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EXHIBIT 10.18
XXX.XXX, INC.
SERIES C PREFERRED STOCK
PURCHASE AGREEMENT
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TABLE OF CONTENTS
PAGE
SECTION 1. AGREEMENT TO SELL AND PURCHASE.................................................................1
1.1 Authorization of Shares........................................................................1
1.2 Sale and Purchase..............................................................................2
SECTION 2. CLOSING, DELIVERY AND PAYMENT..................................................................2
2.1 Closing........................................................................................2
2.2 Delivery.......................................................................................2
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................................3
3.1 Organization, Good Standing and Qualification..................................................3
3.2 Subsidiaries...................................................................................3
3.3 Authorization..................................................................................3
3.4 Valid Issuance of Shares.......................................................................3
3.5 Governmental Consents..........................................................................4
3.6 No Violation...................................................................................4
3.7 Capitalization.................................................................................4
3.8 Litigation.....................................................................................5
3.9 No Default.....................................................................................5
3.10 Employees......................................................................................5
3.11 Patents and Trademarks.........................................................................6
3.12 Transactions with Stockholders, Etc............................................................6
3.13 Registration Rights............................................................................7
3.14 Compliance with Laws...........................................................................7
3.15 Material Contracts.............................................................................7
3.16 Properties, Assets.............................................................................8
3.17 Environmental and Safety Laws..................................................................8
3.18 Financial Statements...........................................................................9
3.19 Tax Returns and Audits.........................................................................9
3.20 Brokers or Finders.............................................................................9
3.21 Minute Books...................................................................................9
3.22 Offering Valid.................................................................................9
3.23 Real Property Holding Corporation.............................................................10
3.24 ERISA.........................................................................................10
3.25 Insurance.....................................................................................10
3.26 Disclosure....................................................................................10
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER...............................................10
4.1 Authorization.................................................................................10
4.2 Purchase Entirely for Own Account.............................................................10
4.3 Investment Experience.........................................................................11
4.4 Accredited Investor...........................................................................11
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TABLE OF CONTENTS
PAGE
4.5 Restricted Securities.........................................................................11
4.6 Further Limitations on Disposition............................................................11
SECTION 5. CONDITIONS TO CLOSING.........................................................................11
5.1 Conditions to Purchasers' Obligations at the Closing..........................................11
5.2 Conditions to Obligations of the Company......................................................13
SECTION 6. COVENANTS.....................................................................................14
6.1 Use of Proceeds...............................................................................14
6.2 Negative Covenants............................................................................14
SECTION 7. MISCELLANEOUS.................................................................................15
7.1 Press Releases................................................................................15
7.2 Governing Law.................................................................................15
7.3 Survival......................................................................................15
7.4 Successors and Assigns........................................................................15
7.5 Entire Agreement..............................................................................15
7.6 Severability..................................................................................15
7.7 Amendment and Waiver..........................................................................15
7.8 Delays or Omissions...........................................................................15
7.9 Notices.......................................................................................16
7.10 Expenses......................................................................................16
7.11 Attorneys' Fees...............................................................................16
7.12 Titles and Subtitles..........................................................................16
7.13 Counterparts..................................................................................16
7.14 Broker's Fees.................................................................................16
7.15 Specific Performance..........................................................................17
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XXX.XXX, INC.
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES C PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is
entered into as of October 10, 1997, by and among XXX.XXX, INC., a Delaware
corporation (the "Company") and each of those persons and entities, severally
and not jointly, whose names are set forth on the Schedule of Purchasers
attached hereto as Exhibit A (which persons and entities are hereinafter
collectively referred to as "Purchasers" and each individually as a
"Purchaser").
RECITALS
WHEREAS, the Company has authorized the sale and issuance of up to an
aggregate of one million four hundred seventy two thousand seven hundred
fifty-two (1,472,752) shares of its Series C Preferred Stock;
WHEREAS, the Purchasers desire to purchase seven hundred thirty six
thousand three hundred seventy-six (736,376) shares of Series C Preferred Stock
(the "Shares") on the terms and conditions set forth herein;
WHEREAS, certain Purchasers desire to have the option to purchase up to
the number of authorized shares of Series C Preferred Stock not sold at the
Initial Closing on the terms and conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Shares to the
Purchasers on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, the parties hereto agree as follows:
SECTION 1. AGREEMENT TO SELL AND PURCHASE.
1.1 AUTHORIZATION OF SHARES. On or prior to the Initial Closing (as
defined in Section 2 below), the Company shall have authorized (i) the sale and
issuance to the Purchasers of the Shares and (ii) the issuance of such shares of
Common Stock to be issued upon conversion of the Shares (the "Conversion
Shares"). The Shares and the Conversion Shares shall have the rights,
preferences, privileges and restrictions set forth in the Restated Certificate
of Incorporation of the Company, as amended, in the form attached hereto as
Exhibit B (the "Restated Certificate").
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1.2 SALE AND PURCHASE. Subject to the terms and conditions hereof, at
the Initial Closing, the Company hereby agrees to issue and sell to the
Purchasers and the Purchasers agree to purchase from the Company the number of
Shares set forth opposite the name of such Purchaser on Exhibit A, at a purchase
price of Six Dollars Seventy-Nine Cents ($6.79) per share.
SECTION 2. CLOSING, DELIVERY AND PAYMENT.
2.1 CLOSING. The closing of the sale and purchase of the Shares under
this Agreement (the "Initial Closing") shall take place at 1:00 p.m. on the date
hereof, at the offices of Xxxxxx Godward LLP, 0000 Xxxxxx Xxxxxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxxx 00000-0000, or at such other time or place as the Company and
the Purchasers may mutually agree. The closing of the sale and purchase of the
shares of Series C Preferred Stock under the purchaser options set forth in
section 2.3 below, shall take place at 1:00 p.m. on the date five (5) business
days after the Company receives notice of a Purchaser's election to buy the
option shares, at the offices of Xxxxxx Godward LLP, 0000 Xxxxxx Xxxxxxxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000-0000, or at such other time or place as the
Company and such Purchaser may mutually agree (each such Closing, an "Option
Closing") (the Initial Closing and each Option Closing are referred to herein as
a "Closing" and each such date is hereinafter referred to as a "Closing Date").
2.2 DELIVERY. At each Closing, subject to the terms and conditions
hereof, the Company will deliver to the Purchasers certificates representing the
number of Shares to be purchased at the Closing by each Purchaser, against
payment of the purchase price therefor by check or wire transfer made payable to
the order of the Company.
2.3 PURCHASER OPTIONS. At any time on or before May 1, 1998 (the
"Option Period"), (i) Premiere Technologies, Inc. ("Premiere") may purchase no
less than a minimum of two hundred ninety-four thousand two hundred fifty-six
(294,256) and up to a maximum of four hundred forty-one thousand eight hundred
twenty-six (441,826) shares of Series C Preferred Stock, (ii) Philadelphia
Ventures Liberty Fund, L.P. may purchase no less than a minimum of ninety-eight
thousand eighty-five (98,085) and up to a maximum of one hundred forty-seven
thousand two hundred seventy-five (147,275) shares of Series C Preferred Stock,
and (iii) ABS Ventures IV L.P. and ABX Fund, L.P., collectively, may purchase no
less than a minimum of ninety-eight thousand eighty-five (98,085) and up to a
maximum of one hundred forty-seven thousand two hundred seventy-five (147,275)
shares of Series C Preferred Stock, all at a per share purchase price of Six
Dollars Seventy-Nine Cents ($6.79) per share. Any such sale shall be made on the
terms and conditions set forth in this Agreement, including, without limitation,
the representations and warranties by the Purchaser as set forth in Section 4
and the conditions to Purchaser's obligations to close set forth in Section 5
below. Any shares of Series C Preferred Stock sold pursuant to this Section 2.3
shall be deemed to be "Shares" for all purposes under this Agreement.
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SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to each Purchaser as follows, except as set forth on the
Schedule of Exceptions attached hereto as Exhibit C (the "Schedule of
Exceptions") which exceptions shall be deemed to be representations and
warranties as if made hereunder.
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own its property, to carry on its business as presently conducted and to enter
into and carry out the transactions contemplated by this Agreement, the Amended
and Restated Investor Rights Agreement attached hereto as Exhibit D (the
"Investor Rights Agreement") and the Co-Marketing and Integration Agreement
attached hereto as Exhibit E (the "Marketing Agreement") (the Investor Rights
Agreement and the Marketing Agreement shall be referred to hereinafter as the
"Related Agreements"). The Company is duly qualified to transact business and is
in good standing under the laws of the State of Colorado and all other
jurisdictions in which the nature of its activities and of its properties (both
owned and leased) makes such qualification necessary, except for those
jurisdictions in which failure to do so would not have a material adverse effect
on the Company or its business. The Company has all necessary governmental
authorizations to own or lease its properties and assets and to carry on its
business as now being conducted.
3.2 SUBSIDIARIES. The Company does not presently own or control,
directly or indirectly, any interest in any other corporation, association, or
other business entity. The Company is not a participant in any joint venture,
partnership or similar arrangement.
3.3 AUTHORIZATION. All corporate action on the part of the Company, its
officers and directors necessary for the authorization, execution and delivery
of this Agreement and the Related Agreements, the performance of all obligations
of the Company hereunder and thereunder, and the authorization, issuance (or
reservation for issuance), sale and delivery of the Shares and the Conversion
Shares has been taken, and this Agreement and the Related Agreements constitute
valid and legally binding obligations of the Company, enforceable in accordance
with their respective terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies, (iii) to the extent the indemnification provisions contained
in Section 2.9 of the Investor Rights Agreement may be limited by applicable
federal or state securities laws and (iv) except to the extent that the amount
of attorneys' fees recoverable in any lawsuit is subject to the supervisory
powers and discretion of the court.
3.4 VALID ISSUANCE OF SHARES. The Shares, when issued, sold and
delivered in accordance with the terms of this Agreement for the consideration
referred to herein will be duly authorized and validly issued, fully paid and
nonassessable, and the Purchasers will have acquired good and marketable title
to such securities, free and clear of any claims, liens,
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restrictions on transfer or voting or encumbrances except that such shares may
be subject to restrictions on transfer under state and/or federal securities
laws as set forth herein, in the Investor Rights Agreement or as otherwise may
be required by such laws at the time a transfer is proposed. The Conversion
Shares have been duly reserved for issuance, and when issued in accordance with
the terms of the Restated Certificate, will be validly issued, fully paid and
nonassessable, and the holders thereof will have acquired good and marketable
title to such securities, free and clear of any claims, liens, restrictions or
transfer or voting or encumbrances except that such shares may be subject to
restrictions on transfer under state and/or federal securities laws as set forth
herein, in the Investor Rights Agreement or as otherwise may be required by such
laws at the time a transfer is proposed.
3.5 GOVERNMENTAL CONSENTS. Other than the filing of the Restated
Certificate, no consents, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state or
local governmental authority on the part of the Company is required in
connection with the offer, sale or issuance of the Shares and the Conversion
Shares or the consummation of any other transaction contemplated hereby.
3.6 NO VIOLATION. The execution, delivery and performance of this
Agreement and the Related Agreements do not and will not, with or without the
passage of time or the giving of notice or both (a) violate any provision of
law, statute, rule or regulation applicable to the Company or any ruling, writ,
injunction, order, judgment or decree of any court, administrative agency or
other governmental body by which the Company is bound or (b) conflict with or
result in any material breach of the terms of or constitute a material default
(or give any rise to any right of termination, cancellation or acceleration)
under, or result in a right of termination or acceleration under, or the
creation of any lien, claim or encumbrance upon any of the properties or assets
of the Company under (i) its Certificate of Incorporation or Bylaws or (ii) any
material note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other material instrument or obligation to which the Company is a
party or by which the Company or its assets may be bound.
3.7 CAPITALIZATION. Immediately prior to the Closing, the Company's
authorized capital stock will consist of (x) 13,872,090 shares of Common Stock,
531,110 shares of which are issued and outstanding and (y) 3,627,910 shares of
Preferred Stock, (i) 1,100,000 of which are designated Series A Preferred Stock,
1,062,231 shares of which are issued and outstanding, (ii) 1,055,158 of which
are designated Series B Preferred Stock, 527,579 of which are issued and
outstanding and 527,579 of which are subject to an option to purchase such
shares in favor of American Express Travel Related Services, Inc. (the "Amex
Option") and (iii) 1,472,752 of which are designated Series C Preferred Stock,
none of which are issued and outstanding. All issued and outstanding shares of
Common Stock and Preferred Stock of the Company have been duly authorized and
validly issued, are fully paid and nonassessable, are owned by the stockholders
and in the numbers specified on Exhibit F attached hereto and were issued in
compliance with all applicable state and federal securities laws concerning the
issuance of securities. The rights, preferences and privileges of each series of
Preferred Stock are as set forth in the Restated Certificate. Except for 714,513
shares of Common Stock
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reserved for issuance under the Company's 1997 Stock Option Plan, the Amex
Option and except as may be granted pursuant to this Agreement or the Investor
Rights Agreement, there are not outstanding any options, warrants, rights
(including conversion or preemptive rights), commitments, or agreements for the
purchase or acquisition from the Company of any shares of its capital stock or
other securities. The Company is not obligated to redeem any of its outstanding
securities, except as may be required under the Investor Rights Agreement. The
Company is not a party or subject to any agreement or understanding, and, to the
Company's knowledge without investigation, there is no agreement or
understanding between any Persons which affects or relates to the voting or
giving of written consents with respect to any security or any director of the
Company.
3.8 LITIGATION. There is no action, suit or proceeding pending against,
or to the best of the Company's knowledge, currently threatened before any
court, administrative agency or other governmental body against the Company
which questions the validity of this Agreement or the Related Agreements, or the
right of the Company to enter into any of such Agreements, or to consummate the
transactions contemplated hereby or thereby, or which could result either
individually or in the aggregate, in any material adverse change in the
condition (financial or otherwise), business, property, assets or liabilities of
the Company, nor is the Company aware that there is any valid basis for the
foregoing. The foregoing includes, without limitation, actions, suits,
proceedings or investigations pending or threatened (or any basis therefor known
to the Company) involving the prior employment of any of the Company's
employees, their use in connection with the Company's business of any
information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers. The
Company is not a party or subject to, and none of its assets is bound by, the
provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality. There is no action, suit or proceeding by
the Company currently pending or which the Company presently intends to
initiate.
3.9 NO DEFAULT. The Company is not in violation or default under any
provision of its Certificate of Incorporation or its Bylaws, each as in effect
at the Closing. The Company is not in violation or default of any provision of
any instrument, mortgage, deed of trust, loan, contract, commitment, judgment,
decree, order or obligation to which it is a party or by which it or any of its
properties or assets are bound which would materially adversely affect the
condition (financial or otherwise), business, property, assets or liabilities of
the Company, or any material note, indenture, mortgage, lease, agreement,
contract, purchase order or other material obligation. There exists no
condition, event or act which after notice, lapse of time, or both, is
reasonably likely to constitute a material default by the Company under any of
the foregoing.
3.10 EMPLOYEES. The Company does not employ anyone to perform services
for the Company except in the capacity of an employee or consultant. Each
employee of and consultant to the Company has executed a Proprietary Information
and Inventions Agreement in substantially the form of Exhibit G. To the best
knowledge of the Company, no officer or
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employee is in violation of such Proprietary Information and Inventions
Agreement. The Company is not a party to or bound by any currently effective
employment contract, deferred compensation agreement, bonus plan, incentive
plan, profit sharing plan, retirement agreement or other employee compensation
agreement or arrangement or with any collective bargaining agent. No employees
of the Company are represented by any labor union or covered by any collective
bargaining agreement. There is no pending or, to the best of the Company's
knowledge, threatened labor dispute involving the Company and any group of its
employees. The Company is not aware that any officer or key employee, or that
any group of key employees, intends to terminate their employment with the
Company. The employment of each officer and employee of the Company is
terminable at the will of the Company. The Company has not received any notice
from any third party alleging that any employee of, or consultant to, the
Company is in violation of any term of any employment agreement or other
agreement relating to the right of such person to be employed by, or to contract
with, the Company. Neither the Company nor any employee is a party to, or is
bound by, any agreement which would limit in any material respect: (a) any
employee's ability to perform his obligations as a full time employee of the
Company; or (b) the Company's or any employee's ability or authority to engage
in any and all lines of business in which the Company currently engages or
proposes to engage as set forth in its current business plan.
3.11 PATENTS AND TRADEMARKS. The Schedule of Exceptions contains a
complete list of patents and pending patent applications and trademarks of the
Company. The Company has sufficient title and ownership of all patents,
trademarks, service marks, trade names, copyrights, trade secrets, information,
domain names (as registered with InterNIC), proprietary rights and processes
necessary for its business as now conducted and as proposed to be conducted and
has unrestricted right to use the foregoing without the payment of any royalty.
To the best of the Company's knowledge, all of the existing patents and
trademarks of the Company are valid and all of the pending and proposed patent
applications and applications for registration of trademarks of the Company will
result in the valid issuance of patents or registration of trademarks. The
Company has not received any communications alleging that the Company has
violated or, by conducting its business as proposed, would violate any of the
patents, trademarks, service marks, trade names, copyrights or trade secrets or
other proprietary rights of any other person or entity. Neither the execution
nor delivery of this Agreement or the Related Agreements, nor the carrying on of
the Company's business as currently proposed to be conducted, will, to the best
of the Company's knowledge, conflict with or result in a material breach of the
terms, conditions or provisions of, constitute a material default under, any
material contract, covenant or instrument under which the Company is bound. To
the best of the Company's knowledge, no employee of the Company is in violation
of any terms of any employee contract, patent disclosure agreement or any other
contract or agreement relating to the relationship of such employee with the
Company because of the nature of the business conducted or to be conducted by
the Company.
3.12 TRANSACTIONS WITH STOCKHOLDERS, ETC. No stockholder, employee,
officer or director of the Company or member of his or her immediate family, is
indebted to the Company, nor is the Company indebted (or committed to make loans
or extend or guarantee
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credit) to any of them. To the best of the Company's knowledge, no employee or
officer, or director who is an employee, of the Company has any direct or
indirect ownership interest in any firm or corporation with which the Company is
affiliated or with which the Company has a business relationship, or any firm or
corporation that competes with the Company, except that employees or officers,
or directors who are employees, of the Company and members of their immediate
families may own less than five percent (5%) of the stock in publicly traded
companies that may compete with the Company. No member of the immediate family
of any officer, or of any director who is an employee, of the Company is
directly or indirectly interested in any material contract with the Company.
3.13 REGISTRATION RIGHTS. The Company is not under any contractual
obligation to register any of its presently outstanding securities or any of its
securities which may hereafter be issued under any securities laws of any
jurisdiction except as set forth in the Investor Rights Agreement.
3.14 COMPLIANCE WITH LAWS. The Company has at all times conducted and
is now conducting its business in compliance with all laws, rules and
regulations applicable to it. The Company has all franchises, permits, licenses
and any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects or financial condition of the company and
believes it can obtain, without undue burden or expense, any similar authority
for the conduct of its business as planned to be conducted. The Company is not
in default in any material respect under any of such franchises, permits,
licenses or similar authority.
3.15 MATERIAL CONTRACTS
(a) Except for agreements explicitly contemplated hereby,
there are no agreements, understandings or proposed transactions between the
Company and any of its officers or directors who are employees of the Company,
affiliates or any affiliate thereof.
(b) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or by which it is bound which may involve (i) obligations
(contingent or otherwise) of, or payments to the Company in excess of $50,000,
or (ii) the license of any patent, copyright, trade secret or other proprietary
right to or from the Company (other than licenses arising from the purchase of
"off the shelf" or other standard products), or (iii) provisions restricting or
affecting the development, manufacture or distribution of the Company's products
or services, or (iv) indemnification by the Company with respect to
infringements of proprietary rights (other than indemnification obligations
arising from purchase or sale agreements entered into in the ordinary course of
business).
(c) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or any
other liabilities individually in
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excess of $50,000 or, in the case of indebtedness and/or liabilities
individually less than $50,000, in excess of $100,000 in the aggregate, (iii)
made any loans or advances to any person, other than ordinary advances for
travel expenses, or (iv) sold, exchanged or otherwise disposed of any of its
assets or rights, other than the sale of its inventory in the ordinary course of
business.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
(e) The Schedule of Exceptions contains a true and complete
list of all Material Contracts (as defined below) in effect on the date hereof.
Each Material Contract is in full force and effect and is a valid and binding
obligation of the Company, enforceable against it in accordance with its terms.
Neither the Company nor to the Company's knowledge, any other party to any such
contract is in default of any provision thereof. "Material Contract" means any
agreement to which the Company is a party, and which involves or relates to (A)
any current or future employment or consulting arrangement; (B) any labor union
or collective bargaining agreement; (C) any indebtedness for borrowed money or
other loan or financing arrangement or any liability on any other debt or other
obligation; (D) any agreement to which any governmental authority is a party;
(E) any transaction not in the ordinary course of business; (F) any agreement
involving prospective obligations or the right to receive in the aggregate in
excess of $50,000; (G) any agreement with the stockholders (other than the
Related Agreements); or (H) any mortgage, pledge, security agreement, financing
statement or other document granting a lien, claim or encumbrance on any of the
Company's properties or assets.
(f) The Company is not a party to and is not bound by any
contract, agreement or instrument, or subject to any restriction under its
Certificate of Incorporation or its Bylaws that adversely affects its business
as now conducted or as proposed to be conducted, its properties or its financial
condition.
3.16 PROPERTIES, ASSETS. The Company owns its property and assets free
and clear of all mortgages, liens, loans and encumbrances, except such
encumbrances and liens which arise in the ordinary course of business and do not
materially impair the Company's ownership or use of such property or assets.
With respect to the property and assets it leases, the Company is in compliance
with such leases, and, to the best of its knowledge, holds a valid leasehold
interest free of any liens, claims or encumbrances.
3.17 ENVIRONMENTAL AND SAFETY LAWS. To the best of its knowledge, the
Company is not in violation of any applicable statute, law or regulation
relating to the environment or occupational health and safety, and to the best
of its knowledge, no material expenditures are or will be required in order to
comply with any such existing statute, law or regulation.
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3.18 FINANCIAL STATEMENTS. Attached hereto as Exhibit H are the audited
financial statements for the year ended December 31, 1996, and the unaudited
balance sheet and income statement for the quarter ended June 30, 1997 and the
months ended July 31, 1997 and August 31, 1997 (the "Financial Statements"). The
Financial Statements are complete and correct in all material respects and
accurately set out and describe the financial condition and operating results of
the Company as of the dates, and for the periods, indicated therein. The
Financial Statements have been prepared in accordance with generally accepted
accounting principles ("GAAP") except for footnotes required by GAAP. Except as
set forth in the Financial Statements, the Company has no liabilities,
contingent or otherwise, other than (i) liabilities incurred in the ordinary
course of business subsequent to August 31, 1997 (the "Statement Date") which in
the aggregate do not exceed $100,000 and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required under
GAAP to be reflected in the Financial Statements, which, in both cases,
individually or in the aggregate, are not material to the financial condition or
operating results of the Company. Except as disclosed in the Financial
Statements, the Company is not a guarantor or indemnitor of any indebtedness of
any other person, firm or corporation. Since the Statement Date, there has not
been any material adverse change in the financial condition of the Company.
3.19 TAX RETURNS AND AUDITS. The Company has accurately prepared all
United States income tax returns and all state and municipal tax returns
required to be filed by it, if any, has paid all taxes, assessments, fees and
charges when and as due under such returns and has made adequate provision for
the payment of all other taxes, assessments, fees and charges shown on such
returns or on assessments received by the Company. To the best of the Company's
knowledge, no deficiency assessment or proposed adjustment of the Company's
United States income tax or state or municipal taxes is pending.
3.20 BROKERS OR FINDERS. The Company has not agreed to incur, directly
or indirectly, any liability for brokerage or finders' fees, agents' commissions
or other similar charges in connection with this Agreement or any of the
transactions contemplated hereby.
3.21 MINUTE BOOKS. The minute books of the Company provided to the
Purchasers contain a complete summary of all meetings of directors and
stockholders since the time of incorporation and reflect all transactions
referred to in such minutes accurately in all material respects.
3.22 OFFERING VALID. Assuming the accuracy of the representations and
warranties of the Purchasers contained in Section 4.2 hereof, the offer, sale
and issuance of the Shares and the Conversion Shares will be exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act") and will have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit or qualification
requirements of all applicable state securities laws. Neither the Company nor
any agent on its behalf has solicited or will solicit any offers to sell or has
offered to sell or will offer to sell all or any part of the Shares to any
person or persons so as to bring the sale of such Shares by the Company within
the registration provisions of the Securities Act.
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3.23 REAL PROPERTY HOLDING CORPORATION. The Company is not a real
property holding corporation within the meaning of Internal Revenue Code Section
897(c)(2) and any regulations promulgated thereunder.
3.24 ERISA. The Company has complied in all material respects with the
applicable rules of the Employee Retirement Income Security Act of 1974, as
amended, with respect to any employee benefit plans subject thereto.
3.25 INSURANCE. The Company has fire and casualty insurance policies
and other insurance coverage customary for companies similarly situated to the
Company.
3.26 DISCLOSURE. No representation, warranty or statement by the
Company in this Agreement, any Schedule or Exhibit hereto or in any written
statement or certificate furnished to the Purchasers pursuant to this Agreement
or the transactions contemplated hereby, contains any untrue statement of a
material fact or, when taken together, omit to state a material fact necessary
to make the statements made therein, in light of the circumstances under which
they were made, not misleading. However, as to any projections furnished to the
Purchasers, such projections were prepared in good faith by the Company, but the
Company makes no representation or warranty that it will be able to achieve such
projections.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
Each Purchaser hereby severally represents and warrants to the Company
as follows:
4.1 AUTHORIZATION. The Agreement, the Investor Rights Agreement and, if
applicable, the Marketing Agreement, constitute and will constitute valid and
legally binding obligations of the Purchaser, enforceable in accordance with
their respective terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies, (iii) to the extent the indemnification provisions of
Section 2.9 of the Investor Rights Agreement may be limited by applicable
federal or state securities laws and (iv) except to the extent that the amount
of attorneys' fees recoverable in any lawsuit is subject to the supervisory
powers and discretion of the court.
4.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with
Purchaser in reliance upon Purchaser's representation to the Company, which by
Purchaser's execution of this Agreement Purchaser hereby confirms, that the
Shares to be received by Purchaser and the Conversion Shares will be acquired
for investment for Purchaser's own account, not as a nominee or agent, and not
with a view to the resale or distribution of any part thereof, and Purchaser has
no present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, Purchaser further represents
that Purchaser does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participations to such person or to
any third person, with respect to
10.
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any of the Shares or Conversion Shares. Purchaser represents that it has full
power and authority to enter into this Agreement.
4.3 INVESTMENT EXPERIENCE. Purchaser is an investor in securities of
companies in the development stage and acknowledges that it is able to fend for
itself, can bear the economic risk of its investment and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Company.
4.4 ACCREDITED INVESTOR. Purchaser is an "accredited investor" within
the meaning of Rule 501 of Regulation D of the Securities Act of 1933, as
amended (the "Act"), as presently in effect.
4.5 RESTRICTED SECURITIES. Purchaser understands that the Shares and
the Conversion Shares are characterized as "restricted securities" under the
federal securities laws inasmuch as they are being acquired from the Company in
a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act only in certain limited circumstances. In this connection, Purchaser
represents that it is familiar with Rule 144 of the Act, as presently in effect,
and understands the resale limitations imposed thereby and by the Act.
4.6 FURTHER LIMITATIONS ON DISPOSITION. Purchaser acknowledges that the
Shares and, if issued, the Conversion Shares, are subject to restrictions on
transfer as set forth in the Investor Rights Agreement.
SECTION 5. CONDITIONS TO CLOSING.
5.1 CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE CLOSING. Each
Purchaser's obligations to purchase the Shares at the Closing are subject to the
satisfaction, at or prior to each such Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company in Section 3
hereof shall be true and correct in all material respects as of the Closing Date
with the same force and effect as if they had been made as of the Closing Date,
and the Company shall have performed all obligations and conditions herein
required to be performed or observed by it on or prior to the Closing.
(b) LEGAL INVESTMENT. On the Closing Date, the sale and
issuance of the Shares and the proposed issuance of the Conversion Shares shall
be legally permitted by all laws and regulations to which the Purchasers and the
Company are subject, and no action is pending seeking to prevent such sale and
issuance.
(c) CONSENTS, PERMITS, AND WAIVERS. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement and the Investor
Rights Agreement, (except for
11.
15
such as may be properly obtained subsequent to the Closing). In addition, the
Company shall have received the consent of VarTec Telecom to Xxxx Street and
Xxxx Xxxxxxx'x activities as they pertain to XXX.XXX's performance under the
Co-Marketing and Integration Agreement.
(d) RESTATED CERTIFICATE. The Restated Certificate shall read
in its entirety as set forth in Exhibit B and shall have been filed with the
Secretary of State of the State of Delaware.
(e) CORPORATE DOCUMENTS. The Company shall have delivered to
the Purchasers or their counsel, copies of all corporate documents of the
Company as the Purchasers shall reasonably request.
(f) RESERVATION OF CONVERSION SHARES. The Conversion Shares
issuable upon conversion of the Shares shall have been duly authorized and
reserved for issuance upon such conversion.
(g) COMPLIANCE CERTIFICATE. The Company shall have delivered
to Purchaser a Compliance Certificate, executed by the President of the Company,
dated the date of the Closing, stating that the conditions specified in
subsection (a) of this Section 5.1 have been satisfied.
(h) INVESTOR RIGHTS AGREEMENT. An Investor Rights Agreement
substantially in the form attached hereto as Exhibit D shall have been executed
and delivered by the parties thereto.
(i) BOARD OF DIRECTORS. Upon the Closing, the authorized size
of the Board of Directors of the Company shall be five (5) members and the Board
shall consist of Xxxx Street, Xxxx Xxxxxxx, Xxxxx Xxxxxxxx, Xxxxx Xxxxxxxxx and
Xxxxx Xxxxxxxx Xxxxx.
(j) CO-MARKETING AND INTEGRATION AGREEMENT. The Company and
Premiere shall have entered into the Co-Marketing and Integration Agreement in
substantially the form attached as Exhibit E hereto.
(k) AMENDMENT OF SERIES B PREFERRED STOCK PURCHASE AGREEMENT.
The Company and American Express Travel Related Services Company, Inc. ("Amex")
shall have entered into an amendment to that certain Series B Preferred Stock
Purchase Agreement, dated as of April 8, 1997, to provide that Section 6.2
therein shall be terminated in its entirety.
(l) LEGAL OPINION. The Purchaser shall have received from
legal counsel to the Company an opinion addressed to it, dated as of the Closing
Date, in substantially the form attached hereto as Exhibit I.
(m) AMENDMENT TO CO-MARKETING PROGRAM AGREEMENT. The Company
and Amex shall have entered into an Amendment to Co-Marketing Program Agreement
in the form attached hereto as Exhibit J.
12.
16
(n) LETTER AGREEMENT. The Company, Amex and Premiere shall
have entered into a letter agreement in a form acceptable to such parties.
(o) SBA MATTERS. The Company shall have executed and delivered
to each Purchaser that is a licensed Small Business Investment Company a Size
Status Declaration on SBA Form 480, an Assurance of Compliance on SBA Form 652
and an SBA Certification in the form provided to the Company, and shall have
provided to each such Purchaser information necessary for the preparation of a
Portfolio Financing Report on SBA Form 1031.
(p) MINIMUM INVESTMENT. The Purchasers shall purchase a
minimum of 736,376 Shares at the Closing.
(q) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
hereby and all documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to the Purchaser and their special
counsel, and the Purchaser and their special counsel shall have received all
such counterpart originals or certified or other copies of such documents as
they may reasonably request.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's obligation
to issue and sell the Shares at the Closing is subject to the satisfaction, on
or prior to each such Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties made by the Purchasers in Section 4 hereof shall be true and
correct in all material respects at the date of the Closing, with the same force
and effect as if they had been made on and as of said date.
(b) PERFORMANCE OF OBLIGATIONS. The Purchasers shall have
performed and complied with all agreements and conditions herein required to be
performed or complied with by the Purchaser on or before the Closing.
(c) RESTATED CERTIFICATE. The Restated Certificate shall read
in its entirety as set forth in Exhibit B and shall have been filed with the
Secretary of State of the State of Delaware.
(d) INVESTOR RIGHTS AGREEMENT. An Investor Rights Agreement
substantially in the form attached hereto as Exhibit D shall have been executed
and delivered by the parties thereto.
(e) CO-MARKETING AND INTEGRATION AGREEMENT. The Company and
Premiere shall have entered into the Co-Marketing and Integration Agreement in
substantially the form attached as Exhibit E hereto.
13.
17
(f) AMENDMENT TO CO-MARKETING PROGRAM AGREEMENT. Company and
Amex shall have entered into an Amendment to Co-Marketing Program Agreement in
the form attached hereto as Exhibit J.
(g) LETTER AGREEMENT. The Company, Amex and Premiere shall
have entered into a letter agreement in a form acceptable to such parties.
(h) CONSENTS, PERMITS, AND WAIVERS. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement and the Investor
Rights Agreement (except for such as may be properly obtained subsequent to the
Closing). In addition, the Company shall have received the consent of VarTec
Telecom to Xxxx Street and Xxxx Xxxxxxx'x activities as they pertain to
XXX.XXX's performance under the Co-Marketing and Integration Agreement.
SECTION 6. COVENANTS.
6.1 USE OF PROCEEDS. The Company shall use a portion of the proceeds
from the Initial Closing as required by and for the purposes set forth in
Section 4 of the Marketing Agreement.
6.2 NEGATIVE COVENANTS. So long as there are at least 250,000 shares of
Series C Preferred Stock outstanding, the Company may not without the approval
of at least one of the persons designated by the Series C Preferred Stock,
voting as a separate class, on the Company's Board of Directors (and, with
respect to subparagraph (a) only, without the approval of the person designated
by the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock, voting together as a separate class, on the Company's Board of
Directors):
(a) issue any debt security in a single transaction or a
series of related transactions with an aggregate principal amount in excess of
fifty percent (50%) of the Company's equity at the closing of such financing;
(b) acquire or obtain a ten percent (10%) or greater interest
in, or permit any subsidiary of the Company to acquire or obtain a ten percent
(10%) or greater interest in, any stock or other securities of any other
corporation, partnership or entity;
(c) declare or pay any dividends on any shares of Common Stock
other than in compliance with Article IV (D)(1) of the Restated Certificate;
provided, however, that repurchase of such shares may be made in connection with
any Restricted Stock Purchase Agreement between the Company and any employee; or
(d) sell any Shares which the Purchasers do not purchase
pursuant to the Purchaser Options set forth in Section 2.3 above to any third
party.
14.
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SECTION 7. MISCELLANEOUS.
7.1 PRESS RELEASES. Except as otherwise required by law, on or prior to
the Initial Closing Date, none of the Purchasers and the Company may issue or
cause publication of any release or other public announcement with respect to
this Agreement or the transactions contemplated hereto, without the prior
written consent of the other parties.
7.2 GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of Delaware without giving effect to conflict of law
principles, with the exception that matters of corporate law shall be governed
by the laws of the State of Delaware.
7.3 SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by the Purchasers and the
closing of the transactions contemplated hereby. All statements as to factual
matters contained in any certificate or other instrument delivered by or on
behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.
7.4 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Shares from time to time.
7.5 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules
hereto, the Related Agreements and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and no party shall be liable or bound to any
other in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein.
7.6 SEVERABILITY. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
7.7 AMENDMENT AND WAIVER. This Agreement may be amended or modified
only upon the written consent of the Company and a majority in interest of the
Purchasers and the obligations of the Company and the rights of the Purchasers
under the Agreement may be waived only with the written consent of the Company
and a majority in interest of the Purchasers.
7.8 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement, the Related
Agreements or the Restated Certificate, shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of or in any similar breach,
15.
19
default or noncompliance thereafter occurring. It is further agreed that any
waiver, permit, consent or approval of any kind or character on the Purchasers'
part of any breach, default or noncompliance under this Agreement, the Related
Agreements or under the Restated Certificate or any waiver on such party's part
of any provisions or conditions of the Agreement, the Agreements, or the
Restated Certificate must be in writing and shall be effective only to the
extent specifically set forth in such writing. All remedies, either under this
Agreement, the Agreements, the Restated Certificate, by law, or otherwise
afforded to any party, shall be cumulative and not alternative.
7.9 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified; (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
Company at the address as set forth on the signature page hereof and to the
Purchasers at the appropriate address set forth on Exhibit A attached hereto or
at such other address as the Company or Purchaser may designate by ten (10) days
advance written notice to the other parties hereto.
7.10 EXPENSES. Each party shall pay all costs and expenses that it
incurs with respect to the negotiation, execution, delivery and performance of
the Agreement and the Related Agreements.
7.11 ATTORNEYS' FEES. In the event that any dispute among the parties
to this Agreement should result in litigation, the prevailing party in such
dispute shall be entitled to recover from the losing party all fees, costs and
expenses of enforcing any right of such prevailing party under or with respect
to this Agreement, including without limitation, such reasonable fees and
expenses of attorneys and accountants, which shall include, without limitation,
all fees, costs and expenses of appeals.
7.12 TITLES AND SUBTITLES. The titles of the sections and subsections
of the Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
7.13 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
7.14 BROKER'S FEES. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein. Each party
16.
20
hereto further agrees to indemnify each other party for any claims, losses or
expenses incurred by such other party as a result of the representation in this
Section 7.14 being untrue.
7.15 SPECIFIC PERFORMANCE. Each party stipulates that the remedies at
law in the event of any default or threatened default by the other party in the
performance of or compliance with the terms of this Agreement are not and will
not be adequate and that, to the fullest extent permitted by law, such terms may
be specifically enforced by a decree for the specific performance of any
agreement contained herein or by an injunction against a violation of any of the
terms hereof.
17.
21
IN WITNESS WHEREOF, the parties hereto have executed this SERIES C
PREFERRED STOCK PURCHASE AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
XXX.XXX, INC. [NAME OF PURCHASER]
By:
-----------------------------------
Name:
---------------------------------
By: /s/ Xxxx Street Title:
------------------------------------ --------------------------------
Xxxx Street
Chairman of the Board, Chief Executive
Officer and President
000 X. Xxxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000
Phone: (000) 000-0000
(000) 000-0000 (facsimile)
18.
22
FIRST AMENDMENT TO
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
This First Amendment to that certain Series C Preferred Stock Purchase
Agreement, dated as of October 10, 1997 (the "Purchase Agreement") is entered
into as of March 23, 1998, by and between XXX.XXX, INC., a Delaware corporation
(the "Company"), the holders of the Company's Series C Preferred Stock (the
"Initial Purchasers") and the purchasers set forth on the Schedule of Current
Purchasers attached hereto as Schedule A, certain of whom are Initial Purchasers
(the "Additional Purchasers").
RECITALS
WHEREAS, the Company and the Initial Purchasers entered into the
Purchase Agreement pursuant to which the Initial Purchasers purchased from the
Company an aggregate of 736,376 shares of the Company's Series C Preferred
Stock;
WHEREAS, pursuant to Section 2.3 of the Purchase Agreement, the
Purchasers have the option to purchase up to an aggregate of 736,376 shares of
Series C Preferred Stock on or before April 8, 1998;
WHEREAS, the Company wishes to sell to the Additional Purchasers, and
the Additional Purchasers wish to purchase, an additional 486,918 shares of
Series C Preferred Stock;
WHEREAS, in accordance with Section 2.3 and Section 7.7 of the Purchase
Agreement, the Company, the Initial Purchasers and the Additional Purchasers
wish to enter into this First Amendment to make certain amendments to the
Purchase Agreement, to permit the Initial Purchasers to exercise their options
to purchase 736,376 shares of Series C Preferred Stock of the Company and to
permit the Additional Purchasers to purchase 486,918 shares of Series C
Preferred Stock.
In consideration of the mutual agreements, covenants and considerations
contained herein, the parties hereto agree as follows:
1. PURCHASE AND SALE; CLOSING
1.1 Subject to the terms and conditions hereof, and in reliance upon
the representations contained herein or incorporated by reference, the Company
hereby agrees to issue and sell to the Additional Purchasers, and the Additional
Purchasers hereby agree to purchase, that number of shares of Series C Preferred
Stock specified opposite each such person's name on the Schedule of Current
Purchasers attached hereto as Schedule A at a purchase price of Six Dollars and
Seventy-Nine Cents ($6.79) per share (the "Additional Shares"). The Company and
the parties hereto agree that the Schedule of Purchasers shall be amended to
read as set forth on Exhibit A hereto.
1.
23
1.2 The closing of the sale and purchase of the Additional Shares (the
"Second Closing") shall take place on the date hereof at the offices of Xxxxxx
Godward LLP, 0000 Xxxxxx Xxxx., Xxxxx 000, Xxxxxxx, XX 00000, or at such other
time or place as the Company and the Additional Purchasers may mutually agree.
The Second Closing shall be held simultaneously with the closing of the sale and
issuance of an aggregate of 356,073 shares of the Company's Series B Preferred
Stock pursuant to that certain Second Amendment to Series B Preferred Stock
Purchase Agreement. At the Second Closing, subject to the terms and conditions
hereof, the Company will deliver to the Additional Purchasers certificates
representing the number of Additional Shares purchased from the Company against
payment by or on behalf of each such Additional Purchaser of the purchase price
therefor by wire transfer, check made payable to the order of the Company or,
with respect to that portion of the purchase price in excess of the par value of
an aggregate of 117,820 of the shares being purchased by ABS Ventures IV L.P.
and ABX Fund, L.P., by delivery of promissory notes in a form acceptable to the
Company.
2. PURCHASE AGREEMENT
2.1 All capitalized terms used herein without definition shall have the
meanings ascribed to them in the Purchase Agreement.
2.2 The Purchase Agreement is hereby amended (i) to include the
Additional Purchasers as "Purchasers" for all purposes thereunder with the
Additional Purchasers agreeing to be bound by all terms and conditions and
making, as of the Second Closing, all representations and warranties therein,
including the representations and warranties in Section 2.4 below; (ii) the
Additional Shares shall be deemed to be "Shares" for all purposes under the
Purchase Agreement; (iii) references in the Purchase Agreement to the "Closing"
shall be deemed to refer to the Second Closing for purposes of the purchase of
the Additional Shares hereunder.
2.3 The Company hereby represents and warrants to the Purchasers that
the representations and warranties of the Company made in Section 3 of the
Purchase Agreement are true and correct in all material respects as of the date
of the Second Closing except (i) as set forth on the updated Schedule of
Exceptions delivered to the Purchasers, (ii) the references in such
representations to the audited financial statements of the Company for the year
ended December 31, 1996, and the unaudited balance sheet and income statement
for the quarter ended June 30, 1997 and the months ended July 31, 1997 and
August 31, 1997, and as to changes since August 31, 1997 shall be deemed to
refer to the unaudited financial statements of the Company as of December 31,
1997, and the unaudited balance sheet and income statement for the month ended
January 31, 1998, copies of which are attached hereto as Exhibit B, and to
changes as of January 31, 1998 and (iii) with respect to the purchase of the
Additional Shares hereunder, references to the "Restated Certificate of
Incorporation" of the Company shall be deemed to refer to the Restated
Certificate of Incorporation, as amended by the Certificate of Amendment
attached hereto as Exhibit C (the "Certificate of Amendment").
2.4 Each Purchaser hereby severally represents and warrants to the
Company as follows:
2.
24
(a) AUTHORIZATION. The Agreement and the Investor Rights
Agreement constitute and will constitute valid and legally binding obligations
of the Purchaser, enforceable in accordance with their respective terms except
(i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors' rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies, (iii) to the extent
the indemnification provisions of Section 2.9 of the Investor Rights Agreement
may be limited by applicable federal or state securities laws and (iv) except to
the extent that the amount of attorneys' fees recoverable in any lawsuit is
subject to the supervisory powers and discretion of the court.
(b) PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made
with Purchaser in reliance upon Purchaser's representation to the Company, which
by Purchaser's execution of this First Amendment Purchaser hereby confirms, that
the Shares to be received by Purchaser and the Conversion Shares will be
acquired for investment for Purchaser's own account, not as a nominee or agent,
and not with a view to the resale or distribution of any part thereof, and
Purchaser has no present intention of selling, granting any participation in, or
otherwise distributing the same. By executing this First Amendment, Purchaser
further represents that Purchaser does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Shares or Conversion Shares. Purchaser represents that it has full power and
authority to enter into this Agreement.
(c) INVESTMENT EXPERIENCE. Purchaser is an investor in
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Company.
(d) RESTRICTED SECURITIES. Purchaser understands that the
Shares and the Conversion Shares are characterized as "restricted securities"
under the federal securities laws inasmuch as they are being acquired from the
Company in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold without
registration under the Act only in certain limited circumstances. In this
connection, Purchaser represents that it is familiar with Rule 144 of the Act,
as presently in effect, and understands the resale limitations imposed thereby
and by the Act.
(e) FURTHER LIMITATIONS ON DISPOSITION. Purchaser acknowledges
that the Shares and, if issued, the Conversion Shares, are subject to
restrictions on transfer as set forth in the Investor Rights Agreement.
3. CONDITIONS TO ADDITIONAL OBLIGATIONS AT THE SECOND CLOSING. In lieu of the
conditions of each Purchaser's obligations at the Second Closing set forth in
Section 5 of the Purchase Agreement, each Purchaser's obligations to purchase
the shares of Series C Preferred
3.
25
Stock at the Second Closing are subject to the satisfaction, at or prior to the
Second Closing, of the following conditions:
3.1 REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF OBLIGATIONS.
The representations and warranties made by the Company in Section 3 of the
Purchase Agreement shall be true and correct in all material respects as of the
Second Closing with the same force and effect as if they had been made on such
date, and the Company shall have performed all obligations and conditions herein
required to be performed or observed by it on or prior to the Second Closing.
3.2 LEGAL INVESTMENT. On the date of the Second Closing, the sale and
issuance of the Additional Shares and the proposed issuance of the Conversion
Shares shall be legally permitted by all laws and regulations to which the
Purchasers and the Company are subject, and no action is pending seeking to
prevent such sale and issuance.
3.3 CONSENTS, PERMITS, AND WAIVERS. The Company shall have obtained any
and all consents, permits and waivers necessary or appropriate for consummation
of the transactions contemplated by the Purchase Agreement and the Investor
Rights Agreement (except for such as may be properly obtained subsequent to the
Second Closing).
3.4 FILING OF CERTIFICATE OF AMENDMENT TO THE RESTATED CERTIFICATE. The
Certificate of Amendment to the Restated Certificate shall have been filed with
the Secretary of State of the State of Delaware.
3.5 CORPORATE DOCUMENTS. The Company shall have delivered to the
Purchasers or their counsel copies of all corporate documents of the Company as
the Purchasers shall reasonably request.
3.6 RESERVATION OF CONVERSION SHARES. The Conversion Shares issuable
upon conversion of the Shares shall have been duly authorized and reserved for
issuance upon such conversion.
3.7 COMPLIANCE CERTIFICATE. The Company shall have delivered to the
Purchasers a Compliance Certificate, executed by the President of the Company,
dated the date of the Second Closing, to the effect that the conditions
specified in Section 3.1 hereof have been satisfied.
3.8 INVESTOR RIGHTS AGREEMENT. The Company, the requisite parties to
the Amended and Restated Investor Rights Agreement, dated October 17, 1997, and
the Additional Purchasers shall have entered into an amendment to such agreement
to provide that the Additional Purchasers shall be deemed to be "Investors"
thereunder.
3.9 LEGAL OPINION. The Purchaser shall have received from legal counsel
to the Company an opinion addressed to it, dated as of the Second Closing, in
substantially the form rendered at the Initial Closing.
4.
26
3.10 SBA MATTERS. The Company shall have executed and delivered to each
Purchaser that is a licensed Small Business Investment Company a Size Status
Declaration on SBA Form 480, an Assurance of Compliance on SBA Form 652 and an
SBA Certification in the form provided to the Company, and shall have provided
to each such Purchaser information necessary for the preparation of a Portfolio
Financing Report on SBA Form 1031.
3.11 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated at the Second Closing hereby and
all documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Purchasers and their special counsel,
and the Purchasers and their special counsel shall have received all such
counterpart originals or certified or other copies of such documents as they may
reasonably request.
4. CONDITIONS TO ADDITIONAL OBLIGATIONS OF THE COMPANY AT THE SECOND CLOSING. In
lieu of the conditions of the Company's obligations at the Second Closing set
forth in Section 5 of the Purchase Agreement, the Company's obligations to issue
and sell the shares at the Second Closing are subject to the satisfaction, at or
prior to the Second Closing, of the following conditions:
4.1 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties made by the Purchasers in Section 2.4 hereof shall be true and
correct in all material respects at the date of the Second Closing, with the
same force and effect as if they had been made on and as of said date.
4.2 PERFORMANCE OF OBLIGATIONS. The Purchasers shall have performed and
complied with all agreements and conditions herein required to be performed or
complied with by the Purchaser on or before the Second Closing.
4.3 FILING OF CERTIFICATE OF AMENDMENT TO THE RESTATED CERTIFICATE. The
Certificate of Amendment to the Restated Certificate shall have been filed with
the Secretary of State of the State of Delaware.
4.4 INVESTOR RIGHTS AGREEMENT. The Company, the requisite parties to
the Amended and Restated Investor Rights Agreement, dated October 17, 1997, and
the Additional Purchasers shall have entered into an amendment to such agreement
to provide that the Additional Purchasers shall be deemed to be "Investors"
thereunder.
4.5 CONSENTS, PERMITS, AND WAIVERS. The Company shall have obtained any
and all consents, permits and waivers necessary or appropriate for consummation
of the transactions contemplated by the Agreement and the Investor Rights
Agreement (except for such as may be properly obtained subsequent to the
Closing).
5. COUNTERPARTS. This Second Amendment may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
5.
27
6. OTHER TERMS AND CONDITIONS. All other terms and conditions of the Purchase
Agreement shall remain in full force and effect.
[REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
6.
28
IN WITNESS WHEREOF, the parties hereto have executed this FIRST
AMENDMENT TO THE SERIES C PREFERRED STOCK PURCHASE AGREEMENT as of the date set
forth in the first paragraph hereof.
COMPANY: PURCHASERS:
XXX.XXX, INC. [NAME OF PURCHASER]
By: /s/ Xxxx X. Street By:
------------------------------------------- --------------------------
Xxxx X. Street
Chairman of the Board, Chief Executive Name:
Officer and President ------------------------
0000 Xxxxx Xxxxxxx Xxxx., Xxxxx 000 Title:
Xxxxxxxx Xxxxxxx, XX 00000 -----------------------
Phone: (000) 000-0000
Facsimile: (000) 000-0000
7.
29
CONSENT
Reference is made to the Series C Preferred Stock Purchase Agreement,
dated as of October 10, 1997, as amended by the First Amendment thereto, dated
as of March 23, 1998 (as so amended, the "Purchase Agreement"), between XXX.XXX,
Inc., a Delaware corporation (the "Company"), and the purchasers listed on
Exhibit A thereto (the "Purchasers").
The Company and the undersigned Purchasers, who together constitute the
requisite parties necessary to amend or modify the Purchase Agreement, hereby
consent to (i) the sale by the Company of an additional 74,000 shares of Series
C Preferred Stock of the Company to ABS Ventures IV L.P. and ABX Fund L.P.
pursuant to the provisions of the Purchase Agreement and (ii) the amendment and
restatement, in the form attached to this consent, of the Schedule of Purchasers
included as Exhibit A to the Purchase Agreement.
IN WITNESS WHEREOF, the undersigned have executed this consent as of
the 23rd day of April, 1998.
XXX.XXX, INC.
By: /s/ Xxxx X. Street
-------------------------------------------------
Xxxx X. Street
Chairman of the Board, Chief Executive
Officer and President
[NAME OF PURCHASER]
By:
-------------------------------------------------
Name:
Title:
