have obtained an opinion of
counsel reasonably satisfactory to the corporation that such
registration is not required or the transferee is an Affiliate of the
holder."
3.2 ACCESS TO INFORMATION. The Purchaser acknowledges that such
Purchaser, during the course of this transaction and prior to the purchase of
any Shares, has had the opportunity to ask questions of and receive answers from
representatives of the Company concerning the terms and conditions of the
offering of the Shares and to obtain additional information, documents, records
and books relative to the Company, its business and an investment in the
Company.
3.3 ACCREDITED INVESTOR STATUS. The Purchaser is an "accredited
investor" as that term is defined in Rule 501 of Regulation D promulgated under
the Securities Act.
3.4 TRANSFER RESTRICTIONS IMPOSED BY SECURITIES LAWS. The Purchaser
understands that none of the Shares and Conversion Shares have been registered
under the Securities Act or any other applicable securities laws and, therefore,
cannot be resold unless they are subsequently registered under the Securities
Act and other applicable securities laws or unless an exemption from such
registration is available. The Purchaser agrees not to resell or otherwise
dispose of all or any part of the Shares purchased by it or the Conversion
Shares, except as permitted by law, including, without limitation, any
regulations under the Securities Act and other applicable securities laws; the
Company does not have any present intention and is under no obligation to
register the Shares or
11
Conversion Shares under the Securities Act and other applicable securities laws,
except as provided in the Investor Rights Agreement.
ARTICLE 4. CLOSING CONDITIONS
4.1 CONDITIONS TO THE PURCHASERS' OBLIGATIONS. Each Purchaser's
obligation to purchase and pay for the Shares to be purchased by it at the
Closing is subject to the complete satisfaction by the Company, on or before
such Closing, of the following conditions:
(a) OPINION OF COMPANY'S COUNSEL. Each Purchaser shall each
have received from Xxxxx Xxxxx Xxxx Xxxxxx Xxxxxxx and Xxxxx, P.C.,
counsel for the Company, an opinion, dated the date of the Closing
Date, in the form set forth in EXHIBIT D hereto with respect to the
Closing.
(b) REPRESENTATIONS AND WARRANTIES; OFFICER'S CERTIFICATE. The
Company's representations and warranties contained in Article 2 shall
be true and correct on and as of the date of the Closing with the same
effect as if made on and as of the date of the Closing. All agreements
and conditions to be performed or satisfied by the Company hereunder on
or before the date of the Closing shall have been duly performed or
satisfied. The Company shall have delivered to each Purchaser a
certificate, dated the date of the Closing and signed by the President
of the Company, to such effect.
(c) CONSENTS AND APPROVALS. The Company shall have delivered
to each Purchaser a certificate, dated the date of the Closing and
signed by the President of the Company, listing any consents, waivers,
approvals, authorizations, registrations, filings and notifications of
the character referred to in Section 2.6 or 2.8 which are necessary, to
which shall be attached evidence, satisfactory to each Purchaser, that
the same have been obtained or made and are in full force and effect,
or stating that none is necessary.
(d) CHARTER OF THE COMPANY. The Purchasers and their counsel
shall have received a copy of the charter documents of the Company
thereof, amended as necessary to permit the Company to fulfill its
obligations under this Agreement and certified as of a recent date by
the Delaware Secretary of State.
(e) CLOSING DOCUMENTS. The Purchasers and their counsel shall
have received such certificates as to the good standing of the Company
and certificates of officers of the Company as counsel to the
Purchasers may reasonably request.
(f) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings and all documents incident to the transactions contemplated
by this Agreement and the other agreements contemplated hereby shall be
satisfactory in form and substance to each Purchaser and its counsel,
and each Purchaser and its counsel shall have received copies of all
documents and records relating thereto.
(g) INVESTOR RIGHTS AGREEMENT. Each of the Purchasers and the
Company shall have entered into Investor Rights Agreement in the form
attached as EXHIBIT E hereto.
12
4.2 CONDITIONS TO THE COMPANY'S OBLIGATIONS. The Company's obligation
to issue the Shares to the Purchasers at the Closing is subject to the
satisfaction of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of each Purchaser contained in Article 3 shall be true,
correct and complete in all material respects on and as of the date of
the Closing with the same force and effect as if they had been made on
and as of the date of the Closing.
(b) PAYMENT OF PURCHASE PRICE. Each Purchaser shall have
delivered to the Company and the Company shall have received payment in
full of the purchase price relating to the number of Shares to be
purchased by such Purchaser at the Closing.
ARTICLE 5. DEFINITIONS
5.1 DEFINITIONS. Except as otherwise defined in this Agreement or as
the context may otherwise require, the following terms shall have the respective
meanings set forth below whenever used in this Agreement:
"AFFILIATE" has the meaning ascribed to that term in Rule
12b-2 under the Exchange Act or any successor rule.
"CLOSING" shall have the meaning assigned to that term in
Section 1.3 of this Agreement.
"CLOSING DATE" shall have the meaning assigned to that term in
Section 1.3 of this Agreement.
"COMMISSION" shall mean the Securities and Exchange Commission
and any successor agency of the Federal government administering the
Securities Act and the Exchange Act.
"CONVERSION SHARES" shall have the meaning assigned to that
term in Section 2.15 of this Agreement.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended, and any similar or successor Federal statute, and the rules
and regulations of the Commission thereunder, all as the same shall be
in effect from time to time.
"GUARANTEE" shall mean any obligation, contingent or
otherwise, of any Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other Person in any manner,
whether directly or indirectly, and including, without limitation, any
obligation of such Person, direct or indirect, (i) to purchase or pay
(or advance or supply funds for the purchase or payment of) such
Indebtedness or to purchase (or to advance or supply funds for the
purchase of) any security for the payment of such Indebtedness, (ii) to
purchase property, securities or services for the purpose of assuring
the owner of such Indebtedness of the payment of such Indebtedness, or
(iii) to maintain working capital, equity capital or other financial
statement condition of the primary obligor so as to enable
13
the primary obligor to pay such Indebtedness; provided, however, that
the term "Guarantee" shall not include endorsements for collection or
deposit, in either case, in the ordinary course of business.
"INDEBTEDNESS" shall mean, with respect to any Person, (i) all
obligations of such Person for borrowed money, or with respect to
deposits or advances of any kind (other than deposits, advances or
excess payments accepted in connection with the sale by such Person of
products or services in the ordinary course of business), (ii) all
obligations of such Person evidenced by bonds, debentures, notes or
similar instruments, (iii) all obligations of such Person upon which
interest charges are customarily paid (other than obligations accepted
in connection with the purchase by such Person of products or services
in the ordinary course of business), (iv) all obligations of such
Person under conditional sale or other title retention agreements
relating to property purchased by such Person, (v) all obligations of
such Person issued or assumed as the deferred purchase price of
property or services (other than accounts payable to suppliers incurred
in the ordinary course of business and paid when due), (vi) all
Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien or security interest on property owned or acquired
by such Person whether or not the obligations secured thereby have been
assumed, (vii) all obligations of such Person under leases required to
be accounted for as capital leases under generally accepted accounting
principles, and (viii) all Guarantees of such Person.
"INTELLECTUAL PROPERTY RIGHTS" shall mean any and all, whether
domestic or foreign, patents, patent applications, patent rights, trade
secrets, confidential business information, algorithms, copyrights,
mask works, claims of infringement against third parties, licenses,
permits, license rights to or of technologies, contract rights with
employees, consultants or third parties, tradenames, trademarks,
trademark applications, trademark rights, inventions and discoveries,
and other such rights generally classified as intangible, intellectual
property assets in accordance with generally accepted accounting
principles.
"INVESTMENT" shall mean, with respect to any Person, any loan,
advance or extension of credit (other than in connection with the sale
by such Person of products or services in the ordinary course of
business) by such Person to, and any Guarantee or other contingent
liability with respect to the capital stock, Indebtedness or other
obligations of, and any contributions to the capital of, any other
Person, as well as any ownership, purchase or other acquisition by such
Person of any interest in any capital stock or other securities of any
such other Person as well as any transfer or sale (other than in
connection with the sale by such Person of products or services in the
ordinary course of business) of property by such Person to any other
Person other than upon full payment, in cash, of not less than the
agreed sale price or the fair value of such property, whichever is
higher.
"LIEN" shall mean: (i) any interest in property (whether real,
personal or mixed and whether tangible or intangible) which secures an
obligation owed to, or a claim by, a Person other than the owner of
such property, whether such interest is based on the common law,
statute or contract, including, without limitation, any such interest
arising from a lease, mortgage, charge, pledge, security agreement,
conditional sale, trust receipt or deposit in trust, or arising from a
consignment of bailment given for security purposes (other than a
14
trust receipt or deposit given in the ordinary course of business
which does not secure any obligation for borrowed money), (ii) any
encumbrance upon such property which does not secure such an
obligation, and (iii) any exception to or defect in the title to or
ownership interest in such property, including, without limitation,
reservations, rights of entry, possibilities of reverter,
encroachments, easements, rights of way, restrictive covenants and
licenses. For purposes of this Agreement, any Person shall be deemed
to be the owner of the leasehold or other interest in any property
which it has acquired or holds subject to a lease and the owner of any
property which it has acquired or holds subject to a conditional sale
agreement or other similar arrangement pursuant to which title to the
property has been retained by or vested in some other Person for
security purposes.
"PERSON" shall include any individual, a corporation, an
association, a partnership, a trust or estate, a government and any
agency or political subdivision thereof, or any other entity.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, and any similar or successor Federal statute, and the rules
and regulations of the Commission thereunder, all as the same shall be
in effect from time to time.
"STOCK PLAN" shall have the meaning assigned to that term in
Section 2.15 of this Agreement.
"SUBSIDIARY" or "SUBSIDIARIES" shall mean any corporation,
partnership, trust or other entity of which the Company and/or any of
its other Subsidiaries directly or indirectly owns at the time a
majority of the outstanding shares of any class of equity security of
such corporation, partnership, trust or other entity.
5.2 ACCOUNTING PRINCIPLES. The character or amount of any asset,
liability, capital account or reserve and of any item of income or expense
required to be determined pursuant to this Agreement, and any consolidation or
other accounting computation required to be made pursuant to this Agreement, and
the construction of any definition in this Agreement containing a financial
term, shall be determined or made, as the case may be, in accordance with
generally accepted accounting principles, to the extent applicable, unless such
principles are inconsistent with the express requirements of this Agreement.
ARTICLE 6. MISCELLANEOUS
6.1 NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing, shall be addressed to the receiving party's
address set forth below or to such other address as a party may designate by
notice hereunder, and shall be either (i) delivered by hand, (ii) made by
telecopy or facsimile transmission, (iii) sent by overnight courier, or (iv)
sent by certified mail, return receipt requested, postage prepaid.
If to a Purchaser: To its address set forth on EXHIBIT A:
If to the Company: Xxxxx Advisors, Inc
00 Xxx Xxxxxxx Xxxx
00
Xxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: General Counsel
With a copy to: Mintz Xxxxx Xxxx Xxxxxx Xxxxxxx and Xxxxx. P.C.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
All notices, requests, consents and other communications hereunder
shall be deemed to have been given (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(ii) if made by telecopy or facsimile transmission, at the time that receipt
thereof has been acknowledged by electronic confirmation or otherwise, (iii) if
sent by overnight courier, on the next business day (or if sent overseas, on the
second business day) following the day such notice is delivered to the courier
service, or (iv) if sent by registered or certified mail, on the 5th business
day (or if sent overseas, on the 10th business day) following the day such
mailing is made.
6.2 ENTIRE AGREEMENT. This Agreement, together with the Exhibits and
Schedules hereto, and the other agreements executed and delivered herewith
embody the entire agreement and understanding between the Purchasers and the
Company, and supersede all prior oral or written agreements and understandings
relating to the subject matter hereof. No statement, representation, warranty,
covenant or agreement of any kind not set forth in this Agreement, including the
Exhibits and Schedules hereto, shall affect, or be used to interpret, change or
restrict, the express terms and provisions of this Agreement.
6.3 MODIFICATIONS AND AMENDMENTS. This Agreement may not be amended or
modified, and no provision hereof may be waived, without the written consent of
the Company and the holders of at least a majority of the outstanding Series C
Preferred Stock. Any waiver or consent hereunder shall be effective only in the
specific instance and for the purpose for which it was given, and shall not
constitute a continuing waiver or consent.
6.4 WAIVERS AND CONSENTS. Any waiver or consent hereunder shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent. Notwithstanding
the consummation of the transactions contemplated hereby, no Purchaser waives or
relinquishes any right it may have or may acquire against the Company or any of
its Affiliates or agents in connection with the acquisition of Series C
Preferred Stock by such Purchaser, or the ownership thereof. All such rights
shall remain unimpaired by the execution of this Agreement and the consummation
of the transactions contemplated hereby.
6.5 BINDING EFFECT, ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Company, and the Purchasers and their respective
heirs, successors (including, without limitation, by sale or transfer of all or
substantially all assets, merger or consolidation) and assigns, except that the
Company shall not have the right to delegate its obligations hereunder or to
16
assign its rights hereunder or any interest herein except by a consent complying
with Section 6.3 above.
6.6 GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and governed by the law
of The Commonwealth of Massachusetts without giving effect to the conflict of
law principles thereof.
6.7 SEVERABILITY. In the event that any court of competent jurisdiction
shall determine that any provision, or any portion thereof, contained in this
Agreement shall be unenforceable in any respect, then such provision shall be
deemed limited to the extent that such court deems it enforceable, and as so
limited shall remain in full force and effect. In the event that such court
shall deem any such provision, or portion thereof, wholly unenforceable, the
remaining provisions of this Agreement shall nevertheless remain in full force
and effect.
6.8 INTERPRETATION. The parties hereto acknowledge and agree that (i)
each party and its counsel, if so represented, reviewed and negotiated the terms
and provisions of this Agreement excluding Schedules and Exhibits and have
contributed to its revision and (ii) the rule of construction to the effect that
any ambiguities are resolved against the drafting party shall not be employed in
the interpretation of this Agreement.
6.9 HEADINGS AND CAPTIONS. The headings and captions of the various
subdivisions of this Agreement are for convenience of reference only and shall
in no way modify or affect the meaning or construction of any of the terms or
provisions hereof.
6.10 NO WAIVER OF RIGHTS, POWERS AND REMEDIES. No failure or delay by a
party hereto in exercising any right, power or remedy under this Agreement, and
no course of dealing between the parties hereto, shall operate as a waiver of
any such right, power or remedy of the party. No single or partial exercise of
any right, power or remedy under this Agreement by a party hereto, nor any
abandonment or discontinuance of steps to enforce any such right, power or
remedy, shall preclude such party from any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. The election of any
remedy by a party hereto shall not constitute a waiver of the right of such
party to pursue other available remedies. No notice to or demand on a party not
expressly required under this Agreement shall entitle the party receiving such
notice or demand to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the party giving such
notice or demand to any other or further action in any circumstances without
such notice or demand.
6.11 RELIANCE. The parties hereto agree that, notwithstanding any
access to information by any party or any right of a party to this Agreement to
investigate the affairs of any other party to this Agreement, the party having
such access and right to investigate shall have the right to rely fully upon the
representations and warranties of the other party expressly contained in this
Agreement and on the accuracy of any Schedule, Exhibit or other document
attached hereto or referred to herein or delivered by such other party or
pursuant to this Agreement. Each of the Purchasers acknowledges that, based on
information provided by the Company, it has made its own analysis and decisions
regarding the transactions contemplated hereby and that it is not relying on any
of the other Purchasers in executing this Agreement or consummating the
transactions contemplated hereby.
17
6.12 CONFIDENTIALITY. Each Purchaser agrees that it will keep
confidential and will not disclose or divulge any confidential, proprietary or
secret information that such Purchaser may obtain from financial statements,
reports and other materials submitted by the Company to such Purchaser pursuant
to this Agreement, or pursuant to visitation or inspection rights granted
hereunder. Notwithstanding the foregoing, a Purchaser may disclose such
information (i) as has become generally available to the public, (ii) as may be
required in any report, statement or testimony submitted to any municipal, state
or Federal regulatory body having or claiming to have jurisdiction over such
Purchaser, (iii) as may be required in response to any summons or subpoena or in
connection with any litigation, (iv) in order to comply with any law, order,
regulation or ruling applicable to such Purchaser; (v) to the extent that such
Purchaser in connection with litigation reasonably deems it necessary to enforce
its rights under this Agreement, (vi) on a confidential basis to its attorneys,
accountants, employees, consultants and other professionals to the extent
necessary to obtain their services in connection with its investment in the
Company, (vii) with the consent of the Company, to any prospective purchaser of
any of the Shares or Conversion Shares from such Purchaser as long as such
prospective purchaser agrees in writing to be bound by the provisions of this
Section 6.12 and (viii) to any Affiliate or partner of such Purchaser; provided,
that, prior to any disclosure to be made in accordance with clause (ii), (iii)
or (iv), the Purchaser proposing to make such disclosure gives the Company
written notice thereof and an opportunity to obtain a protective order or
similar order of confidential treatment. Each Purchaser acknowledges that its
breach of this Section 6.12 could cause the Company irreparable damages and
consents to the entering of a restraining order or other equitable relief for
specific performance of its obligations hereunder.
6.13 FURTHER ASSURANCES. From and after the date of this Agreement,
upon the request of any Purchaser or the Company, the Company and the Purchasers
shall execute and deliver such instruments, documents and other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement.
6.14 COSTS, EXPENSES AND TAXES. As a condition precedent to the
Closing, the Company agrees to pay at the Closing in connection with the
preparation, execution and delivery of this Agreement, the reasonable legal fees
and other expenses, all appropriately documented, of one counsel for the
Purchasers, if any, not to exceed $20,000. In addition, the Company shall pay
any and all stamp, or other similar taxes payable or determined to be payable in
connection with the execution and delivery of this Agreement, the issuance of
the Shares and the other instruments and documents to be delivered hereunder or
thereunder, and agrees to save the Purchasers harmless from and against any and
all liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes.
6.15 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by different parties hereto on separate counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
6.16 USE OF DEFINITIONS; GENDER. Any definitions used herein defined in
the plural shall be deemed to include the singular as the context may require
and any definitions used herein defined in the singular shall be deemed to
include the plural as the context may require. Wherever reference is made herein
to the male, female or neuter genders, such reference shall be deemed to include
any of the other genders as the context may require.
18
6.17 JURISDICTION AND SERVICE OF PROCESS. Any legal action or
proceeding with respect to this Agreement may be brought in the courts of The
Commonwealth of Massachusetts or of the United States of America for the
District of Massachusetts. By execution and delivery of this Agreement, each of
the parties hereto accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of the aforesaid courts. Each of the
parties hereto irrevocably consents to the service of process of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by certified mail, postage prepaid, to the party at its address set
forth in Section 6.1 hereof.
6.18 PUBLICITY. No party shall issue any press releases or otherwise
make any public statement with respect to the transactions contemplated by this
Agreement without the prior written consent of the other party, except as may be
required by law.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
19
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused this Agreement to be executed by their duly authorized representatives,
as of the date first written above.
XXXXX ADVISORS, INC.
By: /s/ Xxxxx Xxxxx
___________________________________
Name Xxxxx Xxxxx
Title CEO
[Counterpart Signature Pages Begin on Next Page]
20
COUNTERPART SIGNATURE PAGE FOR PURCHASERS
The undersigned hereby agrees to become a party to that certain
Preferred Stock Purchase Agreement dated as of November 2, 1999 and amended as
of December 30, 1999 (the "Agreement") among Xxxxx Advisors, Inc. (the
"Company") and others. From and after the undersigned's execution and delivery
and the Company's acceptance of this Counterpart Signature Page, the undersigned
shall be a party to the Agreement and the shares of Series C Preferred Stock
purchased by the undersigned shall be deemed to be "Shares" for all purposes of
the Agreement.
_________________________________
Printed Name of Purchaser
_________________________________
Signature of Purchaser
Investment Amount:
____________________
Number of Shares:
____________________
By:
___________________________________
Title:
________________________________
Address:
______________________________
______________________________________
______________________________________
Date:
_________________________________
Agreed and accepted to as to
_________ shares at $______ per share:
XXXXX ADVISORS, INC.
By:
____________________________________
Title:
_________________________________
Date:
__________________________________
21
SCHEDULE 2.1
Foreign Qualifications
The Commonwealth of Massachusetts
22
SCHEDULE 2.7
Material Agreements
Stockholders Agreement dated as of January 22, 1999 among the Company, The
Ashton Technology Group, Inc., Xxxxx Xxxxx, Xxxxxxxxx Xxxxx, Xxxx X. Xxxx,
Xxxxxxx X. Xxxxxxxxxxx, K. Xxxx X. Xxxxxxx and Xxxxxx X. Xxxxx, as amended as of
December 30, 1999.
Secured Credit Line Agreement dated as of October 27, 1999 between The Ashton
Technology Group, Inc. and the Company
Option Agreement dated as of January 22, 1999 between the Company and Xxxxx
Xxxxx.
Option Agreement dated as of January 22, 1999 between the Company and Xxxx X.
Xxxx.
Option Agreement dated as of January 22, 1999 between the Company and Xxxxxxxxx
Xxxxx
Employment Agreement dated as of August 4, 1998 between Xxxxx Xxxxx and The
Ashton Technology Group, Inc.
Employment Agreement dated as of August 4, 1998 among Xxxxxxxxx Xxxxx, Xxxxx
Advisors, Inc. and The Ashton Technology Group, Inc.
Employment Agreement dated as of August 4, 1998 among Xxxx X. Xxxx, Xxxxx
Advisors, Inc. and The Ashton Technology Group, Inc.
Sublease Agreement dated as of June 15, 1999 by and between FASTech Integration,
Inc., and the Company, relating to premises at 00 Xxx Xxxxxxx Xxxx, Xxxxxxx, XX
GomezPro Research License dated as of May 22, 1999 between the Company and The
Ashton Technology Group, Inc.
Letter agreement between the Company and an entity relating to the Company's
services in finding a buyer for the entity's technology
Asset Purchase Agreement dated as of April 8, 1999 between the Company and THT,
Inc. (relating to account management software)
License Agreement dated as of April 8, 1999 between the Company and THT, Inc.
(relating to account management software)
Strategic Alliance Agreement dated as of April 15, 1999 between the Company and
Xxxxxx Black International, Inc.
23
SCHEDULE 2.12
Title to Assets
Security interest in equipment and receivables granted pursuant to the Secured
Credit Line Agreement dated as of October 27, 1999 between The Ashton Technology
Group, Inc. and the Company.
24
SCHEDULE 2.13
Intellectual Property Rights
Asset Purchase Agreement dated as of April 8, 1999 between the Company and THT,
Inc. License Agreement dated as of April 8, 1999 between the Company and THT,
Inc.
25
SCHEDULE 2.14
Financial Information
Indebtedness to The Ashton Technology Group, Inc. in the principal amount of
$400,000 (which amount was repaid in full on or about November 3, 1999)
26
SCHEDULE 2.15
Capitalization
SHARES OPTIONS Fully- Stock Voting
(on as- AVAILABLE diluted owner- owner-
converted FOR GRANT ownership ship ship
basis)
SERIES A CONVERTIBLE -VOTING
Ashton Technology Group, Inc. 4,905,000 32.1% 45.5% 50.7%
SERIES B CONVERTIBLE (Private 1,100,000 7.2% 10.2% 0.0%
Placement) - Class only voting
SERIES C CONVERTIBLE (First 1,067,782 7.0% 9.9% 11.0%
Closing) - Voting
COMMON STOCK
Ashton Executives - subject to
shareholder agreement
Xxxx Xxxxxxxxxxx 531,000 3.5% 4.9% 5.5%
Van Gothner 300,000 2.0% 2.8% 3.1%
ArtBacci 200,000 1.3% 1.9% 2.1%
Other Ashton Executives 550,000 3.5% 5.1% 5.7%
Xxxxx Founders
Xxxxx Xxxxx 1,051,000 6.9% 9.8% 10.9%
Xxxx Xxxx 526,000 3.4% 4.9% 5.4%
Xxxx Xxxxx 526,000 3.4% 4.9% 5.4%
Ex-employees 11,666 0.1% 0.1% 0.1%
----------------
Outstanding stock 10,768,448
Outstanding options
1999 LTI Plan 3,003,000 0
1998 Stock Plan 567,000 0
1999 Stock Plan 855,000 2,145,000
Xxxxxxxx Option Grant 100,000
---------------------------------
Total options and warrants 4,525,000 2,145,000 29.6%
=================================
Total stock and options 15,293,448 2,145,000 100.0% 100.0% 100.0%
=================================
27
Warrants pursuant to the engagement letter dated as of August 26, 1999 between
the Company and BancBoston Xxxxxxxxx Xxxxxxxx, Inc.
Right of First Refusal granted to Xxxxx Xxxxx pursuant to the Employment
Agreement dated as of August 4, 1998 between Xxxxx Xxxxx and The Ashton
Technology Group, Inc.
28
SCHEDULE 2.18
Registration Rights
Stockholders Agreement dated as of January 22, 1999 among the Company, The
Ashton Technology Group, Inc., Xxxxx Xxxxx, Xxxxxxxxx Xxxxx, Xxxx X. Xxxx,
Xxxxxxx X. Xxxxxxxxxxx, K. Xxxx X. Xxxxxxx and Xxxxxx X. Xxxxx, as amended as of
December 30, 1999.
Registration Rights of the holders of Series B Convertible Preferred Stock,
pursuant to the Subscription Agreements relating to the sale of such Series B
Convertible Preferred Stock.
29
SCHEDULE 2.20
Transactions with Affiliates
Stockholders Agreement dated as of January 22, 1999 among the Company, The
Ashton Technology Group, Inc., Xxxxx Xxxxx, Xxxxxxxxx Xxxxx, Xxxx X. Xxxx,
Xxxxxxx X. Xxxxxxxxxxx, K. Xxxx X. Xxxxxxx and Xxxxxx X. Xxxxx, as amended as of
December 30, 1999.
Option Agreement dated as of January 22, 1999 between the Company and Xxxxx
Xxxxx.
Option Agreement dated as of January 22, 1999 between the Company and Xxxx X.
Xxxx.
Option Agreement dated as of January 22, 1999 between the Company and Xxxxxxxxx
Xxxxx
Employment Agreement dated as of August 4, 1998 between Xxxxx Xxxxx and The
Ashton Technology Group, Inc.
Employment Agreement dated as of August 4, 1998 among Xxxxxxxxx Xxxxx, Xxxxx
Advisors, Inc. and The Ashton Technology Group, Inc.
Employment Agreement dated as of August 4, 1998 among Xxxx X. Xxxx, Xxxxx
Advisors, Inc. and The Ashton Technology Group, Inc.
GomezPro Research License dated as of May 22, 1999 between the Company and The
Ashton Technology Group, Inc.
Secured Credit Line Agreement dated as of October 27, 1999 between The Ashton
Technology Group, Inc. and the Company
30
SCHEDULE 2.21
Employees
Employment Agreement dated as of August 4, 1998 between Xxxxx Xxxxx and The
Ashton Technology Group, Inc.
Employment Agreement dated as of August 4, 1998 among Xxxxxxxxx Xxxxx, Xxxxx
Advisors, Inc. and The Ashton Technology Group, Inc.
Employment Agreement dated as of August 4, 1998 among Xxxx X. Xxxx, Xxxxx
Advisors, Inc. and The Ashton Technology Group, Inc.
31
SCHEDULE 2.30
Small Business Investment Companies
[IDENTIFY PURCHASERS THAT ARE SBIC'S, IF ANY]
32
