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EXHIBIT 10.12
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made and entered into as of November
29, 1999, by and among Xxxxxxx.xxx, Inc., a Delaware corporation (the
"COMPANY"), and Xxxxxx.xxx, Inc., a Delaware corporation (the "XXXXXX.XXX") and
Xxxxxx.xxx Advertising Services NV, Inc., a Nevada corporation ("ASNV"and,
together with "Xxxxxx.xxx," the "PURCHASERS").
THE PARTIES AGREE AS FOLLOWS:
1. AUTHORIZATION AND SALE OF SHARES
1.1. AUTHORIZATION OF THE INITIAL SHARES
On or before the Closing Date (as defined in Section 2.1 below), the
Company will have authorized the issuance and sale, pursuant to the terms and
conditions of this Agreement, shares of common stock of the Company, par value
$.001 per share ("COMMON STOCK") equal to the quotient of $10,000,000 divided
by the closing price of the Common Stock on Wednesday, November 24, 1999 as
reported on the Nasdaq National Market (i.e., $14.125) (the "INITIAL SHARES").
1.2. SALE OF THE INITIAL SHARES
Subject to the terms and conditions hereof, on the Closing Date the
Company will issue and sell to Xxxxxx.xxx, and Xxxxxx.xxx will purchase from
the Company, the Initial Shares at an aggregate purchase price of $10,000,000
(the "INITIAL SHARES CONSIDERATION").
1.3. AUTHORIZATION OF THE ADDITIONAL SHARES
On or before Closing Date, the Company will have authorized the
issuance and delivery, pursuant to the terms and conditions of this Agreement,
of shares of common stock such that Purchasers collectively will hold, as of the
Closing and including the Initial Shares, shares of Common Stock constituting
19.9% of the number of shares of the Company's capital stock outstanding as of
one trading day prior to the Closing (the "ADDITIONAL SHARES"). The Initial
Shares and the Additional Shares are referred to as the "SHARES".
1.4. ISSUANCE OF THE ADDITIONAL SHARES
Subject to the terms and conditions hereof, on the Closing Date the
Company will issue and sell to ASNV, and ASNV will purchase from the Company,
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Additional Shares in exchange for cash in the amount of the product of the
number of Additional Shares multiplied the par value of the Common Stock and
ASNV's entry into Section 9 of this Agreement (the "ADDITIONAL SHARES
CONSIDERATION").
2. CLOSING; CLOSING DATE; AND DELIVERIES AT CLOSING
2.1. CLOSING
The consummation of the transactions contemplated pursuant to this
Agreement (the "CLOSING") shall be held at the offices of Xxxxxxx Coie LLP,
0000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000 at 10:00 a.m., Seattle time on the
Closing Date (as defined below). The parties agree that the Closing may be
effected by facsimile.
2.2. CLOSING DATE
Pursuant to Section 7.4 below, the Company and the Purchasers agree to
file with the U.S. Federal Trade Commission (the "FTC") and the Antitrust
Division of the U.S. Department of Justice (the "DOT") pursuant to the U.S.
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), all requisite documents and notifications in connection with the
transactions contemplated pursuant to this Agreement. The Closing shall occur
three business days after the date that all required clearances or
pre-termination notices under the HSR Act have been received by the Company and
the Purchasers (or all applicable waiting periods have expired). The date on
which the Closing is to occur is referred to as the "CLOSING DATE."
2.3. DELIVERY OF CONSIDERATION
At the Closing, Xxxxxx.xxx shall deliver the Initial Shares
Consideration and ASNV shall deliver the cash portion of the Additional Shares
Consideration to the Company by check or wire transfer of immediately available
funds to an account designated by the Company in writing at least two business
days before the Closing Date.
2.4. DELIVERY OF CERTIFICATES FOR THE SHARES
At the Closing, the Company shall deliver to the Purchasers one or
more certificates representing the Shares.
2.6. CONSUMMATION OF CLOSING
All acts, deliveries and confirmations comprising the Closing
regardless of chronological sequence shall be deemed to occur contemporaneously
and
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simultaneously upon the occurrence of the last act, delivery or confirmation of
the Closing, and none of such acts, deliveries or confirmations shall be
effective unless and until the last of same shall have occurred.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce the Purchasers to enter into this Agreement and to
perform their obligations hereunder, the Company hereby represents and warrants
to the Purchasers, at and as of the date of this Agreement and at and as of the
Closing Date, as follows:
3.1. ORGANIZATION
The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware. The Company has all
requisite corporate power and authority to own, operate and lease its property
and to carry on its business as now being conducted. The Company is duly
qualified or licensed as a foreign corporation to do business and is in good
standing in each jurisdiction in which the character of properties occupied,
owned or held under lease by the Company, or the nature of the business
conducted by the Company, makes such qualification or license necessary, except
where the failure to be so qualified or licensed would not have a material
adverse effect on the business, operations, assets, liabilities or financial
condition of the Company and its subsidiaries taken as a whole (a "MATERIAL
ADVERSE EFFECT").
3.2. VALID ISSUANCE
The Shares when issued and paid for in accordance with this Agreement
will be duly authorized, validly issued, fully paid and nonassessable and
issued in compliance with all applicable U.S., state and foreign securities
laws and will not be subject to any preemptive or other similar rights.
3.3. AUTHORITY
The Company has all requisite corporate power and authority to enter
into this Agreement, to sell and issue the Shares and to consummate the other
transactions contemplated by this Agreement. The execution and delivery of this
Agreement, the issuance and sale of the Shares and the consummation of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of the Company. This Agreement has been
duly executed and delivered by the Company, and constitutes the valid and
binding obligation of the Company, enforceable in accordance with its terms,
except to the extent limited by
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(i) the effect of bankruptcy, insolvency, reorganization, receivership,
conservatorship, arrangement, moratorium, fraudulent transfer or other laws
affecting or relating to the rights of creditors generally, (ii) the rules
governing the availability of specific performance, injunctive relief or other
equitable remedies and general principles of equity, regardless of whether
arising prior to, or after, the date hereof or considered in a proceeding in
equity or at law, or (iii) the effect of federal and state securities laws and
principles of public policy on rights of indemnity and contribution.
3.4. NO CONFLICT
The execution and delivery by the Company of this Agreement does not,
and the sale and issuance of the Shares and consummation of the other
transactions contemplated by this Agreement will not, (a) conflict with, or
result in any violation or breach of any provision of, the charter documents of
the Company, (b) result in any violation or breach of, or constitute (with or
without notice or lapse of time, or both) a default (or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
material benefit) under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, lease, contract or other agreement, instrument
or obligation to which the Company is a party or by which any of its properties
or assets may be bound, or (c) conflict or violate any permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company or any of its properties or assets, except
in the case of (b) and (c) for any such conflicts, violations, defaults,
terminations, cancellations or accelerations which would not have a Material
Adverse Effect.
3.5. REQUIRED FILINGS AND CONSENTS
No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality ("GOVERNMENTAL ENTITY") is
required by or with respect to the Company in connection with the execution and
delivery of this Agreement, the sale and issuance of the Shares or the
consummation of the other transactions contemplated hereby, except for (a) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable U.S., state and foreign securities
laws, (b) filings under the HSR Act and (c) such other consents,
authorizations, filings, approvals and registrations which, if not obtained or
made, would not be expected to have a Material Adverse Effect.
3.6. COMMISSION FILINGS
Attached hereto as EXHIBIT A is a true and accurate list of all forms,
reports and documents required to be filed to date with the U.S. Securities and
Exchange
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Commission (the "COMMISSION") by the Company pursuant to the Securities Act of
1933, as amended (the "SECURITIES ACT"), and the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT") (collectively, the "COMPANY COMMISSION
REPORTS"). The Company Commission Reports (a) at the time filed, complied in
all material respects with the applicable requirements of the Securities Act
and the Exchange Act, and (b) did not at the time they were filed (or if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
3.7. FINANCIAL STATEMENTS
The consolidated financial statements of the Company and its
subsidiaries contained in the Company Commission Reports were prepared in
accordance with U.S. generally accepted accounting principles ("GAAP") applied
on a consistent basis throughout the periods indicated, and present fairly, as
of the dates and for the periods indicated, the consolidated financial position
of the Company and its subsidiaries and the consolidated revenues and expenses,
cash flows and stockholders' equity of the Company and its subsidiaries for the
periods therein set forth, subject in the case of the unaudited consolidated
financial statements to later normal, recurring audit adjustments required by
GAAP that are not in the aggregate material and to omission of certain
footnotes as permitted by GAAP.
3.8. STOCKHOLDERS' CONSENT
No consent or approval of the stockholders of the Company is required
or necessary for the Company to enter into this Agreement, to sell and issue
the Shares or to consummate the other transactions contemplated pursuant to
this Agreement.
3.9 BROKERS OR FINDERS
The Company has not employed any broker, finder, consultant or other
intermediary that would have a valid claim against a Purchaser for a fee or
commission in connection with the transactions contemplated hereby.
3.10 LITIGATION
There is no any litigation, governmental proceeding, investigation or
arbitration pending or, to the knowledge of the Company, threatened against or
directly involving the Company that questions the legality or validity of this
Agreement or any related agreements or any actions taken or to be taken
pursuant to
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or in connection with this Agreement or any related agreements or which could
reasonably be expected to have a Material Adverse Effect.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
In order to induce the Company to enter into this Agreement and to
perform its obligations hereunder, the Purchasers hereby represent and warrant
to the Company, at and as of the date of this Agreement and at and as of the
Closing Date, as follows:
4.1. ORGANIZATION
Xxxxxx.xxx is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware. ASNV is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Nevada.
4.2. AUTHORITY
Each Purchaser has all requisite corporate power and authority to
enter into this Agreement, to purchase and hold the Shares to be purchased by
such Purchaser and to consummate the other transactions to be consummated by
such Purchaser contemplated by this Agreement. The execution and delivery of
this Agreement, the purchase of the Shares and the consummation of the other
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of each Purchaser. This Agreement has
been duly executed and delivered by each Purchaser, and constitutes the valid
and binding obligation of such Purchaser, enforceable in accordance with its
terms, except to the extent limited by (i) the effect of bankruptcy,
insolvency, reorganization, receivership, conservatorship, arrangement,
moratorium, fraudulent transfer or other laws affecting or relating to the
rights of creditors generally, (ii) the rules governing the availability of
specific performance, injunctive relief or other equitable remedies and general
principles of equity, regardless of whether arising prior to, or after, the
date hereof or considered in a proceeding in equity or at law, or (iii) the
effect of federal and state securities laws and principles of public policy on
rights of indemnity and contribution.
4.3. NO CONFLICT
The execution and delivery by the Purchasers of this Agreement does
not, and consummation of the transactions contemplated by this Agreement will
not, (a) conflict with, or result in any violation or breach of any provision
of, the charter documents of such Purchaser or (b) result in any violation or
breach of, or constitute (with or without notice or lapse of time, or both) a
default (or give rise to a right of
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termination, cancellation or acceleration of any obligation or loss of any
material benefit) under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, lease, contract or other agreement, instrument
or obligation to which such Purchaser is a party or by which any of its
respective properties or assets may be bound, except in the case of (b) for any
such conflicts, violations, defaults, terminations, cancellations or
accelerations which would not have a material adverse effect on the business,
operations, assets, liabilities or financial condition of the Purchasers and
their subsidiaries and parents taken as a whole.
4.4. REQUIRED FILINGS AND CONSENTS
No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to each Purchaser in connection with the execution and delivery of this
Agreement, the purchase of the Shares to be purchased by such Purchaser or the
consummation of the other transactions to be consummated by such Purchaser
contemplated hereby, except for (a) such consents, authorizations, filings,
approvals and registrations which, if not obtained or made, could not be
expected to have a material adverse effect on such Purchaser's ability to
consummate the transactions contemplated pursuant to this Agreement and (b)
filings under the HSR Act.
4.5. PURCHASE OF THE SHARES ENTIRELY FOR OWN ACCOUNT
The Shares will be acquired by the Purchasers for investment for such
Purchaser's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof. The Purchasers have no present
intention of selling, granting any participation in, or otherwise distributing
the Shares. The Purchasers do not currently have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with respect to any of the
Shares.
4.6. PURCHASERS ARE "ACCREDITED INVESTORS"
Each Purchaser is an "accredited investor" as defined in Rule 501(a)
under the Securities Act. Each Purchaser believes that it has received all the
information it considers necessary or appropriate for deciding whether to
purchase the Shares to be purchased by such Purchaser. Each Purchaser further
represents that it has had an opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the Shares to be
purchased by such Purchaser and the business, properties, prospects and
financial condition of the Company; provided, however, that the foregoing shall
not diminish or detract from such Purchaser's ability to rely upon any of the
Company's representations or warranties.
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4.7. INVESTMENT EXPERIENCE
Xxxxxx.xxx is an investor in securities of companies in early
development stages 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 Initial Shares. ASNV 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 Additional
Shares.
4.8. RESTRICTED SHARES
Each Purchaser understands that the Shares are characterized as
"restricted securities" under applicable U.S. federal and state securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that, pursuant to these laws and applicable
regulations, each Purchaser must hold the Shares indefinitely unless they are
registered with the Commission and qualified by state authorities, or an
exemption from such registration and qualification requirements is available.
Each Purchaser further acknowledges that if an exemption from registration or
qualification is available, it may be conditioned on various requirements
including, but not limited to, the time and manner of sale, the holding period
for the Shares, and other requirements relating to the Company which are
outside of such Purchaser's control. In this connection, each Purchaser
represents that it is familiar with Rule 144 of the Securities Act ("Rule
144"), as presently in effect, and understands the resale limitations imposed
thereby and by the Securities Act.
It is expressly agreed that no registration statement or opinion of
counsel shall be required for any transfer of any Shares: (i) made in
compliance with Rule 144 or Rule 144A of the Securities Act; or (ii) to any
direct or indirect parent or wholly-owned subsidiary of a Purchaser.
4.9. LEGEND
Each Purchaser understands that the certificates representing the
Shares may bear the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT
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TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.
4.10 BROKERS OR FINDERS
Neither Xxxxxx.xxx nor ASNV has employed any broker, finder,
consultant or other intermediary that would have a valid claim against the
Company for a fee or commission in connection with the transactions
contemplated hereby.
5. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASERS
The obligations of the Purchasers pursuant to Sections 1 and 2 of this
Agreement are subject to the fulfillment on or prior to the Closing Date of the
following conditions, each of which may be waived in whole or part by the
Purchasers:
5.1. REPRESENTATIONS AND WARRANTIES
The representations and warranties made by the Company pursuant to
this Agreement shall have been true and correct when made, and shall be true
and correct on the Closing Date with the same force and effect as if they had
been made on and as of such date.
5.2. COVENANTS
The Company shall have performed all obligations and conditions herein
required to be performed or observed by it on or prior to the Closing Date.
5.3. CLOSING CERTIFICATE
The President or Chief Financial Officer of the Company shall deliver
to the Purchasers at the Closing a certificate certifying that the conditions
specified in Sections 5.1 and 5.2 have been fulfilled and stating that there
shall have been no material adverse change in the business, operations,
properties, assets or financial condition of the Company since the date of this
Agreement.
5.4 NO INJUNCTION OR LITIGATION
As of the Closing Date, there shall not be any claim or judgment of
any nature or type threatened, pending or made by or before any Governmental
Entity that questions or challenges the lawfulness of the transactions
contemplated by this
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Agreement under any law or regulation or seeks to delay, restrain or prevent
such transactions. The waiting period specified in the HSR Act, including any
extensions thereof, shall have expired or been terminated.
5.5 GOVERNMENT APPROVALS
All consents, approvals or authorizations of, and declarations,
filings or registrations with, all Governmental Entities required for the
consummation of the transactions contemplated in Sections 1 and 2 of this
Agreement shall have been obtained or made on terms reasonably satisfactory to
the Purchasers and shall be in full force and effect.
5.6 LEGAL OPINION
The Company shall have delivered to the Purchasers an opinion of
counsel, dated the Closing Date, substantially in the form of EXHIBIT B hereto.
5.7 NASDAQ LISTING
The Company shall have filed a Notification For Listing of Additional
Shares with Nasdaq covering the Shares.
6. CONDITIONS TO THE COMPANY'S OBLIGATIONS
The obligation of the Company pursuant to Sections 1 and 2 of this
Agreement are subject to the fulfillment on or prior to the Closing Date of
each of the following conditions, each of which may be waived in whole or part
by the Company:
6.1. REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Purchasers pursuant to this
Agreement shall have been true and correct when made, and shall be true and
correct on the Closing Date with the same force and effect as if they had been
made on and as of such date.
6.2. COVENANTS
The Purchasers shall have performed all obligations and conditions
herein required to be performed or observed by such Purchaser on or prior to
the Closing Date.
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6.3. CLOSING CERTIFICATE
An officer of Xxxxxx.xxx shall deliver to the Company at the Closing a
certificate certifying that the conditions specified in Sections 6.1 and 6.2
have been fulfilled and stating that there has not been any material adverse
change in the business, operations, properties, assets or financial condition
of either Purchaser since the date of this Agreement that would have a material
adverse effect on the ability of such Purchaser to perform this Agreement.
6.4. NO INJUNCTION OR LITIGATION
As of the Closing Date, there shall not be any claim or judgment of
any nature or type threatened, pending or made by or before any Governmental
Entity that questions or challenges the lawfulness of the transactions
contemplated by this Agreement under any law or regulation or seeks to delay,
restrain or prevent such transactions. The waiting period specified in the HSR
Act, including any extensions thereof, shall have expired or been terminated.
6.5 GOVERNMENT APPROVALS
All consents, approvals or authorizations of, and declarations,
filings or registrations with, all Governmental Entities required for the
consummation of the transactions contemplated in Sections 1 and 2 of this
Agreement shall have been obtained or made on terms reasonably satisfactory to
the Company and shall be in full force and effect.
6.6 SECURITIES LAWS QUALIFICATION
The offer and sale to the Purchasers of the Shares pursuant to this
Agreement shall be qualified or exempt from qualification under all applicable
U.S., state and foreign securities laws, which qualifications and exemptions
the Company shall use commercially reasonable efforts to obtain (at the
Company's expense) as promptly as practicable.
7. CERTAIN COVENANTS
7.1 NONDISCLOSURE
Whether or not the Closing under this Agreement occurs, the Company
and the Purchasers will protect the Confidential Information (as defined below)
of the other party from misappropriation and unauthorized use or disclosure,
and at a minimum, will take precautions at least as great as those taken to
protect its own confidential information of a similar nature. Without limiting
the foregoing, the Receiving Party
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(as defined below) will: (a) use such Confidential Information solely for the
purposes for which it has been disclosed; and (b) disclose such Confidential
Information only to those of its employees, agents, consultants, and others who
have a need to know the same for the purpose of performing this Agreement and
who are informed of and agree to a duty of nondisclosure. The Receiving Party
may also disclose Confidential Information of the Disclosing Party (as defined
below) to the extent necessary to comply with applicable law or legal process,
provided that the Receiving Party uses reasonable efforts to give the
Disclosing Party prompt advance notice thereof. Upon request of the other
party, each party shall return to the other all materials, in any medium, which
contain, embody, reflect or reference all or any part of any Confidential
Information of the other party.
For the purposes of this Section 7.1, the following terms have the
following meanings:
"CONFIDENTIAL INFORMATION" means non-public information and know-how
of the Disclosing Party which, by the nature of the circumstances surrounding
disclosure, ought in good faith to be treated as proprietary and/or
confidential, or which has been or is designated as proprietary and/or
confidential. Confidential Information does not include information that the
Receiving Party can show: (a) was known by the Receiving Party prior to
disclosure thereof by the Disclosing Party; (b) was in or entered the public
domain through no fault of the Receiving Party; or (c) is independently
developed by the Receiving Party without reference to any Confidential
Information of the Disclosing Party.
"DISCLOSING PARTY" means a party that discloses Confidential
Information to the other party in connection with this Agreement.
"RECEIVING PARTY" means a party that receives Confidential Information
from the other party in connection with this Agreement.
7.2 CONFIDENTIALITY; PUBLICITY
Neither the Company nor the Purchasers shall issue any press release
or other public announcement regarding, or otherwise disclose, this Agreement
or the transactions contemplated herein, including without limitation Section
9.9, or make any filing of this Agreement or other agreements relating to the
transactions contemplated herein, without the consent of the other; provided,
however, that if a party is required by applicable law to provide public
disclosure of this Agreement or the transactions contemplated herein, such
party shall use all reasonable efforts to coordinate the disclosure with the
other party before issuance, including, but not limited to the submission to
the Commission (and any other applicable regulatory or
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judicial authority) of an application for confidential treatment of certain
terms (which terms shall be agreed upon by the Purchasers and the Company) of
this Agreement. Except for the initial announcement as to the execution of this
Agreement (which announcement shall nonetheless be subject to the provisions
specified above in this Section 7.2), each party shall provide to the other for
review a copy of any proposed disclosure of this Agreement or its terms and any
application for confidential treatment at least five (5) business days before
any such disclosure or application is made.
7.3 COVENANTS TO SATISFY CONDITIONS
Each of the Company and the Purchasers shall use commercially
reasonable efforts to satisfy or cause to be satisfied all of the conditions
precedent to the other party's obligations that are set forth in Section 5 or
6, as the case may be.
7.4 HSR FILINGS
As soon as practicable after execution of this Agreement, the Company
and the Purchasers shall separately make or cause to be made any filings with
and submissions to the FTC and the DOJ required under the HSR Act in connection
with the consummation of the transactions contemplated by this Agreement. Each
party shall furnish to the other party such necessary information and
reasonable assistance as the other party may request, and shall cooperate with
the other party, in connection with the preparation of such filings and
submissions.
7.5 FURTHER ASSURANCES
Each party agrees from time to time to do and perform such other and
future acts and execute and deliver any and all such other instruments as may
be required by law or reasonably requested by the other party to establish,
maintain or protect the rights and remedies of the requesting party or to carry
out and effect the intent and purpose of this Agreement.
7.6 TRANSACTION COSTS
Each party shall be responsible for its own costs and expenses
incurred in connection with the preparation, negotiation and delivery of this
Agreement, including, but not limited to, attorneys' and accountants' fees and
expenses.
7.7 PROXY
In connection with, and at least five (5) days prior to, any vote or
other action by the stockholders of Company in connection with a "Change of
Control"
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transaction (as defined below) occurring prior to January 1, 2001 or in
connection with the election of any director of the Company, the Purchasers
shall execute and deliver to such representatives as may be identified by the
Company an irrevocable proxy in such form as may be reasonably requested,
providing that the Shares shall be voted by such representative with respect to
each matter presented to the stockholders in the same proportion as the votes
cast by the other holders of voting securities with respect to such matters.
For the purposes of this Section 7.7, "Change of Control" transaction shall
mean (i) the acquisition of a greater than 50% interest in the voting
securities of the Company, whether by way of merger, acquisition or otherwise,
(ii) the sale of all or substantially all of the Company's assets, or (iii) the
election of new directors constituting more than a majority of the directors of
the Company. Notwithstanding the foregoing, the representative(s) of the
Company shall abstain from voting such shares upon written direction from
either Purchaser if such Purchaser believes on advice of counsel that any such
vote would violate any fiduciary duty of the Purchaser.
7.8 ELECTION OF DIRECTORS
Beginning on the date of this Agreement and continuing until December
31, 2000, Purchasers and their Affiliates (as defined in Section 9) will not
(and will not assist or encourage others to), directly or indirectly, seek to
elect as a director of the Company any person affiliated with Purchasers or,
except as provided in Section 7.7, vote their shares in favor of the election
of any such person.
7.9 ACQUISITION OF ADDITIONAL SECURITIES
[*]
7.10 SALE OR TRANSFER OF SHARES
[*]
7.11 OTHER RESTRICTIONS
Beginning on the date of this Agreement and continuing until December
31, 2000, Purchasers and their Affiliates (as defined in Section 9) will not
(and will not assist or encourage others to), directly or indirectly, unless
specifically requested to do so in writing in advance by the Company's Board of
Directors:
(a) make, or in any way participate, in any solicitation of proxies or
consents with respect to any securities of the Company which are, or may be,
entitled to vote in the election of the Company's directors ("Voting
Securities"), become a "participant" in any "election contest" (as such terms
are defined or used in Rule 14a-11
----------------
* Confidential treatment requested as to certain portions of this exhibit.
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under the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
with respect to the Company; or seek to advise, encourage or influence any
person or entity with respect to the voting of any Voting Securities; or demand
a copy of the Company's stock ledger or list of its stockholders; or call or
attempt to call any meeting of the stockholders of the Company; or
(b) seek or propose to control the Company's management or the
Company's policies (or request permission to do so) (provided, that for the
avoidance of doubt, nothing herein shall prohibit Purchasers from discussing
the direction and operation of the Company from time to time with its senior
management); or
(c) enter into any discussions, negotiations, arrangements or
understandings with any third party with respect to any of the matters
described in (a) or (b) above with respect to the Company.
8. REGISTRATION RIGHTS
8.1 DEFINITIONS
For purposes of this Section 8, the following terms have the following
meanings:
(a) "FORM S-3" means such form under the Securities Act as in
effect on the date hereof or any registration form under the Securities Act
subsequently adopted by the Commission that similarly permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the Commission;
(b) "HOLDER" means the Purchasers and any permitted assignee
of a Purchaser;
(c) "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act and the declaration or
order of effectiveness of such registration statement or document;
(d) "REGISTRABLE SECURITIES" means (i) the Shares and (ii)
any securities of the Company issued as (or issuable upon the conversion or
exercise of any warrant, right or other security that is issued as) a dividend
or other distribution with respect to, or in exchange for or in replacement of,
the Shares, excluding in all cases, however, (x) any Registrable Securities
sold by a person in a transaction in which its rights under this Agreement are
not assigned and (y) any of the Shares that the holder thereof is entitled to
sell into the public market, together with all other
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Shares of the Company beneficially owned by such holder (and all Registrable
Securities as to which such holder shares beneficial ownership) that is at the
time of registration, transferable by the holder thereof in a single brokerage
transaction under the provisions and within the volume limitations of Rule
144(e)(1) promulgated under the Securities Act or any successor to such Rule.
8.2 COMPANY REGISTRATION
If (but without the obligation to do so) the Company proposes to
register (including for this purpose a registration effected by the Company for
stockholders other than the Holders) any of its stock or other securities under
the Securities Act in connection with the public offering of such securities
solely for cash (other than a registration relating solely to the sale of
securities to participants in a Company stock plan, or a registration on Form
S-4 or its equivalent), the Company shall, at each such time, promptly give
each Holder written notice of such registration. Upon the written request of
each such Holder given within 15 days after receipt of such notice by the
Company, the Company shall, subject to the provisions of this Section 8, use
all reasonable efforts to cause to be registered under the Securities Act all
of the Registrable Securities that each such Holder has requested to be
registered. Any request pursuant to this Section 8.2 to register Registrable
Securities as part of an underwritten public offering of Common Stock shall
specify that such Registrable Securities are to be included in the underwriting
on the same terms and conditions as the shares of Common Stock otherwise being
sold through underwriters under such registration.
8.3 FORM S-3 REGISTRATION
(a) If the Company shall receive a written request from the Holders of
a majority of the Registrable Securities then outstanding that the Company
effect a registration on Form S-3, then the Company shall, within ten (10) days
after the receipt of such request, give written notice of such request to all
Holders and shall, subject to the limitations set forth below, use all
reasonable efforts to effect as soon as practicable the registration under the
Securities Act of all Registrable Securities that the Holders request to be
registered in a written request to be given within thirty (30) days of receipt
of such notice by the Company.
(b) Notwithstanding the foregoing, the Company shall not be obligated
to effect any such registration pursuant to this Section 8.3 if: (i) Form S-3
is not available for such offering by the Holders; (ii) the Holders, together
with the holders of any other securities of the Company entitled to inclusion
in such registration, propose to sell Registrable Securities and such other
securities (if any) at an aggregate price to the public (before deduction of
any underwriters' discounts or commissions)
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of less than $5,000,000; (iii) the Company shall furnish to the Holders a
certificate signed by the President of the Company stating that, in the good
faith judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its stockholders for such Form S-3 registration
to be effected at such time, in which event the Company shall have the right to
defer the filing of the Form S-3 registration statement for a period of not more
than ninety (90) days after receipt of the request of the Holders under this
Section 8.3; provided, however, that the Company shall not use this right more
than once in any twelve (12)-month period; (iv) if the Company has, within the
twelve (12)-month period preceding the date of such request, already effected
two (2) such registrations on Form S-3 for the Holders pursuant to this Section
8.3; or (v) the Company within the twelve (12)-month period preceding the date
of such request has effected a registration of securities in which the Holders
of Registrable Securities requesting registration pursuant to this Section 8.3
were entitled to participate to the fullest extent they desired pursuant to
Section 8.2.
(c) Notwithstanding the foregoing, in the event of any demand
registration effected pursuant to this Section 8.3 prior to December 31, 2000,
the Holders shall not be entitled to sell more than the number of Registrable
Securities as is equal to [*] of the Shares acquired by Purchasers on the
Closing Date.
8.4 OBLIGATIONS OF THE COMPANY
In effecting the registration of Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the Commission a registration
statement with respect to such Registrable Securities and use its commercially
reasonable efforts to cause such registration statement to become effective
and, upon the request of the Holders of a majority of the Registrable
Securities registered thereunder, keep such registration statement effective
for up to 90 days.
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such registration statement.
(c) Furnish to the Holders such copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request to
facilitate the disposition of all Registrable Securities covered by such
registration statement.
----------------
* Confidential treatment requested as to certain portions of this exhibit.
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(d) Use commercially reasonable efforts to register and
qualify the Registrable Securities covered by such registration statement under
such other securities or blue sky laws of such jurisdictions as shall be
reasonably requested by the Holders, provided that the Company shall not be
required to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering. Each Holder
participating in such registration shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by
such registration statement, during the time when a prospectus is required to
be delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances then existing, not misleading.
(g) At the request of any Holder selling Registrable
Securities in such registration, furnish on the date that such Registrable
Securities are delivered to the underwriters for sale in connection such
registration (i) an opinion, dated such date, of legal counsel representing the
Company for the purposes of such registration, in form and substance as is
customarily given by Company counsel to underwriters in an underwritten public
offering, addressed to the underwriters and the Holder(s) and (ii) a letter,
dated such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering,
addressed to the underwriters and the Holder(s).
(h) Qualify the Registrable Securities being registered for
inclusion on Nasdaq or list the Registrable Securities being registered on the
national securities exchange on which the Common Stock is listed or if the
Common Stock is not listed on Nasdaq.
(i) Provide a transfer agent and registrar for the Shares
being registered and a CUSIP number, not later than the effective date of the
registration statement.
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8.5 FURNISH INFORMATION
It shall be a condition precedent to the obligations of the Company to
take action pursuant to this Section 8 that a prospective selling Holder shall
furnish to the Company such information regarding itself, the securities of the
Company then held by it and the intended method of disposition of such
Registrable Securities as shall be reasonably required to effect the
registration of its Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request.
8.6 EXPENSES OF REGISTRATION
In connection with any registration pursuant to this Section 8, the
Company shall be responsible for the payment of all expenses of the
registration, with the exception of (a) underwriting discounts and commissions,
which shall be paid by the Company, the Holders and any other selling holders
of the Company's securities in proportion to the aggregate value of the
securities offered for sale by each of them, and (b) the fees and expenses of
more than one law firm acting as counsel to the selling Holders selected by a
majority in interest of the selling Holders, which additional counsel, if any,
shall be paid by the Holder or Holders that engage such counsel. The expenses
to be paid by the Company shall include, without limitation, all registration,
filing and qualification fees, printing and accounting fees, the fees and
disbursements of counsel for the Company and the fees and disbursements of one
counsel for the selling Holders.
8.7 UNDERWRITING REQUIREMENTS
The Company shall not be required under Section 8.2 to include any of
Registrable Securities of a Holder in an underwritten offering of the Company's
Shares (but specifically excluding any S-3 demand pursuant to Section 8.3)
unless the Holder accepts the terms of the underwriting as agreed upon between
the Company and the underwriters selected by it and enters into an underwriting
agreement in customary form with the underwriters. If the total amount of
securities including Registrable Securities, requested to be included in such
offering by the Holders and all other stockholders holding registration rights
under the Second Amended and Restated Investors' Rights Agreement dated July 9,
1999, (the "Investors") exceeds the amount of securities sold other than by the
Company that the underwriters determine in their sole discretion is compatible
with the success of the offering, then the Company will be required to include
in the offering only that number of securities, including Registrable
Securities, that the underwriters determine in their sole discretion will not
jeopardize the success of the offering (the securities so included to be
apportioned pro rata among the Investors and the selling Holders according to
the
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total amount of securities entitled to be included therein by each selling
Holder and each Investor or in such other proportions as may be otherwise
agreed by the Investors and the selling Holders), [*].
8.8 DELAY IN REGISTRATION
No Holder shall have the right to obtain or seek an injunction
restraining or otherwise delaying any such registration as a result of any
controversy that might arise with respect to the interpretation or
implementation of this Section 8.
8.9 INDEMNIFICATION
In the event any Registrable Securities are included in a registration
statement under this Agreement:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, any underwriter (as defined in the
Securities Act) for such Holder and each person, if any, who controls such
Holder or underwriter within the meaning of the Securities Act or the Exchange
Act against any expenses (including legal fees and costs), losses, claims,
damages (including settlement amounts) or liabilities (joint or several)
(collectively, "LOSSES") to which they may become subject under the Securities
Act, the Exchange Act or other U.S., state or foreign law, insofar as such
Losses arise out of or are based upon any of the following statements,
omissions or violations (collectively, a "VIOLATION"): (i) any untrue statement
or alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained
therein, or in any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated
therein, or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or (iii) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law and
relating to such registration. The Company will reimburse (as incurred) each
such Holder, underwriter or controlling person for any Losses reasonably
incurred by them in connection with investigating or defending any Violations;
provided, however, that the indemnity agreement contained in this Section
8.9(a) shall not apply to amounts paid in settlement of any claims for
Violations if such settlement is made without the consent of the Company, which
consent shall not be unreasonably withheld, nor shall the Company be liable in
any such case for any Losses that arise out of or are based upon a Violation
that occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by any such
Holder, underwriter or controlling person.
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(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, its officers who signed the
registration statement and its directors, each underwriter and each other
person selling securities of the Company in the offering registered by such
registration statement, and any person who controls any of the foregoing within
the meaning of the Securities Act or the Exchange Act, against any Losses to
which the Company or such officer, director, agent, employee, or underwriter or
other selling Holder or controlling person may become subject under the
Securities Act, the Exchange Act or other federal or state securities law,
insofar as such Losses arise out of or are based upon any Violation that occurs
in reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration; and each such
Holder will reimburse (as incurred) any Losses reasonably incurred by the
Company, the Company's officers who signed the registration statement, the
Company's directors, underwriters and other persons selling securities of the
Company pursuant to the registration statement or controlling persons in
connection with investigating or defending any Violations; provided, however,
that (i) the indemnity agreement contained in this Section 8.9(b) shall not
apply to amounts paid in settlement of any claims for Violations if such
settlement is made without the consent of the Holder, which consent shall not
be unreasonably withheld and (ii) the obligations of such Holders shall be
limited to an amount equal to the net proceeds to each such Holder of
Registrable Securities sold as contemplated herein.
(c) Promptly after receipt of notice of the commencement of
any action (including any governmental action), an indemnified party will, if a
claim is to be made against any indemnifying party under this Section 8.9,
deliver to the indemnifying party a written notice of the commencement, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly notified, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in the proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable period of time
after notice of the commencement of any such action shall relieve such
indemnifying party of any liability to the indemnified party under this Section
8.9 to the extent such failure is prejudicial to its ability to defend such
action, but the omission to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 8.9.
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(d) If the indemnification provided for in this Section 8.9
is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any Losses, then the indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such Losses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the Violations that resulted in such Losses as well as any other relevant
equitable considerations; provided, that, in no event shall any contribution by
a Holder under this Section 8.9(d) exceed the net proceeds to each such Holder
of Registrable Securities sold as contemplated herein. The relative fault of
the indemnifying party and of the indemnified party shall be determined by
reference to, among other things, whether the Violation resulting in such
Losses relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such Violation.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
more favorable to the Holders, the provisions in the underwriting agreement
shall control.
(f) The obligations of the Company and Holders under this
Section 8.9 shall survive the completion of any offering of Registrable
Securities.
8.10 REPORTS UNDER THE SECURITIES ACT
With a view to making available to the Holders the benefits of the
Commission's Rule 144 promulgated under the Securities Act and any other rule
or regulation of the Commission that may at any time permit a Holder to sell
securities of the Company to the public without registration or pursuant to a
registration on Form S-3, the Company agrees to use commercially reasonable
efforts to:
(a) Make and keep public information available, as those
terms are understood and defined in Rule 144;
(b) Take such action as may be necessary to ensure the
availability to the Company of Form S-3, or any successor form that allows the
Company to incorporate substantial amounts of information from other Commission
filings into a registration statement for the sale of Registrable Securities;
and
(c) Furnish to any Holder, so long as the Holder owns any
Registrable Securities, promptly upon request (i) a written statement by the
Company
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that it has complied with the reporting requirements of the Exchange Act, and
(ii) such other information as may be reasonably requested in availing any
Holder of any rule or regulation of the Commission that permits the selling of
any Registrable Securities without registration or pursuant to Form S-3.
8.11 ASSIGNMENT OF REGISTRATION RIGHTS
The rights to cause the Company to register Registrable Securities
pursuant to this Section 8 may be assigned (but only with all related
obligations) by a Holder to a subsidiary or parent of Holder or to a transferee
or assignee of at least twenty percent (20%) of the securities constituting
Registrable Securities as of the date hereof, each of whom shall, upon such
transfer or assignment, be deemed a "Holder" under this Section 8; provided
that the Company is, within a reasonable period of time after such transfer,
furnished with written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration rights are
being assigned; provided, further, that (i) such transferee or assignee agrees
in writing to be bound by and subject to the terms of Section 8 of this
Agreement, and (ii) such assignment shall be effective only if immediately
following such transfer the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act.
8.12 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS
From and after the date of this Agreement, the Company shall not,
without the prior written consent of the Purchasers, or any successor that
holds a majority in interest of the Registrable Securities, enter into any
agreement with any holder or prospective holder of any securities of the
Company that would allow such holder or prospective holder to include such
securities in any registration filed under Section 8.2 or 8.3 unless, under the
terms of such agreement, such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of
its securities will not reduce the amount of the Registrable Securities of the
Holders that is included in such registration.
8.13 TERMINATION OF REGISTRATION RIGHTS
No Holder shall be entitled to exercise any right provided for in this
Section 8 after September 23, 2004 or, as to any Holder, such earlier time at
which all Registrable Securities held by such Holder (and any Affiliate of such
Holder with whom such Holder must aggregate its sales under Rule 144) can be
sold in any three (3) month period without registration in compliance with Rule
144.
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9. ADVERTISING PLACEMENTS
9.1 DEFINITIONS
For purposes of this Section 9, the following terms have the following
meanings:
(a) "ADVERTISING PLACEMENT" means any link, advertisement or other
advertising placement provided for in Section 9.2.
(b) "ADVERTISING PLACEMENT TERM" means the term of the provisions set
forth in this Section 9. Solely for purposes of this Section 9, the Advertising
Placement Term will begin as of the date of this Agreement and, unless earlier
terminated as provided elsewhere in this Section 9, will end automatically as
of December 31, 2000.
(c) "AFFILIATE" means, with respect to either party, any individual or
entity that directly or indirectly controls, is controlled by or is under
common control with that party ("control" meaning, for purposes of the
foregoing, either: (a) beneficial ownership of at least fifty percent (50%) of
the voting equity of an entity; or (b) the ability through contractual
arrangement to direct or control the overall operations or management of an
entity).
(d) "COMPANY CUSTOMER INFORMATION" means the information and data
specified in subparagraphs (a) and (b) of Section 9.4(c).
(e) "INTELLECTUAL PROPERTY RIGHT" means any patent, copyright,
trademark, trade dress, trade name or trade secret right and any other
intellectual property or proprietary right.
(f) "LOOSE DIAMONDS" means loose diamonds, including loose diamonds
that may be placed in a setting prior to delivery to the customer depending on
customer's preference, but excluding all pre-manufactured or pre-set diamond
jewelry.
(g) "NEW COMPANY CUSTOMER" means any individual or entity that:
(i) has not previously purchased a product or service from or
through the Web Site identified by the URL xxx.xxxxxxx.xxx (and any successor
or replacement Web Site) (the "COMPANY SITE");
(ii) accesses the Company Site directly via (i) an encoded
hypertext link posted by ASNV or any Specified Affiliates on any Web Site
(including on the
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Web Site identified by the URL xxx.xxxxxx.xxx (and any successor or replacement
Web Site) (the "XXXXXX.XXX SITE")), (ii) an encoded URL provided in any
Advertising Placement, or (iii) a unique tracking identification number that
interacts with the ordering process and is provided in any Advertising
Placement; and
(iii) either (i) purchases a product or service from Company
or any of its Affiliates before leaving the Company Site by any means, or (ii)
places at least one product or service in a shopping basket or on a shopping
list (or similar data construct) or otherwise identifies, selects or takes
other affirmative steps to order a product or service in a manner that is
recorded and maintained on the Company Site, then leaves the Company Site by
any means, and subsequently returns to the Company Site and purchases any such
identified product or service.
(h) "RESTRICTED MERCHANT" means a third party merchant (excluding [*]
as of the Closing) which is principally known as a seller of [*]. For the
avoidance of doubt, the term "Restricted Merchant" does not include [*] dealers
recruited or engaged by [*] to participate in the [*] service, or any retailer
of [*] notwithstanding that they may sell [*].
(i) "SPECIFIED AFFILIATE" means any Affiliate of ASNV which either:
(a) primarily does business under the Xxxxxx.xxx brand name (or close
variations thereof); or (b) performs any advertising services for Company
pursuant to this Agreement (e.g., by posting Advertising Placements on a Web
Site operated by such Affiliate).
(j) "WEB SITE" means any point of presence maintained on the Internet
or on any other public data network. With respect to any Web Site maintained on
the World Wide Web or any successor public data network, such Web Site includes
all HTML pages (or similar unit of information presented in any relevant data
protocol) that either (a) are identified by the same second-level domain (such
as xxxx://xxx.xxxxxx.xxx) or by the same equivalent level identifier in any
relevant address scheme, or (b) contain branding, graphics, navigation or other
characteristics such that a user reasonably would conclude that the pages are
part of an integrated information or service offering.
9.2 ADVERTISING PLACEMENTS
ASNV will deliver advertising messages targeted at Xxxxxx.xxx's
customer base with the intent of delivering New Company Customers, which
advertising may include, without obligation or limitation, messages and other
Company-related content (a) in mailings or e-mails, (b) in product shipments to
Xxxxxx.xxx customers, (c) on the Xxxxxx.xxx Site, (d) on other Web Sites owned
by
----------------
* Confidential treatment requested as to certain portions of this exhibit.
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Xxxxxx.xxx or Affiliates of Xxxxxx.xxx, such as Xxxxxx.xx.xx, Xxxxxx.xx,
XxxxxxXxx.xxx, Xxxx.xxx and Xxxxx.xxx, or (e) in any other appropriate manner
or media as determined by ASNV. ASNV will determine the use, manner, scope and
duration of any Advertising Placements in its sole discretion; provided, that
to the extent ASNV or its Affiliates makes placements on the [*] Site available
generally to [*], Company shall be entitled to participate in such placements
in a manner and in a proportion that is consistent with that of [*] (provided
that, for the avoidance of doubt, the foregoing shall not include participation
in any placements offered only to [*]. The content, timing and appearance of
any Company-related text and/or graphics contained in such Advertising
Placements will be determined by ASNV after consulting with Company, subject to
the implementation process outlined in Section 9.3 and the requirements of
Section 9.4.
9.3 OBLIGATIONS OF THE COMPANY
(a) ADVERTISING DISCOUNTS OR BENEFITS. In connection with the
Advertising Placements to be provided by ASNV under Section 9.2, the Company
will offer potential New Company Customers either (a) a discount in the
purchase price of products or services offered for sale from or through the
Company Site or (b) an equivalent benefit upon purchase of a product or service
from or through the Company Site (in either case, the "INCENTIVE Offer").
Company will provide the Incentive Offer to each New Company Customer, and will
ensure that each Incentive Offer grants a discount or benefit toward the
purchase of products or services available on or through the Company Site worth
(x) at least [*] with respect to purchases of [*], and (y) at least [*] with
respect to purchases of more than [*].
(b) ADVERTISING COSTS. Company will pay all out of pocket costs
payable to third parties associated with the Advertising Placements to be
provided by ASNV under Section 9.2, including without limitation the costs of
printing and mailing costs. ASNV will invoice Company on a monthly basis for
the out of pocket costs incurred by ASNV in connection with the Advertising
Placements, and Company will pay ASNV the invoiced sums within thirty (30) days
after receipt of the applicable invoice.
(c) RECORDS AND AUDIT. Company will maintain complete and accurate
records of all New Company Customers. Within fifteen (15) days of the end of
each month of the Advertising Placement Term, if any, the Company will deliver
a written statement setting forth the Company Customer Information for the
preceding month and the aggregate Company Customer Information for the
Advertising Placement Term to date, together with: (a) [*] and (b) such other
information regarding the initial purchase by each New Company Customer as ASNV
may reasonably request,
----------------
* Confidential treatment requested as to certain portions of this exhibit.
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including, but not limited to, the date of such purchase, the amount of the
transaction and the products purchased; provided, however, that ASNV
acknowledges that Company subscribes to the "TrustE" privacy practices program
(the "TrustE Program") and agrees that Company shall not be required to
disclose the foregoing information to the extent that: (a) Company is an
authorized licensee of TrustE; and (b) such disclosure would violate the
standards specified by the TrustE Program; provided further, that Company shall
implement its privacy policies and practices in such a manner as to provide
ASNV with as much of the foregoing information as possible consistent with
compliance with the minimum standards of the TrustE Program. ASNV may, at its
expense, examine or audit Company's records related to Company Customer
Information or otherwise related to New Company Customers no more than once
every twelve months; provided, that if any audit discovers any underreporting
of New Company Customers of five percent (5%) or more with respect to the
audited period, Company will promptly pay or reimburse ASNV for the reasonable
costs of such audit. Any such audit will be conducted, to the extent possible,
in a manner that does not unreasonably interfere with Company's business
operations.
9.4 IMPLEMENTATION
(a) ACCOUNT MANAGERS. The Company and ASNV will assign an account
manager (which manager shall be subject to change from time to time by the
assigning party upon written notice to the other party) to facilitate
coordination of the parties' performance of their obligations hereunder
(including, without limitation, in the creation and monitoring of the
Advertising Placements).
(b) COOPERATION. During the Advertising Placement Term, the Company
and ASNV will cooperate in good faith and use commercially reasonable efforts
to (a) establish and implement procedures and processes for proposing,
creating, approving (including, without limitation, content and costs) and
implementing the Advertising Placements under this Agreement, and (b) develop,
test and implement the Advertising Placements in accordance with such
procedures and processes and the terms and conditions of this Agreement.
(c) COMPANY RECORDS. During the Advertising Placement Term, Company
will ensure that its ordering mechanism [*] (including, without limitation, any
orders made using any Incentive Offer and any orders made by persons accessing
the Company Site through a link in any Advertising Placement or utilizing any
tracking identification number provided in any Advertising Placement). During
the Advertising Placement Term and for a period of one (1) year thereafter,
Company shall maintain accurate and complete records of the foregoing
information, the
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number of New Company Customers delivered to Company on each day (including,
without limitation, as a percentage of the total user traffic to the Company
Site delivered through the Advertising Placements), the number of persons
making use of any Incentive Offer on each day, and the total order value for
each order placed by any New Company Customer.
SECTION 9.5 COMPANY LICENSE
Company hereby grants to Purchasers, during the Advertising Placement
Term, a non-exclusive, non-transferable license to use the trade names,
trademarks, service names and other proprietary marks and/or copyrightable
materials supplied by Company as is reasonably necessary to perform its
obligations under this Section 9. All goodwill arising out of any use of any of
Company's marks by, through or under Purchasers will inure solely to the
benefit of Company. Subject to the foregoing, Company reserves all of its
right, title and interest in its Intellectual Property Rights, including,
without limitation, all right, title and interest in and to all trademarks,
trade dress, logos, insignia and copyrightable materials supplied by the
Company to Purchasers.
SECTION 9.6 INDEMNITY
Company or Purchasers, as applicable, (in either case, the
"Indemnifying Party") will defend and indemnify the other Party and its
Affiliates against any third party claim, to the extent arising out of or in
connection with (a) the operation of the web site located at the URL
xxxx://xxx.xxxxxx.xxx (in the case of Purchasers as the Indemnifying Party) or
the URL xxxx://xxx.xxxxxxx.xxx (in the case of Company as the Indemnifying
Party), or (b) any breach of this Section 9 by the Indemnifying Party. The
Indemnifying Party will pay any award against the other party and any costs and
attorneys' fees reasonably incurred by the other party and its Affiliates
resulting from any such claim; provided, that the party seeking indemnification
(i) gives the Indemnifying Party prompt written notice of the claim, (ii)
cooperates with the Indemnifying Party (at the Indemnifying Party's expense) in
connection with the defense and settlement of the claim, and (iii) permits the
Indemnifying Party to control the defense and settlement of the claim, provided
that the Indemnifying Party may not settle the claim without the indemnified
party's prior written consent (which will not be unreasonably withheld). The
indemnified party (at its cost) may participate in the defense and settlement
of the claim.
SECTION 9.7 DISCLAIMERS, LIMITATIONS AND RESERVATIONS
NEITHER COMPANY NOR PURCHASERS (OR EITHER OF THEM) MAKE ANY
REPRESENTATIONS OR WARRANTIES IN RELATION TO THIS
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SECTION 9, ANY WEB SITES OWNED OR OPERATED BY SUCH PARTY OR ITS PERFORMANCE
UNDER THIS SECTION 9, INCLUDING (WITHOUT LIMITATION) IMPLIED WARRANTIES OF
MERCHANTABILITY, NON-INFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, PURCHASERS, AND EACH OF THEM,
SPECIFICALLY DISCLAIM ANY REPRESENTATION OR WARRANTY REGARDING THE AMOUNT OF
REVENUES OR OTHER ECONOMIC OR NON-ECONOMIC BENEFITS THAT COMPANY MAY OBTAIN
THROUGH ITS PARTICIPATION IN THIS SECTION 9. NEITHER COMPANY NOR PURCHASERS (OR
EITHER OF THEM) WILL BE LIABLE TO THE OTHER FOR INCIDENTAL OR CONSEQUENTIAL
DAMAGES ARISING OUT OF THIS SECTION 9, EVEN IF SUCH PARTY HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING THE FAILURE OF THE
ESSENTIAL PURPOSE OF ANY REMEDY.
SECTION 9.8. TERMINATION OF SECTION 9
(a) TERMINATION FOR BREACH. Without limiting any other rights or
remedies (including, without limitation, any right to seek damages and other
monetary relief) that either party may have in law or otherwise, either party
may terminate this Section 9 prior to the expiration of the Advertising
Placement Term if the other party materially breaches its obligations under
this Section 9, provided that (a) the non-breaching party sends written notice
to the breaching party describing the breach, and (b) the breaching party does
not cure the breach within thirty (30) days following its receipt of such
notice. Termination of this Section 9 shall not cause termination of this
Agreement as a whole.
(b) EFFECT OF EXPIRATION AND TERMINATION. Upon expiration of the
Advertising Placement Term or termination of this Section 9 pursuant to Section
9.8(a), each party in receipt, possession or control of the other party's
intellectual or proprietary property, information and materials pursuant to
this Section 9 must return to the other party (or at the other party's written
request, destroy) such property, information and materials. Sections 9.3(b),
9.3(c), 9.4(c), 9.6, 9.7 and 10, together with this Section 9.8(b), will
survive any termination or expiration of this Section 9.
SECTION 9.9 CERTAIN RESTRICTIONS
(a) PURCHASERS. [*]
(b) COMPANY. The Company will not during the Advertising Placement
Term directly or indirectly operate any [*] to be operated on any web site
maintained
----------------
* Confidential treatment requested as to certain portions of this exhibit.
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by or for the Company; provided, however, that the Company may list items for
sale on a third party [*] not affiliated with the Company.
10. MISCELLANEOUS
10.1 GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Washington applicable to contracts executed in and to
be performed in that state.
10.2 SURVIVAL
Except as otherwise provided herein, the representations, warranties,
covenants and agreements made herein shall survive the closing of the
transactions contemplated hereby.
10.3 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.
10.4 ENTIRE AGREEMENT
This Agreement and the other documents referred to herein constitute
the full and entire understanding and agreement among the parties with regard
to the subjects hereof and thereof.
10.5 AMENDMENT; WAIVER
Any term of this Agreement may be amended and the observance of any
term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and the Purchasers. Any term of Section 8 of this
Agreement may be amended and the observance of any term provided for in Section
8 may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company
and the holders of a majority of the Registrable Securities then outstanding.
----------------
* Confidential treatment requested as to certain portions of this exhibit.
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10.6 DELAYS OR OMISSIONS
No delay or omission to exercise any right, power or remedy accruing
to any holder of any of the Shares, upon any breach or default of the Company
under this Agreement, shall impair any such right, power or remedy of such
holder nor shall it be construed to be a waiver of any such breach or default,
or an acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of any holder of any breach or default under this Agreement, or any
waiver on the part of any holder of any provisions or conditions of this
Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies either under this
Agreement, or by law or otherwise afforded to any holder, shall be cumulative
and not alternative.
10.7 NOTICES AND OTHER COMMUNICATIONS
Every notice or other communication required or contemplated by this
Agreement by either party shall be delivered either by (i) personal delivery,
(ii) postage prepaid return receipt requested registered or certified mail or
the equivalent of registered or certified mail under the laws of the country
where mailed, (iii) nationally recognized overnight courier, such as Federal
Express or UPS, or (iv) facsimile with a confirmation copy sent simultaneously
by postage prepaid, return receipt requested, registered or certified mail, in
each case addressed to the Company or the Purchasers as the case may be at the
following address:
To the Company: Xxxxxxx.xxx, Inc.
0000 Xxxxxxx Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
With copies to: Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx Xxxxxxxx &
Xxxxxxxxx LLP
0000 Xxxxxxx xx Xxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxxxx
Facsimile: (000) 000-0000
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To the Purchasers: Xxxxxx.xxx, Inc.
0000 - 00xx Xxxxxx X., Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Vice President and General Counsel
Facsimile: (000) 000-0000
With a copy to: Xxxxxxx Coie LLP
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn.: Xxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
or at such other address as the intended recipient previously shall have
designated by written notice to the other party (with copies to counsel as may
be indicated on the signature page). Notice by registered or certified mail
shall be effective on the date it is officially recorded as delivered to the
intended recipient by return receipt or equivalent, and in the absence of such
record of delivery, the effective date shall be the fifth business day after it
was deposited in the mail. All notices delivered in person or sent by courier
shall be effective on the date of personal delivery; notices delivered by
facsimile with simultaneous confirmation copy by registered or certified mail
shall be effective on the date sent. Notice not given in writing shall be
effective only if acknowledged in writing by a duly authorized representative
of the party to whom it was given.
10.8 SPECIFIC PERFORMANCE
Each of the parties hereto acknowledges and agrees that the other
party hereto would be damaged irreparably in the event any of the provisions of
this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the parties hereto agrees the
other party hereto will be entitled to an injunction to prevent breaches of the
provisions of this Agreement and to enforce specifically this Agreement and the
terms and provisions of this Agreement in any competent court having
jurisdiction over the parties, in addition to any other remedy to which they
might be entitled at law or in equity. In any such action specifically to
enforce any such term or provision of this Agreement, the parties hereby waive
any claim or defense therein that an adequate remedy at law or in damages
exists.
10.9 SEVERABILITY OF THIS AGREEMENT
In case any provision of this 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. Furthermore
the court shall have the power to replace the invalid or unenforceable part or
provision with a
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provision that accomplishes, to the extent possible, the original business
purpose of such part or provision in a valid and enforceable manner. Such
replacement shall apply only with respect to the particular jurisdiction in
which the adjudication is made.
10.10 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. Execution and delivery of this Agreement by exchange of facsimile
copies bearing the facsimile signature of a party hereto shall constitute a
valid and binding execution and delivery of this Agreement by such party. Such
facsimile copies shall constitute enforceable original documents.
10.11 NO THIRD-PARTY RIGHTS
Nothing in this Agreement is intended, nor shall be construed, to
confer upon any person or entity other than the parties and their respective
successors and assigns any right or remedy under or by reason of this
Agreement, except as expressly provided in this Agreement.
10.12 NO AGENCY, ETC.
None of the provisions of this Agreement shall be construed to mean
that any party is appointed or is in any way authorized to act as an agent of
any other party. This Agreement does not constitute, create, give effect to, or
otherwise recognize a joint venture, partnership, or formal business
organization of any kind.
10.13 CONSTRUCTION OF AGREEMENT
This Agreement has been negotiated by the parties and their attorneys,
and the language hereof shall not be construed for or against any party. The
titles and headings herein are for reference purposes only and shall not in any
manner limit the construction of this Agreement, which shall be considered as a
whole.
10.14 TERMINATION
This Agreement may be terminated as follows:
(a) The Purchasers may terminate this Agreement in the event that the
conditions set forth in Section 5 have not been satisfied or waived on or
before March 31, 2000;
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(b) The Company may terminate this Agreement in the event that the
conditions set forth in Section 6 have not been satisfied or waived on or
before March 31, 2000;
(c) Any party may terminate this Agreement if the Company and the
Purchasers shall have mutually determined, in consultation with their
respective legal counsel, that the required clearances or pre-termination
notices under the HSR Act specified in Section 2.2 are not likely to be
obtained.
No termination pursuant to this Section 10.14 shall relieve any party
of liability for breach of this Agreement prior to such termination.
Either the Company or the Purchasers may terminate this Agreement if
the other (a) has a receiver or administrative receiver appointed for it or
over its undertakings or assets, (b) passes a resolution for winding up or a
court of competent jurisdiction makes an order to that effect and such order is
not discharged within ninety (90) days, (c) enters into any voluntary
arrangement with its creditors for the benefit of its creditors, (d) becomes
subject to an administration order, or (e) ceases to carry on business.
10.15 ATTORNEYS' FEES
If any action or proceeding shall be commenced to enforce this
Agreement or any right arising in connection with this Agreement, the
prevailing party in such action or proceeding shall be entitled to recover from
the other party, the reasonable attorneys' fees, costs and expenses incurred by
such prevailing party in connection with such action or proceeding or
negotiation to avoid such action or proceeding.
10.16 XXXXXX.XXX GUARANTEE
Xxxxxx.xxx hereby guarantees the performance of ASNV's obligations
hereunder; provided, that: (a) Xxxxxx.xxx only agrees to act as a guarantor of
the performance of such obligations and not as a party thereto; (b) in the
event of any alleged failure or default by ASNV, Xxxxxx.xxx shall be entitled
to assert on its own behalf such defenses as may be asserted by ASNV in respect
of the same; and (c) the Company acknowledges and agrees that Xxxxxx.xxx may in
its discretion satisfy its obligations under this Section 10.16 by causing one
or more of its Affiliates to perform its obligations under this Section 10.16.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
XXXXXXX.XXX, INC.
---------------------------------------
Its:
-----------------------------------
XXXXXX.XXX, INC.
---------------------------------------
Its:
---------------------------------
XXXXXX.XXX ADVERTISING SERVICES NV, INC.
---------------------------------------
Its:
---------------------------------
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EXHIBIT A - LIST OF COMPANY COMMISSION REPORTS*
* Not Material
37
EXHIBIT B - FORM OF LEGAL OPINION*
* Not Material
